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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 8-K
--------------------
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) October 25, 1999
--------------------
JSCE, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 0-11951 37-1337160
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
</TABLE>
<TABLE>
<S> <C>
150 NORTH MICHIGAN AVENUE
CHICAGO, ILLINOIS 60601
(Address of Principal Executive Offices) (Zip code)
</TABLE>
Registrant's Telephone Number, Including Area Code: (312) 346-6600
--------------------
(Former name or former address, if changed since last report)
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<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On October 25, 1999, JSCE, Inc. (the "Company") completed the
sale and lease assignment of approximately 980,000 acres of timberland in
Florida, Georgia and Alabama to Rayonier Inc. pursuant to a Purchase and Sale
Agreement effective as of July 28, 1999, as amended on October 21, 1999. The
final purchase price, after adjustments, was $710 million. The Company
received $225 million in cash on closing, with the balance $485 million in
the form of installment notes. Proceeds from the notes of $440 million
will be realized by mid-November upon completion of a note monetization
program. The Company will use the proceeds from the sale for debt reduction.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
A. Financial Statements of Businesses Acquired.
Not Applicable.
B. Pro Forma Financial Information.
Unaudited Pro Forma Consolidated Financial Statements of JSCE,
Inc., filed herewith.
C. Exhibits. The following exhibits are filed as a part of this
report:
Exhibit No. Description
----------- -----------
2.1 Purchase and Sale Agreement, effective as of July 28,
1999, between Rayonier Inc. and Jefferson Smurfit
Corporation (U.S.)
2.2 Amendment to Purchase and Sale Agreement, dated
October 21, 1999, between Rayonier Inc. and Jefferson
Smurfit Corporation (U.S.)
-1-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
JSCE, INC.
Dated: October 25, 1999 \s\ Paul K. Kaufmann
------------------------
Name: Paul K. Kaufmann
Title: Vice President and Corporate
Controller
-2-
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma condensed consolidated statements of
operations and condensed consolidated balance sheet of JSCE, Inc. were prepared
to illustrate the estimated effects of the sales transaction and monetization of
installment notes as if the transaction had occurred for the statement of
operations as of the beginning of the periods presented and for the balance
sheet presentation as of June 30, 1999.
The pro forma adjustments are based upon available information and upon
certain assumptions that JSCE Inc. believes are reasonable. The pro forma
condensed consolidated financial statements and accompanying notes should be
read in conjunction with the historical financial statements of JSCE, Inc. and
the related notes thereto.
The pro forma condensed consolidated financial statements are provided for
informational purposes only in response to Securities and Exchange Commission
('SEC') requirements and do not purport to represent what JSCE, Inc.'s financial
position or results of operations would actually have been if the sales
transaction and monetization of installment notes had in fact occurred at such
dates or or to project JSCE, Inc.'s financial position or results of operations
for any future date or period.
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
JSCE, INC.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
<TABLE>
<CAPTION>
June 30, 1999
------------------------------------------
JSCE Pro Forma JSCE
Historical Adjustments Pro Forma
-------------- ------------ ------------
(In Millions)
ASSETS
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents............................... $ 28 $ 225 (a) $ 28
(225)(b)
Receivables............................................. 335 335
Inventories............................................. 241 241
Deferred income taxes................................... 83 83
Prepaid expenses and other current assets............... 17 17
-------- ------- -------
Total current assets............................... 704 704
Property, plant and equipment, net.............................. 1,471 (11)(a) 1,460
Timberland, net................................................. 259 (255)(a) 4
Goodwill, net................................................... 209 209
Notes receivable from Smurfit-Stone Container Corporation....... 347 347
Notes receivable................................................ 485 (a)
(485)(b)
Other assets.................................................... 145 (13)(b) 161
29 (b)
-------- ------- -------
$ 3,135 $ (250) $ 2,885
======== ======= =======
LIABILITIES AND STOCKHOLDER'S
EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term debt.................... $ 57 $ $ 57
Accounts payable........................................ 310 310
Accrued income taxes.................................... 61 (a) 56
(5)(b)
Other accrued liabilities............................... 225 18 (a) 243
-------- ------- -------
Total current liabilities.......................... 592 74 666
Long-term debt, less current maturities......................... 2,522 (665)(b) 1,857
Other long-term liabilities..................................... 273 273
Deferred income taxes........................................... 277 105 (a) 376
(6)(b)
Stockholder's equity (deficit):
Common stock and additional paid-in capital............. 1,128 1,128
Retained earnings (deficit)............................. (1,653) 260 (a) (1,411)
(10)(b)
(8)(b)
Accumulated other comprehensive income (loss)........... (4) (4)
-------- ------- -------
Total stockholder's equity (deficit)............... (529) 242 (287)
-------- ------- -------
$ 3,135 $ (250) $ 2,885
======== ======= =======
</TABLE>
See accompanying notes to the Unaudited Pro Forma
Condensed Consolidated Financial Statements.
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
JSCE, INC.
Pro Forma Condensed Consolidated Statements of Operations
<TABLE>
<CAPTION>
JSCE Pro Forma JSCE
Historical Adjustments Pro Forma
------------- ------------- ---------
(In Millions)
<S> <C> <C> <C>
Six Months Ended June 30, 1999:
Net sales..................................... $ 1,515 $ (20)(c) $ 1,495
Cost of goods sold............................ 1,279 (10)(c) 1,276
7 (d)
Selling and administrative expenses........... 165 (4)(e) 161
Restructuring charge.......................... 9 9
------------- ----------- ----------
Income (loss) from operations................. 62 (13) 49
Interest (expense), net....................... (93) 29 (b) (64)
------------- ----------- ----------
Income (loss) from continuing operations
before income taxes, extraordinary item
and cumulative effect of accounting
change................................ (31) 16 (15)
Benefit from (provision for) income taxes..... 12 (6)(f) 6
------------- ----------- ----------
Income (loss) from continuing operations
before income taxes, extraordinary item and
cumulative effect of accounting change $ (19) $ 10 $ (9)
============= =========== ==========
Year Ended December 31, 1998:
Net sales..................................... $ 3,022 $ (41)(c) $ 2,981
Cost of goods sold............................ 2,524 (21)(c) 2,523
20 (d)
Selling and administrative expenses........... 290 (6)(e) 284
Restructuring charge.......................... 257 257
------------- ----------- ----------
Income (loss) from operations................. (49) (34) (83)
Interest (expense), net....................... (196) 57 (b) (139)
Other (expense), net.......................... (5) (3)(e) (8)
------------- ----------- ----------
Income (loss) from continuing operations
before income taxes, extraordinary
item and cumulative effect of
accounting change..................... (250) 20 (230)
Benefit from (provision for) income taxes..... 96 (8)(f) 88
------------- ----------- ----------
Income (loss) from continuing operations
before extraordinary item and cumulative
effect of accounting change........... $ (154) $ 12 $ (142)
============= =========== ==========
</TABLE>
See accompanying notes to the Unaudited Pro Forma
Condensed Consolidated Financial Statements.
<PAGE>
UNAUDITED PROFORMA CONDENSED CONSOLIDATED FINANCIAL DATA
JSCE, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(a) To record:
The sale and assignment of approximately 980,000 acres of owned and
leased timberland in Florida, Georgia and Alabama to Rayonier Inc.
pursuant to a Purchase and Sale Agreement effective as of July 28,
1999, as amended on October 21, 1999. The final purchase price,
after adjustments, was $710 million consisting of $225 million in
cash on closing and $485 million in installment notes.
Closing costs of $18 million directly attributable to the sales
transaction including financial advisory, legal and accounting fees.
The gain on the sales transaction of $260 million, net of taxes
of $166 million, is included in retained earnings in the pro forma
balance sheet and is excluded from the pro forma statements of
operations.
(b) Balance Sheet
To record cash proceeds and installment notes received as
consideration upon closing and the subsequent monetization
of the installment notes.
Proceeds of $440 million from the note monetization program
will be accounted for under SFAS #125 "Accounting for Transfer
and Servicing of Financial Assets and Extinguishments of Liabilities".
The cash proceeds and monetization transaction will be used to
retire $100 million of the existing Tranche A term loan, due 2005
with a variable rate of 7.4% and $565 million of the existing
Tranche B term loan due 2009 with a variable rate of 8%.
The residual interest in the installment notes is included in the
pro forma balance sheet at its estimated fair value.
Write-off of deferred debt issuance costs of $13 million related
to existing term loans. The extraordinary item of $8 million related
to the early extinguishment of debt, is included in retained
earnings in the pro forma balance sheet, but has been excluded from the
pro forma statements of operations.
Statements of Operations
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
June 30, December 31,
1999 1998
---- ----
<S> <C> <C>
Additional interest expense on the monetized notes......................$ (20) $ (40)
Additional interest income on the installment notes..................... 20 41
Less interest expense on extinguished debt.............................. 28 54
Less amortization of deferred debt issuance costs....................... 1 2
------ -------
Net interest expense decrease...........................................$ 29 $ 57
====== =======
</TABLE>
(c) To eliminate timber sales to third party customers and related cost of
goods sold.
<PAGE>
(d) To eliminate the contribution margin provided by timber harvested for
internal use. After the sales transaction, timber required for internal
use will be purchased at market prices.
(e) To eliminate timberland selling, administrative and other expenses
attributable to third party and internal operating activity.
(f) Tax effects are recorded assuming a 39% tax rate.
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
2.1 Purchase and Sale Agreement, effective as of July 28, 1999,
between Rayonier Inc. and Jefferson Smurfit Corporation (U.S.)
2.2 Amendment to Purchase and Sale Agreement, dated October 21,
1999, between Rayonier Inc. and Jefferson Smurfit Corporation
(U.S.)
STATEMENT OF DIFFERENCES
The section symbol shall be expressed as................................'SS'
<PAGE>
EXHIBIT 2.1
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT (this "Agreement"), made as of the Effective Date (as
defined in paragraph 28 below), by and between RAYONIER INC., a North Carolina
corporation (hereinafter referred to as "Purchaser"), and JEFFERSON SMURFIT
CORPORATION (U.S.), a Delaware corporation (hereinafter referred to as
"Seller");
W I T N E S S E T H:
WHEREAS, Seller is the owner of the Property (as hereinafter defined);
and
WHEREAS, Seller intends to convey the Property to a newly created
limited liability company, wholly owned by Seller (the "LLC"); and
WHEREAS, Purchaser desires to purchase 100% of the membership interests
in the LLC (the "Membership Interests") from Seller;
NOW, THEREFORE, the parties hereby agree as follows:
1. Agreement of Purchase and Sale. Subject to the provisions of this
Agreement, and for the consideration herein stated, Seller agrees to sell to
Purchaser and Purchaser agrees to buy from Seller the Membership Interests. On
or before the date of Closing, Seller shall transfer and convey to LLC, in
accordance with the terms and provisions of this Agreement, all of the following
described property (collectively, the "Property"):
(a) all those certain tracts or parcels of land located in the
States of Alabama, Florida and Georgia and being described on Exhibit A attached
hereto, together with all buildings, structures and other improvements located
thereon, all tenements, hereditaments, easements, appurtenances and privileges
thereto belonging, all timber and trees thereon (excluding the Reserved Timber,
as defined and contemplated in paragraph 3(e) below), and, to the extent (if
any) owned by Seller (but excluding the Reserved Minerals, as defined in
paragraph 3(f) below), all oil, gas and mineral rights and interests with
respect thereto (collectively, the "Owned Real Property");
(b) all of Seller's right, title and interest (excluding the
Reserved Timber) as contemplated in paragraph 3(e) below under those certain
agreements described on Exhibit B attached hereto (collectively, the "Real
Property Leases"), pursuant to which Seller has the right to use or occupy
certain real property owned by third parties and located in the States of
Alabama, Florida and Georgia (the real property covered by the Real Property
Leases being herein referred to collectively as the "Leased Real Property"; the
Owned Real Property and the Leased Real Property being herein referred to
collectively as the "Real Property"); and
<PAGE>
(c) all of Seller's right, title and interest in and to the
leases, subleases, contracts, licenses and permits described on Exhibit C
attached hereto which are in full force and effect on the date of Closing
(collectively, the "Incidental Leases"), pursuant to which third parties have
the right to use portions of the Real Property for hunting, fishing, apiary and
other incidental purposes.
The parties agree that if any portion of the Real Property is deleted or taken
pursuant to any of paragraphs 4(c), 6(a), 7(c) or 30 below, then the term "Real
Property" shall no longer include such deleted portion; and if any Real Property
Lease is deleted pursuant to any of paragraphs 3(g), 4(c) or 6(b) below, then
the term "Real Property Leases" shall no longer include such deleted Real
Property Lease.
2. Purchase Price. The purchase price (the "Purchase Price") for the
Membership Interests will be Seven Hundred Twenty-Five Million and NO/100
DOLLARS ($725,000,000.00), subject to adjustment to the extent, if any, provided
in paragraphs 3(e), 3(g), 4(c), 6, 7(b) and 30 hereof. The Purchase Price will
be paid at the Closing (as hereinafter defined) (a) by the execution and
delivery by Purchaser to Seller of one or more installment promissory notes
issued in conformity with the requirements of, and subject to the terms and
provisions set forth in, Exhibit D attached hereto (collectively the
"Installment Note") in the original principal amount of Five Hundred Million and
NO/100 Dollars ($500,000,000.00), and (b) by wire transfer of the balance of the
Purchase Price in immediately available funds to an account designated by
Seller.
3. Closing.
(a) The execution and delivery of the documents and
instruments for the consummation of the purchase and sale pursuant hereto (the
"Closing") will take place at 10:00 a.m., local time, on October 15, 1999 at the
offices of Seller's counsel, Sutherland Asbill & Brennan LLP, at 999 Peachtree
Street, NE, Atlanta, Georgia, subject to any extension expressly provided for in
this Agreement, or such earlier date and time, and/or such other location, as
may be mutually agreeable to Seller and Purchaser.
(b) On the date of Closing, Seller shall at its sole cost and
expense, amend the Constituent Documents (as defined herein) to withdraw as the
sole member of the LLC and to admit Purchaser as the sole member of the LLC.
Further, Seller shall on the date of Closing and from time to time thereafter at
Purchaser's request and without further consideration, execute and deliver to
Purchaser such instruments of transfer, conveyance and assignment as Purchaser
shall reasonably request to transfer, convey and assign absolute, full, complete
and marketable title to the Membership Interests to Purchaser.
