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ASSET PURCHASE AGREEMENT
among
PAD AND PAPER OF AMERICA LLC, as Buyer
and
AMERICAN PAD & PAPER COMPANY,
AMERICAN PAD & PAPER COMPANY OF DELAWARE, INC.,
AP&P MANUFACTURING, INC.,
WR ACQUISITION, INC. and
AMERICAN PAD & PAPER SALES COMPANY, INC., as Sellers
Dated as of August 2, 2000
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS.................................................................................1
Section 1.1. Certain Defined Terms.....................................................1
Section 1.2. Other Definitional Provisions............................................11
ARTICLE II THE ACQUISITION............................................................................11
Section 2.1. Assets to be Conveyed Free and Clear of Encumbrances.....................11
Section 2.2. Purchase Price for Acquired Assets.......................................11
Section 2.3. Adjustment to Purchase Price.............................................11
Section 2.4. Liabilities Assumed by Buyer.............................................13
Section 2.5. Payment of Purchase Price for Acquired Assets............................14
Section 2.6. Further Assurances.......................................................15
Section 2.7. Closing..................................................................15
ARTICLE III CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES.......................................15
Section 3.1. Access...................................................................15
Section 3.2. Conduct of Business......................................................16
Section 3.3. Proration of Taxes.......................................................16
Section 3.4. Sales Taxes..............................................................17
Section 3.5. Treatment of Contracts...................................................17
Section 3.6. Filings, Consents and Approvals..........................................17
Section 3.7. Employee Matters.........................................................17
Section 3.8. Notice of Actions and Proceedings........................................18
Section 3.9. Purchase Price Allocation................................................19
Section 3.10. Bankruptcy Court Approval................................................19
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER...................................................20
Section 4.1. Organization and Good Standing...........................................20
Section 4.2. Authorization of Agreement...............................................21
Section 4.3. Ownership of Acquired Assets.............................................21
Section 4.4. Financial Condition......................................................21
Section 4.5. Real Property............................................................21
Section 4.6. Tangible Personal Property...............................................22
Section 4.7. Intellectual Property Rights.............................................22
Section 4.8. Pension and Employee Benefit Plans.......................................23
Section 4.9. Litigation...............................................................23
Section 4.10. Contracts................................................................23
Section 4.11. Compliance with Law, Permits.............................................23
Section 4.12. Labor and Employment Matters.............................................23
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Section 4.13. Environmental Matters....................................................24
Section 4.14. Retained Employees.......................................................25
Section 4.15. Brokers..................................................................25
Section 4.16. Accuracy of Statements...................................................25
Section 4.17. Net Inventory............................................................25
Section 4.16. Net Accounts Receivable..................................................25
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER....................................................26
Section 5.1. Organization and Corporate Authority.....................................26
Section 5.2. Agreement Not in Breach of Other Instruments.............................26
Section 5.3. No Proceedings or Litigation.............................................26
ARTICLE VI CONDITIONS TO THE ACQUISITION..............................................................27
Section 6.1. Conditions to Buyer's Obligations to Consummate the
Acquisition..............................................................27
Section 6.2. Conditions to the Obligation of Sellers to Consummate the
Acquisition..............................................................28
ARTICLE VII AMENDMENT; TERMINATION; LIQUIDATED DAMAGES.................................................29
Section 7.1. Amendment................................................................29
Section 7.2. Termination..............................................................29
Section 7.3. Effect of Termination....................................................30
Section 7.4. Sellers' Liquidated Damages for Buyer Breach.............................31
ARTICLE VIII BUYER PROTECTION AND SALE PROVISIONS.......................................................31
Section 8.1. Topping Fee..............................................................31
Section 8.2. Fiduciary Duty of Sellers................................................32
Section 8.3. Sale Hearing.............................................................32
Section 8.4. Non-Solicitation.........................................................32
ARTICLE X MISCELLANEOUS..............................................................................33
Section 9.1. Expenses.................................................................33
Section 9.2. Entire Agreement; Disclosures in Writing.................................33
Section 9.3. Counterparts.............................................................33
Section 9.4. Headings.................................................................33
Section 9.5. Notices..................................................................33
Section 9.6. Governing Law............................................................34
Section 9.7. Waiver of Jury Trial.....................................................34
Section 9.8. Non-Survival of Representations and Warranties...........................34
Section 9.9. Binding Effect; Assignment...............................................34
Section 9.10. Further Assurances.......................................................34
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Section 9.11. Waivers and Amendments; Non-Contractual Remedies.........................34
Section 9.12. Public Announcements.....................................................35
Section 9.13. No Recordation...........................................................35
Section 9.14. Knowledge................................................................35
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EXHIBIT(S)
A Form of Bills of Sale and Assignment Agreements
B Form of Officer's Certificate
C Form of Transitional Services Agreement
D Guaranty of Super American Tissue, Inc.
E Form of Opinion of Counsel
F Form of Interim Order
G Form of Sale Order
H Form of Cure Notice
SCHEDULES
1.1(d) Fixed Assets
1.1(e) Intellectual Property
1.1(g) Assumed Liabilities
1.1(h) Owned Real Property; Leased Real Property
2.2(a) Prepaid Expenses
2.2(b)(i) Accrued Expenses
2.3(c) Example of Calculation of Net Current Assets
3.5 Assumed Contracts
3.7 Employee Information
4.2 Required Consents
4.4 Financial Statements
4.5 Condition of Real Property
4.6 Condition of Fixed Assets
4.8 Employee Benefit Plans
4.9 Litigation
4.10 Contracts
4.12 Labor and Employment Matters
4.13 Environmental Matters; Environmental Site Assessments
4.17 Taxes
4.19 Inventory Not on Real Property
9.14 Knowledge
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT"), dated as of August
2, 2000, is by and among PAD AND PAPER OF AMERICA LLC, a Delaware limited
liability company ("BUYER"), American Pad & Paper Company, a Delaware
corporation ("AP&P"), American Pad & Paper Company of Delaware, Inc., a
Delaware corporation ("AP-DELAWARE"), AP&P Manufacturing, Inc., a Wisconsin
corporation ("AP-MANUFACTURING"), WR Acquisition, Inc., a Delaware
corporation ("WR") and American Pad & Paper Sales Company, Inc., a Delaware
corporation (together with AP&P, AP-Delaware, AP-Manufacturing and WR, the
"SELLERS").
RECITALS:
A. Sellers are debtors in Chapter 11 case numbers 00-00066 through
00-00072, jointly administered under case number 00-00066 (the "CASE")
pending before the Court (as hereinafter defined).
B. Sellers desire to sell, and Buyer desires to buy, the assets of
Sellers' AMPAD and Continuous Forms divisions pursuant to the terms and
conditions of this Agreement (the "ACQUISITION").
ARTICLE I
DEFINITIONS
SECTION 1.1. CERTAIN DEFINED TERMS. As used herein, each of the
following terms shall have the meanings ascribed thereto below:
"AP&P" shall have the meaning set forth in the Preamble.
"AP-DELAWARE" shall have the meaning set forth in the Preamble.
"AP-MANUFACTURING" shall have the meaning set forth in the Preamble.
"ACCOUNTS RECEIVABLE" shall have the meaning set forth in the
definition of Acquired Assets in Section 1.1.
"ACCRUED EXPENSES" shall have the meaning set forth in the
definition of Assumed Liabilities in Section 1.1.
"ACQUIRED ASSETS" shall mean the following assets of Sellers used in
the Business:
(a) All accounts receivable, notes and notes receivable,
Freight Claims and other accounts receivable (excluding both (i) Vendor
Rebates and (ii) OfficeMax Receivables) of the Business (the "ACCOUNTS
RECEIVABLE") existing on the Closing Date;
(b) All inventories of raw material, work-in-process and
finished goods reflected in the inventory records of Sellers
(collectively, the "INVENTORY"), and stores,
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supplies and spare parts of the Business which exist on the Closing
Date, whether located at the premises of the Business or elsewhere,
including, without limitation, any inventory owned by the Business
which is in transit or held by third parties on consignment;
(c) All office supplies, maintenance supplies and other
similar items of the Business that exist on the Closing Date;
(d) The machinery, equipment, furniture, furnishings, and
fixtures owned or leased by Sellers and used in the Business on the
Closing Date (the "FIXED ASSETS"), whether or not fully depreciated on
the books and records of the Business, including, without limitation,
and subject to the items listed on SCHEDULE 1.1(d) attached hereto;
(e) All Intellectual Property, including, without limitation,
and subject to the items listed on SCHEDULE 1.1(e) attached hereto;
(f) All Permits held by the Business to the extent such
Permits are transferable to Buyer;
(g) All assignable warranty rights of the Business under
express or implied warranties from the suppliers of the Business with
respect to the Acquired Assets;
(h) the Owned Real Property and Leased Real Property, provided
that Buyer may by prior written notice not less than 15 days prior to
the Closing Date provide notice of the Buyer's intention to exclude the
Holyoke property from the Acquired Assets without deduction from the
Purchase Price;
(i) the Assumed Contracts;
(j) all goodwill associated with the Business;
(k) to the extent associated with the Business, copies of all
files, books and records and other operating data, including
computerized records and any associated software and documentation,
including, without limitation, books and records relating to or
containing production and operating data, manufacturing and quality
control information, sales or marketing information, customer lists and
information, vendor lists and information and personnel records;
(l) all prepaid expenses of the Business and deferred charges
created in the Ordinary Course of Business (collectively, "PREPAID
EXPENSES"); and
(m) all causes of action and legal claims, relating to (a)
through (l), above, of any Seller against any third parties, including
but not limited to, claims for manufacturer's or vendor's warranties
with respect to the Acquired Assets or products liability related to
the Acquired Assets, and claims related to the value, condition or
title to the Acquired Assets (but specifically excluding all
preferences, fraudulent conveyances and other similar rights arising
under the Bankruptcy Code).
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"ACQUISITION" shall have the meaning set forth in the Recitals of
this Agreement.
"ACTION" shall mean any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"AGREEMENT" shall mean this Agreement and all Schedules and Exhibits
hereto, as each may be amended, supplemented or otherwise modified.
"ASSUMED CONTRACTS" shall have the meaning set forth in Section 3.5.
"ASSUMED LIABILITIES" shall mean (i) the obligations of Sellers
under any Assumed Contracts to the extent relating to performance on or after
the Closing Date, but expressly excluding all liabilities and obligations
arising out of or in connection with any breach occurring prior to the
Closing Date, regardless of when any such liability is asserted, except for
the Cure Obligations, (ii) the cure obligations, if any, of Sellers under any
Assumed Contracts required to be paid in order to assume any of such
Contracts pursuant to Bankruptcy Code section 365 and pursuant to the Cure
Notice or by Final Order of the Court (the "Cure Obligations"), (iii)
liabilities in respect of accrued expenses as set forth on SCHEDULE 2.2(b)(i)
hereto, including, without limitation, vacation liabilities (as listed on
such Schedule) relating to the Retained Employees incurred by Sellers
("ACCRUED Expenses"), (iv) the Customer Rebates (v) the IRB (if assumed by
Buyer), and (vi) the other Liabilities listed on SCHEDULE 1.1(g) hereto.
"ATI" shall have the meaning set forth in Section 3.7.
"BANKRUPTCY CODE" shall mean title 11 of the United States Code,
ss.ss. 101, ET seq., as amended and in effect on the Petition Date.
"BUSINESS" shall mean the business and operations of Sellers' AMPAD
and Continuous Forms divisions, as currently conducted by Sellers.
"BUSINESS DAY" shall mean any day excluding Saturday, Sunday and any
day which is a legal holiday under the Laws of the State of New York or is a
day on which banking institutions located in such state are authorized or
required by Law to close.
"BUYER" shall have the meaning set forth in the Preamble.
"BUYER PROTECTION PROVISIONS" shall mean the terms and provisions of
Section 3.10 and Section 8.1 herein.
"BUYER TERMINATION FEE" shall mean Five Hundred Thousand Dollars
($500,000.00).
"CASE" shall have the meaning set forth in the Recitals to this
Agreement.
"CLOSING" shall have the meaning set forth in Section 2.7.
"CLOSING DATE" shall have the meaning set forth in Section 2.7.
"COMPETITIVE TRANSACTION" shall have the meaning set forth in
Section 8.4.
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"CONSENTS" shall have the meaning set forth in Section 4.2.
"CONTRACTS" shall mean all contracts, agreements, indentures, notes,
bonds, loans, instruments, leases, sub-leases, deeds of trust, conditional
sales contracts, mortgages, franchises, licenses, commitments or other
binding arrangements relating to the Business, currently in effect, to which
any of Sellers is a party or by which the Acquired Assets are bound.
"COURT" shall mean the United States District Court for the District
of Delaware having jurisdiction over the Case and, to the extent of any
reference under section 157, title 28, United States Code, the unit of such
District Court constituted under section 151, title 28, United States Code.
"CURE NOTICE" shall mean a notice, in form and substance reasonably
satisfactory to Buyer and Sellers and attached as EXHIBIT H hereto, informing
non-Seller parties to Assumed Contracts that their respective contract or
lease is being assumed and assigned pursuant to this Agreement and reflecting
the amount, if any, necessary to cure defaults under the contract or lease to
comply with Section 365 of the Bankruptcy Code (as reflected in the Sellers'
books and records).
"CURE OBLIGATIONS" shall have the meaning set forth in the
definition of Assumed Liabilities in Section 1.1.
"CUSTOMER REBATES" shall mean program credits or program allowances
against amounts owed to the Sellers by customers of the Business, incurred in
the Ordinary Course of Business after January 1, 2000, determined in a manner
consistent with the Financial Statements. The term "Customer Rebates" shall
exclude all Customer Rebates of the Business that are relating to OfficeMax
Inc. or any subsidiaries or affiliates thereof.
"DOLLARS" and "$" shall mean lawful currency of the United States of
America.
"EMPLOYEE BENEFIT PLAN" shall mean each ERISA Plan and each other
pension, profit sharing, retirement, bonus, deferred compensation, severance
pay or insurance plan for officers or employees, which currently is
established, maintained, contributed to or legally obligated to be
contributed to by Sellers for the Business.
"ENCUMBRANCE" shall mean any Lien, claim, option, leasehold
interest, right of way, option, restriction or other right of any person or
entity of any kind or any nature whatsoever including, without limitation,
claims for successor liabilities other than Assumed Liabilities.
"ENVIRONMENT" shall mean any indoor or outdoor ambient air, surface
water, ground water, drinking water, building surface, material surface, land
surface or subsurface strata.
