Exhibit 2.1
SECOND AMENDMENT TO
ASSET PURCHASE AGREEMENT
This Second Amendment to Asset Purchase Agreement (this "AMENDMENT")
is made and entered into as of this 28th day of October, 2004, by and among
Boise Cascade Corporation, a Delaware corporation ("Parent"), and Forest
Products Holdings, L.L.C., a Delaware limited liability company ("Holdings").
R E C I T A L S
WHEREAS, Parent, Boise Southern Company, a Louisiana general
partnership ("Southern"), Minidoka Paper Company, a Delaware corporation
("Minidoka") (collectively, "Sellers" and, individually, a "Seller"), Holdings,
and Boise Land & Timber Corp., a Delaware corporation and indirect wholly-owned
Subsidiary of Holdings ("Timber Co.") are party to an Asset Purchase Agreement,
dated as of July 26, 2004 as amended by a First Amendment to Asset Purchase
Agreement dated as of October 23, 2004, between Parent and Holdings
(collectively, the "ASSET PURCHASE AGREEMENT"). Capitalized terms used but not
otherwise defined in this Amendment have the meanings given to such terms in the
Asset Purchase Agreement.
WHEREAS, Section 19.2 of the Asset Purchase Agreement provides that
the Asset Purchase Agreement may be amended if, and only if, such amendment is
set forth in writing and signed by Parent and Holdings.
WHEREAS, Parent and Holdings desire to amend certain provisions of the
Asset Purchase Agreement as provided herein.
NOW, THEREFORE, in consideration of the mutual promises made herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound, do
hereby agree as follows:
1.0 CASH PORTION OF TIMBERLANDS PURCHASE PRICE. Section 4.1.1 of the
Purchase Agreement is amended and restated in its entirety as follows;
4.1.1 An aggregate of $15,000,000 of the Timberlands Purchase Price
shall be payable to Parent and Southern in cash at Closing. $10,000,000 of
such amount shall be allocated to mineral values on the timberlands with
$5,000,000 allocated to Parent and $5,000,000 allocated to Southern.
$4,000,000 of the balance of such cash portion of the Timberlands Purchase
Price shall be allocated to Parent and the balance of $1,000,000 to
Southern.
2.0 CASH IN TRANSIT; CHECKS IN FLOAT. The Purchase Agreement is hereby
amended by adding the following Section 5.5:
5.5 The parties acknowledge and agree that certain bank accounts of
the Business are being transferred to Holdings and the Permitted Affiliate
Purchasers as Assets (the "Relevant Bank Accounts") and that, as part of
the transfer of the Relevant Bank Accounts, Holdings and its Permitted
Affiliate Purchasers may receive certain cash that was deposited into the
Relevant Bank Accounts by customers of Parent and its Subsidiaries prior to
the Closing Date and which was not otherwise immediately available funds
able to be transferred from the Relevant Bank Accounts prior to the Closing
Date (the "Unavailable Funds Cash Amount"). Furthermore, the parties
acknowledge and agree that, prior to the Closing, Parent and its
Subsidiaries may write certain checks or incur other obligations which are
to be satisfied in whole or in part with cash from the Relevant Bank
Accounts, but which are not so satisfied in full prior to the Closing (the
aggregate amount of cash that would be required from the Relevant Bank
Accounts in order to satisfy such obligations, the "Outstanding Cash
Obligation Amount"). At or before 10:00 a.m. (eastern time) on November 1,
2004, Parent shall deliver to Holdings true and correct copies of (a)
copies of true and correct written bank statements showing the Unavailable
Funds Cash Amount and (b) a true and correct statement of the Outstanding
Cash Obligation Amount. In the event that the Unavailable Funds Cash Amount
exceeds the Outstanding Cash Obligation Amount (such excess, the "Cash
Excess Amount"), Holdings shall, or shall cause one of its Subsidiaries to,
pay the Cash Excess Amount to Parent by not later than 12:00 p.m. (eastern
time) on November 1, 2004 by wire transfer of immediately available funds
to an account designated by Parent. In the event that the Unavailable Funds
Cash Amount is less than the Outstanding Cash Obligation Amount (such
shortfall, the "Cash Shortfall Amount"), Parent shall, or shall cause one
of its Subsidiaries to, pay the Cash Shortfall Amount to Holdings or its
designee by no later than 12:00 p.m. (eastern time) on November 1, 2004 by
wire transfer of immediately available funds to an account designated by
Holdings or its designee. Notwithstanding the two immediately foregoing
sentences, the parties agree that (i) if the Unavailable Funds Cash Amount
or the Outstanding Cash Obligation Amount is different than the amount
included in the computation of Cash Excess Amount or Cash Shortfall Amount,
or (ii) if any portion of the Unavailable Cash Funds Amount is not
collected by Holdings or its Subsidiaries or converted into immediately
available funds by November 15, 2004, then the Cash Excess Amount or Cash
Shortfall Amount, as appropriate, shall be appropriately adjusted to
reflect such fact and payment shall be made by the party owing such
adjustment amount to the party to whom such adjustment amount is owed
promptly, but in any event within three (3) business days, after demand
therefor.
3.0 ACKNOWLEDGEMENT. Parent acknowledges that it received notice that the
LaBokay Consents were obtained prior to October 25, 2004 at 5:00 p.m.
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4.0 EFFECTIVENESS. Pursuant to Section 19.2 of the Asset Purchase
Agreement, this Amendment will be valid, binding, and effective against Holdings
and the Sellers when it has been executed by each of Holdings and Parent.
5.0 CONTINUING EFFECT. Except as expressly amended or modified by this
Amendment, the provisions of the Asset Purchase Agreement will continue in full
force and effect.
6.0 GOVERNING LAW. This Amendment shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without giving effect to any
choice of law or conflict of law rules or provisions (whether of the State of
Delaware or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Delaware.
7.0 COUNTERPARTS. This Amendment may be executed in one or more
counterparts (including by facsimile), each of which shall be deemed an
original, and all of which shall constitute one and the same Amendment.
8.0 HEADINGS. The heading references herein are for convenience purposes
only, do not constitute a part of this Amendment and shall not be deemed to
limit or affect any of the provisions hereof.
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IN WITNESS WHEREOF, the parties have caused this amendment to be signed as
of the date first set forth above.
BOISE CASCADE CORPORATION
By /s/ Xxxx X. Xxxxxxxx
--------------------------
Title Senior Vice President
and General Counsel
-----------------------
FOREST PRODUCTS HOLDINGS, L.L.C.
By: Madison Dearborn Capital Partners IV, L.P.
Its: Managing Member
By: Madison Dearborn Partners IV, L.P.
Its: General Partner
By: Madison Dearborn Partners, L.L.C.
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------
Its: Co-President
-----------------------
FIRST AMENDMENT TO
ASSET PURCHASE AGREEMENT
This First Amendment to Asset Purchase Agreement (this "AMENDMENT")
is made and entered into as of this 23rd day of October, 2004, by and among
Boise Cascade Corporation, a Delaware corporation ("Parent"), and Forest
Products Holdings, L.L.C., a Delaware limited liability company ("Holdings").
R E C I T A L S
WHEREAS, Parent, Boise Southern Company, a Louisiana general
partnership ("Southern"), Minidoka Paper Company, a Delaware corporation
("Minidoka") (collectively, "Sellers" and, individually, a "Seller"), Holdings,
and Boise Land & Timber Corp., a Delaware corporation and indirect wholly-owned
Subsidiary of Holdings ("Timber Co.") are party to an Asset Purchase Agreement,
dated as of July 26, 2004 (the "ASSET PURCHASE AGREEMENT"). Capitalized terms
used but not otherwise defined in this Amendment have the meanings given to such
terms in the Asset Purchase Agreement.
WHEREAS, Section 19.2 of the Asset Purchase Agreement provides that
the Asset Purchase Agreement may be amended if, and only if, such amendment is
set forth in writing and signed by Parent and Holdings.
WHEREAS, Parent and Holdings desire to amend certain provisions of
the Asset Purchase Agreement as provided herein.
NOW, THEREFORE, in consideration of the mutual promises made herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound, do
hereby agree as follows:
ARTICLE 1 AMENDMENTS TO THE ASSET PURCHASE AGREEMENT
1.1 SECTION 1.1: DEFINITIONS. The following definitions set forth in
Section 1.1 of the Asset Purchase Agreement are hereby amended as follows:
1.1.1 The definition of "Ancillary Agreements" is hereby amended
to insert the words "(to the extent issued pursuant to Section 4.1)" after the
words "the Timber Notes".
1.1.2 The definition of "Closing" is hereby amended to replace the
words "payment by Holdings to Sellers of the Non-Timber Purchase Price and the
cash portion of the Timberlands Purchase Price, issuance of the Timber Notes,"
with the words "payment by Holdings to Sellers of the Non-Timber Purchase Price
and the Timberlands Purchase Price (including payment of cash and/or issuance of
Timber Notes as described in Section 4.1),".
1.1.3 The definition of "Credit Enhancement Banks" is hereby
amended and replaced in its entirety with the following:
""Credit Enhancement Banks" means Wachovia Bank, National Association, with
respect to 50% of the arrangements described in the LC Commitment Letters,
and Xxxxxx Brothers Holdings Inc., with respect to the other 50% of the
arrangements described in the LC Commitment Letters."
1.1.4 The definition of "Operating Holding Co." is hereby amended
by replacing the words "BCC Holdings, L.L.C." with "Boise Cascade Holdings,
L.L.C.".
1.1.5 The definition of "Required Consents" is hereby amended by
inserting the following language after the words "Section 15.1.3": "; provided
that, notwithstanding anything contained in Section 15.1.3 or Schedule 15.1.3,
the lease and the related natural resources agreement between Southern and
Labokay Corporation (collectively, the "Labokay Agreements") shall not be the
subject of a Required Consent."
1.1.6 The definition of "Timber LLC" is hereby amended by
inserting the following language at the end of the definition:
"In the event that Holdings is unable to secure the Labokay Consents, and
if the Louisiana Timberlands are to be transferred to Louisiana Purchase
Corporation, the term "Timber LLC" shall also include two additional
bankruptcy remote Delaware limited liability companies which are wholly
owned Subsidiaries of Louisiana Purchase Corporation and are disregarded
entities for federal income tax purposes."
1.1.7 The following new definitions are hereby added to Section
1.1:
""Advanced Employee" shall have the meaning given it in Section 11.8."
""Anticipated Taxes Amount" shall have the meaning given it in Section
11.8."
""Bonus Advance Notice" shall have the meaning given it in Section 11.8."
""Draft Documentation" shall have the meaning given it in Section 4.1.2."
""Gross Advanced Bonus Amount" shall have the meaning given it in Section
11.8."
""Labokay Agreements" shall have the meaning given it in Section 15.1.3."
""Labokay Consents" shall have the meaning given it in Section 5.4."
""Louisiana Purchase Corporation" shall have the meaning given it in
Section 5.4."
""Net Advanced Bonus Amount" shall have the meaning given it in Section
11.8."
1.2 SECTION 4.1: TIMBERLANDS PURCHASE PRICE.
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1.2.1 Section 4.1.2 of the Asset Purchase Agreement is hereby
amended as follows:
1.2.1.1 By inserting the words "Subject to the last
sentence of this paragraph," at the beginning of the first sentence.
1.2.1.2 By replacing each instance of the words "standby
letter of credit" therein with the words "irrevocable guaranty."
1.2.1.3 By inserting the words "and Holdings" at the end of
the third sentence.
1.2.1.4 By replacing the fourth sentence in its entirety
with the following:
"The interest rate on the Timber Notes shall be a fixed stated rate of
interest set forth in the Timber Notes, which shall, as described in the
Section entitled "Timber Installment Note" in the LC Commitment Letters, be
equal to (x) the interest rate for the "Collateral Notes" described in the
Section entitled "Collateral Notes" in the LC Commitment Letters, less (y)
the sum of the cost of the irrevocable guaranty and an additional
percentage rate intended to cover the cost of administering the Timber
Notes during their term; provided that Holdings may elect prior to the
Closing Date that the Timber Notes provide for the payment of such interest
rate without reduction for the costs of the irrevocable guaranty if and to
the extent necessary to insure that the yield on the Timber Notes (as
determined in accordance with Internal Revenue Service Regulations as of
the Closing Date) is as of the Closing Date at least equal to 4.78%, and in
such case Parent shall agree in writing with the Credit Enhancement Bank
that it will pay the Credit Enhancement Bank directly the costs of the
irrevocable guaranty that are not included in such interest payments."
1.2.1.5 By inserting the following sentence at the end of
the paragraph:
"Notwithstanding the foregoing, if for any reason the Credit Enhancement
Banks are unwilling or unable to or otherwise do not provide the
irrevocable guaranty and related documentation as described in this Section
4.1.2 on the Closing Date, or if Parent or Holdings has not approved the
form and substance of the Timber Notes and the irrevocable guaranty and
related documentation on or prior to the Closing (which approval in either
case shall not be unreasonably withheld, conditioned, or delayed (it being
understood that (x) Holdings shall be deemed to have approved for purposes
of this Section 4.1.2 any term or provision that is expressly set forth in
the LC Commitment Letters or the form of draft documentation attached
hereto as Schedule 4.1(c) (the "Draft Documentation") and (y) Holdings
shall be deemed to be reasonable in withholding, conditioning or delaying
its consent on account of any term or provision that is not expressly set
forth in the LC Commitment Letters or the Draft Documentation only if
Holdings reasonably determines such term or provision would have more than
a de minimis
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adverse effect on Holdings and its Subsidiaries (other than Timber LLC),
taken as a whole), then Holdings shall in lieu of delivering the Timber
Notes pay the balance of the Timberlands Purchase Price in cash at Closing,
which cash payment shall be allocated between Parent and Southern in
proportion to the relative amounts of the Parent Timberlands Purchase Price
and the Southern Timberlands Purchase Price, respectively."
1.2.2 Section 4.1.3 of the Asset Purchase Agreement is hereby
amended by inserting the words "To the extent Timber Notes are issued pursuant
to Section 4.1.2," at the beginning of the first sentence.
1.2.3 Section 4.1 of the Asset Purchase Agreement is hereby
amended by inserting the following as a new Section 4.1.4:
"4.1.4 Notwithstanding anything to the contrary herein or
otherwise, at the Closing and subject to the occurrence of the Closing,
Parent will, in addition to other amounts that are expressly stated as
payable by Parent in this Agreement or in the LC Commitment Letters, pay in
cash to JPMorgan Chase Bank and Xxxxxx Brothers Bank, FSB the amounts set
forth on Schedule 4.1.4 to this Agreement in exchange for their execution
and delivery of the release and termination letters attached on Schedule
4.1.4 to this Agreement."
1.2.4 Schedule 4.1(b) to the Asset Purchase Agreement is hereby
amended and replaced in its entirety with the LC Commitment Letters attached to
this Amendment as Exhibit A.
1.2.5 The Schedules to the Asset Purchase Agreement are hereby
amended by inserting a new Schedule 4.1(c) consisting of the draft documentation
attached to this Amendment as Exhibit B.
1.2.6 The Schedules to the Asset Purchase Agreement are hereby
amended by inserting a new Schedule 4.1.4 consisting of the payment schedule and
release and termination letters attached to this Amendment as Exhibit C.
1.3 SECTION 5.4: CONSENTS TO ASSIGNMENT. Section 5.4 of the Asset
Purchase Agreement is hereby amended by inserting the following language at the
end of the paragraph:
"With respect to the specific Contracts, Leases and Governmental
Authorizations that are Required Consents, if Parent is unable to obtain
consent to the assignment prior to Closing, and Holdings elects in its sole
discretion to waive its closing condition under Section 15.1.3 with respect
to such consent, then: (a) the Contract, Lease or Governmental
Authorization in question shall be deemed a Retained Asset and any
obligation or liability arising therefrom shall be excluded from the
Assumed Liabilities; (b) Parent shall continue to use its best efforts from
and after Closing to obtain all required consent to assignment, and if such
consent is ultimately obtained such Contract, Lease or Governmental
Authorization shall no longer be a Retained Asset and shall be deemed a
transferred Asset, and any
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obligation or liability arising thereunder from and after the Closing shall
not be a Retained Liability, and shall be deemed to be an Assumed
Liability, in either case to the same extent as if such Contract, Lease or
Governmental Authorization were assigned at Closing (except that any
liability or obligation arising out of or in connection with any breach
thereof occurring after the Closing and prior to, at, or as a result of,
the assignment thereof that is caused by the actions or inactions of
Sellers, and any obligation under this Section 5.4 in respect of such
Contract, Lease or Governmental Authorization, shall be a Retained
Liability and shall not be deemed to be an Assumed Liability); (c) Parent
shall bear all costs of obtaining any such consent, and Parent will
indemnify Holdings and its Subsidiaries for the aggregate amount of any
costs, expenses, losses, or diminution or loss of value resulting from such
consent to assignment not having been obtained prior to Closing; and (d)
until such time as the consent is obtained, the parties shall use their
best efforts to arrange and enter into mirror image purchase and sale
arrangements, subleases, sublicenses, service agreements and other
work-around arrangements in respect of any Contract or Lease so excluded;
PROVIDED that to the extent, despite the exercise of best efforts, such
arrangements cannot be entered into or would not place Holdings and its
Subsidiaries in substantially the same economic position as if such
Contract, Lease or Governmental Authorization were able to be assigned,
Parent will indemnify Holdings and its Subsidiaries for the aggregate
amount of any costs, expenses, losses, or diminution or loss of value
resulting from the exclusion of any such Contract, Lease or Governmental
Authorization.
"Notwithstanding any other provision of this Agreement, (i) Parent does not
assume any obligation with respect to obtaining any consents as may be
required to assign the Labokay Agreements to a Permitted Affiliate
Purchaser that is a disregarded entity for federal income tax purposes (as
opposed to a corporation) ("Labokay Consents"), (ii) Parent shall have no
obligation with respect to (A) any costs, expenses, losses or diminution or
loss of value resulting from any Labokay Consent not having been obtained
prior to Closing or (B) any purchase and sales arrangements, subleases,
sublicenses, service agreements or other work around arrangements in
connection with the failure to obtain any Labokay Consent, and (iii) if the
Labokay Agreements are not transferred at Closing but are assigned
thereafter, then upon such assignment the Labokay Agreements shall not be a
Retained Asset and shall be deemed a transferred Asset, and any obligation
or liability arising thereunder from and after the Closing shall not be a
Retained Liability, and shall be deemed to be an Assumed Liability, in
either case to the same extent as if the Labokay Agreements were assigned
at Closing (except that any liability or obligation arising out of or in
connection with any breach thereof occurring after the Closing and prior
to, at, or as a result of, the assignment thereof to Timber Co. or
Louisiana Purchase Corporation that is caused by the actions or inactions
of Sellers, and any obligation under this Section 5.4 in respect of the
Labokay Agreements, shall be a Retained Liability and shall not be deemed
to be an Assumed Liability).
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"In the event that Holdings is able to obtain the Labokay Consents, it
shall give notice of such fact to Parent. If such notice is not received by
Parent by 5:00 p.m. CDT on Monday, October 25, 2004, then (a) Southern
shall assign, at Closing, the Labokay Agreements to Timber Co. or to a
corporation (the "Louisiana Purchase Corporation") to be formed by Holdings
that will be a wholly owned direct or indirect Subsidiary of Timber
Holdings, (b) Parent and Southern shall, at Closing, convey, assign, and
transfer the remainder of their Louisiana Timberlands to Timber Co. or
Louisiana Purchase Corporation, and (c) Timber Co. or Louisiana Purchase
Corporation, as applicable, shall assume, at Closing, the Assumed
Liabilities in respect of the Labokay Agreements and the other transferred
Louisiana Timberlands, in each case in accordance with the terms of this
Agreement. If the transfer is to Louisiana Purchase Corporation, Holdings
shall cause Louisiana Purchase Corporation to form two wholly owned
bankruptcy remote Subsidiaries which are disregarded entities for federal
income tax purposes, and such Subsidiaries shall issue the portion of the
Timber Notes which are attributable to the Timberlands transferred by
Parent and Southern to Louisiana Purchase Corporation. Parent and Southern
and Holdings shall reasonably cooperate with each other in order to cause
the arrangements contemplated by the LC Commitment Letters to accommodate
the foregoing structural changes."
1.4 SECTION 6.3: EQUITY AGREEMENTS. The form of stockholders agreement
set forth in Schedule 6.3 to the Asset Purchase Agreement is hereby amended as
follows:
1.4.1 By, in the first sentence of Section 7.1, inserting the
following language at the end of clause (i): "and the payment of the proceeds of
such liquidation or dissolution to Boise Sub and FPH."
1.4.2 By, in the first sentence of Section 7.1, inserting the
following language at the end of clause (ii): "(provided that thereafter this
Agreement shall nevertheless remain in full force and effect with respect to the
provisions of Section 8.13 and all related definitions and provisions to the
extent necessary or desirable to give effect to Section 8.13 until the Boise Sub
Holders cease to hold any Series A Common or the occurrence of an event
described in clauses (i), (iii), (iv), or (v) of this sentence)."
1.4.3 By inserting the following as a new Section 8.13(d) thereof:
"(d) Notwithstanding the foregoing, in the event Timber
Holding Co. directly or indirectly transfers all or substantially all of
the Timberlands at any time prior to the payment in full and termination of
the senior credit facility to which Boise Cascade, L.L.C. is a party and
the notes issued under the high-yield indenture to which Boise Cascade,
L.L.C. is a party, then Timber Holding Co. may elect to distribute a
portion of the proceeds from such sale to FPH and Boise Sub. Such a
distribution may be accomplished by (A) a distribution from Timber Holdings
Co. to FPH and Boise Sub, or (B) a liquidation of Timber Holding Co., and
in either case the proceeds Timber Holding Co. elects to distribute shall
be allocated among the Series A Common and Series B
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Common held by FPH and Boise Sub as a liquidating distribution pursuant to
the terms of Timber Holding Co.'s certificate of incorporation.
"Upon any such distribution, if there are Optional Reinvestable Proceeds,
then:
"(I) Boise Sub will have the option to retain an amount of proceeds equal
to the lesser of (x) the aggregate Series A Per Share Value of all Series A
Common held by Boise Sub (the "Series A Value") and (y) the Optional
Reinvestable Proceeds (the lesser of (x) and (y), the "Series A Retainable
Proceeds"), but will have the option to invest a portion of the Series A
Retainable Proceeds in Series A Common Units of Operating Holding Co. in an
amount equal to the lesser of the Series A Retainable Proceeds and the
Optional Reinvestment Amount; and
"(II) if the Series B Optional Reinvestment Amount is greater than zero,
then (x) FPH will invest in Series B Common Units of Operating Holding Co.
an amount equal to the Series B Optional Reinvestment Amount multiplied by
a fraction, the numerator of which is the total sale proceeds distributed
to FPH, and the denominator of which is the total sale proceeds distributed
to FPH and Boise Sub in respect of their Series B Common; and (y) Boise Sub
will invest in Series B Common Units of Operating Holding Co. (at the same
price per unit as paid by FPH under clause (x) above) an amount equal to
the Series B Optional Reinvestment Amount multiplied by a fraction, the
numerator of which is the total sales proceeds distributed to Boise Sub in
respect of its Series B Common, and the denominator of which is the total
sale proceeds distributed to FPH and Boise Sub in respect of their Series B
Common.
"Upon any such distribution, if there is a Mandatory Reinvestment Amount,
then:
"(A) if the Series A Value is greater than the Optional Reinvestable
Proceeds (or if there are no Optional Reinvestable Proceeds), then Boise
Sub will invest in Series A Common Units of Operating Holding Co. an amount
equal to the Mandatory Reinvestment Amount multiplied by a fraction, the
numerator of which is the total sale proceeds distributed to Boise Sub in
respect of its Series A Common (less the Series A Retainable Proceeds, if
any), and the denominator of which is the total sale proceeds distributed
to FPH and Boise Sub (less the Series A Retainable Proceeds, if any);
"(B) FPH will invest in Series B Common Units of Operating Holding Co. an
amount equal to the Mandatory Reinvestment Amount multiplied by a fraction,
the numerator of which is the total sale proceeds distributed to FPH, and
the denominator of which is the total sale proceeds distributed to FPH and
Boise Sub (less the Series A Retainable Proceeds, if any); and
"(C) Boise Sub will invest in Series B Common Units of Operating Holding
Co. (at the same price per unit as paid by FPH under clause (B) above) an
amount equal to the Mandatory Reinvestment Amount multiplied by a fraction,
the numerator of which is the total sale proceeds distributed to Boise Sub
in respect of
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its Series B Common, and the denominator of which is the total sale
proceeds distributed to FPH and Boise Sub (less the Series A Retainable
Proceeds, if any).
"The "Mandatory Reinvestment Amount" shall be equal to the sum, without
duplication, of: (i) if Boise Cascade L.L.C. is required under the terms of
its senior credit facility to pay to its lenders any portion of the
proceeds from the sale of Timberlands over and above amounts of debt
otherwise repaid by Timber Holding Co. and its Subsidiaries, the amount of
such excess requirement, PLUS (ii) any other proceeds from the sale of
Timberlands distributed to FPH and Boise Sub that pursuant to the terms of
the high-yield indenture to which Boise Cascade L.L.C. is a party may not
be distributed to the shareholders of Timber Holding Co. without
reinvestment thereof by such shareholders in Operating Holding Co.
"The "Optional Reinvestable Proceeds" shall be equal to any proceeds from
the sale of Timberlands distributed to FPH and Boise Sub over and above any
Mandatory Reinvestment Amount; provided that the Optional Reinvestable
Proceeds shall be reduced by the aggregate federal and state income taxes
payable in respect of the total sale proceeds distributed to FPH and Boise
Sub.
"The "Optional Reinvestment Amount" shall be equal to, if Boise Cascade
L.L.C. is permitted to repurchase or redeem any notes under the terms of
its high-yield indenture with any portion of the Optional Reinvestable
Proceeds, the amount of such proceeds that FPH determines shall be used to
repurchase or redeem such notes.
"The "Series B Optional Reinvestment Amount" shall mean the lesser of (x)
the excess, if any, of the Optional Reinvestable Proceeds over the Series A
Value, and (y) the Optional Reinvestment Amount minus the amount, if any,
elected to be invested by Boise Sub under clause (I) above."
1.5 SECTION 7.1. Section 7.1 to the Asset Purchase Agreement is hereby
amended by inserting the following language at the end of the paragraph:
"If Timber Notes are issued pursuant to Section 4.1.2, the Timber Notes
shall have an aggregate issue price (within the meaning of Code Sections
1271-1275 and the Treasury regulations thereunder) at Closing that is not
less than the non-cash portion of the Timberlands Purchase Price."
1.6 SECTION 8.7: CAPITAL STRUCTURE. Schedule 8.7 to the Asset Purchase
Agreement is hereby amended and replaced in its entirety with the structure
chart attached to this Amendment as Exhibit D.
1.7 SECTION 8.8.1: FINANCIAL CAPABILITY REP. Section 8.8.1 of the Asset
Purchase Agreement is hereby amended by replacing clause (ii) in its entirety
with the following:
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"(ii) either acquire the Collateral Notes as provided for in the
arrangements described in the LC Commitment Letters or pay the balance of
the Timberlands Purchase Price in cash, as described in Section 4.1."
1.8 SECTION 10.3: EFFORTS TO ACHIEVE CLOSING. Section 10.3 of the Asset
Purchase Agreement is hereby amended by replacing the words "Outside Date" in
the lead-in paragraph with the words "Closing Date."
1.9 SECTION 10.11: EXCLUSIVITY. Section 10.11 of the Asset Purchase
Agreement is hereby amended by deleting the second full paragraph in its
entirety.
1.10 SECTION 10.15: ASSIGNMENT OF TIMBERLANDS PURCHASE RIGHTS. Section
10.15 of the Asset Purchase Agreement is hereby amended as follows:
1.10.1 By, in the first sentence of the lead-in paragraph,
inserting the words "(or its Permitted Affiliate Purchasers that are, except for
Louisiana Purchase Corporation as described in Section 5.4, wholly owned
Subsidiaries of Timber Co. that are disregarded entities for federal income tax
purposes)" after the words "to Timber Co.".
1.10.2 By, in the second sentence of the lead-in paragraph,
inserting the words "(and its Permitted Affiliate Purchasers other than Timber
LLC)" after the words "release Timber Co.".
1.10.3 By, in clause (i) of Section 10.15.2, adding the words "(or
its Permitted Affiliate Purchasers that are, except for Louisiana Purchase
Corporation as described in Section 5.4, wholly owned Subsidiaries of Timber Co.
that are disregarded entities for federal income tax purposes)" after the words
"to Timber Co.".
1.10.4 By, in the last sentence of Section 10.15.2, adding the
words "(or its Permitted Affiliate Purchasers that are, except for Louisiana
Purchase Corporation as described in Section 5.4, wholly owned Subsidiaries of
Timber Co. that are disregarded entities for federal income tax purposes)" after
the words "to Timber Co.".
1.10.5 By inserting the following as a new Section 10.15.4:
"10.15.4. Notwithstanding the foregoing, the provisions of
this Section 10.15 shall only apply in the event Timber Notes are issued at
the Closing pursuant to Section 4.1.2."
1.11 SECTION 10.16: COOPERATION CONCERNING TIMBER NOTES. Section 10.16 of
the Asset Purchase Agreement is hereby amended by inserting the following
language at the end of the paragraph:
"In connection with the foregoing, Holdings will make its officers,
personnel and advisors available as reasonably requested by Parent; will
respond to inquiries, requests, and proposed documentation reasonably
promptly after receipt thereof; and will otherwise reasonably cooperate
with Parent in connection with Parent's
9
efforts to obtain the arrangements described in the LC Commitment Letters
by the Closing Date, including by executing such documents as may be
reasonably required in connection therewith that are mutually satisfactory
to Parent and Holdings as described in Section 4.1.2.
"Notwithstanding the foregoing, Parent's ability to obtain the credit
enhancement provided for in the arrangements called for in the LC
Commitment Letters and the Tax treatment thereof shall not be conditions to
the Sellers' obligations at the Closing, and nothing in this Section 10.16
shall be construed to create any condition to the Sellers' obligations at
the Closing. Pursuant to the last sentence of Section 4.1.2, if the
arrangements called for in the LC Commitment Letters are not available on
the Closing Date, Holdings will deliver the Timberlands Purchase Price in
cash as set forth therein."
1.12 SECTION 11.8: SEVERANCE AND RETENTION OBLIGATIONS. Section 11.8 is
hereby amended by inserting the following language between the second and third
sentences of such section:
"Holdings may at any time prior to the payment of bonuses under the 2004
Retention Bonus Plan give written notice to Parent (the "BONUS ADVANCE
NOTICE"), specifying (a) the names of Transferred Employees covered by the
2004 Retention Bonus Plan who desire to acquire securities of Holdings and
to use all or any portion of their anticipated bonus award under the 2004
Retention Bonus Plan to pay the purchase price for such securities (each,
an "ADVANCED EMPLOYEE"), (b) with respect to each such Advanced Employee,
the amount of the bonus (which amount may not be larger than the aggregate
bonus amount to be awarded to such Advanced Employee under the terms of the
2004 Retention Bonus Plan, as described on Schedule D-18 of Parent's
Disclosure Memorandum) that (after reduction for anticipated income taxes
payable upon the receipt of such bonus) will be used by such Advanced
Employee to purchase Holdings securities (such amount, prior to reduction
for anticipated taxes, such Advanced Employee's "GROSS ADVANCED BONUS
AMOUNT"), (c) with respect to each Advanced Employee the amount of
anticipated income taxes payable upon receipt of the Gross Advanced Bonus
Amount (such Advanced Employee's "ANTICIPATED TAXES AMOUNT"), and (d) with
respect to each Advanced Employee, an amount equal to the Gross Advanced
Bonus Amount less the Anticipated Taxes Amount (the "NET ADVANCED BONUS
AMOUNT"). Parent shall be entitled to rely upon the Bonus Advance Notice as
evidence that the applicable Advanced Employee has consented to the payment
to Holdings described in the next paragraph.
"Upon Holdings' delivery of the Bonus Advance Notice to Parent, Parent
will, on or prior to the closing of Holdings' issuance of securities to
each Advanced Employee, (A) pay the Net Advanced Bonus Amount for such
Advanced Employee in cash to Holdings on behalf of such Advanced Employee,
and (B) with respect to the Anticipated Taxes Amount for such Advanced
Employee, either withhold the entire amount for payment to the relevant
taxing authorities or withhold the statutorily required amount and pay the
excess to such Advanced
-10-
Employee; provided, however, that Parent shall not be obligated to make any
payments or advance any amounts hereunder to the extent that Parent
reasonably determines that such payments or advances could, either alone or
in combination with another event, result in the payment to any Transferred
Employee of an "excess parachute payment" within the meaning of Section
280G of the Code, unless the Transferred Employee to whom the advance is
made agrees to indemnify Parent against any liabilities to which Parent may
be subject relating to excess parachute payments within the meaning of
Section 280G of the Code as a result of such advance. The amounts payable
to any Advanced Employee under the 2004 Retention Bonus Plan will be
reduced dollar-for-dollar by such Advanced Employee's Gross Advanced Bonus
Amount, and any amounts payable under the 2004 Retention Bonus Plan that
are not Gross Advanced Bonus Amounts shall be payable to the Transferred
Employees by Parent when due pursuant to the terms of the 2004 Retention
Bonus Plan.
"If any Advanced Employee ceases to be employed by Holdings and its
Subsidiaries, Holdings shall promptly provide notice of such event to
Parent, which notice shall include the name of the Advanced Employee and
information regarding the circumstances of such Advanced Employee's
termination. If Parent reasonably determines that such Advanced Employee
would not have been entitled to receive the Gross Advanced Bonus Amount
pursuant to the terms of the 2004 Retention Bonus Plan had such amount not
been advanced, then Parent will provide notice of such determination to
Holdings and, within 15 days of such notice, Holdings shall pay to Parent
in cash the Gross Advanced Bonus Amount in respect of such Advanced
Employee."
1.13 SECTION 14.1: CLOSING. Section 14.1 of the Asset Purchase Agreement
is hereby amended and restated in its entirety as follows:
"14.1 CLOSING. Subject to satisfaction or waiver (in writing
by the party entitled to waive satisfaction of such condition) of the
conditions specified herein, the Closing shall occur at 9:00 a.m. MDT on
October 29, 2004, at (x) in the case of matters relating to real property,
the offices of Parent, 0000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx, Xxxxx 00000-0000,
and (y) in the case of all other matters, the offices of Xxxxxxxx & Xxxxx
LLP, 000 Xxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, or in either case at
such other time and place as Purchaser and Parent mutually agree upon in
writing. If Closing does not occur on such date, or any other date agreed
upon by the parties, because one or more conditions precedent are not
satisfied or waived in writing by the party entitled to waive satisfaction
of such condition, then in such event the Closing shall be delayed to a
later date agreed upon by the parties. The date and time at which the
Closing occurs shall be the "Closing Date.""
1.14 SECTION 14.2.5: TERMINATION. Section 14.2.5 of the Asset Purchase
Agreement is hereby deleted and replaced in its entirety with "[Reserved].".
-11-
1.15 SECTION 14.3.1: EFFECT OF TERMINATION. Section 14.3.1 of the Asset
Purchase Agreement is hereby deleted in its entirety.
1.16 ARTICLE 15: HOLDINGS CONDITIONS TO CLOSING. Article 15 of the Asset
Purchase Agreement is hereby amended as follows:
1.16.1 By replacing 15.1.10 in its entirety with the following:
"15.1.10. AMENDED PAPER SALES AGREEMENT. Parent and Boise
Office Solutions shall have assigned the BOS Paper Sales Agreement to Boise
White Paper, L.L.C., and, immediately upon such assignment, Parent (to be
renamed OfficeMax Incorporated), Boise Cascade Office Products Corporation
(to be renamed OfficeMax Contract, Inc.), OfficeMax, Inc. (to be renamed
OfficeMax Retail, Inc.), and Boise White Paper, L.L.C. shall have executed
and delivered to the other parties thereto the Amended Paper Sales
Agreement, and the Amended Paper Sales Agreement shall be in full force and
effect."
1.16.2 By deleting the last sentence of Section 15.1.11.
1.16.3 By deleting Section 15.1.17 in its entirety.
1.16.4 By inserting the following as a new Section 15.2:
"15.2 PARENT UNDERWRITING OF HOLDINGS CONDITIONS TO
CLOSING. In the event any of Holdings' conditions to Closing set forth in
Section 15.1 (other than the conditions in Sections 15.1.1 and 15.1.2
(which are governed by Article 17), Section 15.1.3 (which is governed by
Section 5.4), Section 15.1.4, Section 15.1.5, Section 15.1.8, and the first
sentence of Section 15.1.11) has not been satisfied as of the Closing Date,
and Holdings elects in its sole discretion to waive such closing condition,
then: (a) Parent shall continue to use its commercially reasonable efforts
from and after Closing to cause such condition to become satisfied, and (b)
Parent shall bear all costs of causing such condition to become satisfied,
and Parent will indemnify Holdings and its Subsidiaries for the aggregate
amount of any costs, expenses, losses, or diminution or loss of value
resulting from such condition not having been satisfied as of the Closing."