(c) On or before the date of Closing, Seller will execute
and/or deliver to LLC (i) special or limited warranty deeds (warranting only
against claims arising by, through or under Seller) conveying the Owned Real
Property to LLC subject only to the Permitted Encumbrances (as hereinafter
defined) (the "Deeds"), (ii) assignment and assumption agreements, in form and
substance reasonably satisfactory to Purchaser and Seller, pursuant to which
Seller will assign to LLC all of Seller's right, title and interest under the
Real Property Leases and the Incidental Leases, subject to
2
<PAGE>
the Permitted Encumbrances (as hereinafter defined), and LLC will assume and
agree to pay and perform all of Seller's obligations and duties under the Real
Property Leases and the Incidental Leases (the "Assignments"), (iii) an
affidavit as to the non-foreign status of Seller pursuant to 'SS'1445 of the
Internal Revenue Code, as amended, (iv) evidence, reasonably satisfactory to
Purchaser and LLC's title insurer, with respect to the power and authority of
Seller to enter into and consummate this Agreement and the transactions
contemplated hereby and of the persons executing documentation on behalf of
Seller, and (v) any and all files, documents, instruments and other items used
by Seller in connection with the operation, management, use and research of the
Property, including, without limitation, all working files, aerial photographs,
technical, research, administrative and operations data. With the consent of
Purchaser (not to be unreasonably withheld), Seller shall be permitted to
provide Purchaser copies of certain of such files, documents, instruments and
other items and to retain the originals thereof for Seller's own use if such
originals are necessary or useful to Seller in connection with open tax years,
pending tax controversies, pending litigation, pending contracts or similar
ongoing matters. Notwithstanding any assignment of this Agreement which may
occur prior to Closing, Jefferson Smurfit Corporation (U.S.) will execute and
deliver to Purchaser (i) a Timber Cutting Agreement in the form attached hereto
as Exhibit E (the "Timber Agreement"), and (ii) a Seedling Supply Agreement in
substantially the form attached hereto as Exhibit F (the "Seedling Agreement").
(d) At the Closing, Purchaser will execute and/or deliver to
Seller (i) the Installment Note and any related note purchase agreement or
similar agreement which may be executed by the parties pursuant to the
provisions of Exhibit D attached hereto, (ii) the Assignments, (iii) the Timber
Agreement, (iv) the Seedling Agreement, and (v) evidence, satisfactory to
Seller, with respect to the power and authority of Purchaser to enter into and
consummate this Agreement and the transactions contemplated hereby and of the
persons executing documentation on behalf of Purchaser. Notwithstanding any
assignment of this Agreement which may occur prior to Closing, Rayonier Inc. and
Purchaser shall execute and deliver to Seller and Jefferson Smurfit Corporation
(U.S.) at Closing a written agreement (which will include customary
representations, warranties and indemnifications concerning the accuracy of the
information provided by Rayonier Inc. and Purchaser) reasonably acceptable to
Purchaser and Seller pursuant to which Rayonier Inc. and Purchaser shall agree
to cooperate in good faith with Seller and Jefferson Smurfit (U.S.) in Seller's
obtaining the "Loan" (as defined in Exhibit D) by (i) making their respective
management teams available to answer questions, to meet with prospective note
purchasers and to otherwise assist in Seller's obtaining the Loan, and (ii) by
preparing and making available such books, records and other information
regarding their respective companies as may be reasonably necessary to such
effort. Purchaser and Rayonier Inc. also covenant and agree to cooperate in good
faith with Seller and Jefferson Smurfit Corporation (U.S.) in such effort in the
manner described above at all times after the Effective Date through the date of
Closing.
(e) In addition, Purchaser will deliver to Seller, and Seller
will deliver to Purchaser, favorable opinions from their respective general
counsel as to the due authorization, execution and enforceability of this
Agreement and all other agreements, contracts and instruments delivered pursuant
to this agreement, said opinions to be in substantially similar form. The
parties
3
<PAGE>
also agree to do such other acts and execute and deliver such other
documents and instruments as are reasonably necessary for the consummation of
the transactions contemplated hereby.
(f) Prior to the date of Closing, Seller shall have the
unrestricted right to harvest any and all of the pine timber on those portions
of the Real Property identified and described on Exhibit G attached hereto (the
"Reserved Timber"); provided, however, that Seller's rights to the Reserved
Timber shall be limited to harvesting up to 1,351,445 tons of the Reserved
Timber between July 1, 1999 and the end of the Reserved Timber Cutting Period
(as hereinafter defined). In the event Seller fails or elects not to harvest all
or any portion of the Reserved Timber prior to the date of Closing, Seller shall
have the right, pursuant to the provisions of the Timber Agreement, to continue
to enter upon the Real Property and to harvest all or any portion of the
Reserved Timber during the period commencing on the date of Closing and ending
at midnight on December 31, 1999 (the "Reserved Timber Cutting Period");
provided, however, if Seller shall have failed to cut all of the Reserved Timber
prior to the expiration of the Reserved Timber Cutting Period as the result of
fires, adverse weather conditions, temporary loss of access or other conditions
beyond the reasonable control of Seller, Seller shall have the one-time right to
extend the expiration of the Reserved Timber Cutting Period until March 31,
2000, by delivering written notice of such extension to Purchaser on or before
December 15, 1999; provided further, however, that with respect to the timber
covered by the "MONY Timber Agreement" described on Exhibit G hereto, the
Reserved Timber Cutting Period shall expire on April 14, 2000.
(g) Seller, for itself and its successors and assigns, hereby
reserves, and the Deeds, as applicable, shall contain reservations by Seller of,
all of the right, title and interest of Seller in and to any and all oil, gas,
and fugitive hydrocarbons lying 300 feet or more below the surface level of all
portions of the Owned Real Property located in the State of Alabama (the
"Reserved Minerals"), together with full rights and easements for ingress and
egress and use on, over, across and through such Owned Real Property for
purposes of testing or exploring for, drilling for, quarrying, mining,
producing, removing, transporting and owning any or all of the Reserved Minerals
and for performing all such acts as may be necessary or desirable in connection
therewith (collectively, the "Reserved Minerals Access"), and together with all
royalty interests, royalties, bonuses, rental and other rights with respect to
the Reserved Minerals. Notwithstanding the above, to act upon its rights set
forth in this paragraph, (i) Seller must provide reasonable advance written
notice to LLC prior to any exercise of the Reserved Minerals Access; (ii) Seller
must exercise its Reserved Mineral Access in a manner designed to minimize to
the extent reasonably possible any damage to, or interference with LLC's
operation of its business on, the Real Property; (iii) Seller must reimburse LLC
the fair market value of any timber or other improvements located on the Real
Property which are damaged as the result of Seller's exercise of its Reserved
Mineral Access; and (iv) Seller must defend, indemnify and hold harmless LLC and
its successors, successors-in-title and assigns from any and all losses,
liabilities, damages, costs and expenses (including, without limitation,
reasonably restoring the Owned Real Property to its pre-Reserved Minerals Access
condition, and interest, penalties and reasonable attorneys' fees and
disbursements, including fees and expenses arising from the enforcement of this
provision) based upon, arising out of or otherwise in respect of Seller's
Reserved Minerals Access.
4
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(h) Seller and Purchaser acknowledge that each of the Real
Property Leases listed as Gilder 41, Oliver and Fuqua requires the consent of
the lessor(s) thereunder to the assignment thereof. Seller agrees that it will
use reasonable, good faith efforts to obtain the consent of the lessor(s) under
each of such three Real Property Leases to the assignment thereof from Seller to
LLC. If Seller fails to receive any such consent prior to the Closing, then
Purchaser and Seller may elect to negotiate in good faith in an attempt to
structure an indemnity, a sublease, a timber supply agreement or similar
agreement or arrangement acceptable to Purchaser in its sole discretion which
does not require the consent of the lessor(s) under said leases and which will
transfer to LLC the economic and operational benefits of said leases. In the
event the parties are unwilling or unable to structure such an agreement or
arrangement, then each of Seller and Purchaser by written notice to the other
shall have the right to delete the Real Property Lease with respect to which
such consent was not obtained from the Real Property Leases to be assigned by
Seller to LLC at the Closing. In such event, the Purchase Price shall be reduced
by the following amounts:
Gilder 41 - $9,151,400.00
Oliver - $3,810,800.00
Fuqua - $1,890,500.00
(i) Seller covenants and agrees to use its best efforts to
prepare financial statements in accordance with GAAP and in accordance with
Regulation S-X of the Securities and Exchange Commission for Seller's "Timber
Harvesting and Marketing Business" being acquired by Purchaser for the most
recent three (3) fiscal years ending prior to the date of the Closing, in such
form that such statements can be audited by Ernst & Young LLP, Seller's
independent certified public accountants, and to cause such accountants to issue
to Seller an unqualified opinion with respect to such financial statements (such
statements and related opinions being hereinafter referred to as the "Audited
Financial Statements"). Seller shall, within three (3) business days after the
date of this Agreement, engage Ernst & Young LLP for that purpose, and shall
direct Ernst & Young LLP to use its best efforts to assist in the preparation of
the Audited Financial Statements so that the Audited Financial Statements can be
completed and delivered to Purchaser not later than the date of Closing. Such
engagement shall include the consent of Ernst & Young LLP that the Audited
Financial Statements may be relied upon by Purchaser and Rayonier Inc., and
their respective underwriters (a) to prepare and file reports under the
Securities and Exchange Act of 1934, as needed, and (b) in connection with any
financing or public offering of securities by Purchaser or Rayonier Inc. or any
of their respective affiliates. Purchaser may, at its option and expense, engage
its own certified public accountants, Arthur Andersen LLP, to monitor and review
the progress of the production of the Audited Financial Statements. The delivery
of the Audited Financial Statements shall be an express condition of Purchaser's
obligation to close the purchase and sale transaction contemplated hereunder,
and the Closing shall be extended as necessary, up to and including December 1,
1999, to permit Seller to obtain and deliver the Audited Financial Statements;
provided, however, Purchaser may, at any time during the period of such
extension, waive by written notice to Seller the condition that Seller obtain
and deliver the Audited Financial Statements, in which case the parties shall
close the purchase and sale transaction as promptly as practical after the
delivery of such notice, but in no event more than fifteen (15) days after such
delivery. In the event that Seller, after employing its best efforts to procure
the Audited Financial Statements, is unable to
5
<PAGE>
obtain and deliver them by December 1, 1999, then either Seller or Purchaser may
terminate this Agreement by delivering written notice of such termination to the
other, whereupon no party will have any further rights or obligations hereunder,
except as may otherwise be expressly provided herein; provided however, Seller's
right to rely on its failure to provide the Audited Financial Statements as
grounds to terminate this Agreement shall be conditioned upon delivery to
Purchaser of a letter signed by Ernst & Young LLP that, after examination of
books and records pertaining to Seller's "Timber Harvesting and Marketing
Business" being acquired by Purchaser and exhausting all reasonable efforts, it
is the opinion of Ernst & Young LLP that it is not possible to prepare the
Audited Financial Statements, and giving the reasons therefor; and provided
further, Seller's right to terminate the Agreement under this sentence shall be
also be conditioned on Seller not being in material default under any provision
of this Agreement.
(j) From and after the Effective Date and continuing after the
Closing, Seller shall provide to Purchaser and Rayonier Inc. such unaudited
financial statements and other financial information pertaining to the "Timber
Harvesting and Marketing Business" being acquired by Purchaser, covering the
period included in the Audited Financial Statements, as well as the period
commencing with the fiscal year in which Closing occurs until the date of
Closing, as may reasonably be required (A) to prepare and file reports under the
Securities Exchange Act of 1934, as amended, and (B) in connection with any
financing or public offering of securities by Purchaser or Rayonier Inc. or any
of their respective affiliates. The provisions of this paragraph shall survive
the Closing.
4. Title.
(a) Seller agrees to convey to LLC fee simple title to the
Owned Real Property and to assign to LLC the Real Property Leases covering the
Leased Real Property, free and clear of all liens, claims and encumbrances
created by Seller, except for the matters set forth on Exhibit H attached hereto
(the "Permitted Encumbrances").
(b) Purchaser acknowledges that Seller has made available to
Purchaser, for Purchaser's review, certain title insurance commitments relating
to the Real Property, as listed on Exhibit I attached hereto (the "Title
Commitments"). Within ten (10) days after the Effective Date, Purchaser shall
give written notice to Seller of any Title Objections (as hereinafter defined)
disclosed by the Title Commitments which are unacceptable to Purchaser. If
Purchaser fails to give any such notice with respect to any Title Objections
which are disclosed in the Title Commitments on or prior to the aforesaid date,
then Purchaser shall be deemed to have waived such Title Objections. Thereafter,
Purchaser may have Seller's title to the Real Property re-examined at any time
and from time to time up to and through the date of Closing, and may give Seller
written notice of any additional Title Objections which were not of record as of
the effective date of Purchaser's prior title examination. For purposes of this
Agreement, the term "Title Objections" shall mean any mortgages, deeds of trust,
liens, financing statements, security interests, easements, leases, rental
agreements, licenses, restrictive covenants, agreements, options, claims,
clouds, encroachments, rights, taxes, assessments, mechanics' or materialmen's
liens (inchoate or perfected), liens for federal or state estate or inheritance
taxes, and other encumbrances of any nature whatsoever, whether existing of
record or otherwise, together with any and all matters of any kind or
description, including, without
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limitation, matters of survey and any litigation or other proceedings affecting
Seller and which affect title to the Real Property or the right, power and
authority of Seller to convey fee simple, marketable and insurable title to the
Real Property to Purchaser in accordance with the terms of this Agreement, other
than the Permitted Encumbrances.
(c) Upon receipt of a Title Objection notice hereunder, Seller
shall have ten (10) business days within which to notify Purchaser in writing
whether, in its sole discretion, it will: (i) remediate the Title Objection;
(ii) indemnify Purchaser for the Title Objection, subject to reasonable time and
dollar limits given the nature and extent of such Title Objection and such
written indemnity, in form and content reasonably acceptable to Purchaser, shall
be delivered to Purchaser by Seller at Closing (the "Indemnity Letter"), (iii)
reduce the Purchase Price in an amount equal to the diminution in value of the
affected portion of the Real Property encumbered by the Title Objection, or (iv)
delete from the Real Property the portion of the Real Property affected by the
Title Objection, whereupon the Purchase Price shall be reduced by the value of
such deleted portion of the Real Property. With respect to the alternatives set
forth in clauses (iii) and (iv) above, Seller shall deliver to Purchaser a good
faith estimate of the diminution in value of that portion of the Real Property
affected by the Title Objection, or the value of the portion of the Real
Property to be deleted, as applicable, which amount shall be subject to the
approval of Purchaser, such approval not to be unreasonably withheld,
conditioned or delayed. In the event Seller and Purchaser are unable to agree
upon the amount by which the Purchase Price should be reduced in connection with
the Title Objection, the question of such value shall be submitted for
determination in accordance with the provisions of paragraph 25. Should Seller
conclude in good faith that Purchaser's Title Objection is not authorized
pursuant to the terms of this Agreement, then Seller shall, within ten (10)
business days of receipt of Purchaser's notice, notify Purchaser of its
disagreement. Similarly, should Purchaser conclude in good faith that Seller's
attempted remediation of Purchaser's Title Objection was not successful,
Purchaser shall notify Seller of its disagreement. In either event, Purchaser
shall have the right to: (i) accept the title as is and waive Purchaser's Title
Objection; or (ii) proceed to Closing but seek a determination as to the merits
of Purchaser's Title Objection with any dispute to be determined in accordance
with the provisions of paragraph 25. Any reasonably disputed amounts shall be
escrowed by Purchaser in a separate interest-bearing account or other investment
satisfactory to Purchaser and Seller with the parties proceeding to Closing.