"ENVIRONMENTAL LAWS" shall mean any Regulation, Order, settlement
agreement or Governmental Authority requirement, which relates to or
otherwise imposes liability or standards of conduct concerning the
environment, including, without limitation, mining or reclamation of mined
land, discharges, emissions, releases or threatened releases of noises, odors
or any pollutants, contaminants or hazardous or toxic wastes, substances or
materials, whether as matter or energy, into ambient air, water, or land, or
otherwise relating to the manufacture, processing,
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generation, distribution, use, treatment, storage, disposal, cleanup,
transport or handling of pollutants, contaminants or hazardous wastes,
substances or materials, including (but not limited to) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 USCA 9601,
et. Seq.), as amended, the Superfund Amendments and Reauthorization Act of
1986 (Act of October 17, 1986, Pub. L. No. 99-499 (100 Stat. 1613)), as
amended, the Hazardous Material Transportation Act, the Resource Conservation
and Recovery Act of 1976, as amended, the Toxic Substances Control Act, as
amended, the Federal Water Pollution Control Act, the Clean Water Act, the
Clean Air Act, the Toxic Substances Control Act, the Pulp & Paper Cluster
Rules (63 FR 18504-18751), the Occupational Safety and Health Act, any
so-called "Superfund" law, all as now or hereafter amended or supplemented,
and the Regulations promulgated thereunder, and any other similar Federal,
state or local statutes relating or applicable to pollution or protection of
human health or the Environment, including, without limitation, any of the
foregoing relating or applicable to emissions, discharges, spills, Releases
or threatened Releases of any Hazardous Materials into the Environment, or
human or natural resource exposure to any Hazardous Materials, or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of any Hazardous Materials.
"ENVIRONMENTAL LIABILITIES" shall mean any known liability or
obligation, including, without limitation, liability for investigatory costs,
oversight costs, remediation and cleanup costs, governmental or private
response costs and cost recovery actions, natural resource damages, property
damages, personal injuries, consequential economic damages, administrative,
civil or criminal penalties or forfeitures, and attorneys' fees or other
costs of defending an Action asserting liability under any Environmental Law.
"ENVIRONMENTAL SITE ASSESSMENTS" means the environmental site
assessments listed on SCHEDULE 4.13 hereto, copies of which have previously
been provided to Buyer.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA PENSION PLAN" shall mean an employee pension benefit plan as
defined in Section 3(2) of ERISA.
"ERISA PLAN" shall mean an ERISA Pension Plan or an ERISA Welfare
Plan.
"ERISA WELFARE PLAN" shall mean an employee welfare benefit plan as
defined in Section 3(1) of ERISA.
"ESTATE" shall mean the estate created in the Case.
"EXCLUDED ASSETS" shall mean any and all assets of Sellers not
included herein as Acquired Assets or any other assets excluded by mutual
agreement of the parties. For the avoidance of doubt, the term "Excluded
Assets" shall include Vendor Rebates as well as OfficeMax Receivables which
shall be retained by Sellers.
"EXCLUDED LIABILITIES" shall mean any and all liabilities or
obligations of Sellers of any kind or nature, other than the Assumed
Liabilities, whether known or unknown, fixed or contingent, recorded or
unrecorded, and whether arising before or after the Closing, including,
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but not limited to those Liabilities specifically set forth in Section 2.4.
"EXPENSE REIMBURSEMENT" shall mean an amount up to One Million Five
Hundred Thousand Dollars ($1,500,000.00) to reimburse Buyer for any and all
of its out-of-pocket costs and expenses (including reasonable, documented
legal, accounting, and other consultant fees and expenses) incurred in
connection with the Transactions, which shall be paid by Sellers to Buyer
under the circumstances set forth in Section 8.1.
"FINAL ORDER" shall mean (i) an order of the Court as to which the
time to appeal, petition for certiorari or move for reargument or rehearing
has expired and as to which no appeal, petition for certiorari or other
proceedings for reargument or rehearing shall then be pending, or (ii) if an
appeal, writ of certiorari, reargument or rehearing thereof has been filed or
sought, such order of the Court shall have been affirmed by the highest court
to which such order was appealed, or certiorari shall have been denied or
reargument or rehearing shall have been denied or resulted in no modification
of such order, and the time to take any further appeal, petition for
certiorari or move for reargument or rehearing shall have expired; PROVIDED,
that the possibility that a motion under Rule 59 or Rule 60 of the Federal
Rules of Civil Procedure, or any analogous rule under the Bankruptcy Rules,
may be filed with respect to such order shall not cause such order not to be
a Final Order.
"FINANCIAL STATEMENTS" shall have the meaning set forth in Section
4.4.
"FINANCING COMMITMENT" shall mean either (a) a letter, in form and
substance reasonably satisfactory to Sellers, addressed by a reputable
financial institution to Buyer whereby such financial institution commits to
provide the funds required to consummate the Transactions or (b) evidence,
that is reasonably satisfactory to Sellers, of Buyer's willingness and
ability to provide the funds required to consummate the Transactions; in
either case subject only to obtaining an order of the Court authorizing the
Transactions.
"FIXED ASSETS" shall have the meaning set forth in the definition of
Acquired Assets in Section 1.1.
"FREIGHT CLAIMS" shall mean shall mean claims, of the Business, for
reimbursement made upon freight carriers for shipments that are lost or
damaged in transit.
"GAAP" shall mean generally accepted accounting principles in effect
in the United States, consistently applied.
"GOVERNMENTAL APPROVALS" shall mean the consents, approvals,
authorizations and other requirements prescribed by any Law which must be
obtained or satisfied by Sellers or Buyer and which are necessary for the
execution and delivery by Sellers of this Agreement and the Transaction
Documents or for the consummation of any of the Transactions in accordance
with the terms of this Agreement and the Transaction Documents.
"GOVERNMENTAL AUTHORITY" shall mean any domestic or foreign federal,
state, county, parish, municipal or other local court, agency, department,
legislative body, commission, council, board or other administrative or
governmental body.
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"HAZARDOUS MATERIALS" shall mean any substance that is defined as a
"hazardous waste," "hazardous substance," "hazardous material," "extremely
hazardous substance," "toxic substance," "pollutant," "contaminant" or "solid
waste" under any Environmental Law, provided, however, that "Hazardous
Materials" shall not include materials that are used in the day-to-day
operation of any Owned Real Property or Leased Real property such as cleaning
agents, petroleum products, or other products that are (a) stored and used in
accordance with Environmental Laws, (b) not in excess of levels or amounts
necessary for the routine operation of any Owned Real Property or Leased Real
Property, (c) in amounts not in excess or violative of Environmental Laws, or
(d) used in accordance with the label requirements for such materials.
"HSR ACT" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"INDEPENDENT ACCOUNTANTS" shall have the meaning set forth in
Section 2.4(d).
"INTELLECTUAL PROPERTY" shall mean all (a) patents, patent
applications, patent disclosures and all related continuation,
continuation-in-part, divisional, reissue, reexamination, utility, model,
certificate of invention and design patents, patent applications,
registrations and applications for registrations; (b) trademarks, service
marks, trade dress, logos, trade names and corporate names and registrations
and applications for registration thereof; (c) copyrights and registrations
and applications for registration thereof; (d) mask works and registrations
and applications for registration thereof; (e) computer software, data and
documentation; (f) trade secrets and confidential business information,
whether patentable or unpatentable and whether or not reduced to practice,
know-how, manufacturing and production processes and techniques, research and
development information, copyrightable works, financial, marketing and
business data, pricing and cost information, business and marketing plans and
customer and supplier lists and information; (g) other proprietary rights
relating to any of the foregoing; and (h) copies and tangible embodiments
thereof.
"INTERIM ORDER" shall mean an Order of the Court, in form and
substance reasonably satisfactory to Buyer and Sellers and attached as
EXHIBIT F hereto, which, among other things, contains the provisions
described in Section 3.10(c).
"INVENTORY" shall have the meaning set forth in the definition of
Acquired Assets in Section 1.1.
"IRB" shall mean the $5,200,000 Industrial Development Board of the
City of Morristown, Tennessee Industrial Development Revenue Bonds
(Williamhouse-Regency of Delaware, Inc. Project) Series 1995 which, in the
Buyer's sole discretion, may be assumed by the Buyer.
"LAW" shall mean any statute, law (including common law), rule,
regulation, ordinance, order, decree, ruling, Permit, authorization, action,
restriction, requirement or policy of any Governmental Authority (each as may
be in effect from time to time).
"LEASED REAL PROPERTY" shall mean the real property leased by
Sellers for use in the Business, including, without limitation, the leases
listed on SCHEDULE 1.1(h) hereto.
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"LIABILITY" shall mean any debt, liability or obligation, whether
accrued, contingent, disputed, undisputed, secured, unsecured, liquidated,
unliquidated, matured or unmatured.
"LIEN" shall mean a charge against or interest in property to secure
payment of a debt or performance of a liability, whether granted voluntarily
or involuntarily, including without limitation, any security interest,
pledge, mortgage or charge.
"MATERIAL ADVERSE EFFECT" shall mean any condition, change or event
that, individually or in the aggregate, could reasonably be expected to
materially and adversely affect the Acquired Assets, operations or financial
condition of the Business taken as a whole.
"MINIMUM INCREMENTAL BID AMOUNT" shall have the meaning set forth in
the Interim Order.
"NET ACCOUNTS RECEIVABLE" shall mean Accounts Receivable less a
reserve for doubtful accounts.
"NET CURRENT ASSETS" shall have the meaning set forth in Section
2.3(b).
"NET INVENTORY" shall mean Inventory less reserves for excess and
obsolete inventory.
"OFFICEMAX RECEIVABLES" shall mean all Accounts Receivable of the
Business that are owing from OfficeMax Inc. or any subsidiaries or affiliates
thereof.
"ORDER" shall mean any order, writ, judgment, injunction, decree,
determination or award of a Governmental Authority.
"ORDINARY COURSE OF BUSINESS" shall mean, the ordinary course of
business of Sellers consistent with past custom and practice.
"OUTSIDE DATE" shall have the meaning set forth in Section 7.2(h)(A).
"OWNED REAL PROPERTY" shall mean real property and interests in the
real property listed on SCHEDULE 1.1(h) attached hereto, including, without
limitation, buildings, structures and improvements (including construction in
progress) located thereon, fixtures contained therein and appurtenances
thereto, together with all servitudes, easements, rights of way and other
real property rights related thereto.
"PERMITS" shall mean all permits, licenses, certificates, franchises
and other authorizations, consents and approvals of any Governmental
Authority.
"PERMITTED ENCUMBRANCES" shall mean (a) statutory Encumbrances not
yet delinquent other than under Environmental Laws; (b) such imperfections or
irregularities of title or Encumbrances as do not materially detract from or
interfere with the present use of any of the Owned Real Property or Acquired
Assets subject thereto or affected thereby, otherwise impair present business
operations at such Real Property or Acquired Assets, or do not detract from
the value of such Real Property or Acquired Assets; (c) the rights of
customers of Sellers with respect to inventory or work in progress under
orders or contracts entered into by Sellers in the
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Ordinary Course of Business; (d) mechanics', carriers', workers',
repairmen's, warehousemen's, or other similar Encumbrances arising in the
Ordinary Course of Business in respect of obligations not overdue or which
are being contested in good faith and covered by a bond in an amount at least
equal to the amount of the Encumbrance; (e) deposits or pledges to secure
workmen's compensation, unemployment insurance, old age benefits or other
social security obligations in connection with, or to secure the performance
of, bids, tenders, trade contracts not for the payment of money or leases, or
to secure statutory obligations or surety or appeal bonds or other pledges or
deposits for purposes of like nature in the Ordinary Course of Business; and
(f) Permitted Liens, if any.
"PERMITTED LIENS" shall mean any Liens which secure any Assumed
Liabilities.
"PERSON" shall mean any natural person, corporation, partnership,
firm, joint venture, association, joint-stock, trust, unincorporated
organization, governmental or regulatory body or other entity.
"PETITION DATE" shall mean January 10, 2000, the date on which the
Case was commenced in the Court.
"PRELIMINARY ASSUMED CONTRACTS" shall have the meaning set forth in
Section 3.5(b).
"PRELIMINARY STATEMENT" shall have the meaning set forth in Section
2.3(b).
"PREPAID EXPENSES" shall have the meaning set forth in the
definition of Acquired Assets in Section 1.1.
"PURCHASE PRICE" shall have the meaning set forth in Section 2.2.
"QUALIFIED BID" shall have the meaning set forth in the Interim
Order.
"QUALIFIED BIDDER" shall have the meaning set forth in the Interim
Order.
"REAL PROPERTY" shall mean the Leased Real Property and the Owned
Real Property.
"REJECTED CONTRACTS" shall have the meaning set forth in Section 3.5.
"RELEASE" shall mean any spilling, leaking, leaching, pumping,
pouring, emitting, emptying, placing, discharging, injecting, escaping,
dumping or disposing into the Environment, whether intentional or
unintentional.
"REPRESENTATIVES" shall mean, with respect to any party, the
directors, officers, employees, representatives or agents of such party or
its Affiliates and its accountants, legal counsel, and financial advisors.
"RETAINED EMPLOYEES" shall have the meaning set forth in Section 3.7.
"SALE ORDER" shall mean a Final Order of the Court, in form and
substance reasonably acceptable to Buyer and Sellers and attached as EXHIBIT
G hereto, which, among other things, contains the provisions described in
Section 3.10.
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"SELLERS" shall have the meaning set forth in the Preamble.
"TARGET AMOUNT" shall mean Seventy Six Million Four Hundred Twenty
One Thousand Dollars ($76,421,000.00).
"TAX CODE" shall mean the Internal Revenue Code of 1986, as amended,
and the Regulations thereunder.
"TAX RETURNS" shall mean federal, state, foreign and local tax
reports, returns, information returns, declarations, claims for refund and
other documents, including any schedules or attachments, and any amendments
to any of the foregoing.
"TAXES" shall mean all taxes, charges, fees, imposts, levies or
other assessments, including, without limitation, all net income, gross
receipts, sales, use, ad valorem, value added, transfer, franchise, profits,
inventory, capital stock, license, withholding, payroll, employment, social
security, unemployment, excise, severance, stamp, occupation, and property
taxes, customs duties, fees, assessments and charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or additional
amounts imposed by any taxing authority (domestic or foreign) and any
interest and penalties imposed with respect to the filing, obligation to file
or failure to file any Tax return, and shall include any transferee liability
in respect of Taxes. Taxes as used herein shall not include any obligation to
pay or reimburse a lessor under a lease for taxes on leased property.
"TERMINATION DATE" shall have the meaning set forth in Section 7.2.
"THIRD PERSON" shall have the meaning set forth in Section 8.4.
"TOPPING FEE" shall have the meaning set forth in Section 8.1.
