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ACQUISITION AGREEMENT
DATED
August 28, 2000
OSLER, HOSKIN & HARCOURT LLP
-
WHITE & CASE LLP
TABLE OF CONTENTS
ARTICLE 1
Interpretation 1
Section 1.1 Definitions 1
Section 1.2 Interpretation Not Affected by Headings, etc. 6
Section 1.3 Currency 6
Section 1.4 Number, etc. 6
Section 1.5 Date For Any Action 6
Section 1.6 Entire Agreement 7
Section 1.7 Schedules 7
Section 1.8 Accounting Matters 7
Section 1.9 Knowledge 7
ARTICLE 2
THE AMALGAMATION 7
Section 2.1 Implementation Steps by Repap 7
Section 2.2 Articles of Amalgamation 8
Section 2.3 Repap Circular 8
Section 2.4 Preparation of Filings, etc. 8
ARTICLE 3
REPRESENTATIONS AND WARRANTIES 9
Section 3.1 Representations and Warranties of Repap 9
Section 3.2 Representations and Warranties of UPM 23
Section 3.3 Survival 25
ARTICLE 4
COVENANTS 25
Section 4.1 Retention of Goodwill 25
Section 4.2 Covenants of Repap 25
Section 4.3 Covenants of UPM 29
Section 4.4 Treatment of Repap Stock Options 30
Section 4.5 Covenants Regarding Non-Solicitation 30
Section 4.6 Notice by Repap of Superior Proposal Determination 32
Section 4.7 Access to Information 33
Section 4.8 Closing Matters 33
Section 4.9 Indemnification 33
ARTICLE 5
CONDITIONS 34
Section 5.1 Mutual Conditions Precedent. 34
Section 5.2 Additional Conditions Precedent to the Obligations of UPM 35
Section 5.3 Additional Conditions Precedent to the Obligations of Repap 36
Section 5.4 Notice and Cure Provisions 36
Section 5.5 Satisfaction of Conditions. 37
ARTICLE 6
AMENDMENT AND TERMINATION 37
Section 6.1 Amendment 37
Section 6.2 [Intentionally Deleted] 38
Section 6.3 Termination 38
Section 6.4 Break and Other Fees; Option 39
Section 6.5 Remedies 39
ARTICLE 7
GENERAL 40
Section 7.1 Notices 40
Section 7.2 Assignment 41
Section 7.3 Binding Effect 42
Section 7.4 Waiver and Modification 42
Section 7.5 Further Assurances 42
Section 7.6 Expenses 42
Section 7.7 Consultation 42
Section 7.8 Governing Laws 43
Section 7.9 Time of Essence 43
Section 7.10 Counterparts 43
SCHEDULE A - AMALGAMATION AGREEMENT
SCHEDULE B - SPECIAL RESOLUTION OF THE REPAP SHAREHOLDERS
SCHEDULE C - REGULATORY APPROVALS
SCHEDULE D - CONFIDENTIALITY PROVISIONS
SCHEDULE E - OPTION AGREEMENT
ACQUISITION AGREEMENT
MEMORANDUM OF AGREEMENT made as of the 28th day of August, 2000
B E T W E E N :
UPM-KYMMENE CORPORATION,
a corporation existing under the laws of Finland
("UPM")
- and -
REPAP ENTERPRISES INC.,
a corporation existing under the laws of Canada
("Repap").
THIS AGREEMENT WITNESSES THAT in consideration of the respective covenants and agreements herein contained, the parties hereto covenant and agree as follows:
In this Agreement, unless there is something in the subject matter or context inconsistent therewith, the following terms shall have the following meanings respectively:
"Acquireco" means 3796477 Canada Inc., a corporation existing under the laws of Canada and a wholly-owned subsidiary of UPM;
"Acquisition Proposal" means any proposal or offer with respect to any merger, amalgamation, arrangement, business combination, liquidation, dissolution, recapitalization, take-over bid, tender offer, purchase of all or any material assets of, or any purchase of more than 20% of the equity (or rights thereto) of, or similar transactions involving, Repap or any Repap Material Subsidiary, excluding the Amalgamation;
"Affiliate" shall have the meaning ascribed thereto under the Securities Act;
"Amalco" means the corporation continuing as a result of the Amalgamation;
"Amalco Special Shares" means the redeemable special shares of Amalco to be issued on the Amalgamation and to be redeemed by Amalco on the Redemption Date at the Redemption Price;
"Amalgamation" means an amalgamation of Repap and Acquireco under Section 181 of the CBCA on the terms and subject to the conditions set out in the Amalgamation Agreement, subject to any amendments or variations thereto made in accordance with Section 6.1;
"Amalgamation Agreement" means the amalgamation agreement providing for the Amalgamation substantially in the form and content of Schedule A annexed hereto and any amendments or variations thereto made in accordance with Section 6.1;
"Amalgamation Resolution" means the special resolution of the Repap Shareholders, to be substantially in the form and content of Schedule B annexed hereto;
"Ancillary Documents" means the schedules hereto and any disclosure letters between the parties as contemplated herein;
"Articles of Amalgamation" means the articles of amalgamation of Repap and Acquireco in respect of the Amalgamation that are required by the CBCA to be filed with the Director;
"Berg Litigation" means the litigation relating to Mr. S. Berg disclosed in the documents Publicly Disclosed by Repap;
"Break Fee" shall have the meaning ascribed thereto in Section 6.4(1);
"Business Day" means any day on which commercial banks are generally open for business in Toronto, Ontario and Helsinki, Finland other than a Saturday, a Sunday or a day observed as a holiday in Toronto, Ontario or in Helsinki, Finland under applicable Laws;
"CBCA" means the Canada Business Corporations Act as now in effect and as it may be amended from time to time prior to the Effective Date;
"COBRA" has the meaning ascribed thereto in Section 3.1(1)(vii);
"Convertible Debenture" means the U.S. $45 million principal amount 6% convertible subordinated debenture of Repap;
"Director" means the Director appointed pursuant to Section 260 of the CBCA;
"Dissent Rights" means the rights of dissent in respect of the Amalgamation under Section 190 of the CBCA;
"Dissenting Shareholder" means any Repap Shareholder which exercises its Dissent Rights in compliance with Section 190 of the CBCA and thereby becomes entitled to receive the fair value of the Repap Common Shares held by that Repap Shareholder;
