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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
Page
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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
iv
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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,
Sections-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.
<PAGE>
"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.
<PAGE>
"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
<PAGE>
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
<PAGE>
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;
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
Section 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-
<PAGE>
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
<PAGE>
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,
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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,
<PAGE>
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
<PAGE>
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;
<PAGE>
(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
<PAGE>
(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.
<PAGE>
(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.
<PAGE>
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:
<PAGE>
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
<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]
<PAGE>
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:
------------------------
<PAGE>
Name:
------------------------
Title:
------------------------
WR ACQUISITION, INC.
By:
------------------------
Name:
------------------------
Title:
------------------------
AMERICAN PAD & PAPER SALES COMPANY, INC.
By:
------------------------
Name:
------------------------
Title:
------------------------
<PAGE>
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
<PAGE>
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.
2
<PAGE>
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:
----------------------------------
3
<PAGE>
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.
4
<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:
--------------------------------
<PAGE>
EXHIBIT C
TRANSITIONAL SERVICES AGREEMENT
This Transitional Services Agreement (the "Agreement"), dated as of
September __, 2000, is made by and between Pad and Paper of America LLC, a
Delaware limited liability company ("Buyer"), and American Pad & Paper
Company , a Delaware corporation ("AP&P"), American Pad & Paper Company of
Delaware, Inc., a Delaware Corporation ("AP&PCD"), AP&P Manufacturing, Inc.,
a Wisconsin corporation ("AP&PM"), WR Acquisition, Inc., a Delaware
corporation ("WR"), and American Pad & Paper Sales Company, Inc., a Delaware
corporation, (together with AP&P, AP&PM and WR, "Seller").
RECITALS
A. The parties hereto are parties to that certain Asset Purchase
Agreement dated August 2, 2000, (the "Purchase Agreement") by and among Buyer
and Seller, pursuant to which Seller shall sell to Buyer substantially all of
the assets of Seller.
B. In order to provide for an orderly transition to ownership and
operation by Buyer of the Purchased Assets, Seller and Buyer desire that
Seller provide the transitional services listed on EXHIBIT A attached hereto
(each a "Transitional Service" and collectively, the "Transitional Services")
to Buyer after the Closing Date, the provision of such services to be as set
forth in and pursuant to this Agreement. Capitalized terms not otherwise
defined herein shall have the meanings set forth in the Purchase Agreement.
ARTICLE 1
TRANSITIONAL SERVICES
Section 1.1 TERM. This Agreement will be effective as of the Closing
Date and will continue, with respect to each Transitional Service, for the
period listed on EXHIBIT A attached hereto for such service.
Section 1.2 TRANSITIONAL SERVICES.
(a) Seller agrees to provide to Buyer and its affiliates the
Transitional Services listed on Exhibit A to the extent requested by Buyer,
at levels consistent with and in no event to exceed the extent to which such
Transitional Services had been made available to Seller's AMPAD and
Continuous Forms divisions before the date hereof, subject to the terms of
this Agreement. In providing Transitional Services, Seller reserves the right
to use third-party providers or change existing third-party providers,
provided that such use or change will not (i) materially diminish
<PAGE>
the nature or scope of such services being provided under this Agreement, or
(ii) increase the amounts payable by Buyer for such services.
(b) The parties intend that, pursuant to the provision of these
services, neither party will incur a gain or loss at the expense of the
other. Seller will work with Buyer to define service requirements and to
ensure that resources are available to support the service requirements until
both parties agree that sufficient capability is in place so that Buyer does
not require that Seller provide such services; provided, however, that Seller
shall not be required to provide Buyer with any service (other than
Management Information Services) following the confirmation of Seller's plan
of reorganization.
Section 1.3 ABSENCE OF WARRANTIES. The parties expressly agree that
no warranty will be implied under this Agreement for any of the Transitional
Services, including without limitation warranties of fitness for any
particular purpose or merchantability or of any other type, and further that
no warranties of any sort are made herein.
Section 1.4 INDEPENDENT CONTRACTORS. Nothing in this Agreement shall
constitute evidence that the persons providing the Transitional Services are
or may be deemed employees of Buyer, and neither Sellers, the party providing
the Transitional Services, nor their agents or employees, shall have any
power to bind or obligate Buyer contractually for any purpose whatsoever.
ARTICLE 2
FORCE MAJEURE
Section 2.1 FORCE MAJEURE. Seller may suspend or reduce, in whole or
in part, the performance or supply of any or all of the Transitional Services
or any of its obligations hereunder to the extent that it is materially
impeded in its ability to provide such Transitional Services as a result of
causes beyond its reasonable control, such as natural catastrophes,
governmental acts or omissions, laws or regulations, labor strikes or
difficulties, transportation stoppages or slowdowns, or the inability to
procure parts or materials. Any Transitional Service not provided by reason
of this section will be promptly resumed upon the elimination of the Force
Majeure event.
