Exhibit 10.3
ASSET PURCHASE
AGREEMENT
AMONG
NEENAH PAPER COMPANY OF
CANADA
As Seller
And
AZURE MOUNTAIN CAPITAL FINANCIAL
CORPORATION
As Purchaser
MADE AS OF
June 24, 2008
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PICTOU PULP MILL WORKING CAPITAL
ASSETS
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TABLE OF CONTENTS
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Article 1 –
INTERPRETATION
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1
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1.1
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Definitions
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1
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1.2
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Headings
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3
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1.3
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Extended Meanings
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3
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1.4
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Statutory References
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4
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1.5
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Accounting Principles
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4
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1.6
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Currency, Prices and Values
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4
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1.7
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Schedules
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4
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Article 2 – SALE AND
PURCHASE
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5
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2.1
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Assets to be Sold and Purchased
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5
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2.2
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Retained Liabilities
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5
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2.3
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Purchase Price
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5
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2.4
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Purchase Price Adjustment
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5
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2.5
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Allocation of Purchase Price; Taxes
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8
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2.6
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Section 85 Election
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9
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2.7
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Instruments of Conveyance
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9
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Article 3 – REPRESENTATIONS AND
WARRANTIES
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9
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3.1
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Seller’s Representations and
Warranties
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9
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3.2
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Survival of Seller’s Representations,
Warranties and Covenants
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12
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3.3
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Purchaser’s Representations and
Warranties
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13
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3.4
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Survival of Purchaser’s Representations,
Warranties and Covenants
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14
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Article 4 – COVENANTS
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14
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4.1
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Governmental Filings
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14
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4.2
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Expenses
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14
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4.3
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Indemnification for Brokerage
Commissions
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15
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4.4
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Further Assurances
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15
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4.5
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Use of Seller’s Trade Name
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15
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4.6
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Money Received After Closing
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15
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Article 5 – CLOSING
ARRANGEMENTS
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16
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5.1
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Closing
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16
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Article 6 – GENERAL
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16
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6.1
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Time of the Essence
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16
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6.2
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Public Announcements
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16
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6.3
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Benefit of the Agreement
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16
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6.4
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Third Party Beneficiaries
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16
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6.5
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Entire Agreement
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16
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6.6
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Amendments and Waivers
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17
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6.7
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Assignment
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17
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6.8
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Notices
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17
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6.9
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Remedies Cumulative
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18
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6.10
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Governing Law
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18
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6.11
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Attornment
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18
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6.12
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Counterparts
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18
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ASSET PURCHASE
AGREEMENT
THIS AGREEMENT is made as of June 24, 2008,
between NEENAH PAPER COMPANY OF CANADA, an unlimited company
incorporated under the laws of Nova Scotia (“ Seller
”) and AZURE MOUNTAIN CAPITAL FINANCIAL CORPORATION, an
unlimited company incorporated under the laws of Nova Scotia
(“ Purchaser ”).
PRELIMINARY
STATEMENT
Purchaser desires to purchase, and
Seller desires to sell, the Assets (as defined herein) relating to
the business conducted by Seller at and only with respect to its
Pictou County, Nova Scotia pulp mill (the “ Pictou Pulp
Mill ” or the “ Pulp Business ”), for
the consideration set forth below, subject to the terms and
conditions of this Agreement.