"TRANSACTION DOCUMENTS" shall mean the contracts, agreements,
documents and instruments contemplated to be entered into by the terms of
this Agreement.
"TRANSACTIONS" shall mean the Acquisition and related transactions
contemplated by this Agreement or the Transaction Documents.
"TRANSFER DOCUMENTS" shall have the meaning set forth in Section
3.11.
"TRANSFER TAXES" shall have the meaning set forth in Section 3.11.
"TRANSITIONAL SERVICES AGREEMENT" shall mean that certain
Transitional Services Agreement, dated as of the Closing Date, by and among
the Buyer and the Sellers, in form and substance reasonably acceptable to
Buyer and Sellers and attached as EXHIBIT C hereto.
"VENDOR REBATES" shall mean monies due to the Business arising from
agreements with its vendors which provide for the payment or credit of money
based upon, (a) volumes purchased within defined time periods, (b) a
percentage of the invoice price regardless of volumes purchased, or (c) a
fixed dollar amount regardless of volumes purchased.
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"WR" shall have the meaning set forth in the Preamble.
SECTION 1.2 OTHER DEFINITIONAL PROVISIONS.
(a) The words "hereof," "hereto," "herein," and "hereunder" and
words of similar import, when used in this Agreement, shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
References herein to Sections, Schedules and Exhibits shall be construed as
references to Sections, Schedules and Exhibits of this Agreement unless the
context otherwise requires.
(b) Terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa. References to "Sellers" shall in
cases of representations, warranties and other matters involving performance
hereunder, include the Sellers both collectively and individually, unless the
context clearly indicates otherwise.
ARTICLE II
THE ACQUISITION
SECTION 2.1. ASSETS TO BE CONVEYED FREE AND CLEAR OF ENCUMBRANCES.
On the terms and subject to the conditions set forth in this Agreement, on
the Closing Date, Sellers shall convey, transfer, assign, sell and deliver to
Buyer and/or its designees, and Buyer and/or its designees shall acquire,
accept and purchase, all of the Acquired Assets, free and clear of all
Encumbrances other than Permitted Encumbrances. Sellers shall not transfer to
Buyer, and Buyer is not purchasing hereunder, the Excluded Assets.
SECTION 2.2. PURCHASE PRICE FOR ACQUIRED ASSETS. The purchase price
for the Acquired Assets (the "PURCHASE PRICE") is Sixty Seven Million One
Hundred Fifteen Thousand Dollars ($67,115,000.00):
(a) PLUS the total amount of Prepaid Expenses (as set forth on
Schedule 2.2(a)) as of the Closing Date;
(b) LESS the following amounts:
(i) the total amount of Accrued Expenses (as set forth on
Schedule 2.2(b)(i)) as of the Closing Date; and
(ii) if assumed by the Buyer, the unpaid principal balance and
accrued interest with respect to the IRB as of the Closing Date.
SECTION 2.3. ADJUSTMENT TO PURCHASE PRICE. The Purchase Price shall
be subject to adjustment after the Closing in accordance with the following
procedure:
(a) On the Closing Date, Sellers and Buyer will jointly conduct a
physical count of the Inventory.
(b) Promptly after the Closing Date, Sellers, with the assistance
and cooperation of
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personnel of the Business employed by the Buyer after the Closing Date, will
prepare and present to Buyer a statement in reasonable detail of Net Current
Assets (as hereinafter defined) as of the Closing Date (the "PRELIMINARY
STATEMENT") in the manner set forth on Schedule 2.3(c), with the
understanding that the comparison set forth on Schedule 2.3(c) assumes a June
30, 2000 Closing Date. The Preliminary Statement shall be delivered to Buyer
no later than 15 days after the Closing Date. Representatives of Buyer shall
be entitled to observe and review the preparation of the Preliminary
Statement to whatever extent Buyer may reasonably elect. "NET CURRENT ASSETS"
shall mean the sum of Net Accounts Receivable (less Customer Rebates) and Net
Inventory, as determined in a manner consistent with the Financial Statements.
(c) Buyer and its accountants shall have the right to review the
work papers of Sellers utilized in preparing the Preliminary Statement and
shall have full access to the books, records, properties and personnel of
Sellers for purposes of verifying the accuracy and fairness of the
presentation of Net Current Assets in the Preliminary Statement. The
Preliminary Statement shall be binding on Buyer and Sellers, unless Buyer
presents to Sellers written notice of disagreement within 15 days after
receipt of the Preliminary Statement specifying in reasonable detail the
nature and extent of the disagreement.
(d) If Buyer and Sellers are unable to resolve any such disagreement
within 15 days after Sellers receive notice of such disagreement, the
disagreement shall be referred for final determination to Deloitte & Touche
or if Deloitte & Touche is unable or unwilling to make such final
determination, to such other independent accounting firm as the parties shall
mutually designate. The accounting firm so designated to make the final
determination is hereinafter referred to as the "INDEPENDENT ACCOUNTANTS."
(e) Net Current Assets shall be deemed to have been finally
determined upon the first to occur of (i) acceptance of the Preliminary
Statement, (ii) Buyer's failure to object thereto within 15 days of receipt
thereof, or (iii) absent manifest error, notification by the Independent
Accountants of their final determination thereof.
(f) If Net Current Assets, as finally determined, is less than the
Target Amount, the Purchase Price shall be deemed reduced by such difference.
The amount of any reduction in the Purchase Price shall be refunded by
Sellers to Buyer within 10 days after such final determination by wire
transfer of immediately available funds to an account designated by Buyer.
Such refund will be (i) payable from proceeds of the Closing of sale of the
Acquired Assets before any other expenses or claims are paid, regardless or
priority, and (ii) as a means of additional protection, shall have
superpriority administrative expense status in the Cases pursuant to Section
507(b) of the Bankruptcy Code, senior to all other superpriority
administrative expense claims. If Net Current Assets, as finally determined,
is more than the Target Amount, the Purchase Price shall be deemed increased
by such excess. The amount of any increase in the Purchase Price shall be
paid to Sellers by Buyer within 10 days after such final determination by
wire transfer of immediately available funds to an account designated by
Sellers.
(g) The parties acknowledge and agree that Schedule 2.3(c)
(including attachments (A) through (G) thereto) (i) sets forth an example of
how Net Current Assets shall be calculated and (ii) assuming the amounts set
forth on Schedule 2.3(c) (including attachments (A) through (G) thereto) were
the amounts used on June 30, 2000, represents the amount that would have
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been remitted to Buyer had the Closing Date been June 30, 2000.
(h) The fees and disbursements of the accountants of Buyer shall be
paid by Buyer. The fees and disbursements of Sellers' accountants shall be
paid by Sellers. The fees and disbursements of the Independent Accountants
shall be borne equally, one-half by Sellers and one-half by Buyer.
SECTION 2.4. LIABILITIES ASSUMED BY BUYER. As further consideration
for consummation of the Transactions, at the Closing, Buyer shall assume and
agree to thereafter pay when due and discharge the Assumed Liabilities. Buyer
shall not assume nor be liable for any Liabilities of Sellers other than the
Assumed Liabilities. Buyer is not a successor to Seller. Except as to the
Assumed Liabilities, none of Buyer, Buyer's Representatives or its or their
Affiliates shall have any liability for claims against Sellers (whether or
not currently known) as a result of Buyer's purchase of the Acquired Assets
or the consummation of the Transactions hereunder. The Sale Order shall
provide that Buyer shall not assume or be liable for any Liabilities of
Sellers other than the Assumed Liabilities. Unless otherwise expressly
agreed, the Assumed Liabilities shall exclude, and Buyer shall not by this
Agreement be deemed to assume or to become responsible for or subject to any
liability of any of Sellers, or otherwise in respect of the Business or the
Acquired Assets, of any nature, including, without limitation, the following
(collectively, the "EXCLUDED LIABILITIES"):
(a) any Liability for Taxes, incurred or suffered by Sellers
in the conduct of, or relating to, the Business or the Acquired Assets
prior to Closing or incurred by Sellers with respect to any of the
transactions contemplated hereby;
(b) any Liability, whether civil or criminal in nature,
arising out of any actual or alleged violations by Sellers which
occurred, or which are alleged to have occurred, prior to Closing, or
by any previous owner of any of the Acquired Assets, of any Regulation
or Order;
(c) any Liability arising under any contract or agreement
other than the Assumed Contracts;
(d) any Liability of Sellers under unsatisfied purchase
obligations;
(e) any Liability of Sellers for any refunds, rebates (other
than Customer Rebates), discounts or other such sums, whether falling
due before or after the Closing Date;
(f) any Liability of Sellers including, without limitation,
inter-company interest payable and accounts payable or any liabilities
owed by Sellers to any shareholder, investor, member, partner, equity
participant or other Person having an interest in any of Sellers;
(g) any Liability of Sellers for legal, accounting and other
professional services rendered to Sellers;
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(h) any Liability of Sellers sought to be imposed upon Buyer
or arising out of any claim to the extent based upon an event
occurring, or a claim arising, (i) prior to Closing or (ii) against
Buyer as a successor to Sellers or the Business for matters occurring
prior to the Closing under any successor liability or similar theory of
recovery;
(i) any Liability relating to the Acquired Assets incurred
prior to the Closing, including, without limitation, any accounts
payable or other current Liabilities of Sellers and any other
Liabilities of Sellers incurred in connection with its efforts to
consummate the transactions contemplated hereby;
(j) any Liability of Sellers arising out of indebtedness for
borrowed money or otherwise other than the IRB (if assumed by Buyer);
(k) any Liability relating to services rendered by, or under
any Law or agreement applicable to any Person, including, without
limitation, pension, termination, or severance liabilities of Sellers
arising from or under any collective bargaining, union or other
employee association agreement or any individual or group, sick pay,
severance, termination, survivor's benefits, bonus, deferred
compensation, profit sharing, stock option or purchase or other
employees' benefit plan, arrangement or policy and all Liabilities of
Sellers under Sellers' pension or retirement or similar plan,
including, but not limited to, all unfunded past service Liabilities,
all liabilities with respect to current contributions and all
liabilities that will become due upon the complete or partial
termination of Sellers' pension or retirement or similar plans,
including all Liabilities for termination or severance required under
any federal or state act or law;
(l) any obligation of Sellers to indemnify any person by
reason of the fact that such person was a director, officer, employee,
or agent of Sellers or was serving at the request of Sellers as a
partner, trustee, director, officer, employee, or agent of another
entity (whether such indemnification is for judgments, damages,
penalties, fines, costs, amounts paid in settlement, losses, expenses,
or otherwise and whether such indemnification is pursuant to any
statute, charter documents, bylaw, agreement or otherwise);
(m) any Environmental Liabilities or any liability, whether
known or unknown, for any cost associated with remediation, removal,
response, corrective action, abatement, clean-up, investigative or
monitoring costs, damages, penalties, fines, obligations and any claims
for personal injury or damage to property related to or arising out of
the generation and, transportation, storage or Release or disposal of
waste or other chemicals or materials (including any Hazardous
Materials) any petroleum products associated with the Real Property,
the Business, the Acquired Assets or the Sellers with regard to any
other property, during or prior to Sellers' ownership, use or operation
of the Real Property, the Business or the Acquired Assets; and
(n) any other Liability of, or relating to, Sellers, the
Acquired Assets, or the Business as of the time immediately prior to
the Closing.
SECTION 2.5. PAYMENT OF PURCHASE PRICE FOR ACQUIRED ASSETS. At the
Closing, Buyer
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shall pay the Purchase Price to Sellers by wire transfer to an account
designated in writing five (5) days prior to Closing by Sellers to Buyer.
SECTION 2.6. FURTHER ASSURANCES. From time to time after the
Closing, Sellers will execute and deliver or will cause to be executed and
delivered to Buyer such instruments of sale, transfer, conveyance,
assignment, assumption and delivery, consents, assurances, powers of attorney
and other instruments as may be reasonably requested by Buyer's
Representatives in order to vest in Buyer all right, title and interest of
Sellers in and to the Acquired Assets and otherwise in order to carry out the
purposes and intent of this Agreement and the Transaction Documents.
SECTION 2.7. CLOSING. The closing of the Transactions (the
"CLOSING") shall, unless another date, time or place is agreed to in writing
by the parties hereto, take place at the offices of Gibson, Dunn & Crutcher
LLP, 200 Park Avenue, New York, New York 10166 at 10:00 a.m. local time, as
soon as practical after the waiver or satisfaction of all conditions set
forth herein, but in no event later than September 30, 2000 (such date, or
such other date as is agreed to in writing by the parties hereto, is referred
to herein as the "CLOSING DATE").
ARTICLE III
CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES
SECTION 3.1. ACCESS.
(a) From the date hereof to the Closing Date, Sellers shall, and
shall cause Sellers' Representatives to, provide Buyer and Buyer's
Representatives reasonable access to Sellers' Representatives related to the
Business, and the properties, offices and other facilities of the Business
during normal business hours and in a manner not unreasonably disruptive to
the operation of the Business and to all books and records of the Business
(including, without limitation, Sellers' reasonable efforts to provide
reasonable access to the outside auditors of the Business and their work
papers), and shall furnish to Buyer all financial and operating data and
other information regarding the Business and the Acquired Assets that Buyer
may from time to time reasonably request, to the extent such information is
in the possession of Sellers. All information provided by Sellers to Buyer or
Buyer's Representatives or obtained by Buyer or Buyer's Representatives
relating to the Business in the course of Buyer's review, including without
limitation, the Environmental Site Assessments, shall be treated as
confidential information by Buyer and Buyer shall instruct all of its
Representatives as to the confidentiality of all such information. Buyer
shall be liable for all damage or injury to any person or property resulting
from, or arising out of (i) the disclosure of any such confidential
information, except as required by the Court or applicable Law, (ii) any
testing conducted by Buyer or Buyer's Representatives, or (iii) from such
visits or inspection of the Business, whether occasioned by the acts of Buyer
or any of its Representatives, and Buyer shall indemnify and hold harmless
Sellers and their Representatives from any and all Liabilities resulting
therefrom. This indemnification by Buyer shall survive the Closing or the
termination of this Agreement, as applicable.
(b) If so requested by Buyer, after the execution of this Agreement,
Buyer and Sellers shall jointly conduct a physical count of the Inventory for
the purpose of expediting the
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calculation of Net Inventory (as a component of Net Current Assets) as
required by Section 2.3. For purposes of expediting the calculation of Net
Inventory as set forth in the preceding sentence: (i) Buyer and its
accountants shall have the right to review the work papers of Sellers and
shall have full access to the books, records, properties and personnel of
Sellers and (ii) Buyer, at its sole cost and expense, may require the
Independent Accountant to assist in the calculation of Net Current Assets at
any time after the execution of this Agreement.