ARTICLE 3
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 3.1 LIMITATION OF LIABILITY OF SELLER. Neither Seller, nor
its employees or agents will be liable to Buyer for, and Buyer releases and
discharges Seller, its employees and agents from, any and all claims,
liabilities, actions, suits, judgments, losses, injuries, damages (including,
without limitation, incidental or consequential damages), costs and expenses
arising out of or connected with any act or omission of Seller, its employees
or agents, with respect to the Transitional Services, other than a continuous
and repeated refusal by Seller to provide such Transitional Services in
breach of this Agreement, gross negligence or the willful misconduct of
Seller, its employees or agents.
2
<PAGE>
ARTICLE 4
BILLING AND PAYMENT FOR SERVICES
Section 4.1 BILLING PROCEDURE. Transitional Services will be
billed to Buyer by the 10th business day of the month following the month in
which the Transitional Service was provided.
Section 4.2 PAYMENT TERMS. Payment will be made within 30 days
of receipt of the bill.
Section 4.3 COST OF SERVICES. Transitional Services will be
provided in accordance with the costing methodology set forth on Exhibit A.
ARTICLE 5
CONFIDENTIAL INFORMATION
Section 5.1 TRANSITIONAL SYSTEMS ACCESS. While this Agreement remains
in effect, certain Seller and Buyer employees will have access to the computer
and business systems of the other. Such access will be permitted only to the
extent that it is required to perform certain business functions as agreed upon
by Seller and Buyer. Any access by these employees to information on these
systems which is not required for business purposes will be strictly forbidden.
The party whose confidential information is accessed without authorization will
have the right to refuse further access to their systems by the offending
employee. The party whose employee has accessed such confidential information
without authorization will take appropriate disciplinary action with regard to
that offending employee in such party's discretion.
ARTICLE 6
MISCELLANEOUS
Section 6.1 NOTICES. All notices required to be given
hereunder shall be provided in the manner set forth in the Purchase Agreement.
Section 6.2 INTERPRETATION. The headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
Section 6.3 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 6.4 WAIVER. No waiver of any of the provisions hereof shall
be effective unless in writing and signed by the party to be charged with
such waiver. No waiver shall be deemed a continuing waiver or waiver in
respect of any subsequent breach or default, whether of similar or different
nature, unless so expressly stated in writing.
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<PAGE>
Section 6.5 MODIFICATION. This Agreement may not be orally cancelled,
changed, modified or amended, and no cancellation, change, modification or
amendment shall be effective or binding, unless in writing and signed by all of
the parties to this Agreement.
Section 6.6 SEVERABILITY. If any provision of this Agreement is found
to be void or unenforceable by a court of competent jurisdiction, the remaining
provisions of this Agreement shall nevertheless be binding upon the parties with
the same effect as though the void or unenforceable part had been severed and
deleted.
Section 6.7 STRICKEN WORDS OR PHRASES. If any words or phrases in
this Agreement shall have been stricken out or otherwise eliminated, whether
or not any other words or phrases have been added, this Agreement shall be
construed as if the words or phrases so stricken out or otherwise eliminated
had never appeared in this Agreement.
Section 6.8 NUMBER AND GENDER. All terms and words used in this
Agreement, regardless of the number or gender in which they are used, shall be
deemed to include any other number and any other gender as the context may
require.
Section 6.9 MISCELLANEOUS. This Agreement and all Exhibits hereto
(i) constitute the entire agreement of the parties as to the subject matter
hereof and supersede all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter
hereof; (ii) are not intended to and shall not confer upon any other person
or business entity, other than the parties hereto, any rights or remedies
with respect to the subject matter hereof; (iii) shall be binding upon and
inure to the benefit of the parties hereto and their respective successors
and assigns; and (iv) shall not be assigned by operation of law or otherwise
without the prior written consent of the parties hereto.
Section 6.10 SPECIFIC PERFORMANCE. Seller and Buyer acknowledge that
the Transitional Services are a vital, necessary and unique part of the orderly
separation by Seller and transition to ownership and operation by Buyer of
Seller's AMPAD and Continuous Forms divisions, and that any breach of this
Agreement by Seller could not be adequately compensated by monetary damages.
Accordingly, if Seller breaches its obligations under this Agreement, Buyer
shall be entitled, in addition to any other remedies that it may have, to the
enforcement of this Agreement by a decree of specific performance requiring
Seller to fulfill its obligations under this Agreement.