NOW THEREFORE
, in consideration of the premises
and the covenants and agreements herein contained, the parties
hereto agree as follows:
ARTICLE 1 –
INTERPRETATION
1.1
Definitions
In this Agreement, unless something
in the subject matter or context is inconsistent therewith, the
following terms shall have the respective meanings set out below
and grammatical variations of such terms shall have corresponding
meanings:
“ Affiliate ” means, with
respect to any Person, any other Person directly or indirectly
controlling, controlled by or under common control with, such
Person, and for these purposes “control” is the power
whether by contract or ownership of equity interests or otherwise
to select a majority of the board of directors or other supervisory
management authority of an Entity, whether directly or indirectly
through a chain of Entities that are “controlled”
within the foregoing meaning; provided, however, that for purposes
of this Agreement, Seller and Purchaser shall be deemed not to be
Affiliates of each other;
“ Agreement ” means this
asset purchase agreement including the Preliminary Statement and
Schedules to this agreement, as amended, supplemented or restated
from time to time;
“ Applicable Law ” means any
applicable domestic or foreign, federal, provincial or local law,
including any statute or subordinate legislation or treaty and any
applicable rule, regulation, ordinance, requirement, order, Permit,
judgment, injunction, award or decree or other binding requirement
of a Governmental Authority having the force of law;
“ Assets ” has the meaning
set out in Section 2.1;
“ Business Day ” means a day
other than a Saturday, Sunday or statutory holiday in New York, New
York, Atlanta, Georgia or Halifax, Nova Scotia;
“ Closing ” means the closing
of the transactions contemplated hereby;
1
“ Closing Date ” means the
date hereof;
“ Contract ” means any
agreement, indenture, contract, lease, deed of trust, licence,
option, instrument or other commitment, whether written or
oral;
“ Entity ” means a Person
other than an individual;
“ GAAP ” has the meaning set
out in Section 1.5;
“ Governmental Authority ”
means any domestic or foreign, federal, provincial, municipal,
local or other governmental, quasi-governmental, legislative,
executive, judicial or administrative body or person having
jurisdiction in the relevant circumstances, including any
governmental ministry, agency, branch, department, commission,
board, tribunal, bureau or arbitrator;
“ Issued Shares ” has the
meaning set out in Section 2.3(a);
“ knowledge ”, with respect
to Seller, means the actual knowledge, after due enquiry, of any of
the Persons listed on Schedule 1.1(a);
“ lien or other encumbrance ”
or “ Encumbrance ” means any lien, pledge,
hypothec, mortgage, security interest of any nature, adverse claim,
reservation, easement, title retention agreement, claim, lease,
charge, option, right of first refusal, easement, servitude,
transfer restriction under any shareholder or similar agreement,
encumbrance or any other restriction or limitation whatsoever, or
any Contract to create any of the foregoing;
“ Losses ” means all fines,
losses, liabilities, damages, deficiencies, costs or expenses
(including interest, legal fees and disbursements of legal counsel)
arising directly or indirectly as a consequence of such
matter;
“ Material Adverse Change ”
and “ Material Adverse Effect ” mean any event,
change or effect that, when taken individually or together with all
other adverse effects, will or is reasonably likely to have a
materially adverse effect on the business, affairs, capitalization,
assets, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Pulp Business, taken as a whole;
provided, however, that effects or changes relating to:
(a)
changes in general political and
economic conditions and changes affecting generally the industries
and markets in which the Pulp Business is conducted that, in any of
the foregoing cases, do not affect the Pulp Business, taken as a
whole, in a disproportionate manner relative to other participants
in the same industry as the Pulp Business;
(b)
the effect of any changes in
applicable laws, regulations or accounting rules; and
(c)
the fact of the pendency of the
transactions contemplated by this Agreement and the identity of
Purchaser;
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are not Material Adverse Changes or Material
Adverse Effects and are not to be taken into account in determining
whether a Material Adverse Change or a Material Adverse Effect has
occurred;
“ Person ” means any
individual, corporation, company, unlimited liability company,
partnership, firm, joint venture, association, joint-stock company,
trust, unincorporated organization, Governmental Authority or other
legal or business entity however designated or
constituted;
“ Pictou Pulp Mill ” has the
meaning set out in the Preliminary Statement;
“ Pulp Business ” has the
meaning set out in the Preliminary Statement;
“ Purchase Price ” has the
meaning set out in Section 2.3;
“ Purchaser ” has the meaning
set out on Page 2;
“ Seller ” has the meaning
set out on Page 2;
“ Taxes ” means any federal,
provincial, local or foreign, income, capital, branch, goods and
services, valued added, harmonized sales, gross receipts, property,
sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or add-on minimum, ad valorem , or
excise tax, or any other tax, custom, duty, governmental fee or
other like assessment or charge of any kind whatsoever, together
with any interest or penalty, imposed by any Governmental
Authority; provided, however, that in no event shall Taxes be
deemed to include any transfer tax or capital gains tax payable in
connection with the purchase and sale of the Assets; and
“ Time of Closing ” means
10:15 a.m. in Nova Scotia on the Closing Date, with an
effective Time of Closing for accounting purposes of
12:01 a.m. in Nova Scotia on the Closing Date.