1.17 ARTICLE 16: PARENT CONDITIONS TO CLOSING. Article 16 of the Asset
Purchase Agreement is hereby amended as follows:
1.17.1 By replacing Section 16.1.5 in its entirety with the word
"[Reserved].".
1.17.2 By replacing Section 16.1.6.5 in its entirety with the
following:
"16.1.6.5 TIMBERLANDS PURCHASE PRICE. The Timber Notes and
the irrevocable guaranty called for in Section 4.1.2 hereof, or in lieu
thereof payment of the balance of the Timberlands Purchase Price in cash as
set forth in Section 4.1.2;"
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1.17.3 By deleting Section 16.1.7 in its entirety.
1.18 Section 18.2: Amended Paper Sales Agreement. Section 18.2 of the
Asset Purchase Agreement is hereby amended and restated in its entirety as
follows:
""18.2 Immediately prior to Closing, Parent shall assign its
rights and obligations under the BOS Paper Sales Agreement to Boise White
Paper, L.L.C., and, immediately upon such assignment, Parent (to be renamed
OfficeMax, Inc.) shall and shall cause Boise Cascade Office Products
Corporation (to be renamed OfficeMax Contract, Inc.) and OfficeMax, Inc.
(to be renamed OfficeMax Retail, Inc.) to execute and deliver to Boise
White Paper, L.L.C. an Amended Paper Sales Agreement in form and substance
substantially similar to the form attached as Schedule 18.2 (the "Amended
Paper Sales Agreement"), which Amended Paper Sales Agreement shall amend
and restate the BOS Paper Sales Agreement in its entirety."
1.19 SECTION 19.3: ASSIGNMENT. Section 19.3 of the Asset Purchase
Agreement is hereby amended by inserting the following new paragraph at the end
of the section:
"In addition to the foregoing, at any time within 15 months
after the Closing Holdings and its Subsidiaries may, without the consent of
the Sellers, assign their rights under this Agreement relating to the
Timberlands and the Timberlands Business to one (but not more than one)
purchaser in connection with any sale of all or any portion of the
Timberlands (including by direct transfer of Timberlands or by indirect
transfer of one or more entities holding Timberlands). Upon any such
assignment by Holdings, such purchaser shall have the benefit of all
representations, warranties, and covenants of the Sellers under this
Agreement (including representations and warranties contained in the Deeds)
relating to the Timberlands and the Timberlands Business (subject to the
last sentence of this paragraph and to all limitations on the exercise of
rights relating thereto set forth in this Agreement) as if such purchaser
were a Permitted Affiliate Purchaser thereof under this Agreement,
including the right to indemnification as a Holdings Indemnified Party
under Article 17 in connection therewith. In connection with any such
assignment, the Sellers shall execute such assignment documents as
reasonably requested by Holdings in order to evidence the purchaser's
rights under this Agreement in accordance with the provisions hereof.
Notwithstanding anything to the contrary herein or in the Confidentiality
Agreement, prior to any such transfer of Timberlands, Holdings may disclose
to any prospective purchaser of any or all of the Timberlands confidential
information relating to title, survey, and inventory matters concerning the
Timberlands proposed to be purchased, so long as Holdings informs such
prospective purchaser of the confidential nature of such information and of
the obligations in respect thereof under the Confidentiality Agreement.
The rights of assignment provided for in this Section 19.3 and the rights
of any such assignee hereunder shall not be construed in any manner so as
to (i) increase the liabilities of Parent or Sellers under this Agreement,
(ii) increase or change the
-13-
remedies available with respect to any breach of any provision hereof,
(iii) permit any duplication of recovery as to Losses, or (iv) solely with
respect to the rights of assignment provided for in Section 19.3(c) or to a
purchaser of Timberlands in the immediately preceding paragraph, permit any
further assignment by such assignee of any rights under this Agreement
without the prior written consent of Parent."
ARTICLE 2 EFFECTIVENESS OF AMENDMENT.
2.1 EFFECTIVENESS. Pursuant to Section 19.2 of the Asset Purchase
Agreement, this Amendment will be valid, binding, and effective against Holdings
and the Sellers when it has been executed by each of Holdings and Parent.
2.2 CONTINUING EFFECT. Except as expressly amended or modified by this
Amendment, the provisions of the Asset Purchase Agreement will continue in full
force and effect.
ARTICLE 3 MISCELLANEOUS
3.1 GOVERNING LAW. This Amendment shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without giving effect to any
choice of law or conflict of law rules or provisions (whether of the State of
Delaware or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Delaware.
3.2 COUNTERPARTS. This Amendment may be executed in one or more
counterparts (including by facsimile), each of which shall be deemed an
original, and all of which shall constitute one and the same Amendment.
3.3 HEADINGS. The heading references herein are for convenience purposes
only, do not constitute a part of this Amendment and shall not be deemed to
limit or affect any of the provisions hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this amendment to be signed
as of the date first set forth above.
BOISE CASCADE CORPORATION
By /s/ Xxxx X. Xxxxxxxx
------------------------
Title Senior Vice President
and General Counsel
---------------------
FOREST PRODUCTS HOLDINGS, L.L.C.
By: Madison Dearborn Capital Partners IV, L.P.
Its: Managing Member
By: Madison Dearborn Partners IV, L.P.
Its: General Partner
By: Madison Dearborn Partners, L.L.C.
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------
Its: Co-President
-----------------------
EXHIBIT A
REPLACEMENT LC COMMITMENT LETTERS
See attached.
EXHIBIT B
DRAFT GUARANTY DOCUMENTATION
See attached.
EXHIBIT C
PAYMENT TO BANKS
XX Xxxxxx Xxxxx Bank $ 8,250,000
Xxxxxx Brothers Bank, FSB $ 8,250,000
RELEASE AND TERMINATION LETTERS
See attached.
EXHIBIT D
REPLACEMENT STRUCTURE CHART
See attached.
ASSET PURCHASE AGREEMENT
This Agreement is made and entered into as of this 26th day of
July, 2004, by and among Boise Cascade Corporation, a Delaware corporation
("Parent"), Boise Southern Company, a Louisiana general partnership
("Southern"), Minidoka Paper Company, a Delaware corporation ("Minidoka")
(collectively, "Sellers" and, individually, a "Seller") and Forest Products
Holdings, L.L.C., a Delaware limited liability company ("Holdings") and Boise
Land & Timber Corp., a Delaware corporation and indirect wholly-owned Subsidiary
of Holdings ("Timber Co.").
R E C I T A L S
WHEREAS Sellers own, directly or through certain Subsidiaries
and Affiliates, certain business operations in which they own and operate
timberlands, convert timber produced on such lands and timber grown on the lands
of others to paper products, packaging and newsprint products and building
products and sell and distribute paper products, packaging and newsprint
products and building products;
WHEREAS Holdings and certain Permitted Affiliate Purchasers
have agreed with Sellers to purchase the paper operations, packaging and
newsprint operations and building products manufacturing and distribution
operations of Parent and its Subsidiaries, including their headquarters
operations which manage and administer their paper, packaging and newsprint,
building products manufacturing and distribution, and timberlands businesses;
and
WHEREAS Timber Co. has agreed with certain of the Sellers to
purchase the Timberlands (as hereinafter defined) and such Sellers have agreed
to accept the Timber Notes in partial payment of the purchase price for the
Timberlands;
NOW THEREFORE, the parties do hereby agree as follows:
ARTICLE 1 DEFINED TERMS
1.1 DEFINITIONS. The terms set forth below shall have the meaning
indicated below whenever used in this agreement:
"Accounting Principles" means GAAP, applied in a manner consistent with the
accounting practices and procedures used in the preparation of the Historical
Financial Statements.
"Accounts Receivable" means the obligations to make payment to any of Sellers or
any of their Retained Subsidiaries by all Persons who have purchased products or
services in the operation of the Business prior to Closing, including Trade
Intercompany Accounts. Accounts Receivable does not include any such receivables
which have been sold by Parent to its receivables securitization facility;
provided that Parent shall cease making sales of its receivables generated
by the Business to its receivables securitization facility not less than 45 days
prior to the date set for Closing.
"ABO" shall have the meaning given it in Section 11.4.2.1.
"Accumulated Benefit Obligation" means such term as defined under Statement of
Financial Accounting Standards No. 87.
"Additional Consideration Agreement" means the agreement bearing such title
between Parent and Holdings provided for in Section 3.5.
"Additional Financial Statements" shall have the meaning given it in Section
10.13.
"Affiliates" means, with respect to any Person, any Persons directly or
indirectly controlling, controlled by or under common control with, such other
Person as of the date on which, or at any time during the period for which, the
determination of affiliation is being made. For the purpose of this definition,
"control" means (i) the ownership or control of 50% or more of the equity
interest in any Person, or (ii) the ability to direct or cause the direction of
the management or affairs of a Person, whether through the direct or indirect
ownership of voting interests, by contract or otherwise.
"Allocation" shall have the meaning given it in Section 3.4.
"Amended Paper Sales Agreement" means the agreement between Parent (to be
assigned to Holdings at Closing) and Boise Office Solutions to be entered into
as of the Closing pursuant to Section 18.2.
"Ancillary Agreements" means, with respect to any party, each additional
agreement which such party or any of such party's Subsidiaries is obligated to
enter into pursuant to the terms of this agreement, including, without
limitation, the Shareholder Agreements, the Additional Consideration Agreement,
the Amended Paper Sales Agreement, the Mutual Administrative Services Agreement,
the Timber Notes, and the Aviation Services Agreements.
"Assets" means all of the assets owned (including all leasehold and licensee
interests in any assets leased or licensed) by any of Sellers or any of the
Retained Subsidiaries and (a) located at any of the Facilities or the
Timberlands, or (b) exclusively or primarily related to, or used exclusively or
primarily in, the conduct of the Business, whether tangible or intangible, real
or personal, including the Transferred Cash, the Realty, Timberlands, Leases,
Fixtures and Equipment, Inventory, Accounts Receivable, Contracts, Permits and
Licenses, Parent Intellectual Property, IP Licenses, the Boise Marks,
Transferred Records, stock of the Transferred Subsidiaries, and Miscellaneous
Assets. Notwithstanding the foregoing, the "Assets" do not include any of the
Retained Assets.
"Assumed Liabilities" means the liabilities and obligations of Sellers to be
assumed by Holdings or a Permitted Affiliate Purchaser pursuant to Section 5.1.
"Audited Financial Statements" shall have the meaning given it in Section 10.13
-2-
"Auditor Consent Letter" shall have the meaning given it in Section 10.13.
"Aviation Services Agreements" means the agreements between Holdings and Parent
relating to operation and cost sharing for the Business's aviation operations
after Closing, in form and substance substantially similar to that set forth on
Schedule D-1A and D-1B.
"Boise Marks" means (i) the trade names Boise, Cascade, Boise Cascade, and
combinations of such names with other words and phrases, including, without
limitations, the trademarks and business descriptions Boise Building Solutions
and Boise Paper Solutions; (ii) Parent's tree in a circle logo, and its "Boise"
logo; and (iii) Parent's New York Stock Exchange trading symbol, BCC, and all
rights related to the assets described in clauses (i) - (iii) foregoing.
"Boise Office Solutions" means Boise Cascade Office Products Corporation, a
Delaware corporation, and OfficeMax, Inc., an Ohio corporation, and their
respective direct and indirect Subsidiaries to the extent engaged in the office
products distribution business conducted by such parties, and in each case shall
include such Person as the name thereof may be changed after Closing after
giving effect to the covenants of Parent in Section 10.6 hereof.
"BOS Paper Sales Agreement" means the agreement titled Paper Purchase Agreement
Term Sheet dated April 28, 2004, between Parent and Boise Office Solutions.
"Business" means the forest products and paper manufacturing and distribution
businesses that have been conducted by Sellers and their Subsidiaries prior to
the Closing, including, without limitation: (1) their timberlands operations;
(2) their paper manufacturing, conversion, distribution and sales operations;
(3) their building solutions manufacturing and conversion operations; (4) their
building solutions distribution and sales operations, (5) their packaging and
newsprint manufacturing, conversion, distribution and sales operations, (6)
Parent's aviation operations (other than as specifically included in Retained
Assets), (7) all business activities currently conducted at the facility
locations set forth on Schedule D-2, (8) all business activities contemplated as
part of the business to be sold as depicted in the Historical Financial
Statements and the management presentations delivered by Parent and its
management to Holdings and its Affiliates, (9) their transportation operations;
and (10) the Transferred Headquarters Operations. For greater certainty, the
"Business" does not include: (a) any portion of the operations described in the
immediately preceding sentence that was sold, transferred, discontinued or
terminated prior to the date hereof; (b) Boise Office Solutions, (c) any line of
business of Parent or its Retained Subsidiaries not described in the preceding
sentence, including any such line of business that was sold, transferred,
discontinued or terminated prior to the date hereof, (d) the architectural
products business division of Parent and its Subsidiaries, or (e) any of the
Excluded Staff Functions.
"Cap" means two hundred forty-eight million nine hundred thousand dollars
($248,900,000).
"CERCLA" shall have the meaning given it in Section 17.9.
"Chosen Courts" shall have the meaning given it in Section 19.11.
-3-
"Closing" means the simultaneous conveyance of the Assets to Holdings or its
designated Permitted Affiliate Purchasers by Sellers, payment by Holdings to
Sellers of the Non-Timber Purchase Price and the cash portion of the Timberlands
Purchase Price, issuance of the Timber Notes, Reinvestment by Parent or one of
its Subsidiaries in Operating Holding Co. and by Parent Sub in Timber Co., and
delivery by the parties of the other items called for in this Agreement at
"Closing".
"Closing Balance Sheet" means the consolidated balance sheet for the Operating
Units to be prepared by Holdings pursuant to Section 4.2.1.
"Closing Date" shall have the meaning given it in Section 14.1.
"Closing Net Working Capital" means the Net Working Capital of the Operating
Units, determined in accordance with the Accounting Principles, as of
immediately prior to Closing (but assuming consummation of the transactions
contemplated hereby).
"Closing Statement" shall have the meaning given it in Section 4.2.1.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commitment Letters" shall have the meaning given it in Section 8.8.
"Company Superior Proposal" shall have the meaning given it in Section 10.11.
"Company Takeover Proposal" shall have the meaning given it in Section 10.11.
"Confidential Information" shall have the meaning given it in Section 19.18.
"Confidentiality Agreement" shall mean the letter agreement dated January 21,
2004, between Madison Dearborn Partners, Inc. and Xxxxxxx, Xxxxx & Co. on behalf
of Parent.
"Consent" shall mean any consent, approval, authorization, waiver, permit,
grant, franchise, concession, agreement, license, exemption or order of,
registration, certificate, declaration or filing with, or report or notice to
any Person, including any Governmental Authority, including those identified
pursuant to Sections 7.3, 7.14, and 7.15.
"Contracts" means all agreements, contracts, timber deeds, cutting contracts,
purchase orders, refund and other arrangements, IP Licenses, incentive
agreements, commitments, collective bargaining agreements, and other agreements
to which any of the Sellers or any of their respective Subsidiaries are a party
or to which any of the Assets are subject, and which are related to the
Business, except to the extent included in the Retained Assets.
"Credit Enhancement Banks" means one or more banks selected by Timber Co. with
the consent of Parent (such consent not to be unreasonably withheld) to provide
the standby letters of credit required by Section 4.1 hereof as credit
enhancement for the Timber Notes.
"Current Assets" means, with respect to the Operating Units, as of any date, the
amounts (other than cash or cash equivalents) required to be recorded as current
assets on a balance sheet for the
-4-
Operating Units prepared in accordance with the Accounting Principles and as set
forth on Schedule D-3.
"Current Liabilities" means, with respect to the Operating Units, as of any
date, the amounts required to be recorded as current liabilities on a balance
sheet for the Operating Units prepared in accordance with the Accounting
Principles and as set forth on Schedule D-3.
"Debt Commitment Letters" shall have the meaning given it in Section 8.8.
"Deductible" means twenty million seven hundred thousand dollars ($20,700,000).
"Deeds" shall have the meaning given it in Section 9.2.
"Defined Contribution Plans" means the Boise Cascade Corporation Savings and
Supplemental Retirement Plan, the Boise Cascade Corporation Retirement Savings
Plan, and the Boise Cascade Corporation Qualified Employee Savings Trust.
"Disclosed" means, with respect to Parent and where referenced in any
representation, warranty, covenant, or agreement of Parent herein, a specific
disclosure made by Parent to Holdings contained in Parent's Disclosure
Memorandum, and, with respect to Holdings and where referenced in any
representation, warranty, covenant, or agreement of Holdings herein, a specific
disclosure made by Holdings to Parent in Holdings' Disclosure Memorandum, in
each case with specific identification of the representation, warranty, covenant
or agreement for which such disclosure is made.
"Disclosure Memorandum" means, in respect of each of Parent or Holdings, the
memorandum delivered by such party of even date herewith providing specific
Disclosures referred to in this Agreement.
"Elections" means, with respect to the Transferred Subsidiaries, the elections
to be made by Sellers and Holdings, or a Permitted Affiliate Purchaser, pursuant
to Section 338(h)(10) of the Code, as described in Section 12.1 hereof.
"Employees" means all persons employed by any of Sellers or any of their
respective Subsidiaries whose duties are wholly or primarily related to or
involved in the conduct of the Business. Employees does not include persons
assigned exclusively or primarily to the Excluded Staff Functions nor does it
include the specific additional individuals listed in Schedule D-4.
"Encumbrance" shall mean Financial Encumbrances, easements, covenants, use
restrictions, zoning restrictions and other third-party rights affecting any
Asset.
"Environmental Assessment" has the meaning given it in Section 9.3.
"Environmental Deductible" means five million dollars ($5,000,000).
"Environmental Law" shall mean any applicable federal, state, local, common or
foreign law, statute, ordinance, rule, regulation, code, order, judgment,
decree, injunction or other legal requirement relating to (i) the protection of
the environment (including air, water vapor, surface
-5-
water, groundwater, drinking water supply, surface or subsurface land), or (ii)
the exposure to, or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, protection, release or disposal
of, hazardous materials, substances or wastes, or workplace safety or health, in
each case as the same may be in effect from time to time on or prior to the
Closing Date; PROVIDED that for purposes of clauses (A), (B), (C), (F) and (G)
of the definition of "Retained Environmental Liabilities," "Environmental Law"
shall include all of the foregoing legal requirements as the same may be in
effect from time to time prior to, on, or after the Closing Date.
"Equipment Leases" means all leases held by either of the Sellers or any of the
Retained Subsidiaries as lessee of Fixtures and Equipment, except to the extent
included in the Retained Assets.
"Equity Commitment Letter" shall have the meaning given it in Section 8.8.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"ERISA Affiliate" means any entity that, together with Parent or any of its
subsidiaries, is treated as a single employer under Section 414 of the Code.
"Estimated Non-Timber Purchase Price" shall have the meaning given it in Section
4.2
"Excluded Staff Functions" means the staff functions in Parent's Headquarters
Facility which are listed in Schedule D-5.
"Facility" means any discrete location owned, leased or licensed by Sellers or
any of their Subsidiaries related to or in connection with the conduct of the
Business, including the locations set forth on Schedule D-2, but excluding any
Retained Assets. When the term Facility is combined with a geographic location,
it is intended to refer solely to the specific Facility at such geographic
location. Headquarters Facility means Parent's headquarters building at 0000
Xxxx Xxxxxxxxx Xxxxxx, Xxxxx, Xxxxx and the additional properties owned or
leased by it in the immediate vicinity thereof.
"Facility Leases" means all leases of real property in respect of any Facility.
"Financial Encumbrances" means liens, charges, mortgages, security interests,
encumbrances, or other interests or rights in any portion of the Assets which
subject such Asset to payment of any obligation or which relate to claims and
litigation included in the Assumed Liabilities; PROVIDED that "Financial
Encumbrances" shall not include (a) the lien for property Taxes not yet due and
payable, and (b) mechanics, materialman's, and warehouseman's liens and other
similar statutory liens arising in the ordinary course of the conduct of the
Business which are not yet perfected because payment of the amount secured is
not due.
"Fixtures and Equipment" means all furniture, fixtures, furnishings, machinery,
vehicles, equipment (including computer hardware, computer terminals, network
servers, and research and development equipment) and other tangible personal
property owned by any of Sellers or the Retained Subsidiaries and that are (a)
located at any of the Facilities or the Timberlands or (b)
-6-
exclusively or primarily related to, or used exclusively or primarily in the
conduct of, the Business, in each case except to the extent included in the
Retained Assets.
"Former Facility" means a facility or property previously owned or operated by
any of Sellers or any of their respective Subsidiaries or their respective
predecessors in the conduct of the Business, other than the Facilities.
"Former Timberlands" means any real property owned or operated at any time prior
to Closing by any of Sellers or any of their respective Subsidiaries or their
respective predecessors for the purpose of growing and harvesting timber, which
is not included in the Timberlands due to the prior sale or transfer of such
lands.
"GAAP" means United States generally accepted accounting principles,
consistently applied.
"Governmental Authority" means any nation or government, any state, province or
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including any government authority, agency, department, board,
commission or instrumentality of the United States, any state of the United
States or any political subdivision thereof or of the nations of Canada, Brazil,
United Kingdom, Chile, or the People's Republic of China.
"Governmental Authorizations" means all licenses, permits, franchises,
certificates of occupancy, other certificates and other authorizations and
approvals required to carry on the Business as currently conducted under the
applicable laws, ordinances or regulations of any Governmental Authority.
"Harvest Plan" means Parent's actual and projected timber harvest plans posted
to the on-line database during the month of June 2004 entitled "Harvest Plan
Update" under the file names "6-x-3-14", with the letter "x" denoting the region
number assigned by Parent.
"Hazardous Substances" means (i) petroleum, petroleum byproducts and any
petroleum fractions; (ii) materials which contain any substance defined as a
hazardous or toxic substance or words of similar meaning or effect under the
following United States federal statutes and their state counterparts, as well
as such statutes' implementing regulations: the Hazardous Materials
Transportation Act, the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the Clean
Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the Toxic
Substances Control Act, the Federal Insecticide, Fungicide, and Rodenticide Act,
and the Clean Air Act; and (iii) any other material, substance or waste as to
which liability or standards of conduct may be imposed pursuant to Environmental
Laws.
"Headquarters Facility" has the meaning given it in the definition of
"Facility."
"Historical Accounting Procedures" means the accounting principles and
procedures used by Parent in preparing the Historical Financial Statements.
"Historical Financial Statements" has the meaning given to such term in Section
7.6.
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"Holdings" shall mean Forest Products Holdings, L.L.C., a Delaware limited
liability company.
"Holdings General Severance Policy" shall have the meaning given it in Section
11.8.
"Holdings Indemnified Parties" shall have the meaning given it in Section 17.2.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended.
"Indebtedness" means with respect to the Business, on any date, each of the
following obligations of Seller and its Subsidiaries in connection with the
Business, except to the extent included in Retained Liabilities: (i) any
obligation for borrowed money or issued in substitution for or exchange of
indebtedness for borrowed money, (ii) any obligation evidenced by any note,
bond, debenture or other debt security, (iii) any obligation for the deferred
purchase price of property or services with respect to which any such Person is
liable, contingently or otherwise, as obligor or otherwise (other than trade
payables and other current liabilities incurred in the ordinary course of
business), including any amounts owed by any such Person under any
noncompetition or consulting Contract that was entered into in connection with
an acquisition or sale of any portion of a business, (iv) any commitment by
which any such Person assures a creditor against loss (including, without
limitation, contingent reimbursement obligations with respect to letters of
credit and performance bonds) exclusive of (x) letters of credit and performance
bonds to the extent they provide standby assurance for obligations which are
included in the adjustments to the Non-Timber Purchase Price provided for in
Section 3.2.2, (y) letters of credit and performance bonds to the extent they
provide standby credit support for Contracts, Leases and Governmental
Authorizations that are assumed by Holdings, and (z) performance bonds to the
extent posted as security for lien claims included in Transferred Litigation,
(v) any obligation guaranteed in any manner by any such Person (other than
warranties made to customers in the ordinary course of business, but including
guarantees in the form of an agreement to repurchase or reimburse), (vi) any
obligations under capitalized or synthetic leases (as determined in accordance
with GAAP) with respect to which any such Person is liable, contingently or
otherwise, as obligor, guarantor or otherwise, or with respect to which
obligations any such Person assures a creditor against loss, (vii) any
obligation secured by a Financial Encumbrance, and (viii) any fees, penalties,
premiums or accrued and unpaid interest with respect to the foregoing (in the
case of prepayments or otherwise).
"Indemnification Claim Notice" shall have the meaning given it in Section 17.6.
"Indemnified Environmental Liabilities" means all liabilities arising under
Environmental Laws relating to or arising from (A) any breach of the
representations and warranties set forth in Section 7.11; (B) any Straddle
Environmental Regulatory Issue (solely to the extent arising from pre-Closing
operations or activities); and (C) any Straddle Hazardous Substance Release
(solely to the extent arising from pre-Closing operations or activities).
"Indemnified Party" shall have the meaning given it in Section 17.6.
"Indemnifying Party" shall have the meaning given it in Section 17.6.
"Independent Accountants" means the accounting firm identified as such in
Section 4.2.3.
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"Insurance Policies" means the insurance policies listed on Schedule D-14.
"Intellectual Property" means (except to the extent included in the Retained
Assets) the following intellectual property (and the rights associated
therewith) exclusively or primarily related to, or used by Sellers and its
Subsidiaries exclusively or primarily in the conduct of, the Business:
trademarks, service marks, stock exchange trading symbols, brand names,
certification marks, trade dress, assumed names, Internet domain names, trade
names and other indications of origin, the goodwill associated with the
foregoing and registrations in any jurisdiction of, and applications in any
jurisdiction to register, the foregoing, including any extension, modification
or renewal of any such registration or application; patents, applications for
patents (including divisionals, continuations, continuations-in-part and renewal
applications), and any renewals, extensions or reissues thereof, in any
jurisdiction; patent disclosures and inventions (whether or not patentable and
whether or not reduced to practice); non-public information, trade secrets and
confidential information and rights in any jurisdiction to limit the use or
disclosure thereof by any Person; copyrightable works and registrations or
applications for registration of copyrights in any jurisdiction, and any
renewals or extensions thereof; software; any similar intellectual property or
proprietary rights; and any claims or causes of action arising out of or related
to any infringement or misappropriation of any of the foregoing occurring before
or after the Closing.
"Interest Rate" means a rate of interest equal to LIBOR plus 300 basis points.
"Inventory" means all goods owned by any of the Sellers or any of the Retained
Subsidiaries and held by them for resale in connection with the conduct of the
Business, together with all raw materials, work in process, finished products,
office supplies, storeroom inventory, spare parts and equipment, wrapping,
supply and packaging items owned by any of them in connection with the conduct
of the Business.
"IP Licenses" means all licenses and other agreements held by any of Sellers or
any of the Retained Subsidiaries allowing them to use the intellectual property
of others, including without limitation, software licenses.
"Knowledge," "Known", or any similar phrase means the actual knowledge, after
due inquiry, of one or more of the following management employees of Parent and
its Subsidiaries as of the date hereof and the Closing Date: Chairman and Chief
Executive Officer; Senior Vice President and Chief Financial Officer; Senior
Vice President and General Counsel; Vice President and Controller; Senior Vice
President and General Manager, Boise Paper Solutions; Senior Vice President and
General Manager, Boise Building Solutions, Manufacturing; and Senior Vice
President and General Manager, Boise Building Solutions, Distribution.
"KPMG" shall have the meaning given it in Section 10.13.
"LC Commitment Letters" shall have the meaning given it in Section 4.1.2.
"Leased Timberlands" shall have the meaning given it in the definition of
"Timberlands."
"Leases" means the Equipment Leases, the Facility Leases, and the Timberlands
Leases.
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"LIBOR" shall mean the London interbank offered rate per annum for 30-day
periods for deposits in dollars, determined in the manner provided for such rate
under the definitive loan documentation entered into by Holdings in connection
with the debt financing contemplated by the Debt Commitment Letters. For
purposes of this Agreement, the LIBOR will be determined on the date when
interest begins to accrue pursuant to the terms of this Agreement and will be
redetermined on the last day of each 30-day period thereafter during which
interest is being accrued.
"Litigation and Claims Reserve" means, as of Closing, an aggregate reserve for
liabilities relating to litigation and other claims constituting Transferred
Litigation, which will be equal to the sum of the individual reserves set forth
opposite each item of Transferred Litigation listed on Schedule D-6, as such
individual reserves may be adjusted solely pursuant to this definition and the
second paragraph of Section 7.21. From the date hereof until the Closing, each
of the individual reserves set forth on Schedule D-6 will be increased (in the
case of any increase in the expected liability relating to the item of
Transferred Litigation corresponding to such individual reserve) or decreased
(in the event the item of Transferred Litigation corresponding to such
individual reserve is settled or resolved in the ordinary course of business and
ceases to be an Assumed Liability) in accordance with Parent's historical
practices and methods for establishing and adjusting book reserves relating to
litigation and other claims liabilities.
"Losses" shall have the meaning given it in Section 17.2.
"Matching Offer" shall have the meaning given it in Section 10.11.
"Material Adverse Change" and "Material Adverse Effect" mean a change or an
effect that is or would reasonably be expected to be materially adverse to the
value of the Assets or the Business taken as a whole or materially adverse to
the business, financial condition or results of operations or business prospects
of the Business taken as a whole; PROVIDED that none of the following shall be
considered a Material Adverse Change or a Material Adverse Effect: (1) any
general market, economic or political conditions (it being understood that
"political conditions" would not include the effects of any terrorist attack)
affecting the economy or market generally, or normal cyclical fluctuations
affecting the forest products or paper manufacturing and distribution industry;
(2) any change or effect resulting from compliance with the terms and conditions
of this Agreement; or (3) any change in accounting requirements or principles or
applicable laws, rules or regulations of general application that becomes
effective after the date of this agreement. The scope of this definition of
"Material Adverse Change" and "Material Adverse Effect" shall in no way be
construed to be applicable to or to limit in any respect the determination of
"Material Adverse Effect" or "Material Adverse Change" as used in the Commitment
Letters, or the agreements and indentures contemplated thereby, or by the
lenders thereunder with respect to the conditions precedent to such lenders'
obligation to consummate the financing contemplated by the Debt Commitment
Letters.
"MDP" means Madison Dearborn Capital Partners IV, L.P., and its affiliated
entities.
"Minidoka" means Minidoka Paper Company, a Delaware corporation.
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"Miscellaneous Assets" means assets, rights and properties of any of the Sellers
or the Retained Subsidiaries not included in any other category of Assets which
are exclusively or primarily related to, or used exclusively or primarily in the
conduct of, the Business, except to the extent included in Retained Assets.
"Mutual Administrative Services Agreement" means the Agreement between Parent
and Holdings to be entered into as of the Closing pursuant to Section 18.1.
"Net Working Capital" means, with respect to the Operating Units, as of any
date, the excess (whether positive or negative) of Current Assets over Current
Liabilities.
"Noncompete Period" shall have the meaning given it in Section 10.12.
"Non-Timber Assets" shall mean all of the Assets, save and except the
Timberlands.
"Non-Timber Purchase Price" means the amount payable by Holdings and/or its
Permitted Affiliate Purchasers to Sellers for the Non-Timberlands Business, as
determined pursuant to Section 3.1.
"Non-Timberlands Business" means that portion of the Business which does not
include the Timberlands Business.
"Notice Period" shall have the meaning given it in Section 17.6.
"Objection Statement" shall have the meaning given it in Section 4.2.2.
"Operating Holding Co." means BCC Holdings, L.L.C., a Delaware limited liability
company. Operating Holding Co. is a Permitted Affiliate Purchaser.
"Operating Units" means the following operating divisions of Parent and its
Subsidiaries, as generally understood in the historical operation of the
Business: Boise Building Solutions, Manufacturing; Boise Building Solutions,
Distribution; and Boise Paper Solutions.
"Outside Date" shall mean November 12, 2004.
"Owned Timberlands" shall have the meaning given it in the definition of
"Timberlands".
"Parent" means Boise Cascade Corporation, a Delaware corporation, and shall
include such Person to which the name thereof may be changed after Closing after
giving effect to the covenants of Parent in Section 10.6 hereof.
"Parent Confidential Information" shall have the meaning given it in Section
19.18.
"Parent Indemnified Parties" shall have the meaning given it in Section 17.4.
"Parent Intellectual Property" means (except to the extent included in the
Retained Assets) the Intellectual Property owned by any of the Sellers or any of
the Retained Subsidiaries and related to, or used by any of them in their
conduct of or operation of, the Business or the Assets.
-11-
"Parent Plans" means each "employee benefit plan" as defined in Section 3(3) of
ERISA, and each pension, retirement, profit sharing, stock bonus, stock option,
stock purchase, severance, retention, change of control, deferred compensation,
medical, post-employment welfare, dental, vision, vacation, life insurance, sick
pay or disability plan, program, policy or arrangement or any material bonus,
incentive, death benefit or other employee benefit plan, program, policy or
arrangement maintained or contributed to by any of the Sellers, any of the
Transferred Subsidiaries or any of the Retained Subsidiaries for any of the
Employees or with respect to which any Transferred Subsidiary has any liability.
"Parent Preliminary Tax Payment" shall have the meaning given it in Section
12.2.3.
"Parent Sub" means a Delaware corporation to be organized by Parent prior to
Closing which shall be a wholly-owned Subsidiary of Parent.
"Parent Timberlands Purchase Price" shall have the meaning given it in Section
3.4.
"Pension Plans" means: (i) the Boise Cascade Corporation Pension Plan for
Salaried Employees; (ii) Boise Cascade Corporation WCIW Pension Plan "A"; (iii)
Boise Cascade Corporation Pension Plan "B"; (iv) Boise Cascade Corporation
Pension Plan "C"; (v) Boise Cascade Corporation Pension Plan "P"; and (vi) the
Boise Cascade Corporation Pension Plan for Hourly Employees at International
Falls, Minnesota.
"Permits and Licenses" means all permits, licenses, and other governmental
authorizations held by any of Sellers or any of the Retained Subsidiaries to
conduct any aspect of the Business.
"Permitted Affiliate Purchaser" means Operating Holding Co., Timber Co., Timber
LLC and each of the other corporations, limited liability companies, or other
business organizations listed on Schedule D-7.
"Permitted Encumbrances" shall have the meaning given it in Section 7.16.2.
"Perpetual Timber Rights" shall have the meaning given it in the definition of
"Timberlands."
"Person" means an individual, a corporation, a partnership, a limited liability
company, an association, a trust or other entity or organization.
"Pre-Closing Environmental Regulatory Issue" means any failure to comply with
Environmental Laws by the Business or at any Facility which failure to comply
occurred prior to the Closing Date and did not continue after the Closing Date
as a result of the operation of the Business by Purchasers in violation of
Permits and Licenses or other regulatory requirements under Environmental Laws
immediately after the Closing.
"Pre-Closing Hazardous Substance Release" means any Release of Hazardous
Substances or any condition of contamination on, at, or migrating from any
Facility, which Release or condition of contamination occurred or was caused
prior to the Closing Date, and which Release did not continue as a result of, or
which condition of contamination was not exacerbated by (excluding, for the
avoidance of doubt, any exacerbation arising from post-Closing passive migration
of such Hazardous Substances), the operation of the Business by Purchasers in
violation of Permits and
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Licenses or other regulatory requirements under Environmental Laws immediately
after the Closing.
"Pre-Closing Period" means that portion of any Straddle Period that ends on the
Closing Date.
"Pre-Closing Returns" shall have the meaning given it in Section 12.2.1.
"Pre-Closing Workers' Compensation Policy" has the meaning given it in Section
11.9.
"Proceeding" shall have the meaning given it in Section 17.6.
"Purchaser Payment Performance Obligations" shall have the meaning given it in
Section 10.15.2.
"Purchasers" means Holdings, Timber Co., and the other Permitted Affiliate
Purchasers designated by Holdings to acquire portions of the Assets.
"Realty" means all real property owned by Sellers or their Retained Subsidiaries
which is exclusively or primarily related to, or used exclusively or primarily
in the conduct of, the Business, including real property of which the address is
listed on Schedule D-8; provided that "Realty" does not include the Timberlands
nor any Retained Asset.