(d) In the event Seller chooses to remediate the Title
Objections, the transactions contemplated hereby shall close, subject to the
other terms and conditions of this Agreement, and, in such event, Seller shall
undertake the remediation at its sole cost and expense (including, without
limitation, any incremental title insurance cost or premium associated
therewith). A Title Objection shall be deemed remediated when and if Purchaser's
title insurance company agrees in writing to insure against the defect either by
removing the defect from its Title Commitment or by affirmatively agreeing in
writing to insure against the defect. Purchaser shall waive all objection and
accept any such remediated defects that Purchaser identified as Title
Objections. Seller shall bear all costs of remediating any Title Objection
pursuant to this paragraph 4.
(e) Purchaser shall have the absolute right to terminate this
Agreement if the total acreage of the Real Property affected by Title Objections
pursuant to this paragraph 4 and not
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subsequently waived by Purchaser within ten (10) days prior to the date of
Closing, exceeds 150,000 acres.
(f) At or prior to the Closing, Seller will cause any monetary
liens, mortgages, deeds to secure debt and deeds of trust encumbering the Owned
Real Property or Seller's leasehold interest in the Leased Real Property to be
satisfied or otherwise removed.
(g) Except for the Reserved Timber and except for the
Permitted Encumbrances, so long as this Agreement remains in force, Seller will
not lease, encumber or convey all or part of the Property or any interest
therein, without the prior written consent of Purchaser.
(h) Seller agrees that it will take such action and deliver
such indemnities, affidavits and agreements as may be reasonably necessary or
appropriate to cause the LLC's title insurer to (i) issue a "non-imputation
endorsement" in favor of LLC in form and substance reasonably acceptable to
Purchaser to ensure that no knowledge of Seller or its officers, managers,
members or shareholders shall be imputed to the LLC for purposes of determining
coverage under the LLC's title insurance policies; and (ii) to delete its
standard creditors rights exception to coverage.
5. Inspection; Sale "AS IS". (a) Purchaser and its agents and
representatives will have the right prior to the Closing to enter upon and to
inspect the Real Property, including the right to examine, survey and perform
timber cruises, environmental assessments and other tests or surveys which it
may deem necessary or advisable. Purchaser shall give reasonable advance notice
to Seller's Vice President and General Manager, John Davis (Phone: 904-277-5816)
prior to any such entry on the Real Property, which notice shall include (i) a
reasonably detailed description of the scope of the examination, survey, timber
cruises, environmental assessments or other test or surveys which Purchaser
intends to conduct on or about the Real Property, (ii) the identity of the
consultant or agent which will be entering the Real Property on Purchaser's
behalf, and (iii) the date of such consultant's or agent's initial entry upon
the Real Property. Thereafter, Purchaser shall keep Seller's General Manager
progressively advised as to the status of the activities being performed on the
Real Property. Seller shall have the right to have a representative of Seller
accompany Purchaser or its agents or representatives during any such entry on
the Real Property. Subject to the requirements of applicable laws, rules and
regulations, Purchaser will not discuss with or disclose to any governmental
authority the results of any report, test, examination or assessment conducted
by or on behalf of Purchaser with respect to the Real Property unless and until
the written consent of Seller to such discussion or disclosure has been received
by Purchaser. Purchaser will deliver to Seller, promptly upon Purchaser's
receipt thereof, complete copies of all final results, reports and other
information in connection with any inspection, examination, test, survey, cruise
or assessment performed by or for Purchaser. Purchaser's entry upon the Real
Property pursuant to this paragraph shall be at Purchaser's own risk, and
Seller, its affiliates, officers and employees shall not be responsible to
Purchaser or to any person claiming through or under Purchaser for injury, loss
or damage, whether to person, including death arising therefrom, or property
suffered by Purchaser or any such person on the Real Property from any cause
whatever. Purchaser hereby agrees to indemnify and hold Seller harmless from and
against any and all damages, liens, losses, liabilities, claims, costs and
expenses (including, without limitation, attorneys' fees and court costs) caused
by
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said inspections, examinations, tests, surveys, cruises and assessments. The
foregoing indemnification provision will survive the Closing and will survive
any termination of this Agreement.
(b) Seller agrees to make available to Purchaser, at Seller's
offices in Fernandina, Florida or Stone Mountain, Georgia, for reviewing and
copying by Purchaser at Purchaser's expense, copies of various materials
relating to the Property, including maps, aerial photographs, surveys, timber
inventory data, harvest schedules, the Real Property Leases, the Incidental
Leases, the Title Commitments and other title materials.
(c) Except for the special or limited warranty to be included
in the Deeds and except for the warranties, representations and indemnities and
related agreements expressly made by Seller in this Agreement, Purchaser
acknowledges and agrees as follows: (i) Purchaser is purchasing and Seller is
selling the Property (by way of the purchase and sale of the Membership
Interests) "AS IS", "WHERE IS" and "WITH ALL FAULTS"; (ii) Seller has not made,
does not make and specifically disclaims any representations, warranties,
guaranties, commitments, promises or agreements of any kind, express or implied,
with respect to the Property, including, without limitation, governmental
regulations, requirements or constraints, site or physical conditions, condition
of the Property, matters affecting use or occupancy, profitability, volumes, age
classes, species, merchantability, yields, acreage, access, availability,
quantity or quality of water, environmental compliance, prospects for future
improvements or future development, economic feasibility, marketability or any
other matter relating to the Property except as otherwise set forth herein;
(iii) Purchaser is relying on Purchaser's independent investigations and
examinations relating to the Property; and (iv) Purchaser (for itself and, from
and after the date of Closing, for the LLC as owner of the Property) waives, and
releases Seller from, any and all claims, liabilities, losses, damages, costs
and expenses, whether known or unknown, or foreseen or unforeseen, with respect
to the condition of the Property, other than the "Permitted Environmental
Claims," as hereinafter defined. For purposes of this Agreement, the term
"Permitted Environmental Claims" shall mean, subject to the limitations provided
in the following sentence, any and all claims, liabilities, losses, damages,
costs and expenses, whether known or unknown, or foreseen or unforeseen with
respect to the condition of the Property arising under or with respect to any
Environmental Laws (as hereinafter defined). Notwithstanding the foregoing,
Purchaser's right to assert or seek recovery of any Permitted Environmental
Claims shall be limited as follows: (i) after the fifth (5th) anniversary of the
Closing hereunder, Purchaser may not assert or seek recovery of any Permitted
Environmental Claims, unless said claims arise under or with respect to (A) the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
USC 'SS' 9601, et seq., as amended ("CERCLA"), (B) any act similar or analogous
to CERCLA which is adopted by the States of Georgia, Alabama and/or Florida,
and/or (C) any other Environmental Laws (as hereinafter defined), but, with
respect to the provisions of this clause (C) only, only to the extent related to
or arising out of the acts or omissions of Jefferson Smurfit Corporation (U.S.)
and its agents, affiliates, contractors and/or employees during its period of
ownership of the Real Property, (ii) Seller shall have no liability to Purchaser
with respect to any Permitted Environmental Claims until the aggregate amount of
all such claims, plus the aggregate amount of all of Purchaser's Losses under
paragraph 6(b), plus the aggregate amount of all losses by Purchaser for all
breaches by Seller of warranties and representations provided for in paragraph
8(c) exceeds the sum of $5,000,000.00, and then only for
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the amount by which such claims exceed such sum; and (iii) in no event will
Seller's aggregate liability for Permitted Environmental Claims under this
paragraph plus all of Purchaser's Losses under paragraph 6(b) plus the aggregate
amount of all losses by Purchaser for all breaches by Seller of warranties and
representations provided for under paragraph 8(c), exceed $200,000,000.00. The
provisions of this paragraph 5(c) will survive the Closing and will survive any
termination of this Agreement.
6. Environmental Assessment.
(a) Within forty-five (45) days from the Effective Date,
Purchaser may conduct an environmental assessment of the Real Property utilizing
an environmental consultant of Purchaser's choice; provided, however, Purchaser
shall have the right to extend the aforesaid forty-five (45) day period for a
period not to exceed fifteen (15) days upon delivery to Seller of written notice
of the exercise of such extension right not later than the expiration of said
forty-five (45) day period. If the environmental assessment obtained or
conducted by Purchaser reveals any Environmental Contamination on or under any
portion of the Real Property and if, in the good faith professional judgment of
Purchaser's environmental consultant the Environmental Contamination could
reasonably be expected to cost in excess of $50,000.00 per Environmental
Contamination in any one area or, in the aggregate, in excess of $250,000.00
within any "Block" (as designated on Seller's internally prepared Block Maps,
copies of which have been made available to Purchaser for its review and use) to
investigate and remediate, Purchaser shall notify Seller in writing within such
forty-five (45) day period (as the same may be extended, as provided above)
identifying with reasonable specificity the Environmental Contamination and
exercising the right, at Purchaser's election, to do the following: (i) if such
portion is Owned Real Property, then Purchaser may delete such portion or
"Block," as applicable, from the Real Property; or (ii) if such portion is
Leased Real Property, then Purchaser may delete the Real Property Lease covering
such portion or "Block," as applicable (and all of the Leased Real Property
covered by such Real Property Lease shall be deemed deleted from the Real
Property). If Purchaser makes a timely election under either of clauses (i) or
(ii) of the preceding sentence, then the Purchase Price will be reduced by an
amount equal to the value (assuming no Environmental Contamination) of such
deleted portion of Owned Real Property or the value (assuming no Environmental
Contamination) of Seller's leasehold interest under such deleted Real Property
Lease, as the case may be, as mutually agreed upon by Purchaser and Seller, or
if Purchaser and Seller are unable to agree within fifteen (15) days after
Seller's receipt of Purchaser's election notice, then such value and the amount
of such reduction will be determined pursuant to paragraph 25 below; provided,
however, if the sum of the values of all such deletions under this paragraph 6,
plus the values of all portions of the Real Property deleted pursuant to
paragraph 4(c) above, plus the value of all portions of the timber which are
damaged or destroyed by fire, insect infestation or other casualty (paragraph
7(b) below) and the values of all portions of the Real Property which are taken
or to be taken by condemnation or eminent domain (paragraph 7(c) below), exceeds
fifteen percent (15%) of the Purchase Price, then Purchaser may terminate this
Agreement by promptly giving written notice of such termination to Seller,
whereupon no party hereto will have any further rights or obligations hereunder,
except as may otherwise be expressly provided herein, and any determinations of
such values will be mutually agreed upon by Purchaser and Seller, or if
Purchaser and Seller are unable to agree, then such values will be determined
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pursuant to paragraph 25 below. The date of Closing will be extended to the
extent necessary to permit any determination(s) of value pursuant to this
paragraph.
(b) Subject to the limitations set forth below in Paragraph
6(c), Seller agrees to indemnify, defend and hold harmless Purchaser and LLC
(and their respective directors, partners, members, officers, employees,
shareholders, successors and assigns) from and against all losses, liabilities,
damages, costs and expenses (including, without limitation, interest, penalties
and reasonable attorneys' fees and disbursements, including fees and expenses
arising from the enforcement of rights under this Agreement) ("Losses") actually
incurred by Purchaser, LLC or any of such other indemnified parties based upon,
arising out of or otherwise in respect of: (i) any Environmental Contamination
(as hereinafter defined) on, in, about or under the Real Property on or prior to
Closing which is not disclosed in writing by Seller or in the environmental
assessments obtained by Seller prior to Closing, and (ii) any Environmental
Contamination on, in, about or under the Real Property that originates from any
of the sites identified on Seller's "Carve-out Sites" document dated April 26,
1999, and any sites deleted by Purchaser pursuant to paragraph 6(a).
For purposes of this Agreement, the term "Hazardous Material"
means any chemical, compound, constituent, material, waste, contaminant or other
substance (including petroleum and petroleum derived substances or wastes) as
defined in or regulated by any Environmental Laws (as hereinafter defined).
"Environmental Contamination" means any release, spill, emission, leak,
injection, deposit, disposal, discharge, dumping, dispersal, leaching, migration
or the presence (collectively, "Release") of Hazardous Materials, including the
movement of Hazardous Materials through groundwater. Environmental Laws mean any
federal, state and local laws (including common law), regulations or other legal
requirements relating to the protection of the environment, natural resources,
pollution control, hazardous materials or human health.
At Purchaser's discretion, any exception to the
representations or warranties set forth in paragraphs 8(a)(vi)(K)-(O) shall be
handled either under paragraph 6(a) or 6(b).
(c) The indemnification obligations set forth in paragraph
6(b) above shall be subject to the following limitations: (i) the
indemnification obligations shall survive the Closing but shall expire and be of
no further force or effect whatsoever as of the fifth (5th) anniversary of the
date of Closing, except to the extent, if any, that Purchaser has given to
Seller, prior to expiration of the five-year period, written notice of specific
indemnifiable Losses and (ii) the limitations set forth in paragraph 8(d)(ii)
and (iii).
7. Condition of Property; Damage; Condemnation.
(a) Seller agrees that at the Closing the Property will be in
the same condition as exists on the Effective Date hereof, subject to natural
wear and tear, to condemnation, casualties and other circumstances beyond
Seller's control, to Seller's use, operation and management of the Property in
the ordinary course of business, and to harvesting, cutting and removal of the
Reserved Timber.
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(b) If at any time prior to the Closing, any material portion
of the timber which is included as part of the Real Property is destroyed or
damaged by fire, insect infestation or other casualty, then the Purchase Price
will be reduced by an amount equal to the value of the portions of such timber
so damaged or destroyed as mutually agreed by Seller and Purchaser, or if Seller
and Purchaser are unable to agree within fifteen (15) days after Purchaser's
receipt of notice of the occurrence of such damage or destruction, such value
and the amount of such reduction will be determined pursuant to paragraph 25
hereof; provided, however, if the sum of the values of all portions of such
timber so damaged or destroyed, plus the values of all deletions pursuant to
paragraphs 4(c) and 6 above and the values of all portions of the Real Property
which are taken or to be taken by condemnation or eminent domain (paragraph 7(c)
below), exceeds fifteen percent (15%) of the Purchase Price, then Purchaser may
terminate this Agreement by promptly giving written notice of such termination
to Seller, whereupon no party hereto will have any further rights or obligations
hereunder, except as may otherwise be expressly provided herein, and any
determinations of such values will be mutually agreed upon by Purchaser and
Seller, or if Purchaser and Seller are unable to agree, then such values will be
determined pursuant to paragraph 25 below. The date of Closing will be extended
to the extent necessary to permit any determination(s) of value pursuant to the
preceding sentence.
(c) If at any time prior to the Closing, any action or
proceeding is filed or threatened under which any material portion of the Real
Property is or may be taken pursuant to any law, ordinance or regulation by
condemnation or the right of eminent domain, then Purchaser and Seller will
proceed with the purchase and sale of the Property (excluding any portion
thereof so taken prior to Closing) pursuant to this Agreement, notwithstanding
such action or proceeding, and the Purchase Price will not be reduced, but
Purchaser will be entitled to receive all proceeds of any awards paid or payable
to Seller with respect to such taking; provided, however, if the sum of the
values of all portions of the Real Property so taken or to be taken, plus the
values of all deletions pursuant to paragraphs 4(c) and 6 above and the values
of all portions of the timber which are damaged or destroyed by fire, insect
infestation or other casualty (paragraph 7(b) above), exceeds fifteen percent
(15%) of the Purchase Price, then Purchaser may terminate this Agreement by
promptly giving written notice of such termination to Seller, whereupon no party
hereto will have any further rights or obligations hereunder, except as may
otherwise be expressly provided herein, and any determinations of such values
will be mutually agreed upon by Purchaser and Seller, or if Purchaser and Seller
are unable to agree, then such values will be determined pursuant to paragraph
25 below. The date of Closing will be extended to the extent necessary to permit
any determination(s) of value pursuant to the preceding sentence.