(c) After the execution of this Agreement, the Sellers will use
reasonable efforts to contact obligors of Accounts Receivable, including
utilizing Sellers' independent accountants, for the purpose of obtaining
confirmation of the net balance due and such other information as Buyer may
reasonably request.
SECTION 3.2. CONDUCT OF BUSINESS.
(a) From the date hereof to the Closing Date, except as permitted by
the prior written consent of Buyer, or as required by the Court or applicable
Law: (1) the Business shall be conducted only in, and Sellers shall not take
any action in connection with the operation of the Business except in the
Ordinary Course of Business after the Petition Date, (2) Sellers shall use
reasonable efforts to preserve the Business substantially intact, to maintain
the Acquired Assets in customary repair, order and condition (subject to
ordinary wear and tear), to comply with all material Laws applicable to the
Business (subject to Sellers taking or omitting to take any actions, which
action or omission is asserted by a Governmental Authority to be a violation
of any Law the application of which to Sellers, the Business or the
Transactions is being or will be contested by Sellers in good faith in
appropriate proceedings before the Court), to keep available the services of
employees whose continuing employment in connection with the Business is
necessary to the conduct of the Business, and to preserve the present
relationships of the Business with customers and suppliers and other Persons
with which the Business has significant business relations (excluding any
such customers or suppliers that are parties to Contracts with Sellers that
constitute Rejected Contracts), in each case unless the failure to do so
would not have a Material Adverse Effect.
(b) In the event that Sellers intend to take any action or not to
take any action which action or omission, pursuant to Section 3.2(a) hereof,
requires the prior written consent of Buyer, Sellers will, as soon as
practicable, inform Buyer of the proposed action or omission and a proposed
reasonable time frame for obtaining the required written consent. With
respect to any such proposed action or omission, Sellers and Buyer shall use
reasonable efforts to resolve any disputes regarding the proposed action or
omission so that the necessary written consent to the proposed action can be
provided by Buyer within the appropriate time frame. If, however, the Buyer
informs Sellers or their designated Representative that Buyer will not
consent to the proposed action or omission, Sellers and Buyer will submit the
matter to the Court for resolution.
SECTION 3.3. PRORATION OF TAXES. Real Property and personal property
Taxes with respect to the Acquired Assets for the tax years occurring prior
to the tax year in which the Closing Date occurs shall not be Assumed
Liabilities, and all liens, Encumbrances or claims related thereto shall be
transferred, pursuant to an order of the Court, to the Purchase Price at the
Closing. All Real Property and personal property Taxes with respect to the
Acquired Assets for the tax year in which the Closing Date occurs shall be
prorated through the Closing Date based
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on the most current assessment information available from the applicable
taxing authority where the Acquired Assets are located. All special
assessments against the Acquired Assets for utilities or otherwise shall not
be Assumed Liabilities, and all liens, Encumbrances or claims related thereto
shall be transferred, pursuant to an order of the Court, to the Purchase
Price at the Closing (and to the extent not due and payable at the time of
the Closing, shall be allocated among Buyer and Sellers in accordance with
customary practice in the applicable jurisdiction).
SECTION 3.4. SALES TAXES. To the extent the sale of the Acquired
Assets and other Transactions contemplated hereby are subject under
applicable Law to sales, transfer, use, stamp or similar Taxes that are not
exempt under Bankruptcy Code section 1146, such Taxes shall be paid by Buyer.
At the Closing, Buyer shall provide to Sellers a sales tax resale certificate
for the state(s) that are reasonably requested by Sellers.
SECTION 3.5. TREATMENT OF CONTRACTS. Attached hereto as SCHEDULE 3.5
is a schedule of Contracts to be assumed by Sellers and assigned to Buyer on
the Closing Date under Section 365 of the Bankruptcy Code (the "PRELIMINARY
ASSUMED CONTRACTS"). Prior to the Closing, Buyer may, in its sole discretion
designate additional Contracts as Contracts to be assumed by Sellers and
assigned to Buyer and/or eliminate some or all of the Preliminary Assumed
Contracts. SCHEDULE 3.5 shall be updated at Closing to reflect the final list
of Contracts to be assumed by Sellers and assigned to Buyer (the "ASSUMED
CONTRACTS"). With respect to the Assumed Contracts, Buyer shall pay all cure
costs and obligations. Buyer shall assume all rights and obligations of
Sellers first arising on or after the Closing Date under the Assumed
Contracts. Contracts that are not Assumed Contracts shall be rejected by
Sellers ("REJECTED CONTRACTS"), unless Buyer otherwise consents in the case
of one or more individual Contracts, which consent shall not be unreasonably
withheld. Upon request of Buyer, Sellers shall cooperate with and provide
reasonable assistance to Buyer in Buyer's efforts to negotiate acceptable
terms and conditions of post-Closing Contracts with the parties to any
Rejected Contract. Notwithstanding any other provision of this Section 3.5,
Sellers shall have the right, after notice to Buyer and opportunity for a
hearing, to reject any Contract which in their judgment Sellers believe must
be rejected to maintain the viability of the Business prior to the Closing
Date or to comply with any order of the Court. In any hearing pursuant to the
immediately preceding sentence, Buyer shall be a party in interest with
standing to object.
SECTION 3.6. FILINGS, CONSENTS AND APPROVALS. From and after the
date hereof until the Closing Date, if required, each of Sellers and Buyer
shall file, if necessary, or cause to be filed with the Federal Trade
Commission and United States Department of Justice any notifications under
the HSR Act with respect to the Acquisition or the Transactions. During this
period, each party shall consult with the other as to the appropriate time of
filing of such notifications, shall cooperate with each other as to the
preparation of such notifications and shall use its reasonable efforts to
make such filings at the agreed upon time, and to respond promptly to any
requests for additional information made by any such agency. Sellers and
Buyer shall promptly take all reasonable actions required to obtain all
Governmental Approvals and to give all notices and make all filings with, any
Governmental Authorities necessary to authorize, approve or permit the
consummation of the Transactions in accordance with the terms of the
Transaction Documents.
SECTION 3.7. EMPLOYEE MATTERS. (a) A list of the employees of the
Business and their
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positions, wages, salaries, other compensation (if any), benefits, collective
bargaining affiliations, seniority, and other terms of employment is attached
hereto as SCHEDULE 3.7. Sellers shall not add any employees in connection
with the Business except in the Ordinary Course of Business, and Sellers
shall promptly notify Buyer's Representative of each case of any such
addition and/or any change in the terms of employment (including, without
limitation, any dismissal) of any employee in connection with the Business.
Sellers shall terminate all of its employees employed in the Business
effective on the Closing Date. Buyer shall offer to employ not less than 80%
of such employees of Sellers on terms substantially similar to the terms of
their employment by Sellers as of the Closing, including positions of
responsibility, location and employee benefits, and such employment shall
commence immediately following such termination. Sellers shall reasonably
cooperate with Buyer in its employment of all such of the foregoing employees
who accept Buyer's offers (the "RETAINED EMPLOYEES"). Buyer shall not be
required to give any Retained Employees credit for their time of employment
with Sellers with respect to employee benefits vesting and eligibility,
amount of vacation or severance benefits, or with respect to their seniority
as an employee of Buyer or any other benefit or other matter, except as may
be consistent with the policies of Buyer's affiliated entity, American Tissue
Inc. ("ATI"). Buyer shall not terminate any Retained Employee (other than for
cause) for the first six months after the Closing. The Retained Employees
will participate immediately in Buyer's applicable health and welfare
(excluding Buyer's 401K plan) and insurance plans, with no waiting period,
pre-existing condition limitations or restrictions, or requirements for
evidence of insurability and Buyer's 401K plan subject to a 90-day waiting
period. Sellers shall be and remain solely responsible for the payment of all
benefits due to its employees at any time under its Employee Benefit Plans,
except to the extent any such benefits are Assumed Liabilities.
(b) Ten (10) business days prior to Closing, Sellers shall advise
Buyer in writing of the number of employees of the Business which constitute
80% of those employees of the Business entitled to protection under the
Worker Adjustment and Retraining Notification Act ("WARN Act") and Buyer
shall offer employment with Buyer, effective no later than the day following
the Closing Date, to such number of employees. Buyer represents to Sellers
that it does not intend to implement a "plant closing" or a "mass layoff" as
those terms are defined in the WARN Act at or in respect of any site of
employment of the Business within ninety (90) days following the Closing
Date. Buyer shall be responsible for and shall indemnify and hold harmless
Sellers from any and all claims or liability under the WARN Act arising from
(a) a breach of Buyer's agreement with respect to hiring contained in this
Section 3.7 or (b) a "plant closing" or "mass layoff" in violation of the
WARN Act occurring after the Closing Date with respect to the Business.
(c) As soon as practicable following the Closing Date, Sellers shall
take whatever action is reasonably necessary (i) to permit employees of the
Business to elect a distribution of their benefits from Sellers' 401(k) plan
in accordance with applicable law and (ii) in accordance with applicable law,
to permit employees of the Business who do not elect a distribution of their
benefits from Sellers' 401(k) plan to elect a direct rollover from Sellers
401(k) plan to Buyer's 401(k) plan and in connection therewith to continue to
repay any outstanding loan balances existing to Buyer's 401(k) plan.
SECTION 3.8. NOTICE OF ACTIONS AND PROCEEDINGS. From and after the
date hereof until the Closing Date, Sellers shall promptly notify Buyer of
any written notice received by Sellers
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with respect to Actions commenced or, to its knowledge, threatened, involving
or affecting Sellers or the Business or which could have a Material Adverse
Effect.
SECTION 3.9. PURCHASE PRICE ALLOCATION. Sellers and Buyer agree to
use their reasonable best efforts to agree, on or before the Closing, as to
an allocation of the Purchase Price between and among the Acquired Assets.
SECTION 3.10. BANKRUPTCY COURT APPROVAL.
(a) Sellers shall use reasonable best efforts to obtain the Sale
Order which shall, among other things, (i) determine that this Agreement was
proposed by Buyer and Sellers in good faith and represents the highest and
best offer for the Acquired Assets and should be approved, (ii) determine
that Buyer is a good faith purchaser under Section 363(m) of the Bankruptcy
Code and that the provisions of Section 363(n) of the Bankruptcy Code have
not been violated, (iii) authorize and direct Sellers to convey the Acquired
Assets to Buyer pursuant to this Agreement and Sections 363 and 365 of the
Bankruptcy Code, free and clear of all Liens, claims, interests, liabilities
and Encumbrances (including any and all "interests" in the Assets within the
meaning of section 363(f) of the Bankruptcy Code), other than the Assumed
Liabilities and the Permitted Encumbrances such that Buyer shall not incur
any liability as a successor to Sellers or the Business, (iv) determine that
Buyer has provided adequate assurance of future performance relative to the
Assumed Contracts, (v) authorize and direct Sellers to execute, deliver,
perform under, consummate and implement, this Agreement, together with all
additional instruments and documents that may be reasonably necessary or
desirable to implement the foregoing, (vi) grants Buyer a claim against the
Purchase Price senior to any creditors whose liens attach to the Purchase
Price for the amount owed to Buyers under Section 2.3(f) of this Agreement,
(vii) provide for relief from transfer taxes under Section 1146(c) of the
Bankruptcy Code, and (viii) determine that Buyer is not a successor to
Sellers or otherwise liable for any Excluded Liabilities and permanently
enjoin each and every holder of a Liability that is not an Assumed Liability
from commencing, continuing or otherwise pursuing or enforcing any remedy,
claim or cause of action against Buyer relative to such liability.
(b) Sellers shall provide appropriate notice, as is required by the
Bankruptcy Code, to all parties entitled to notice of the Interim Order and
the Sale Order, including, but not limited to, all parties to Assumed
Contracts.
(c) Sellers shall use reasonable best efforts to obtain the Interim
Order which shall, among other things, (i) approve the Topping Fee and the
Expense Reimbursement, (ii) provide that Buyer's claim to the Topping Fee
shall be entitled to superpriority administrative claim treatment in the
Case, senior to all other superpriority claims; (iii) establish a date by
which initial Qualified Bids must be submitted, (iv) establish the procedures
for an auction at which only Qualified Bidders who have previously submitted
a Qualified Bid may bid, (v) sets the Minimum Incremental Bid Amount at Two
Million Thirteen Thousand Four Hundred Fifty Dollars ($2,013,450.00) plus Two
Hundred Fifty Thousand Dollars ($250,000.00) for the initial incremental bid
and Five Hundred Thousand Dollars ($500,000.00) for any additional
incremental bids, (vi) require Sellers to promptly provide a copy of any
Qualified Bid to Buyer and to any Qualified Bidder who has submitted a
Qualified Bid, (vii) provide that the Sellers will file the Cure Notice with
the Court and serve it on all non-Seller parties to contracts that have
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been designated as Assumed Contracts at least seven (7) days prior to the
hearing to approve the Transaction and that non-Seller parties that do not
object to the Cure Notice will be bound by the Cure Notice notwithstanding
anything to the contrary in the Assumed Contracts or any other document, and
that the non-Seller party will be forever barred from asserting any other
claims against the Buyer or the Acquired Assets as to such Assumed Contract,
and (viii) if a Qualified Bid is submitted and there shall be an auction at
which Buyer shall become the successful bidder, than the Purchase Price to be
paid at the Closing shall be increased by the incremental amount that Buyer
bids in order to become the successful highest bidder, provided, however,
Sellers shall credit Buyer the Topping Fee against the ultimate Purchase
Price payable by Buyer.
(d) Sellers shall promptly make any filings, take all actions and
use reasonable best efforts to obtain any and all other approvals and orders
necessary or appropriate for consummation of the Transactions, subject to
their obligations to comply with any order of the Bankruptcy Court.
(e) In the event an appeal is taken, or a stay pending appeal is
requested, from the Sale Order or the Interim Order, Sellers shall
immediately notify Buyer of such appeal or stay request and shall provide to
Buyer within one business day a copy of the related notice of appeal or
request for stay. Sellers shall also provide Buyer with a copy of any motion
or application filed in connection with any appeal from either of such orders.
SECTION 3.11. TRANSFER TAXES. In accordance with Section 1146(c) of
the Bankruptcy Code, the making or delivery of any instrument of transfer,
including the filing of any deed, assignment, lease or other document of
transfer to evidence, effectuate or perfect the rights, transfers and
interest contemplated by this Agreement (collectively the "Transfer
Documents"), shall be in contemplation of a plan or plans of reorganization
to be confirms in the Case, and as such shall be free and clear of any and
all transfer Tax, stamp Tax, conveyance Tax or similar Taxes (collectively
the "Transfer Taxes"). The instruments transferring the Acquired Assets to
Buyer shall contain the following endorsement:
"Because this [instrument] has been authorized pursuant to
Order of the United States Bankruptcy Court for the District
of Delaware, in contemplation of a plan of reorganization of
the Grantor, it is exempt from transfer taxes, stamp taxes or
similar taxes pursuant to 11 U.S.C. sections 1146(c)."