"REC" shall have the meaning given it in Section 9.3.
"Regulation S-X" shall have the meaning given it in Section 10.13.
"Regulation S-X Financial Statements" shall have the meaning given it in Section
10.13.
"Reinvestment" means Parent's purchase of the securities of Operating Holding
Co. and Parent Sub's purchase of the securities of Timber Holdings, in each case
as provided for in Article 6.
"Reinvestment Amount" means one hundred seventy-five million dollars
($175,000,000), which is the aggregate cash consideration to be paid by Parent
and Parent Sub for the Reinvestment.
"Release" shall have the meaning given to it in the Comprehensive Environmental
Response, Compensation and Liability Act, 42 USC 9601 et seq.
"Required Consents" shall have the meaning given it in Section 15.1.3.
"Retained Assets" means the assets, rights, and properties of any of Sellers
listed on Schedule D-9.
"Retained Environmental Liabilities" means all liabilities arising under
Environmental Laws relating to or arising from (A) any operations or businesses
conducted by Sellers or the Transferred Subsidiaries other than the Business;
(B) any property, facility or location associated with the Business other than
the Facilities or the Timberlands; (C) any Former Facility or Former
Timberlands; (D) any Pre-Closing Hazardous Substance Release; (E) any
Pre-Closing Environmental Regulatory Issue; (F) the discharge, disposal or
arrangement for the disposal of
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Hazardous Substances prior to Closing onto or into any location other than the
Facilities; (G) events or conditions set forth on Schedule D-10 hereto; or (H)
any matter so designated pursuant to Section 9.3.2.2 hereof. Any liability
falling within the foregoing definition shall be deemed to be a Retained
Environmental Liability for all purposes under this Agreement, regardless of
whether it is Disclosed in the Parent's Disclosure Memorandum or would also fall
within the definition of "Indemnified Environmental Liabilities."
"Retained HBU Lands" means the 6,000 acres of timberlands in Idaho previously
identified by Parent for sale in its Idaho higher and better use land sales
program and included on Schedule D-9 as a Retained Asset.
"Retained Liabilities" means the liabilities and obligations of Sellers and its
Subsidiaries which are to be retained by Sellers pursuant to Section 5.3. Any
liability falling within the foregoing definition shall be deemed to be a
Retained Liability for all purposes under this Agreement, regardless of whether
it is Disclosed in Parent's Disclosure Memorandum.
"Retained Litigation" means all claims and litigation, pending or threatened,
against any of Sellers or any of their respective Subsidiaries relating to the
Business other than the Transferred Litigation, including any claim or
litigation which (i) is based on the plaintiff's exposure to asbestos (including
silica or mixed dust if part of or included with an asbestos claim); (ii) arises
out of the conduct of the Business at any location other than the Facilities;
(iii) arises out of any activities or relationships of any of Sellers or any of
their respective Subsidiaries which did not arise from their conduct of the
Business; or (iv) is listed in Schedule D-11.
"Retained Records" means (whether in paper or electronic form in all cases) all
files and records of any of Sellers or any Retained Subsidiary relating to or
arising out of any aspect of their business and affairs not included in the
Business or the Assets, including, without limitation, financial records, Tax
Returns, dispute settlements, transactional records, realty abstracts and other
realty records, minute books and other corporate records of any of Sellers or
any Retained Subsidiary or former subsidiary of Sellers or any Retained
Subsidiary.
"Retained Subsidiaries" means the corporations and other business entities
identified as such on Schedule D-12.
"Sellers" means, collectively, Parent, Southern and Minidoka.
"Shareholder Agreements" means the agreements between Parent and Holdings
concerning their respective investments in Operating Holding Co., and between
Holdings and Parent Sub concerning their respective investments in Timber
Holdings, in each case as provided for in Section 6.3.
"Southern" means Boise Southern Company, a Louisiana General Partnership
composed of Parent and Minidoka, and shall include such Person to which the name
thereof may be changed after Closing after giving effect to the covenants of
Parent in Section 10.6 hereof.
"Southern Timberlands Purchase Price" shall have the meaning given it in Section
3.4.
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"Straddle Environmental Regulatory Issue" means any failure to comply with
Environmental Laws by the Business or at any Facility prior to the Closing where
such failure to comply continues as a result of the operation of the Business by
Purchasers in violation of Permits and Licenses or other regulatory requirements
under Environmental Laws immediately after the Closing.
"Straddle Hazardous Substance Release" means any Release of Hazardous Substances
or condition of contamination on, at, or migrating from any Facility prior to
Closing, where such Release continues as a result of, or such conditions of
contamination are exacerbated by (excluding, for the avoidance of doubt, any
exacerbation arising from post-Closing passive migration of such Hazardous
Substances), the operation of the Business by Purchasers in violation of Permits
and Licenses or other regulatory requirements under Environmental Laws
immediately after the Closing.
"Straddle Period" means any taxable period that begins before and ends after the
Closing Date.
"Straddle Period Return" means any Tax Return for a Straddle Period.
"Stub Period Financial Statements" shall have the meaning given it in Section
10.13.
"Subsequent Financial Statements" shall have the meaning given it in Section
10.13.
"Subsidiary" means, with respect to any Person, any other Person of which (i) if
a corporation, a majority of the total voting power of shares of stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof, or (ii) if a partnership, limited
liability company, association or other business entity, a majority of the
partnership or other similar ownership interest thereof is at the time owned or
controlled, directly or indirectly, by any Person or one or more Subsidiaries of
that Person or a combination thereof. For purposes hereof, a Person or Persons
shall be deemed to have a majority ownership interest in a partnership, limited
liability company, association or other business entity if such Person or
Persons shall be allocated a majority of partnership, limited liability company,
association or other business entity gains or losses or shall be or control the
managing director or general partner of such partnership, association or other
business entity.
"Surveys" shall have the meaning given it in Section 9.1.
"Tax" and "Taxes" means all federal, state, local or foreign taxes, including
but not limited to income, gross receipts, windfall profits, goods and services,
value added, severance, property, production, sales, use, license, excise,
franchise, employment, estimated, environmental, minimum, withholding or other
taxes of any kind, together with any interest, additions or penalties with
respect thereto and any interest in respect of such additions or penalties.
"Tax Authority" means, with respect to any Tax, the governmental entity or
political subdivision thereof that imposes such Tax, and the agency (if any)
charged with the collection of such Taxes for such entity or subdivision.
-15-
"Tax Benefit" means the amount, if any, by which a Person's net Tax liability is
actually reduced (including any related interest actually received from a Tax
Authority in connection therewith, net of any Tax imposed thereon), after taking
into account the tax effects of the Loss at issue and any corresponding
indemnification payments.
"Tax Claim" shall have the meaning given it in Section 12.5.1.
"Tax Indemnification Obligation" shall have the meaning given it in Section
12.2.3.
"Tax Indemnified Party" shall have the meaning given it in Section 12.5.1.
"Tax Indemnifying Party" shall have the meaning given it in Section 12.5.1.
"Tax Period" means, with respect to any Tax, the period for which the Tax is
reported as provided under applicable Tax laws.
"Tax Return" means, with respect to any Tax, any information return with respect
to such Tax, any report, statement, declaration or document required to be filed
under the applicable Tax law in respect of such Tax, any claim for refund of
Taxes paid, and any amendment or supplement to any of the foregoing.
"Timber Co." means Boise Land & Timber Corp., a Delaware corporation and wholly
owned subsidiary of Timber Holdings. Timber Co. is a Permitted Affiliate
Purchaser with respect to the Timberlands.
"Timber Holdings" means Boise Land & Timber Holdings Corp., a Delaware
corporation and subsidiary of Holdings.
"Timber LLC" means Boise Land & Timber, L.L.C., a Delaware limited liability
company and wholly owned subsidiary of Timber Co., which as of the date hereof
is treated as a disregarded entity and as a division of Timber Co. for federal
income tax purposes. Timber LLC is a Permitted Affiliate Purchaser with respect
to the Timberlands. At Holdings' option, and consistent with the LC Commitment
Letters, Timber LLC may consist of two such Delaware limited liability
companies, in order to accommodate multiple Credit Enhancement Banks, and
collectively such limited liability companies will perform the obligations of
Timber LLC hereunder.
"Timber Notes" shall have the meaning given it in Section 4.1.
"Timber Supply Agreement" means a contract or timber deed obligating Sellers or
any of the Transferred Subsidiaries to purchase standing timber, to pay for
standing timber already conveyed to them under a timber deed, or to purchase
delivered logs.
"Timberlands" means all real property owned or leased by either of Parent or
Southern for the purpose of growing and harvesting timber, including: (i) real
property owned by Parent or Southern described in Schedule D-13A (the "Owned
Timberlands"); (ii) leases of land for the purpose of growing and harvesting
timber which are described in Schedule D-13B (the "Timberlands Leases" and the
"Leased Timberlands"); and (iii) the perpetual timber rights
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described in Schedule D-13C (the "Perpetual Timber Rights"), together, in each
case, with all easements and other rights appurtenant thereto.
"Timberlands Business" means that portion of the Business of growing and
harvesting timber conducted by Sellers and its Subsidiaries with the
Timberlands.
"Timberlands Leases" shall have the meaning given it in the definition of
Timberlands.
"Timberlands Purchase Price" means the amount to be paid by Timber Co. to Parent
and Southern for the Timberlands determined in accordance with Section 3.1.
"Title Commitments" shall have the meaning given it in Section 9.1.
"Title Company" shall have the meaning given it in Section 9.1.
"Title Policies" shall have the meaning given it in Section 9.1.
"Trade Intercompany Accounts" means bona fide trade intercompany accounts
payable and accounts receivable (as determined in accordance with GAAP) that are
incurred for the provision of goods and services in the ordinary course of
business.
"Transferred Cash" means (i) the lock boxes, deposit accounts, payroll accounts,
and payables accounts of Sellers and the Transferred Subsidiaries exclusively or
primarily related to, or used exclusively or primarily in, the conduct of the
Business, and the cash balances thereof, and (ii) an amount of cash and cash
equivalents that will be specified by Holdings to Parent in writing not less
than 10 days prior to Closing.
"Transferred Headquarters Operations" shall mean all of the business operations,
support functions, and other activities conducted by Parent and its Subsidiaries
at the Headquarters Facility (including all assets of Sellers and its
Subsidiaries located at the Headquarters Facility and any other assets of
Sellers and its Subsidiaries exclusively or primarily related to, or used
exclusively or primarily in, the Headquarters Facility or the conduct of such
activities), except for the Excluded Staff Functions.
"Transferred Insurance Policies" shall have the meaning given it in Section
10.10.
"Transferred Litigation" means the claims and litigation, pending or threatened,
against any of Sellers which arose out of their conduct of the Business and
which are set forth on Schedule D-15 to this Agreement.
"Transferred Records" means all files and records of any of Sellers and their
Subsidiaries generated by them in the course of their conduct of the Business,
whether in paper or electronic form, exclusive of "Retained Records".
"Transferred Subsidiaries" shall mean the corporations and other business
entities identified as such on Schedule D-12 to this Agreement.
"Transfer Taxes" shall have the meaning given it in Section 12.3.
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"Unfunded Pension Plans" means (i) the Boise Cascade Corporation Supplemental
Early Retirement Plan for Executive Officers; and (ii) the Boise Cascade
Corporation Supplemental Pension Plan.
"Workers Compensation Reserve" means, as of Closing, an aggregate reserve for
liabilities relating to workers compensation claims, which will be equal to the
sum of (x) the IBNR reserve set forth on Schedule D-16, and (y) the claims
reserve set forth on Schedule D-16, in each case as such reserves may be
adjusted solely pursuant to this definition. From the date hereof until the
Closing, the IBNR reserve described in clause (x) above will be adjusted on a
semi-annual basis as required by GAAP in accordance with Parent's historical
practices and methods for establishing and adjusting IBNR reserves relating to
workers compensation claims. From the date hereof until the Closing, the claims
reserve described in clause (y) above will be increased (in the case of any
increase in the expected liability relating to any of the workers compensation
claims included in such claims reserve) or decreased (in the event any of the
workers compensation claims included in such claims reserve are settled or
resolved in the ordinary course of business and cease to be an Assumed
Liability) in accordance with Parent's historical practices and methods for
establishing and adjusting book reserves relating to workers compensation
claims. With respect to each workers compensation claim arising from the most
recent month-end prior to the date hereof until the Closing Date, an individual
reserve will be established for such claim, which reserve will be determined in
accordance with Parent's historical practices and methods for establishing and
adjusting book reserves relating to workers compensation claims and will be
reasonably acceptable to Holdings, and such individual reserve will be added to
the claims reserve described in clause (y) above.
"2004 Capital Spending Authorizations" means the amounts for capital
expenditures set forth on Schedule D-17.
"2004 Retention Bonus Plan" means the retention bonus plan and the retention
agreements for officers and nonofficers in the form set forth in Schedule D-18
of Parent's Disclosure Memorandum. Schedule D-18 also includes a chart setting
forth the aggregate amounts of bonuses to be awarded pursuant to this plan in
2004 for nonofficers and for executive officers (in each case, broken out and
subtotaled by salary range).
"2004 Severance Agreements" means the severance agreements for executive
officers of Parent in the form set forth in Schedule D-19 of Parent's Disclosure
Memorandum. Schedule D-19 sets forth the identity of each executive officer to
enter into such a severance agreement and the term and amount of severance pay
or benefits applicable to each such executive officer.
1.2 INTERPRETIVE PROVISIONS.
1.2.1 The words "hereof', "herein", and "hereunder" and
words of similar import, when used in this Agreement, shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. The
word "including" means "including without limitation. "
1.2.2 The terms defined in the singular shall have a
comparable meaning when used in the plural, and vice versa.
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1.2.3 The terms "dollars" and "$" shall mean United States
dollars.
ARTICLE 2 PURCHASE AND SALE OF ASSETS
2.1 PURCHASE AND SALE OF ASSETS. At Closing, Sellers shall, and
shall cause each of the Retained Subsidiaries to, sell, convey, assign and
deliver, free and clear of all Encumbrances (other than Permitted Encumbrances),
the Non-Timber Assets to Holdings or one or more of its designated Permitted
Affiliate Purchasers, and Holdings or one or more of its designated Permitted
Affiliate Purchasers shall purchase and accept the Non-Timber Assets from
Sellers and such Retained Subsidiaries. In addition, at Closing, Parent and
Southern shall sell, convey, assign and deliver, free and clear of all
Encumbrances (other than Permitted Encumbrances), the Timberlands to Timber Co.,
and Timber Co. shall purchase and accept the Timberlands from Parent and
Southern.
ARTICLE 3 TIMBERLAND PURCHASE PRICE AND NON-TIMBER PURCHASE PRICE
3.1 TIMBERLANDS AND NON-TIMBER PURCHASE PRICES. The Non-Timber
Purchase Price to be paid by Holdings and/or the Permitted Affiliate Purchasers
to Sellers shall be two billion twenty-five million dollars ($2,025,000,000), as
adjusted pursuant to terms of this Agreement. The Timberlands Purchase Price to
be paid by Timber Co. to Parent and Southern for the Timberlands shall be one
billion six hundred fifty million dollars ($1,650,000,000), as adjusted pursuant
to the provisions of this Agreement.
3.2 NON-TIMBER PURCHASE PRICE ADJUSTMENTS. The Non-Timber
Purchase Price shall be adjusted as follows:
3.2.1 It shall be reduced by the amount (which, in the case
of standby letters of credit and performance bonds, will be the amount that
would be required to be set forth on a balance sheet prepared in accordance with
the Accounting Principles) of Indebtedness assumed by Purchasers at Closing.
3.2.2 It shall be reduced by the following amounts:
3.2.2.1 the Workers Compensation Reserve.
3.2.2.2 the Litigation and Claims Reserve.
3.2.2.3 an amount equal to nineteen million
seven hundred thousand dollars ($19,700,000), which represents the amount to
compensate Holdings for assuming certain obligations to provide post-employment
welfare benefits to Transferred Employees who retire after the Closing Date, as
described in Article 11
3.2.3 It shall be increased by the amount, if any, by which
the Closing Net Working Capital of the Operating Units is greater than five
hundred forty-eight million nine hundred thousand dollars ($548,900,000), or
shall be decreased by the amount, if any, by which the Closing Net Working
Capital of the Operating Units is less than four hundred ninety-eight million
nine hundred thousand dollars ($498,900,000).
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3.2.4 It shall be increased by the amount of cash and cash
equivalents included in clause (ii) of the definition of Transferred Cash and
transferred to Holdings at Closing.
3.3 [Reserved.]
3.4 ALLOCATION OF PURCHASE PRICE.
3.4.1 ALLOCATION OF NON-TIMBER PURCHASE PRICE. Holdings
shall determine and prepare, and Sellers shall agree to (which agreement shall
not be unreasonably withheld), the allocation of the Non-Timber Purchase Price
and the Assumed Liabilities that are considered assumed liabilities for income
Tax purposes (other than liabilities directly related to the Timberlands which
are assumed by Timber Co.) among the Non-Timber Assets to be purchased hereunder
which allocation shall be finalized as soon as practicable after the Closing,
but not later than six months after Closing, but shall be adjusted to take
account of any post-closing Non-Timber Purchase Price adjustments (together with
the allocation described in Section 3.4.2, the "Allocation"). The Allocation
shall be made in accordance with Section 1060 of the Code and applicable
Treasury regulations. Except to the extent such action or inaction would cause
any Person to be in violation of the final determination of any Taxing
Authority, each of Holdings and Sellers shall (i) be bound by the Allocation for
purposes of determining any Taxes, (ii) prepare and file, and cause their
affiliates to prepare and file, their Tax Returns on a basis consistent with the
Allocation, and (iii) take no position, and cause their affiliates to take no
position, inconsistent with the Allocation on any applicable Tax Return or in
any proceeding before any Taxing Authority or otherwise. In the event that the
Allocation is disputed by any Taxing Authority, the party receiving notice of
the dispute shall promptly notify the other party hereto concerning the dispute
and shall keep the other party informed regarding the dispute and its
resolution.
3.4.2 ALLOCATION OF TIMBERLANDS PURCHASE PRICE. The parties
agree that the Timberlands Purchase Price (together with any Assumed Liabilities
directly related to the Timberlands which are considered liabilities for income
tax purposes and are assumed by Timber Co.) shall be allocated in its entirety
to the Timberlands. Assets other than Timberlands utilized in the Timberlands
Business or Assumed Liabilities directly related to the Timberlands Business
will be allocated for Tax purposes as a part of the allocation provided for in
Section 3.4.1, it being the intention of the parties that the Timberlands
Purchase Price will be paid solely as consideration for the transfer of the
Timberlands. The Timberlands Purchase Price shall be allocated between Parent
(the "Parent Timberlands Purchase Price") and Southern (the "Southern
Timberlands Purchase Price") in proportion to Parent's reasonable estimate of
the relative fair value of their respective shares of the Timberlands. Such
estimate shall be prepared in consultation with Timber Co.'s timberlands
consultant, Forest Systems, LLC. Such allocation shall be provided to Timber Co
within 15 days after the date hereof. If Holdings or Timber Co. disagrees with
such allocation, the parties shall meet and negotiate in good faith in respect
of such issue, and if they are unable to reach agreement, they shall jointly
retain Xxxxxx Forest Resources as an independent forestry consultant and
instruct such consultant to determine the allocation of the Timberlands Purchase
Price between Parent and Southern based on the relative fair value of the
Timberlands owned by Parent and Southern. Such consultant's conclusion shall be
final and binding on the parties and shall be respected in further allocation
provided for in the balance of this Section. Holdings shall determine and
prepare, and Sellers shall agree to (which
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agreement shall not be unreasonably withheld), the allocation of the Parent
Timberlands Purchase Price among the Timberlands to be purchased hereunder from
Parent, and of the Southern Timberlands Purchase Price among the Timberlands to
be purchased hereunder from Southern, which allocation shall be finalized as
soon as practicable after the Closing, but not later than six months after
Closing, but shall be adjusted to take account of any post-closing Timberlands
Purchase Price adjustments (together with the allocation described in Section
3.4.1, the "Allocation"). The Allocation shall be made in accordance with
Section 1060 of the Code and applicable Treasury regulations. Except to the
extent such action or inaction would cause any Person to be in violation of the
final determination of any Taxing Authority, each of Holdings, Timber Co.,
Parent and Southern shall (i) be bound by the Allocation for purposes of
determining any Taxes, (ii) prepare and file, and cause their affiliates to
prepare and file, their Tax Returns on a basis consistent with the Allocation,
and (iii) take no position, and cause their affiliates to take no position,
inconsistent with the Allocation on any applicable Tax Return or in any
proceeding before any Taxing Authority or otherwise. In the event that the
Allocation is disputed by any Taxing Authority, the party receiving notice of
the dispute shall promptly notify the other party hereto concerning the dispute
and shall keep the other party informed regarding the dispute and its
resolution.
3.5 ADDITIONAL CONSIDERATION. As additional mutual consideration
for the Non-Timber Assets Parent and Holdings shall, at Closing, enter into the
Additional Consideration Agreement in form and substance substantially similar
to the form attached as Schedule 3.5.
ARTICLE 4 TERMS OF PAYMENT
The Timberlands Purchase Price and the Non-Timber Purchase Price shall be paid
as follows:
4.1 TIMBERLANDS PURCHASE PRICE.
4.1.1 An aggregate of $5,000,000 of the Timberlands Purchase
Price shall be payable to Parent and Southern in cash at Closing. Such cash
portion of the Timberlands Purchase Price shall be allocated between Parent and
Southern in proportion to the relative amounts of the Parent Timberlands
Purchase Price and the Southern Timberlands Purchase Price, respectively.
4.1.2 The balance of the Timberlands Purchase Price shall be
payable in one or more promissory notes (the "Timber Notes") issued by Timber
LLC to each of Parent and Southern in an amount for Parent equal to the Parent
Timberlands Purchase Price less the portion thereof paid to Parent in cash
pursuant to Section 4.1.1, and an amount for Southern equal to the Southern
Timberlands Purchase Price less the portion thereof paid to Southern in cash
pursuant to Section 4.1.1, and which shall be in form and substance mutually
satisfactory to Parent and Holdings and substantially consistent with the LC
Commitment Letters (as defined below). Each Timber Note shall be secured by a
standby letter of credit issued by a Credit Enhancement Bank in an amount not
less than the aggregate principal amount of such Timber Note and for a term
which exceeds the maturity of such Timber Note by at least 95 days. The standby
letter of credit and related documentation shall be fully assignable in
connection with any transfer, sale, assignment or pledge of the Timber Notes and
shall otherwise be substantially consistent with the structure and terms
described in the commitment letters attached hereto as Schedule 4.1(b)
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(the "LC Commitment Letters") and reasonably acceptable in form and substance to
Parent. The interest rate on the Timber Notes shall be a fixed stated rate of
interest set forth in the Timber Notes, which shall, as described in the Section
entitled "Timber Installment Notes" in Exhibit A to the LC Commitment Letters,
be equal to (x) the interest rate for the "Collateral Notes" described in the
Section entitled "Collateral Notes" in Exhibit A to the LC Commitment Letters,
less (y) the sum of the cost of the letter of credit and an additional
percentage rate intended to cover the cost of administering the Timber Notes
during their term; provided that, at Holdings' option, the Timber Notes may
provide for the payment of such interest rate without reduction for the costs of
the letter of credit, and in such case Parent shall agree in writing with the
Credit Enhancement Bank that it will upon receipt of each such interest payment
pay the Credit Enhancement Bank directly the costs of the letter of credit.
4.1.3 Any reduction in the Timberlands Purchase Price
pursuant to any provision of this Agreement (including Section 9.3.2.1 or
10.2.1.2 or Article 13) shall operate to reduce the cash portion of the
Timberlands Purchase Price prior to any reduction in the aggregate amount of
Timber Notes. Any such reduction shall be allocated between Parent and Southern
in proportion to the relative amounts of the Parent Timberlands Purchase Price
and the Southern Timberlands Purchase Price prior to such reduction.
4.2 NON-TIMBER PURCHASE PRICE. The Non-Timber Purchase Price shall
be paid in cash to Parent, as agent for Sellers, at Closing by wire transfer of
immediately available funds to a bank account designated by Parent. Such payment
shall be made on the basis of Parent's good faith estimate of the Non-Timber
Purchase Price (the "Estimated Non-Timber Purchase Price"). Such estimate shall
be made by Parent, and communicated to Holdings not less than 10 business days
prior to Closing. Parent shall estimate the closing payment on the basis of the
latest financial data reasonably available (which shall not be more than 60 days
old). Such calculation shall include an estimate of all adjustments to the
Non-Timber Purchase Price required by this Agreement. During and after its
preparation of the Estimated Non-Timber Purchase Price, Parent shall give
Holdings and its representatives reasonable access to the information required
to calculate, and otherwise being used to calculate, and the personnel
(including outside accountants) involved in calculating, the Estimated
Non-Timber Purchase Price. If Holdings disagrees with Parent's calculation of
the Estimated Non-Timber Purchase Price, the parties will use reasonable best
efforts to resolve their respective differences with regard to the calculation
of the Estimated Non-Timber Purchase Price, but if they cannot resolve their
differences prior to Closing despite such reasonable best efforts, then the
Estimated Non-Timber Purchase Price actually paid at the Closing shall be
Parent's determination thereof.
4.2.1 Within 60 days following the Closing, Holdings shall,
at its expense and with reasonable cooperation from Sellers' employees, prepare,
or cause to be prepared, and deliver to Parent a consolidated balance sheet for
the Operating Units as of immediately prior to (but assuming consummation of)
the Closing (the "Closing Balance Sheet"). The Closing Balance Sheet shall be
prepared from the books and records of the Business in accordance with the
Accounting Principles and as set forth on Schedule D-3. The Closing Balance
Sheet shall be accompanied by a statement derived from the Closing Balance Sheet
(the "Closing Statement") setting forth Holdings' calculation of Closing Net
Working Capital and the Non-Timber Purchase Price in accordance with the terms
hereof.
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4.2.2 Parent and its accountants shall have 30 days after
delivery by Holdings of the Closing Balance Sheet and the Closing Statement to
review such financial statements. During such 30-day period, Parent and its
representatives shall have full access to all information used by Holdings, and
all personnel (including outside accountants) involved, in preparing the Closing
Balance Sheet, the Closing Statement and in calculating the Closing Net Working
Capital and the Non-Timber Purchase Price, including work papers of Holdings'
accountants (subject to Sellers executing any waivers or indemnifications
reasonably required by Holdings' accountants related to review of such work
papers). If, as a result of such review, Parent determines that the Closing
Balance Sheet, or Closing Net Working Capital or the Non-Timber Purchase Price,
was not prepared in accordance with the requirements of this Agreement, it
shall, prior to the expiration of such 30 day period, provide Holdings with a
written statement of its objections (an "Objection Statement"), setting forth a
specific description of the basis of each objection and the adjustments to the
Closing Balance Sheet or the calculations of Closing Net Working Capital or the
Non-Timber Purchase Price which Parent seeks to have made. Holdings shall then
have 30 days to review and respond to the Objection Statement. In reviewing any
Objection Statement, Holdings and its accountants shall have full access to all
information used by the Sellers, and all personnel (including outside
accountants) involved, in preparing the Objection Statement, including work
papers of Sellers' accountants (subject to Holdings executing any necessary
waivers or indemnifications reasonably required by Sellers' accountants related
to review of such work papers).
4.2.3 The parties shall attempt in good faith to reach an
agreement with respect to all disputed items set forth in Parent's Objection
Statement. All discussions in connection with such attempts shall be governed by
Rule 408 of the Federal Rules of Evidence or any similar state or local rule of
evidence that may be applicable to any settlement discussions, and all
settlement discussions shall be inadmissible in any proceeding before or
submission to the Independent Accountants resulting pursuant to this Section
4.2. If the parties are unable to resolve all of their disagreements with
respect to any of such items within 45 days following the delivery of the
Objection Statement, they shall refer their remaining differences to the Boise
office of Deloitte & Touche LLP (the "Independent Accountants"), who shall,
acting as experts and not as arbitrators, determine in accordance with this
Agreement a resolution of the items referred to them. The parties shall each
direct the Independent Accountants to use their best efforts to render their
determination within 30 days after such submission. The Independent Accountants'
determination shall be conclusive and binding upon the parties with respect to
the items referred and shall not be subject to appeal except for manifest error.
The fees and disbursements of the Independent Accountants shall be borne equally
by Parent and Holdings. The parties shall make readily available to the
Independent Accountants all relevant books and records of the Business and any
work papers generated by the parties (or their accountants) in their preparation
and review of the Closing Balance Sheet, the Closing Statement and the Objection
Statement together with any other items reasonably requested by the Independent
Accountants.
4.2.4 In the event that no Objection Statement is delivered
to Holdings during the 30 day period provided for in Section 4.2.2 or upon
resolution of all issues raised by such Objection Statement pursuant to the
procedures of Section 4.2.3, the Closing Balance Sheet and Closing Statement
shall be deemed final (with the changes, if any, required by the outcome of the
objection process).
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4.2.5 Within ten days after the Closing Balance Sheet is
deemed final and the calculations of Closing Net Working Capital and Non-Timber
Purchase Price have been finally determined, (i) in the event that the Estimated
Non-Timber Purchase Price is less than the Non-Timber Purchase Price (as finally
determined), Holdings shall, or shall cause one or more of its Subsidiaries to,
make payment to Parent in an amount equal to such shortfall or (ii) in the event
that the Estimated Non-Timber Purchase Price is greater than the Non-Timber
Purchase Price (as finally determined), Parent shall, or shall cause one or more
of its Subsidiaries to, make payment to Holdings in an amount equal to such
excess. Such payment, together with interest thereon from the date of Closing to
the date of payment at the Interest Rate, shall be made by wire transfer of
immediately available funds to a bank account of the party to receive the
payment designated by such party.
ARTICLE 5 LIABILITIES
5.1 ASSUMED LIABILITIES. At the Closing, Holdings and/or one or
more Permitted Affiliate Purchasers shall assume all of the Assumed Liabilities
(as defined below). Assumed Liabilities directly relating to the Timberlands,
including the obligations of Parent and Southern under the Timberlands Leases,
shall be assumed by Timber Co. The "Assumed Liabilities" shall consist of all
debts, liabilities, commitments or obligations of Sellers exclusively or
primarily related to their conduct of the Business at the Facilities, other than
the Retained Liabilities, including, without duplication, the following (and in
the case of items described in 5.1.1 through 5.1.6, subject to the limitations
stated therein):
5.1.1 All undischarged current liabilities and obligations
of Sellers which arose in the ordinary course of and are related to the
operation of the Business prior to the Closing (including Trade Intercompany
Accounts) and which are recorded pursuant to the Accounting Principles on the
Closing Balance Sheet and included in the calculation of Closing Net Working
Capital, but only to the extent of the dollar amount reflected therein;
5.1.2 All liabilities and obligations of Sellers arising
from and after the Closing under the Contracts, Leases and Governmental
Authorizations that are identified, or by the express terms of this Agreement
not required to be identified, in Parent's Disclosure Memorandum (other than any
Contracts, Leases and Governmental Authorizations that are listed or described
on Schedule 5.3 as a Retained Liability), but only to the extent such Contracts,
Leases and Governmental Authorizations are assigned to Holdings or a Permitted
Affiliate Purchaser and excluding any liability or obligation arising out of or
in connection with any breach thereof occurring prior to, at, or as a result of
the Closing;
5.1.3 Liabilities and obligations relating to the employee
benefit plans, workers' compensation, and Transferred Employees in accordance
with, but only to the extent required by, Article 11;
5.1.4 The obligations of Sellers in respect of the
Transferred Litigation;
5.1.5 Straddle Environmental Regulatory Issues and Straddle
Hazardous Substance Releases (including Straddle Environmental Regulatory Issues
and Straddle Hazardous Substance Releases Disclosed on Schedule 7.11 of Parent's
Disclosure
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Memorandum), in either case solely to the extent arising as a result of the
operation of the Business by Purchasers in violation of Permits and Licenses or
other regulatory requirements under Environmental Laws immediately after
Closing, but excluding any Retained Environmental Liabilities; and
5.1.6 Liabilities and obligations of the Business solely to
the extent expressly agreed to be assumed by Holdings and its Subsidiaries under
the terms of this Agreement and the Ancillary Agreements.
At Closing, Holdings shall and/or shall cause one or more of
its Subsidiaries to, execute any instrument reasonably requested by Parent to
reflect such assumption. After the Closing, Holdings shall, or shall cause one
or more of its Subsidiaries to, fully perform and discharge the Assumed
Liabilities.
5.2 [Reserved.]
5.3 NONASSUMPTION OF OTHER LIABILITIES. Except as set forth in
Section 5.1 of this Agreement, Holdings and its Subsidiaries do not, and will
not be obligated to, assume any other debt, obligation, liability, commitment or
duty of any of Sellers or of any of their respective Subsidiaries of any form or
nature, absolute or contingent, known or unknown (the "Retained Liabilities").
Without limiting the generality of the foregoing, and notwithstanding anything
to the contrary in Section 5.1, neither Holdings nor any of its Subsidiaries
shall assume or become liable for any of the Retained Liabilities set forth on
Schedule 5.3. At Closing, Parent shall and shall cause its Subsidiaries to
execute any instrument reasonably requested by Holdings to reflect Parent's
continued retention of the Retained Liabilities.
5.4 CONSENTS TO ASSIGNMENT. Parent shall use its best efforts to
obtain any required consent to the assignment of the Contracts, Leases, and
Governmental Authorizations prior to the Closing; provided that Parent shall not
be obligated or permitted (without Holdings' written consent) to agree to any
change in the terms of the transferred arrangement which is material in the
context of the particular item being transferred. Holdings shall reasonably
cooperate with Parent to obtain such consents, but shall not be obligated to
make any payment to obtain any consent to assignment. With respect to the
specific Contracts, Leases and Governmental Authorizations, other than the
Required Consents, if Parent is unable to obtain consent to the assignment prior
to Closing, the Contract, Lease or Governmental Authorization in question shall
be deemed a Retained Asset and any obligation or liability arising therefrom
shall be excluded from the Assumed Liabilities. The parties shall use their best
efforts to arrange and enter into mirror image purchase and sale arrangements,
subleases, sublicenses, service agreements and other work-around arrangements in
respect of any Contract or Lease so excluded; PROVIDED that to the extent,
despite the exercise of best efforts, such arrangements cannot be entered into
or would not place Holdings and its Subsidiaries in substantially the same
economic position as if such Contract, Lease or Governmental Authorization were
able to be assigned, Parent will indemnify Holdings and its Subsidiaries for the
aggregate amount of any costs, expenses, losses, or diminution or loss of value
resulting from the exclusion of any such Contract, Lease or Governmental
Authorization.
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ARTICLE 6 REINVESTMENT BY PARENT AND PARENT SUB
At Closing, Parent and Parent Sub shall reinvest the Reinvestment Amount in the
Business on the terms and conditions set forth in this Article 6.
6.1 ISSUANCES OF OPERATING HOLDING CO. EQUITY. Holdings shall
cause its subsidiary, Operating Holding Co., to issue to Parent, or a
wholly-owned Subsidiary of Parent, its Series A Common Units and its Series B
Common Units. The consideration payable by Parent for the Series A Common Units
shall be $36,367,347 and the consideration payable by Parent for the Series B
Common Units shall be $60,061,224. Subject only to the following sentence, the
price per Series B Common Unit paid by Parent or such wholly-owned Subsidiary of
Parent shall be the same as that paid by Holdings for its Series B Common Units.
Operating Holding Co. shall be entitled to issue equity instruments (including
units, other equity interests, or options on units or equity interests) to
Holdings to reflect management equity issued at Holdings so that both MDP and
Parent proportionately bear any dilution caused by such management equity. At
the time of issuance, the Series B Common Units acquired by Parent shall
constitute less than 20% of the outstanding Series B Common Units and the
aggregate of all equity interests acquired by Parent shall be less than 50% of
the aggregate equity interests of Operating Holding Co then outstanding. The
consideration payable for the Series A Common Units and Series B Common Units to
be acquired by Parent or its wholly-owned Subsidiary shall be paid by Parent at
Closing by wire transfer of immediately available funds to an account designated
by Holdings on behalf of Operating Holding Co.
6.2 ISSUANCES OF TIMBER HOLDINGS CAPITAL STOCK. Holdings shall
cause its subsidiary, Timber Holdings, the parent company of Timber Co., to
issue to Parent Sub, its Series A Common Stock, and its Series B Common Stock.