8. Warranties and Representations.
(a) Seller hereby warrants and represents to Purchaser as
follows:
(i) Seller is a corporation duly formed and validly
existing under the laws of the State of Delaware and is duly qualified
to do business in the States of Alabama, Florida and Georgia, and
Seller has the full capacity, power and authority to enter into this
Agreement and fully perform its obligations hereunder.
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(ii) This Agreement and the performance hereof by
Seller will not contravene any law or contractual restriction binding
on Seller.
(iii) No consent, approval, order or authorization of
any court or other governmental entity is required to be obtained by
Seller in connection with the execution and delivery of this Agreement
or the performance hereof by Seller, except for any filing required
under the HSR Act (as hereinafter defined).
(iv) This Agreement has been duly executed and
delivered by Seller and constitutes the valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms,
subject to applicable bankruptcy, insolvency and other similar laws
affecting the enforceability of creditors' rights generally and the
discretion of the courts with respect to equitable remedies.
(v) Seller warrants, represents and covenants the
following with respect to the LLC:
(A) The LLC shall, as of the date of
Closing, be a limited liability company duly organized,
validly existing and in good standing under the laws of the
State of Delaware, and shall be duly qualified to do business
in the States of Alabama, Florida and Georgia, and shall have
the full capacity, power and authority to fully perform its
obligations under this Agreement.
(B) Seller shall, as of the date of Closing,
be the record owner and shall hold legal title to all of the
Membership Interests. Such Membership Interests shall be
validly issued, fully paid and nonassessable, and shall be
free and clear of any liens, claims, charges, rights of first
refusal or other encumbrances of any nature whatsoever. Other
than such Membership Interests, Seller shall own no securities
of the LLC or any right of any kind to have any such security
issued. Upon the amendment of the Constituent Documents
pursuant to paragraph 3(b) hereof, Seller shall have
transferred to Purchaser good and valid title to all
Membership Interests owned by Seller, free and clear of any
liens, claims, charges, rights of first refusal or other
encumbrances of any nature whatsoever. Seller shall have the
exclusive right, power and authority to vote such Membership
Interests owned by Seller. Seller covenants that at Closing it
shall not be a party to or bound by any agreement affecting or
relating to Seller's right to transfer or vote the Membership
Interests owned by Seller. Seller covenants that it shall not,
nor shall it cause the LLC to, issue, sell or grant options,
warrants or rights to purchase or subscribe to, or enter into
an arrangement or contract with respect to the issuance or
sale of any of the securities of the LLC or rights or
obligations convertible into or exchangeable for any
Membership Interests or other securities of the LLC or make
any changes (by split-up, combination, reorganization or
otherwise) in the capital structure of the LLC.
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(C) Seller covenants and agrees with
Purchaser that the terms of the articles of organization,
operating agreement (if applicable) and other similar
formation documents of the LLC (the "Constituent Documents")
shall be prepared and filed (at the sole expense of Seller) in
the form reasonably agreed upon by the parties hereto.
(D) This Agreement and all documents
executed by Seller in connection with this Agreement which are
to be delivered to Purchaser at Closing are, or at the time of
Closing will be, duly authorized, executed and delivered by
Seller, and are or at the Closing will be, the legal, valid
and binding obligations of Seller, enforceable against Seller
in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization and other laws of
general application affecting the enforcement of rights or
remedies of creditors generally and the discretion of the
courts with respect to equitable remedies. This Agreement and
such documents do not and at the time of Closing will not
violate any provisions of any agreement or judicial order to
which Seller or the LLC is a party or by which it is bound.
(E) As of the date of Closing, Seller shall
be the sole beneficial and legal owner of the Membership
Interests, free and clear of any and all liens, claims,
encumbrances and security interests, and will convey to
Purchaser good title to the same free and clear of any and all
liens, claims, encumbrances and security interests.
(F) Seller does not, and at the time of
Closing will not, have any claim against the LLC.
(G) As of the date of Closing, there shall
be no written or filed claims, demands, actions, suits or
proceedings whatsoever pending or threatened against Seller
with respect to the LLC or the Membership Interests.
(H) On the date of Closing, the LLC will
have no liabilities of any nature whatsoever (whether express
or implied, fixed or contingent, liquidated or unliquidated,
known or unknown, accrued, due or to become due) other than
arising under the Leases and the Permitted Exceptions, and
Purchaser shall not be liable to pay, perform or discharge any
such obligation or liability which may have arisen prior to
the date of Closing.
(I) As of the date of Closing, the LLC will
not have any employees.
(J) Neither the Property nor the Membership
Interests constitute, in whole or in part the asset of any
employee benefit plan within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as
amended.
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(K) As of the date of Closing, the LLC shall
not have filed or be required to file any federal, state,
county or local income, excise, sales, property, withholding,
social security, franchise, license or information returns or
other tax returns or reports.
(L) At Closing, the LLC will own fee simple
title to the Owned Real Property and, subject to the
provisions of paragraph 3(h), will have a valid leasehold
interest in the Leased Real Property, free and clear of any
and all liens, claims and encumbrances related thereto, other
than Permitted Encumbrances.
(M) At Closing, the Constituent Documents
shall not have been further modified or amended since the date
of filing and shall be in full force and effect as of the date
of filing.
(N) As of the date of Closing, there shall
be no written or filed claims, demands, actions, suits or
proceedings whatsoever pending or threatened against the LLC,
and Seller shall not have received any notice, written or
oral, of any claims, demands, actions, suits or proceedings
whatsoever, pending or threatened, against the LLC.
(O) Prior to Closing, the sole business of
the LLC shall be the ownership and leasing of the Property and
activities directly related thereto.
(P) For the period the LLC is in existence
prior to Closing up to and including the date of Closing, the
LLC shall have been and will be disregarded as an entity under
Treasury Regulations Section 301.7701.-3 (the "Regulations")
and Seller shall not have taken, and will not take, any action
inconsistent with the treatment of the LLC as disregarded as
an entity under the Regulations, including without limitation
the filing of an election under the Regulations to treat the
LLC as a corporation and not disregarded as an entity under
the Regulations.
(vi) Except for the matters set forth on the
Disclosure Schedule attached hereto as Exhibit J, Seller warrants and
represents, in each case to Seller's knowledge, as follows:
(A) Seller owns fee simple title to the
Owned Real Property, subject to the Permitted Encumbrances.
(B) Seller has made available for
Purchaser's review at Seller's offices correct and complete
copies of the Real Property Leases; the Real Property Leases
are valid and subsisting agreements and are in full force and
effect in accordance with their respective terms; and there
are no existing defaults by Seller under any of the Real
Property Leases.
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(C) Seller has made available for
Purchaser's review at Seller's offices representative copies
of the Incidental Leases; to the extent that actual copies of
the Incidental Leases have not been provided to Purchaser for
its review, Seller hereby represents that all such Incidental
Leases are in substantially the form of the representative
copies previously made available to Purchaser; if and to the
extent that Seller has inadvertently failed to list any
Incidental Lease on Exhibit C hereto, Seller represents and
warrants that any such additional Incidental Leases shall be
in substantially the form of the representative copies
previously made available to Purchaser; other than the
Incidental Leases and the Permitted Encumbrances, there are no
leases, subleases, contracts, licenses or permits (other than
the oil, gas and mineral leases (the "OGM Leases") described
on Exhibit K attached hereto which shall be retained by
Seller) pursuant to which any person other than Seller has the
right to use or occupy any of the Real Property; and there are
no existing defaults by Seller under any of the Incidental
Leases.
(D) The Real Property is in compliance in
all material respects with all applicable statutes,
ordinances, rules, regulations and orders of all federal,
state and local governmental authorities having jurisdiction
over the Real Property; and Seller has not received any notice
from any such governmental authority of any material violation
of any such statute, ordinance, rule, regulation or order
relating to the Real Property.
(E) No person other than Seller has any
right to conduct timbering operations on the Real Property or
any right, title or interest in or to any standing timber
located on the Real Property.
(F) There is neither pending nor threatened
any legal action against Seller or involving the Real Property
which could materially affect Purchaser or LLC after its
acquisition of the Real Property or which could materially
enjoin or restrict Seller's rights or ability to perform its
obligations under this Agreement.
(G) There are no management, service, or
brokerage agreements affecting the Real Property to which
Seller is a party, or of which Seller has actual knowledge,
that will create a liability for Purchaser or LLC, or a lien
or charge upon the Real Property.
(H) The Real Property Leases, the Incidental
Leases and the OGM Leases (which shall be retained by Seller)
(a) are all of the material contracts concerning the Real
Property to which Seller is a party and (b) do not provide for
management services by any person or entity to be rendered for
the benefit of the Real Property.
(I) Other than the Permitted Encumbrances,
there are no claims made by third parties pursuant to which
Seller's title or estate or access to any portion
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of the Real Property is or has been challenged, and Seller is
in undisputed possession of the Real Property.
(J) Other than the Reserved Timber, Seller
has not harvested any timber on the Real Property that is
represented as unharvested in the Seller's Land Data dated
July 1, 1999.
(K) Seller has not received notice of actual
or threatened liability under any Environmental Laws, and
there are no facts or circumstances relating to the Real
Property that would reasonably be expected to form the basis
for the assertion of any claim against the Seller under any
Environmental Laws or that would have a material adverse
effect on the Real Property.
(L) As relates to the Real Property, Seller
has not entered into, agreed to or contemplates entering into
any consent decree or order under any Environmental Law, and
Seller is not subject to any judgment, decree or judicial or
administrative order relating to compliance with, or the
cleanup of Hazardous Materials under, any Environmental Laws
and the Real Property complies in all material respects with
all applicable Environmental Laws.
(M) The Real Property does not contain and,
during Seller's ownership or operation, has not contained, any
underground storage tanks, landfills, surface impoundments or
cattle dip vats and there has been no Release of any Hazardous
Materials on or under the Real Property in violation of any
Environmental Laws during Seller's ownership or operation.
(N) Seller has made available to Purchaser
all existing environmentally related reports, test data,
audits, assessments, correspondence, studies and investigation
results relating to the Real Property.
(O) There are no species currently listed by
the U.S. Fish and Wildlife Service as endangered or threatened
species living on the Real Property which could have a
material and adverse effect on Purchaser's ability to grow and
harvest timber on the Real Property.
As used in this paragraph 8(a)(v), the term "Seller's knowledge" means only the
present, actual knowledge of any one of John E. Davis (Seller's Vice President
and General Manager), Merle Conkin (Seller's Land Manager), Kim Lloyd (Seller's
Land Operations Manager), Joe Parsons (Seller's Technical Director) or Jim
Kauffman (Seller's Land Forester), without any duty or obligation to undertake
or make any due diligence, inquiry or investigation. At Closing, Seller shall
deliver to Purchaser a certificate executed by Seller in favor of Purchaser
reaffirming or updating, as the case may be, the representations and warranties
set forth in paragraph 8(a) above; provided, however, that the delivery of any
supplemental disclosure pursuant to this sentence shall not cure any material
breach of any representation or warranty requiring disclosure of such matter
prior to or on
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the date of this Agreement or otherwise limit or affect the determination of the
satisfaction of the condition to deliver such certificate.
(b) Purchaser hereby warrants, represents and covenants to
Seller as follows:
(i) Purchaser is a corporation duly formed and
validly existing under the laws of the State of North Carolina and has
full capacity, power and authority to enter into this Agreement and
fully perform its obligations hereunder.
(ii) This Agreement and the performance hereof by
Purchaser will not contravene any law or contractual restriction
binding on Purchaser.
(iii) No consent, approval, order or authorization of
any court or other governmental entity is required to be obtained by
Purchaser in connection with execution and delivery of this Agreement
or the performance hereof by Purchaser, except for any filing required
under the HSR Act (as hereinafter defined).
(iv) This Agreement and all documents executed by
Purchaser in connection with this Agreement which are to be delivered
by Purchaser at Closing are, or at the time of Closing will be, duly
authorized, executed and delivered by Purchaser, and are or at the
Closing will be, the legal, valid and binding obligations of Purchaser,
enforceable against Purchaser in accordance with their terms, subject
to applicable bankruptcy, insolvency and other laws of general
application affecting the enforceability of creditors' rights generally
and the discretion of the courts with respect to equitable remedies.
This Agreement and such documents do not, and at the time of Closing
will not, violate any provisions of any agreement or judicial order to
which Purchaser is a party or by which it is bound.
(v) Purchaser intends to own, operate and manage the
Real Property for use in its ongoing business operations.
At Closing, Purchaser shall deliver to Seller a
certificate executed by Purchaser in favor of Seller reaffirming or
updating, as the case may be, the representations and warranties set
forth in this paragraph 8(b); provided, however, that the delivery of
any supplemental disclosure pursuant to this sentence shall not cure
any breach of any representation or warranty requiring disclosure of
such matter prior to or on the date of this Agreement or otherwise
limit or affect the determination of the satisfaction of the condition
to deliver such certificate.
(c) Subject to the limitations set forth in paragraph 8(d)
below, Seller and Purchaser each agrees to indemnify and hold harmless the other
from any damage, loss, liability, expense, cost and claim (including, without
limitation, attorneys' fees and court costs) incurred by or asserted against the
indemnified party as a result of the breach by the indemnifying party of any
warranty or representation set forth in this paragraph 8.
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(d) The indemnification obligations set forth in paragraph
8(c) above shall be subject to the following limitations: (i) such
indemnification obligations will survive the Closing, but will expire and be of
no further force and effect whatsoever (A) as to the representations and
warranties set forth in paragraphs 8(a)(i) through (v), 8(a)(vi)(A) through (J),
and 8(b)(i) through (v), on the date which is eighteen (18) months from the date
of Closing, and (B) as to the representations and warranties set forth in
paragraphs 8(a)(vi)(K)-(O) on the date which is five (5) years from the date of
Closing, except to the extent, if any, that Seller or Purchaser, as the case may
be, has given to the other party, prior to expiration of such eighteen-month
period, or five-year period, as the case may be, written notice of a specific
claim of a breach by such other party of a warranty or representation set forth
in this paragraph 8; (ii) neither Seller nor Purchaser will have any liability
for indemnification under paragraph 8(c) and Seller will have no liability for
Permitted Environmental Claims under paragraph 5(c) or for indemnification under
paragraph 6(b) until the aggregate amount of all losses by the indemnified party
for all breaches by the indemnifying party of warranties and representations set
forth in paragraph 8(c) plus, as to Seller, all Permitted Environmental Claims
under paragraph 5(c) and all Purchaser's Losses under paragraph 6(b), exceeds
the sum of $5,000,000.00 and then only for the amount by which such losses
exceeds such sum; and (iii) in no event will Seller or Purchaser have any
liability for indemnification under paragraph 8(c) plus, as to Seller, any
liability for Permitted Environmental Claims under paragraph 5(c) and for
indemnification under paragraph 6(b), in excess of an aggregate amount of
$200,000,000.00. Notwithstanding anything contained in this Agreement to the
contrary, Seller's liability with respect to a breach of Seller's
representations and warranties under paragraphs 8(a)(v)(B), 8(a)(v)(E) and
8(a)(v)(P) above shall not be subject to the limitations set forth in clauses
(ii) and (iii) of this paragraph 8(d). Further notwithstanding anything
contained herein to the contrary, the representation and warranty made by Seller
in paragraph 8(a)(v)(P) above shall survive the Closing until the earliest to
occur of (a) the closing of the statute of limitations for Purchaser's taxable
year which includes the day following the date of Closing, (b) a final
determination of an applicable court to the effect that the LLC is not a
corporation at the date of Closing, and (c) the execution by Purchaser and the
Internal Revenue Service ("IRS") of an agreement binding on the IRS to the
effect that the LLC is not a corporation on the date of Closing.