Section 6.11 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York. Seller
and Buyer hereby expressly consent to the jurisdiction of the Supreme Court of
the State of New York with respect to any action or proceeding between Seller
and Buyer with respect to this Agreement or any rights or obligation of such
party pursuant to this Agreement and each of Seller and Buyer agrees that the
venue shall lie in Suffolk County, New York. Each party of this Agreement waives
trial by jury in any such action or proceeding and consents to the service of
process in any such action or proceeding in the manner provided for notices and
other communications in Section 6. 1.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Transitional
Services Agreement to be executed by their duly authorized representatives as of
the date first written above.
By By:
---------------------------- -----------------------------
Print Name: Print Name:
------------------ ---------------------
Title: Title:
----------------------- --------------------------
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<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.
<PAGE>
(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:
--------------------------------
Name:
Title:
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<PAGE>
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.
<PAGE>
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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<PAGE>
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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<PAGE>
EXHIBIT F
FORM OF INTERIM ORDER
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
IN RE )
)
AMERICAN PAD & PAPER COMPANY, ) CHAPTER 11
WR ACQUISITION, INC., )
AMERICAN PAD & PAPER COMPANY )
OF DELAWARE, INC., ) CASE NOS. 00-00066 (RRM)
AP&P MANUFACTURING, INC., ) THROUGH 00-00072 (RRM)
AMERICAN PAD & PAPER SALES )
COMPANY, INC., )
AP&P FINANCING COMPANY, INC., AND ) JOINTLY ADMINISTERED UNDER
AMERICAN PAD AND PAPER ) CASE NO. 00-00066 (RRM)
FOREIGN SALES CORPORATION, )
)
DEBTORS. )
ORDER (1) APPROVING SALE PROCEDURES FOR SALE OF THE
ASSETS OF THE DEBTORS' AMPAD AND FORMS DIVISIONS;
(2) SCHEDULING DATE, TIME AND PLACE FOR AUCTION AND
FURTHER HEARING TO APPROVE SALE; AND (3) APPROVING
FORM OF NOTICE OF THE SALE PROCEDURES AND AUCTION
Upon the Motion (the "Motion")1 of American Pad & Paper Company
("AP&P") and its affiliated debtors and debtors in possession (collectively with
AP&P, the "Debtors") for entry of an order under sections 105, 363 and 365 of
title 11 of the United States Code (the "Bankruptcy Code") (i) approving certain
sale procedures (the "Sale Procedures") applicable to the submission of a bid
for the purchase of substantially all of the assets of the Debtors' AMPAD and
Forms divisions (the "Assets"), (ii) scheduling an auction (the "Auction") and a
further hearing to approve the sale of such
--------------------
(1) Capitalized terms used but not defined herein shall have the meaning
set forth in the Motion or, if not defined in the Motion, in the Asset
Purchase Agreement.
<PAGE>
assets (the "Sale Hearing"), (iii) approving the form of notice of the
Auction and the Sale Procedures and (iv) approving the form of Cure Notice;
and any objections to the Motion having been overruled; and upon
consideration by the Court; and it appearing that the Debtors have good
business justifications for requesting the sale of the Assets; and it
appearing that the relief requested in the Motion is necessary and
appropriate to assist the Debtors in their efforts to obtain the maximum
value for the Assets and is in the best interests of the Debtors and their
estates and creditors; and after due deliberation and sufficient cause
appearing therefor, it is hereby FOUND AND DETERMINED THAT:2
A. The Debtors have articulated good and sufficient reasons for
approving (i) the manner of notice of the Sale Motion, the Sale Hearing and the
assumption and assignment of the Assumed Contracts, (ii) the form of notice of
the Sale Motion and the Sale Hearing (the "Sale Notice") to be distributed to
creditors and other parties in interest, including prospective bidders, (iii)
the form of Cure Notice related to the assumption and assignment of the Assumed
Contracts to be filed with the Court and served on parties to each Assumed
Contract, (iv) the Sale Procedures and (v) the buyer protections, as described
in the Motion and the Asset Purchase Agreement.