The consideration payable by Parent Sub for the Series A Common Stock shall be
$29,632,653 and the consideration payable by Parent for the Series B Common
Stock shall be $48,938,776. Subject only to the following sentence, the capital
stock acquired by Parent will be issued at the same price per share of Series B
Common Stock ) as the Series B Common Stock in Timber Holdings acquired by
Holdings at the Closing, subject only to adjustment in the case of the Series B
Common Stock for management equity issued at Holdings. Timber Holdings shall be
entitled to issue equity instruments (including common or preferred stock or
options on common or preferred stock) to Holdings to reflect management equity
issued at Holdings so that both MDP and Parent Sub proportionately bear any
dilution caused by such management equity. At the time of issuance, the Series B
Common Stock acquired by Parent Sub shall constitute less than 20% of the
outstanding Series B Common Units and the aggregate of all equity interest
acquired by Parent Sub shall be less than 50% of the aggregate equity interests
of Timber Holdings then outstanding. The consideration payable for the Series A
Common Stock and Series B Common Stock to be acquired by Parent Sub shall be
paid by Parent Sub at Closing by wire transfer of immediately available funds to
an account designated by Holdings on behalf of Timber Holdings.
6.3 EQUITY AGREEMENTS. Holdings and Parent shall enter into a
securityholders agreement in respect of Operating Holding Co., and Holdings and
Parent Sub shall enter into a stockholders agreement in respect of Timber
Holdings, in form and substance substantially similar to the form attached as
Schedule 6.3.
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ARTICLE 7 SELLERS' REPRESENTATIONS AND WARRANTIES
Sellers jointly and severally represent and warrant to
Purchasers that:
7.1 ORGANIZATION AND QUALIFICATION. Parent, Minidoka, and each of
the Transferred Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the state of Delaware (or in the case of
certain of the Transferred Subsidiaries, the jurisdiction indicated after their
name on Schedule D-12). Southern is a partnership organized under the laws of
Louisiana which is composed of Parent and Minidoka. Sellers and each Transferred
Subsidiary have all requisite power and authority to own and operate the Assets
and to carry on the Business as currently conducted. Sellers and each of the
Transferred Subsidiaries are duly qualified to do business and are in good
standing as a foreign entity in all jurisdictions in which such qualification is
required to permit them to own their respective assets and to conduct their
portion of the Business as it is currently being conducted. Parent Sub is a
wholly-owned Subsidiary of Parent that does not own, lease or license any of the
Timberlands.
7.2 CORPORATE AUTHORIZATION. Each Seller and each Transferred
Subsidiary have all necessary power and authority to execute and deliver this
Agreement and each of the Ancillary Agreements to which it is a party, and to
perform their respective obligations hereunder and thereunder. The execution,
delivery, and performance by each Seller and each Transferred Subsidiary of this
Agreement and each of the Ancillary Agreements to which it is a party have been
duly and validly authorized, and no additional authorization or Consent is
required in connection with the execution, delivery, and performance by them of
this Agreement and each of the Ancillary Agreements to which it is a party.
7.3 CONSENTS AND APPROVALS. Except as Disclosed on Schedule 7.3 of
Parent's Disclosure Memorandum, no Consent is required to be obtained by any
Seller or any Transferred Subsidiary from, and no notice or filing is required
to be given by any Seller or any Transferred Subsidiary to, or made by any
Seller with, its shareholders or any Governmental Authority. Except as
specifically set forth in Schedule 7.14(c) or 7.15(b) of Parent's Disclosure
Memorandum, no Consent is required to be obtained by any Seller or any
Transferred Subsidiary from, and no notice or filing is required to be given to,
any counterparty under any Contract or Lease listed, or required to be listed,
on Schedule 7.14(a) or 7.15(a) of Parent's Disclosure Memorandum, in connection
with the execution, delivery, and performance by any Seller or any Transferred
Subsidiary of this Agreement and each of the Ancillary Agreements to which it is
a party.
7.4 NON-CONTRAVENTION. Except as Disclosed on Schedule 7.4 of
Parent's Disclosure Memorandum, the execution, delivery and performance by any
Seller and/or any Transferred Subsidiary of this Agreement and each of the
Ancillary Agreements to which it is a party, and the consummation of the
transactions contemplated hereby and thereby, does not and will not (i) violate
any provision of the certificate of incorporation or bylaws of Parent or
Minidoka or any Transferred Subsidiary or the partnership agreement of Southern;
(ii) subject to obtaining the Consents specifically identified on Schedules 7.3,
7.14(c) and 7.15(b) of Parent's Disclosure Memorandum, conflict with, or result
in the breach of, or constitute a default under, or result in the termination,
cancellation or acceleration (whether after the filing of notice or the lapse of
time or both) of any right or obligation of any Seller or any Transferred
Subsidiary under, or give
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rise to a loss of any benefit to which such Seller or such Transferred
Subsidiary is entitled under, any material Contract or Lease included in the
Assets or result in the creation of any Encumbrance upon any of the Assets; or
(iii) assuming compliance with the matters set forth in Schedule 7.3 of Parent's
Disclosure Memorandum, violate, or result in a breach of or constitute a default
under, any law, rule, regulation, judgment, injunction, order, decree or other
restriction of any court or governmental authority to which any Seller or any
Transferred Subsidiary is subject.
7.5 BINDING EFFECT. This Agreement constitutes, and each of the
Ancillary Agreements when executed and delivered by the parties thereto will
constitute, a valid and legally binding obligation of each Seller and each
Transferred Subsidiary party thereto, enforceable against each of them in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
7.6 FINANCIAL STATEMENTS; ABSENCE OF CERTAIN CHANGES.
7.6.1 Schedule 7.6.1 contains (or, with respect to those
financial statements identified on Schedule 7.6.1 as forthcoming (which upon
delivery will be reasonably acceptable to Holdings), will within five working
days from the date hereof contain) true and correct copies of the Historical
Financial Statements and will upon their completion in accordance with Section
10.13 contain true and correct copies of the Subsequent Financial Statements,
the Audited Financial Statements, the Stub Period Financial Statements and the
Additional Financial Statements. The "Historical Financial Statements" are (x)
Parent's internal operating balance sheet, profit and loss statement, and cash
flow statement for each of the Operating Units and for Parent's aviation
division, transportation operations (including the operations of Parent's
Subsidiaries, Minnesota, Dakota and Western Railroad Company and BCT, Inc.) and
its cottonwood farm operations, at and for the periods ending on December 31,
2001, December 31, 2002, and December 31, 2003, together with the same
statements for the 2004 year to date periods ending May 31, 2004 and June 30,
2004 and comparable statements for the year to date periods ending on May 31,
2003 and June 30, 2004, and (y) a balance sheet and a profit and loss statement
for Parent's corporate staff departments at and for each of the periods provided
for above.
7.6.2 Except as Disclosed on Schedule 7.6.2 of Parent's
Disclosure Memorandum, the Historical Financial Statements and the Subsequent
Financial Statements fairly present (or, in the case of the Subsequent Financial
Statements, will on their delivery to Holdings fairly present ), in all material
respects, the results of operations for the portions of the Business they report
on and the financial condition of the portions of the Business they report on as
of the dates, and for the periods, thereof. The Historical Financial Statements
and the Subsequent Financial Statements were (or, in the case of the Subsequent
Financial Statements, will be) prepared from and are, or in the case of the
Subsequent Financial Statements will be, consistent with the financial records
of the Business which are maintained by Parent in accordance with the Historical
Accounting Procedures. Such financial records are true, accurate and complete in
all material respects and are a portion of the books and records from which
Parent's audited financial statements are prepared. The Historical Accounting
Procedures are consistent with the accounting procedures used by Parent in
preparation of Parent's audited financial statements as filed with the
Securities and Exchange Commission.
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7.6.3 The Audited Financial Statements, the Stub Period
Financial Statements and the Additional Financial Statements will, upon their
delivery to Holdings, fairly present in all material respects, the results of
operations for the Business (or applicable portion thereof reported on) and the
financial condition of the Business (or applicable portion thereof reported on)
stated and presented in compliance with GAAP and, except to the extent disclosed
therein, on a basis consistent with the Historical Accounting Procedures.
7.6.4 The Inventory shown on the Historical Financial
Statements and the Subsequent Financial Statements was (or will be in the case
of the Subsequent Financial Statements) determined in accordance with Parent's
Historical Accounting Procedures, and the Inventory shown on the Audited
Financial Statements, Stub Period Financial Statements and the Additional
Financial Statements will when delivered be determined in accordance with GAAP,
in each case stated at the lower of cost or market.
7.6.5 Subject to the next two sentences of this
Section 7.6.5, all Accounts Receivable reflected on the Historical Financial
Statements were, and all Accounts Receivable to be included as Current Assets in
the computation of Closing Net Working Capital are, bona fide receivables,
accounted for in accordance with Historical Accounting Procedures (and, in the
case of Accounts Receivable included in Closing Net Working Capital, the
Accounting Principles), and subject to no offsets or counterclaims (other than
ordinary course returns and allowances for which reserves have been, or will be,
recorded to the extent required by the Historical Accounting Procedures and
GAAP), representing amounts due with respect to actual transactions in the
operation of the Business; it being understood that this representation shall
not be deemed to constitute a warranty or guaranty that all such accounts
receivable shall be collected. Throughout the period covered by the Historical
Financial Statements, Parent sold substantially all of such accounts receivable
to a wholly owned subsidiary which, in turn, resold a fractional undivided
interest in such accounts receivable to third parties in a securitization
facility. Such sales are not reflected in the Historical Financial Statements or
the Subsequent Financial Statements. Such sales will be discontinued 45 days
prior to the date scheduled for Closing.
7.6.6 Except as Disclosed on Schedule 7.6.6 of Parent's
Disclosure Memorandum, since March 31, 2004, Sellers and their Subsidiaries have
conducted the Business in the ordinary and usual course and, other than in the
ordinary and usual course, have not, with respect to the Business: (i) sold,
assigned, pledged, hypothecated or otherwise transferred any material portion of
the Assets (other than sales of Inventory in the ordinary course of business, or
sales of Accounts Receivable pursuant to the securitization facility referred to
in Section 7.6.5 not less than 45 days prior to Closing ); (ii) terminated or
materially amended any Contracts or Leases that are individually or in the
aggregate material to the Business; (iii) suffered any extraordinary damage,
destruction or other casualty loss; (iv) except for normal salary
administration, and ordinary course promotions for Employees, increases pursuant
to collective bargaining agreements, or other compensation increases (including
bonuses), in each case in the ordinary course of business, increased the
compensation payable or to become payable by Sellers or the Transferred
Subsidiaries to any of the Employees or increased any bonus, insurance, pension
or other employee benefit plan, payment or arrangement made by Sellers or the
Transferred Subsidiaries, for or with any of the Employees; (v) took any action
or failed to any action, which if taken or failed to be taken after the date of
this Agreement and prior to the
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Closing, would require the consent of Holdings pursuant to Section 10.2.1 or
Section 10.2.2 or (vi) entered into an agreement to do any of the foregoing.
7.7 LITIGATION AND CLAIMS. Except as Disclosed on Schedule 7.7
of the Parent's Disclosure Memorandum:
7.7.1 There is no action (whether civil, criminal or
administrative), suit, demand, claim, dispute, hearing, proceeding (including
condemnation or other proceeding in eminent domain) or investigation pending, or
to the Knowledge of Parent threatened, related to or arising out of the Business
or any of the Assets or included in the Assumed Liabilities except for workers'
compensation claims, collection matters, and unemployment compensation claims
not reasonably expected individually to exceed $500,000 or $2,000,000 in the
aggregate and for which, in the case of workers' compensation claims, the
liability therefor has been included in the Workers Compensation Reserve.
7.7.2 None of the Sellers (with respect to the Business),
the Transferred Subsidiaries, or the Assets is subject to any order, writ,
judgment, award, injunction, or decree or settlement enforceable in any court or
governmental or regulatory authority of competent jurisdiction or any arbitrator
or arbitrators except for regulatory decrees and orders of general applicability
to both the Business and others conducting similar businesses in the affected
jurisdiction which do not and could not reasonably be expected to materially
impair the operation of the Business or materially detract from the value of the
Business.
7.8 TAXES. Except as Disclosed on Schedule 7.8 of Parent's
Disclosure Memorandum:
7.8.1 Sellers and each of their Affiliates (including each
of the Transferred Subsidiaries) have duly and timely filed (or have caused to
be duly and timely filed) each Tax Return required to be filed with any Tax
Authority which includes or is based upon the Assets, or the operations,
ownership or activities of the Business; each of such Tax Returns is complete
and accurate in all material respects; and all Taxes due and payable (whether or
not shown or required to be shown on such Tax Returns) have been or will be paid
by Sellers and their Affiliates (including each of the Transferred Subsidiaries)
prior to their due dates.
7.8.2 None of the Transferred Subsidiaries is obligated to
make any payments (or is a party to any agreement that could obligate it to make
any future payments), and none of the Assumed Liabilities is an obligation to
make any payments, that will not be deductible under Sections 162(m) or 280G of
the Code.
7.8.3 None of the Assets or the assets of the Transferred
Subsidiaries (i) is subject to any lien arising in connection with any failure
or alleged failure to pay any Tax, (ii) secures any debt the interest on which
is Tax-exempt under Section 103(a) of the Code, (iii) is required to be or is
being depreciated under the alternative depreciation system under Section
168(g)(2) of the Code, (iv) is "limited use property" within the meaning of
Revenue Procedure 2001-28, or (v) will be treated as owned by any other person
pursuant to the provisions of former Section 168(f)(8) of the Code.
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7.8.4 Sellers (with respect to the Business) and the
Transferred Subsidiaries have withheld and paid each Tax required to have been
withheld and paid in connection with amounts paid or owing to any Employee,
independent contractor, creditor, shareholder, or other party.
7.8.5 There are no pending, threatened, or proposed audits,
assessments or claims from any Tax Authority for deficiencies, penalties, or
interest against Sellers (with respect to the Assets or the Business), any of
the Transferred Subsidiaries or any of their assets, operations, or activities.
7.8.6 No Transferred Subsidiary owns, directly or
indirectly, and none of the Assets consists of any interest in, any entity
classified as a partnership for United States federal income tax purposes.
7.8.7 No claim has ever been made by a Tax Authority in a
jurisdiction where any of the Sellers or the Transferred Subsidiaries do not
file Tax Returns that such Seller or Transferred Subsidiary is or may be subject
to Taxes assessed by such jurisdiction.
7.8.8 None of the Transferred Subsidiaries will be required
(A) as a result of a change in method of accounting for a taxable period ending
on or prior to the Closing Date, to include any adjustment in taxable income for
any taxable period (or any portion thereof) ending after the Closing Date, (B)
as a result of any "closing agreement," as described in Section 7121 of the Code
(or any similar provision of state, local or foreign income Tax law), to include
any item of income in, or exclude any item of deduction from, taxable income for
any taxable period (or portion thereof) ending after the Closing Date, or (C) as
a result of any payment received prior to the Closing or any installment sale
prior to the Closing to include any item of income in any taxable period (or
portion thereof) ending after the Closing Date.
7.8.9 None of the Transferred Subsidiaries has distributed
stock of another Person, or has had its stock distributed by another Person, in
a transaction that was purported or intended to be governed in whole or in part
by Section 355 or Section 361 of the Code.
7.9 EMPLOYEES AND EMPLOYEE BENEFITS.
7.9.1 All of the Employees based in the United States are
employed by Parent except for 42 Employees who are employed by Minnesota, Dakota
& Western Railway Company. None of the Transferred Subsidiaries have Employees
except for Minnesota, Dakota & Western Railway Company, Boise Cascade do Brasil
LTDA, Boise Alljoist Ltd., and Boise Building Products Limited, and none of the
Retained Subsidiaries have any Employees. Upon Holdings' request, Parent will
promptly provide a list of each Employee who is on disability leave as of any
date after the date of this Agreement and prior to the Closing Date and also as
of the Closing Date.
7.9.2 Schedule 7.9.2(a) of Parent's Disclosure Memorandum
lists each Parent Plan, complete and accurate copies of which have been provided
(or made available in the dataroom) to Holdings; PROVIDED, however, with respect
to Parent Plans providing benefits to employees outside the United States, if a
complete and accurate copy of such plans has not been
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provided to Holdings, then summaries of all material terms (including, without
limitation, whether any unfunded liabilities with respect to such plan exist)
have been provided to Buyer. Except as set forth on Schedule 7.9.2(b) of
Parent's Disclosure Memorandum, no Parent Plan provides for post-employment
welfare benefits to any Employee other than as required under Section 4980B of
the Code. Except as Disclosed on Schedule 7.9.2(c) of Parent's Disclosure
Memorandum, each Parent Plan has been and is being maintained in substantial
compliance with all applicable laws, including ERISA and the Code, and each plan
that is intended to be qualified under Section 401(a) of the Code is so
qualified and has received a determination of such qualification from the
Internal Revenue Service. Except as Disclosed on Schedule 7.9.2(d) of Parent's
Disclosure Memorandum, no Employee is covered by a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA or has been covered by such a plan during
the past five years. Except as provided in Section 11.8 with respect to
Holdings' General Severance Policy and the 2004 Severance Agreement, none of the
Parent Plans will obligate Holdings or any Permitted Affiliate Purchaser or any
of their Subsidiaries or any Transferred Subsidiary to pay separation,
severance, termination or similar-type benefits in whole or in part as a result
of any transaction contemplated by this Agreement or as a result of a "change in
control" (as such term is defined in Section 280G of the Code) arising from the
execution and performance of this Agreement. No liability to the PBGC (except
for routine payment of premiums), Internal Revenue Service, Department of Labor,
or otherwise has been or is expected to be incurred with respect to any
"employee benefit plan" (as such term is defined under Section 3(3) of ERISA)
that is subject to Title IV of ERISA which could result in a liability to
Holdings or any Permitted Affiliate Purchaser or any of their Subsidiaries or
any Transferred Subsidiary. No "change in control" as defined under any
employment or retention agreements of Sellers or their Subsidiaries applicable
to any Employee will occur, and no rights or obligations under any similar
agreement will arise, in whole or in part as a result of the transactions
contemplated herein.
7.10 COMPLIANCE WITH LAWS; GOVERNMENTAL AUTHORIZATIONS. Except as
Disclosed on Schedule 7.10 of Parent's Disclosure Memorandum, the Business is
being conducted in substantial compliance with all laws applicable to the
Business, and Sellers and the Transferred Subsidiaries have all material
Governmental Authorizations required for the ongoing conduct of the Business
where and as it is currently being conducted. Parent has no Knowledge of any
intention or commencement of any process by or before any Governmental Authority
to suspend, revoke, materially modify (other than modifications made in
connection with a normal renewal of an expiring Governmental Authorization) or
cancel any such Governmental Authorization, or any claims by or before any
Governmental Authority alleging or investigating any violation of law.
Notwithstanding the foregoing, it is understood and agreed by the parties that
nothing in this representation is intended to address any compliance issue that
is the subject of the representations and warranties set forth in Sections 7.7,
7.8, 7.9, 7.11, 7.12, or 7.13 hereof, and that Sellers make no representations
as to the transferability or assignability of any such Governmental
Authorization.
7.11 ENVIRONMENTAL MATTERS. Except as Disclosed on Schedule 7.11
of Parent's Disclosure Memorandum:
7.11.1 Sellers and the Transferred Subsidiaries have complied
at all times during the past five years with, and are currently in compliance
with, all applicable Environmental Laws
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applicable to the Business, and there are no liabilities under any Environmental
Law with respect to the Business;
7.11.2 None of Sellers nor any of the Transferred
Subsidiaries have received any written notice of any material violation or
alleged material violation of, or any material liability under, any
Environmental Law in connection with the Business during the past five years;
7.11.3 There are no material writs, injunctions, decrees,
orders or judgments outstanding, or any actions, suits, proceedings or
investigations pending or, to the Knowledge of Parent, threatened, relating to
compliance with or liability under any Environmental Law affecting the Business
or the Assets;
7.11.4 None of Sellers nor any of the Transferred
Subsidiaries nor the Business has any material or potentially material liability
with respect to the design, manufacture, sale or distribution of products
containing asbestos or any other Hazardous Substance prior to Closing or with
respect to the presence of asbestos or silica in any product or item in, on or
beneath any property, facility or structure (including, without limitation, the
Facilities or the Timberlands) and no damaged and friable asbestos-containing
material is currently present at the Facilities or the Timberlands; and
7.11.5 Sellers and the Transferred Subsidiaries have made
available to Holdings true and correct copies of all environmental audit
reports, action plans and updated action plans and Environmental Assessments
covering the Facilities and the Timberlands prepared by Sellers in the three
year period preceding the date of this Agreement.
7.12 INTELLECTUAL PROPERTY.
7.12.1 Schedule 7.12.1 of Parent's Disclosure Memorandum sets
forth a list and description (including the country of registration) of all
registered Parent Intellectual Property currently (or, to the Knowledge of
Parent, within the last 12 months) used in the Business. Except as Disclosed, no
third party has rights in or otherwise has the right to restrict Parent's use of
such Parent Intellectual Property, and, to Parent's Knowledge (without any
inquiry), no third party has rights in, or otherwise has the right to restrict
Holdings' and its Subsidiaries use of such Parent Intellectual Property and the
Boise Marks as of and following the Closing.
7.12.2 To the Knowledge of Parent, no product (or component
thereof) or process currently used, sold, or manufactured by the Business
infringes on, misappropriates, or otherwise violates a valid and enforceable
intellectual property right of any other Person. Any pending or threatened claim
of such infringement Known to Parent is set forth on Schedule 7.12.2 of Parent's
Disclosure Memorandum.
7.12.3 There are no actions or proceedings pending or, to the
Knowledge of Parent, threatened, challenging, and, to the Knowledge of Parent,
no person is infringing or otherwise violating, the Parent Intellectual
Property, except for challenges, infringements or violations which, individually
or in the aggregate, would not have a Material Adverse Effect.
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7.12.4 All of the Parent Intellectual Property used in the
Business and all of Parent's and its Subsidiaries' interest in the Boise Marks
will be transferred to Holdings at Closing, and such transferred Parent
Intellectual Property and the Boise Marks will be available to Holdings after
Closing on the same terms and conditions under which it was available to Parent
and its Subsidiaries prior to the Closing. The Boise Marks will remain available
for use by Parent in its Boise Office Solutions business for the period and to
the extent permitted in Section 10.6.
7.13 LABOR MATTERS. Except as Disclosed on Schedule 7.13 of
Parent's Disclosure Memorandum:
7.13.1 None of Sellers nor any Transferred Subsidiary is a
party to any labor or collective bargaining agreement with respect to Employees,
no Employees are represented by any labor organization and, to the Knowledge of
Parent, there are no organizing or decertification activities (including any
demand for recognition or certification proceedings pending or threatened to be
brought or filed with the National Labor Relations Board or other labor
relations tribunal) involving any of the Employees;
7.13.2 There are no strikes, work stoppages, slowdowns,
lockouts, or unfair labor practice charges pending or, to the Knowledge of
Parent, threatened against or involving the employees of the Business;
7.13.3 There are no complaints, charges, claims or grievances
against Sellers or any of the Transferred Subsidiaries pending or, to the
Knowledge of Parent, threatened to be brought or filed with any governmental
authority, arbitrator or court based on or arising out of the employment of any
Employee by Sellers or any of the Transferred Subsidiaries, where the aggregate
potential liability to Sellers or the Transferred Subsidiaries from such matter
if adversely determined is at least $75,000; and
7.13.4 Each Seller and each Transferred Subsidiary are in
substantial compliance with all laws relating to the employment of labor,
including all such laws relating to wages, hours, collective bargaining,
discrimination, civil rights, safety and health, immigration, workers'
compensation, layoffs, and the collection and payment of withholding and/or
Social Security Taxes and similar Taxes except where such noncompliance would
not have a Material Adverse Effect.
7.14 CONTRACTS. Schedule 7.14(a) Parent's Disclosure Memorandum
contains a list of (a) each Contract which has a remaining unexpired term of at
least one year and requires payments by or to the Business of more than
$1,000,000 in any year; (b) all Contracts which require payment (other than for
the provision of goods or services in the ordinary course of business) by or to
the Business of more than $1,000,000; (c) any Contract that contains a
non-compete covenant or similar provision that could restrict Holdings in its
conduct of the Business following Closing, (d) any consulting, retention,
severance, bonus, compensation, or similar agreement with any Employee, other
than the Parent Plans, and any employment agreement with any Employee (other
than temporary employment contracts that are terminable without penalty at any
time at the will of the employer with a term of less than one year and at an
annual compensation rate of less than $75,000 and that provide for no payments
of severance), (e) all
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collective bargaining agreements affecting any of the Employees, (f) any
Contract between any of Sellers or any Retained Subsidiary on one hand and any
of Sellers, any Retained Subsidiary, or any Transferred Subsidiary on the other
hand, which is related to the Business, other than purchase orders entered into
in the ordinary course of business and included in Trade Intercompany Accounts,
and (g) any other Contract that is material to the Business or the Assets. Each
Contract required to be disclosed on Schedule 7.14(a) of Parent's Disclosure
Memorandum is a valid and binding agreement of Sellers or a Transferred
Subsidiary and, to the Knowledge of Parent, is in full force and effect. Except
as Disclosed on Schedule 7.14(b) of Parent's Disclosure Memorandum, none of the
Sellers or any Transferred Subsidiary is in, and, to Parent's Knowledge, no
other party thereto is in, default in any material respect under any Contract
required to be disclosed in such Schedule. Parent's Disclosures made pursuant to
this Section 7.14 include all Contracts that are material to the Business.
Solely for purposes of this Section, the term Contract is deemed to also include
any such instrument which is held by a Transferred Subsidiary rather than one of
Sellers. Schedule 7.14(c) of Parent's Disclosure Memorandum also identifies
which of the Contracts listed thereon may not be transferred to Holdings and its
Subsidiaries (including indirectly by transfer of the stock of the Transferred
Subsidiaries) without the consent of the counterparty thereto or for which
rights or obligations of any party thereto will (with or without the passage of
time), without the consent of the other party(ies) thereto, terminate,
accelerate, be modified or otherwise become due.
7.15 LEASES. Schedule 7.15(a) of Parent's Disclosure Memorandum
sets forth a list of: (i) each Timberlands Lease; (ii) each Equipment Lease with
a remaining term of more than one month and rental payments in excess of
$1,000,000 in the aggregate for such lease or which covers equipment with an
original purchase cost in excess of $5,000,000; and (iii) each Facilities Lease,
together with, for each such Timberlands Lease, the general location and
approximate acreage, and for each such Facilities Lease, the address of each
parcel of real property subject to such Lease. Sellers have delivered to
Holdings true and correct copies of each such Lease, other than the following
Leases, true and correct copies of which will be delivered within ten working
days after the date hereof: (i) resource management agreements marked with an
asterisk on Schedule 7.15, each of which is substantially similar to the form of
resource management agreement previously delivered to Holdings, and which are
not (individually or in the aggregate) materially adverse to Holdings and its
Subsidiaries, and (ii) timber cutting contracts marked with an asterisk on
Schedule 7.15, as to each of which Schedule 7.15 describes the acreage covered
thereby and the unexpired term thereof, and which are not (individually or in
the aggregate) materially adverse to Holdings and its Subsidiaries. Each of the
Leases is a valid and binding agreement of Parent or Southern, as the case may
be, and is in full force and effect. There are no defaults under any leases
which defaults have not been cured or waived and which would, individually or in
the aggregate, have a Material Adverse Effect. None of the Transferred
Subsidiaries holds any Timberlands Leases or any Equipment Lease or Facilities
Lease which would meet the threshold for disclosure on such Schedule. Parent's
Disclosures made pursuant to this Section 7.15 include all Leases that are
material to the Business. Solely for purposes of this Section 7.15, the terms
Timberlands Lease, Equipment Lease, and Facilities Lease are deemed to also
include any such instrument which is held by a Transferred Subsidiary rather
than one of Sellers. Schedule 7.15(b) of Parent's Disclosure Memorandum also
identifies which of the Leases listed thereon may not be transferred to Holdings
and its Subsidiaries without the consent of the counter-party thereto or for
which rights or obligations of any party thereto will
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(with or without the passage of time), without the consent of the other
party(ies) thereto, terminate, accelerate, be modified or otherwise become due.
7.16 ENTIRE BUSINESS; TITLE TO PROPERTY; CAPITAL STRUCTURE OF
TRANSFERRED SUBSIDIARIES.
7.16.1 Except as Disclosed on Schedule 7.16.1 of Parent's
Disclosure Memorandum, the Assets (including the Timberlands, Facilities, and
Fixtures and Equipment held pursuant to the Leases, and Intellectual Property
covered by the IP Licenses) together with the assets held by the Transferred
Subsidiaries, and the rights specifically provided or made available to Holdings
and its Subsidiaries under the Ancillary Agreements, include all of the
buildings, machinery, equipment and other assets (whether tangible or
intangible) necessary and adequate for Holdings and its Subsidiaries immediately
after Closing to conduct in all material respects the Business as conducted as
of the date hereof and since March 31, 2004. None of the Assets is held by, and
no aspect of the Business is conducted by, and (except with respect to the
balance sheet and profit and loss statements of the corporate staff operations)
the Historical Financial Statements do not include any of the financial
condition or results of operations of, any of the Retained Subsidiaries or any
other Person other than the Sellers and the Transferred Subsidiaries. Schedule
7.16.1 sets forth a description of any and all assets (whether tangible or
intangible, real or personal) used in the conduct of the Business, but which do
not fall within the definition of "Assets". Schedule D-13 lists the county and
approximate acreage of the Timberlands. Except for the Timberlands and the
Retained HBU Lands, none of Sellers or any of the Retained Subsidiaries owns or
leases any real property for the purpose of growing or harvesting timber. The
letters of credit and performance bonds to be assumed by Holdings and its
Subsidiaries at the Closing are substantially as set forth on Schedule 7.16.1 of
Parent's Disclosure Memorandum, and in any event the aggregate amount thereof
shall not exceed $110 million.
7.16.2 Except as Disclosed on Schedule 7.16.2 of Parent's
Disclosure Memorandum, Sellers and the Transferred Subsidiaries have good (and,
in the case of the Realty and the Timberlands (as applicable), marketable) title
to the Assets, free and clear of all Financial Encumbrances and all other
Encumbrances except (i) liens for Taxes (which are not related to income, sales,
or withholding Taxes), assessments and other governmental charges not yet due
and payable or due but not delinquent as of the Closing Date or being contested
in good faith by appropriate proceedings; (ii) mechanic's, workmen's,
repairmen's, warehousemen's, carriers, or other like liens arising or incurred
in the ordinary course of business for amounts which are not delinquent and
which will not individually or in the aggregate materially impair the operation
of the Business, original purchase price conditional sales contracts and
equipment leases with third parties entered into in the ordinary course of
business; (iii) with respect to the Realty and Timberlands, (A) easements,
quasi-easements, licenses, covenants, rights-of-way and other similar
restrictions, including any other agreements, conditions, restrictions, or other
matters which would be shown by a current title report or other similar report
or listing, (B) any conditions that may be shown by a current survey (other
than, for purposes of Section 15.1.12, Surveys delivered pursuant to Section
9.1.3), title report or physical inspection, and (C) zoning, building and other
similar restrictions, none of which Encumbrances in (A) through (C) materially
impairs the uses of the Realty or Timberlands as currently used in the Business
or materially detracts from the value thereof as currently used in the Business;
(iv) with respect to the Timberlands, such encroachments, boundary line
disputes, access restrictions or absence of
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access, adverse possession claims, and other Encumbrances (other than Financial
Encumbrances) which are common to commercial timberlands and will not
individually or in the aggregate materially impair the operation of the
Timberlands or materially detract from the value of the Timberlands; and (v)
Encumbrances not described in items (i) - (iv) immediately preceding which are
not Financial Encumbrances and which, individually or in the aggregate, would
not materially impair the operation of the Business or materially detract from
the value of the Business (all items included in (i) through (v), including any
matter Disclosed on Schedule 7.16.2 of Parent's Disclosure Memorandum, are
referred to collectively herein as the "Permitted Encumbrances"); provided,
however, that as of the Closing Date and for any periods of time thereafter
(including for purposes of Section 2.1 and Article IX), "Permitted Encumbrances"
shall not include any Financial Encumbrances. Solely for purposes of this
Section 7.16.2, each reference to the Assets and each subcategory thereof is
intended to include any such asset held by a Transferred Subsidiary.
7.16.3 Parent owns, directly or indirectly, all of the shares
of issued and outstanding stock or other equity interests of the Transferred
Subsidiaries, and no shares of stock or other equity interests of any indirectly
owned Transferred Subsidiary are held by any Retained Subsidiary. All shares of
stock or other equity interests of the Transferred Subsidiaries are validly
issued, fully paid and non-assessable. Except as Disclosed on Schedule 7.16.3(a)
of Parent's Disclosure Memorandum, (i) there are no options, warrants, or
similar rights to purchase any of the shares of any of the Transferred
Subsidiaries, and no obligations binding upon any Transferred Subsidiary to
issue, sell, redeem, purchase or exchange any of its capital stock or any right
relating thereto, and (ii) there are no shareholders' agreements, voting
agreements, voting trusts or other agreements or rights of third parties with
respect to or affecting any of the Transferred Subsidiaries or any of their
shares of stock.
7.16.4 The Assets and the assets of the Transferred
Subsidiaries are in operating condition and repair (subject to normal wear and
tear) and are in a condition to allow the continued conduct after the Closing by
Holdings of the Business as it is currently conducted in all material respects.
With respect to the Assets and the assets of the Transferred Subsidiaries,
Parent has not failed to make or deferred or postponed any maintenance, repair,
capital improvement, or capital expenditure in anticipation of a potential sale
of all or part of the Business, including the transactions contemplated by this
Agreement and the Ancillary Agreements. Except as set forth in this paragraph
and otherwise set forth in this Agreement or any of the Ancillary Agreements,
all of the Assets will be sold AS IS and WHERE IS as to the Sellers.
7.16.5 Except as set forth on Schedule 7.16.5 of Parent's
Disclosure Memorandum, none of the Sellers or their Retained Subsidiaries or any
officer or director thereof, or any individual related by blood, marriage or
adoption to any such individual or any entity in which any such Person or
individual owns any beneficial interest, is a party to any Contract with any of
Sellers or any of the Transferred Subsidiaries or has any interest in any
property, asset, or right used by Sellers or any Transferred Subsidiary or
necessary for the Business. Schedule 7.16.5 of Parent's Disclosure Memorandum
describes all services provided to or for the benefit of the Business by any
portion of Sellers not included in the Business and any of the Retained
Subsidiaries.
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7.16.6 Since March 31, 2004, Sellers and their Subsidiaries
have operated the Timberlands in the ordinary course of business consistent with
past practice, including (a) conducting their on-going timber harvest operations
on the Timberlands substantially in accordance with the species composition,
timber products, volume levels, and timing detailed in Parent's Harvest Plan,
and (b) performing necessary and prudent maintenance of roads, drainage systems,
fire protection and prevention as well as appropriate stand establishment
activities.
7.17 FINDERS' FEES. Except for the fees of Xxxxxxx Xxxxx & Co.,
whose fees will be paid by Parent, there is no investment banker, broker or
finder which has been retained by or is authorized to act on behalf of Parent
who might be entitled to any fee or commission from Holdings or any of its
Affiliates in connection with the transactions contemplated by this Agreement.
7.18 INSURANCE. Except as Disclosed on Schedule 7.18 of Parent's
Disclosure Memorandum, Schedule D-14 hereto identifies each of the insurance
policies currently carried by Parent or any of its Subsidiaries which cover
risks associated with or arising out of the Business. The column marked "status"
indicates for each policy whether it will be retained by Sellers (those policies
labeled as "excluded"); fully assigned to Holdings (those policies labeled as
"assigned"); or divided between the parties in accordance with Section 10.1.1
(those policies labeled as "divided"). In addition, the status column indicates
which of the assigned or divided policies will name Parent and the Retained
Subsidiaries as additional insureds. The policies listed in Schedule D-14 as
"excluded" will be retained by Sellers and shall constitute Retained Assets. The
policies listed in Schedule D-14 as "assigned" shall be included in the Assets
to be transferred hereunder. The policies listed in Schedule D-14 as "divided"
shall be included as Assets to be transferred hereunder to the extent of the
contemplated assignment and as a Retained Asset to the extent of the carved out
retained coverages. For each of the Insurance Policies listed thereon, Schedule
D-14 sets forth (a) the name of the insurer, the name of the policyholder, and
the name of each covered insured, (b) the scope, period and amount of coverage,
and (c) a description of any retroactive premium adjustments or other loss
sharing arrangements (including any self-insured retention, deductible or
similar self-insurance or co-insurance in respect of each such insurance
policy). Parent has paid all premiums or other amounts due and owing to such
insurers in respect of each policy listed on Schedule D-14 and is not otherwise
in default under any such policy.