"Effective Date" means the date shown on the certificate of amalgamation to be issued by the Director under the CBCA giving effect to the Amalgamation;
"Environmental Laws" means all applicable Laws, including applicable common law, relating to the protection of the environment and public health and safety or any hazardous or toxic substance or pollutant;
"ERISA" has the meaning ascribed thereto in Section 3.1(l)(vi);
"Exchange Act" means the United States Securities Exchange Act of 1934, as amended and the rules, regulations and policies made thereunder, as now in effect and as they may be amended from time to time prior to the Effective Date;
"Governmental Entity" means any (a) multinational, federal, provincial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, board, bureau or agency, domestic or foreign, (b) self regulatory organization or stock exchange including The Nasdaq Stock Market, Inc. OTC Bulletin Board and The Toronto Stock Exchange, (c) subdivision, agent, commission, board, or authority of any of the foregoing, or (d) quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing;
"Holders" means, when used with reference to the Repap Common Shares and the Repap Preferred Shares, the holders thereof shown from time to time in the register maintained by or on behalf of Repap in respect of such securities;
"Including" means including without limitation;
"Information" has the meaning ascribed thereto in Section 4.7(2);
"Intellectual Property Rights" means all patents, trade-marks, copyright, industrial designs, trade-names and other intellectual property rights whether registered or not, owned by or licensed to Repap or its subsidiaries; "Copyright" means the rights prescribed by section 3(1) of the Copyright Act (Canada) and other copyright rights; "Industrial Designs" means the exclusive rights conferred under the Industrial Design Act (Canada) and other equivalent rights including design patent rights; "Patents" means all issued patents and inventions and pending applications therefor and patents which may be issued from current applications (including divisions, reissues, renewals, re-examinations, continuations, continuations-in-part and extensions) applied for or registered in any jurisdiction; and "Trade-marks" means the trade-marks, trade-names, brands, business names, uniform resource locators, domain names, tag lines, designs, graphics, logos, service marks and other commercial symbols and indicia of origin whether registered or not and any goodwill associated therewith;
"Laws" means all statutes, regulations, statutory rules, orders, and terms and conditions of any grant of approval, permission, authority or license of any Governmental Entity, and the term "applicable" with respect to such Laws and in the context that refers to one or more Persons, means that such Laws apply to such Person or Persons or its or their business, undertaking, property or securities and emanate from a Governmental Entity having jurisdiction over the Person or Persons or its or their business, undertaking, property or securities;
"Match Period" has the meaning ascribed thereto in Section 4.6(1);
"Material Adverse Change", when used in connection with a Person, means any change, effect, event or occurrence with respect to the financial condition, properties, assets, liabilities, obligations (whether absolute, accrued, conditional or otherwise), businesses, operations or results of operations of such Person or any of its subsidiaries that is or would be material and adverse to such Person and its subsidiaries taken as a whole, other than any change, effect, event or occurrence (i) relating to, or arising out of, the Canadian, United States or European economies, political conditions or securities markets in general or (ii) affecting the worldwide pulp and paper industry in general or the North American coated paper industry in general which does not have a materially disproportionate impact on such Person and its subsidiaries;
"Material Adverse Effect" when used in connection with a Person, means any effect resulting in a Material Adverse Change with respect to it;
"Material Fact" shall have the meaning ascribed thereto under the Securities Act;
"Option Agreement" means the option agreement attached as Schedule C hereto;
"OSC" means the Ontario Securities Commission;
"Outside Date" means December 20, 2000 or such later date as may be mutually agreed by the parties;
"Person" includes any individual, firm, partnership, limited partnership, joint venture, venture capital fund, limited liability company, unlimited liability company, association, trust, trustee, executor, administrator, legal personal representative, estate, group, body corporate, corporation, unincorporated association or organization, Governmental Entity, syndicate or other entity, whether or not having legal status;
"Publicly Disclosed by Repap" means disclosed by Repap in a public filing made by it with the OSC or the SEC on or before the date hereof;
"Redemption Date" means the Effective Date;
"Redemption Price" means Cdn. $0.20 per Amalco Special Share or such greater amount established in accordance with Section 4.6;
"Regulatory Approvals" means those sanctions, rulings, consents, orders, exemptions, permits and other approvals (including the lapse, without objection, of a prescribed time under a statute or regulation that states that a transaction may be implemented if a prescribed time lapses following the giving of notice without an objection being made) of Governmental Entities, as set out in Schedule C hereto;
"Repap Circular" means the notice of the Repap Meeting and accompanying management information circular, including all appendices thereto, to be sent to Repap Shareholders in connection with the Repap Meeting;
"Repap Common Shares" means the common shares in the capital of Repap;
"Repap Documents" has the meaning ascribed thereto in Section 3.1(m);
