Item 1.01. | Entry into a Material Definitive Agreement |
Merger Agreement
On July 5, 2022, Resolute Forest Products Inc. (the “Company”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Domtar Corporation, a Delaware corporation (“Parent”), Terra Acquisition Sub Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (“Merger Sub”), Karta Halten B.V., a private limited company organized under the laws of the Netherlands (“Terra 1”), and Paper Excellence B.V., a private limited company organized under the laws of the Netherlands (together with Parent and Terra 1, the “Parent Parties”). The Parent Parties, Merger Sub and the Company are referred to individually as a “Party” and collectively as “Parties”.
Transaction Structure
The Merger Agreement provides that, among other things, subject to the terms and conditions of the Merger Agreement, Merger Sub will be merged with and into the Company (the “Merger”), with the Company continuing as the surviving entity in such merger (the “Surviving Corporation”). At the time the Merger becomes effective (the “Effective Time”), each share of common stock, par value $0.001 per share, of the Company (the “Company Common Stock”), will be converted into the right to receive (i) $20.50 in cash, without interest (the “Upfront Per Share Merger Consideration”) and (ii) one contractual contingent value right (each a “Contingent Value Right”, together with the Upfront Per Share Merger Consideration, the “Merger Consideration”).
Effective as of immediately prior to the Effective Time, all then-outstanding and unexercised options to purchase shares of Company Common Stock (“Company Stock Options”) (whether vested or unvested) will automatically be canceled and each such Company Stock Option will be converted into the right to receive from the Surviving Corporation (i) an amount of cash, without interest and subject to any applicable tax withholding (including, for the avoidance of doubt, any withholding tax that may be required in respect of any Contingent Value Right issued with respect to such Company Stock Option) in accordance with the terms of the Merger Agreement, equal to the product of (A) the total number of shares of Company Common Stock then underlying such Company Stock Option multiplied by (B) the excess, if any, of the Upfront Per Share Merger Consideration over the exercise price per share of such Company Stock Option and (ii) one Contingent Value Right for each share of Company Common Stock subject to such Company Stock Options. In the event that the exercise price of any Company Stock Option is equal to or greater than the Merger Consideration, such Company Stock Option will be canceled, without any consideration being payable in respect thereof, and have no further force or effect.
Effective as of immediately prior to the Effective Time, all then-outstanding awards of restricted stock units of the Company (“Company RSUs”), other than any restricted stock units of the Company granted in or after November 2022 in accordance with the Merger Agreement to the extent Closing has not yet occurred by such time (the “2022 RSUs”) (whether vested or unvested and including any corresponding dividend equivalents), will automatically be canceled and each such Company RSU will be converted into the right to receive from the Surviving Corporation (i) an amount of cash, without interest and subject to any applicable withholding tax, (including, for the avoidance of doubt, any withholding tax that may be required in respect of any Contingent Value Right issued with respect to such Company RSU) in accordance with the terms of the Merger Agreement, equal to the product of (A) the total number of shares of Company Common Stock then underlying such Company RSU multiplied by (B) the Upfront Per Share Merger Consideration and (ii) one Contingent Value Right for each share of Company Common Stock subject to such Company RSU.
Effective as of immediately prior to the Effective Time, all then-outstanding awards of performance stock units of the Company (“Company PSUs”), other than any performance stock units of the Company granted in or after November 2022 in accordance with the Merger Agreement to the extent Closing has not yet occurred by such time (the “2022 PSUs”) (whether vested or unvested and including any corresponding dividend equivalents), will become fully vested and each such Company PSU will be canceled and converted into the right to receive from the Surviving Corporation (i) an amount of cash, without interest and subject to any applicable withholding tax (including, for the avoidance of doubt, any withholding Tax that may be required in respect of any Contingent Value Right issued with respect to such Company PSU) in accordance with the terms of the Merger Agreement, equal to the product of (A) the total number of shares of Company Common Stock then underlying such Company PSU multiplied by (B) the Upfront Per Share Merger Consideration and (ii) one Contingent Value Right for each share of Company Common Stock subject to such Company PSU; provided, that, for purposes of determining the number of shares of Company Common Stock underlying each Company PSU outstanding immediately prior to the Effective Time: (1) for any portion of any Company PSU with respect to which the performance period has been completed as of the closing of the Merger, the number of shares of Company Common Stock underlying such portion will be determined based on the actual level of performance achieved for the applicable performance period as determined by the Company board of directors (the “Company Board”) prior to such closing; and (2) for any portion of any Company PSU with respect to which the performance period has not yet commenced as of the closing date of the Merger, the number of shares of Company Common Stock underlying such portion will be determined assuming achievement of the target level of performance. For purposes of determining the number of shares of Company Common Stock underlying each Company PSU outstanding immediately prior to the Effective Time with respect to any portion of any Company PSU for which the performance period has commenced but is not completed as of the closing of the Merger, the number of shares of Company Common Stock underlying such portion will be determined based on the following: (1) with respect to the portion of Company PSUs that vest pursuant to either the total shareholder return metric or the return on capital metric, the greater of the target level of performance and actual level of performance achieved as of the closing date of the Merger (taking into account the Merger Consideration) as determined by the Company Board, and (2) with respect to the portion of Company PSUs that vest pursuant to any other metric, the target level of performance.
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