7.19 NO UNDISCLOSED LIABILITIES. No Seller nor any of the
Transferred Subsidiaries has any material obligations or liabilities (whether
accrued, absolute, contingent, unliquidated or otherwise, whether or not known
to Parent, whether due or to become due and regardless of when asserted) arising
out of transactions entered into at or prior to the Closing or any action or
inaction at or prior to the Closing or any state of facts existing at or prior
to the Closing other than: (i) liabilities recorded or disclosed on the December
31, 2003 balance sheet included in the Historical Financial Statements
(including any notes thereto, if any); (ii) liabilities and obligations arising
from or in connection with matters Disclosed pursuant to Parent's
representations and warranties in this Agreement or in the Disclosure Memorandum
(none of which, except as Disclosed pursuant to Section 7.7, is a liability
resulting from a breach of contract,
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breach of warranty, tort, infringement claim or lawsuit); (iii) liabilities and
obligations which have arisen after December 31, 2003, in the ordinary course of
business (none of which, except as Disclosed pursuant to Section 7.7, is a
liability resulting from a breach of contract, breach of warranty, tort,
infringement claim or lawsuit); (iv) its long term indebtedness and other long
term liabilities which are carried on its books at the corporate level and are
not Assumed Liabilities; and (v) any Retained Liabilities.
7.20 NO OTHER REPRESENTATIONS OR WARRANTIES. Except for the
representations and warranties contained in this Article 7, neither Parent nor
any other Person makes any other express or implied representation or warranty
on behalf of any of Sellers. ANY WARRANTY IMPLIED BY LAW INCLUDING WARRANTIES OF
MERCHANTABILITY AND OF FITNESS FOR A PARTICULAR PURPOSE ARE HEREBY DISCLAIMED.
7.21 CLOSING DATE. The representations and warranties of Sellers
contained in this Article 7 and elsewhere in this Agreement and all information
contained in any exhibit, schedule or attachment hereto or in any certificate or
other writing delivered by, or on behalf of, any of Sellers to Holdings pursuant
to this Agreement shall be true and correct in all respects on the Closing Date
as though then made, except as affected by the transactions expressly
contemplated by this Agreement. Parent shall have the right, at any time prior
to the fifth business day prior to the Closing Date to update the portion of the
Parent Disclosure Memorandum prepared in respect of the representations and
warranties of Sellers in this Article VII to reflect changes in the Business
between the date hereof and the Closing Date that are actions taken by Parent
permitted under Section 10.2 without Holdings' prior consent or were actions not
permitted thereby which were taken with Holdings' consent.
In the event any litigation or claim against any of the
Sellers or their Subsidiaries relating to the Business (other than the
Transferred Litigation), or any action, complaint, charge, claim, grievance, or
other labor matter of the type described in Section 7.13, arises after the date
hereof and prior the Closing, then (a) Parent will promptly deliver written
notice to Holdings of the nature of such matter and will provide to Holdings all
information concerning such matter as Holdings reasonably requests; (b) Holdings
may elect to assume such matter by delivering written notice of such assumption
to Parent, in which case a reserve will be established for such matter (which
reserve will be determined in accordance with Parent's historical practices and
methods for establishing and adjusting book reserves relating to litigation and
other claims liabilities and will be reasonably acceptable to Holdings), and
such reserve will be added to Schedule D-6 and included in the Litigation and
Claims Reserve; and (c) if Holdings elects not to, or does not, assume such
matter in writing as described in clause (b) above, then such matter will be
treated as Retained Litigation, and all liabilities and obligations in respect
of such matter will be Retained Liabilities.
ARTICLE 8 HOLDINGS' REPRESENTATIONS AND WARRANTIES
Holdings represents and warrants to Sellers that:
8.1 ORGANIZATION AND QUALIFICATION. Each of Holdings and the
Permitted Affiliate Purchasers (other than Timber Co., Timber Holdings, and any
other Permitted Affiliate Purchaser that is a corporation) is a limited
liability company duly organized, validly existing, and in good standing under
the laws of the state of Delaware. Timber Co., Timber Holdings and each other
Permitted Affiliate Purchaser that is a corporation, is a corporation duly
organized, validly existing, and in good standing under the laws of Delaware.
Each of Holdings and each of
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the Permitted Affiliate Purchasers has all requisite power and authority to own
and operate its assets and to carry on its business as currently conducted. Each
of Holdings and each of the Permitted Affiliate Purchasers is duly qualified to
do business and is in good standing as a foreign entity in all jurisdictions in
which such qualification is required to permit it to own its assets and to
conduct its business (and, as of the Closing Date, will be so qualified to
conduct the Business) as it is currently being conducted.
8.2 AUTHORIZATION. Holdings and the Permitted Affiliate Purchasers
have all necessary power and authority to execute and deliver this Agreement and
each of the Ancillary Agreements, and to perform their respective obligations
hereunder and thereunder. The execution, delivery and performance by each of
Holdings and each Permitted Affiliate Purchaser of this Agreement and each of
the Ancillary Agreements to which such Person is party have been duly and
validly authorized and no additional authorization or consent is required in
connection with the execution, delivery and performance by them of this
Agreement and each of the Ancillary Agreements to which such Person is party.
8.3 CONSENTS AND APPROVALS. Except as Disclosed on Schedule 8.3 of
the Holdings Disclosure Memorandum, no Consent is required to be obtained by
Holdings or any of the Permitted Affiliate Purchasers from, and no notice or
filing is required to be given by Holdings or any of the Permitted Affiliate
Purchasers to, or made by Holdings or any of the Permitted Affiliate Purchasers
with, its members or shareholders or any Governmental Authority in connection
with the execution, delivery and performance by such entities of this Agreement
and the Ancillary Agreements.
8.4 NON-CONTRAVENTION. Except as Disclosed on Schedule 8.4 of the
Holdings Disclosure Memorandum, the execution, delivery and performance by each
of Holdings and each Permitted Affiliate Purchaser of this Agreement and each of
the Ancillary Agreements to which it is a party, and the consummation of the
transactions contemplated hereby and thereby, does not and will not (i) violate
any provision of the certificate of incorporation, bylaws, or other
organizational documents of Holdings or of any Permitted Affiliate Purchaser; or
(ii) assuming compliance with the matters set forth in Section 8.3, violate, or
result in a breach of or constitute a default under any law, rule, regulation,
judgment, injunction, order, decree or other restriction of any court or
Governmental Authority to which Holdings or any of the Permitted Affiliate
Purchasers is subject.
8.5 BINDING EFFECT. This Agreement constitutes, and each of the
Ancillary Agreements when executed and delivered by the parties thereto will
constitute, a valid and legally binding obligation of each of Holdings and each
of the Permitted Affiliate Purchasers signatory thereto, enforceable against
them in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
8.6 ORGANIZATIONAL HISTORY. Each of Holdings and each of the
Permitted Affiliate Purchasers was newly organized for the purpose of
undertaking the transactions provided for in this Agreement, and none of them
has conducted any operations or incurred any obligations or liabilities except
in connection with such transactions.
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8.7 CAPITAL STRUCTURE. As of immediately after Closing, the
ownership structure of Holdings and the Permitted Affiliate Purchasers shall, in
all material respects, be as depicted in Schedule 8.7 of the Holdings Disclosure
Memorandum and neither Holdings nor any of the Permitted Affiliate Purchasers
shall have any Subsidiaries other than as depicted on such Schedule 8.7 of the
Holdings Disclosure Memorandum, other than wholly-owned Subsidiaries of
Operating Holding Co. and Timber Holdings that are formed for the purpose of
consummating the transactions contemplated hereby.
8.8 FINANCIAL CAPABILITY.
8.8.1 On the Closing Date, Holdings and its Permitted
Affiliate Purchasers will, assuming the making by Parent and Parent Sub on the
Closing Date of the Reinvestment and receipt of all of the financing
contemplated by the Commitment Letters, have sufficient funds to (i) pay the
Non-Timber Purchase Price and the cash portion of the Timberlands Purchase Price
and (ii) arrange for provision of the standby letter of credit securing the
Timber Notes provided for in the arrangements described in the LC Commitment
Letters.
8.8.2 Schedule 8.8.2 of the Holdings Disclosure Memorandum
includes true and correct copies of (a) commitment letters received by Holdings
and its Subsidiaries (the "Debt Commitment Letters") to provide the debt
financing for the transactions contemplated hereby and (b) a true and correct
copy of the commitment letter received by Holdings and its Subsidiaries (the
"Equity Commitment Letter" and, together with the Debt Commitment Letters, the
"Commitment Letters") from MDP to provide equity financing for the transactions
contemplated hereby. As of the date of this Agreement, the Commitment Letters
are in full force and effect and have not been amended or, to Holdings'
knowledge, rescinded. Holdings or one or more of its Subsidiaries has paid, or
at or prior to Closing will pay, all fees and other amounts required by such
Commitment Letters to be paid by it at or prior to the Closing.
8.9 REPRESENTATIONS RELATING TO THE WHITE PAPER BUSINESS. Holdings
and its Affiliates have not at any time during the two months prior to the date
of this Agreement received any proposals from, nor engaged in any discussions
with, any Person regarding a potential sale of all or substantially all of the
assets of the white paper manufacturing, conversion, distribution and sales
operations of the Business, and as of the date hereof Holdings and its
Affiliates are not aware of any reason to expect that such a sale is likely to
occur shortly after the Closing.
8.10 NO OTHER REPRESENTATIONS OR WARRANTIES. Except for the
representations and warranties contained in this Article 8, neither Holdings nor
any other Person makes any other express or implied representation or warranty
on behalf of Holdings or any of its Subsidiaries.
ARTICLE 9 REALTY
9.1 TITLE REPORTS.
9.1.1 Parent has ordered from First American Title Company
("Title Company") preliminary title reports on (i) all of the Timberlands
(including the timberlands held pursuant to long term leases and those held in
the form of perpetual cutting rights); (ii) all of the Realty (including realty
owned by Transferred Subsidiaries (other than Boise Cascade do Brasil LTDA
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and Compania Industrial Puerto Montt, S.A.); and (iii) the Facility Leases
covering the Xxxxxxx, Alabama Facility (collectively, the "Titled Property").
Parent will provide such preliminary title reports to Holdings as they are
received. Parent shall provide reasonable cooperation with Holdings and Title
Company in the review and examination of the title to the Realty and the
Timberlands. Such cooperation shall include providing access to Parent's Realty
and Timberlands records and including available maps and surveys.
9.1.2 Parent and Holdings shall cooperate with the Title
Company and use commercially reasonable efforts so that Holdings shall have
obtained (a) no later than thirty (30) days prior to the Closing, a commitment
from the Title Company for an ALTA Owner's Title Insurance Policy, 1992 Form (or
other form of policy acceptable to Purchaser), together with a copy of all
documents referenced therein (the "Title Commitments"), and (b) at Closing,
title insurance policies from the Title Company (which may be in the form of a
xxxx-up of a pro forma of the Title Commitments) in accordance with the Title
Commitments, insuring Purchaser's fee simple title to each owned Titled Property
or Holdings' legal, valid, binding and enforceable leasehold interest in each
leased Titled Property (as the case may be) (in each case, excluding the
Timberlands except to the extent required by Holdings' or its Affiliates'
lenders) as of the Closing Date (including all recorded appurtenant easements
necessary for access to Titled Property and insured as separate legal parcels)
with gap coverage from Parent through the date of recording and extended
coverage over the general exceptions, subject only to Permitted Encumbrances, in
such amount as Holdings reasonably determines to be the value of the Titled
Property insured thereunder (the "Title Policies"). Sellers shall execute any
affidavits, indemnities and other agreements or assurances reasonably required
by the Title Company to issue the Title Policies. The fees, costs and expenses
with respect to the Title Commitments and Title Policies, including ALTA
extended coverage, shall be borne equally by Parent and Holdings; provided that
100% of the premium or fee for deletion of the creditors rights exception will
be borne by Holdings.
9.1.3 Holdings shall have obtained no later than ten (10)
days prior to the Closing, a survey for each property set forth on Schedule
9.1.3 dated no earlier than the date of this Agreement, prepared by a licensed
surveyor reasonably satisfactory to Holdings, and conforming to 1997 ALTA/ACSM
Minimum Detail Requirements for Land Title Surveys, including Table A Items Nos.
1, 2, 3, 4, 6, 7(a), 7(b)(1), 7(c), 8, 9, 10, 11(b), 13, 14 15 and 16, or such
lesser standards as the Title Company requires as a condition to the removal of
any survey exceptions from the Title Policies in respect of such properties, and
certified to Holdings, Holdings' lender and the Title Company, in a form
satisfactory to each of such parties (the "Surveys"). The fees, costs and
expenses with respect to the Surveys shall be borne equally by Parent and
Holdings.
9.2 CONVEYANCING. At Closing, Sellers will convey the Realty to
Holdings or its designated Permitted Affiliate Purchasers and the Timberlands to
Timber Co. or its designee, in each case by special limited warranty deeds (the
"Deeds") in a form customary and suitable for recordation in each applicable
jurisdiction and sufficient to convey fee simple title to the Realty and
Timberlands, subject only to Permitted Encumbrances, and otherwise in form and
substance reasonably satisfactory to Holdings. For the avoidance of doubt, when
used in this paragraph the term "special limited warranty deed" shall be
interpreted to mean a customary form of deed in which the warranties of Sellers
relate only to the period during which the Sellers had title, and in
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which Sellers represent that they have no knowledge that such warranties are
untrue for any period prior thereto.
9.3 ENVIRONMENTAL ASSESSMENTS. Parent has delivered or will
deliver to Purchasers within 45 days after the date hereof environmental
assessments (each an "Environmental Assessment") prepared in accordance with
ASTM 1527-00 for each Facility (including Facilities owned by Transferred
Subsidiaries), other than (i) Facilities and properties owned by Compania
Industrial Puerto Montt, S.A.; (ii) Facilities leased by Boise Building Products
Limited; and (iii) Facilities which are leased commercial office space. In
addition, Parent will deliver within 60 days after the date hereof Environmental
Assessments prepared in accordance with a modified version of ASTM 1528-00
covering all of the Timberlands and the eucalyptus plantations owned by Boise
Cascade do Brasil LTDA. If any of such Environmental Assessments report (or
disclose any environmental issue that Holdings reasonably determines could
constitute) a Recognized Environmental Condition, as defined in the
above-referenced ASTM standards (a "REC"), the following procedure shall be
utilized by the parties to address the issue presented by such REC:
9.3.1 Parent and Holdings shall review each Environmental
Assessment as it is made available by Parent. Within 10 days after receipt of
each such Environmental Assessment (or within 10 days after the date hereof in
the case of Environmental Assessments received prior to execution of this
Agreement) either party may request that further investigation of the REC be
conducted by a contractor designated by the requesting party or if it is
requested by both parties by a contractor agreed upon by the parties, with the
expense of the further investigation to be shared equally by the parties. In
either case, the results of the additional investigation shall be made available
to both parties and the scope of the investigation and technical details shall
be consented to by both parties, such consent not to be unreasonably withheld.
9.3.2 Following the receipt of such additional investigation
or if neither party requests any investigation Holdings may at its option
either: (i) delete the affected Facility or Timberlands parcel or the affected
portion of the Facility or Timberlands parcel from the transaction (and such
deleted parcel or portion thereof shall be a Retained Asset and shall not be
included in the definition of Facility or Timberlands); or (ii) take no action
in which case the affected Facility or Timberlands parcel shall remain a portion
of the Assets. If Holdings takes no action within ten days after expiration of
the 10 day period provided for in Section 9.3.1 without a request by either
party for additional investigation or within 10 days after receipt of any final
report resulting from additional investigation, it shall be deemed to have
elected option (ii) under the preceding sentence.
9.3.2.1 In the event that Holdings elects to
delete the affected Facility or Timberlands parcel (or the affected portion
thereof), the Timberlands Purchase Price or the Non-Timber Purchase Price, as
appropriate, shall be equitably adjusted to reflect the value of the Asset so
deleted; and
9.3.2.2 In the event that Holdings elects not to
delete the affected Facility or Timberlands Parcel or affected portion thereof,
the transaction shall be completed without adjustment of either the Non-Timber
Purchase Price or the Timberlands Purchase Price and any liability incurred by
Holdings or its subsidiaries in respect of the conditions in such REC
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shall be a Retained Environmental Liability (PROVIDED that Holdings shall use
commercially reasonable efforts to remedy as promptly as practicable after
Closing such condition with the proceeds of indemnification therefor).
9.3.3 Holdings shall have no obligation to attend and carry
out the actions required of it at the Closing, as set forth in Section 15.1.8,
if the matters identified in the Environmental Assessments could reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
ARTICLE 10 COVENANTS OF THE PARTIES
10.1 ACCESS. Prior to the Closing, Sellers and the Transferred
Subsidiaries will permit Holdings and the Permitted Affiliate Purchasers and
their respective financing sources and representatives to have full access,
during regular business hours and upon reasonable advance notice, to the Assets
and the Business (including personnel and outside accountants and, with Parent's
consent (not to be unreasonably withheld), other advisors), subject to
reasonable rules and regulations of Parent concerning visitors to its
Facilities, and shall furnish, or cause to be furnished, to Holdings any
financial and operating data and other information that is available with
respect to the Business, the Assets, or the Assumed Liabilities as Holdings
shall from time to time reasonably request. Holdings shall abide by the terms of
the Confidentiality Agreement with respect to such access and any information
furnished to it or its representatives pursuant to this Section 10.1.
Notwithstanding anything herein to the contrary, Holdings shall not be permitted
to perform any invasive testing of any of the Realty without specific additional
authorization from Parent (which consent shall not be unreasonably withheld), or
to perform any testing which would cause a breach of any Lease to which Parent
is a party, provided that, upon request from Holdings, Parent shall use
reasonable efforts to obtain any necessary consent to permit such testing.
10.2 CONDUCT OF BUSINESS. During the period from the date hereof to
the Closing, except as otherwise contemplated by this Agreement or as Holdings
shall otherwise agree in writing in advance, Parent shall, and shall cause its
Subsidiaries to, conduct the Business in the ordinary and usual course. Without
limiting the foregoing, during such period Parent shall, and shall cause its
Subsidiaries to, observe the negative and positive restrictions set forth in
Sections 10.2.1 and 10.2.2 below.
10.2.1 During the period from the date hereof to the Closing,
except as otherwise expressly provided for in this Agreement or as Holdings
shall otherwise consent in writing (which consent shall not be unreasonably
withheld), with respect to the Business, the Assets or the Assumed Liabilities,
other than as set forth in Schedule 10.2 of Parent's Disclosure Schedule, Parent
shall not:
10.2.1.1 enter into commitments for new capital
expenditures in excess of $25,000,000 in the aggregate to the extent not
otherwise contemplated in the 2004 Capital Spending Authorizations;
10.2.1.2 except for pending transactions which are
specifically Disclosed in Schedule 10.2.1.2 of Parent's Disclosure Memorandum,
dispose of or otherwise
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transfer, or incur, create or assume any Encumbrance (other than Permitted
Encumbrances) on any asset of the Business, other than sales of Inventory or
dispositions of worn out or obsolete assets, in each case in the ordinary course
of business consistent with past practice. Notwithstanding the foregoing, Parent
may sell the Retained HBU Lands (and any proceeds therefrom will be retained by
Parent) and may sell not more than 500 additional acres of Timberlands in the
aggregate transferred in the ordinary course. The Timberlands Purchase Price
shall be reduced dollar-for-dollar by the amount of the proceeds (net of
transaction costs) from all such ordinary course sales (other than sales of the
Retained HBU Lands) pursuant to the immediately preceding sentence, and such
proceeds shall not be included as a Current Asset in the determination of
Closing Net Working Capital nor as cash that increases the purchase price
pursuant to Section 3.2.4. Notwithstanding and in addition to the foregoing,
Parent may pledge Accounts Receivable generated after it commences the wind-down
of its receivables securitization program required by Section 7.6.5 to the
extent necessary to fund the partial liquidation of such program, so long as
such pledge is released at Closing;
10.2.1.3 institute any material change in the
methods of purchase, sale, lease or other accounting or engage in any activity
which would accelerate the collection of Accounts Receivable, accelerate or
delay the payment of the accounts payable, or increase, reduce or otherwise
affect the amount of Inventory (including raw material, packaging,
work-in-process, or finished goods) on hand; or reduce or otherwise change any
book reserves relating to workers' compensation, litigation, and other claims
liabilities other than as set forth in the definitions of Workers Compensation
Reserve and Litigation and Claims Reserve;
10.2.1.4 on or after the 45th day prior to the
date set for Closing hereunder, sell any Accounts Receivable to Parent's
receivables securitization facility;
10.2.1.5 acquire (by merger, exchange,
consolidation, acquisition of stock or assets or otherwise) any Person or
division or material assets thereof, whether or not engaged in a business
similar to the Business; provided that nothing in this Section 10.2.1.5 shall
preclude any acquisition by Boise Office Solutions of a Person, or the assets of
a Person, engaged in the office products distribution business, so long as such
transaction would have no effect on the Business, the Assets, the Transferred
Subsidiaries, or the transactions contemplated by this Agreement;
10.2.1.6 sell, transfer, or grant licenses of
Intellectual Property to any Person or allow registered Intellectual Property to
lapse, expire, or become abandoned;
10.2.1.7 amend any Transferred Subsidiary's
certificate of incorporation, bylaws, or other charter documents;
10.2.1.8 grant (or agree to grant) to any Employee
any salary or wage increases except for regularly scheduled salary reviews and
promotional increases consistent with past practices in the ordinary course of
business or change or amend any Parent Plan affecting Employees, other than, in
either case, pursuant to renegotiation of any collective bargaining agreements
in the ordinary course or as required under law; provided that Parent may amend
the Pension Plans and/or Defined Contribution Plans as it reasonably deems
necessary or advisable solely for the purpose of preparing for and accomplishing
the transfers contemplated
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under Sections 11.4 and 11.5; and provided further that nothing in the foregoing
shall preclude Boise from entering into the 2004 Severance Agreements with its
executive officers as set forth on Schedule D-19, or from adopting the 2004
Retention Bonus Plan for key employees as set forth on Schedule D-18;
10.2.1.9 enter into any transactions affecting the
Business with Affiliates not in the ordinary course of business consistent with
past practice other than the elimination of inter-company obligations involving
Transferred Subsidiaries provided for in Section 10.4;
10.2.1.10 enter into, amend, or terminate any
Contracts or Lease required to be disclosed hereunder, including the BOS Paper
Supply Agreement (except as set forth in Section 18.2);
10.2.1.11 (a) with respect to the Assets, the
Business or any Transferred Subsidiary, make or change any Tax election, change
an annual Tax accounting period, adopt or change any Tax accounting method, or
(b) with respect to any Transferred Subsidiary, file any amended Tax Return,
enter into any Tax closing agreement, settle any Tax claim or assessment,
surrender any right to claim a Tax refund, or consent to the extension or waiver
of any limitation period applicable to any Tax, claim or assessment;
10.2.1.12 Sellers shall not with respect to the
Transferred Subsidiaries, and Sellers shall cause the Transferred Subsidiaries
not to, use any net operating loss carryforward, alternative minimum Tax net
operating loss carryforward or any alternative minimum Tax credit carryforward,
in each case to the extent permitted by applicable law; or
10.2.1.13 agree, in writing or otherwise, to do any
of the foregoing.
10.2.2 During the period between the date hereof and Closing,
Parent shall and shall cause its Subsidiaries to:
10.2.2.1 use commercially reasonable efforts to
(i) preserve intact the organization and goodwill of the Business, (ii) keep
available the services of its officers and employees as a group (provided that
such efforts shall not require Parent to pay any bonuses or other amounts beyond
normal compensation to such persons, except that Parent will adopt the 2004
Retention Bonus Plan for key employees as set forth on Schedule D-18), (iii)
maintain satisfactory relationships with its material suppliers and customers
and other Persons having business relationships with it, and (iv) maintain all
Governmental Authorizations required for the conduct of the Business;
10.2.2.2 use reasonable commercial efforts to
maintain its Facilities and Assets in accordance with its normal and customary
maintenance practices and carry out its ongoing plan of capital expenditures in
the ordinary course of business in an aggregate amount consistent with the 2004
Capital Spending Authorizations for the Business; provided that, so long as
Parent and its Subsidiaries have exercised reasonable commercial efforts as
required by the preceding phrase, the foregoing shall not constitute an absolute
guaranty that all planned capital expenditures will be completed as scheduled in
such authorizations;
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10.2.2.3 promptly, but in any event within two (2)
business days after becoming aware thereof, notify Holdings of any
representation or warranty made hereunder ceasing to be true, or any breach of
any covenant or agreement made hereunder;
10.2.2.4 notify Holdings of any emergency or other
change in the normal course of the Business or in the condition of the Assets or
the Assumed Liabilities or the operation of the Business and of any governmental
or third party complaint, investigation or hearing (or communication indicating
that such a complaint, investigation or hearing is or may be contemplated), if
such emergency, change, complaint, investigation or hearing would reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect;
10.2.2.5 prepare and timely file all applicable
Tax Returns with respect to the Assets or the Business or any Transferred
Subsidiary in a manner consistent with past practice, and pay all applicable
Taxes when due and payable; and
10.2.2.6 operate the Timberlands in the ordinary
course of business consistent with past practice, including (a) conducting their
on-going timber harvest operations on the Timberlands substantially in
accordance with the species composition, timber products, volume levels, and
timing detailed in Parent's Harvest Plan, and (b) performing necessary and
prudent maintenance of roads, drainage systems, fire protection and prevention
as well as appropriate stand establishment activities.
10.3 EFFORTS TO ACHIEVE CLOSING. Each of Parent and Holdings will
use commercially reasonable efforts to fulfill the conditions precedent to the
other's respective obligations hereunder and to secure all Consents required to
be obtained by it in connection with the transactions contemplated hereby, and
Parent and Holdings will cooperate in all reasonable requests to fulfill the
conditions precedent to their and the other party's obligations described in
this Section 10.3, in each case as soon as practicable but in any event not
later than the Outside Date. Without limiting the generality of the foregoing,
10.3.1 Parent and Holdings will file within 10 Business Days
of the date hereof the required notice (including all documentary materials)
under the HSR Act and will as soon as practicable make required filings under
any similar regulatory programs applicable to the transaction in Canada, Brazil
and the United Kingdom. Each party shall promptly file any additional
information requested in respect of such filings by any Governmental Authority
as soon as practicable after receipt of request therefor. The filing fees for
such filings shall be shared equally by Parent and Holdings.
10.3.2 Holdings shall, and shall cause each of its respective
Subsidiaries to, use reasonable efforts to satisfy all conditions precedent to
be satisfied by Holdings or its Affiliates in the Commitment Letters and to
otherwise obtain, on behalf of Holdings and its Subsidiaries, the proceeds of
the debt financing and equity financing contemplated by the Commitment Letters;
PROVIDED that nothing in this Section 10.3.2 or elsewhere in this Agreement
shall require (i) the payment by Holdings or any of its Subsidiaries of any
material amount of cash other than as required by the Debt Commitment Letters
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or any fee letters executed in connection with the Debt Commitment Letters, (ii)
the agreement by Holdings or any of its Subsidiaries to any material economic
terms other than those contemplated by either the Debt Commitment Letters or the
Equity Commitment Letter or to other terms that are not commercially reasonable,
or (iii) Holdings or any of its Subsidiaries to seek to obtain any alternative
financing in the event that any portion of the financing contemplated by the
Debt Commitment Letters or the Equity Commitment Letter is unavailable.
10.3.3 Parent shall use its reasonable efforts to cooperate
with Holdings in connection with the financing contemplated by the Commitment
Letters, including using (and causing its Subsidiaries to use) reasonable
efforts to satisfy all conditions precedent to be satisfied by Parent and its
Subsidiaries in the Commitment Letters, providing information to and permitting
the financing sources and their representatives access to the Assets and the
Business, as provided in Section 10.1 hereof, participating in meetings with
prospective investors and participating (and permitting members of its senior
management to participate) in "road shows" in connection with the financing,
participating in meetings with rating agencies, participating in drafting
sessions related to the offering materials for the debt financing of Holdings
and its Subsidiaries contemplated by the Debt Commitment Letters, causing the
present and former independent accountants for Parent to participate in drafting
sessions related to the offering materials for the debt financing contemplated
by the Debt Commitment Letters and making work papers available to Holdings and
its Subsidiaries, the underwriters for the debt financing and their respective
representatives; provided that Holdings shall endeavor to minimize the
interference with the ability of such senior management members to carry out
their normal responsibilities for ongoing management of the Business resulting
from such participation in drafting sessions and the road show. Out of pocket
costs incurred by Parent for participation by its external accountants, outside
counsel, and other outside advisors and consultants in the foregoing shall be
paid by Holdings; provided that the fees of KPMG for preparation of the
Regulation S-X Financial Statements shall be shared equally by Parent and
Holdings.
10.4 TRANSFERRED SUBSIDIARIES. Prior to Closing, Parent shall and
shall cause its Subsidiaries to:
10.4.1 cause all inter-company indebtedness owed by any
Transferred Subsidiary to Parent or a Retained Subsidiary or by Parent or a
Retained Subsidiary to a Transferred Subsidiary, to be eliminated so that at
Closing there will be no inter-company indebtedness between Parent (or its
Retained Subsidiaries) and any Transferred Subsidiaries, except for Trade
Intercompany Accounts; and
10.4.2 cause each Transferred Subsidiary which holds any
assets which are not related to the Business to transfer such assets to Parent
or a Retained Subsidiary; and cause each Transferred Subsidiary which has any
obligations constituting Retained Liabilities to assign such obligations to
Parent, and Parent will assume such Retained Liabilities.
10.4.3 Parent shall indemnify Holdings and each Transferred
Subsidiary for any loss, liability or Tax incurred by Holdings or such
Transferred Subsidiary in connection with the actions referred to in Section
10.4.1 and Section 10.4.2.
10.5 FURTHER ASSURANCES. At any time after the Closing Date,
Holdings, and Sellers shall promptly execute, acknowledge, and deliver any other
assurances or documents reasonably requested by Holdings or Seller, as the case
may be, and necessary for them or it to satisfy their
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or its respective obligations hereunder or obtain the benefits contemplated
hereby and to confirm to third parties the transfer of Assets and the Assumed
Liabilities provided for herein. Without limiting the generality of the
foregoing, Holdings agrees that if any of the Transferred Subsidiaries are found
to own assets that are not related to the Business, or if any Retained Assets
are inadvertently transferred to Holdings, Holdings, or its applicable Permitted
Affiliate Purchaser, shall transfer or cause the Transferred Subsidiary to
transfer such assets to Parent, or as Parent shall direct, at Parent's expense
(including any Tax incurred by Holdings or its Subsidiaries) but without
consideration. Similarly, if, after the Closing, Parent or Holdings identifies
any assets that should have been transferred to Holdings as part of the Assets,
but were not, Parent shall transfer such assets to Holdings, or a designated
Permitted Affiliate Purchaser at Parent's expense and without further
consideration. A similar process shall be followed with Assumed Liabilities and
Retained Liabilities which are not properly transferred or retained.
10.6 USE OF BOISE MARKS. As soon as commercially practicable
after Closing, Parent and its Retained Subsidiaries shall discontinue the use of
the Boise Marks. Notwithstanding the foregoing, the following specific
limitations shall be observed by Parent:
10.6.1 Parent and its Retained Subsidiary, Boise Cascade
Office Products Corporation, shall change their names to a variant of OfficeMax
or other name not including the words "Boise" nor "Cascade" within five business
days after Closing and the legal names of Parent's remaining Retained
Subsidiaries shall be changed to eliminate the words "Boise" and "Cascade"
within three months after Closing.
10.6.2 Within 60 days after Closing, Parent shall change
its New York Stock Exchange Trading Symbol from BCC to OMX.
10.6.3 Existing stocks of printed stationary, including
letterhead, invoices, acknowledgements and checkstock (for bank accounts not
included in the Assets) may continue to be used for up to three months. Where
possible without unreasonable effort or expense, such stationary shall be
stamped or overprinted before use to disclose the correct identity of the user.
10.6.4 Signage on facilities and rolling stock shall be
changed over within three years and five years, respectively; and
10.6.5 Parent's office products catalogs and other marketing
materials shall not utilize the Boise Marks in the 2006 catalog cycle or
thereafter.
Nothing in the foregoing shall preclude Parent from using
appropriate Boise Marks associated with paper products supplied to it by
Holdings after Closing in the remarketing of any such products through its
office products distribution business so long as such use is limited to, and
clearly identified with, such Holdings products and is otherwise consistent with
any terms that Holdings or any of its Subsidiaries imposes on the use of the
Boise Marks with its customers. In no event shall Parent or any of the Retained
Subsidiaries use the Boise Marks in any manner not used by them in the 12 month
period prior to the date hereof or in connection with goods or services of a
different character or quality than those offered by them prior to the date
hereof.
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Each party shall use commercially reasonable efforts to
clarify any confusion concerning their respective identities which arises after
Closing. Parent shall indemnify Holdings against third party claims asserted
against Holdings arising from any use by Parent or its Retained Subsidiaries of
the Boise Marks after the Closing.
10.7 CERTAIN MATTERS RELATED TO RETAINED AND ASSUMED LIABILITIES.
10.7.1 With respect to all Retained Liabilities, Holdings
Indemnified Parties shall reasonably cooperate with Parent, provide Parent as
promptly as possible with notices and other information received by such parties
as well as all relevant materials, information and data requested by Parent and
shall grant Parent, without charge, such reasonable access to employees of the
Business and to the Assets as may be reasonably necessary for Parent to defend
against, settle, and discharge the Retained Liabilities.
10.7.2 With respect to all Assumed Liabilities, Parent
Indemnified Parties shall reasonably cooperate with Holdings, provide Holdings
as promptly as possible with notices and other information received by such
parties as well as all relevant materials, information and data requested by
Holdings and shall grant Holdings, without charge, such reasonable access to
employees of Parent as may be reasonably necessary for Holdings to defend
against, settle, and discharge the Assumed Liabilities.
10.8 INTER-COMPANY AGREEMENTS.
10.8.1 Parent (on the one hand) and Boise Office Solutions
(on the other hand) shall, during the period between the date hereof and
Closing, perform in the ordinary course and refrain from amending the BOS Paper
Sales Agreement (except as set forth in Section 18.2) and shall not grant to
either party any material waiver of the provisions of such contract which will
have any effect after Closing. Parent shall take such actions as may be
necessary to cause Boise Office Solutions to comply with the foregoing covenant.
10.8.2 All other inter-company agreements between Parent and
any of its Affiliates which relate to the conduct of the Business or between any
Transferred Subsidiary and Parent or a Retained Subsidiary shall be terminated
prior to Closing and all liabilities and obligations arising thereunder and any
other intercompany accounts, indebtedness, liabilities, or obligations shall be
fully discharged prior to Closing, except for any Trade Intercompany Accounts.
10.8.3 Parent shall indemnify Holdings and each Transferred
Subsidiary for any loss, liability or Tax incurred by Holdings or such
Transferred Subsidiary in connection with the actions referred to in Section
10.8.1 and Section 10.8.2.
10.9 RECORDS AND RETENTION AND ACCESS. Holdings shall keep and
preserve in an organized and retrievable manner the Retained Records in its
possession at Closing and the Transferred Records for the lesser of (i) seven
years from the Closing Date or (ii) the retention period for such records under
the longer of Holdings' or Parent's records retention schedules applicable to
such records. Upon expiration of such period for any specific Transferred Record
or Retained Record, Holdings shall notify Parent that it intends to destroy such
records unless
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Parent takes possession of them within 60 days following such notice and upon
expiration of such period may promptly destroy any such record not taken by
Parent. Notwithstanding the foregoing, Parent may take possession of the
Retained Records at any time on 30 days notice to Holdings. While such Retained
Records and Transferred Records remain in existence, each party shall allow the
other party, its representatives, attorneys and accountants, at the requesting
party's expense, access to the Books and Records upon reasonable request and
advance notice and during normal business hours, subject to the confidentiality
provisions set forth in Section 19.18. Holdings' obligations with respect to
such records shall include maintaining, for at least the retention period
specified above, computer systems permitting access to any of such records which
are stored in electronic form in a fashion which is not less efficient than
current access methods.
10.10 INSURANCE.
10.10.1 Sellers shall use commercially reasonable efforts to
arrange for assignment of each policy which under the terms of Schedule D-14 is
indicated to be an "assigned" policy. For those policies which are required by
Schedule D-14 to be divided, Sellers shall, in consultation with Holdings, use
commercially reasonable efforts to either arrange a carve out of an appropriate
portion of the coverage for the benefit of Holdings (or Sellers if the policy is
to be transferred to Holdings) or arrange for the cancellation and reissue of
the divided policy as two policies of like coverage, limits, deductible, and
other material terms for the respective benefit of Sellers and Holdings. The
assigned policies and the portions of the partially assigned policies to be
assigned and any replacement policies issued to Holdings as a result of a policy
which is divided shall be the "Transferred Insurance Policies". Parent and its
Subsidiaries shall be additional insureds on the Transferred Insurance Policies
to the extent indicated in Schedule D-14; PROVIDED that notwithstanding anything
herein to the contrary, Holdings and its Subsidiaries shall not have any
obligations to process claims on behalf of Parent and its Subsidiaries except to
the extent provided under the Mutual Administrative Services Agreement.