"Repap Material Subsidiary" means Repap New Brunswick Inc. and each other subsidiary of Repap (i) the total assets of which constituted more than ten percent of the consolidated assets of Repap or (ii) the total revenues of which constituted more than ten percent of the consolidated revenues of Repap, in each case as set out in the financial statements of Repap for the year ended December 31, 1999 and each affiliate of Repap that directly or indirectly holds an equity interest in any such subsidiary;
"Repap Meeting" means the special meeting of Repap Shareholders, including any adjournment or postponement thereof, to be called and held to consider the Amalgamation;
"Repap Options" means the Repap Common Share purchase options granted under the Repap Stock Option Plans;
"Repap Plans" has the meaning ascribed thereto in Section 3.1(l);
"Repap Preferred Shares" means collectively the Preferred Shares, Series C and the Preferred Shares, Series F in the capital of Repap;
"Repap Shareholders" means the holders of Repap Common Shares and Repap Preferred Shares;
"Repap Shares" means the Repap Common Shares and the Repap Preferred Shares;
"Repap Stock Option Plans" means Repap's 1987 Directors, Officers and Employees Stock Option Plan, and the 1991 Salaried Employees Amended Stock Option Plan, as amended to the date hereof;
"Representatives" has the meaning ascribed thereto in Section 4.7(1);
"SEC" means the United States Securities and Exchange Commission;
"Securities Act" means the Securities Act (Ontario) and the rules, regulations and policies made thereunder, as now in effect and as they may be amended from time to time prior to the Effective Date;
"Subsidiary" means, with respect to a specified body corporate, any body corporate of which more than 50% of the outstanding shares ordinarily entitled to elect a majority of the board of directors thereof (whether or not shares of any other class or classes shall or might be entitled to vote upon the happening of any event or contingency) are at the time owned directly or indirectly by such specified body corporate, and shall include any body corporate, partnership, joint venture or other entity over which such specified body corporate exercises direction or control or which is in a like relation to a subsidiary;
"Superior Proposal" means any bona fide written Acquisition Proposal that in the good faith determination of the Board of Directors of Repap, after consultation with its financial advisors and with outside counsel (a) is reasonably capable of being completed, taking into account all legal, financial, regulatory and other aspects of such proposal and the party making such proposal, and (b) would, if consummated in accordance with its terms, result in a transaction more favourable to the holders of Repap Common Shares and no less favourable to the holders of Repap Preferred Shares from a financial point of view than the transaction contemplated by this Agreement;
"Tax" and "Taxes" have the respective meanings ascribed thereto in Section 3.1(k) (iii);
"Tax Returns" means all returns, declarations, reports, information returns and statements required to be filed with any taxing authority relating to Taxes;
"Technical Information" means all know-how and related technical knowledge owned by or licensed to Repap, its subsidiaries or affiliates including, without limitation: all trade secrets, confidential information and other proprietary know-how; all public information and non-proprietary know-how; any information of a scientific, technical, financial or business nature regardless of its form; all documented research, forecasts, studies, marketing plans, budgets, market data, developmental, demonstration or engineering work; all information that can be or is used to define a design or process or procure, produce, support or operate material and equipment; all software, methods of production and procedures; all integrated circuit topographies, mask works and similar rights in semi-conductor chip technology; and all formulae, designs, drawings, blueprints, patterns, plans, flow charts, parts lists, manuals and records;
"Unsolicited" means unsolicited after Tuesday, August 22, 2000; and
"US Repap Plans" has the meaning ascribed thereto in Section 3.1(l)(vi).
Section 1.2 Interpretation Not Affected by Headings, etc.
The division of this Agreement into Articles, Sections and other portions and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation hereof. Unless otherwise indicated, all references to an "Article" or "Section" followed by a number and/or a letter refer to the specified Article or Section of this Agreement. The terms "this Agreement", "hereof", "herein" and "hereunder" and similar expressions refer to this Agreement (including the Schedules hereto) and not to any particular Article, Section or other portion hereof and include any agreement or instrument supplementary or ancillary hereto.
Unless otherwise specifically indicated, all sums of money referred to in this Agreement are expressed in lawful money of Canada.
Unless the context otherwise requires, words importing the singular shall include the plural and vice versa and words importing any gender shall include all genders.
Section 1.5 Date For Any Action
In the event that any date on which any action is required to be taken hereunder by any of the parties hereto is not a Business Day, such action shall be required to be taken on the next succeeding day which is a Business Day.
This Agreement, and the agreements and other documents referred to herein, constitute the entire agreement between the parties hereto pertaining to the terms of the transactions contemplated hereby and supersede all other prior agreements, understandings, negotiations and discussions, whether oral or written, between the parties hereto with respect to the terms of the transactions contemplated hereby.