B. The Debtors' payment or credit, as the case may be, to the Buyer
(as set forth in the Asset Purchase Agreement) of the Topping Fee and/or the
Expense Reimbursement, as applicable, is (a) an actual and necessary cost and
expense of preserving the Debtors' estates, within the meaning of section 503(b)
of the Bankruptcy Code, (b) of substantial benefit to the Debtors' estates, (c)
reasonable and appropriate, including in light of the size and nature of the
--------------------
(2) Findings of fact shall be construed as conclusions of law and
conclusions of law shall be
[Footnote continued on next page]
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<PAGE>
proposed transaction and the efforts that have been or will be expended by the
Buyer notwithstanding that the proposed sale is subject to higher and better
offers for the Assets and (d) necessary to ensure that the Buyer will continue
to pursue its proposed acquisition of the Assets. The Topping Fee and Expense
Reimbursement were a material inducement for, and condition of, the Buyer's
entry into the Asset Purchase Agreement. The Buyer is unwilling to commit to
hold open its offer to purchase the Assets under the terms of the Asset Purchase
Agreement unless it is assured payment or credit, as the case may be, of the
Topping Fee and the Expense Reimbursement. Thus, assurance to the Buyer of
payment or credit, as the case may be, of the Topping Fee or Expense
Reimbursement is designed to promote more competitive bidding by inducing the
Buyer's bid that otherwise would not have been made, and without which bidding
would have been limited. Further, because the Topping Fee and the Expense
Reimbursement induced the Buyer to research the value of the Assets and submit a
bid that will serve as a minimum bid on which other bidders can rely, the Buyer
has provided a benefit to the Debtors' estates by increasing the likelihood that
the price at which the Assets are sold will reflect their true worth. Finally,
absent authorization of the Topping Fee and the Expense Reimbursement, the
Debtors may lose the opportunity to obtain the highest and best available offer
for the Assets.
C. The bidding procedures, as described in the Motion and herein, are
reasonable and appropriate and represent the best method for maximizing the sale
price of the Assets.
NOW, THEREFORE, IT IS HEREBY:
--------------------
[Footnote continued from previous page]
construed as findings of fact when appropriate. SEE Fed. R. Bankr. P. 7052.
3
<PAGE>
ORDERED that the Auction for the sale of the Assets pursuant to the
sale procedures contained herein shall be held at 10:00 a.m. on September 13,
2000, at the offices of Richards, Layton & Finger, which are located at One
Rodney Square, Eighth Floor, Wilmington, Delaware 19899; and it is further
ORDERED that a hearing on the approval of the sale of the Assets (the
"Sale Hearing") shall be held before the Honorable Roderick R. McKelvie in the
United States District Court for the District of Delaware, 844 North King
Street, Wilmington, Delaware 19801, on September 14, 2000, at 11:00 a.m., or as
soon thereafter as counsel can be heard; and it is further
ORDERED that the following competitive bidding procedures are hereby
approved and shall be employed by any party interested in submitting a bid (a
"Competing Bid") for the Assets (a party submitting a Competing Bid is referred
to herein as a "Competing Bidder"):
a. Each party requesting information relating to the
Assets is required to (i) demonstrate to the Debtors that such
party has the financial wherewithal to make a Competing Bid
and (ii) execute a confidentiality agreement in form and
substance satisfactory to the Debtors. Upon fulfillment of the
requirements set forth in the preceding sentence, and
consistent with the requirements of section 8.4 of the Asset
Purchase Agreement, the Debtors shall take such actions
necessary to afford such parties reasonable access to
requested information on a reasonably prompt basis in a manner
that provides all such parties a fair opportunity to evaluate
information and to prepare a Competing Bid by the Bid
Deadline.
b. Each Competing Bid submitted prior to the Auction
must be made in writing and executed by an individual
authorized to bind the prospective purchaser to its terms. The
initial Competing Bid of each party must be served so that
such bids are received no later than 4:00 p.m., on September
6, 2000 (the "Bid Deadline"), upon (i) Robert Kost of Lazard
Freres & Co. LLC, 30 Rockefeller Plaza, 60th Floor, New York,
New York 10112 (facsimile number (212) 632-6060), (ii) D.J.
Baker, Esq. and Conor Reilly, Esq. of Gibson, Dunn & Crutcher
LLP, 200 Park Avenue, New York, New York 10166-0193 (facsimile
number (212) 351-4035), (iii) Nicholas J. Kaiser, Esq. of
Mandel Resnik & Kaiser P.C., 220 East 42 Street, 20th Floor,
New York, New York 10017 (facsimile number (212) 573-0067/12,
(iv) Laurie Selber Silverstein, Esq. of Potter Anderson &
Corroon LLP, Hercules Plaza, 1313 North Market Street, 6th
Floor, Wilmington, Delaware 19801 (facsimile number (302)
658-1192), (v) Richard Stern, Esq. of Luskin, Stern & Eisler
LLP, 330 Madison Avenue, New York, New
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<PAGE>
York 10017 (facsimile number (212) 293-2700) and David
Friedman, Esq. of Kasowitz, Benson, Torres & Friedman LLP,
1301 Avenue of the Americas, New York, New York 10019
(facsimile number (212) 506-1800); and the copy to Lazard
Freres & Co. must be accompanied by the Earnest Money Deposit
(as defined below).