In the event Transfer Taxes are required to be paid in order to
record the Transfer Documents to be delivered to Buyer in accordance
herewith, or in the event any such Taxes are assessed at any time thereafter,
such Transfer Taxes incurred as a result of the transactions contemplated
hereby shall be paid by Buyer.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereto jointly and severally represent and warrant to the
Buyer as follows:
SECTION 4.1. ORGANIZATION AND GOOD STANDING. Each of Sellers, other
than AP-
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Manufacturing, is a duly organized corporation, validly existing and in good
standing under the Laws of the State of Delaware, with full power to carry on
the Business as it is now conducted and to own, lease or operate the Acquired
Assets. AP-Manufacturing is a duly organized corporation, validly existing
and in good standing under the Laws of the State of Wisconsin, with full
power to carry on the Business as it is now conducted and to own, lease or
operate the Acquired Assets. Each of Sellers is qualified to do business and
is in good standing in each jurisdiction in which the nature of the Business
or the character of such Sellers' properties makes such qualification
necessary.
SECTION 4.2. AUTHORIZATION OF AGREEMENT. Subject to approval of the
Court, each of Sellers has all requisite power and authority to enter into
this Agreement and the Transaction Documents and to consummate the
Transactions. This Agreement and all other Transaction Documents to be
executed by Sellers in connection herewith have been (or upon execution will
have been) duly executed and delivered by Sellers, have been effectively
authorized by all necessary action of Sellers, and subject to approval of the
Court constitute (or upon execution will constitute), legal, valid and
binding obligations of Sellers enforceable against Sellers in accordance with
its terms (except as limited by insolvency, fraudulent conveyance and other
laws affecting creditors rights and remedies generally). Except as set forth
in SCHEDULE 4.2, no consent, approval, authorization or other order of, or
action or exemption by, or filing with or notification of, any Person
(including, without limitation, Governmental Approvals, "CONSENTS") is
required for Sellers' lawful execution, delivery and performance of this
Agreement and the other documents and instruments required by this Agreement
to be executed and delivered by Sellers. Sellers shall use its reasonable
best efforts to obtain any permit, authorization, approval and other Consent
of any Person (including, without limitation, Governmental Authorities) for
the consummation of the Transactions.
SECTION 4.3. OWNERSHIP OF ACQUIRED ASSETS. Sellers are the lawful
owners of or have the right to use each of the Acquired Assets. Upon transfer
to Buyer on the Closing Date of ownership of the Acquired Assets that are
owned by Sellers, Buyer will have good and marketable title to the Acquired
Assets (other than the Owned Real Property, which is dealt with in Section
4.5), free and clear of all Encumbrances, except for Permitted Encumbrances.
Upon transfer to Buyer on the Closing Date of all of Sellers' interest in the
Acquired Assets that are leased or licensed by Sellers or otherwise subject
to a limited interest in favor of any of Sellers, Buyer shall acquire all of
such interest of Sellers in such Acquired Assets, free and clear of all
Encumbrances, except for Permitted Encumbrances.
SECTION 4.4. FINANCIAL CONDITION. Sellers have furnished to Buyer
the financial statements or reports listed in SCHEDULE 4.4 hereto (the
"FINANCIAL STATEMENTS"). The Financial Statements: (a) except as may be
indicated in the notes thereto, were prepared in accordance with GAAP
(subject to, in the case of unaudited statements or reports, the absence of
any footnote disclosures or year-end audit adjustments required by GAAP); and
(b) fairly present, in all material respects, the financial position, results
of operations and cash flows of the Business as of the dates thereof and
periods covered thereby.
SECTION 4.5. REAL PROPERTY. Except as set forth in SCHEDULE 4.5,
Sellers have good and marketable title in fee simple to all of the Owned Real
Property as set forth on SCHEDULE 1.1(h), subject to any Lien that will be
satisfied and discharged on the Closing Date (which Liens, if
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any, are listed on Schedule 4.5) and to Permitted Encumbrances. Sellers have
made available to Buyer all deeds, title insurance policies, surveys,
mortgages and other Contracts granting or relating to Sellers' ownership of
such Owned Real Property that are in the possession or control of Sellers.
Except as indicated in SCHEDULES 4.5 AND 4.13, to the knowledge of
Sellers:
(a) the Real Property constitutes all of the Real Property
necessary for the continued conduct by Buyer on the Closing Date of the
Business;
(b) Sellers enjoys peaceful and undisturbed possession of the
improvements located on the Real Property; and
(c) all of the buildings, fixtures and other improvements
located on the Real Property are in working condition and repair,
ordinary wear and tear excepted, and the operation thereof as presently
conducted is not in material violation of any applicable building code,
zoning ordinance or other Law.
SECTION 4.6. TANGIBLE PERSONAL PROPERTY. SCHEDULE 1.1(d) sets forth
a listing of the Fixed Assets of the Business. Except as otherwise disclosed
in SCHEDULE 4.6, all Fixed Assets included in the Acquired Assets are in
working order and suitable for the use for which they are intended (subject
to exceptions for (a) ordinary wear and tear and (b) Fixed Assets that are in
storage).
SECTION 4.7. INTELLECTUAL PROPERTY RIGHTS. There is listed in
SCHEDULE 1.1(e) (a) an identification of items of Intellectual Property used
by Sellers in the conduct of the Business and (b) a true and complete list of
all licenses or similar agreements or arrangements to which Sellers is a
party either as licensee or licensor for each such item of Intellectual
Property. Except as otherwise indicated on SCHEDULE 1.1 (e), Sellers own all
of such Intellectual Property free and clear of all Liens, and all such
Intellectual Property, to the extent assignable, will be transferred to Buyer
at the Closing free and clear of all Liens. To the knowledge of Sellers:
(i) There have not been any actions or other judicial or
adversary proceedings involving Sellers concerning any of the
Intellectual Property included in the Acquired Assets, nor is any such
action or proceeding threatened;
(ii) Sellers have the right and authority to use all items of
Intellectual Property included in the Acquired Assets in connection
with the conduct of the Business in the manner presently conducted and,
to the extent assignable, to convey such right and authority to Buyer,
and such use does not conflict with, infringe upon or violate any
patent, copyright, trademark, service mark, trade secret, trade name or
other right of any other Person;
(iii) There are no outstanding, nor are there any threatened,
disputes or disagreements with respect to any licenses or similar
agreements or arrangements included in the Intellectual Property
included in the Acquired Assets; and
(iv) The conduct of the Business does not conflict with any
patent, copyright,
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trademark, service mark, trade secret, trade name or other similar
rights of others.
SECTION 4.8. PENSION AND EMPLOYEE BENEFIT PLANS.
(a) Except as set forth in SCHEDULE 4.8 attached hereto,
there are no Employee Benefit Plans; and
(b) Sellers have made available to Buyer true and correct
copies of each Employee Benefit Plan set forth in SCHEDULE 4.8.
(c) Buyer will not, as a result of consummation of the
Transactions, assume any Liabilities with regard to the Employee
Benefit Plans, except to the extent any such Liabilities are Assumed
Liabilities.
SECTION 4.9. LITIGATION. Except for adversary proceedings and other
matters pending in the Case or which are described on SCHEDULES 4.5, 4.9 AND
4.13, there are no claims, disputes, actions, proceedings or investigations
of any nature before any Governmental Authority pending or, to the knowledge
of Sellers, threatened, involving the Business or the Acquired Assets that,
if determined adversely to Sellers, would have a Material Adverse Effect.
SECTION 4.10. CONTRACTS. Except (a) as set forth on SCHEDULE 4.10,
(b) as otherwise provided in the Bankruptcy Code, or (c) for events of
default arising as a result of the filing of a petition for relief under
Chapter 11 of the Bankruptcy Code, to the knowledge of Sellers:
(i) the Contracts constitute lawful, valid and legally binding
obligations of the parties thereto and are enforceable in accordance
with their terms;
(ii) each Contract is in full force and effect and constitutes
the entire agreement by and between the parties thereto; and
(iii) in all material respects, all obligations required to be
performed under the Contracts by Sellers and the other parties thereto
on or prior to the date hereof have been performed, and no event has
occurred or failed to occur which constitutes, or with the giving of
notice, the lapse of time or both would constitute, a default by any of
Sellers under the Contracts.
SECTION 4.11. COMPLIANCE WITH LAW, PERMITS. To the knowledge of
Sellers and except as disclosed on SCHEDULES 4.5 OR 4.13, the Business as
presently conducted does not violate, in any material respect, any Law.
Sellers have obtained all material Permits required for the conduct of the
Business as presently conducted. To the extent such Permits are transferable,
Sellers shall fully cooperate so as to permit Buyer to continue to have the
use and benefit thereof and the rights granted thereby after the Closing
shall have occurred. To the extent such Permits are not transferable, Sellers
shall reasonably cooperate, but at no expense to Sellers with and assist
Buyer in applying for replacement Permits.
SECTION 4.12. LABOR AND EMPLOYMENT MATTERS.
(a) Except as set forth in SCHEDULE 4.12, with regard to the
Business there is
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no (i) collective bargaining agreement or other labor agreement to
which any Seller is a party or by which any Seller is bound; (ii)
employment, retainer, consulting, or incentive plan, policy or contract
to which any Seller is a party or by which it is bound (other than any
Employee Benefit Plan); or (iii) plan or agreement under which "fringe
benefits" (including, but not limited to, vacation plans or programs,
sick leave plans or programs and related benefits) are afforded any
employees of Sellers (other than any Employee Benefit Plan).
(b) To the knowledge of Sellers, no party to any such plan or
Contract is in default with respect to any material term or condition
thereof, nor has any event occurred which through the passage of time
or the giving of notice, or both, would constitute a default thereunder
or would cause the acceleration of any obligation of any party thereto.
(c) Except as set forth in SCHEDULE 4.12, with regard to the
Business and/or the Acquired Assets there is no (i) unfair labor
practice complaint against any of Sellers pending before the National
Labor Relations Board or any state or local agency or any basis for any
such complaint; (ii) pending labor strike or other material labor
trouble; (iii) pending labor grievance; (iv) pending representation
question respecting the employees of the Business; or (v) pending or,
to the knowledge of Sellers, threatened claim against Sellers regarding
the discharge or dismissal of any employee or the failure to hire or
promote any individual employee or any other employment-related matter
and, to the knowledge of Sellers there is no basis for any such claim.
SECTION 4.13. ENVIRONMENTAL MATTERS.
(a) To the knowledge of Sellers, and except as specifically
identified in the Environmental Site Assessments or disclosed on SCHEDULES
4.5 OR 4.13 hereto:
(i) No Hazardous Materials have been used, manufactured,
produced, constructed, deposited, disposed of, stored or otherwise
located on, under, in or about any Real Property, in a manner or
condition which constitutes a material violation of or for which
remediation is required under any Environmental Law;
(ii) No Hazardous Materials have migrated, or due to their
location are threatening to migrate, from any Real Property on, under,
in or about other properties, and no Hazardous Materials have migrated,
or due to their location are threatening to migrate, from other
properties on, under, in or about any Real Property, in a manner or
condition which constitutes a material violation of or for which
remediation is required under any Environmental Law;
(iii) No underground improvement, including, without limitation,
any treatment, sump, or storage tank or water, gas or oil well, has
been installed or located on any Real Property, in a manner or
condition which constitutes a violation of any Environmental Law; and
(iv) Neither Sellers nor any officers thereof have received any
written notice or other written communication concerning (A) any
violation or alleged violation of Environmental Laws arising out of the
conduct of the Business (except for any such
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violations which have been corrected to the satisfaction of the
appropriate authority); (B) any alleged liability for environmental
damages, third party injury or property damages arising from a failure
to comply with Environmental Laws and relating to any Real Property or
arising out of the conduct of the Business; or (C) any alleged
liability for the presence or suspected presence of Hazardous Materials
on any Real Property.
(b) Except as disclosed in the Environmental Site Assessments or on
SCHEDULES 4.5 OR 4.13, each of Sellers has been and remains in compliance in
all material respects with the terms and conditions of each Permit issued to
such Seller in connection with Environmental Laws by any Governmental
Authority with respect to the activity of the Business on any Real Property.
To the knowledge of Sellers, no other Permits were or are required pursuant
to Environmental Laws for the Business, and immediately prior to the Closing,
each such Permit will be in full force and effect.
SECTION 4.14. RETAINED EMPLOYEES. Since December 31, 1999, except
for the Sellers retention plan as approved by the Court, there has been no
material change in the rate of compensation of the Retained Employees and the
compensation of the Retained Employees for 1999 were consistent with past
practices of Sellers for similar employees in similar situations.
SECTION 4.15. BROKERS. Buyer will not, as a result of consummation
of the Transactions or otherwise in connection with this Agreement, become
liable for any fee or commission payable to any broker, finder or investment
banker working for or on behalf of Sellers (including, without limitation,
Lazard Freres & Co., LLC and its affiliates), or to anyone claiming any such
fee or commission (or for any expense in connection therewith), except to a
broker, if any, engaged directly by Buyer.
SECTION 4.16. ACCURACY OF STATEMENTS. Neither this Agreement, nor
any schedule, exhibit, statement, list, document, certificate or other
information furnished by or on behalf of Sellers to Buyer in connection with
this Agreement, when read together, contains any untrue statement of a
material fact or omission of a material fact necessary to make the statements
contained herein or therein, in light of the circumstances in which they are
made, not misleading.
SECTION 4.17. TAXES. Except as listed in SCHEDULE 4.17, all real
property Taxes currently due and payable with respect to the Owned Real
Property have been paid by Sellers. All water and sewage and other municipal
charges and assessments, and any interest and/or penalties thereon, which are
currently due and payable with respect to the Acquired Assets (whether or not
constituting an Encumbrance upon any of the Acquired Assets) have been paid.
SECTION 4.18. SUFFICIENCY OF ACQUIRED ASSETS. The Acquired Assets
include all properties and rights of Sellers used in the conduct of the
Business as conducted by Sellers and are sufficient for the conduct of the
Business by Buyer in the Ordinary Course of Business.
SECTION 4.19. NET INVENTORY. The Net Inventory, in the aggregate,
(a) is fit for the purpose for which it was procured and manufactured and is
usable or saleable in the Ordinary Course of Business, (b) is sufficient but
not excessive in kind or amount for the conduct of the Business as it is
presently being conducted, and (c) except as may result from employing
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principles of perpetual inventory, is carried on the books of Seller at an
amount which reflects valuations not in excess of the lower of cost or market
determined in accordance with GAAP. SCHEDULE 4.19 sets forth a list of
locations of Inventory not located on the Real Property.