The following Schedules are annexed to this Agreement and are hereby incorporated by reference into this Agreement and form part hereof:
Schedule A - Amalgamation Agreement
Schedule B - Special Resolution of the Repap Shareholders
Schedule C - Regulatory Approvals
Schedule D - Confidentiality Provisions
Schedule E - Option Agreement
Section 1.8 Accounting Matters
Unless otherwise stated, all accounting terms used in this Agreement in respect of Repap shall have the meanings attributable thereto under Canadian generally accepted accounting principles and all determinations of an accounting nature in respect of Repap required to be made shall be made in a manner consistent with Canadian generally accepted accounting principles and past practice.
Each reference herein to the knowledge of Repap means, unless otherwise specified, the actual knowledge of H. Stephen, S. Larson, M. Cormier or T. McBride following due review of corporate records and inquiry of such employees of Repap as they determine in their reasonable judgement can be made without jeopardizing the confidentiality of the subject matter of this Agreement. Each reference herein to the knowledge of UPM means, unless otherwise specified, the actual knowledge of UPM's senior officers.
ARTICLE 2
THE AMALGAMATION
Section 2.1 Implementation Steps by Repap
Repap covenants in favour of UPM that Repap shall:
Section 2.2 Articles of Amalgamation
The Articles of Amalgamation shall implement the Amalgamation, as a result of which, among other things, each holder of Repap Common Shares will be entitled to receive one Amalco Special Share for each Repap Common Share.
Repap shall commence preparation of the Repap Circular no later than on August 29, 2000. As promptly as reasonably practicable after the execution and delivery of this Agreement, Repap shall complete the Repap Circular together with any other documents required by the Securities Act or other applicable Laws in connection with the Amalgamation required to be prepared by Repap, and as promptly as practicable after the execution and delivery of this Agreement, and in any event on or prior to September 15, 2000 Repap shall, unless otherwise agreed by the parties, cause the Repap Circular and other documentation required in connection with the Repap Meeting to be sent to each Repap Shareholder and filed as required by applicable Laws.
Section 2.4 Preparation of Filings, etc.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of Repap
Repap represents and warrants to and in favour of UPM as follows and acknowledges that UPM is relying upon such representations and warranties in connection with the transactions contemplated by this Agreement:
v No consent, approval, order or authorization of, or declaration or filing with, any Governmental Entity is required to be obtained by Repap or any of its subsidiaries in connection with the execution and delivery of this Agreement or the Option Agreement or the consummation by Repap of the transactions contemplated hereby other than (A) filings with the Director under the CBCA, (B) the Regulatory Approvals relating to Repap and (C) any other consents, approvals, orders, authorizations, declarations or filings of or with a Governmental Entity which have been disclosed in writing by Repap to UPM in a form acceptable to UPM or which, if not obtained, would not, individually or in the aggregate, have a Material Adverse Effect on Repap and would not prevent, materially hinder or materially delay the completion of the transactions contemplated hereby.
The quarterly financial statements for Repap for the fiscal quarters ended March 31, 2000 and June 30, 2000 have been prepared in accordance with Canadian generally accepted accounting principles on a basis consistent with the consolidated audited financial statements for the year ended December 31, 1999 and such financial statements fairly present, in all material respects, the consolidated financial position and results of operations of Repap as of the respective dates thereof and for the respective periods covered thereby.
except to the extent that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Repap; provided that, notwithstanding the foregoing, Repap makes no representation or warranty in this Section 3.1(t) with respect to the technology for making pulp known as the ALCELL® technology.
Section 3.2 Representations and Warranties of UPM
UPM represents and warrants to and in favour of Repap as follows and acknowledges that Repap is relying upon such representations and warranties in connection with the matters contemplated by this Agreement:
The representations and warranties of Repap and UPM contained herein shall survive the execution and delivery of this Agreement and shall terminate on the earlier of the termination of this Agreement in accordance with its terms and the Effective Date. Any investigation by a party hereto or its advisors shall not mitigate, diminish or affect the representations and warranties of another party to this Agreement.
Section 4.1 Retention of Goodwill
Until the Effective Date, Repap will continue to carry on the business of Repap and its subsidiaries in a manner consistent with prior practice, working to preserve the attendant goodwill of such entities and to contribute to retention of that goodwill to and after the Effective Date, but subject to the following provisions of this Article 4. The provisions of Section 4.2 are intended to be in furtherance of this general commitment.
Section 4.2 Covenants of Repap
UPM hereby covenants and agrees to and, if applicable, will cause Acquireco to, perform all obligations required or desirable to be performed by it under this Agreement, to co-operate with Repap in connection therewith, and to do all such other acts and things as may be necessary or desirable in order to consummate and make effective, as soon as reasonably practicable, the transactions contemplated by this Agreement and, without limiting the generality of the foregoing, to:
Section 4.4 Treatment of Repap Stock Options
UPM understands that Repap will provide interim financial assistance to holders of Repap Options in connection with the exercise of such Repap Options. Such financial assistance shall consist of interest free loans in an amount necessary to enable such holders of Repap Options to exercise such options. Each loan shall be secured by an assignment of the proceeds and direction of payment thereof to Repap of any disposition of the shares under option up to the amount of the loans. Furthermore, Repap shall provide lists to UPM of optionholders who will receive financial assistance, the number of options held by those holders and the exercise price(s) of their options.
Section 4.5 Covenants Regarding Non-Solicitation
Section 4.6 Notice by Repap of Superior Proposal Determination
Section 4.7 Access to Information
Each of UPM and Repap shall deliver, at the closing of the transactions contemplated hereby, such customary certificates, resolutions and other closing documents as may be required by the other party hereto, acting reasonably.