c. Each Competing Bid must be binding, shall be for the
purchase of all or substantially all of the Assets, and shall
be on substantially the same terms and conditions (other than
as to Purchase Price) as those set forth in the Asset Purchase
Agreement, or more favorable terms.
d. The initial purchase price offered by any Competing
Bidder shall be at least the sum of the Purchase Price in the
Asset Purchase Agreement, the Topping Fee, the Expense
Reimbursement, and $250,000 (the "Initial Competing Bid
Amount").
e. The initial Competing Bid of each party shall be
accompanied by:
(i) a certified or bank check, wire transfer or
non-contingent irrevocable letter of credit payable
to Lazard Freres & Co. LLC, as the Debtors' agent,
for not less than $500,000 (the "Earnest Money
Deposit"), such funds representing a refundable
earnest money deposit to be held in escrow and
applied toward the purchase price if the Competing
Bid is accepted and the sale approved by this Court,
or returned to the Competing Bidder if the bid is not
accepted and approved by this Court. If a Competing
Bid is accepted and approved by this Court but the
closing of the sale does not occur by September 30,
2000 (other than by reason of a default by the
Debtors), the Debtors shall retain the deposit, and
such deposit shall not be applied toward the purchase
price of any future purchase;
(ii) evidence reasonably acceptable to the Debtors
demonstrating that the Competing Bidder has the
financial ability to close and consummate an
acquisition of the Assets. If financing is to be
provided by any external source(s), included with the
Competing Bid shall be a statement of the terms and
present status of all financing arrangements,
including copies of all existing commitment
agreements, if any, and the forms of all commitment
agreements anticipated to be obtained. Competing
Bidders must provide the names and telephone numbers
of the contact persons at the institutions providing
financing in connection with the Competing Bid,
inform such persons that they may be contacted by the
Debtors or their representatives and authorize such
persons to communicate with the Debtors or their
representatives regarding the Competing Bid;
(iii) the name and telephone number(s) of a contact person
who will be available to answer questions regarding
the Competing Bid, as well as the names and telephone
numbers of any financial and legal advisors retained
by the Competing Bidder, as applicable;
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<PAGE>
(iv) a statement that the Competing Bidder has received
all necessary corporate governance approvals. Any
material conditions to closing must be clearly
described and detailed in the Competing Bid,
including identifying any consents and approvals that
the Competing Bidder views as essential to completing
the transaction. Competing Bidders should also
acknowledge that the Debtors believe that time is of
the essence. The scope of any representations,
warranties, covenants and any conditions to closing
deemed to be material to the Debtors in their sole
and exclusive discretion may cause the Debtors to
discount the value of a Competing Bid; and
(v) such other information as reasonably may be requested
by the Debtors.
f. Only those Competing Bids that meet all of the
requirements of paragraphs b through e above shall constitute
"Qualified Competing Bids," and only parties submitting
Qualified Competing Bids shall be entitled to participate in
the Auction.
g. During the Auction, any bid after the Initial
Competing Bid Amount for the Assets shall be in increments
of at least $500,000 in excess of the last bid (the "Minimum
Incremental Bid Amount"); provided that, in its bid, Buyer
shall be credited with the amount of the Topping Fee and the
Expense Reimbursement. All parties desiring to participate
in the Auction shall be present through representatives who
are authorized to make binding bids on behalf of the
prospective purchaser. In addition, only Competing Bids made
in compliance with the terms set forth herein shall be
considered at the Auction.
h. At the Sale Hearing, the Debtors, after consultation
with their prepetition and postpetition bank lenders and the
Committee, shall present to the Court their recommendation on
the highest and best bid. The Court, in its discretion, may
then approve the highest and best bid for the Assets.
i. If a bid is approved by this Court, but such bid does
not result in the sale of the Assets by September 30, 2000,
other than because of a default by the Debtors, the Debtors
may close upon the second highest offer as determined by the
Debtors, with the written consent of their prepetition and
postpetition bank lenders, and such closing shall require no
further order of the Court.
j. If no Qualified Competing Bids are received, the
Debtors will not conduct the Auction, and the Court, in its
discretion, will decide whether to approve the sale to the
Buyer under the terms of the Asset Purchase Agreement; and
it is further
ORDERED that the Topping Fee and the Expense Reimbursement, as more
fully described in the following paragraph and the Asset Purchase Agreement, are
hereby approved.