10.10.2 Sellers covenant and agree that (i) each Seller shall,
and shall cause each of its Affiliates to, continue to maintain, without
amendment or modification, the Transferred Insurance Policies (or if such
policies are terminated, substantially equivalent policies) for the benefit of
the Business, with respect to occurrences prior to the Closing Date, regardless
of whether claims are brought prior to or after the Closing Date; (ii) prior to
Closing, Sellers shall give notice to the insurers under the Transferred
Insurance Policies and other policies of each claim then pending or threatened
against Parent or any of its Subsidiaries with respect to any of the Assets or
the Business which they reasonably expect to exceed 50% of the applicable
deductible or other loss retention feature of the applicable Transferred
Insurance Policies; (iii) Holdings and its Subsidiaries will, with respect to
the Assets and the Business, be provided full coverage under the Transferred
Insurance Policies after the Closing (subject only to deductibles, self-insured
retentions and policy limits set forth on Schedule D-14), with respect to
occurrences prior to and/or after the Closing, regardless of whether claims are
brought prior to or after the Closing; (iv) after Closing, Holdings and its
Subsidiaries will have the right to bring claims (whenever brought) as a direct
insured party under the Transferred Insurance Policies for all occurrences that
relate to actions, events, conditions and/or operations of the Assets and the
Business prior to and/or after the Closing Date within the scope of the
Transferred Insurance Policies; and (v) Sellers shall cause Holdings and its
Subsidiaries to be "additional insureds"
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under each insurance policy that affected any portion of the Assets or the
Business which is not a Transferred Insurance Policy and shall ensure that
Holdings and its Subsidiaries will, in such capacity, have the same coverage
under such insurance after the Closing as existed for the Business and the
Assets prior to Closing. Holdings and its Subsidiaries will be responsible for
satisfying any deductibles, self-insured portions, retentions and other retained
amounts on insurance coverage with respect to losses arising under claims made
under the Transferred Policies to the extent relating to Assumed Liabilities and
Sellers shall be responsible for any such deductibles, self-insured portions,
retentions and other retained amounts on insurance coverage with respect to any
such losses arising under the Transferred Policies to the extent relating to
Retained Liabilities and under all policies that are Retained Assets.
10.11 EXCLUSIVITY. Neither Parent nor any of its Affiliates will,
nor will they permit or cause their respective officers, directors, agents or
employees to, solicit, initiate, encourage, discuss, negotiate or enter into any
arrangements relating to, any possible sale or other disposition of all or any
material part of the Assets or of the Business other than the sale of Inventory
in the ordinary course of business or other sales or dispositions permitted by
this Agreement (whether by merger, reorganization, recapitalization or
otherwise) with any party other than Holdings and its Affiliates (a "Company
Takeover Proposal"), or provide any information to any other party regarding the
Business other than information which is traditionally provided in the regular
course of its business operations to third parties where Parent and its
officers, directors, employees, and agents have no reason to believe that such
information may be utilized to evaluate a Company Takeover Proposal. Parent and
its officers, directors, employees, agents and Affiliates (i) do not have any
agreement, arrangement, or understanding with any third party with respect to
any Company Takeover Proposal (other than confidentiality agreements), (ii) will
cease and cause to be terminated any and all discussions with third parties
regarding any Company Takeover Proposal, and (iii) will promptly notify Holdings
if any Company Takeover Proposal, or any inquiry or contact with or by any
Person or entity with respect thereto, is made (including the identity of the
proposing Person and the terms of such proposal).
If within 30 days after the date hereof Parent receives,
without any solicitation thereof which is made after the date hereof, a Company
Takeover Proposal that constitutes a Company Superior Proposal (as defined
below), then in such event Parent shall notify Holdings that it has received a
Company Superior Proposal that Parent's Board of Directors is prepared to accept
and shall provide Holdings with a description of all material terms of the
Company Takeover Proposal and the identity of the party making such offer.
Holdings may, at any time during the five business days after delivery of such
notice, at its option, submit a counter-proposal providing for the delivery of
aggregate consideration for the Business (valuing Timber Notes for such purpose
at their face value) that is at least equal to the aggregate consideration to be
paid for the Business under the Company Superior Proposal (as reduced to take
into account the effect of the break-up fee that would be payable under Section
14.3.1 hereof) (a "Matching Offer"). If Parent delivers such a notice of a
Company Superior Proposal and after five business days from delivery of such
notice Holdings has not submitted a Matching Offer to Parent, then either Parent
or Holdings may terminate this Agreement pursuant to Section 14.2.5 hereof with
the effect specified therein and in Section 14.3.1 hereof. A "Company Superior
Proposal" means a Company Takeover Proposal that provides for cash consideration
to be paid at closing for the Business that is at least $250,000,000 higher than
the aggregate consideration (without reduction
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for the amount of the Reinvestment or the break-up fee payable under Section
14.3.1 hereof, and valuing Timber Notes for such purpose at their face value) to
be paid for the Business under this Agreement, and contains terms and conditions
that Parent's Board of Directors determines in good faith, after consultation
with counsel and a financial advisor of nationally recognized reputation and
taking into account all relevant material terms of such Company Takeover
Proposal and this Agreement, are more favorable to the shareholders of Parent
than the transactions provided for herein, and as to which Parent's Board of
Directors reasonably determines that rejection of such Company Takeover Proposal
would constitute a violation by the Board of Directors of its fiduciary duties
as directors of Parent under applicable laws.
10.12 NONCOMPETITION From and after the Closing:
10.12.1 NONCOMPETITION. In consideration of the mutual
covenants provided for herein, during the period beginning on the Closing Date
and ending on the fifth anniversary of the Closing Date (the "Noncompete
Period"), Parent shall not, and shall cause its Affiliates not to, directly or
indirectly (i) engage in any business that competes with all or any portion of
the Business (as conducted as of Closing), anywhere within the United States, or
(ii) induce or attempt to induce any customer or other business relation of
Holdings or any of its Subsidiaries to terminate or reduce such relationship
with Holdings or any of its Subsidiaries; provided that Parent and its
Affiliates shall not be deemed to be competing in violation of this Section
10.12 by virtue of its or their (w) equity interest relating to the
Reinvestment, (x) ownership of less than 5% of the outstanding stock of any
publicly-traded corporation, (y) acquisition of any Person (whether by asset
purchase, stock purchase, merger or otherwise) engaged in a business that
competes with the Business if such businesses are not such target Person's
primary business and, on a pro forma basis after giving effect to such
acquisition, the aggregate sales attributable to the business(es) competitive
with the Business represent less than 3% of aggregate consolidated pro forma
revenues of Parent, its Subsidiaries and such Person, or (z) ordinary course
business operation of Boise Office Solutions substantially in the manner
operated as of the date of this Agreement. This Section 10.12 shall not apply to
any entity which might acquire Parent or any assets or division of Parent,
subject to the terms of the Shareholder Agreements.
10.12.2 SEVERABILITY. The parties hereto agree that the
covenant set forth in Section 10.12.1 is reasonable with respect to its
duration, geographical area and scope. If the final judgment of a court of
competent jurisdiction declares that any term or provision of Section 10.12.1 is
invalid or unenforceable, the parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.
10.13 DELIVERY OF ADDITIONAL FINANCIAL STATEMENTS.
10.13.1 SUBSEQUENT STATEMENTS. As soon as practicable, but in
any event no later than 30 days after the end of each calendar month following
June 30, 2004, Parent will
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deliver to Holdings a copy of Parent's internal operating balance sheet, profit
and loss statement, and cash flow statement for each the Operating Units and for
Parent's aviation division, transportation operations (including the operations
of Parent's Subsidiaries, Minnesota, Dakota and Western Railroad Company and
BCT, Inc.) and its cottonwood farm operations, at and for the year to date
periods ending on the last day of each such month, together with a balance sheet
and a profit and loss statement for Parent's corporate staff departments for
each of the periods provided for above (collectively the "Subsequent Financial
Statements"). At the time of delivery, the Subsequent Financial Statements shall
be attached as part of Schedule 7.6.1.
10.13.2 AUDITED YEAR-END STATEMENTS. At least 30 days prior to
the Closing, Parent shall furnish or shall cause Parent's independent
accountants to furnish the following financial statements for the Business, each
in a form meeting the requirements of Regulation S-X of the Securities Act of
1933, as amended ("Regulation S-X"): (i) the audited consolidated balance sheet
of the Business (after elimination, to the extent permitted by Regulation S-X,
of any Retained Assets or any Retained Liabilities and any operations not
included in the Business) as at December 31, 2003 and December 31, 2002,
together with the related audited consolidated statement of income and
consolidated statement of cash flows for the twelve-month periods ended December
31, 2003, December 31, 2002, and December 31, 2001, (ii) the audited
consolidated balance sheet of the Timberlands Business (after elimination of any
Retained Assets or Retained Liabilities and any operations not included in the
Business) as at December 31, 2003 and December 31, 2002, together with the
related audited consolidated statement of income and consolidated statement of
cash flows for the twelve-month periods ended December 31, 2003, December 31,
2002, and December 31, 2001, and (iii) the audited consolidated balance sheet of
the Non-Timberlands Business (after elimination of any Retained Assets or any
Retained Liabilities and any operations not included in the Business) as at
December 31, 2003 and December 31, 2002, together with the related audited
consolidated statement of income and consolidated statement of cash flows for
the twelve-month periods ended December 31, 2003, December 31, 2002, and
December 31, 2001 (the financial statements referred to in clauses (i), (ii) and
(iii) foregoing, collectively referred to herein as the "Audited Financial
Statements"). At the time of such delivery, the Audited Financial Statements
shall be attached as part of Schedule 7.6.1.
10.13.3 UNAUDITED STUB PERIOD STATEMENTS. Furthermore, as soon
as practicable, but in any event not less than 30 days prior to Closing, Parent
shall furnish the following financial statements for the Business, each in a
form meeting the requirements of Regulation S-X: (i) the unaudited combined
balance sheet of the Business (after elimination, to the extent permitted by
Regulation S-X, of any Retained Assets or any Retained Liabilities and any
operations not included in the Business) as at June 30, 2004 (and as at June 30,
2003), together with the related unaudited consolidated statement of income and
consolidated statement of cash flows for the period from January 1, 2004 through
June 30, 2004 (and for the period from January 1, 2003 through June 30, 2003),
(ii) the unaudited balance sheet of the Timberlands Business (after elimination
of any Retained Assets or Retained Liabilities and any operations not included
in the Business) as at June 30, 2004 (and as at June 30, 2003), together with
the related unaudited statement of income and statement of cash flows for the
period from January 1, 2004 through June 30, 2004 (and for the period from
January 1, 2003 through June 30, 2003), and (iii) the unaudited consolidated
balance sheet of the Non-Timberland Business (after elimination of any Retained
Assets or any Retained Liabilities and any operations not included in the
Business)
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as at June 30, 2004 (and as at June 30, 2003), together with the related
unaudited consolidated statement of income and consolidated statement of cash
flows for the period from January 1, 2004 through June 30, 2004 (and for the
period from January 1, 2003 through June 30, 2003) (the financial statements
referred to in clauses (i), (ii) and (iii) foregoing, collectively referred to
herein as the "Stub Period Financial Statements"). At the time of such delivery,
the Stub Period Financial Statements shall be attached as part of Schedule
7.6.1.
10.13.4 ADDITIONAL FINANCIAL STATEMENTS. In addition, promptly
after a request therefor, Parent shall provide to Holdings and its Subsidiaries,
each other financial statement and all other financial data required by
Regulation S-X in connection with the debt financing contemplated by the Debt
Commitment Letters, including any offering memorandum, prospectus, or
registration statement delivered or filed in connection therewith (collectively,
the "Additional Financial Statements"). At the time of such delivery, the
Additional Financial Statements shall be attached as part of Schedule 7.6.1.
10.13.5 ADDITIONAL COVENANTS. The financial statements and
financial data in this Section 10.13 (other than the Subsequent Financial
Statements) are collectively known as the "Regulation S-X Financial Statements."
Parent will prepare, or cause the Regulation S-X Financial Statements to be
prepared, in accordance with GAAP and in a form meeting the requirements of
Regulation S-X for Holdings' or its Subsidiaries' offering memorandum,
prospectus, registration statement and any amendments thereto in connection with
the debt financing contemplated by the Debt Commitment Letters and any updated
filings. Parent shall furnish to Holdings and its Subsidiaries any information
or documents requested by Holdings or any of its Subsidiaries, which is in
Parent's possession or to which Parent has access, constituting, or necessary or
desirable for the completion of, the Regulation S-X Financial Statements or any
updated filings or amendments thereto, and Parent agrees to execute any
reasonably necessary management representation letters to permit Holdings or its
Subsidiaries' independent accountants to issue unqualified reports with respect
to the Regulation S-X Financial Statements to be included in the offering
memorandum, prospectus, registration statement and any updated filings or
amendments thereto.
10.13.6 CONSENT OF PARENT AUDITORS. Parent shall use its
reasonable best efforts to obtain prior to the Closing the written agreement
(the "Auditor Consent Letter") of KPMG LLP ("KPMG") to permit the use of the
Regulation S-X Financial Statements (a) in connection with offerings of
securities by Holdings and/or one or more of its Subsidiaries as contemplated by
the Commitment Letters, and (b) subject to KPMG's normal procedures, in other
private or public offerings of securities as may be reasonably requested by
Holdings and/or one or more of its Subsidiaries. In addition, Parent will use
commercially reasonable efforts to cause KPMG to provide a comfort letter in
accordance with SAS 72 for any such offering.
10.14 RESTRICTIONS ON SALE OF WHITE PAPER BUSINESS. Holdings agrees
that it will not, and will cause its Subsidiaries not to, transfer all or
substantially all of the assets constituting the white paper manufacturing,
conversion, distribution and sales operations of the Business (including by
transfer of a majority of the equity interest in any entity containing such
operations) to any Person at any time during the 6-month period commencing on
the Closing Date.
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10.15 ASSIGNMENT OF TIMBERLANDS PURCHASE RIGHTS. Timber Co. has
advised Parent and Southern that it intends to assign its rights and obligations
in respect of its purchase of the Timberlands to Timber LLC prior to Closing and
that Timber LLC will on the terms and conditions set forth below direct Parent
and Southern to convey the Timberlands to Timber Co. Sellers hereby consent to
such transfer so long as it conforms to the following terms and conditions (and,
in such case, Parent and Southern will absolutely, unconditionally, and
irrevocably release Timber Co. from the Purchaser Payment Performance
Obligations):
10.15.1 Such assignment shall be in writing and a copy thereof
shall have been provided to Parent prior to Closing. It shall provide that
Timber LLC shall assume and agree to the due and punctual performance of the
terms and conditions, undertakings, covenants and obligations of Timber Co.
hereunder in respect of the purchase of the Timberlands;
10.15.2 Subsequent to the assignment provided for in Section
10.15.1 and at or before Closing: (i) Timber LLC will direct Parent and Southern
to convey the Timberlands to Timber Co. upon Closing; and (ii) Timber Co. will
absolutely, unconditionally, and irrevocably assume the due and punctual
performance of the terms, conditions, undertakings, covenants, and obligations
assumed and to be performed or observed by Timber LLC under this Agreement and
under applicable law in respect of the sale of the Timberlands (and will assume
all rights and benefits relating to the Timberlands under this Agreement and any
other agreements and under applicable laws), excepting only Timber LLC's
obligations under the Timber Notes and the other documents provided for in the
LC Commitment Letters, or any other liability with respect to the payment of the
Timberlands Purchase Price (such excepted obligations of performance by Timber
LLC hereinafter referred to as "Purchaser Payment Performance Obligations"). At
Closing, Parent and Southern will convey the Timberlands to Timber Co. in
accordance with Timber LLC's direction, and Parent and Southern will absolutely,
unconditionally, and irrevocably release Timber LLC from all of the terms,
conditions, understandings, comments and obligations under this Agreement and
under applicable law other than the Purchaser Payment Performance Obligations.
10.15.3 Timber Co. and Timber LLC shall covenant in the
assignment document and for the express benefit of Sellers that during the term
of the Timber Notes:
10.15.3.1 without the prior written consent of
Parent (which consent, in the case of amendments that would not have an adverse
effect on Sellers will not be unreasonably withheld, and otherwise may be
withheld by Seller in its sole discretion), neither Timber Co. nor the manager
of the Timber LLC shall make any modification or amendment to, or grant any
waiver under, Timber LLC's operating agreement or cause or permit any interest
in Timber LLC to be issued to any person other than Timber Co.;
10.15.3.2 without the prior written consent of
Parent (which consent shall not be unreasonably withheld, conditioned, or
delayed), Timber Co. shall not sell, assign or transfer all or any portion of
its interest in Timber LLC to any Person nor shall the manager of the Timber LLC
resign;
10.15.3.3 without the prior written consent of
Parent (which consent may be withheld by Parent in its sole discretion), neither
Timber Co. nor the manager of Timber LLC
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shall make any election that would cause Timber LLC to be treated as an
association taxable as a corporation for federal income tax purposes; and
10.15.3.4 without the prior written consent of
Parent (which consent may be withheld by Parent in its sole discretion) neither
Timber Co. nor the manager of the Timber LLC shall cause or permit Timber LLC to
engage in any activities prohibited by the terms of Timber LLC's operating
agreement, or cause or permit Timber LLC to engage in any activities
inconsistent with the purposes of Timber LLC as provided in Timber LLC's
operating agreement;
PROVIDED, however, that the foregoing shall only be applicable
to Timber Co. prior to the transfer of Timber Co.'s interest in Timber LLC and
to the manager of the Timber LLC prior to resignation of the manager of Timber
LLC, in each case in compliance with the provisions of this Subsection 10.15.3.
Timber Co.'s right to transfer its membership interest in Timber LLC and the
manager's right to resign (if the member to which Timber Co. transfers its
interest determines to replace the manager) shall be subject to the additional
condition that Timber Co. has obtained agreement of its transferee and of the
replacement manager (if there shall be one) (in each case, expressly stated to
be for the benefit of and enforceable by Parent) to be bound by the provisions
of the assignment of Timber Co.'s Interest as if such transferee were Timber Co.
and the replacement manager were the manager named therein (including the
specific restrictions contained in Sections 10.15.3.1 through 10.15.3.4 above).
10.16 COOPERATION CONCERNING TIMBER NOTES. Holdings and Timber Co.
acknowledge that Parent and Southern desire to obtain installment sale treatment
for federal and state income Tax purposes on the sale of the Timberlands (to the
extent of the Timber Notes) and obtain the credit enhancement of the Timber
Notes provided for in the arrangements called for in the LC Commitment Letters.
The parties agree to work cooperatively to complete the arrangements described
in the LC Commitment Letters on a basis which is reasonably acceptable to both
parties in an effort to satisfy the objectives of Parent and Southern described
in the preceding sentence.
ARTICLE 11 EMPLOYEES
11.1 TERMINATION OF EMPLOYEES. As of 11:59 p.m., Mountain standard
time, on the day immediately preceding Closing, Parent shall terminate its
employment of all of the Employees except for Employees employed by the
Transferred Subsidiaries. With respect to each Employee terminated by Parent,
Parent shall be responsible for payment when due of all salaries, wages,
commissions and bonuses and other incentive compensation (including without
limitation, a pro-rata payment under each incentive plan (determined in good
faith) with respect to periods prior to the Closing Date) and any amounts due or
to become due under the 2004 Retention Bonus Plan. Parent shall reimburse the
Employees for all travel expenses and other business-related expenses arising
prior to Closing. Parent will indemnify Holdings for any severance and retention
obligations to current or former Employees of the Business as a result of any
termination prior to the Closing Date.
11.2 OBLIGATION TO HIRE EMPLOYEES. Effective 12:00 a.m., Mountain
standard time, on the day of Closing, Holdings shall offer employment to each of
the Employees, including
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Employees then on leave but excluding any Employees receiving long-term
disability benefits, and Employees on leave shall be deemed to have accepted
employment as of the Closing Date unless such Employee declines such offer. Such
offer shall be at a wage rate and on other terms and conditions which (i) in
respect of Employees whose employment is governed by a collective bargaining
agreement, is in accordance with the requirements of such agreement, and (ii) in
respect of all other Employees, provides for base salaries, base wages and
commission, and cash bonus opportunity, which in the aggregate are substantially
comparable to those in effect for each such Employee under its employment with
Parent immediately prior to the Closing Date. Holdings will provide incentive
compensation for management via equity-based awards and/or equity investment
opportunities. Holdings shall not be obligated to pay severance to any Employee
who rejects Holding's offer of employment. All Employees who accept employment
with Holdings on the Closing Date shall commence such employment as of
immediately after their termination by Parent so that there is no gap in their
employment or in their health and welfare benefit plan coverage. All Employees
who accept employment with Holdings pursuant to this Section 11.2 shall be
referred to herein as "Transferred Employees." The parties acknowledge that
Holdings may cause one or more of its Subsidiaries to satisfy its obligations
under this Article 11, including the obligation to offer employment to and hire
the Transferred Employees.
Notwithstanding anything to the contrary herein, in connection with any
offer of employment to an Employee who is party to a 2004 Severance Agreement,
Holdings may include as part of such offer that such Employee will enter into a
severance agreement or arrangement with terms and conditions (other than with
respect to the aggregate amount of severance benefits) different than the 2004
Severance Agreement, so long as Holdings offers such Employee an alternative
offer (which may contain lesser compensation and benefits) that includes the
2004 Severance Agreement. With respect to any Transferred Employee who is party
to a 2004 Severance Agreement, Parent agrees at Holdings' request to take all
such actions and enter into such agreements as may be necessary for Parent to
assign to Holdings all of the rights and benefits applicable to Parent
(including covenants from such Transferred Employee) under such 2004 Severance
Agreement.
11.3 HEALTH AND WELFARE BENEFIT PLANS.
11.3.1 Parent shall remain solely responsible in accordance
with its employee health and welfare benefit plans, programs, and policies for
the satisfaction of all claims regardless of when filed (subject to claim filing
requirements of such plans) for (i) medical, dental and vision benefits claims
which relate to services provided to Employees (and their covered dependents)
prior to Closing, and (ii) life insurance, accident or disability benefits
(other than workers' compensation benefits) claims which relate to events or
injuries incurred prior to Closing.
11.3.2 Except as otherwise provided under the Mutual
Administrative Services Agreement, Holdings shall establish, effective as of the
Closing Date, health and welfare benefit plans for the Transferred Employees
which (i) in respect of unionized Transferred Employees, meet the requirements
of applicable collective bargaining agreements, and (ii) in respect of all other
Transferred Employees, provide health and welfare benefits which in the
aggregate are substantially comparable (taking into account premium
participation, co-payment, deductibles,
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amount of coverage and other material terms) to the benefits currently provided
by Parent which are listed on Schedule 7.9.2(a) of Parent's Disclosure
Memorandum. Transferred Employees shall be enrolled in such plans as of the
beginning of their employment by Holdings without waiting period or other
initial limitation of coverage (except as applied under Parent Plans). Holdings
shall not terminate or make materially adverse reductions in coverage or
Employee increases in cost of participation for a period of two years after
Closing. Holdings' new health and welfare benefits shall include transition
provisions coordinating the transfer of Transferred Employees from Parent's
benefits to Holdings' benefits without duplication of annual deductibles and
other yearly calculations. Employees (and covered dependents) who are
hospitalized as of the Closing will remain on Parent's medical coverage until
discharged from the hospital, at which time they will be eligible to enroll
under Holdings' medical plan. Employees who are on long-term disability as of
the Closing, and Employees who first become eligible for long-term disability
benefits after the Closing because they remain disabled from the Closing Date
through the end of an applicable elimination or waiting period, will remain on
Parent's long-term disability coverages unless they return to active employment
with Holdings. Parent shall transfer to Holdings its contract with the service
provider for its flexible spending accounts for Transferred Employees (or
provide a replacement contract on the same terms limited in scope to the
Transferred Employees) and assets equal to Transferred Employees' account
balances as of the date of transfer, and Holdings shall maintain substantially
comparable flexible spending plans for at least two years after the date of
Closing. Holdings' flexible spending account plan shall reimburse Transferred
Employees for eligible medical and dependent care expenses incurred by such
Transferred Employees (and their covered dependents) in 2004 (other than
expenses that have been reimbursed prior to such transfer).
11.3.3 Parent will provide eligibility for coverage and will
be solely responsible for complying with all employer responsibilities under
provisions of the Consolidated Omnibus Budget Reconciliation Act ("COBRA") to
Employees (and their covered dependents) in respect of its termination of their
employment with Parent. Holdings will be solely responsible for complying with
all employer responsibilities under COBRA on and after the Closing Date with
respect to all Transferred Employees (and their covered dependents).
11.4 PENSION PLANS.
11.4.1 On or after July 31, 2004, but no later than the
Closing Date, Parent shall spin off (within the meaning of Section 1.414(l)-1(n)
of the Treasury Regulations) from each of the Pension Plans that portion of each
plan attributable to Employees who shall be identified as of the date of the
spinoff (collectively, the "Spunoff Pension Plans"). Each of the Spunoff Pension
Plans will be a mirror plan of each respective Pension Plan in all material
respects and Parent will not amend the Spunoff Pension Plans except as required
under applicable law or as necessary to accomplish the spinoff and transfer
under this Section 11.4. Assets assigned to the Spunoff Pension Plans shall be
in the form of cash or marketable securities that are acceptable to Holdings,
provided that such acceptance shall not be unreasonably withheld.
11.4.2 Parent agrees to transfer to Holding on the Closing
Date Spunoff Pension Plans that are each fully funded on an Accumulated Benefit
Obligation basis as described below.
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11.4.2.1 On the Closing Date, Parent shall make a
contribution to each Spunoff Pension Plan. The amount of the contribution shall
be determined as follows: Parent will provide data to Parent's actuary that is
complete and accurate upon which Parent's actuary's calculations will be based.
Parent shall cause Parent's actuary to calculate the Accumulated Benefit
Obligation for each Spunoff Pension Plan (determined as of the Closing Date in
accordance with Statement of Financial Accounting Standards No. 87) using a
discount rate equal to 6.25%, and all other actuarial assumptions, procedures,
processes and methods (disregarding changes in procedures and processes under
Parent's actuary's valuation software that also apply on a consistent basis to
Parent's actuary's other clients) used in the preparation of the January 1, 2003
Milliman USA Actuarial Valuation Report for each respective Pension Plan and
participant data as of the date of the spinoff (recognizing service, age, salary
and benefit multipliers for benefit accrual purposes through the Closing Date
(but not taking into account new hires, deaths, disabilities, terminations or
other such changes in participant data that occur after the date of the spinoff
and on or prior to the Closing Date) if the spinoff happens prior to Closing)
(the "ABO"). The market value of plan assets shall be determined as of the day
prior to the Closing Date for each respective Spunoff Pension Plan and
subtracted from the ABO for each respective Spunoff Pension Plan, and Parent
shall contribute the resulting amount to each respective Spunoff Pension Plan.
The contribution shall be made in the form of cash or marketable securities that
are acceptable to Holdings, provided that such acceptance shall not be
unreasonably withheld.
11.4.2.2 Immediately after the contributions
determined under Section 11.4.2.1 are made, Parent shall assign to Holdings, and
Holdings shall assume from Parent, the sponsorship of the Spunoff Pension Plans.
Parent shall take all actions necessary to satisfy requests of the Pension
Benefit Guaranty Corporation with respect to such spinoff and transfer,
including without limitation, the posting of bonds or collateral.
11.4.2.3 Parent shall cause Parent's actuary to
determine and certify in writing to Holdings in form and substance satisfactory
to Parent and Holdings, on or prior to the Closing Date, that (i) the spinoff
under Section 11.4.2.1 complies with Code Section 414(l), (ii) that the ABO that
was calculated for each respective Spunoff Pension Plan under Section 11.4.2.1
was calculated in accordance with Section 11.4.2.1 and (iii) each participant's
accrued benefit used in the determination of the ABO was calculated in
accordance with the terms of each respective Spunoff Pension Plan based on the
participant data provided to such actuary by Parent. Not later than 30 days
prior to Closing, Parent (or Parent's actuary) shall provide to Holdings'
actuary all information necessary to calculate the accrued benefit for each
Employee included in the calculation and all demographic information pertaining
to the calculation. Not later than 15 days prior to Closing, Parent (or Parent's
actuary) shall provide to Holdings' actuary all information necessary to verify
such calculations, including without limitation, the accrued benefit and ABO for
each Employee included in the calculation and all demographic information
pertaining to the calculation.
11.4.3 At Closing Parent shall fully vest and freeze the
benefits accrued to date by participating Transferred Employees under the Boise
Cascade Corporation Supplemental Pension Plan and it shall pay such frozen
benefits to affected Transferred Employees when and as they may become due under
such plan. Prior to the Closing, Parent shall amend the Boise Cascade
Corporation Supplemental Early Retirement Plan for Executive Officers to provide
(i)
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for the recognition of service for Transferred Employees with Holdings and its
Affiliates after the Closing Date for the purpose of meeting vesting and
eligibility requirements and (ii) that to the extent that any Transferred
Employee participating under such plan as of the Closing Date retires from
Holdings and its Affiliates after reaching age 55 with 10 or more years of
service and 5 or more years of service as an executive officer (taking into
account service with Parent and its Affiliates prior to the Closing Date and
service with Holdings and its Affiliates on and after the Closing Date), such
plan will provide a benefit to such Transferred Employee as if he or she had met
all applicable age and service requirements as of the Closing. Holdings shall
create plans that in the aggregate are substantially comparable to the Unfunded
Pension Plans for the affected Employees, which shall be maintained without
material change at least two years after Closing. Holdings shall provide
participants in the Unfunded Pension Plans with a past service credit reflecting
their past service with Parent and it shall be entitled to an offset for
benefits earned under such plans equal to the participating Transferred
Employee's frozen benefit under Parent's plan.
11.4.4 Holdings will maintain the Spunoff Pension Plans and
Holdings' replacement unfunded pension plans without any material and adverse
(to the Transferred Employees) change for two years after Closing.
11.5 DEFINED CONTRIBUTION RETIREMENT PLANS.
11.5.1 Effective as of the Closing Date or as soon as
reasonably practicable thereafter, Holdings shall establish one or more defined
contribution retirement plans (collectively, the "Holdings DC Plans") which will
provide each of the Transferred Employees for a period of at least two years
matching contribution percentages that in the aggregate are substantially
comparable to that available to such Transferred Employees immediately prior to
the Closing Date under the Defined Contribution Plans, provided that Holdings
shall not be required to establish an Employee Stock Ownership Plan (an "ESOP")
and provided further that Holdings shall not be required to maintain a Parent
common stock account. Except as not permitted by a trustee or recordkeeper of
any Holdings DC Plan, Holdings will provide Transferred Employees with an
opportunity to transfer any Parent common stock they hold in the Defined
Contribution Plans (not relating to the ESOP accounts) into a qualified plan
account that accepts such Parent common stock.
11.5.2 Each of the Transferred Employees shall receive credit
for eligibility and vesting purposes under the Holdings DC Plans for all service
credited under the Defined Contribution Plans.
11.5.3 As soon as practicable following the Closing Date, but
in no event later than 60 days after the Closing Date, all assets and
liabilities of the Defined Contribution Plans attributable to the Transferred
Employees' vested and non-vested account balances shall be transferred (within
the meaning of Section 1.414(l)-1(o) of the Treasury Regulations) in the form of
cash or other marketable securities reasonably acceptable to Holdings, Parent
common stock not relating to the ESOP accounts (except as not permitted under
Section 11.5.1) and notes associated with plan loans to the Holdings DC Plans.
Parent agrees not to place any Transferred Employee's plan loan into default on
or after the Closing Date and prior to the transfer of account balances under
this paragraph.
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11.6 INCENTIVE COMPENSATION AND DEFERRED COMPENSATION PLANS.
Holdings will not be obligated to assume Parent's deferred compensation and
incentive compensation plans. Parent will discharge its obligations to Employees
under such plans in accordance with their terms and Section 11.1 hereof.
11.7 VACATION. Holdings shall establish a vacation policy or
policies that in the aggregate are substantially comparable to Parent's current
vacation policies in effect immediately prior to the date hereof for Transferred
Employees and are in compliance with applicable collective bargaining
agreements. Such policies shall recognize service credit for all past service
recognized for Transferred Employees under Parent's policies in effect on the
date hereof. Except insofar as Parent is required by applicable state law to
compensate Transferred Employees in cash upon termination of employment for
earned and unused vacation, Holdings shall assume the liability for such accrued
and unused vacation to the extent accrued as a Current Liability in the
computation of Closing Net Working Capital and discharge such liability in
accordance with the terms of Holdings' established policies, provided that such
policies shall not unreasonably restrict the use of such accrued and unused
vacation. To the extent such a liability transfer is not permitted by applicable
state law, no liability assumption shall occur and Parent shall pay affected
Transferred Employees in cash for earned and unused vacation when and as
required by applicable state law.
11.8 SEVERANCE AND RETENTION OBLIGATIONS. Parent will retain all
severance, change of control, retention and other similar obligations that arise
prior to the Closing or with respect to terminations of employment that occur
prior to the Closing Date or with respect to resignations by Transferred
Employees (whether prior to or after the Closing Date) for "good reason" (within
the meaning of the 2004 Severance Agreements) where events forming the basis for
the claim of "good reason" occurred prior to the Closing Date (unless the event
forming the basis for such claim of "good reason" consists of the terms of
employment offered by Holdings). Parent also will retain (i) all employment,
change of control, retention and similar agreements (and obligations thereunder)
other than temporary employment contracts that are terminable without penalty at
any time at the will of the employer with a term of less than one year and at an
annual compensation rate of less than $75,000 and that provide for no payments
of severance, (ii) all payments, bonuses or other obligations to provide
compensation or benefits as a result of the occurrence of the transaction and
(iii) all obligations to provide retention payments to Employees, including
officer and non-officer Transferred Employees, pursuant to retention plans,
policies or agreements in existence as of the Closing Date (including, without
limitation, the 2004 Retention Bonus Plan) regardless of whether such
obligations are or become payable prior to, on or after the Closing Date. After
Closing, Holdings will adopt a general severance policy that will be in the
aggregate substantially comparable to Section VII.A. of the Parent's Termination
of Employment Corporate Policy Number 10.2, dated July 26, 2004 (which is
attached hereto as Schedule 11.8 in its currently applicable form and the form
applicable on and after such date) ("Holdings General Severance Policy").
Holdings will be responsible for all severance costs under the Holdings General
Severance Policy with respect to Transferred Employees who are terminated by
Holdings after Closing and under the 2004 Severance Agreements 'for any
Transferred Employees who are officers immediately prior to Closing and who are
terminated by Holdings after Closing. During the two year period after Closing,
for all terminations of Transferred Employees who are not officers as of the
Closing Date, Holdings shall provide severance benefits at a rate no lower than
the maximum severance rate (within the
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applicable severance range) which would have been applicable to such Employee at
the time of Closing under Section VII.A. of the Parent's Termination of
Employment Corporate Policy Number 10.2, dated July 26, 2004.
11.9 WORKERS' COMPENSATION. Holdings shall assume all liabilities
arising from workers compensation claims, whether characterized as medical or
indemnity, or arising under any other similar government-mandated programs which
are based on injuries incurred by Employees or former employees in connection
with the Business, without regard to the date of occurrence of the injury or
injuries giving rise to the workers' compensation claim. Holdings shall have the
right to submit claims under relevant workers' compensation insurance policies
and related agreements maintained by Parent and its affiliates prior to the
Closing Date (each, a "Pre-Closing Workers' Compensation Policy") for claims
brought by any current or former employee of the Business arising out of an
event occurring prior to the Closing Date to the full limits of such Pre-Closing
Workers' Compensation Policy to the extent covered by such Pre-Closing Workers'
Compensation Policy. With respect to each Pre-Closing Workers' Compensation
Policy other than those which are assigned to Holdings, Parent and its
Affiliates shall (i) ensure such policies are in full force and effect as of the
Closing Date; (ii) not take any action or inaction to amend or terminate such
policies after the Closing Date with respect to coverage for Holdings; and (iii)
maintain any letter-of-credit or security bonds needed to maintain any such
policy. Holdings and Parent shall cooperate fully with the relevant insurer in
the defense of any claim brought under any insurance policies pursuant to this
Section 11.9.