SECTION 4.20. NET ACCOUNTS RECEIVABLE. The Net Accounts Receivable
of Sellers are, to the knowledge of Sellers, valid and enforceable claims not
subject to counterclaims or setoffs (except for setoffs included as part of
Customer Rebates), are current and collectible and will be collected in
accordance with their terms at their recorded amounts, subject to normal cash
discounts accrued in the Ordinary Course of Business consistent with past
practices and the reserve for bad debts set forth in the Financial Statements
as adjusted for the passage of time through the Closing Date in accordance
with past custom and practices of Seller.
SECTION 4.21. AGREEMENT NOT IN BREACH OF OTHER INSTRUMENTS. The
execution and delivery of this Agreement, the consummation of the
Transactions and the fulfillment of the terms hereof will not result in a
breach of the terms or provisions of, or constitute a default under, or
conflict with, any of Sellers' organizational documents (including, without
limitation, articles or certificates of incorporation, certificates of
formation, by-laws, or other similar documents), or any Order of any
Governmental Authority or any Law applicable to Sellers.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
SECTION 5.1. ORGANIZATION AND CORPORATE AUTHORITY. Buyer is a
limited liability company , duly organized, validly existing and in good
standing under the Laws of the State of Delaware and has all requisite power
and authority to enter into this Agreement and to consummate the
Transactions. This Agreement and all other agreements herein contemplated to
be executed in connection herewith have been (or upon execution will have
been) duly executed and delivered by Buyer, have been effectively authorized
by all necessary action, and constitute (or upon execution will constitute)
legal, valid and binding obligations of Buyer, enforceable against Buyer in
accordance with their terms (except as limited by insolvency, fraudulent
conveyance and other laws affecting creditors rights and remedies generally).
SECTION 5.2. AGREEMENT NOT IN BREACH OF OTHER INSTRUMENTS. The
execution and delivery of this Agreement, the consummation of the
Transactions and the fulfillment of the terms hereof will not result in a
breach of any of the terms or provisions of, or constitute a default under,
or conflict with, Buyer's certificate of formation, Buyer's operating
agreement, or any Order of any Governmental Authority or any Law applicable
to Buyer, its constituent members or any of their respective Affiliates.
SECTION 5.3. NO PROCEEDINGS OR LITIGATION. No Action by any
Governmental Authority or other Person shall have been instituted or
threatened which questions the validity or legality of the Transactions
contemplated herein and which could reasonably be expected to damage Buyer
materially if the Transactions contemplated hereby are consummated, including
any material adverse effect on the right or ability of Buyer to own, operate,
possess or transfer
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the Acquired Assets after the Closing.
ARTICLE VI
CONDITIONS TO THE ACQUISITION
SECTION 6.1. CONDITIONS TO BUYER'S OBLIGATIONS TO CONSUMMATE THE
ACQUISITION. The obligations of Buyer to consummate the Acquisition and the
other Transactions to be consummated at the Closing as contemplated by this
Agreement shall be subject to the satisfaction or waiver by Buyer in writing
on or prior to the Closing Date of each of the following conditions:
(a) REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS. Each of
the representations and warranties of Sellers shall be true and correct as of
the Closing Date, unless the failure of any such representations or
warranties so to be true and correct as of such date would not have a
Material Adverse Effect. Each of the covenants and agreements of Sellers to
be performed after the date hereof and prior to the Closing or such other
time period as specifically set forth in a particular covenant or agreement
shall have been duly performed in all material respects by the prescribed
date or for the duration of the prescribed time period.
(b) CONSENTS. All Consents, (including, without limitation,
Governmental Approvals) shall have been received on or prior to the Closing
Date.
(c) NO ORDERS. On the Closing Date, there shall be no Order of any
nature issued by a Governmental Authority of competent jurisdiction in effect
that directs that the Transactions not be consummated.
(d) ADDITIONAL CLOSING DOCUMENTS. Buyer shall have received at the
Closing the following documents, dated the Closing Date:
(i) Bills of sale and assignment agreements substantially in
the form attached hereto as EXHIBIT A, covering the items of personal
property included in the Acquired Assets to be transferred or assigned
to Buyer at the Closing;
(ii) Grant deeds or similar forms of conveyance in form and
substance reasonably satisfactory to Buyer and to the applicable title
insurance company hereunder, conveying to Buyer or, in Buyer's
discretion, to Buyer's designees respectively, the Real Property to be
conveyed to Buyer pursuant to this Agreement;
(iii) Such further instruments of sale, transfer, conveyance,
assignment or delivery covering the Acquired Assets or any part thereof
as Buyer may reasonably require to assure the full and effective sale,
transfer, conveyance, assignment or delivery to it, or, in Buyer's
discretion, to Buyer's designees, of the Acquired Assets to be
transferred to Buyer under this Agreement;
(iv) Title insurance policies issued by Chicago Title Insurance
Company, or, if Buyer requests, Stewart Title Insurance Company, under
an ALTA Standard Form B Policy insuring good and marketable title of
Buyer in and to the Owned Real Property,
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subject only to Permitted Encumbrances and such other exceptions as
are generally contained in such Standard Form B Policy, for the amounts
as may be reasonably specified by Buyer (which shall be obtained at the
expense of Buyer);
(v) A certificate to the effect that, on and as of the Closing
Date, none of Sellers is a foreign person within the meaning of section
1445 of the Tax Code and the Treasury Regulations thereunder; such
certificate to be in form and substance reasonably satisfactory to
Buyer; PROVIDED, that if such certificate is not delivered to Buyer,
Buyer shall be entitled to withhold 10% of the Purchase Price as
required by Section 1445 of the Tax Code;
(vi) An opinion of counsel to Sellers, the form of which is set
forth on EXHIBIT E hereto, addressed to Buyer, Buyer's designees
hereunder, and Buyer's lenders, with respect to this Agreement and the
Transactions, dated as of the Closing Date;
(vii) A certificate or certificates of executive officer(s) of
Sellers with respect to the truth, correctness and continuing accuracy
and completeness of the representations of Sellers hereunder and as to
such other matters (including, without limitation, due authorization
and validity of Sellers' actions taken in connection with consummation
of the Transactions) the form of which is set forth as EXHIBIT B; and
(viii) Such other documents as may be specified herein, in the
Transaction Documents or as Buyer may reasonably request.
(e) NO ADVERSE CHANGES. Between the date hereof and the Closing Date
there shall not have occurred any damage, destruction or loss of any of the
Acquired Assets, whether or not covered by insurance, which has had a
Material Adverse Effect, nor shall there have occurred any other event or
condition which has had a Material Adverse Effect.
(f) THE INTERIM ORDER AND THE SALE ORDER. The Interim Order and the
Sale Order, in form and substance reasonably satisfactory to the Buyer, shall
have been entered and shall not have been modified, amended, dissolved,
revoked or rescinded in any material respect.
(g) TRANSITIONAL SERVICES AGREEMENT. The Buyer shall have received
from the Sellers the Transitional Services Agreement the form of which is
attached hereto as EXHIBIT C.
(h) SIMULTANEOUS CLOSING. Subject to the terms and conditions set
forth in this Agreement, the closing of the Transactions contemplated to be
consummated at the Closing shall occur simultaneously.
SECTION 6.2. CONDITIONS TO THE OBLIGATION OF SELLERS TO CONSUMMATE
THE ACQUISITION. The obligation of Sellers to consummate the Acquisition and
the other Transactions to be consummated at the Closing as contemplated by
this Agreement shall be subject to the satisfaction or waiver in writing by
Sellers on or prior to the Closing Date of each of the following conditions:
(a) REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS. Each of
the representations and warranties of Buyer contained in this Agreement shall
be true and correct in
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all material respects as of the date hereof, and as of the Closing Date, with
the same effect as though such representations and warranties had been made
on and as of the such dates (except representations and warranties that are
made as of a specific date need be true and correct only as of such date),
unless the failure of such representations and warranties so to be true and
correct does not materially and adversely affect the ability of Buyer to
consummate the Transactions. Each of the covenants and agreements of Buyer to
be performed after the date hereof and prior to the Closing Date or such
other time period as specifically set forth in a particular covenant or
agreement shall have been duly performed by the prescribed date or for the
duration of the prescribed time period, in all material respects.
(b) CONSENTS. All Consents, (including, without limitation,
Governmental Approvals) shall have been received on or prior to the Closing
Date.
(c) NO ORDERS. On the Closing Date, there shall be no Order of any
nature issued by a Governmental Authority of competent jurisdiction in effect
that directs that the Transactions not be consummated.
(d) INTERIM ORDER AND SALE ORDER. The Interim Order and the Sale
Order, in form and substance reasonably satisfactory to Sellers, shall have
been entered and shall not have been modified, amended, dissolved, revoked or
rescinded in any material respect.
(e) CERTAIN CLOSING DELIVERIES. Sellers shall have received from
Buyer any other documents required to be delivered by Buyer to Sellers
pursuant to the provisions of this Agreement or the Transaction Documents,
including, without limitation, the Transitional Services Agreement.
(f) SIMULTANEOUS CLOSING. Subject to the terms and conditions set
forth in this Agreement, the closing of the Transactions contemplated to be
consummated at the Closing shall occur simultaneously.
ARTICLE VII
AMENDMENT; TERMINATION; LIQUIDATED DAMAGES
SECTION 7.1. AMENDMENT. Subject to any Court approval requirement
that may be applicable, this Agreement may be amended by the written
agreement of Sellers and Buyer at any time prior to the Closing Date.
SECTION 7.2. TERMINATION. This Agreement may be terminated prior to
the Closing as follows (the actual date on which this Agreement is terminated
being referred to herein as the "TERMINATION DATE"):
(a) at any time on or prior to the Closing Date, by mutual
written consent of Sellers and Buyer;
(b) at the election of Sellers, if any one or more of the
conditions to the obligations of Sellers to close as set forth in
Section 6.2 has not been fulfilled prior to the Outside Date;
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(c) at the election of Buyer, if any one or more of the
conditions to the obligations of Buyer to close as set forth in Section
6.1 has not been fulfilled prior to the Outside Date;
(d) at the election of Sellers, if either (i) Buyer has
materially breached any representation, warranty, covenant or agreement
contained in this Agreement, which breach cannot be or is not cured
prior to the Outside Date or (ii) the Closing has not occurred within
five (5) business days of the waiver or satisfaction of the conditions
set forth in Section 6.1, through no fault of Sellers;
(e) at the election of Buyer, if Sellers have breached any
representation, warranty, covenant or agreement contained in this
Agreement, which breach cannot be or is not cured prior to the Outside
Date, unless such breach would not have a Material Adverse Effect;
(f) by either Buyer or Sellers, if any Governmental Authority
of competent jurisdiction shall have issued an Order or taken any other
action restraining, enjoining or otherwise prohibiting the Transactions
(which the party seeking to terminate this Agreement shall have used
all reasonable efforts to have lifted or reversed) and such Order shall
have become final and nonappealable; or
(g) by either Buyer or Sellers, upon the entry of an order of
the Court authorizing the sale of the Business to a Person other than
Buyer or another entity designated by Buyer;
(h) by either Buyer or Sellers if:
(A) the Closing has not occurred on or before September 30,
2000, unless extended by written notice delivered by Buyer or
Sellers at least five (5) Business Days prior to such date
(the "OUTSIDE DATE") and agreed to by the other party, time
being of the essence; provided that, in the event that a
filing in respect of the Transactions is required under the
HSR Act, neither Buyer nor Seller shall be permitted to
terminate this Agreement pursuant to this Section 7.2(h)(A)
unless a Governmental Authority prohibits the consummation of
the Transactions or requires a material change to the
Transactions in order to comply with the HSR Act;
(B) the Case is dismissed or converted to a Chapter 7
bankruptcy pursuant to provisions of the Bankruptcy Code;
(C) the Interim Order has not been entered on or before August
14, 2000; or
(D) the Sale Order has not been entered on or before September
15, 2000.
SECTION 7.3. EFFECT OF TERMINATION. If this Agreement is terminated
and the Transactions are not consummated, this Agreement shall become void
and of no further force and effect, except that any such termination shall
not affect (a) Buyer's indemnity obligations under Section 3.1; (b) Sellers'
right to receive the Buyer Termination Fee, if applicable, or
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(c) Buyer's right to receive the Topping Fee and the Expense Reimbursement,
if applicable.
SECTION 7.4. SELLERS' LIQUIDATED DAMAGES FOR BUYER BREACH. If
Sellers are not then in material default in their obligations or agreements
hereunder, and Sellers elect to terminate this Agreement under Section
7.2(d), Buyer shall pay to Sellers the Buyer Termination Fee. Buyer's payment
of the Buyer Termination Payment shall be guaranteed by Super American Tissue
Inc., pursuant to a guarantee attached as Exhibit D hereto. In all events,
and notwithstanding anything inconsistent in this Section or anywhere else in
this Agreement or any Transaction Document, if Buyer shall default in the
performance of or otherwise breach this Agreement, an amount equal to the
"Buyer Termination Fee" shall (a) be full consideration for the Sellers'
efforts and expenses in connection with this Agreement, the other Transaction
Documents and all Transactions contemplated hereby and thereby, and (b)
constitute liquidated and agreed damages in respect of this Agreement and
such Transactions, and Buyer shall have no further liability to the Sellers
in connection therewith. Sellers agree that it is impossible to determine
accurately the amount of all of the damages that Sellers would incur by
virtue of a breach by Buyer of its obligations to proceed with the
Transactions, and agree that the sole and exclusive remedy for any such
breach shall be for the Sellers to receive payment of the Buyer Termination
Fee. Except as provided in this Section 7.4, Sellers shall have no right or
remedy against Buyer, at law or in equity by reason of a breach or default by
Buyer of its obligations under this Agreement, whether the same would entitle
Sellers to terminate this Agreement under Section 7.2(d) or otherwise.
ARTICLE VIII
BUYER PROTECTION AND SALE PROVISIONS
SECTION 8.1. (a) TOPPING FEE AND EXPENSE REIMBURSEMENT. In the event
that Buyer has not materially breached any of its representations,
warranties, covenants or agreements herein, and the Acquired Assets or any
portion thereof (except for any immaterial portion thereof) are sold to a
party other than Buyer, Sellers shall pay a topping fee of Two Million
Thirteen Thousand Four Hundred Fifty Dollars ($2,013,450.00) (the "TOPPING
FEE") to Buyer by wire transfer of immediately available funds to an account
designated by Buyer, upon the consummation of such sale payable from the
proceeds of the closing of the sale of the Acquired Assets or any portion
thereof (except for any immaterial portion thereof) before any other expenses
or claims are paid regardless of priority. If a Qualified Bid is submitted
and there shall be an auction at which Buyer shall become the successful
bidder, Sellers shall credit Buyer the Topping Fee against the ultimate
Purchase Price payable by Buyer. Notwithstanding anything contained herein to
the contrary, the Topping Fee will not be payable and this Section 8.1 will
not become operative until the Buyer delivers the Financing Commitment to the
Sellers.