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<PAGE>
The Topping Fee and Expense Reimbursement shall constitute superpriority
administrative expense claims in the bankruptcy case of each of the Debtors
under sections 503(a) and 507(a)(1) of the Bankruptcy Code, senior to all
other superpriority claims, and shall be paid in accordance with the Asset
Purchase Agreement without further order of the Court; and it is further
ORDERED that the Topping Fee and Expense Reimbursement shall be payable
from the proceeds of the Closing of the sale of the Assets before any other
expenses or claims are paid, regardless of priority, on the following terms: (a)
the Sellers will pay the Topping Fee, in the amount of $2,013,450, to the Buyer
if (i) the Buyer has delivered a Financing Commitment to the Sellers, (ii) the
Buyer has not materially breached the Asset Purchase Agreement and (iii) the
Assets, or any material portion thereof, are sold to another bidder; and (b) the
Sellers will pay the Expense Reimbursement, in the amount of up to $1,500,000
for the Buyer's out-of-pocket costs and expenses (including reasonable,
documented legal, accounting, and other consultant fees and expenses) incurred
in connection with the proposed transaction, if (i) the Buyer has delivered a
Financing Commitment to the Sellers and (ii) the Asset Purchase Agreement is
terminated by the Buyer for certain reasons enumerated in section 8.1(b) of the
Asset Purchase Agreement (the "Triggering Events"), including, but not limited
to, the sale of the Assets, or any material portion thereof, to another
purchaser (PROVIDED, HOWEVER, that the Expense Reimbursement shall not be
payable on account of any Triggering Event that occurs after the Closing or
while Buyer is in breach of the Asset Purchase Agreement).
ORDERED that the form of notice attached to the Motion as Exhibit C
(the "Notice") is reasonable and adequate notice of the Sale Procedures and the
Auction and is hereby approved; and it is further
7
<PAGE>
ORDERED that the form of notice attached to the Motion as Exhibit D
(the "Cure Notice") is reasonable and adequate notice of the assumption and
assignment and cure amount related to each Assumed Contract and is hereby
approved; and it is further
ORDERED that the terms of this Order are without prejudice to the
rights of any appropriate party to object at the Sale Hearing; and it is further
ORDERED that objections, if any, to the relief requested at the Sale
Hearing must (i) be in writing; (ii) conform to the requirements of the
Bankruptcy Code, the Federal Rules of Bankruptcy Procedure and the Local Rules
of the United States Bankruptcy Court for the District of Delaware; (iii) set
forth the name of the objector and the nature and amount of any claims against
or interests in the applicable Debtor(s); (iv) state with particularity the
legal and factual basis for the objection and the specific grounds therefor; and
(v) be filed with the Court by 4:30 p.m., on September 6, 2000 (the "Objection
Deadline"), and served so that such objections are RECEIVED no later than such
date and time upon D.J. Baker, Esq., Esq. of Gibson, Dunn & Crutcher LLP, 200
Park Avenue, New York, New York 10166; Michael A. Rosenthal, Esq. of Gibson,
Dunn & Crutcher LLP, 2100 McKinney Avenue, Dallas, Texas 75201; David Friedman,
Esq. of Kasowitz, Benson, Torres & Friedman, 1301 Avenue of the Americas, New
York, New York 10019; Richard Stern, Esq. of Luskin, Stern & Eisler, LLP, 330
Madison Avenue, New York, New York 10017; Nicholas J. Kaiser, Esq., Mandel
Resnik & Kaiser P.C., 220 East 42 Street, New York, New York 10017; Laurie
Selber Silverstein, Potter Anderson & Corroon LLP, 1313 North Market Street, 6th
Floor, Wilmington, Delaware 19801; and Maria Giannirakis, Esq. of the Office of
the United States Trustee, Curtis Center, 601 Walnut Street, Suite 950 West,
Philadelphia, PA 19106; and it is further
8
<PAGE>
ORDERED that the failure of any person or entity that has received
notice of the Sale Motion to file objections thereto on a timely basis shall be
a bar to the assertion of any objection to the Debtors' consummation and
performance of the Asset Purchase Agreement (including the transfer of the
Assets and Assumed Contracts free and clear of all claims, liens, encumbrances
and interests) if approved by this Court by such person or entity at the Sale
Hearing or thereafter; and it is further
ORDERED that notice of the relief requested at the Sale Hearing, as
provided below, shall be deemed good and sufficient notice thereof, and any
requirements for other notice shall be, and hereby are, waived and dispensed
with pursuant to rules 2002, 6004, 6006 and 9007 of the Federal Rules of
Bankruptcy Procedure and section 102 of the Bankruptcy Code and pursuant to this
Court's powers under section 105 of the Bankruptcy Code:
a. On or before August 21, 2000, the Debtors shall serve by
regular U.S. mail a copy of this Order upon the Office of the