9. Operation of Property Prior to Closing; Site Preparation
Reimbursement.
(a) During the period from the Effective Date until the date
of the Closing, Seller will continue to use, operate and manage the Property in
the ordinary course of business and consistent with past practice, provided that
unless Purchaser shall have consented thereto in writing, Seller will not
harvest, cut or remove any timber from the Real Property other than the Reserved
Timber and other than timber harvested, cut and/or removed pursuant to salvage
operations in connection with fire, insect infestation or other casualties
affecting the Real Property.
(b) Purchaser acknowledges that between the Effective Date and
the date of Closing Seller, in the ordinary course of business, shall conduct
certain site preparation activities on the Real Property in anticipation of the
1999-2000 planting season. Purchaser agrees that Purchaser will directly benefit
from such site preparation activities and will reimburse Seller on a
dollar-for-
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dollar basis at Closing for the reasonable and verifiable costs incurred by
Seller in connection therewith; provided, however, the amount of such
reimbursement shall not exceed $1,500,000.00.
10. Brokerage. At the Closing, Seller will pay to Donaldson, Lufkin &
Jenrette, Inc. ("DLJ") and Warburg Dillon Read LLC ("WDR") certain commissions,
fees and/or expenses pursuant to the terms of a separate agreement. At the
Closing, Purchaser will pay to Credit Suisse First Boston Corporation ("CS First
Boston") certain fees and expenses pursuant to the terms of a separate
agreement. Seller and Purchaser each warrant and represent to the other that,
except for the aforesaid amounts payable to DLJ, WDR, and CS First Boston,
neither has incurred any liability for any brokerage or finder's commission, fee
or expense in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby. Seller and Purchaser
each agree to indemnify and hold harmless the other from any and all damage,
loss, liability, expense, cost and claim (including but not limited to
attorneys' fees and court costs) arising with respect to any such commission,
fee or expense which may be suffered by the indemnified party by reason of any
action or agreement of the indemnifying party. The foregoing indemnification
provision will survive the Closing and will survive any termination of this
Agreement. The indemnification obligations of the parties set forth in this
paragraph 10 shall not be subject to the limitations of paragraph 8(d) above.
11. Prorations; Taxes; Expenses.
(a) Ad valorem real property taxes on the Real Property,
amounts paid or payable by Seller pursuant to the Real Property Leases for any
applicable period in which the Closing occurs and rents or fees received or
receivable by Seller pursuant to the Incidental Leases for any applicable period
in which the Closing occurs will be prorated between Seller and LLC as of the
date of Closing. If actual tax bills for the calendar year of Closing are not
available, said taxes will be prorated based on tax bills for the previous
calendar year and such proration will be final. If any portion of the Real
Property is not designated as a separate tax parcel, said taxes will be adjusted
to an amount bearing the same relationship to the total tax bill which the
acreage contained within such portion of the Real Property bears to the acreage
contained within the property included within said tax bill.
(b) Purchaser will pay (i) all costs and expenses for any
title examinations and all title insurance premiums and other charges in
connection with any title insurance policy or policies obtained by Purchaser or
LLC, and (ii) all costs and expenses in connection with any inspections,
examinations, tests, surveys, cruises or assessments performed by or for
Purchaser.
(c) "Transfer Taxes" shall mean all documentary stamp taxes,
document recording taxes or fees, realty transfer taxes and any other similar
taxes or fees in connection with Seller's transfer of the Property to LLC,
Seller's transfer of the membership interests in LLC to Purchaser, and the
subsequent liquidation, if any, of LLC within one year following the date of the
Closing or in connection with the recording of the Deeds and the Assignments.
Transfer Taxes shall be shared equally by Purchaser and Seller; provided,
however, Purchaser's liability for the payment of Transfer Taxes shall not
exceed one-half of the amount of any and all documentary stamp taxes,
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document recording taxes or fees, realty transfer taxes and any other similar
taxes or fees as would have been due if Seller had conveyed title to the
Property directly to Purchaser. This limitation on the amount of taxes to be
paid by Purchaser shall in no way limit the amount of any penalties or interest
payable by Purchaser on any portion of the Transfer Taxes payable by Purchaser.
Seller and Purchaser shall participate jointly in determining their respective
obligations with respect to Transfer Taxes, and in pursuing any reasonable
refund claims for Transfer Taxes paid or reasonable challenges to assessments of
Transfer Taxes. All costs, including legal fees, of any such refund claims or
challenges shall be shared equally by Purchaser and Seller in the ratio in which
each would benefit from such refund claim or challenge. Further, Seller shall
indemnify Purchaser for any additional federal or state income tax liabilities
arising from any action by Seller or the LLC prior to the date of the Closing
which causes the LLC to be classified as a corporation under section 7701 of the
Internal Revenue Code of 1986, as amended. The provisions of this paragraph
11(c) shall expressly survive the Closing.
(d) Each party will pay its respective costs and expenses of
its legal, accounting and other professional advisors.
(e) Purchaser shall be solely responsible and liable for any
and all taxes, assessments and similar charges (including any and all fines,
penalties and interest charges in connection therewith) that may be levied,
assessed, recaptured or otherwise imposed with respect to the Property or any
part thereof for any period before or after the Closing which result from or
arise out of any change in the use of, or other change in circumstances relating
to, the Property or any part thereof after the date of Closing.
(f) The provisions of this paragraph 11 will survive the
Closing and will not be subject to the limitations of paragraph 8(d) above.
12. Hart-Scott-Rodino. Seller and Purchaser acknowledge that the
transaction contemplated by this Agreement may be subject to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and it will be a condition to the Closing hereunder that the parties
obtain such approvals as may be required under the HSR Act. If Purchaser
determines that a filing must be made under the HSR Act, Purchaser agrees that
it will cause such filing to be made within ten (10) business days after the
Effective Date of this Agreement. The parties agree to cooperate in good faith
in exchanging relevant information and filing any documents required under the
HSR Act, and each party will bear its own costs, fees and expenses in making
such filing, provided that any filing fees payable in connection with such
filings shall be shared equally by Purchaser and Seller. The date of Closing
will be extended as necessary to obtain any such required approvals; provided,
however, if any approval required under the HSR Act has not been received on or
before December 1, 1999, then this Agreement shall automatically terminate,
whereupon no party hereto will have any further rights or obligations hereunder,
except as may otherwise be expressly provided herein.
13. Default; Remedies. If the purchase and sale of the Property
contemplated hereby is not consummated because of a default under this Agreement
by Purchaser or Seller, then the other
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party shall have the right, at its option, (a) to terminate this Agreement,
whereupon neither party will have any further rights or obligations hereunder,
except as may otherwise be expressly provided herein, or (b) to exercise any and
all rights and remedies available at law or in equity, including, without
limitation, an action or suit for monetary damages and/or specific performance.
14. Assignment; Continuing Liability.
(a) Neither party hereto will have the right to assign its
rights or obligations under this Agreement, in whole or in part, without the
prior written consent of the other party. Any attempted assignment in violation
of this paragraph will be deemed null and void. Notwithstanding the foregoing,
Purchaser shall have the right to assign its interest in this Agreement without
the prior consent of Seller to any entity which owns substantially all of
Purchaser's existing U.S. timberlands; provided, however, Purchaser shall
provide Seller with an executed copy of any and all assignment and assumption
documentation promptly upon complete execution and delivery of same. Further
notwithstanding the foregoing, Seller shall have the right to assign its
interest in this Agreement without the prior consent of Purchaser to a newly
created limited liability company, wholly owned by Seller, which shall acquire
the Membership Interests from Seller at or prior to Closing; provided, however,
Seller shall provide Purchaser with an executed copy of any and all assignment
and assumption documentation promptly upon complete execution and delivery of
same.
(b) Following any such assignment by Seller, (i) Jefferson
Smurfit Corporation (U.S.) ("JSC") shall retain all rights to the Reserved
Timber, (ii) JSC shall retain all rights to the Reserved Minerals, the Reserved
Mineral Rights and the OGM Leases, (iii) the Timber Cutting Agreement shall be
executed by and run to the benefit of JSC, and (iv) the Seedling Agreement shall
be executed by and be binding upon JSC.
(c) Upon any assignment of this Agreement by Purchaser
pursuant to the provisions of this paragraph, Rayonier Inc. and each assignee of
this Agreement shall remain jointly and severally liable to Seller and any other
person or entity related to or affiliated with Seller who is expressly
benefitted under this Agreement (collectively, the "Seller Parties") for and
with respect to, and shall guaranty the performance of all obligations arising
under, all indemnifications, representations, warranties and other obligations
of Purchaser set forth in this Agreement (collectively, "Purchaser's
Obligations").
(d) Upon any assignment of this Agreement by Seller pursuant
to the provisions of this paragraph, JSC and each assignee of this Agreement
shall remain jointly and severally liable to Purchaser and any other person or
entity related to or affiliated with Purchaser who is expressly benefitted under
this Agreement (including, without limitation, the LLC) (collectively, the
"Purchaser Parties") for and with respect to, and shall guaranty the performance
of all obligations arising under, all indemnifications, representations,
warranties and other obligations of Seller set forth in this Agreement
(collectively, "Seller's Obligations").
(e) The Purchaser Parties shall not be entitled to make any
claim against any Seller Party with respect to Seller's Obligations after the
appropriate Claims Period (as defined
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below); provided, however, that if prior to the close of business on the last
day of the Claims Period, the Seller Parties shall have been notified of a claim
hereunder and such claim shall not have been finally resolved or disposed of at
such date, the basis for such claim shall continue to survive with respect to
such claim and shall remain a basis for recovery hereunder with respect to such
claim until such claim is finally resolved or disposed of in accordance with the
terms hereof; provided that the Purchaser Parties and Seller Parties shall use
reasonable efforts to resolve promptly any such claim.
(f) The Seller Parties shall not be entitled to make any claim
against any Purchaser Party with respect to Purchaser's Obligations after the
appropriate Claims Period (as defined below); provided, however, that if prior
to the close of business on the last day of the Claims Period, the Purchaser
Parties shall have been notified of a claim hereunder and such claim shall not
have been finally resolved or disposed of at such date, the basis of such claim
shall continue to survive with respect to such claim and shall remain a basis
for recovery hereunder with respect to such claim until such claim is finally
resolved or disposed of in accordance with the terms hereof; provided that the
Purchaser Parties and Seller Parties shall use reasonable efforts to resolve
promptly any such claim.
(g) Claims to be made by the Purchaser Parties or the Seller
Parties hereunder (the party desiring to make such a claim being referred to
herein as a "Claiming Party" and the party against whom such claim is made being
referred to herein as a "Responding Party") shall be made in accordance with the
following procedures:
(i) Promptly after receipt by a Claiming Party of
notice by a third party of any complaint or the commencement of any
action or proceeding with respect to which recovery is being sought
hereunder, such Claiming Party shall notify the Responding Party of
such complaint or of the commencement of such action or proceeding;
provided, however, that failure to so notify the Responding Party shall
not relieve the Responding Party from liability for such claim arising
otherwise than under this Agreement and such failure to so notify the
Responding Party shall relieve the Responding Party from liability
which the Responding Party may have hereunder with respect to such
claim if, but only if, and only to the extent that, such failure to
notify the Responding Party results in the forfeiture by the Responding
Party of material rights and defenses otherwise available to the
Responding Party with respect to such claim. The Responding Party shall
have the right, upon written notice by the Responding Party to the
Claiming Party, to assume the defense of such action or proceeding,
including the employment of counsel reasonably satisfactory to the
Claiming Party and the payment of the reasonable fees and disbursements
of such counsel as incurred. If the Responding Party does not elect to
assume control of the defense of any such claims, the Responding Party
shall be bound by the results otherwise obtained with respect to such
claim. In the event, however, that the Responding Party declines or
fails to assume the defense of the action or proceeding or to employ
counsel reasonably satisfactory to such Claiming Party, in either case
in a timely manner, then the Claiming Party may employ counsel to
represent or defend it in any such action or proceeding and the
Responding Party shall pay the reasonable fees and disbursements of
such counsel as incurred; provided, however, that the Responding Party
shall not be required to pay the fees and disbursements
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of more than one counsel for all the Claiming Parties in any
jurisdiction in any single action or proceeding. In any action or
proceeding with respect to which recovery is being sought hereunder,
the Claiming Party or the Responding Party, whichever is not assuming
the defense of such action, shall have the right to participate in such
litigation and to retain its own counsel at such party's own expense.
The Claiming Party or the Responding Party, as the case may be, shall
at all times use reasonable efforts to keep the Responding Party or the
Claiming Party, as the case may be, reasonably apprised of the status
of the defense of any claim the defense of which they are maintaining,
and to cooperate in good faith with each other with respect to the
defense of any such action.
(ii) The Claiming Party may not settle or compromise
any claim or consent to the entry of any judgment with respect to which
recovery is being sought from the Responding Party hereunder without
the prior written consent of the Responding Party, unless such
settlement, compromise or consent includes an unconditional release of
the Responding Party and its affiliates from all liability arising out
of such claim and does not contain any equitable order, judgment or
term which affects, restrains or interferes with the business of the
Responding Party or its successors or assigns. The Responding Party may
not, without the prior written consent of the Claiming Party, settle or
compromise any claim or consent to the entry of any judgment with
respect to which recovery is being sought hereunder unless such
settlement, compromise or consent includes an unconditional release of
the Claiming Party from all liability arising out of such claim and
does not contain any equitable order, judgment or term which in any
material manner affects, restrains or interferes with the business of
the Claiming Party or any of its affiliates.
(iii) In the event that the Claiming Party shall
claim a right to payment pursuant to this Agreement, such Claiming
Party shall send written notice of such claim to the Responding Party.
Such notice shall specify the basis for such claim. As promptly as
possible after the Claiming Party has given such notice, the Claiming
Party and the Responding Party shall establish the merits and amount of
such claim (by mutual agreement, litigation, arbitration, meditation or
otherwise) and, within ten (10) business days of the final
determination of the merits and amount of such claim, the Responding
Party shall deliver an amount of cash to the Claiming Party as
appropriate to satisfy and discharge in full such claim as determined
hereunder.