(b) EXPENSE REIMBURSEMENT. In the event that this Agreement is
terminated pursuant to Section 7.2(c), (e), (f), (g), (h)(A) or (h)(B),
Sellers shall pay the Expense Reimbursement to Buyer by wire transfer of
immediately available funds to an account designated by Buyer, upon the first
day after the termination of the Agreement. Notwithstanding anything
contained herein to the contrary, the Expense Reimbursement shall not be
payable and this Section 8.1(b) will not become operative until the Buyer
delivers a Financing Commitment to the Sellers.
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(c) SUPERPRIORITY. In addition to the protections given above, the
amounts provided for in this Section 8.01 shall have superpriority
administrative expense claim status in the Case pursuant to Section 507(b) of
the Bankruptcy Code, senior to all other superpriority administrative expense
claims.
SECTION 8.2. FIDUCIARY DUTY OF SELLERS. Except as may be limited by
Section 8.4, nothing contained herein shall limit Sellers from performing
their fiduciary duties to maximize the value of Sellers' Estate, including
the right of Sellers directly or indirectly to solicit or to encourage any
proposals or offers from any Person relating to the acquisition of the
Business, to assist any third party in preparing or soliciting an offer
relating to such an acquisition, or to accept such an offer subject to the
obligations of Sellers under this Article VIII.
SECTION 8.3. SALE HEARING. Within three days after execution of this
Agreement by all parties, Sellers shall file with the Court a motion to
approve this Agreement and the Transactions pursuant to Section 363 and 365
of the Bankruptcy Code, and shall request an immediate hearing relative to
entry of the Interim Order. In addition to approving the Buyer Protection
Provisions, the Interim Order shall establish a timetable and mechanism for
the submission of competing bids by other prospective purchasers of the
Acquired Assets.
SECTION 8.4. NON-SOLICITATION. (a) Subsequent to the entry of the
Interim Order and except as expressly set forth herein or required by the
Court, without the prior written consent of Buyer, Sellers will not, seek or
solicit from any third person (a "THIRD PERSON") any inquiries or proposals
relating to any agreement, or propose or enter into any agreement with any
Third Person, other than a confidentiality agreement (on terms not materially
more favorable than those, if any, afforded to Buyer) concerning the sale of
all or any of the Acquired Assets or any other transaction otherwise
inconsistent with this Agreement in any material respect (collectively, a
"COMPETITIVE TRANSACTION"). Notwithstanding the foregoing, nothing contained
in this Agreement or elsewhere shall prevent Sellers (consistent with the
fiduciary duties of Sellers to obtain the highest and best offer for the
Acquired Assets), from (a) cooperating with or responding to unsolicited
inquiries from, or negotiating with, any Third Person who expresses, or has
expressed, prior to the date hereof, interest in a Competitive Transaction,
including granting to such Third Person access to the books, records and
documents pertaining to the Sellers and Sellers' assets which are the subject
of the Transactions; (b) responding to unsolicited inquiries submitted by
Third Persons, subject, however, to the provisions of this Section 8.4; (c)
providing notice of the Transactions to all creditors and parties in interest
and any and all Third Persons who have heretofore expressed an interest in a
Competitive Transaction; and (d) cooperating, negotiating or entering into an
agreement with any Third Person that expresses or has expressed an interest
in a Competitive Transaction on terms more favorable to the Sellers, as
determined by the boards of directors of the Sellers, than those contained in
this Agreement.
(b) LIMITATIONS ON NON-SOLICITATION. Notwithstanding anything
contained herein to the contrary the Non-Solicitation provision set forth in
Section 8.4(a):
(i) will not become operative until the Buyer delivers a
Financing Commitment to the Sellers; and
(ii) will terminate and be of no force and effect after
September 30, 2000.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.1. EXPENSES. Except as otherwise provided herein, the
parties hereto shall bear their own respective costs and expenses (including,
but not limited to, all compensation and expenses of counsel, financial
advisors, consultants, actuaries and independent accountants) incurred in
connection with the preparation and execution of this Agreement and the
Transaction Documents and consummation of the Transactions.
SECTION 9.2. ENTIRE AGREEMENT; DISCLOSURES IN WRITING. Except as
otherwise contemplated herein, this Agreement, together with the Schedules
and Exhibits hereto, constitutes the entire agreement of the parties with
respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof.
SECTION 9.3. COUNTERPARTS. This Agreement and any amendments hereto
may be executed in one or more counterparts, each of which shall be deemed to
be an original by the party executing such counterpart, but all of which
shall be considered one and the same instrument.
SECTION 9.4. HEADINGS. The section and paragraph headings contained
in this Agreement are for reference purposes only and shall not in any way
affect the meaning or interpretation of this Agreement.
SECTION 9.5. NOTICES. All notices hereunder shall be deemed given if
in writing and delivered or sent by telecopy, courier or by registered or
certified mail (return receipt requested) to the following addresses or
telecopier numbers (or at such other addresses or telecopier numbers as shall
be specified by like notice):
(a) if to Sellers, to:
American Pad & Paper Company
17304 Preston Road
Suite 700
Dallas, Texas 75252
Attn: John H. Rodgers, Senior Vice President
Facsimile No.: (972) 733-6298
With a copy to:
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, New York 10166
Attn: Conor Reilly, Esq.
Facsimile No.: (212) 351-5247
(b) if to Buyer, to:
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Pad and Paper of America LLC
135 Engineers Road
Hauppauge, New York 11788
Attn: Mehdi Gabayzadeh
Facsimile No.: (631) 435-8980/71
With a copy to:
Mandel Resnik & Kaiser P.C.
220 East 42nd Street
New York, New York 10017
Attn: Nicholas J. Kaiser, Esq.
Facsimile No.: (212) 573-0067
Any notice given by delivery, mail or courier shall be effective when
received. Any notice given by telecopier shall be effective upon oral or
machine confirmation of transmission. Notices may be given on behalf of a
party by such party's attorneys specified above.
SECTION 9.6. GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the Laws of the State of New York without regard
to the conflicts of law principles thereof, and, to the extent applicable,
the Bankruptcy Code.
SECTION 9.7. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
WAIVES TRIAL BY JURY IN ANY LITIGATION ARISING OUT OF THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY COURT IN WHICH SUCH
LITIGATION MAY BE BROUGHT.
SECTION 9.8. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Sellers and Buyer set forth in this
Agreement shall not survive the Closing.
SECTION 9.9. BINDING EFFECT; ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. This Agreement and the rights
and remedies hereunder are not assignable by Sellers or Buyer (except, in the
case of Buyer, to Buyer's designees, PROVIDED that no such assignment shall
release Buyer from any of its obligations hereunder), without the prior
written consent of the other party. Notwithstanding the foregoing, the
parties hereto acknowledge that Sellers' execution of this Agreement is
subject to approval of the Court. This Agreement shall not be binding upon
Sellers unless and until it is approved by the Court in accordance with the
applicable provisions of the Bankruptcy Code.
SECTION 9.10. FURTHER ASSURANCES. Sellers, on the one hand, and
Buyer, on the other, agree, to the extent necessary (and only to such
extent), on or any time after the Closing Date, to execute and deliver, or to
cause to be executed and delivered, all such instruments, and to take all
such actions, as the other may reasonably request in order to effectuate the
intent and purposes of, and to carry out the terms of, this Agreement.
SECTION 9.11. WAIVERS AND AMENDMENTS; NON-CONTRACTUAL REMEDIES. This
Agreement may be amended, superseded, canceled, renewed or extended, and the
terms and
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<PAGE>
conditions hereby may be waived, only by a written instrument signed by the
parties or, in the case of a waiver, by the party waiving compliance. Except
as otherwise provided herein, no delay on the part of any party in exercising
any right, power or privilege hereunder, nor any single or partial exercise
of any such right, power or privilege hereunder, shall preclude any other or
further exercise thereof or the exercise of any other such right, power or
privilege hereunder. Except as otherwise provided herein, the rights and
remedies herein provided are cumulative and are not exclusive of any rights
or remedies that any party may otherwise have at law or in equity.
SECTION 9.12. PUBLIC ANNOUNCEMENTS. Except as required by the Court
or applicable law, or in connection with obtaining the Sale Order, neither
Buyer nor Sellers shall issue any press release or make any public statement
regarding, or disclose to any third party any information regarding, this
Agreement or the Transactions contemplated hereby, without the prior written
consent of the other party.
SECTION 9.13. NO RECORDATION. Sellers and Buyer hereby acknowledge
that neither this Agreement nor any memorandum or affidavit thereof shall be
recorded in the public records in the State, county, or municipality of any
of the Real Property. Should Buyer ever record or attempt to record this
Agreement, or a memorandum or affidavit thereof, or any other similar
document, then notwithstanding anything herein to the contrary, such
recordation or attempt at recordation shall constitute a default by Buyer
hereunder, and in addition to the other remedies provided for herein, Sellers
shall have the right to terminate this Agreement by filing a notice of said
termination in any such records where the affected Real Property is located.
SECTION 9.14. KNOWLEDGE. In each provision of this Agreement where a
representation or warranty is qualified to the "knowledge," "actual
knowledge" or any similar qualification of a person, each such phrase means
that the relevant person does not have actual knowledge of any state of facts
which is different from the facts described in the representation or
warranty. In addition, such knowledge shall refer solely to the "knowledge"
of those persons identified and subject to the limitations listed on Schedule
9.14.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, this Agreement has been signed on behalf of each
of the parties hereto as of the date first above-written.
PAD AND PAPER OF AMERICA LLC
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
AMERICAN PAD & PAPER COMPANY
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
AMERICAN PAD & PAPER COMPANY OF
DELAWARE, INC.
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
AP&P MANUFACTURING, INC.
By:
----------------------------------
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Name:
----------------------------------
Title:
----------------------------------
WR ACQUISITION, INC.
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
AMERICAN PAD & PAPER SALES COMPANY, INC.
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
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EXHIBIT A
FORM OF BILLS OF SALE AND ASSIGNMENT AGREEMENTS
BILL OF SALE AND ASSIGNMENT
THIS BILL OF SALE AND ASSIGNMENT is executed this ___ day of ____,
2000, by and among American Pad & Paper Company, American Pad & Paper Company
of Delaware, Inc., AP&P Manufacturing, Inc., WR Acquisition, Inc. and
American Pad & Paper Sales Company, Inc., (collectively, the "ASSIGNORS") and
Pad and Paper of America LLC (the "ASSIGNEE").
RECITALS
A. On August ______, 2000, Assignors and Assignee entered into an
Asset Purchase Agreement pertaining to the sale of certain assets as
described therein (the "PURCHASE AGREEMENT"). All capitalized terms used but
not defined herein, shall have the meaning assigned to such terms in the
Purchase Agreement;
B. The Purchase Agreement requires, among other things, that Bills
of Sale and Assignments covering the items of personal property included in
the Acquired Assets be prepared to transfer and assign such property to Buyer
at the Closing; and
C. The parties hereto desire to execute and deliver this instrument
to evidence such transfer and assignment of the personal property hereinafter
described.
AGREEMENT
NOW, THEREFORE, Assignors, for and in consideration of the sum of
TEN AND NO/100 DOLLARS ($10.00) and other good and valuable consideration to
it in hand paid by Assignee, the receipt and sufficiency of which
consideration are hereby acknowledged, have GRANTED, SOLD, ASSIGNED,
TRANSFERRED, CONVEYED and DELIVERED and do by these presents GRANT, SELL,
ASSIGN, TRANSFER, CONVEY and DELIVER unto Assignee, all of Assignors' right,
title and interest in and to the Acquired Assets, including without
limitation, the property described in EXHIBIT "A", attached hereto and made a
part hereof (collectively, the "ASSIGNED PROPERTY"), subject, however, to the
Permitted Encumbrances.
TO HAVE AND TO HOLD the Assigned Property, subject to the Permitted
Encumbrances, unto Assignee, its heirs, personal representatives, successors
and assigns forever by and through Assignors but not otherwise; provided,
however, IT IS UNDERSTOOD AND AGREED THAT EXCEPT AS MAY BE EXPRESSLY PROVIDED
IN THE PURCHASE AGREEMENT, ASSIGNORS ARE NOT MAKING AND SPECIFICALLY DISCLAIM
ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESS OR
IMPLIED, WITH RESPECT TO THE ASSIGNED PROPERTY, INCLUDING, BUT NOT LIMITED
TO, WARRANTIES OR REPRESENTATIONS AS TO MATTERS OF TITLE (OTHER THAN AS
EXPRESSLY MADE BY ASSIGNORS HEREIN), ZONING, TAX
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CONSEQUENCES, PHYSICAL OR ENVIRONMENTAL CONDITIONS, AVAILABILITY OF ACCESS,
INGRESS OR EGRESS, OPERATING HISTORY OR PROJECTIONS, VALUATION, GOVERNMENTAL
APPROVALS, GOVERNMENTAL REGULATIONS OR ANY OTHER MATTER OR THING RELATING TO
OR AFFECTING THE ASSIGNED PROPERTY, INCLUDING, WITHOUT LIMITATION: (i) THE
VALUE, CONDITION, MERCHANTABILITY, MARKETABILITY, PROFITABILITY, SUITABILITY
OR FITNESS FOR A PARTICULAR USE OR PURPOSE OF THE ASSIGNED PROPERTY, (ii) THE
MANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS INCORPORATED INTO ANY OF
THE ASSIGNED PROPERTY, AND (iii) THE MANNER, QUALITY, STATE OF REPAIR OR LACK
OF REPAIR OF THE ASSIGNED PROPERTY. ASSIGNEE HEREBY AGREES THAT WITH RESPECT
TO THE ASSIGNED PROPERTY, ASSIGNEE HAS NOT RELIED UPON, EITHER DIRECTLY OR
INDIRECTLY, ANY REPRESENTATION OR WARRANTY OF ASSIGNORS OR ANY AGENT OF
ASSIGNOR EXCEPT AS EXPRESSLY MADE BY ASSIGNORS IN THIS BILL OF SALE AND
ASSIGNMENT OR THE PURCHASE AGREEMENT, ASSIGNEE REPRESENTS THAT IT IS A
KNOWLEDGEABLE PURCHASER AND THAT IT IS RELYING ENTIRELY ON ITS OWN EXPERTISE
AND THAT OF ASSIGNEE'S CONSULTANTS, AND THAT ASSIGNEE HAS CONDUCTED SUCH
INSPECTIONS AND INVESTIGATIONS OF THE ASSIGNED PROPERTY, INCLUDING, BUT NOT
LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AND IS RELYING
EXCLUSIVELY UPON SAME, AND HAS ASSUMED THE RISK THAT ADVERSE MATTERS,
INCLUDING, BUT NOT LIMITED TO, ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS,
MAY NOT HAVE BEEN REVEALED BY ASSIGNEE'S INSPECTIONS AND INVESTIGATIONS.