United States Trustee, the agents for the Debtors' bank
lenders and the agent's counsel, counsel for the official
committee of unsecured creditors, parties in interest that
have requested notice pursuant to Rule 2002 of the Federal
Rules of Bankruptcy Procedure, counsel to the Buyer, all
appropriate regulatory agencies, all entities known to the
Debtors to have expressed a BONA FIDE interest (in the
Debtors' business judgment) in a transaction with respect to
the Assets during the past six months, and all entities known
to have asserted a claim against, an interest in, a lien
against or encumbrance on the Assets, all parties to any
executory contract or unexpired lease then designated as an
Assumed Contract, the United States Attorney's Office, the
Securities and Exchange Commission, the Internal Revenue
Service;
b. No later than August 25, 2000, the Debtors shall cause the
Notice to be published in the national edition of THE WALL
STREET JOURNAL; and
c. No later than seven (7) days prior to the Sale Hearing, the
Debtors shall file with the Court and serve the Cure Notice on
all non-Debtor parties to the Assumed Contracts by expedited
mail delivery, federal express or other overnight courier or
facsimile, which notice shall identify (i) each such Assumed
Contract and (ii) the cure necessary to assume the Assumed
Contract (the "Cure"). Objections, if any, to the proposed
assumption and assignment or the Cure related to an Assumed
Contract shall be filed and served so as to be received no
later than two (2) days prior to the Sale Hearing. Any such
objection must state with specificity what Cure is required
(with appropriate documentation in support thereof). If no
9
<PAGE>
objection is timely received, the Assumed Contract shall be
deemed assumed and assigned to the Buyer on the Closing Date
and the Cure set forth in the Cure Notice shall be
controlling, notwithstanding anything to the contrary in any
Assumed Contract or any other document, and the non-Debtor
party to the Assumed Contract shall be forever barred from
asserting any other claims against the Buyer or the Assets, as
to such Assumed Contract; and it is further
ORDERED that the Sale Hearing may be adjourned from time to time
without further notice to creditors or parties in interest other than by
announcement of the adjournment in open court or on the Court's calendar on
the date scheduled for the Sale Hearing or any adjourned date; and it is
further
ORDERED that the provisions of the Asset Purchase Agreement shall
not be applied in a manner contrary to the terms of this Order.
Dated: Wilmington, Delaware
August ___, 2000
----------------------------
RODERICK R. McKELVIE
UNITED STATES DISTRICT JUDGE
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EXHIBIT G
FORM OF SALE ORDER
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
IN RE )
)
AMERICAN PAD & PAPER COMPANY, ) CHAPTER 11
WR ACQUISITION, INC., )
AMERICAN PAD & PAPER COMPANY )
OF DELAWARE, INC., ) CASE NOS. 00-00066 (RRM)
AP&P MANUFACTURING, INC., ) THROUGH 00-00072 (RRM)
AMERICAN PAD & PAPER SALES )
COMPANY, INC., )
AP&P FINANCING COMPANY, INC., AND ) JOINTLY ADMINISTERED UNDER
AMERICAN PAD AND PAPER ) CASE NO. 00-00066 (RRM)
FOREIGN SALES CORPORATION, )
)
DEBTORS. )
ORDER UNDER 11 U.S.C. SECTIONS 105, 363, 365 AND 1146 APPROVING
(i) ASSET PURCHASE AGREEMENT WITH PAD AND PAPER OF
AMERICA LLC, AND (ii) SALE OF AMPAD AND FORMS ASSETS
FREE AND CLEAR OF ALL LIENS, CLAIMS, INTERESTS AND
ENCUMBRANCES AND ASSUMPTION AND ASSIGNMENT OF
CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES
This matter having come on for hearing (the "Sale Hearing") on the
14th and 18th days of September, 2000, upon the motion, filed August 16, 2000
(the "Sale Motion"), of American Pad & Paper Company ("AP&P") and its
affiliated debtors and debtors-in-possession (the "Debtors"), for an order
under sections 105, 363, 365 and 1146 of title 11 of the United States Code
(the "Bankruptcy Code") authorizing, INTER ALIA, the sale of certain of the
Debtors' assets related to the Debtors' AMPAD and Forms divisions (the
"Acquired Assets") free and clear of (a) all mortgages, security interests,
conditional sale or other title retention agreements, pledges, liens,
judgments, demands, encumbrances, easements, restrictions or charges of any
kind or nature, if any, including, but not limited to, any restriction on the
use, voting, transfer, receipt of income or
<PAGE>
other exercise of any attributes of ownership including all "interests" in the
Acquired Assets within the meaning of section 363(f) of the Bankruptcy Code
(the foregoing collectively referred to herein as "Liens") and (b) all debts
arising in any way in connection with any acts or omissions of any of the
Sellers (as defined herein), claims (as that term is defined in section 101(5)
of the Bankruptcy Code) against the Sellers (as defined herein) arising on or