1.2
Headings
The division of this Agreement into
articles and sections and the insertion of a table of contents and
headings are for convenience of reference only and are not to
affect the construction or interpretation of this Agreement.
The terms “hereof”, “hereunder” and similar
expressions refer to this Agreement and not to any particular
Article, Section or other portion hereof. Unless
something in the subject matter or context is inconsistent
therewith, references herein to Articles and Sections are to
Articles and Sections of this Agreement.
1.3
Extended
Meanings
In this Agreement words importing
the singular number only include the plural and
vice versa and words importing any gender include all
genders. Unless something in the subject matter or context is
inconsistent therewith, the term “including” means
“including without limiting the generality of the
foregoing”.
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1.4
Statutory
References
Unless something in the subject
matter or context is inconsistent therewith and except with respect
to Environmental Laws, each reference to any statute refers to that
statute and to the regulations made under that statute, as now
enacted or as the same may from time to time be amended, re-enacted
or replaced.
1.5
Accounting
Principles
Wherever in this Agreement reference
is made to a calculation to be made or an action to be taken in
accordance with generally accepted accounting principles, such
reference will be deemed to be to the generally accepted accounting
principles in the United States from time to time (“
GAAP ”), applicable as at the date on which such
calculation or action is made or taken or required to be made or
taken.
1.6
Currency, Prices and
Values
All references to currency, prices
and values (monetary, accounting, financial or otherwise) herein
are to lawful currency of Canada unless otherwise
specified.
1.7
Schedules
(a)
The following Schedules are attached to and form part of this
Agreement:
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Schedule
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Contents
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Schedule 1.1(a)
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Knowledge of Certain Persons
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Schedule 2.5
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Allocation of Purchase Price
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Schedule 2.6
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Section 85(1) Tax Election
Amounts
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Schedule 3.1(c)
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Compliance with Laws
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Schedule 3.1(e)
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Actions and Proceedings
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Schedule 3.1(j)
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Location of Assets
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Schedule 3.1(m)
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Insurance Policies
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* The schedules listed above have been omitted
in accordance with Item 601(b)(2) of Regulation S-K. The
Company hereby undertakes to furnish to the Securities and Exchange
Commission a copy of any omitted exhibits or schedules upon
supplemental request.
(b)
Any matter disclosed on any of the Schedules hereto shall be deemed
to be disclosed on each other Schedule hereto relating to such
matters.
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ARTICLE 2 – SALE
AND PURCHASE
2.1
Assets to be Sold and
Purchased
Seller hereby sells, assigns,
transfers, conveys and delivers to Purchaser, as of the Time of
Closing, the following current assets of Seller relating to the
Pulp Business:
(a)
the trade receivables of the Pulp
Business as reflected in Seller’s general ledger accounts
numbers 000-0321 and 000-0321-100; and
(b)
the hardwood pulp inventory and the
softwood pulp inventory of the Pulp Business as reflected in
Seller’s general ledger accounts numbers 000-0631 and
000-0633, respectively.
All of the foregoing assets and
properties being sold, assigned, transferred, conveyed and
delivered to Purchaser hereunder are hereinafter referred to as the
“ Assets ”.
2.2
Retained
Liabilities
Notwithstanding anything to the
contrary contained herein, Purchaser shall not hereby assume, or in
any way be liable or responsible for, any liabilities or
obligations of Seller.
2.3
Purchase
Price
Subject to the adjustments
contemplated in Section 2.4, the aggregate purchase price (the
“ Purchase Price ”) payable by Purchaser to
Seller for the Assets shall be $41,993,380, which shall be
satisfied as follows:
(a)
the issuance by Purchaser to Seller
of 41,993,380 no par value common shares of Purchaser (the “
Issued Shares ”) represented by share certificate no.
NPV-1 registered in the name of Seller, the receipt of which is
hereby acknowledged by Seller; and
(b)
all purchase price adjustments
pursuant to Section 2.4 shall be satisfied by payment of cash
as specified in Section 2.4.
2.4
Purchase Price
Adjustment
(a)
The Purchase Price shall be adjusted as set forth in this
Section 2.4.
(b)
At the Time of Closing, Seller shall provide to Purchaser a
complete list of the receivables referred to in
Section 2.1(a) (the “ Closing Date Receivables
List ”). The aggregate amount of the receivables
listed in the Closing Date Receivables List is referred to as the
“ Closing Date Receivables Amount ”.