EXCEPT AS MAY BE EXPRESSLY PROVIDED IN THE PURCHASE AGREEMENT ASSIGNEE
ACKNOWLEDGES AND AGREES THAT ASSIGNORS HEREBY SELL AND CONVEY TO ASSIGNEE AND
ASSIGNEE HEREBY ACCEPTS THE ASSIGNED PROPERTY "AS IS, WHERE IS," WITH ALL
FAULTS, AND THERE ARE NO ORAL AGREEMENTS, WARRANTIES OR REPRESENTATIONS
COLLATERAL TO OR AFFECTING THE ASSIGNED PROPERTY MADE BY ASSIGNORS OR
ASSIGNEE, ANY AGENT OF ASSIGNORS OR ASSIGNEE OR ANY THIRD PARTY. ASSIGNORS
ARE NOT LIABLE OR BOUND IN ANY MANNER BY ANY VERBAL OR WRITTEN STATEMENTS,
REPRESENTATIONS, OR INFORMATION PERTAINING TO THE ASSIGNED PROPERTY FURNISHED
BY ANY REAL ESTATE BROKER, AGENT, EMPLOYEE, SERVANT OR OTHER PERSON, UNLESS
THE SAME ARE SPECIFICALLY SET FORTH OR REFERRED TO HEREIN OR IN ANY DOCUMENT
DELIVERED BY ASSIGNOR TO ASSIGNEE.
Assignor and Assignee further acknowledge and agree that the
provisions of the preceding paragraph have been negotiated by the parties as
a material part of the sale of the Assigned Property evidenced hereby and
that Assignee's agreement to purchase the Assigned Property in accordance
with such provisions was a material part of the consideration for the
Assigned Property and is reflected in the total consideration paid to
Assignor for the Assigned Property.
Assignee, by its execution hereof, hereby assumes all of the duties
and obligations of Assignors under the Assigned Contracts and Assumed
Liabilities as more particularly described in the Purchase Agreement.
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Assignee hereby agrees to indemnify and hold harmless Assignors from
all claims, liabilities, damages, losses, costs, expenses (including, without
limitation, reasonable attorney's fees, actions and causes of action arising
out of or in any way relating to the Assigned Property on and after the date
hereof and arising or related to performance on or after the date hereof and
the cure obligations as of the date hereof.
EXECUTED as of the __________ day of August, 2000.
ASSIGNORS:
AMERICAN PAD & PAPER COMPANY
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
AMERICAN PAD & PAPER COMPANY OF
DELAWARE, INC.
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
AP&P MANUFACTURING, INC.
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
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WR ACQUISITION, INC.
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
AMERICAN PAD & PAPER SALES COMPANY, INC.
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
ASSIGNEE:
PAD AND PAPER OF AMERICA LLC
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
NOTE: THIS FORM MAY BE MODIFIED TO COVER REQUIREMENTS OF INDIVIDUAL STATES.
IN ADDITION, SEPARATE ASSIGNMENTS OF LEASES WILL BE PREPARED IN CONNECTION
WITH THE LEASED REAL PROPERTY.
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<PAGE>
EXHIBIT B
FORM OF OFFICER'S CERTIFICATE
CERTIFICATE OF [EXECUTIVE OFFICER] PURSUANT TO SECTION 6.1(d)(vii)
OF THE ASSET PURCHASE AGREEMENT
As of [closing date], and pursuant to the requirements of Section 6.1(d)(vii)
of the Asset Purchase Agreement ("APA"), dated as of August __, 2000, by and
between American Pad & Paper Company, American Pad & Paper Company of
Delaware, Inc., AP&P Manufacturing, Inc., WR Acquisition, Inc. and American
Pad & Paper Sales Company, Inc. ("Sellers") and Pad and Paper of America LLC
("Buyer"), the undersigned hereby certify that:
1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Sellers contained in Article IV of the APA together with the
Schedules thereto, and any other related documents executed by or on behalf
of Sellers after the date of execution of the APA, including, but not limited
to, the Transaction Documents (as defined in the APA), through the date
hereof, are true and complete in all material respects as of the date of the
APA and as of the date hereof, as if made on and as of the date hereof.
2. PERFORMANCE OF THE APA. Sellers have complied in all material
respects with all of their respective obligations under the APA that are to
be performed or complied with by each of them prior to the date hereof.
AMERICAN PAD & PAPER COMPANY
By:
----------------------------------
AMERICAN PAD & PAPER COMPANY OF
DELAWARE, INC.
By:
----------------------------------
AP&P MANUFACTURING, INC.
By:
----------------------------------
WR ACQUISITION, INC.
By:
----------------------------------
AMERICAN PAD & PAPER SALES COMPANY, INC.
By:
----------------------------------
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EXHIBIT C
FORM OF TRANSITIONAL SERVICES AGREEMENT
43
<PAGE>
EXHIBIT D
GUARANTY OF SUPER AMERICAN TISSUE, INC.
1. Pad and Paper of America LLC, a Delaware limited liability
company ("Buyer"), is entering into an Asset Purchase Agreement, dated as of
August 2, 2000 (the "Purchase Agreement"), by and among the Buyer, American
Pad & Paper Company, American Pad & Paper Company of Delaware, Inc., AP&P
Manufacturing, Inc., WR Acquisition, Inc. and American Pad & Paper Sales
Company, Inc. (collectively, the "Sellers"). Pursuant to the Purchase
Agreement, Buyer will, under certain circumstances, be obligated to pay the
Buyer Termination Fee (as such term is defined in the Purchase Agreement).
The undersigned guarantor, Super American Tissue Inc. (the "Guarantor"), an
affiliate of Buyer, hereby unconditionally and absolutely undertakes,
guarantees and agrees to cause Buyer to perform Buyer's obligation and
agreement to immediately pay the Buyer Termination Fee when due and expressly
agrees to be liable in the event Buyer fails to pay the Buyer Termination Fee
(as such term is defined in the Purchase Agreement).
2. The Guarantor hereby represents, warrants and covenants to the
Sellers, as of the date hereof, that:
(a) ORGANIZATION; AUTHORITY. The Guarantor is a corporation
duly organized and validly existing and in good standing under the laws
of its jurisdiction of incorporation. The Guarantor has all requisite
corporate power and authority to execute and deliver this Guaranty, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. This Guaranty has been duly authorized, executed
and delivered by the Guarantor, constitutes the valid and binding
agreement of the Guarantor and is enforceable against the Guarantor in
accordance with its terms.
(b) CONFLICTING INSTRUMENTS; CONSENTS. The execution and
delivery by the Guarantor of this Guaranty do not, and the consummation
of the transactions contemplated hereby will not, violate any provision
of the articles of incorporation or the bylaws (or the equivalent
thereof) of the Guarantor, or conflict with or result in a breach of,
or create an event of default (or event that, with the giving of notice
or lapse of time or both, would constitute an event of default) under,
any agreement, mortgage, license, lease, indenture, instrument, order,
arbitration award, judgment or decree to which the Guarantor is a
party.
(c) LITIGATION. There is no action, suit, claim, proceeding,
inquiry or investigation pending or, to the knowledge of the Guarantor,
threatened, at law or in equity, or before or by any arbitrator or any
federal, state, local or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, relating
to or involving the transactions contemplated by this Guaranty.
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(d) FINANCIAL ABILITY. The Guarantor has the financial ability
to perform all of its obligations under this Guaranty.
3. Guarantor waives all presentments, demands for payment,
performance or default, notices of non-performance, protests, notices of
protest, notices of dishonor and notices of acceptance of this Guaranty.
4. This Guaranty is the final expression of the agreement between
the Guarantor and the Sellers and this written agreement may not be
contradicted by evidence of any alleged oral agreement. This Guaranty may not
be amended or modified except by a written document that is executed by
Guarantor and the Sellers.
5. This Guaranty shall be construed in accordance with and governed
by the laws of the State of New York, without giving effect to the choice of
law rules thereof.
6. This Guaranty is and shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
7. All disputes arising out of or related to this Guaranty,
including, without limitation, any dispute relating to the interpretation,
meaning or effect of any provision hereof will be resolved in the Court (as
defined in the Purchase Agreement), and the Guarantor submits to the
exclusive jurisdiction of the Court for the purpose of adjudicating any such
dispute.
IN WITNESS WHEREOF, the undersigned Guarantor has executed this
Guaranty as of the date first written above.
GUARANTOR
SUPER AMERICAN TISSUE INC.
By:
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Name:
Title:
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EXHIBIT E
FORM OF OPINION OF COUNSEL
Ladies and Gentlemen:
We have acted as counsel for American Pad & Paper Company, American
Pad & Paper Company of Delaware, Inc., American Pad & Paper Sales Company,
Inc. and WR Acquisition, Inc., each, a Delaware corporation, and AP&P
Manufacturing, Inc., a Wisconsin corporation, in connection with the
Acquisition pursuant to the Asset Purchase Agreement dated as of August __,
2000 among Sellers and Buyer (the "Purchase Agreement") and the consummation
of the other transactions contemplated by the Purchase Agreement. Capitalized
terms used herein without definitions will have the respective definitions
ascribed to such capitalized terms in the Purchase Agreement. We are
rendering this opinion to you pursuant to Section 6.1(d)(vi) of the Purchase
Agreement.
In connection with this opinion, we have examined the following
documents as executed at or prior to the Closing:
the Purchase Agreement; and
the bills of sale and assignment documents relating to the items of
personal property included in the Acquired Assets to be assigned and
transferred to Buyer or its designees at the Closing pursuant to the Purchase
Agreement.
In addition to the foregoing, we have examined the original or
certified, conformed or photostatic copies of such other instruments,
documents and agreements and such corporate and public records as we have
deemed necessary or relevant for the purpose of issuing the opinion
hereinafter expressed. In our examination of the foregoing instruments,
documents, agreements and records, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals
and the conformity to original documents of documents submitted to us as
certified, conformed or photostatic copies. As to any facts material to this
opinion, we have, to the extent that such facts were not independently
established by us, relied upon certificates of officers and employees of
Sellers.
We understand that with respect to Real Property title matters you
will be relying on the title insurance commitments issued to you. We have not
made any investigation of, and do not express an opinion as to, any matters
of title to or the descriptions of any Real Property or priority of liens.
We express no opinion with respect to the effect of the laws of any
jurisdiction, other than the Delaware General Corporation Law, the law of the
States of California and New York and the federal law of the United States.
While we are not admitted to practice in the State of Delaware we are
generally familiar with the Delaware General Corporation Law as presently in
effect and have made such inquiries as we consider necessary to render the
opinions contained herein.
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Each opinion set forth below relating to the enforceability of any
agreement or instrument against each of the Sellers is subject to the
following qualifications:
(a) as to any agreement or instrument delivered by any of Sellers,
we assume that such Seller has received the agreed-to consideration therefor;
and
(b) as to any agreement or instrument to which any of Sellers is a
party, we assume that such agreement or instrument is the binding obligation
of each other party thereto.
Based upon, and subject to, the assumptions, qualifications and
limitations set forth herein, we are of the opinion that:
1 Except for AP&P Manufacturing, Inc. for which we render no
opinion, each of Sellers is a duly organized corporation and is validly
existing under the laws of its jurisdiction of incorporation, with full power
to carry on its respective part of the Business as it is now conducted and to
own, lease, license or operate the Acquired Assets.
2. Except for AP&P Manufacturing, Inc. for which we render no
opinion, each of Sellers has all requisite power and authority to enter into
the Purchase Agreement and the Transaction Documents to which it is a party
and to consummate the Transactions. The Purchase Agreement and the other
Transaction Documents to be executed by Sellers in connection with the
Purchase Agreement have been, or upon execution, will have been, duly
executed and delivered by Sellers, have been effectively authorized by all
necessary corporate action of Sellers, and constitute, or upon execution,
will constitute, legal, valid and binding obligations of Sellers, enforceable
against Sellers in accordance with their respective terms.
3. The bills of sale and other assignment documents executed by
Sellers at the Closing which purport to assign and transfer to Buyer and its
designees all right, title and interest of Sellers in the items of personal
property included in the Acquired Assets, are in proper form to effect such
assignment and transfer to Buyer and its designees.
4. The execution, delivery and performance by each of Sellers of the
Purchase Agreement and the Transaction Documents to which such Seller is a
party, and the consummation of the Transactions contemplated hereby and
thereby, will not, as of the Closing Date, (i) require any consent, approval,
authorization or other order of, or qualification with, any Governmental
Authority, except such as have been obtained or filings and recordings with
certain Government Authorities to register or record certain of the
Transaction Documents, (ii) conflict with, or constitute a breach of any of
the provisions of, or a default under, the charter, by-laws or other
organizational document of any of the Sellers (except for AP&P Manufacturing,
Inc. for which we render no opinion), or (iii) violate any material law
applicable to Sellers or the Acquired Assets (excepting all local laws and
ordinances).
Our opinion that any document is valid, binding or enforceable in
accordance with its terms is qualified as to (a) limitations imposed by
bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance,
moratorium or other laws relating to or affecting the rights of creditors
generally, (b) rights to indemnification and contribution which may be
limited by applicable law and equitable principles, and (c) general
principles of equity, including without limitation concepts of materiality,
reasonableness, good faith and fair dealing and the possible
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unavailability of specific performance or injunctive relief, regardless of
whether such enforceability is considered in a proceeding in equity or at law.
The opinion expressed herein is rendered solely for your benefit and
use and the benefit of Deutsche Bank Securities Corporation. This opinion may
not be relied upon by any other person without our prior written consent.
Except as hereinabove expressly set forth, no opinion is made, and none shall
be implied. We disclaim any obligation to update this opinion letter for
events occurring or coming to our attention after the date hereof.
Very truly yours,
Gibson, Dunn & Crutcher LLP
[The Sellers agree to procure an opinion of counsel that is admitted to practice
in the State of Wisconsin to opine on the matters excluded from the opinions
set forth above.]
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EXHIBIT F
FORM OF INTERIM ORDER
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EXHIBIT G
FORM OF SALE ORDER
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EXHIBIT H
FORM OF CURE NOTICE
51