Section 5.1 Mutual Conditions Precedent
The respective obligations of the parties hereto to complete the transactions contemplated by this Agreement shall be subject to the satisfaction, on or before the Effective Date, of the following conditions precedent, each of which may only be waived by the mutual consent of UPM and Repap:
Section 5.2 Additional Conditions Precedent to the Obligations of UPM
(2) UPM may not rely on the failure to satisfy any of the above conditions precedent if the condition precedent would have been satisfied but for a material default by UPM in complying with its obligations hereunder.
Section 5.3 Additional Conditions Precedent to the Obligations of Repap
Section 5.4 Notice and Cure Provisions
Section 5.5 Satisfaction of Conditions.
The conditions precedent set out in Sections 5.1, 5.2 and 5.3 shall be conclusively deemed to have been satisfied, waived or released when, with the agreement of UPM and Repap, a Certificate of Amalgamation in respect of the Amalgamation is issued by the Director.
ARTICLE 6
AMENDMENT AND TERMINATION
This Agreement and the Amalgamation Agreement may, at any time and from time to time before or after the holding of the Repap Meeting but not later than the Effective Date, be amended by mutual written agreement of the parties hereto, and any such amendment may, subject to applicable Laws, without limitation:
Section 6.2 [Intentionally Deleted]
in each case, prior to the Effective Date.
Section 6.4 Break and Other Fees; Option
(ii) either Repap or UPM shall terminate this Agreement pursuant to Section 6.3(1) or (2) as a result of the failure to satisfy the conditions specified in either Section 5.1(a) or Section 5.1(b) in circumstances where the requisite Repap Shareholder approval has not been obtained at the Repap Meeting or if either Repap or UPM shall terminate this Agreement pursuant to Section 6.3(3)(d); and
(ii) the prospect of there being an Acquisition Proposal has been disclosed to holders of more than 20 percent of the Repap Shares prior to or during the Repap Meeting, Repap Shareholder approval of the Amalgamation is not obtained at the Repap Meeting and an Acquisition Proposal is made, publicly announced or otherwise publicly disclosed, prior to the expiration of six months following termination of this Agreement; and
then in any such case Repap shall pay to UPM $18 million (the "Break Fee") in immediately available funds to an account designated by UPM. Such payment shall be due concurrently with the consummation of an Acquisition Proposal. Repap shall not be obligated to make more than one payment pursuant to this Section 6.4(1).
All notices and other communications which may or are required to be given pursuant to any provision of this Agreement shall be given or made in writing and shall be deemed to be validly given if served personally or by facsimile, in each case addressed to the particular party at:
UPM Kymmene Group
Eteläesplanadi 2
P.O. Box 380
FIN-00101
Helsinki, Finland
Attention: Reko Aalto-Setälä
Facsimile No.: (358) 204 15 0304
with a copy to:
Osler, Hoskin & Harcourt LLP
P.O. Box 50
1 First Canadian Place
Toronto, Ontario
M5X 1B8
Attention: Dale Ponder
Facsimile No.: (416) 862-6666
and with a copy to:
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
Attention: Timothy B. Goodell
Facsimile No.: (212) 354-8113
Repap Enterprises Inc.
300 Atlantic Street, Suite 200
Stamford, Connecticut 07901
Attention: Stephen Larson
Facsimile No.: (203) 964-6183
with a copy to:
Stikeman Elliott
1155 René-Lévesque Blvd. W.
40th Floor
Montréal, Québec H3B 3V2
Attention: Pierre Raymond
Facsimile No.: (514) 397-3222
and with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Andrew Soussloff
Facsimile No.: (212) 558-3588
or at such other address of which any party may, from time to time, advise the other party by notice in writing given in accordance with the foregoing. The date of receipt of any such notice shall be deemed to be the date of delivery or facsimile transmission thereof if prior to 5:00 p.m. local time on a Business Day in place of delivery or receipt, and if not received on a Business Day or after 5:00 p.m. on a Business Day then the date of receipt shall be deemed to be the next Business Day. Notice to the persons to be copied hereunder is not proper notice to the primary recipients.
No party hereto may assign its rights or obligations under this Agreement or the Amalgamation Agreement, except that UPM may assign all or part of its rights or obligations to a wholly-owned subsidiary thereof, provided that UPM remains jointly and severally liable hereunder with such wholly-owned subsidiary.
This Agreement shall be binding upon and shall enure to the benefit of the parties hereto and their respective successors and permitted assigns and no third party shall have any rights hereunder.
Section 7.4 Waiver and Modification
Each of Repap and UPM may waive or consent to the modification of, in whole or in part, any inaccuracy of any representation or warranty made to it hereunder or in any document to be delivered pursuant hereto and may waive or consent to the modification of any of the covenants herein contained for its respective benefit or waive or consent to the modification of any of the obligations of the other party hereto. Any waiver or consent to the modification of any of the provisions of this Agreement, to be effective, must be in writing executed by the party granting such waiver or consent.
Section 7.5 Further Assurances
Each party hereto shall, from time to time, and at all times hereafter, at the request of the other parties hereto, but without further consideration, do all such further acts and execute and deliver all such further documents and instruments as shall be reasonably required in order to fully perform and carry out the terms and intent hereof.