(i)
If the Closing Date Receivables
Amount is less than $28,086,792 (the “ Target Receivables
Amount ”), the Purchase Price shall be decreased by an
amount (the “ Purchase Price Receivables Reduction
Amount ”) equal
5
to the difference between the Target
Receivables Amount and the Closing Date Receivables Amount, and
Seller shall immediately thereafter pay to Purchaser in immediately
available funds the Purchase Price Receivables Reduction
Amount.
(ii)
If the Closing Date Receivables
Amount is greater than the Target Receivables Amount, the Purchase
Price shall be increased by an amount (the “ Purchase
Price Receivables Increase Amount ”) equal to the
difference between the Closing Date Receivables Amount and the
Target Receivables Amount, and Purchaser shall immediately after
the Closing pay to Seller in immediately available funds the
Purchase Price Receivables Increase Amount.
(c)
At the Time of Closing, Seller shall provide to Purchaser a
reasonable estimate of the aggregate value of the inventories
referred to in Section 2.1(b) (the “ Closing
Date Inventories Estimate ”).
(i)
If the Closing Date Inventories
Estimate is less than $9,333,265 (the “ Target Inventories
Amount ”), the Purchase Price shall be decreased by an
amount (the “ Purchase Price Inventories Reduction
Amount ”) equal to the difference between the Target
Inventories Amount and the Closing Date Inventories Estimate, and
Seller shall immediately thereafter pay to Purchaser in immediately
available funds the Purchase Price Inventories Reduction
Amount.
(ii)
If the Closing Date Inventories
Estimate is greater than the Target Inventories Amount, the
Purchase Price shall be increased by an amount (the “
Purchase Price Inventories Increase Amount ”) equal to
the difference between the Closing Date Inventories Estimate and
the Target Inventories Amount, and Purchaser shall immediately
after the Closing pay to Seller in immediately available funds the
Purchase Price Inventories Increase Amount.
(d)
For purposes of Section 2.4(d), if the difference between
(x) the sum of the Purchase Price Receivables Reduction Amount
and the Purchase Price Inventories Reduction Amount, minus
(y) the Purchase Price Receivables Increase Amount and the
Purchase Price Inventories Increase Amount is a positive amount,
such amount is referred to as the “ Seller Closing
Payment ”; and if the difference is a negative amount,
the absolute value thereof shall be referred to as the “
Purchaser Closing Payment ”.
Not later than 30 calendar days following the
Closing Date, Purchaser will prepare and deliver to Seller a
calculation of the value of the Assets as of the Closing Date (the
“ Final Net Working Capital ”) in accordance
with GAAP applied in a manner consistent with Seller’s
historic practices. The “ Target Net Working
Capital ” is an amount equal to $37,420,057.
(i)
If the Final Net Working Capital is
less than:
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(A)
the Target Net Working Capital minus
the Seller Closing Payment, or
(B)
the Target Net Working Capital plus
the Purchaser Closing Payment,
the Purchase Price shall be
decreased by an amount (the “ Purchase Price Reduction
Amount ”) equal to:
(I)
in the case of clause (A),
(x) the Target Net Working Capital minus (y) the sum of
the Final Net Working Capital plus the Seller Closing Payment,
or
(II)
in the case of clause (B),
(x) the Target Net Working Capital minus (y) the
difference between the Final Net Working Capital minus the
Purchaser Closing Payment,
and Seller shall, on the Final
Determination Date, pay to Purchaser in immediately available funds
the Purchase Price Reduction Amount.
(ii)
If the Final Net Working Capital is
more than:
(A)
the Target Net Working Capital minus
the Seller Closing Payment, or
(B)
the Target Net Working Capital plus
the Purchaser Closing Payment,
the Purchase Price shall be
increased by an amount (the “ Purchase Price Increase
Amount ”) equal to:
(I)
in the case of clause (A),
(x) the sum of the Final Net Working Capital plus the Seller
Closing Payment, minus (y) the Target Net Working Capital,
or
(II)
in the case of clause (B),
(x) the difference between the Final Net Working Capital minus
the Purchaser Closing Payment, minus (y) the Target Net
Working Capital,
and Purchaser shall, on the Final
Determination Date, pay to Sel