11.10 RETIREE BENEFITS. Parent shall be liable for all liabilities
and obligations to provide coverage in connection with claims for benefits
brought by or in respect of former and retired employees of the Business (and
their covered dependents) who had terminated employment or retired prior to
Closing (including Employees who are eligible to retire as of the day prior to
Closing whose employment is terminated pursuant to Section 11.1) under any of
Parent's retirement welfare benefit plans, including, but not limited to, such
liabilities with respect to medical, dental, life insurance, health, accident or
disability benefits, but excluding any claims for or relating to workers'
compensation benefits for which Holdings is responsible under Section 11.9
hereof. Holdings will assume the obligation to provide retiree welfare benefits
to (i) active union Transferred Employees after their post-Closing retirements
(in accordance with the applicable collective bargaining agreements), (ii)
active non-union hourly Transferred Employees in Parent's Boise Building
Solutions, Manufacturing Division after their post-Closing retirements (with a
40% employer subsidy that may be reduced or eliminated in the future)and (iii)
active salaried Transferred Employees after their post-Closing retirements (with
the entire cost paid by such employees); provided, however, that Holdings shall
have the right (subject to applicable collective bargaining agreements) to
modify or terminate such benefits in the future.
11.11 NO THIRD-PARTY BENEFICIARY. This Agreement is being entered
into solely for the benefit of the parties hereto, and the parties do not intend
that any Employee or any other Person shall be a third-party beneficiary of the
covenants by either Parent or Holdings contained in this Agreement.
11.12 WORKERS ADJUSTMENT AND RETRAINING ACT ("WARN"). Holdings shall
indemnify and hold Parent harmless from and against any and all liabilities,
claims and losses (including attorney's fees, court costs, and other litigation
expenses) arising under the Worker Adjustment
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and Retraining Notification Act of 1988 or any similar state or local law,
regulation or ordinance (collectively, the "WARN Act") by reason of Holding's
shutdown of any Facility or layoff of Employees which occurs after the Closing.
Parent shall indemnify and hold Holdings harmless from and against any and all
liabilities, claims and losses (including attorney's fees, court costs, and
other litigation expenses) arising under the WARN Act by reason of the shutdown
of any Facility or layoff of Employees which occurs or has occurred prior to the
Closing.
11.13 NON-SOLICITATION OF EMPLOYEES. For a period of two years
following the Closing, Parent and its Affiliates shall not directly or
indirectly solicit any Transferred Employee for employment without the prior
consent of Holdings. The foregoing shall not prohibit Parent from (i) soliciting
any Transferred Employee who has terminated his or her employment with Holdings
prior to such solicitation, or (ii) offering employment to any Employee who
approaches Parent without prior solicitation by Parent, whether in response to a
general advertisement by Parent, or otherwise.
11.14 MODIFICATIONS TO BENEFITS. Subject to the two-year
restrictions on modification of compensation and benefits set forth in this
Article 11 and any other applicable restrictions under collective bargaining
agreements, Holdings may modify or terminate its compensation and benefit plans
at any time in its discretion; provided, however, that notwithstanding the
various two-year restrictions on modification of compensation and benefits set
forth in this Article 11, Holdings may initially adopt compensation and benefit
plans different from those provided by Sellers and may modify its compensation
and benefit plans during such two-year period following the Closing, in either
case so long as its compensation and benefit plans (including equity
arrangements), in the aggregate, are substantially comparable to that provided
to Transferred Employees immediately prior to the Closing Date or as otherwise
consistent with changes under collective bargaining agreements.
ARTICLE 12 TAX MATTERS
12.1 SECTION 338(h)(10) ELECTION.
12.1.1 (i) At Holdings' option, Parent and Holdings
(and/or its designated Permitted Affiliate Purchaser(s)) shall jointly make
Elections (and any comparable election under state or local tax law) with regard
to each of the Transferred Subsidiaries for which such an election may be made;
(ii) Parent and Holdings shall, as promptly as
practicable following the Closing Date, cooperate with each other to take all
actions necessary and appropriate (including filing such forms, returns,
elections, schedules and other documents as may be required) to effect and
preserve timely Elections in accordance with the provisions of Treasury
regulations promulgated under Section 338 of the Code (or any comparable
provisions of state or local tax law) or any successor provisions;
(iii) Parent and Holdings shall report the purchase by
Holdings of the Transferred Subsidiaries pursuant to this Agreement consistent
with the Elections (and any comparable elections under state or local tax laws)
and shall take no position inconsistent therewith in any Tax Return, any
proceeding before any taxing authority or otherwise; and
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(iv) Nothing in this Agreement shall prevent
Holdings or its Affiliates from making an election under Section 338(g) of the
Code with respect to the acquisition (or deemed acquisition) of the equity of
each Transferred Subsidiary organized under the laws of a foreign jurisdiction.
12.1.2 In connection with each Election, Holdings shall
prepare, and Parent shall agree to (which agreement shall not be unreasonably
withheld), the determination of the "Aggregate Deemed Sales Price" (as defined
under Treasury regulation Section 1.338-4) and the allocation of each such
"Aggregate Deemed Sales Price" among the assets of each respective Transferred
Subsidiary, which shall be consistent with the Allocation contemplated by
Section 3.4 hereof. The determination of the amount of each such "Aggregate
Deemed Sales Price" and the allocation thereof shall be made in accordance with
Section 338(b) of the Code and applicable Treasury regulations. Parent and
Holdings shall (i) be bound by such determination and such allocation for
purposes of determining any Taxes, (ii) prepare and file, and cause their
affiliates to prepare and file, Tax Returns on a basis consistent with each such
determination of the "Aggregate Deemed Sales Price" and each such allocation,
and (iii) take no position, and cause their affiliates to take no position,
inconsistent with any such determination or allocation on any applicable Tax
Return in any proceeding before any taxing authority or otherwise. In the event
that any such allocation and/or determination is disputed by any Tax Authority,
the party receiving notice of the dispute shall promptly notify the other party
hereto concerning resolution of the dispute.
12.2 TAX RETURN FILING AND PAYMENT OF TAXES RESPONSIBILITY.
12.2.1 Parent shall (i) prepare and file, or cause to be
prepared and filed, on a timely basis (in each case, at its sole cost and
expense) all Tax Returns with respect to the Transferred Subsidiaries or
otherwise relating to the Assets or the Business for all Tax Periods ending on
or before the Closing Date (the "Pre-Closing Returns"), and (ii) pay, or cause
to be paid, all Taxes shown to be due on such Pre-Closing Returns.
12.2.2 Holdings shall (i) prepare and file, or cause to be
prepared and filed, on a timely basis (in each case, at its sole cost and
expense) all other Tax Returns for all taxable periods ending after the Closing
Date with respect to the Transferred Subsidiaries or otherwise relating to the
Assets or to the Business, including Straddle Period Returns, and (ii) pay, or
cause to be paid, all Taxes shown to be due on such Tax Returns.
12.2.3 In connection with any Straddle Period Return, Parent
shall be liable for and shall pay, or cause to be paid, any Taxes for which
Parent has agreed to indemnify Holdings pursuant to Section 12.4 hereof.
Holdings shall provide Parent with copies of any Straddle Period Returns at
least twenty (20) days prior to the due date thereof (giving effect to any
extensions thereto), accompanied by a statement calculating in reasonable detail
the Parent indemnification obligation pursuant to Section 12.4 hereof (the "Tax
Indemnification Obligation"). Parent shall pay, or cause to be paid, to Holdings
the amount of the Tax Indemnification Obligation within ten (10) days of
receiving copies of the Straddle Period Returns (the "Parent Preliminary Tax
Payment"). If Parent objects to the determination of the Tax Indemnification
Obligation, Holdings and Parent shall use reasonable efforts to resolve such
dispute, but if a final resolution is not obtained within fifteen (15) days, the
dispute shall be
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submitted to the Independent Accountants with instructions that such Independent
Accountants render a determination with respect to the dispute within thirty
(30) days. The determination of the Independent Accountants shall be conclusive
and binding upon the parties in the manner and to the same effect as a binding
arbitration award. All costs and expenses incurred relating to the engagement of
the Independent Accountants shall be shared equally by Parent and Holdings. If
the Tax Indemnification Obligation, as finally determined, exceeds the amount of
the Parent Preliminary Tax Payment, Parent shall promptly pay, or cause to be
paid, the amount of such excess to Holdings. If the Tax Indemnification
Obligation, as finally determined, is less than the amount of the Parent
Preliminary Tax Payment, Holdings shall promptly refund the amount of such
deficiency to Parent.
12.2.4 Parent and Holdings shall reasonably cooperate, and
shall cause their respective affiliates, officers, employees, agents, auditors
and representatives to reasonably cooperate, in preparing and filing all Tax
Returns (including amended returns and claims for refund), including the
issuance of a power of attorney and maintaining and making available to each
other all records necessary in connection with Taxes and in resolving all
disputes and audits with respect to all taxable periods relating to Taxes.
12.3 TRANSFER AND SIMILAR TAXES. Notwithstanding any other
provision of this Agreement to the contrary, all fees, sales (including, without
limitation, bulk sales), use, transfer, gains, stamp, duties, value-added,
recording and similar Taxes ("Transfer Taxes") incurred in connection with the
transactions contemplated by this Agreement shall be borne equally by Holdings
and/or its Subsidiaries, on the one hand, and Parent and its Retained
Subsidiaries, on the other hand. The party charged by law with the duty of
making the necessary filings and returns with respect to such Transfer Taxes
shall do so in accordance with applicable law, and shall be entitled to
reimbursement from the other party to the extent that such party, in connection
with such filings, pays an amount in excess of what it is required to pay
hereunder.
12.4 TAX INDEMNIFICATION.
12.4.1 Parent shall indemnify Holdings and its Affiliates and
hold them harmless from and against (i) any Taxes of Sellers and its Affiliates
(other than Taxes described in Section 12.4.2), (ii) any liability for Taxes of
the Transferred Subsidiaries or otherwise relating to the Assets or Business for
all taxable periods ending on or before the Closing Date and for the Pre-Closing
Period, (iii) any liability for Taxes which result from (A) the deemed sale of
assets pursuant to the Elections or any election under Section 338(g) of the
Code, and (B) the deemed sale of assets pursuant to any comparable elections
under state or local tax laws, (iv) any liability for Taxes imposed upon any of
the Transferred Subsidiaries pursuant to Treasury Regulation Section 1.1502-6
(or similar provision under any state, local or foreign Tax law) as a result of
being a member of an affiliated group, within the meaning of Section 1504 of the
Code (or similar provision under any state, local or foreign Tax law), prior to
the Closing, and any liability for Taxes imposed on any of the Transferred
Subsidiaries as a transferee or successor (where such Transferred Subsidiary
became a transferee or successor before the Closing) or by contract (where such
contract was entered into prior to the Closing), and (v) any Loss attributable
to any breach of the representations and warranties contained in Section 7.8.
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12.4.2 Holdings shall indemnify Parent and its affiliates and
hold them harmless from and against (i) any liability for Taxes of the
Transferred Subsidiaries or otherwise relating to the Assets or Business for any
taxable period ending after the Closing Date (except to the extent such taxable
period began before the Closing Date, in which case Holdings' indemnity will
cover only that portion of any such Taxes that is not attributable to the
Pre-Closing Period), and (ii) any liability for sales and use Taxes, value added
Taxes, and real and personal property Taxes attributable to Pre-Closing Periods
to the extent that each is accrued on the Closing Balance Sheet and included as
a Current Liability in the computation of Closing Net Working Capital.
12.4.3 In the case of any Straddle Period, the liability for
Taxes for the Pre-Closing Period shall be determined on an
interim-closing-of-the-books basis as if such taxable period ended on and
included the Closing Date, except that (i) all standard deductions, exemptions,
allowances and other similar items shall be apportioned to the pre-Closing
period on a per diem basis and (ii) real and personal property Taxes shall be
apportioned between Parent and Holdings in accordance with the principles under
Section 164(d) of the Code.
12.5 PROCEDURES RELATING TO INDEMNIFICATION OF TAX CLAIMS.
12.5.1 If a claim for Taxes is made or a notice of an audit
is issued by any Tax Authority in writing, which, if successful, might result in
an indemnity payment pursuant to Section 12.4, the party seeking indemnification
(the "Tax Indemnified Party") shall promptly notify the other party (the "Tax
Indemnifying Party") in writing of such claim (a "Tax Claim") within a
reasonably sufficient period of time to allow the Tax Indemnifying Party
effectively to contest such Tax Claim, and in reasonable detail to apprise the
Tax Indemnifying Party of the nature of the Tax Claim, and provide copies of all
correspondence and documents received by it from the relevant Tax Authority.
Failure to give prompt notice of a Tax Claim hereunder shall not affect the Tax
Indemnifying Party's obligation under Section 12.4, except to the extent that
the Tax Indemnifying Party is materially prejudiced by such failure to give
prompt notice.
12.5.2 With respect to any Tax Claim which might result in an
indemnity payment to Holdings pursuant to Section 12.4 (including, without
limitation, Taxes relating to a Pre-Closing Period), Parent shall control all
proceedings taken in connection with such Tax Claim to the extent relating to
periods ending prior to the Closing or any Pre-Closing Period and, without
limiting the foregoing, may in its sole discretion and at its sole expense
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with any Tax Authority with respect thereto, and may, in its sole
discretion, either pay the Tax claimed and xxx for a refund where applicable law
permits such refund suits or contest such Tax Claim. Parent shall not under any
circumstances settle or otherwise compromise any Tax Claim referred to in the
preceding sentence without Holdings' prior written consent, not to be
unreasonably withheld. In connection with any proceeding taken in connection
with such Tax Claim, (i) Parent shall keep Holdings informed of all material
developments and events relating to such Tax Claim if involving a material
liability for Taxes, and (ii) Holdings shall have the right to participate, at
its sole expense, in (but not control) any such proceedings. Holdings shall
cooperate with Parent in contesting such Tax Claim, which cooperation shall
include, without limitation, the issuance of a power of attorney, the provision
to Parent of records and information which are reasonably relevant to such Tax
Claim, and making employees available to provide additional information
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or explanation of any material provided hereunder or to testify at proceedings
relating to such Tax Claim. In connection with such cooperation, Parent shall
reimburse Holdings for any out-of-pocket expenses incurred with respect thereto.
12.5.3 With respect to any Tax Claim not described in the
preceding paragraph (including that which might result in an indemnity payment
to Parent pursuant to Section 12.4), Holdings shall control all proceedings in
accordance with provisions that are parallel to those in Section 12.5.2.
12.6 REFUNDS AND CREDITS. Any refunds and credits of Taxes of any
of the Transferred Subsidiaries or otherwise relating to the Assets or the
Business realized after the Closing Date with respect to (i) any taxable period
ending on or before the Closing Date shall be for the account of Parent, and if
received or utilized by Holdings or any of its Affiliates, shall be paid to
Parent within five (5) business days after Holdings or any of its Affiliates
receives such refund or utilizes such credit, (ii) any taxable period beginning
after the Closing Date shall be for the account of Holdings, and if received or
utilized by Parent, or any of its Affiliates, shall be paid by Parent to
Holdings within five (5) business days after Parent, or any of its Affiliates,
receives such refund or utilizes such credit, (iii) any Straddle Period shall be
apportioned between Parent and Holdings in the same manner as such Taxes
originally had been allocated pursuant to Sections 12.2.3 and 12.4.3 hereof, and
(iv) any Election (and any comparable elections under state or local tax laws)
shall be for the account of Parent (but only to the extent Sellers paid the
Taxes being refunded or credited), and if received or utilized by Holdings, any
of its Affiliates or either of the Transferred Subsidiaries shall be paid to
Parent within five (5) business days after Holdings, any of its Affiliates or
either of the Transferred Subsidiaries receives such refund or utilizes such
credit. Notwithstanding the foregoing, Parent shall not be entitled to the
benefit of any refund or credit to the extent such refund or credit (i) arises
from a step-up in the Tax basis of Assets as a result of the Elections, (ii) is
attributable to the carryback of a loss arising after the Closing Date, or (iii)
was reflected as an asset on the Closing Balance Sheet.
12.7 TERMINATION OF TAX SHARING AGREEMENTS. On or prior to the
Closing Date, all Tax sharing agreements and similar arrangements to which
either of the Transferred Subsidiaries is a party or otherwise relating to the
Assets or the Business shall be terminated, all obligations thereunder shall be
settled, and no additional payments shall be made under any thereof after the
Closing Date.
12.8 EMPLOYEE PAYROLL INFORMATION. Parent shall transfer to
Holdings any records relating to withholding and payment of income and
unemployment Taxes (federal, state and local) and FICA Taxes with respect to
wages paid to Transferred Employees by Parent during the calendar year in which
the Closing occurs (including, without limitation, Forms W-4, Employee's
Withholding Allowance Certificate). Holdings shall provide the Transferred
Employees with Forms W-2, Wage and Tax Statement, for such calendar year setting
forth the wages paid and Taxes withheld with respect to the Transferred
Employees for the calendar year in which the Closing occurs by Parent and
Holdings as predecessor and successor employers, respectively, as provided by
Revenue Procedure 96-60.
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12.9 SURVIVAL OF TAX PROVISIONS. Notwithstanding anything to the
contrary in Section 17.1, any claim to be made pursuant to this Section 12 must
be made before the 60th day after the expiration (with extensions) of the
applicable statute of limitations relating to the Taxes at issue.
ARTICLE 13 RISK OF LOSS
If any loss or damage is suffered prior to Closing to any
portion of the Non-Timber Assets which is not a Material Adverse Change, Parent
shall at its sole cost and expense repair or replace such damaged or lost assets
as soon as reasonably practicable and the Closing shall proceed without delay or
adjustment to the Non-Timber Purchase Price on account of such loss or damage.
Holdings shall not, in such event, be entitled to or have any claim against the
proceeds of insurance held by Parent to the extent covering such loss, unless
Parent shall fail to repair or replace such damaged or lost assets prior to
Closing, in which event Holdings shall be entitled to have a claim against the
proceeds of such insurance and Parent shall be responsible for the costs thereof
in excess of the amount of such proceeds. If any of the Timberlands are
destroyed prior to Closing the Timberlands Purchase Price shall be adjusted by
an amount equal to the fair market value of the standing timber destroyed. If
any of the Assets are condemned prior to Closing and the magnitude of such
condemnation is not sufficient to constitute a Material Adverse Change, Closing
shall proceed without delay or adjustment of the Non-Timber Purchase Price or
the Timberlands Purchase Price and Parent shall deliver the condemnation
proceeds to Holdings, or if such condemnation proceedings have not been
concluded prior to Closing, Parent shall at Closing assign its rights in such
proceeding to Holdings. The provisions of this Article 13, including the
obligations of Parent hereunder, shall survive the Closing and the delivery of
the Deeds.
ARTICLE 14 CLOSING AND TERMINATION
14.1 CLOSING. Subject to satisfaction or waiver (in writing by the
party entitled to waive satisfaction of such condition) of the conditions
specified herein, the Closing shall occur at 9:00 a.m., local time, on September
30, 2004 at the offices of Parent, 0000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx, Xxxxx
00000-0000, or at such other time and place as Purchaser and Parent mutually
agree upon in writing. If Closing does not occur on such date, or any other date
agreed upon by the parties, because one or more conditions precedent are not
satisfied or waived in writing by the party entitled to waive satisfaction of
such condition, then in such event the Closing shall be delayed to a later date
agreed upon by the parties, and if the parties are unable to agree upon such a
date, it shall be the first business day which is at least five (5) days after
the day all of the conditions precedent are satisfied or waived. The date and
time at which the Closing occurs shall be the "Closing Date."
14.2 TERMINATION. This Agreement may be terminated at any time
prior to the Closing as follows, and in no other manner:
14.2.1 By mutual consent of Holdings and Parent.
14.2.2 By either Parent or Holdings, if, through no fault of
the party seeking termination, the Closing shall not have occurred on or prior
to the Outside Date.
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14.2.3 By either Parent or Holdings if any court or
governmental body having competent jurisdiction shall have issued a preliminary
injunction or other similar or final order enjoining the transactions
contemplated hereby.
14.2.4 By Holdings in the event any representation or
warranty made herein for the benefit of Holdings, or in any certificate,
schedule or documents furnished to Holdings, pursuant to this Agreement is
untrue in any material respect, or Parent shall have defaulted in any material
respect in the performance of any material obligation under this Agreement,
which breach or default has not been cured within 10 days (or such longer period
as is reasonably necessary to cure such breach or default) after notice of such
breach or default.
14.2.5 By either Parent or Holdings if Parent has delivered
notice to Holdings pursuant to Section 10.11 that it intends to accept a Company
Superior Offer, and after five business days from delivery of such notice
Holdings has not submitted a Matching Offer to Parent as described in Section
10.11.
14.2.6 By Parent at any time prior to Closing if any
representation or warranty made herein for the benefit of Parent, or in any
certificate, schedule, or documents furnished to Parent, pursuant to this
Agreement is untrue in any material respect, or Holdings shall have defaulted in
any material respect in the performance of any material obligation under this
Agreement, which breach or default has not been cured within 10 days (or such
longer period as is reasonably necessary to cure such breach or default) after
notice of such breach or default.
14.3 EFFECT OF TERMINATION. In the event of the termination of this
Agreement as provided in Section 14.2, written notice thereof shall forthwith be
given by the terminating party or parties to the other party or parties
specifying the provision hereof pursuant to which such termination is made, and
this Agreement shall forthwith become null and void, and there shall be no
liability on the part of any of the parties hereto except that the obligations
of the parties hereto contained in this Section 14.3 and in Article 19 (other
than Section 19.16) shall survive any termination hereof, and except that
nothing herein will relieve any party from liability for any breach of this
Agreement prior to such termination.
14.3.1 If this Agreement is terminated pursuant to Section
14.2.5, Parent shall pay Holdings or its designee the sum of $185,000,000 in
cash on the date of such termination, and payment of such amount shall be
Holdings' sole and exclusive remedy with respect to the termination of this
Agreement pursuant to Section 14.2.5.
ARTICLE 15 HOLDINGS CONDITIONS TO CLOSING; PARENT CLOSING DELIVERIES
15.1 HOLDINGS. Neither Holdings nor any of its Subsidiaries shall
have any obligation to attend and carry out the actions required of it at the
Closing unless all of the following conditions precedent shall have been
satisfied or waived in a writing executed by Holdings:
15.1.1 CONTINUED TRUTH OF REPRESENTATIONS AND WARRANTIES.
Without giving effect to any disclosure pursuant to Section 10.2.2.3, all of the
representations and warranties of Parent contained in this Agreement not
qualified by materiality or Material Adverse Effect shall continue to be true
and correct at the Closing in all material respects as if made on and as of the
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Closing Date, and all of the representations and warranties of Parent contained
in this Agreement qualified by materiality or Material Adverse Effect shall
continue to be true and correct at the Closing in all respects as if made on and
as of the Closing Date.
15.1.2 PERFORMANCE OF OBLIGATIONS. Parent and its
Subsidiaries shall have performed or tendered performance of, in all material
respects, each and every one of their respective obligations hereunder which by
its terms is to be performed at or prior to Closing.
15.1.3 THIRD-PARTY CONSENTS. Parent shall have obtained and
delivered to Holdings all Consents to the assignment of those Contracts and
Facility Leases listed on Schedule 15.1.3 (the "Required Consents"), in form and
substance reasonably satisfactory to Holdings, or the parties shall have reached
agreement on a mutually satisfactory work around arrangement pursuant to Section
5.4.
15.1.4 LEGAL PROCEEDINGS. No order shall have been entered
and not vacated by or before any court, administrative agency or other
governmental authority to restrain, prohibit or invalidate any of the
transactions contemplated by this Agreement. No action, suit, proceeding or
investigation by any administrative agency, governmental authority, or other
Person regarding the transactions contemplated by this Agreement shall have been
instituted and be continuing. In the event that such shall occur, Closing shall
be delayed, but not beyond the Outside Date, while the parties take commercially
reasonable steps to resolve such litigation (which shall not include the payment
of any sum of money by any party except in its sole discretion).
15.1.5 MATERIAL ADVERSE CHANGES OR EFFECTS. Since May 31,
2004, there shall have been no Material Adverse Change or Material Adverse
Effect.
15.1.6 PERMITS AND GOVERNMENTAL CONSENTS. All Governmental
Authorizations required for the operation of the Business shall have been
obtained by Holdings or transferred to or reissued in Holdings' name and all
material Consents and approvals of any federal, state, county, local, or other
governmental or regulatory body required for any of the execution, delivery, or
performance of this Agreement shall have been obtained, except for any such
Governmental Authorization or any Consent which is routinely and customarily
given or granted, issued, or transferred in connection with similar transactions
by the governmental entity empowered to do so after the transaction has closed,
and the absence of which will not have a Material Adverse Effect on the Business
or the Assets.
15.1.7 HSR FILING. The applicable waiting period under the
HSR Act with respect to the actions contemplated by this Agreement shall have
expired or been earlier terminated and any similar waiting period shall have
expired and the applicable governmental consent shall have been obtained from
the reviewing authorities in Brazil, Canada, and the United Kingdom.
15.1.8 ENVIRONMENTAL ASSESSMENT. Holdings shall have
completed its review of the Environmental Assessments to be provided by Parent
and its other related environmental due diligence activities and shall have
reasonably determined that there does not exist any environmental compliance or
liability issue with respect to a Facility (other than a Retained Environmental
Liability) which, individually or in the aggregate, would reasonably be expected
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to have a Material Adverse Effect. In the event that Holdings makes such
determination, Holdings shall have no obligation to attend and carry out the
actions required of it at the Closing unless and until Parent either (a)
conducts and presents the results of additional environmental assessment work
with respect to the subject Facility which demonstrates, to the reasonable
satisfaction of Holdings, that no reasonable expectation of a Material Adverse
Effect exists; or (b) agrees to treat the subject matter of such determination
as a Retained Environmental Liability or agrees to an alternative
indemnification or risk allocation arrangement with respect thereto which is
reasonably satisfactory to Holdings.
15.1.9 FINANCIAL STATEMENTS. Not less than 30 days prior to
Closing, Parent shall have delivered to Holdings and its Subsidiaries the
Audited Financial Statements, the Stub Period Financial Statements and the
Subsequent Financial Statements prepared and presented in accordance with
SECTIONS 7.6 and 10.13. None of the financial statements included in the Audited
Financial Statements or the Stub Period Financial Statements, as so delivered,
will when compared to the corresponding unaudited financial statement for the
same period included in the Historical Financial Statements or the Subsequent
Financial Statements, reflect any material diminution in the value of the
Business as a whole, or any material diminution in the net income, cash flows,
or net worth of the Business.
15.1.10 AMENDED PAPER SALES AGREEMENT. Parent and Boise Office
Solutions shall have entered into the Amended Paper Sales Agreement as required
by Section 18.2, the Amended Paper Sales Agreement shall be assigned to Holdings
in the Closing, and such Amended Paper Sales Agreement shall be in full force
and effect.
15.1.11 FINANCING ARRANGEMENTS;_ NO LIENS OR INDEBTEDNESS.
Holdings and its Subsidiaries shall have received all of the proceeds of the
debt financing contemplated by the Debt Commitment Letters, the equity financing
contemplated by the Equity Commitment Letter and the Reinvestment contemplated
to be received by Holdings and its Subsidiaries at the Closing, in each case on
terms as described in the Commitment Letters (or in the case of the
Reinvestment, the terms hereof and the Ancillary Agreements) or otherwise on a
basis satisfactory to Holdings and Parent. Each of the Assets shall be free and
clear of all Encumbrances (other than Permitted Encumbrances), and the Business
shall not have or be liable for any Indebtedness or obligation giving rise to
any lien on any of the Assets. Timber LLC shall have obtained the standby
letter(s) of credit from the Credit Enhancement Banks as necessary to satisfy
its obligations under Section 4.1.2.
15.1.12 TITLE; SURVEYS. Each of the Title Policies shall have
the creditor's right exception deleted, and shall include an extended coverage
endorsement (insuring over the general or standard exceptions) and all other
endorsements reasonably requested by Holdings, in form and substance reasonably
satisfactory to Holdings, and the Surveys shall not disclose any material
encroachment from or onto any of the Titled Property or any portion thereof or
any other material survey defect which has not been cured or, provided the Title
Company will issue a further assurance endorsement with respect to such defect,
insured over to Holdings' reasonable satisfaction prior to the Closing.
15.1.13 LANDLORD DELIVERIES. Without limiting any other
covenant or agreement of Parent, Parent shall have obtained and delivered an
estoppel certificate, a waiver of
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landlord liens, collateral assignment of lease and/or leasehold mortgage from
each landlord or other party whose consent thereto is required under any
particular Facility Lease or Timberlands Lease with respect to those sites
listed on Schedule 15.1.13 or for which such deliveries shall have been
requested by the lenders in connection with the financing contemplated by the
Debt Commitment Letters.
15.1.14 AUDITOR CONSENT LETTER. Parent shall have obtained and
delivered to Holdings and its Subsidiaries a copy of the Auditor Consent Letter
and related "cold comfort" letter for the financing arrangements contemplated by
the Debt Commitment Letter, each of which shall be in form and substance
reasonably satisfactory to Holdings, its Subsidiaries and the underwriters for
the debt financing contemplated by the Debt Commitment Letters.
15.1.15 SPUNOFF PENSION PLANS. Parent shall have made a
contribution to each Spunoff Pension Plan, and each such Spunoff Pension Plan
shall be fully funded on an Accumulated Benefit Obligation basis as described in
Section 11.4.2.1.
15.1.16 DELIVERY OF CLOSING DOCUMENTS. Parent shall have
tendered delivery to Holdings of all of the following:
15.1.16.1 CERTIFICATES OF TITLE. A certificate of
title for each registered motor vehicle held by
Sellers or any of their Subsidiaries.
15.1.16.2 OPINION OF COUNSEL. The opinion of X. X.
Xxxxxxxx, Senior Vice President and General Counsel of Parent, in the form
attached as Schedule 15.1.16.2.
15.1.16.3 CERTIFIED RESOLUTIONS. A copy of the
resolutions of the boards of directors or other
governing bodies of Sellers authorizing the execution and performance of this
Agreement and the Ancillary Agreements, certified by the Secretary or an
Assistant Secretary of each of the Sellers;
15.1.16.4 CLOSING CERTIFICATE. A certificate
signed by an officer of Parent to the effect that the conditions specified in
Section 15.1.1, Section 15.1.2 and Section 15.1.5 have been satisfied in full;
15.1.16.5 ASSIGNMENTS. Such assignments, bills of
sale, stock transfer powers, and other instruments of conveyance as may be
required to convey the Assets from Sellers to Holdings, in form and substance
reasonably satisfactory to Holdings and its Subsidiaries, together with
assignments of Timberlands Leases shall be in recordable form and otherwise in
form and substance reasonably satisfactory to Holdings and its Subsidiaries;
15.1.16.6 INTELLECTUAL PROPERTY TRANSFERS.
Documents acceptable for recordation in the United States Patent and Trademark
Office, the United States Copyright Office and any other similar domestic or
foreign office, department or agency for the conveyance of registered
Intellectual Property otherwise in form and substance reasonably satisfactory to
Holdings and its Subsidiaries.
15.1.16.7 DEEDS. Deeds to the Realty and
Timberlands satisfying the requirements of Section 9.2. Deeds to the Timberlands
shall convey the Timberlands to Timber
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Co. Deeds to the Realty shall convey the Realty to Holdings or its nominated
Permitted Affiliate Purchaser;
15.1.16.8 MINUTE BOOKS. The original minute
books and stock transfer records of each Transferred Subsidiary.
15.1.16.9 FIRPTA CERTIFICATE. A duly executed
affidavit of non-foreign status by each of Sellers described in Section 1445 of
the Code and the regulations thereunder;
15.1.16.10 CONFIDENTIALITY AGREEMENT ASSIGNMENT. An
executed assignment by Parent of its rights as they relate to the Business under
each of the confidentiality agreements executed by or on behalf of Parent and/or
any of its Subsidiaries in connection with the proposed sale of the any of the
Business, which assignment shall be in form and substance reasonably
satisfactory to Holdings;
15.1.16.11 ANCILLARY AGREEMENTS. Executed copies of
each of the Ancillary Agreements to which Parent or its Subsidiaries is a party;
and
15.1.16.12 ADDITIONAL ITEMS. Such additional
documents, instruments, and other items as counsel for Holdings may reasonably
request.
15.1.17 COMPLETE SCHEDULES. The parties accept, acknowledge,
and agree that they are executing this agreement with the Schedules and
Disclosure Memoranda hereto in draft form. The parties agree to work together in
good faith and use their reasonable best efforts to agree upon and finalize
mutually acceptable Schedules and Disclosure Memoranda within 72 hours after
execution of this Agreement. The parties' reaching mutual agreement on the final
form of the Schedules and Disclosure Memoranda is a condition to Closing
hereunder.
ARTICLE 16 PARENT CONDITIONS TO CLOSING; HOLDINGS CLOSING DELIVERIES
16.1 PARENT. Parent shall have no obligation to attend and carry
out the actions required of it at the Closing unless all of the following
conditions precedent shall have been satisfied:
16.1.1 CONTINUED TRUTH OF REPRESENTATIONS AND WARRANTIES. All
of the representations and warranties of Holdings contained in this Agreement
not qualified by materiality or Material Adverse Effect shall continue to be
true and correct at the Closing in all material respects as if made on and as of
the Closing Date and all of the representations and warranties of Holdings
contained in this Agreement qualified by materiality or Material Adverse Effect
shall continue to be true and correct at the Closing in all respects as if made
on and as of the Closing Date.
16.1.2 PERFORMANCE OF OBLIGATIONS. Holdings shall have
substantially performed or tendered substantial performance of each and every
one of its obligations hereunder which by its terms is to be performed at or
prior to the Closing.
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16.1.3 LEGAL PROCEEDINGS. No order shall have been entered
and not vacated by or before any court, administrative agency or other
governmental authority to restrain, prohibit or invalidate any of the
transactions contemplated by this Agreement.
16.1.4 GOVERNMENTAL FILINGS. The applicable waiting period
under the HSR Act with respect to the actions contemplated by this Agreement
shall have expired or been earlier terminated and any similar waiting period
shall have expired or the applicable governmental consent shall have been
obtained from the reviewing authorities in Brazil, Canada, and the United
Kingdom.
16.1.5 TIMBER NOTE CREDIT ENHANCEMENT. Timber LLC shall have
obtained one or more standby letters of credit from the Credit Enhancement Banks
and entered into the related agreements substantially consistent with the terms
of the LC Commitment Letters and shall have tendered delivery of the Timber
Notes and the standby letter(s) of credit to Parent and Southern.
16.1.6 DELIVERY OF CLOSING DOCUMENTS. Holdings shall have
tendered delivery to Parent of all of the following:
16.1.6.1 RESOLUTIONS. A copy of the resolutions of
the boards of directors or other governing bodies of Holdings and the Permitted
Affiliate Purchasers authorizing the execution and performance of this Agreement
and each of the Ancillary Agreements certified by the secretary or an assistant
secretary of each;
16.1.6.2 CLOSING CERTIFICATE. A certificate
signed by an officer of Holdings on behalf thereof to the effect that each of
the conditions to Closing specified in Section 16.1.1 and Section 16.1.2 have
been satisfied in full;
16.1.6.3 OPINION. An opinion of Xxxxxxxx & Xxxxx
LLP, counsel to Holdings, substantially in the form of Schedule 16.1.6.3
attached hereto;
16.1.6.4 PURCHASE PRICE. Receipt by Parent of cash
in an amount equal to the sum of the cash portion of the Timberlands Purchase
Price provided for in Section 4.1.1 and the Estimated Non-Timber Purchase Price
determined pursuant to Section 4.2;
16.1.6.5 TIMBER NOTES. The Timber Notes and the
standby letter(s) of credit called for in Section 4.1.2 hereof;
16.1.6.6 ANCILLARY AGREEMENTS. Executed copies of
each of the Ancillary Agreements to which Holdings or any of its Subsidiaries is
a party; and
16.1.6.7 ADDITIONAL ITEMS. Such additional
documents, instruments, and other items as counsel for Sellers may reasonably
request.
16.1.7 COMPLETE SCHEDULES. The parties accept, acknowledge,
and agree that they are executing this agreement with the Schedules and
Disclosure Memoranda hereto in draft form. The parties agree to work together in
good faith and use their reasonable best efforts to agree upon and finalize
mutually acceptable Schedules and Disclosure Memoranda within 72
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hours after execution of this Agreement. The parties' reaching mutual agreement
on the final form of the Schedules and Disclosure Memoranda is a condition to
Closing hereunder.