UPM and Repap agree to consult with each other as to the general nature of any news releases or public statements with respect to this Agreement or the transactions contemplated hereby, and to use their respective reasonable efforts not to issue any news releases or public statements inconsistent with the results of such consultations. Subject to applicable Laws, each party shall use its reasonable efforts to enable the other parties to review and comment on all such news releases prior to the release thereof. The parties agree to issue jointly the news release in the agreed form with respect to the Amalgamation as soon as practicable following the execution of this Agreement. UPM and Repap also agree to consult with each other in preparing and making any filings and communications in connection with any Regulatory Approvals or other regulatory approvals and in seeking any third party consents under leases, or other agreements.
This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein and shall be treated in all respects as a Ontario contract. Each party hereby irrevocably attorns to the jurisdiction of the courts of the Province of Ontario in respect of all matters arising under or in relation to this Agreement.
Time shall be of the essence in this Agreement.
This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF the parties hereto have executed this Acquisition Agreement as of the date first written above.
UPM-KYMMENE CORPORATION |
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By: |
"Juha Niemelä" |
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By: |
"Reko Aalto-Setälä" |
REPAP ENTERPRISES INC. |
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By: |
"Harold (Hap) Stephen" |
SCHEDULE A
AMALGAMATION AGREEMENT
THIS AMALGAMATION AGREEMENT is made as of l, 2000
BETWEEN: |
REPAP ENTREPRISES INC., |
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3796477 CANADA INC., |
RECITALS: |
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A. |
Repap and Acquireco have agreed to amalgamate pursuant to the Canada Business Corporations Act and upon the terms and conditions set forth in this Agreement; |
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B. |
The authorized capital of Repap consists of an unlimited number of Repap Common Shares and an unlimited number of Preferred Shares of which, as of the date hereof, there are 743,960,637 Repap Common Shares (and no more) and 240,000 Preferred Shares, Series C and 400,000 Preferred Shares, Series F (and no more) and no Preferred Shares of any other series, issued and outstanding; |
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C. |
The authorized capital of Acquireco consists of an unlimited number of common shares; and |
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D. |
It is desirable that this amalgamation be effected. |
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NOW THEREFORE in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged) the parties agree as follows: |
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1. |
Interpretation |
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In this Agreement: |
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"Acquireco Common Shares" means the common shares in the capital of Acquireco; |
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"Act" means the Canada Business Corporations Act; |
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"Affiliate" means an affiliated body corporate within the meaning of section 1(2) of the Act; |
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"Agreement" means this amalgamation agreement, and the expressions "hereof", "herein", "hereto", "hereunder", "hereby" and similar expressions refer to this agreement; |
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"Amalco" means the corporation continuing as a result of the Amalgamation; |
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"Amalco Class A Redeemable Preferred Shares" means the Class A redeemable preferred shares in the capital of Amalco having the rights, privileges, restrictions and conditions set forth in Schedule 1. |
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"Amalco Class B Preferred Shares" means the Class B preferred shares in the capital of Amalco, issuable in series, having the rights, privileges, restrictions and conditions set forth in Schedule 1; |
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"Amalco Class B Preferred Shares, Series C" means the Class B preferred shares, series C in the capital of Amalco having the rights, privileges, restrictions and conditions set forth in Schedule 1; |
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"Amalco Class B Preferred Shares, Series F" means the Class B preferred shares, Series F in the capital of Amalco having the rights, privileges, restrictions and conditions set forth in Schedule 1; |
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"Amalco Common Shares" means the common shares in the capital of Amalco having the rights, privileges, restrictions and conditions set forth in Schedule 1; |
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"Amalgamating Corporations" means Repap and Acquireco; |
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"Amalgamation" means the amalgamation of the Amalgamating Corporations as contemplated in this Agreement; |
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"Business Day" means any day on which commercial banks are generally open for business in Toronto, Ontario and Helsinki, Finland other than a Saturday, a Sunday or a day observed as a holiday in Toronto, Ontario or in Helsinki, Finland under applicable laws; |
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"Dissenting Shareholder" means a registered holder of Repap Shares who, in connection with the special resolution of the shareholders which approves and adopts this Agreement, has exercised the right to dissent under section 190 of the Act in compliance with the provisions thereof and thereby becomes entitled to receive the fair value of his or her Repap Shares; |
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"Effective Date" means the date shown on the certificate of amalgamation to be issued by the Director under the Act giving effect to the Amalgamation; |
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"Record Date" means the record date for the Meeting; |
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"Redemption Consideration" means Cdn. $.20 per Amalco Class A Redeemable Preferred Share; and |
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"Redemption Date" means the Effective Date; |
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"Repap Common Shares" means the common shares in the capital of Repap; |
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"Repap Meeting" means the special meeting of Repap shareholders to be held to consider the approval of the special resolution which approves and adopts this Agreement; |
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"Repap Preferred Shares, Series C" means the preferred shares, series C in the capital of Repap ; |
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"Repap Preferred Shares, Series F" means the preferred shares, series F in the capital of Repap; |
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"Repap Shares" means the Repap Common Shares, Repap Preferred Shares, Series C and Repap Preferred Shares, Series F. |
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Words and phrases used but not defined in this Agreement and defined in the Act shall have the same meaning in this Agreement as in the Act unless the context or subject matter otherwise requires. |