(h) Except as provided in this paragraph or elsewhere in this
Agreement, no claim may be asserted with respect to the Purchaser's Obligations
or Seller's Obligations by the Purchaser Parties or the Seller Parties after the
end of the claims period (the "Claims Period") which shall commence on the date
of Closing and terminate five (5) years thereafter; provided, however, that the
Claims Period with respect to (a) Purchaser Losses arising out of or pursuant to
any breach by Seller of the representations and warranties in paragraphs 8(a)(i)
through (iv) and 8(a)(vi)(A) through (J) of this Agreement shall commence of the
date hereof and terminate eighteen (18) months thereafter, (b) Purchaser Losses
arising out of or pursuant to any breach by Seller of the representations and
warranties in paragraphs 8(a)(v)(B) and 8(a)(v)(E) shall commence on the date
hereof and remain in effect without limitation, except as limited by law, and
(c) Seller Losses arising out of or pursuant to
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any breach by Purchaser of the representations and warranties in paragraphs
8(b)(i) through (v) of the Purchase Agreement shall commence on the date hereof
and terminate eighteen (18) months thereafter.
(i) By the execution and delivery of this Agreement, each of
Seller (on behalf of the Seller Parties) and Purchaser (on behalf of the
Purchaser Parties) irrevocably designates and appoints each of the parties set
forth under its name or designation below as its authorized agent(s) upon which
process may be served in any suit or proceeding arising out of or relating to
this Agreement that may be instituted in any state of federal court in the
States of Alabama, Georgia or Florida.
Seller (on behalf of the Seller Parties):
Jefferson Smurfit Corporation (U.S.)
c/o Smurfit-Stone Container Corporation
8182 Maryland Avenue
St. Louis, Missouri 63105
Attention: Craig Hunt, General Counsel
Purchaser (on behalf of the Purchaser Parties):
Rayonier Inc.
1177 Summer Street
Stamford, Connecticut 06905-5529
Attention: Lisa M. Palumbo, Vice President
and General Counsel
In addition, Responding Party submits to the personal
jurisdiction of any such court in any such suit or proceeding, and agrees that
service of process upon the above-designated individuals shall be deemed in
every respect effective service of process upon such Responding Party in any
such suit or proceeding. Each such Responding Party further agrees to take any
and all action reasonably requested by a Claiming Party hereunder, including the
execution and filing of any and all such documents and instruments, as may be
necessary to continue such designation and appointment of the above-designated
individuals in full force and effect or to provide for an appropriate
substitution for such agents. The foregoing shall not limit the rights of any
party to serve process in any other manner permitted by law.
(j) To the extent that any Responding Party has or hereafter
may acquire any immunity from jurisdiction of any court or from any legal
process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, or otherwise) with respect to itself or its
property, each Responding Party hereby irrevocably waives such immunity in
respect of its obligations with respect to this Agreement.
(k) The parties hereto agree that an appropriate forum and
venue for any disputes between any of the parties hereto arising out of this
Agreement shall be any state or federal court in
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the States of Alabama, Georgia or Florida. The foregoing shall not limit the
rights of any party to obtain execution of judgment in any other jurisdiction.
The parties further agree, to the extent permitted by law, that a final and
unappealable judgment against any of them in any action or proceeding
contemplated above shall be conclusive and may be enforced in any other
jurisdiction within or outside the United States by suit on the judgment, a
certified or exemplified copy of which shall be conclusive evidence of the fact
and amount of such judgment.
(l) The provisions of this paragraph 14 shall expressly
survive the Closing. Each of Purchaser, Seller. JSC and Rayonier Inc. shall
execute and deliver at Closing a written confirmation at the obligations assumed
and agreed to by the parties under this paragraph 14.
15. No Waiver. No action or failure to act by any party hereto will
constitute a waiver of any right or duty afforded to such party under this
Agreement, nor will any such action or failure to act constitute an approval of
or acquiescence in any breach of this Agreement except as may be specifically
agreed in writing.
16. Governing Law. This Agreement will be governed by the laws of the
States of Georgia, Florida and Alabama as to those portions of the Real Property
located in such states.
17. Notice. Any and all notices, elections and communications required
or permitted by this Agreement will be made or given in writing and will be
delivered in person, sent by reputable overnight courier, or sent by postage
prepaid United States mail, certified or registered, return receipt requested,
to the other parties at the addresses set forth below, or such other address as
may be furnished by notice in accordance with this paragraph. The date of notice
given by personal delivery will be the date of such delivery. The effective date
of notice by overnight courier or by mail will be the date such notice is
received by the addressee.
Seller: Jefferson Smurfit Corporation (U.S.)
c/o Smurfit-Stone Container Corporation
8182 Maryland Avenue
St. Louis, Missouri 63105
Attention: Craig A. Hunt, Vice President
and General Counsel
with a copy to: Sutherland Asbill & Brennan LLP
999 Peachtree Street, NE
Suite 2300
Atlanta, GA 30309-3996
Attention: William H. Bradley, Esq.
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Purchaser: Rayonier Inc.
1177 Summer Street
Stamford, Connecticut 06905-5529
Attention: Lisa M. Palumbo
Vice President and General
Counsel
with a copy to: King & Spalding
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1763
Attention: Robert G. Pennington, Esq.
18. Entire Agreement. This Agreement contains the entire agreement
among the parties hereto with respect to the subject matter hereof and cannot be
amended or supplemented except by a written agreement signed by all parties.
19. Captions. The captions of paragraphs in this Agreement are for
convenience and reference only and are not part of the substance hereof.
20. Severability. In the event that any one or more of the provisions,
paragraphs, words, clauses, phrases or sentences contained in this Agreement, or
the application thereof in any circumstance is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision, paragraph, word, clause, phrase or
sentence in every other respect and of the remaining provisions, paragraphs,
words, clauses, phrases or sentences of this Agreement, will not be in any way
impaired, it being the intention of the parties that this Agreement will be
enforceable to the fullest extent permitted by law.
21. Counterparts. This Agreement may be executed in counterparts which
will be construed together as one instrument.
22. No Third Party Beneficiaries; Binding Effect. This Agreement is for
the sole benefit of the parties hereto and their permitted assigns and nothing
contained herein will give or be construed to give to any party, other than the
parties hereto and such permitted assigns, any legal or equitable rights
hereunder. Subject to the foregoing and the provisions of paragraph 14 above,
this Agreement will be binding upon and will inure to the benefit of the parties
hereto and their respective heirs, legal representatives, successors and
assigns.
23. Time of Essence. Time is of the essence of this Agreement.
24. No Survival. Except to the extent otherwise expressly provided in
this Agreement, the provisions of this Agreement will not survive any
termination of this Agreement and will not survive the Closing and will be
merged into the documents executed and delivered and the payment of all amounts
made at the Closing.
27
<PAGE>
25. Determination of Value; Arbitration.
(a) Either Seller or Purchaser may require that any
determination of value contemplated in this Agreement be submitted to
arbitration pursuant to this paragraph 25.
(b) The party desiring such arbitration shall give notice to
that effect to the other party. As soon as possible, but in any event within the
next five (5) days, Seller and Purchaser shall each select one arbitrator. As
soon as possible, but in any event, within the next five (5) days, the two
arbitrators so selected shall select a third arbitrator. No arbitrator shall be
an employee, officer, director, shareholder, member, partner or other affiliate
of either party. In the event of the failure, refusal or inability of any
arbitrator to act, a new arbitrator shall be appointed in his stead, which
appointment shall be made in the same manner as hereinbefore provided. At the
request of either party, the arbitrators shall authorize the service of
subpoenas for the production of documents or attendance of witnesses.
(c) Each arbitrator shall be either (i) a partner, principal
or senior executive of a regionally recognized forest management firm having
substantial experience in the valuation of timberland and timber in the
southeastern United States, or (ii) an appraiser associated with a regionally
recognized real estate appraisal firm who is a member of the American Institute
of Real Estate Appraisers (or the successor organization, or if no such
organization exists, then an organization composed of persons of similar
professional qualifications) and having substantial experience in the valuation
of timberland and timber in the southeastern United States, or (iii) in the case
of an arbitration pursuant to paragraph 4(c) hereof relating to the validity of
a Title Objection, a present or former underwriting officer of a nationally
recognized title insurance company having at least ten (10) years experience in
underwriting and handling title insurance claims in connection with timberland
or commercial property in the southeastern United States, or an attorney
licensed to practice in the state in which the affected property is situated,
having not less than ten (10) years of practice experience in real estate law in
such state, or (iv) in the case of an arbitration pursuant to paragraph 6(a), an
environmental engineer licensed in the state of the affected property and having
not less than ten (10) years of engineering experience, or an attorney licensed
to practice in the state in which the affected property is situated, having not
less than ten (10) years of practice experience in environmental law in such
state.
(d) Within thirty (30) days after their appointment, the
arbitrators so chosen shall hold a hearing at which each party may submit
evidence, be heard and cross-examine witnesses, with each party having at least
five (5) business days advance notice of the hearing. The hearing shall be
conducted such that each of Seller and Purchaser shall have reasonably adequate
time to present oral evidence or argument, but either party may present whatever
written evidence it deems appropriate prior to the hearing (with copies of any
such written evidence being sent to the other party).
(e) The decision of the arbitrators so chosen shall be given
in writing within a period of ten (10) days after the conclusion of such
hearing. The decision in which any two arbitrators so appointed and acting
hereunder concur shall in all cases be binding and conclusive upon the parties.
28
<PAGE>
(f) The fees and expenses of the arbitration proceeding and
the fees of the third arbitrator appointed under this paragraph 25 shall be
borne equally by Seller and Purchaser. Seller and Purchaser each shall pay the
fees of the arbitrator each selected, and the fees and expenses of preparing and
presenting its own case. Seller and Purchaser may at any time by mutual written
agreement discontinue arbitration proceedings and themselves agree upon any such
matter submitted to arbitration.
26. Incorporation of Exhibits. All exhibits referred to herein are
hereby incorporated in this Agreement by this reference.
27. No Publicity. Neither Purchaser nor Seller shall make any public
announcement or otherwise publicly disseminate any information with respect to
this Agreement or the transactions contemplated hereby without the prior written
consent of the other party hereto.
28. Effective Date. The effective date (the "Effective Date") of this
Agreement will be the last date on which all parties hereto shall have executed
this Agreement, as indicated below.
29. Deletion of Real Property. Purchaser and Seller agree that the
following provisions shall be taken into consideration in determining the size
and configuration of any portions of the Owned Real Property which is to be
excluded from the Real Property pursuant to the provisions of paragraphs 4(c)
and/or 6(a) above: (a) no parcel or site excluded shall be of a size less than
five (5) acres without the prior approval of Seller; (b) each parcel so excluded
shall retain or be granted commercially reasonable access either directly to a
public road or over the Real Property acquired by Purchaser; (c) if access is
retained or granted over the Real Property acquired by Purchaser, such access
shall not materially or adversely affect Purchaser's use and operation of the
Real Property, and shall be in a location reasonably acceptable to Purchaser;
(d) in determining the size and configuration of the tract or tracts to be
excluded, Seller may elect to exclude an area which is up to 125% of the area
actually impacted or affected by the Title Objection or the Environmental
Condition, as the case may be, in order to ensure that the excluded tract or
tracts retain economic viability; (e) Purchaser shall retain approval rights
over the size (subject to the five-acre minimum described in clause (a) above),
configuration and means of access of any tract proposed to be excluded from the
Real Property pursuant to paragraphs 4(c) and 6(a) hereof, which approval shall
not be unreasonably withheld; (f) all tracts excluded pursuant to paragraphs
4(c) and 6(a) hereof shall be subject to restrictive covenants (to be agreed to
by the parties) which shall prohibit Seller and its successors-in-title from
operating landfills or other noxious uses which are inconsistent with, or which
could unreasonably interfere with, Purchaser's timber operations on its adjacent
Real Property; and (g) Purchaser shall be granted a right of first offer in the
event Seller ever elects to sell or otherwise dispose of any excluded tract or
tracts. If the Title Objection or Environmental Condition in question impacts a
portion of the Real Property which is a portion of the Leased Real Property,
then the Real Property Lease covering such portion of the Real Property shall be
deleted, and all of the Leased Real Property covered by such Real Property Lease
shall be deemed deleted from the Real Property.
29
<PAGE>
30. Property to be Excluded. Purchaser acknowledges and agrees that
prior to Closing (a) Seller may elect to carve out up to 1,000 acres of the Real
Property in Alachua County, Florida near the University of Florida to facilitate
a settlement of the AFIDA Proceeding described on Exhibit J hereto; and (b) may
convey in lieu of condemnation up to 300 acres of the Real Property to Alabama
Power Company. If the conveyance described in clause (a) above occurs prior to
Closing, then the Purchase Price shall be reduced by the fair value of the Real
Property conveyed, as determined by the agreement of the parties or pursuant to
the provisions of paragraph 25 hereof. If the conveyance described in clause (b)
above occurs prior to Closing, then the Purchase Price shall be reduced by the
greater of (i) the fair value of the Real Property conveyed, as determined by
the agreement of the parties or pursuant to the provisions of paragraph 25
hereof, or (ii) the net proceeds received by Seller from Alabama Power Company
as consideration for said conveyance.
[End of Text]
30
<PAGE>
EXHIBIT A
---------
FEE PROPERTY
------------
All of the real property described in the following owners title
commitments issued by First American Title Insurance Company of New York.