ARTICLE 17 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATIONS
17.1 SURVIVAL. The representations and warranties of the parties
shall survive the Closing for 18 months; PROVIDED that (a) the representations
and warranties of Sellers contained in SECTION 7.9 and SECTION 7.11 shall
survive the Closing until the fifth anniversary of the Closing Date, (b) the
representations and warranties of Sellers contained in SECTIONS 7.1 through 7.5
hereof, SECTION 7.16.2, SECTION 7.16.3, and SECTION 7.17 shall survive the
Closing forever, (c) and the representations and warranties of Holdings
contained in SECTIONS 8.1 through 8.5 hereof shall survive the Closing forever.
All claims, causes of action and rights of the parties based on the
representations and warranties of the other party shall expire upon expiration
of the applicable limitation period set forth in the immediately preceding
sentence and no claim based on a breach of any such representation and warranty
may be asserted unless written notice reasonably identifying the breach claimed
shall have been given to the party allegedly in breach prior to expiration of
such applicable limitation period. In addition, as between Sellers and Holdings
and its Permitted Affiliate Purchasers, all representations and warranties
contained in any Deed conveying Timberlands or Realty shall likewise survive
indefinitely. No claim shall be made for breach of any representation or
warranty contained in such Deeds except in accordance with the procedures
provided for indemnification claims in this Article 17.
17.2 INDEMNIFICATION BY SELLERS. Sellers shall, jointly and
severally, indemnify, defend and hold harmless Holdings, its Subsidiaries and
each of the Permitted Affiliate Purchasers and, if applicable, their respective
directors, officers, shareholders, partners, members, agents and employees and
their heirs, successors and assigns (the "Holdings Indemnified Parties") from,
against and in respect and to the extent of any damages, claims, losses,
charges, actions, suits, proceedings, deficiencies, interest, penalties, and
reasonable costs and expenses of defense (including reasonable attorneys' fees,
removal costs, remediation costs, closure costs, fines, penalties and expenses
of investigation and ongoing monitoring) (collectively, the "Losses") imposed
on, sustained, incurred or suffered by or asserted against any of the Holdings
Indemnified Parties, directly or indirectly, relating to or arising out of:
17.2.1 any breach of any representation or warranty made by
Parent or Sellers contained in this Agreement, or in any certificate, opinion,
or other document delivered by or on behalf of Parent or Sellers pursuant to the
requirements of this Agreement;
17.2.2 the Retained Liabilities;
17.2.3 the breach of any covenant or agreement of Parent or
Sellers contained in this Agreement;
17.2.4 provided such claim is made during the 5-year period
commencing on the Closing Date, any Indemnified Environmental Liabilities; and
17.2.5 provided such claim is made during the 18-month period
commencing on the Closing Date, any Losses arising from, related to or incurred
in connection with any state of
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facts or conditions or transactions (or series of facts, conditions or
transactions) existing at or prior to the Closing related to the Business, other
than the Assumed Liabilities specified in items 5.1.1 through 5.1.6 of Section
5.1.
17.3 SELLERS LIABILITY LIMITS.
17.3.1 Sellers shall not be liable to the Holdings
Indemnified Parties pursuant to Section 17.2.1 for any Losses arising as a
result of any breach of any representation or warranty except to the extent (and
then only to the extent) the aggregate of such Losses (when added to the
aggregate Losses under Section 17.2.4, whether or not in excess of the
Environmental Deductible) exceeds the Deductible, and then only for all such
Losses in excess thereof up to an aggregate amount (when added to the aggregate
Losses under Section 17.2.4, whether or not in excess of the Environmental
Deductible) equal to the Cap; PROVIDED that neither the Cap nor the Deductible
shall apply to any breach of any representation or warranty of Sellers made in
any of SECTIONS 7.1 through 7.5 hereof, SECTION 7.16.1, SECTION 7.16.2, SECTION
7.16.3, SECTION 7.16.5, SECTION 7.16.6, or SECTION 7.17.
17.3.2 Sellers shall not be liable to the Holdings
Indemnified Parties pursuant to Section 17.2.4 for any Losses relating to
Indemnified Environmental Liabilities except to the extent (and then only to the
extent) the aggregate of such Losses exceeds the Environmental Deductible, and
then only for all such Losses in excess thereof up to an aggregate amount (when
added to the aggregate Losses under Section 17.2.1) equal to the Cap.
17.3.3 The Deductible and the Cap shall not apply to Losses
suffered by the Holdings Indemnified Parties from a breach by Sellers or any of
their Subsidiaries of any of its covenants hereunder, its obligations hereunder
in respect of the Retained Liabilities, or its obligations under Section 17.2.5.
Claims made by any Holdings Indemnified Party against any of the Sellers for
breach of any representation or warranty contained in any Deed given pursuant to
this Agreement shall likewise not be subject to the operation of the Deductible
and the Cap.
17.4 HOLDINGS INDEMNITY. Holdings shall indemnify, defend and hold
harmless Parent and each of its Retained Subsidiaries and their respective
directors, officers, shareholders, partners, members, agents and employees and
their heirs, successors and assigns (the "Parent Indemnified Parties") from,
against and in respect and to the extent of any Losses directly or indirectly
caused by or relating to (i) any breach by Holdings of any of its
representations and warranties made in this Agreement, (ii) any breach of its
covenants made in this Agreement, or (iii) its failure to discharge the Assumed
Liabilities when and as they become due.
17.5 HOLDINGS LIABILITY LIMITS. Holdings shall not be liable to the
Parent Indemnified Parties for any Losses arising as a result of any breach of
any representation or warranty made by Holdings, except to the extent (and then
only to the extent) the aggregate of such Losses exceeds the Deductible, and
then only for all such Losses in excess thereof up to an aggregate amount equal
to the Cap. The deductible and the Cap shall not apply to Losses suffered by the
Parent Indemnified Parties from a breach by Holdings of any of its covenants
hereunder or of its obligations in respect of the Assumed Liabilities.
17.6 INDEMNIFICATION PROCEDURES.
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17.6.1 Any Person making a claim for indemnification pursuant
to Section 17.2 or 17.4 above (an "Indemnified Party") must give the party from
whom indemnification is sought (an "Indemnifying Party") written notice of such
claim describing such claim with reasonable particularity and the nature and
amount of such Loss to the extent that the nature and amount of such Loss is
known at such time) (an "Indemnification Claim Notice") promptly after the
Indemnified Party receives any written notice of any action, lawsuit,
proceeding, investigation or other claim (a "Proceeding") against or involving
the Indemnified Party by a Governmental Authority or other third party or
otherwise discovers the liability, obligations or facts giving rise to such
claim for indemnification; provided that, the failure to notify or delay in
notifying an Indemnifying Party will not relieve the Indemnifying Party of its
obligations pursuant to Section 17.2 or 17.4, as applicable, except to the
extent that (and only to the extent that) such failure shall have caused the
damages for which the Indemnifying Party is obligated to be greater than such
damages would have been had the Indemnified Party given the Indemnifying Party
prompt notice hereunder.
17.6.2 The Indemnifying Party shall have 30 days from the
personal delivery or mailing of the Indemnification Claim Notice (the "Notice
Period") to notify the Indemnified Party (i) whether or not the Indemnifying
Party disputes the liability of the Indemnifying Party to the Indemnified Party
hereunder with respect to such claim or demand, and (ii) whether or not it
desires to defend the Indemnified Party against such claim or demand.
17.6.3 If (i) the Indemnifying Party agrees in writing to be
responsible for the full amount of such Loss, and (ii) the claim for
indemnification does not relate to a matter (A) that, if determined adversely,
could reasonably be expected to expose the Indemnified Party to criminal
prosecution or penalties, (B) that, if determined adversely, could reasonably be
expected to result in the imposition of a consent order, injunction or decree
which would restrict the activity or conduct of the Indemnified Party or any
Affiliate thereof, or (C) for which the Indemnified Party shall have reasonably
concluded, in good faith, after consultation with the Indemnifying Party, that
such representation is likely to result in a conflict of interest or materially
jeopardize the viability of such defense, then the Indemnifying Party shall have
the right to defend the Indemnified Party by appropriate proceedings and shall
have the sole power to direct and control such defense. If any Indemnified Party
desires to participate in any such defense, it may do so at its sole cost and
expense.
The Indemnifying Party in no event shall have any right to
control (as opposed to participate in pursuant to Section 17.6.4 hereof) the
defense of any claim and shall pay the expenses of the Indemnified Party's
defense of such claim if:
17.6.3.1 the Indemnifying Party does not agree in
writing to be responsible for the full amount of any claim;
17.6.3.2 the claim for indemnification relates to
a matter (A) that, if determined adversely, could reasonably be expected to
expose the Indemnified Party to criminal prosecution or penalties, (B) that, if
determined adversely, could reasonably be expected to result in the imposition
of a consent order, injunction or decree which would restrict the activity or
conduct of the Indemnified Party or any Affiliate thereof, or (C) for which the
Indemnified party shall have reasonably concluded, in good faith, after
consultation with the Indemnifying Party,
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that such representation is likely to result in a conflict of interest or
materially jeopardize the viability of such defense; or
17.6.3.3 a court determines that the Indemnifying
Party is not vigorously defending the claim.
17.6.4 If the claim relates to a matter for which both the
Indemnifying Party and any Indemnified Party could be liable or responsible
hereunder, such as a Loss for which both parties could be partially liable due
to the Cap and Deductible, the Indemnifying Party and the Indemnified Parties
shall cooperate in good faith in the defense of such action. No party shall
settle any claim without the prior consent of the other party (which consent
shall not be unreasonably withheld); provided, however, that an Indemnified
Party shall not be required to consent to any settlement if the proposed
settlement (i) does not provide for a full release of all claims against such
Indemnified Party, (ii) is on a basis which would result in the imposition of a
consent order, injunction or decree or any other restriction on the activity or
conduct of such Indemnified Party, or (iii) is on a basis which could, in such
Indemnified Party's judgment, expose such Indemnified Party to criminal
liability or require an admission of wrongdoing by such Indemnified Party;
provided further that, the foregoing notwithstanding, an Indemnified Party may
settle or compromise any claim without the prior consent of the Indemnifying
Party if under Section 17.6.3 the Indemnifying Party had no right to control the
defense of such claim. If an Indemnified Party does not consent to a definitive
settlement proposed by the Indemnifying Party (with respect to which a
settlement agreement has been agreed to by all parties other than the
Indemnified Party) which settlement satisfies the foregoing clauses (i) through
(iii) or if the Indemnifying Party does not consent to a settlement proposed by
an Indemnified Party, then the party declining such settlement shall thereafter
have full control of the defense of such claim, and the maximum liability of the
party that proposed such settlement shall be determined as though such matter
had settled on the terms so proposed, and, if applicable, the amount of the
proposed settlement, together with all legal costs and expenses incurred in
connection with such matter through and including the proposed settlement date,
shall be deemed the amount of the Loss of the Indemnified Party for purposes of
determining whether the Cap and Deductible have been met. If both parties agree
to the settlement, the relative liabilities of the parties for such Losses shall
be determined as provided in the other provisions of this Article 17.
17.6.5 All costs and expenses incurred by the Indemnifying
Party in defending a claim or demand under Section 17.6.3, and all costs and
expenses incurred by the Indemnified Party in defending a claim or demand which
the Indemnifying Party has elected not to defend (including by virtue of its
failure to give timely notice to the Indemnified Party) or is not permitted to
defend under Section 17.6.3 shall be a liability of, and shall be paid by, the
Indemnifying Party.
17.6.6 To the extent the Indemnifying Party shall direct,
control or participate in the defense or settlement of any third-party claim or
demand, the Indemnified Party will give the Indemnifying Party and its counsel
access to, during normal business hours, the relevant business records and other
documents, and shall permit them to consult with the employees and counsel of
the Indemnified Party. The Indemnifying Party and Indemnified Parties shall use
their best efforts in the defense of all such claims.
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17.7 ACKNOWLEDGEMENT REGARDING LIABILITIES. Holdings and Sellers
acknowledge the allocation of relative responsibility for liabilities under this
Agreement is a material term of this Agreement, and that they have taken such
matters into consideration in determining the financial and other terms of this
transaction. Accordingly, the parties agree that a party shall be entitled to
the indemnification or other remedies provided in this Agreement by reason of
any breach of any such representation, warranty, covenant or agreement by
another party notwithstanding whether such party or any employee, representative
or agent of such party seeking to enforce a remedy knew or had reason to know of
such breach. Furthermore, for all purposes of indemnification under this Article
17, determinations of whether a representation or warranty has been breached and
of the amount of Losses arising from any such breach shall be made without
giving effect to any materiality, Material Adverse Effect or Knowledge
qualifications contained in such representation or warranty.
17.8 COMPUTATION OF LOSSES SUBJECT TO INDEMNIFICATION. The amount
of any Loss for which indemnification is provided under this Article 17 shall be
computed net of any insurance proceeds actually received by the Indemnified
Party in connection with such Loss. Indemnification for any Loss shall be
determined and paid without reduction for any Tax Benefits not yet realized by
the Indemnified Party. The Indemnified Party will pay to the Indemnifying Party
the amount of any Tax Benefits attributable to the Loss actually realized by the
Indemnified Party promptly after such Tax Benefits are realized; provided,
however, that in the event such Tax Benefits are realized prior to the
indemnification payment hereunder, such indemnification payment shall be reduced
by Tax Benefits previously realized in lieu of a separate payment to the
Indemnifying Party. The amount of any Tax Benefit shall be determined (i) by
comparing the liability of the Indemnified Party for Taxes, determined without
the Loss and any corresponding indemnification payments, to the liability of the
Indemnified Party for Taxes, taking into account the Loss and any corresponding
indemnification payments, and (ii) by treating any items attributable to the
Loss as the last items claimed by the Indemnified Party in any given Tax Period.
The amount of any Loss for which indemnification is provided under this Article
17 shall exclude consequential damages (it being understood that a reduction in
the value of the Business or the Assets shall not be considered consequential
damages) and punitive damages by an Indemnified Party; provided that, any
consequential damages and punitive damages of a third party for which an
Indemnified Party is liable shall be included in computing such Indemnified
Party's Loss.
17.9 EXCLUSIVE REMEDY. Each party acknowledges that, except as set
forth in Article 12 and Section 19.16, from and after the Closing this Article
17 constitutes the sole remedy of any party with respect to any matter arising
hereunder (other than with respect to claims based on fraud), including any
Losses or liability under any Environmental Law or with respect to any Hazardous
Substances (including claims under the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA")) and expressly waives any other rights
or causes of action, including under any Environmental Law (including CERCLA) or
with respect to any claim involving the presence of or exposure to any Hazardous
Substances.
17.10 TAX INDEMNITIES SEPARATE. The Tax indemnifications extended by
the parties pursuant to Article 12 hereof shall be independent of the
indemnifications provided for in this Article 17, and no claim for Loss shall be
asserted under this Article 17 which is a matter which is governed by the Tax
indemnifications provided for in Article 12. Payments to be made
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pursuant to Article 12 shall not be subject to the Deductible and Cap
limitations contained in this Article 17 and shall not affect the calculation of
the satisfaction of such limits.
17.11 ADJUSTMENTS TO PURCHASE PRICE. Indemnity payments made
pursuant to Article 17 or Article 12 shall be treated by the parties as an
adjustment to the Non-Timber Purchase Price or the Timberlands Purchase Price,
as applicable.
ARTICLE 18 TRANSITION SERVICES; AMENDED PAPER SALES AGREEMENT
18.1 At Closing, Parent and Holdings shall enter into a Mutual
Administrative Services Agreement in form and substance substantially similar to
the form attached as Schedule 18.1 (the "Mutual Administrative Services
Agreement").
18.2 At Closing Parent shall, and shall cause Boise Office
Solutions to, enter into an Amended Paper Sales Agreement in form and substance
substantially similar to the form attached as Schedule 18.2 (the "Amended Paper
Sales Agreement"), which agreement will amend and supersede the BOS Paper Sales
Agreement, and which agreement will be assigned to Holdings at the Closing.
ARTICLE 19 NOTICES
19.1 NOTICES. All notices, demands and other communications given
or delivered under this Agreement shall be in writing and shall be deemed to
have been given (i) when delivered personally to the recipient, (ii) one
business day after being sent to the recipient by reputable overnight courier
service (charges prepaid), (iii) upon machine-generated acknowledgment of
receipt after transmittal by facsimile if so acknowledged to have been received
before 5:00 p.m. on a business day at the location of receipt and otherwise on
the next following business day, provided that such notice, demand or other
communication is also deposited within 24 hours thereafter with a reputable
overnight courier service (charges prepaid) for delivery to the same Person, or
(iv) five days after being mailed to the recipient by certified or registered
mail, return receipt requested and postage prepaid. Notices, demands and other
communications to any party shall, unless another address is specified in
writing, be sent to the address or facsimile number indicated below:
To Holdings: Forest Products Holdings, LLC
c/o Madison Dearborn Partners, LLC
Three First Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxxx
With a copy to: Xxxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
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Telephone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxx, PC
Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
To Parent: Boise Cascade Corporation
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxx, Xxxxx 00000
Telephone (000) 000-0000
Fax: (000) 000-0000
Attn: Chairman and Chief Executive Officer
With a copy to: Boise Cascade Corporation
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxx, Xxxxx 00000
Telephone (000) 000-0000
Fax: (000) 000-0000
Attn: Senior Vice President and General
Counsel
19.2 AMENDMENT; WAIVER. Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by Parent, on behalf of all Sellers, and
Holdings, or in the case of a waiver, by the party against whom the waiver is to
be effective. No failure or delay by any party in exercising any right, power,
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power, or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
19.3 ASSIGNMENT. Except as otherwise provided herein, no party to
this Agreement may assign any of its rights or obligations under this Agreement
without the prior written consent of the other party hereto (not to be
unreasonably withheld), except that a party may, without the consent of any
other party hereto, (a) collaterally assign its rights and obligations under
this Agreement to a lender as security for a loan to Holdings or any of its
Subsidiaries, (b) Holdings and each of its Subsidiaries may assign its rights,
but not its obligations, hereunder to one or more of its Affiliates, and (c)
Holdings and its Subsidiaries may assign their rights under this Agreement to
one (but not more than one) purchaser in connection with any sale of all or
substantially all of the Business.
19.4 ENTIRE AGREEMENT. This Agreement together with all Schedules
hereto, and the parties' respective Disclosure Memoranda, and the Ancillary
Agreements contain the entire agreement between the parties hereto with respect
to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, except for the
obligations of the parties under the Confidentiality Agreement and the
obligations of Madison Dearborn Partners, Inc., set forth in that certain letter
dated January 21, 2004, to Xxxxxxx, Xxxxx & Co. on behalf of Parent, which
obligations will remain in full force and effect; PROVIDED that
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the obligations of Holdings and each of its Affiliates under the Confidentiality
Agreement and such letter shall terminate as of the Closing.
19.5 FULFILLMENT OF OBLIGATIONS. Any obligation of any party to any
other party under this Agreement or any of the Ancillary Agreements, which
obligation is performed satisfied or fulfilled by an Affiliate of such party,
shall be deemed to have been performed, satisfied, or fulfilled by such party.
Without limiting the generality of the foregoing, each party agrees that
Holdings may cause performance of any of its obligations hereunder by any one or
more of its Subsidiaries and, to the extent that performance by such
Subsidiary(ies) satisfies the obligations of Holdings hereunder, Holdings shall
be deemed to have fully performed such obligation.
19.6 PARTIES IN INTEREST. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
permitted assigns. Nothing in this Agreement, express or implied, is intended to
confer upon any Person other than Sellers, Holdings, the Permitted Affiliate
Purchasers, the Indemnified Parties and their respective successors or permitted
assigns, any rights or remedies under or by reason of this Agreement.
19.7 PUBLIC DISCLOSURE. Notwithstanding anything herein to the
contrary, except as may be required to comply with the requirement of any
applicable laws and the rules and regulations of each stock exchange upon which
the securities of one of the parties (or its Affiliate) is listed, no press
release or similar public announcement or communication shall, prior to the
Closing, be made or caused to be made concerning the execution or performance of
this Agreement unless specifically approved in advance by all parties hereto.
Holdings understands and acknowledges that Parent has concluded that upon
signing of this Agreement it will be legally obligated to make a public
disclosure of such fact and of the material terms of the transaction and that it
has reviewed and approved Parent's proposed external and internal information
releases.
19.8 EXPENSES Except as otherwise expressly provided in this
Agreement, whether or not the transactions contemplated by this Agreement are
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be borne by the party incurring
such expenses ; PROVIDED that, notwithstanding the foregoing, each of Holdings
or one or more of its Subsidiaries, on the one hand, and Parent or one or more
of its Subsidiaries, on the other hand, shall each pay 50% of the fees for
filings required to be made with Governmental Authorities, as described in
Section 10.3.1.
19.9 SCHEDULES. The disclosure of any matter in any Schedule shall
not be deemed to constitute an admission by Parent or Holdings or otherwise
imply that any such matter is material for the purposes of this Agreement.
19.10 BULK TRANSFER LAWS. Holdings acknowledges that Parent has not
taken, and does not intend to take, any action required to comply with any
applicable bulk sale or bulk transfer laws or similar laws; provided that,
Parent shall indemnify Holdings for any Losses arising from such non-compliance.
Such indemnification shall not be subject to the Deductible and Cap provisions
of Article 17.
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19.11 GOVERNING LAW; SUBMISSION TO JURISDICTION; SELECTION OF FORUM.
This Agreement shall be governed by, and construed in accordance with, the laws
of the state of Delaware. Each party hereto agrees that it shall bring any
action or proceeding in respect of any claim arising out of or related to this
Agreement or the transaction contained in or contemplated by this Agreement,
whether in tort or contract or at law or in equity, exclusively in the United
States District Court for the District of Delaware or any state court located in
Delaware (the "Chosen Courts") and (i) irrevocably submits to the exclusive
jurisdiction of the Chosen Courts, (ii) waives any objection to laying venue in
any such action or proceeding in the Chosen Courts, (iii) waives any objection
that the Chosen Courts are an inconvenient forum or do not have jurisdiction
over any party hereto, and (iv) agrees that service of process upon such party
in any such action or proceeding shall be effective if notice is given in
accordance with Section 19.1 of this Agreement.
19.12 COUNTERPARTS. This agreement may be executed in one or more
counterparts (including by facsimile), each of which shall be deemed an
original, and all of which shall constitute one and the same Agreement.
19.13 HEADINGS. The heading references herein are for convenience
purposes only, do not constitute a part of this Agreement and shall not be
deemed to limit or affect any of the provisions hereof.
19.14 SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (i) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision; and (ii) the remainder of this Agreement and the application of such
provision to other Person or circumstances shall not be affected by such
invalidity unenforceability.
19.15 BUSINESS DAY. Any reference herein to a business day shall
be any day other than a Saturday, Sunday or any United States federal holiday.
19.16 SPECIFIC PERFORMANCE. The Sellers acknowledge that the
Business is unique and recognize and affirm that in the event of a breach of
this Agreement by any of the Sellers, money damages may be inadequate and
Holdings and the Permitted Affiliate Purchasers may have no adequate remedy at
law. Accordingly, the Sellers agree that Holdings shall have the right, in
addition to any other rights and remedies existing in its favor, to enforce its
rights and the obligations of the Sellers hereunder not only by an action or
actions for damages but also by an action or actions for specific performance,
injunctive and/or other equitable relief. If any such action is brought by
Holdings or any of its Affiliates to enforce this Agreement, the Sellers hereby
waive the defense that there is an adequate remedy at law.
19.17 INDEPENDENT SIGNIFICANCE. The parties intend that each
representation, warranty, and covenant contained herein shall have independent
significance. If any party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same subject matter
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(regardless of the relative levels of specificity) which the party has not
breached shall not detract from or mitigate the fact that the party is in breach
of the first representation, warranty, or covenant.
19.18 CONFIDENTIAL INFORMATION. Parent shall, and shall cause each
of its Affiliates to, treat and hold as confidential any information concerning
the Business that is not already generally available to the public (the
"Confidential Information"), refrain from using any of the Confidential
Information except in connection with this Agreement and the Ancillary
Agreements or disclosing such Confidential Information to any Person (other than
Holdings and its Affiliates), and (except as otherwise provided herein) deliver
promptly to Holdings, at the request and option of Holdings, all tangible
embodiments (and all copies) of the Confidential Information which are in its or
their possession or under its or their control. In the event that Parent or any
of its Affiliates is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any Confidential
Information, Parent shall notify Holdings promptly of the request or requirement
so that Holdings may seek an appropriate protective order or waive compliance
with the provisions of this Section 19.18. If, in the absence of a protective
order or the receipt of a waiver hereunder, Parent or one of its Affiliates is,
on the advice of counsel, compelled to disclose any Confidential Information to
any tribunal or else stand liable for contempt, Parent or such Affiliate may
disclose to the tribunal only so much of the Confidential Information as it is
on the advice of counsel compelled to disclose; PROVIDED THAT such disclosing
Person shall use its best efforts to obtain an order or other assurance that
confidential treatment shall be accorded to such portion of the Confidential
Information required to be disclosed as Holdings shall designate.
Holdings shall, and shall cause each of its Affiliates to, treat and
hold as confidential any information concerning Boise Office Solutions that is
not already generally available to the public (the "Parent Confidential
Information"), refrain from using any of the Parent Confidential Information
except in connection with this Agreement and the Ancillary Agreements or
disclosing such Parent Confidential Information to any Person (other than Parent
and its Affiliates), and (except as otherwise provided herein) deliver promptly
to Parent, at the request and option of Parent, all tangible embodiments (and
all copies) of the Confidential Information which are in its or their possession
or under its or their control. In the event that Holdings or any of its
Affiliates is requested or required (by oral question or request for information
or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any Confidential
Information, Holdings shall notify Parent promptly of the request or requirement
so that Parent may seek an appropriate protective order or waive compliance with
the provisions of this Section 19.18. If, in the absence of a protective order
or the receipt of a waiver hereunder, Holdings or one of its Affiliates is, on
the advice of counsel, compelled to disclose any Confidential Information to any
tribunal or else stand liable for contempt, Holdings or such Affiliate may
disclose to the tribunal only so much of the Confidential Information as it is
on the advice of counsel compelled to disclose; PROVIDED THAT such disclosing
Person shall use its best efforts to obtain an order or other assurance that
confidential treatment shall be accorded to such portion of the Confidential
Information required to be disclosed as Parent shall designate.
-85-
IN WITNESS WHEREOF, the parties have caused this agreement to be signed
as of the date first set forth above.
BOISE CASCADE CORPORATION
By /s/ Xxxxxx X. Xxxxx
---------------------------------------
Title Chairman & Chief Executive Officer
-----------------------------------
BOISE SOUTHERN COMPANY
By Its General Partner
Boise Cascade Corporation
By /s/ Xxxxxx X. Xxxxx
--------------------------------------
Title Chairman & Chief Executive Officer
-----------------------------------
MINIDOKA PAPER COMPANY
By /s/ Xxxx X. Xxxxxxxx
-----------------------------------------
Title President
--------------------------------------
FOREST PRODUCTS HOLDINGS, L.L.C.
By: Madison Dearborn Capital Partners IV, L.P.
Its: Managing Member
By: Madison Dearborn Partners IV, L.P.
Its: General Partner
By: Madison Dearborn Partners, L.L.C.
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Its: Co-President
---------------------------------
The following schedules have been omitted from this Agreement. We will
furnish a copy of any such schedule to the Securities and Exchange Commission
upon request.
SCHEDULES
Schedule D-1A Form of Boise Cascade Aviation Operation Agreement
Schedule D-1B Form of Amendment to Operation Agreement
Schedule D-2 List of facility locations, and whether such facilities are
leased or owned
Schedule D-3 Description of Accounting Principles
Schedule D-4 List of individuals excluded from the definition of
Employees in this Agreement
Schedule D-5 Description of Excluded Staff Functions performed in
Parent's Headquarters Facility
Schedule D-6 List of individual reserves for liabilities relating to
litigation and other claims constituting Transferred
Litigation included in the Litigation and Claims Reserve
Schedule D-7 List of Permitted Affiliate Purchasers, excluding Operating
Holding Co., Timber Co. and Timber LLC
Schedule D-8 List of Realty owned by Sellers or their Retained
Subsidiaries, and addresses of such Realty
Schedule D-9 List of Retained Assets of any of Sellers
Schedule D-10 Events and conditions that would result in Retained
Environmental Liabilities arising under Environmental Laws
Schedule D-11 List of certain Retained Litigation against any of Sellers
or their respective Subsidiaries relating to the Business
other than the Transferred Litigation, and list of
outstanding reserves
Schedule D-12 List of the Retained Subsidiaries and Transferred
Subsidiaries, and their respective jurisdictions of
incorporation
Schedule D-13A Legal descriptions of the Owned Timberlands, including the
county and approximate acreage
Schedule D-13B Legal descriptions of the Leased Timberlands, including the
county and approximate acreage
Schedule D-13C Legal descriptions of the Perpetual Timberlands Rights,
including the county and approximate acreage
Schedule D-14 List of insurance policies currently carried by Parent or
any of its Subsidiaries which cover risks associated with or
arising out of the Business, including the status of the
insurance policy,
Schedule D-15 List of Transferred Litigation and claims pending or
threatened against any of Sellers, which arouse out of their
conduct of the Business
Schedule D-16 Comparison of specific claims under workers; compensation
and the IBNR reserve
Schedule D-17 List of 2004 Capital Spending Authorizations amounts
Schedule 3.5 Form of Additional Consideration Agreement
Schedule 4.1(b) Form of LC Commitment Letters
Schedule 4.1(c) Form of draft guaranty documentation
Schedule 4.1.4 Payment schedule to banks and form of release and
termination letters
Schedule 5.3 List of Retained Liabilities
Schedule 6.3 Forms of Registration Rights Agreement and Stockholders'
Agreement
Schedule 7.6.1 Copies of Financial Statements
Schedule 9.1.3 List of Realty surveys
Schedule 11.8 Form of Parent's general Severance Policy
Schedule 15.1.3 List of required consents
Schedule 15.1.13 List of landlord deliveries
Schedule 15.1.16.2 Form of Sellers' Counsel's Opinion
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Schedule 15.1.16.3 Form of Holding's Counsel's Opinion
Schedule 18.1 Form of Mutual Administrative Services Agreement
PARENT DISCLOSURE MEMORANDUM SCHEDULES
Schedule D-18 Forms of the Retention Bonus Plan, forms of the Retention
Bonus Award Agreements for officers and non-officers and
chart setting forth the aggregate bonus amounts to be
awarded pursuant to the retention bonus plan in 2004
Schedule D-19 Form of 2004 Severance Agreements for executive officers of
Parent, names of executive officers who have entered into
such Severance Agreements and the terms and amounts of
severance pay or benefits applicable to such executive
officers
Schedule 7.3 List of required consents and approvals to be obtained by
any Seller or any Transferred Subsidiary from its
shareholders or any Government Authority
Schedule 7.4 List of exceptions to Parent's non-contravention
representation and warranty
Schedule 7.6.1 Copies of Historical Financial Statements, Subsequent
Financial Statements, Audited Financial Statements, Stub
Period Financial Statements and Additional Financial
Statements
Schedule 7.6.2 List of exceptions where the Historical Financial Statements
and Subsequent Financial Statements did not fairly present,
in all material respects, the results of operations for the
portions of the Business they report on
Schedule 7.6.3 Exceptions to conduct of the Business in the ordinary and
usual course
Schedule 7.6.6 List of exceptions where Sellers and their Subsidiaries have
not conducted the Business in the ordinary and usual course
Schedule 7.7 List and description of any action, suit, demand, claim,
dispute, proceeding or investigation pending or, to the
knowledge of Parent threatened, related to or arising out of
the Business or any of the Assets or included in the Assumed
Liabilities, subject to certain exceptions listed in Section
7.1 of the Agreement
Schedule 7.8 List of (a) exceptions where Sellers or any of their
Affiliates did not duly or timely file Tax Returns; (b) list
of obligated Tax payments; (c) liens on assets of the
Transferred Subsidiaries subject to any lien arising in
connection with any failure to pay any Tax,; (d) exceptions
where Sellers and Transferred Subsidiaries have failed to
withhold or pay Taxes to any party; (e) pending or
threatened audits, assessments or claims from any Tax
Authority; and (f) stock distributions
Schedule 7.9.2(a) List of Parent's employee benefit plans
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(b) List of Parent's post-employment welfare benefit plans
(c) List of exceptions where any Parent employee plan has failed
to comply with applicable laws, including ERISA and the Code
(d) List of Parent's multiemployer benefit plans
Schedule 7.10 List of exceptions where the Business has not been conducted
in substantial compliance with applicable laws or Sellers
and the Transferred Subsidiaries have not obtained required
Governmental Authorizations for the ongoing conduct of the
Business
Schedule 7.11 List of exceptions arising from violation of applicable
Environmental Laws, including Straddle Environmental
Regulatory Issues and Straddle Hazardous Substance Releases
Schedule 7.12.1 List and description (including the county of registration)
of all registered Intellectual Property currently used in
the Business and third party rights in or ability to
restrict the use of such Intellectual Property
Schedule 7.12.2 List and description of pending or threatened Intellectual
Property infringement claims
Schedule 7.13.1 List of labor and collective bargaining agreements
2 List of strikes, work stoppages and unfair labor practice
charges
3 List of complaints or charges arising out of the employment
of any Employee where the aggregate potential liability for
such matter is at least $75,000
4 List of exceptions to compliance with applicable employment
laws
Schedule 7.14(a) List of (a) each Contract that has a remaining unexpired
term of at least one year and requires payment by or to the
Business of more than $1 million in any year; (b) any
Contract that requires payment by or to the Business of more
than $1 million; (c) any Contract containing a non-compete
covenant or similar provision that could restrict Holdings
in its post-Closing conduct of the Business; (d) any
consulting, retention, severance, bonus, compensation,
employment or similar agreement with any Employee other than
contracts that are less than one year and at an annual
compensation rate of less than $75,000; (e) any collective
bargaining agreement; (f) any Contract between any of
Sellers or any Retained Subsidiary on the one hand and any
of Sellers, Retained Subsidiary or Transferred Subsidiary on
the other hand; and (g) any other material Contract
4
(b) List of Contracts that are in default in any material
respect and list of Contracts that may not be transferred to
Holdings and its Subsidiaries without the consent of the
counter party thereto
(c) List of Contracts that may not be transferred to Holdings
and its Subsidiaries without the consent of the
counter-party thereto
Schedule 7.15(a) List of (a) each Timberlands Leases; (b) each Equipment
Lease with a remaining term of more than one month and
rental payments in excess of $1 million in the aggregate or
which covers equipment with an original purchase cost in
excess of $5 million; and (c) each Facilities Lease,
together with, for each Timberlands Lease, the general
location and acreage, and for each Facilities Lease, the
address of each parcel or real property subject to such
Lease
b) List of Leases that may not be transferred to Holdings and
its Subsidiaries without the consent of the counter-party
thereto
Schedule 7.16.1(A) List of (a) exceptions where the Assets together with the
assets held by the Transferred Subsidiaries, and the rights
specifically provided to Holdings and its Subsidiaries under
the Ancillary Agreements, are not sufficient for Holdings
and its Subsidiaries to conduct the Business in all material
respects and(b) any and all assets used in the conduct of
the Business, but which do not fall within the definition of
"Assets"
(B) List of letters of credit and performance bonds to be
assumed by Holdings and its Subsidiaries
Schedule 7.16.2 List of Encumbrances and exceptions of title to property,
other than those listed in Section 7.16.2 of the Agreement
Schedule 7.16.3 List of (a) options, warrants or similar rights to purchase
any of the shares of any of the Transferred Subsidiaries and
(b) shareholders' agreements, voting agreements, voting
trusts or other agreements with respect to or affecting any
of the Transferred Subsidiaries or their stock
Schedule 7.16.5 List of related party Contracts with any of Sellers,
Transferred Subsidiaries or person who has any interest in
any property or assets used by Sellers or any Transferred
Subsidiary, and description of all services provided to or
for the benefit of the Business by any portion of Sellers
not included in the Business and any of the Retained
Subsidiaries
Schedule 7.18 List of exceptions to disclosure of insurance policies on
Schedule D-14
Schedule 10.2 List of pending real estate transactions pursuant to which
Sellers are legally committed
5
HOLDINGS DISCLOSURE MEMORANDUM
Schedule 8.3 List of consents or approvals required to be obtained by
Holdings or any of the Permitted Affiliated Purchasers from
shareholders or any Governmental Authority in connection
with the execution, delivery and performance of this
Agreement and the Ancillary Agreements
Schedule 8.4 List of exceptions to Holdings' non-contravention
representation and warranty
Schedule 8.7 Ownership structure of Holdings and the Permitted Affiliate
Purchasers immediately after Closing
Schedule 8.8.2 Copies of (a) Debt Commitment Letters and (b) Equity
Commitment Letters
6