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2. |
Agreement to Amalgamate |
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The Amalgamating Corporations hereby agree to amalgamate as of the Effective Date and to continue as one corporation on the terms and conditions set out in this Agreement. |
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3. |
Name |
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The name of Amalco shall be 3796477 Canada Inc. |
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4. |
Registered Office |
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The registered office of Amalco shall be c/o Osler, Hoskin & Harcourt LLP, P.O. Box 50, 1 First Canadian Place, Toronto, Ontario, M5X 1B8. |
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5. |
Authorized Capital |
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Amalco shall be authorized to issue an unlimited number of Amalco Common Shares, an unlimited number of Amalco Class A Redeemable Preferred Shares and an unlimited number of Amalco Class B Preferred Shares, issuable in series. The rights, privileges, restrictions and conditions attaching to each class of shares of Amalco shall be as described in Schedule 1 to this Agreement. |
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6. |
Private Company Restrictions |
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Effective immediately upon UPM-Kymmene Corporation becoming the sole holder of shares of Amalco: |
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(a) |
the right to transfer shares of Amalco shall be restricted in that no share shall be transferred except with the consent of the board of directors of Amalco, to be expressed either by a resolution passed at a meeting of the board of directors or by an instrument or instruments in writing signed by a majority of the directors; and |
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(b) |
the number of shareholders of Amalco, exclusive of persons who are in its employment or the employment of an affiliate and exclusive of persons who, having been formerly in the employment of Amalco were, while in that employment, and have continued after the termination of that employment to be, shareholders of Amalco, shall be limited to not more than fifty. Two or more persons who are the joint registered owners of one of more shares shall be counted as one shareholder. |
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Any invitation to the public to subscribe for securities of Amalco is prohibited. For the purposes hereof, the issuance of Amalco Class A Redeemable Preferred Shares, Amalco Class B Preferred Shares and Amalco Common Shares upon the Amalgamation shall not constitute an invitation to the public to subscribe for securities of Amalco. |
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7. |
Restrictions on Business |
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There shall be no restrictions on the business which Amalco is authorized to carry on. |
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8. |
Number of Directors |
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The board of directors of Amalco shall, until otherwise changed in accordance with the Act, consist of a minimum number of one and a maximum number of [5] directors. The number of directors of Amalco shall initially be [3] and the directors of Amalco shall be empowered to determine from time to time the number of directors of Amalco within the said minimum and maximum numbers provided for in the Articles of Amalco, as the same may be amended from time to time. |
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9. |
Initial Directors |
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The first directors of Amalco shall be the persons whose names and residential addresses appear below; |
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Municipality of Residence |
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Such directors shall hold office until the next annual meeting of shareholders of Amalco or until their successors are elected or appointed. |
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10. |
By-Laws |
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The by-laws of Amalco, until repealed, amended or altered, shall be the by-laws of Repap. |
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11. |
Amalgamation |
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On the Effective Date: |
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(a) |
each issued and outstanding Repap Common Share (other than those held by Dissenting Shareholders and other than those held by Acquireco, if any) will be converted into one Amalco Class A Redeemable Preferred Share; |
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(b) |
each issued and outstanding Repap Common Share held by Acquireco will be cancelled; |
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(c) |
each issued and outstanding Acquireco Common Share will be converted into one Amalco Common Share; |
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(d) |
each issued and outstanding Repap Preferred Share, Series C will be converted into one Amalco Class B Preferred Share, Series C; |
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(e) |
each issued and outstanding Repap Preferred Share, Series F will be converted into one Amalco Class B Preferred Share, Series F; and |
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(f) |
Dissenting Shareholders will be entitled to be paid the fair value of their Common Shares. |
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12. |
Stated Capital Accounts |
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There shall be added to the stated capital account in the accounting records of Amalco maintained for: |
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(a) |
the Amalco Class A Redeemable Preferred Shares, an amount equal to the number of Amalco Class A Redeemable Preferred Shares issued on the Amalgamation multiplied by Cdn. $.20; |
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(b) |
the Amalco Class B Preferred Shares, Series C, an amount equal to the aggregate stated capital of each Repap Preferred Share, Series C changed into an Amalco Class B Preferred Share, Series C on the Amalgamation; |
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(c) |
the Amalco Class B Preferred Shares, Series F, an amount equal to the aggregate stated capital of each Repap Preferred Share, Series F changed into an Amalco Class B Preferred Share, Series F on the Amalgamation; and |
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(d) |
the Amalco Common Shares, an amount equal to the amount by which the aggregate stated capital attributable to the Repap Common Shares (other than those held by Acquireco, if any) and the Acquireco Common Shares exceeds the amount added to the stated capital account maintained for the Amalco Class A Redeemable Preferred Shares in accordance with this section. |
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The amount of stated capital attributable to the Amalco Common Shares shall be adjusted to reflect payments that may be made to Dissenting Shareholders. |
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13. |
Share Certificates |
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No certificates shall be issued in respect of the Amalco Class A Redeemable Preferred Shares and such shares shall be evidenced by the certificates representing Repap Common Shares. No certificates shall be issued in respect of the Amalco Class B Preferred Shares, Series C or the Amalco Class B Preferred Shares, Series F and such shares shall be evidenced by certificates representing Repap Preferred Shares, Series C and Repap Preferred Shares, Series F respectively. |