<TABLE>
<CAPTION>
COUNTY TITLE COMMITMENT NO. EFFECTIVE DATE
------ -------------------- --------------
<S> <C> <C>
A. FLORIDA
-------
1. Alachua Co. FA-C-2264 3/15/99
` Agents File No. FL99-1699E
2. Baker Co. FA-C-2266 3/16/99
Agents File No. FL99-1699T
3. Bradford Co. #1 FA-C-2265 3/15/99
Agents File No. FL99-1699F/AA
4. Bradford Co. #2 FA-C-2449 6/16/99
Agents File No. FL99-1699CC
5. Columbia Co. FA-C-2267 3/12/99
Agents File No. FL99-1699G
6. Duval Co. FA-C-2268 3/12/99
Agents File No. FL99-1699H
7. Flagler Co. FA-C-2269 3/23/99
Agents File No. FL99-1699I
8. Hamilton Co. FA-C-2342 4/14/99
Agents File No. FL99-1699C
9. Jefferson Co. FA-C-2270 3/11/99
Agents File No. FL99-1699J
10. Levy Co. FA-C-2271 3/12/99
Agents File No. FL99-1699K
11. Madison Co. FA-C-2272 3/17/99
Agents File No. FL99-1699L
</TABLE>
A-1
<PAGE>
<TABLE>
<S> <C> <C>
12. Marion Co. FA-C-2273 3/10/99
Agents File No. FL99-1699M
13. Nassau Co. FA-C-2274 3/9/99
Agents File No. FL99-1699N
14. Okaloosa Co. FA-C-2275 3/16/99
Agents File No. FL99-1699O
15. Santa Rosa Co. FA-C-2276 3/18/99
Agents File No. FL99-1699P
16. St. John Co. FA-C-2277 3/18/99
Agents File No. FL99-1699Q
17. Suwannee Co. FA-C-2340 4/15/99
Agents File No. FL99-1699B
18. Taylor Co. FA-C-2278 3/11/99
Agents File No. FL99-1699R
19. Union Co. FA-C-2330 4/12/99
Agents File No. FL99-1699D
20. Volusia Co. FA-C-2279 3/17/99
Agents File No. FL99-1699S
B. ALABAMA
-------
1. Baldwin Co. Agents File No. 57235 3/22/99
2. Barbour Co. Agents File No. 57235 3/22/99
3. Butler Co. Agents File No. 57235 3/22/99
4. Coffee Co. Agents File No. 57235 3/22/99
5. Conecuh Co. Agents File No. 57235 3/22/99
6. Covington Co. Agents File No. 57235 3/22/99
7. Crenshaw Co. Agents File No. 57235 3/22/99
</TABLE>
A-2
<PAGE>
<TABLE>
<S> <C> <C>
8. Escambia Co. Agents File No. 57235 3/22/99
9. Geneva Co. Agents File No. 57235 3/22/99
10. Lowndes Co. Agents File No. 57235 3/22/99
11. Monroe Co. Agents File No. 57235 3/22/99
12. Montgomery Co. Agents File No. 57235 3/22/99
13. Pike Co. Agents File No. 57235 3/22/99
14. Wilcox Co. Agents File No. 57235 3/22/99
C. GEORGIA
-------
1. Atkinson Co. 17517.08 3/5/99
2. Bacon Co. 17518.08 2/28/99
3. Ben Hill Co. 17519.08 3/15/99
4. Bleckley Co. 17513.08 3/9/99-Bleckley
Pulaski Co. 3/1/99-Pulaski
5. Berrien Co. 17520.08 3/17/99
6. Brantley Co. 17521.08 3/15/99
7. Charlton Co. 17522.08 3/17/99
8. Clinch Co. 17523.08 3/15/99
9. Dodge Co. 17524.08 3/16/99
10. Dooly Co. 17525.08 3/17/99
11. Echols Co. 17526.08 3/17/99
12. Lanier Co. 17527.08 3/17/99
13. Laurens Co. 17528.08 3/17/99
</TABLE>
A-3
<PAGE>
<TABLE>
<S> <C> <C>
14. Montgomery Co. 17514.08 3/15/99
15. Pierce Co. 17529.08 2/28/99
16. Pierce Co. and 17516.08 3/2/99 - Pierce
Appling Co. 3/12/99 - Appling
17. Telfair Co. 17530.08 3/17/99
18. Toombs Co. 17515.08 3/12/99
19. Ware Co. 17531.08 3/4/99
20. Webster Co. 17512.08 3/2/99
21. Wheeler Co. 17534.08 3/17/99
22. Wilcox Co. 17533.08 3/3/99
23. Wayne Co. 17532.08 3/17/99
</TABLE>
LESS AND EXCEPT FROM THE FOREGOING THE FOLLOWING DESCRIBED PROPERTIES:
1. Any and all real property located within the city limits of the City of
Fernandina Beach, Florida which may be described in the foregoing
commitments;
2. Any real property located within the Brewton, Alabama and Jacksonville,
Florida mill site complexes; and
3. The real property more particularly described on Exhibit A-1 attached hereto
and incorporated herein by this reference.
TOGETHER WITH ANY PORTIONS of the timberlands currently owned by Seller in the
States of Alabama, Florida and Georgia which were (i) included on the block maps
provided by Seller to Purchaser for its review as part of its due diligence
prior to executing this Agreement, and (ii) inadvertently omitted from the legal
descriptions contained in the foregoing title commitments, unless same were
expressly excepted and excluded pursuant to items 1, 2 and 3 of the immediately
preceding paragraph.
A-4
<PAGE>
EXHIBIT A-1
-----------
[EXCLUDED PROPERTY]
A-1-1
<PAGE>
EXHIBIT B
---------
[REAL PROPERTY LEASES]
B-1
<PAGE>
EXHIBIT C
---------
[INCIDENTAL LEASES]
C-1
<PAGE>
EXHIBIT D
---------
[TERMS GOVERNING THE ISSUANCE OF THE INSTALLMENT NOTE]
D-1
<PAGE>
EXHIBIT E
---------
[FORM OF TIMBER AGREEMENT]
E-1
<PAGE>
EXHIBIT F
---------
FORM OF SEEDLING AGREEMENT
JEFFERSON SMURFIT CORPORATION (U.S.)
SEEDLING SALES AGREEMENT
JEFFERSON SMURFIT CORPORATION (U.S.), a Delaware corporation
(hereinafter, "Seller"), agrees to sell, and _________________________________
(hereinafter, "Buyer") agrees to purchase, seedlings in accordance with the
following provisions:
Seller agrees to sell at market price seedlings to Buyer to plant the
[TIMBERLANDS] for a period of three (3) years. The quantity of seedlings will be
sufficient to permit Buyer to conduct planting activity on the [TIMBERLANDS] in
a manner consistent with that performed by Seller prior to its conveyance of the
[TIMBERLANDS] to Purchaser. Market price shall be F.O.B. Seller's Florida
Nursery or Seller's Alabama Nursery, as appropriate.
The seedlings will be grown by Seller in accordance with its standard
operating procedures and practices. It is agreed that Buyer must contact the
nursery approximately one week prior to delivery, so that the seedlings can be
lifted, packaged and placed in refrigerated storage. Failure to do so shall
relieve Seller from any responsibility whatsoever for late shipment to Buyer.
Seedling availability may be limited by adverse weather conditions,
pestilence, disease or other factors beyond the control of the nursery. Buyer
will be immediately informed of any such seedling shortage, in which event Buyer
shall elect to receive a prorated share of the available seedlings or to cancel
this Contract without further liability on the part of Buyer or Seller.
Any seedlings not picked up by Buyer within 30 days of notice by Seller
shall at Seller's sole election either be considered as abandoned and subject to
resale, or otherwise disposed of by Seller, with Buyer being liable to Seller
for the full above stated contract quantity and price. Seller shall be under no
obligation to undertake to mitigate the contract price through resale or
otherwise.
Seller makes no warranty whether expressed or implied; nor is there any
warranty of merchantability or warranty of fitness for any particular purpose.
All such warranties are expressly disclaimed and excluded.
IN WITNESS WHEREOF, the parties have executed this Contract to be
effective as of the ____ day of _____________, 1999.
F-1
<PAGE>
<TABLE>
<S> <C>
SELLER: BUYER:
JEFFERSON SMURFIT CORPORATION ------------------------------------
(U.S.)
By: ---------------------------------- By: --------------------------------
Witness: ----------------------------- Witness: ---------------------------
</TABLE>
G-1
<PAGE>
EXHIBIT G
---------
DESCRIPTION OF RESERVED TIMBER
<TABLE>
<S> <C> <C>
BREWTON
- -------
Blocks:
1012 3116
1021 3162
1109 5059
1157 5198
1518 5278
1604 5313
1610 5317
2004 2030 2158
2045
2070 3099
2424 3230
2506 3602
2665
3103
3110 5199
3127
3160
3191
3523
5019
5034
5109
5229
5268
5284
5590
1045
1609
1655
2072
2094
2096
2527
</TABLE>
G-2
<PAGE>
FERNANDINA
- ----------
Nassau:
Blocks: 2, 3, 4, 22, 64, 84, 98, 142, 155, 156, 176, 194, 52,
53, 143, 12, 51, 100,102, 103, 104, 175
St. Johns:
Blocks: 2, 30, 35, 43, 67, 80, 84, 81, 86, 88, 124, 126, 18,
19, 27, 68, 128, 161, 164, 166
Baker:
Blocks: 22, 32, 42, 62, 71, 81, 91, 92, 131, 141, 183, 192,
211, 212, 213, 251, 12, 153, 191, 252, 341, 342, 202
Bradford:
Blocks: 69, 73, 86, 88, 125, 85, 123, 133, 3, 22, 51, 59,
60, 66, 131
Madison:
Blocks: 68, 87, 56, 31, 54, 57
Ocala:
Blocks: 172, 176, 185, 192, 227, 92, 121, 122, 149
Waycross:
Blocks: 35, 107, 213, 221, 228, 34, 174, 175, 59, 60, 173,
179, 180, 240
Homerville:
Blocks: 139, 502, 507, 534, 628, 508, 530, 574, 575, 578,
586, 604, 4, 5, 90, 560, 562, 585, 642
Richland:
Blocks: 86, 126, 139
G-3
<PAGE>
*NOTE: Block numbers have been obtained from Seller's internally
prepared Block Maps, copies of which have been made available
to Purchaser for its review and use.
Hamilton County, Florida
The timber located on those portions of the Real Property in Hamilton County,
Florida which are more particularly identified and described in that certain
Timber Sale Agreement dated April 14, 1998, made by and between The Mutual Life
Insurance Company of New York, as Seller, and Jefferson Smurfit Corporation
(U.S.), as Purchaser (the "MONY Timber Agreement").
G-4
<PAGE>
EXHIBIT H
---------
PERMITTED ENCUMBRANCES
1. All taxes, assessments and similar charges for the year 1999 and all
subsequent years; and all taxes, assessments and similar charges
described in paragraph 11(e) of this Agreement.
2. The Incidental Leases (as defined in paragraph 1(c) of this Agreement)
and the OGM Leases (as defined in paragraph 8 of this Agreement).
3. The Timber Agreement (as defined in paragraph 3(c) of this Agreement).
4. Seller's reservations of the Reserved Timber and the Reserved Minerals
and all rights and easements with respect thereto, as described in
paragraphs 3(f) and 3(g) of this Agreement.
5. Any and all matters not of record which would be disclosed by a current
survey or inspection of the Real Property.
6. Any and all prior reservations, conveyances, grants or leases of
minerals of whatever kind or character (including, without limitation,
oil, gas, coal, lignite, clay, sand, gravel, rock, aggregate and other
minerals) located in, on or under the Real Property or any part thereof
and all rights and easements with respect to the mining, extraction and
removal of such minerals.
7. Any and all riparian rights of others in and to any creeks, rivers,
lakes, streams, other bodies of water or waterways located on or
adjoining the Real Property or any part thereof.
8. Any and all claims of the sovereign or any other person or entity with
respect to portions of the Real Property which border or are under any
body of water.
9. Any and all road, railroad and utility easements or rights of way
physically in existence and affecting the Real Property on the date of
Closing.
10. Any other defect in title to the Real Property, or any portion thereof,
that does not materially adversely affect the use of the Real Property
for the growing and harvesting of timber; provided, however, that no
defect in title shall be deemed to have a material adverse effect on the
use of the Real Property for the growing and harvesting of timber unless
(i) such defect results in a loss of value of $50,000.00 individually,
or (ii) the value of any loss associated with such defect, when added to
the value of the loss associated with all other defects having a loss of
value of less than $50,000.00 individually, causes the aggregate value
of the loss associated with all such defects to exceed $1,000,000.00;
H-1
<PAGE>
and provided further, however, that the exceptions set forth hereinabove
in paragraphs 1 through 9 shall not be deemed to have any material
adverse effect on the use of the Real Property for the growing and
harvesting of timber.
H-2
<PAGE>
EXHIBIT I
---------
TITLE COMMITMENTS
All the title commitments listed below have been issued by First
American Title Insurance Company of New York.
I. FEE PROPERTY
------------
<TABLE>
<CAPTION>
COUNTY TITLE COMMITMENT NO. EFFECTIVE DATE
------ ------------------- --------------
<S> <C> <C>
A. FLORIDA
-------
1. Alachua Co. FA-C-2264 3/15/99
Agents File No. FL99-1699E
2. Baker Co. FA-C-2266 3/16/99
Agents File No. FL99-1699T
3. Bradford Co. #1 FA-C-2265 3/15/99
Agents File No. FL99-1699F/AA
4. Bradford Co. #2 FA-C-2449 6/16/99
Agents File No. FL99-1699CC
5. Columbia Co. FA-C-2267 3/12/99
Agents File No. FL99-1699G
6. Duval Co. FA-C-2268 3/12/99
Agents File No. FL99-1699H
7. Flagler Co. FA-C-2269 3/23/99
Agents File No. FL99-1699I
8. Hamilton Co. FA-C-2342 4/14/99
Agents File No. FL99-1699C
9. Jefferson Co. FA-C-2270 3/11/99
Agents File No. FL99-1699J
10. Levy Co. FA-C-2271 3/12/99
Agents File No. FL99-1699K
</TABLE>
I-1
<PAGE>
<TABLE>
<S> <C> <C>
11. Madison Co. FA-C-2272 3/17/99
Agents File No. FL99-1699L
12. Marion Co. FA-C-2273 3/10/99
Agents File No. FL99-1699M
13. Nassau Co. FA-C-2274 3/9/99
Agents File No. FL99-1699N
14. Okaloosa Co. FA-C-2275 3/16/99
Agents File No. FL99-1699O
15. Santa Rosa Co. FA-C-2276 3/18/99
Agents File No. FL99-1699P
16. St. John Co. FA-C-2277 3/18/99
Agents File No. FL99-1699Q
17. Suwannee Co. FA-C-2340 4/15/99
Agents File No. FL99-1699B
18. Taylor Co. FA-C-2278 3/11/99
Agents File No. FL99-1699R
19. Union Co. FA-C-2330 4/12/99
Agents File No. FL99-1699D
20. Volusia Co. FA-C-2279 3/17/99
Agents File No. FL99-1699S
B. ALABAMA
-------
1. Baldwin Co. Agents File No. 57235 3/22/99
2. Barbour Co. Agents File No. 57235 3/22/99
3. Butler Co. Agents File No. 57235 3/22/99
4. Coffee Co. Agents File No. 57235 3/22/99
5. Conecuh Co. Agents File No. 57235 3/22/99
6. Covington Co. Agents File No. 57235 3/22/99
</TABLE>
I-2
<PAGE>
<TABLE>
<S> <C> <C>
7. Crenshaw Co. Agents File No. 57235 3/22/99
8. Escambia Co. Agents File No. 57235 3/22/99
9. Geneva Co. Agents File No. 57235 3/22/99
10. Lowndes Co. Agents File No. 57235 3/22/99
11. Monroe Co. Agents File No. 57235 3/22/99
12. Montgomery Co. Agents File No. 57235 3/22/99
13. Pike Co. Agents File No. 57235 3/22/99
14. Wilcox Co. Agents File No. 57235 3/22/99
C. GEORGIA
-------
1. Atkinson Co. 17517.08 3/5/99
2. Bacon Co. 17518.08 2/28/99
3. Ben Hill Co. 17519.08 3/15/99
4. Bleckley Co. 17513.08 3/9/99-Bleckley
Pulaski Co. 3/1/99-Pulaski
5. Berrien Co. 17520.08 3/17/99
6. Brantley Co. 17521.08 3/15/99
7. Charlton Co. 17522.08 3/17/99
8. Clinch Co. 17523.08 3/15/99
9. Dodge Co. 17524.08 3/16/99
10. Dooly Co. 17525.08 3/17/99
11. Echols Co. 17526.08 3/17/99
12. Lanier Co. 17527.08 3/17/99
</TABLE>
I-3
<PAGE>
<TABLE>
<S> <C> <C>
13. Laurens Co. 17528.08 3/17/99
14. Montgomery Co. 17514.08 3/15/99
15. Pierce Co. 17529.08 2/28/99
16. Pierce Co. and 17516.08 3/2/99 - Pierce
Appling Co. 3/12/99 - Appling
17. Telfair Co. 17530.08 3/17/99
18. Toombs Co. 17515.08 3/12/99
19. Ware Co. 17531.08 3/4/99
20. Webster Co. 17512.08 3/2/99
21. Wheeler Co. 17534.08 3/17/99
22. Wilcox Co. 17533.08 3/3/99
23. Wayne Co. 17532.08
</TABLE>
B. LEASEHOLD PROPERTY
-----------------
<TABLE>
<CAPTION>
Title Effective
Lease Name County and State Commitment No. Date
---------- ---------------- -------------- ---------
<S> <C> <C> <C>
1. Arnold St. Johns Co., FL FA-C-2458 5/4/99
Agents File No.