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14. |
Contribution of Assets |
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Each of Repap and Acquireco shall contribute to Amalco all its assets, subject to its liabilities, as such exist immediately before the Effective Date. |
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15. |
Property of Amalco |
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Amalco shall posses all the property, rights, privileges and franchises and shall be subject to all the liabilities, contracts, disabilities and debts of each of the Amalgamating Corporations as such exist immediately before the Effective Date. |
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16. |
Rights of Creditors |
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All rights of creditors against property, rights and assets of each of the Amalgamating Corporations and all liens upon their property, rights and assets shall be unimpaired by the Amalgamation and all debts, contracts, liabilities and duties of each of the Amalgamating Corporations shall thenceforth attach to Amalco and may be enforced against it. |
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17. |
General Conditions Precedent |
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The respective obligations of the parties hereto to consummate the transactions contemplated hereby, and in particular the Amalgamation, are subject to the satisfaction, on or before the Effective Date, of the following conditions any of which may be waived by the mutual consent of such parties without prejudice to their rights to rely on any other or others of such conditions: |
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(a) |
this Agreement and the transactions contemplated hereby, including in particular the Amalgamation, shall have been approved by: |
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(i) |
the common shareholder of Acquireco; and |
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(ii) |
not less than two-thirds of the votes cast by the holders of Repap Shares who, being entitled to do so, vote in person or by proxy at the Repap Meeting in accordance with the provisions of the Act and in accordance with other applicable regulatory requirements; and |
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(b) |
there shall not be in force any order or decree restraining or enjoining the consummation of the transactions contemplated by this Agreement, including, without limitation, the Amalgamation. |
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18. |
Termination |
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This Agreement may, prior to the issuance of a certificate of Amalgamation, be terminated by the board of directors of Repap or Acquireco notwithstanding the approval thereof by the shareholders of Repap and Acquireco. |
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19. |
Dissenting Shareholders |
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Repap Shares which are held by a Dissenting Shareholder shall not be converted into Amalco Class A Redeemable Preferred Shares. However, in the event that a holder of Repap Shares fails to perfect or effectively withdraws such shareholder's claim under section 190 of the Act or forfeits such shareholder's rights to make a claim under section 190 of the Act or his rights as a shareholder of Repap are otherwise reinstated, (i) such shareholder's Repap Common Shares shall thereupon be deemed to have been converted as of the Effective Date into Amalco Class A Redeemable Preferred Shares, (ii) such shareholder's Repap Preferred Shares, Series C shall thereupon be deemed to have been converted as of the Effective Date into Amalco Class B Preferred Shares, Series C and (iii) such shareholder's Repap Preferred Shares, Series F shall thereupon be deemed to have been converted as of the Effective Date into Amalco Class B Preferred Shares, Series F, in each case, on the basis set forth in paragraph 11 hereof. |
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20. |
Filing Documents |
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Upon the shareholders of each of the Amalgamating Corporations approving this Agreement by special resolution in accordance with the Act and subject to the other provisions of this Agreement, the Amalgamating Corporations shall jointly file with the Director under the Act articles of amalgamation and such other documents as may be required. |
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21. |
Governing Law |
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This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. |
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22. |
Counterparts |
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This Agreement may be signed in counterparts and each such counterpart shall constitute an original document and such counterparts, taken together, shall constitute one and the same instrument. |
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IN WITNESS WHEREOF the parties have executed this Agreement. |
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REPAP ENTERPRISES INC. |
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By: _______________________________ |
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3796477 CANADA INC. |
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By: _______________________________ |
SCHEDULE B
SPECIAL RESOLUTION OF THE REPAP SHAREHOLDERS
RESOLVED AS A SPECIAL RESOLUTION THAT:
1. The amalgamation (the "Amalgamation") of Repap (the "Corporation") and 3796477 Canada Inc. ("Acquireco") under section 181 of the Canada Business Corporations Act, as more particularly described and set forth in the Management Information Circular (the "Circular") of Repap accompanying the notice of this meeting is hereby authorized and approved upon the terms and conditions set forth in the acquisition agreement (the "Acquisition Agreement") dated as of August 28, 2000 between the Corporation and UPM-Kymmene Corporation, the full text of which is set forth in Schedule l to the Circular;
2. The amalgamation agreement between the Corporation and Acquireco dated l , 2000, in the form set forth in Schedule A to the Acquisition Agreement, is hereby approved;
3. The board of directors of the Corporation is hereby authorized to revoke this resolution at any time prior to the Amalgamation becoming effective without further approval of the shareholders of the Corporation and to determine not to proceed with the Amalgamation; and
4. The directors and proper officers of the Corporation are hereby authorized to take all such steps as they deem necessary or desirable in connection with the Amalgamation of the Corporation and Acquireco.
SCHEDULE C
REGULATORY APPROVALS
Canada
United States
SCHEDULE D
CONFIDENTIALITY PROVISIONS
In connection with UPM's interest in the acquisition of Repap (the "Transaction"), Repap and Repap's affiliates are furnishing UPM or UPM's representatives with certain information which is either non-public, confidential or proprietary in nature. This information furnished to UPM or UPM's representatives, together with analyses, compilations, forecasts, studies or other documents prepared by UPM, its agents, representatives (including lawyers, accountants and financial advisors) or employees which contain or otherwise reflect such information is, subject to section 3 of this Schedule, hereinafter referred to as the "Information". In consideration of Repap furnishing UPM with the Information, UPM agrees that:
SCHEDULE E
OPTION AGREEMENT
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