FL99-1700J
2. Burgin Lumber Co. Barbour Co., AL 17550.08 3/26/99
Calhoun Co., GA Agents File No. 3/26/99
135-GA-28699-2
Chattahoochee Co., GA 3/22/99
Clay Co., GA 2/28/99
Early Co., GA
Lee Co., GA 3/15/99
Quitman Co., GA 3/31/99
Randolph Co., GA 5/17/99
Stewart Co., GA 4/1/99
Sumter Co., GA 3/17/99
Terrell Co., GA 5/4/99
</TABLE>
I-4
<PAGE>
<TABLE>
<S> <C> <C> <C>
Webster Co., GA 4/28/99
3. Cummer HAVE NOT RECEIVED TITLE COMMITMENT
4. Dewar-Cox Clinch Co., GA 17545.08 5/17/99
Agents File No. 135-GA-28699-2
5. Donaldson Alachua Co., FL FA-C-2436 3/19/99
Agents File No. FL99-1700H
6. Ferguson HAVE NOT RECEIVED TITLE COMMITMENT
7. Fuqua HAVE NOT RECEIVED TITLE COMMITMENT
8. Ga. Baptist Bacon Co., GA 17543.08 4/30/99
Agents File No. 135-GA-28699-2
9. Gilder #1 Laurens Co., GA 17540.08 3/25/99
Dodge Co., GA Agents File No. 135-GA-28699-2
10. Gilder #2 Laurens Co., GA 17538.08 3/25/99
Dodge Co., GA Agents File No. 135-GA-28699-2
Wheeler Co., GA
11. Huster Marion Co., GA 17548.08 3/21/99
Agents File No. 135-GA-28699-2
12. Johnson Nassau Co., FL FA-C-2469 6/18/99
Agents File No. FL99-1700E
13. Klaerich St. Johns Co., FL FA-C-2453 5/4/99
Agents File No. FL99-1700D
14. Lee Clinch Co., GA 17544.08 5/17/99
Agents File No. 135-GA-28699-2
15. Oliver Charlton Co., GA 17546.08 5/17/99
Agents File No. 135-GA-28699-2
16. Partin Levy Co., FL FA-C-2440 5/12/99
Agents File No. FL99-1700C1
Marion Co., FL FA-C-2442 3/12/99
Agents File No. FL99-1700C2
</TABLE>
I-5
<PAGE>
<TABLE>
<S> <C> <C> <C>
17. Passailaigue Marion Co., GA 17549.08 3/22/99-C
Chattahoochee Co, GA Agents File No. 3/21/99-M
135-GA-28699-2
18. Robinson Levy Co., FL FA-C-2445 5/12/99
Agents File No. FL99-1700B
19. Weatherly Laurens Co., GA 17539.08 4/1/99-D
Dodge Co., GA Agents File No. 3/25/99-L
135-GA-28699-2
20. Whitehurst Alachua Co., FL FA-C-2437 3/18/99
Agents File No. FL99-1700A
</TABLE>
I-6
<PAGE>
EXHIBIT J
---------
DISCLOSURE SCHEDULE
Exceptions to Seller's Warranties and Representations in Paragraph 8(a)(vi):
A: Pending Litigation.
<TABLE>
<CAPTION>
Case Name Case No. Court Subject Matter
- --------- -------- ----- --------------
<S> <C> <C> <C>
Griffis v. JSC 98V-256 Superior Court of Clinch County, GA Property line dispute
Fla. DOT v. Rudin, et al. CA98-123A. Circuit Court of St. Johns County, FL Condemnation
(Cummer Lease) B.C.D.
Fla. DOT v. Republic CA99-283 Circuit Court of St. Johns County, FL Condemnation
Media, et al. (Cummer Lease) Div. 55
Commercial Bancorp of 94VS22005 State Court of Fulton County, GA Dispute concerning correct payee
Ga., Inc. v. Joann Gilder of lease payment
Groover and Container
Corporation of America
JSC v. Commercial Bancorp E-44131 Superior Court of Fulton County, GA Dispute concerning correct
of GA, Inc., et al. payee of lease payment
(Gilder Lease)
</TABLE>
B: AFIDA Proceeding. During 1998 and 1999, Seller received multiple Notices of
Violation from the U.S. Department of Agriculture ("USDA") with respect to the
failure by Seller to make required filings under the Agricultural Foreign
Investment Disclosure Act of 1978 ("AFIDA") with respect to the Real Property.
These filings were required as a result of the acquisition of an interest in
Container Corporation of America (n/k/a Jefferson Smurfit Corporation (U.S.)) by
an entity controlled by Smurfit Group plc in 1986, at which time Seller became a
"foreign person" for purposes of AFIDA. Seller is currently engaged in
negotiations with the Appeals and Litigation Group of the Farm Service Agency
within the USDA. One settlement proposal under discussion includes the donation
of approximately 1,000 acres to the University of Florida or some other
appropriate entity which is adjacent to a research forest used by the
University. The sale of the Real Property contemplated by this Agreement will
require an additional filing by Seller under AFIDA which must be made within 90
days after Closing. The obligation to make this filing is Seller's and not
Purchaser's unless Purchaser is itself a "foreign person" for purposes of AFIDA.
C: Donaldson Lease. In the context of a pending renewal of the Donaldson Lease
(described on Exhibit B hereto), the lessors have made certain proposals for
lease modifications. The terms of the lease do not provide for or require these
proposed modifications.
J-1
<PAGE>
EXHIBIT K
---------
OIL, GAS AND MINERAL LEASES
All oil, gas and mineral leases and similar agreements relating to the
Reserved Minerals pursuant to which Seller receives a royalty, including
specifically, without limitation, those agreements with the following described
tenants:
K-1
<PAGE>
<TABLE>
<CAPTION>
TENANT CHECK DATE COMMENT
<S> <C> <C>
Esco Oil 1/12/99 ATICFEE332-Hughes Eastern/Esco Sizemore Creek Field
Esco Oil 2/4/99 ATICFEE332-Hughes Eastern/Esco Sizemore Creek Field
Esco Oil 4/9/99 ATICFEE332-Hughes Eastern/Esco Sizemore Creek Field
Esco Oil 6/4/99 ATICFEE332-Hughes Eastern/Esco Sizemore Creek Field
Exxon Co 12/18/98
Exxon Co 12/23/98
Exxon Co 1/25/99 Scott Paper Co Gas Unit 24-1 TR3
Exxon Co 1/25/99 Scott Paper Co Gas Unit 24 TR#3
Exxon Co 1/31/99 Big Escambia Creek Gas Plant Property 006-9105
Exxon Co 2/18/99
Exxon Co 2/25/99
Exxon Co 3/18/99 Big Escambia Creek Gas Plant Property 006-9105
Exxon Co 3/25/99 Scott Paper Co Gas Unit 24-1 TR3
Exxon Co 3/25/99 Scott Paper Co Gas Unit 24 TR#3
Exxon Co 4/20/99 Big Escambia Creek Gas Plant Property 006-9105
Exxon Co 4/23/99 Scott Paper Co Gas Unit 24-1 TR3
</TABLE>
K-1
<PAGE>
<TABLE>
<CAPTION>
TENANT CHECK DATE COMMENT
<S> <C> <C>
Exxon Co 4/23/99
Scott Paper 5/20/99 Big Escambia Creek Gas Plant Property 006-9105
Co Gas Unit
24
TR3Exxo
n Co
Exxon Co 5/25/99 Scott Paper Co Gas Unit 24-1 TR3
Exxon Co 5/25/99 Scott Paper Co Gas Unit 24-TR3
Exxon Co 6/18/99 Big Escambia Creek Gas Plant Property 006-9105
Exxon Co 6/25/99 Scott Paper Co Gas Unit 24-1 TR3
Exxon Co 6/25/99 Scott Paper Co Gas Unit 24 TR3
Longleaf 12/25/98
Longleaf 1/25/99 Smak-Dixon 22-10 #1
Longleaf 2/25/99
Longleaf 3/25/99 Smak-Dixon 22-10 #1
Longleaf 4/26/99 Smak-Dixon 22-10 #1
Longleaf 5/25/99 Smak-Dixon 22-10 #1
Longleaf 6/25/99 Smak-Dixon 22-10 #1
Spooner 3/25/99 #1 Columbus Smith-Satartia Fld
Longleaf 7/25/99 Smak-Dixon 22-10 #1
Exxon Co 7/21/99 Big Escambia Creek Gas Plant Property 006-9105
</TABLE>
K-2
<PAGE>
ACTIVE ALABAMA OIL AND GAS LEASES
- ---------------------------------
<TABLE>
<CAPTION>
Leasee Lease Date County, ST Net Acres
------ ---------- ---------- ---------
<S> <C> <C> <C>
1. Shell Oil Co. 8/4/72 Escambia, AL 78.5
2. Hughes Eastern Petroleum 5/29/90 Escambia, AL 40.0
3. Smacko, Ltd. 2/24/93 Covington, AL 40.0
4. Longleaf Energy Group 12/27/95 Covington, AL 30.0
5. Longleaf Energy Group 1/18/96 Covington, AL 24.5
6. Gulf Crescent Resources 1/18/96 Conecuh, AL 40.0
7. Gulf Crescent Resources 1/18/96 Conecuh, AL 220.0
8. Pruet Oil Co. 3/18/96 Monroe, AL 46.5
9. Gulf Crescent Resources 3/25/96 Conecuh, AL 80.0
10. Gulf Crescent Resources 4/23/97 Conecuh, AL 233.7875
11. Strago Petroleum 12/31/97 Monroe, AL 60.0
12. Gulf Crescent Resources 6/2/98 Conecuh, AL 273.5
13. Wiser Oil Company 9/10/98 Conecuh, AL 199.01
</TABLE>
ACTIVE SEISMIC EXPLORATION/OGM LEASE OPTION AGREEMENT
- -----------------------------------------------------
<TABLE>
<CAPTION>
Agreement with Agrmnt Date Agrmnt Term County/ST Acres
-------------- ----------- ----------- --------- -----
<S> <C> <C> <C> <C>
1. Gulf Crescent Resources 7/10/98 18 months Monroe, AL 80
2. Gulf Crescent Resources 8/10/98 12 months Conecuh, AL 80
</TABLE>
K-3
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed, sealed and
delivered by the parties hereto on the date(s) indicated below.
PURCHASER:
Date of execution: RAYONIER INC.
By: W. Lee Nutter
------------------------------------
Title: Chairman of the Board, President
and Chief Executive Officer
--------------------------------
SELLER:
Date of execution: JEFFERSON SMURFIT CORPORATION (U.S.)
By: Ray M. Curran
------------------------------------
Title: Chief Executive Officer
---------------------------------
<PAGE>
EXHIBIT 2.2
FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT
This Amendment (this "Amendment") is entered into as of the 21st day of
October, 1999, by and between JEFFERSON SMURFIT CORPORATION (U.S.), a Delaware
corporation ("Seller"), and RAYONIER INC., a North Carolina corporation
("Purchaser").
WITNESSETH
WHEREAS, Seller and Purchaser entered into that certain Purchase and Sale
Agreement (the "Agreement") dated as of July 28, 1999, for the purchase and sale
of certain timberlands more particularly described therein; and
WHEREAS, Seller and Purchaser desire to amend the Agreement as provided herein.
NOW, THEREFORE, for and in consideration of the premises set forth herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by each party hereto, Seller and Purchaser, intending to be
legally bound, do hereby agree as follows:
1. Defined Terms. Unless otherwise defined in this Amendment, terms used herein
with an initial capital letter or initial capital letters shall have the
meanings given them in the Agreement.
2. Purchase Price Reduction. Paragraph 2 of the Agreement is hereby amended by
deleting the number "Seven Hundred Twenty-Five Million and NO/100 DOLLARS
($725,000,000.00)" in line 2 of said Paragraph 2 and substituting in lieu
thereof the number "Seven Hundred Ten Million and NO/100 DOLLARS
($710,000,000.00)." Paragraph 2 is hereby further amended by deleting the number
"Five Hundred Million and NO/100 DOLLARS ($500,000,000.00)" in line 8 of said
Paragraph 2 and substituting in lieu thereof the number "Four Hundred Eighty
Five Million and NO/100 DOLLARS ($485,000,000.00)."
3. Extension of Closing Date. Paragraph 3(a) of the Agreement is hereby amended
by deleting the date "October 15, 1999" in line three of said paragraph 3(a) and
substituting in lieu thereof the date "October 25, 1999."
4. Site Preparation Reimbursement. Paragraph 9(b) is hereby amended by deleting
the number "$1,500,000.00" in the last line of said paragraph 9(b) and
substituting in lieu thereof the number "$1,750,000.00."
5. Closing Deliveries. Paragraph 3(c) of the Agreement is hereby amended by
adding the following new clause (v) in said Paragraph 3(c):
"and (v) an assignment with reservation of royalties of the OGM Leases
(hereinafter defined) in form and substance reasonably satisfactory to Purchaser
and Seller
<PAGE>
pursuant to which Seller shall assign to LLC the OGM Leases and reserve the
royalties thereunder."
6. Exhibits. Exhibit C (Incidental Leases), Exhibit F (Seedling Agreement) and
Exhibit K (Oil, Gas and Mineral Leases) attached to the Agreement are hereby
deleted in their entirety and Exhibit C, Exhibit F and Exhibit K attached to
this Amendment shall be substituted in lieu thereof.
7. No Change in Terms and Conditions. Except as modified herein, the Agreement
is ratified and confirmed and remains in full force and effect.
8. Counterparts. To facilitate execution, this Amendment may be executed in as
many counterparts as may be convenient or required. It shall not be necessary
that the signature of each party appear on each counterpart. All counterparts
shall collectively constitute a single instrument.
[SIGNATURES ON FOLLOWING PAGES]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.
SELLER:
JEFFERSON SMURFIT CORPORATION (U.S.), a
Delaware corporation
By: Ray M. Curran
---------------------------------------
Name:
-------------------------------------
Title: Chief Executive Officer
------------------------------------
PURCHASER:
RAYONIER INC., a North Carolina corporation
By: W. Lee Nutter
---------------------------------------
Name:
-------------------------------------
Title: Chairman of the Board, President
and Chief Executive Officer
------------------------------------