prior to the date of the closing of the sale under the Asset Purchase
Agreement and obligations, demands, guaranties, options, rights, contractual
commitments, restrictions, interests and matters of or against the Sellers (as
defined herein) of any kind and nature, whether arising prior to or subsequent
to the commencement of these cases, whether matured or unmatured, liquidated
or unliquidated, whether known or unknown and whether imposed by agreement,
understanding, law, equity or otherwise, including, but not limited to, those
of the kind specified in sections 502(g), 502(h) and 502(i) of the Bankruptcy
Code (the foregoing collectively referred to herein as "Claims") and the
assumption and assignment of certain contracts (the "Assumed Contracts") to
Pad and Paper of America LLC, an affiliate of American Tissue Inc., or its
designee (the "Buyer") pursuant to the terms of an Asset Purchase Agreement,
dated August 2, 2000, among certain of the Debtors and Buyer, as amended by
amendments dated as of August 14, 2000 and September 18, 2000 (as so amended,
the "Asset Purchase Agreement");1 and
This Court having entered an order, dated August 17, 2000, scheduling
the Sale Hearing with respect to the sale of the Acquired Assets, prescribing
the form and manner of notice thereof and approving bidding procedures and bid
protections related to the sale (the "Sale Procedures Order"); and
---------------------
(1) Unless otherwise defined herein, capitalized terms shall have the meaning
set forth in the Sale Motion or, if not defined therein, in the Asset
Purchase Agreement.
2
<PAGE>
This Court having reviewed the pleadings, afforded all parties a
reasonable opportunity to bid and heard such representations of counsel,
arguments, evidence and objections as were appropriate under the circumstances,
NOW, THEREFORE, based upon all of the evidence, including evidence
proffered or adduced at the Sale Hearing, memoranda, objections and
representations and argument of counsel in connection with the Sale Hearing,
and upon the entire record of the Sale Hearing and of the Debtors' chapter 11
cases, and after due deliberation thereon, and good cause appearing therefor,
IT IS HEREBY FOUND, CONCLUDED AND DETERMINED THAT:
A. The findings and conclusions set forth herein constitute the
Court's findings of fact and conclusions of law pursuant to rule 7052 of the
Federal Rules of Bankruptcy Procedures (the "Bankruptcy Rules"), made
applicable to this proceeding pursuant to rule 9014 of the Bankruptcy Rules.
To the extent that any finding of fact shall later be determined to be a
conclusion of law it shall be so deemed and vice versa.
B. This Court has jurisdiction to hear and determine the Sale Motion
pursuant to 28 U.S.C. Sections 157 and 1134.
C. Venue of this case in this district is proper pursuant to 28
U.S.C. Section l408(a) and venue of this proceeding is proper pursuant to 28
U.S.C. Section 1409(a).
D. Determination of the Sale Motion is a core proceeding under 28
U.S.C. Sections 157(b) (2) (A) and (N). The statutory predicates for the
relief requested herein are sections 105, 363, 365 and 1146 of the Bankruptcy
Code and rules 2002, 6004, 6006, 9104 and 9019 of the Bankruptcy Rules.
3
<PAGE>
E. The Debtors have followed the procedures for notice of the Sale
Motion and the Sale Hearing set forth in the Sale Procedures Order, which
procedures were fair and reasonable to provide notice of the Sale Motion and
the Sale Hearing to all creditors and other parties in interest and to provide
interested bidders with notice of the Sale Motion and Sale Hearing and an
opportunity to bid for the Acquired Assets.
F. Proper, timely, adequate and sufficient notice of the Sale Motion,
the Auction, the Sale Hearing, the sale and the assumption and assignment of
the Assumed Contracts has been provided in accordance with all applicable law,
including without limitation, section 102(1) of the Bankruptcy Code and rules
2002, 6004, 6006, 9014 and 9019 of the Bankruptcy Rules and the Sale
Procedures Order, and no other or further notice of the Sale Motion, the Sale
Hearing, the assumption and assignment of the Assumed Contracts, or of the
entry of this Sale Order is required. The marketing efforts, advertising and
solicitations conducted in connection with the sale of the Acquired Assets
were appropriate and reasonable to obtain the highest and best price for the
Acquired Assets and in compliance with the Sale Procedures Order.
G. A reasonable opportunity to bid, to object and to be heard
regarding the relief requested in the Sale Motion has been afforded to all
creditors, parties in interest and other entities, including, but not limited
to, (a) the Office of the United States Trustee, (b) the committee of
unsecured creditors appointed in the Debtors' chapter 11 cases, (c) the
Debtors' bank lenders (the "Committee"), (d) each party in interest that has
requested notice under rule 2002 of the Bankruptcy Rules, (e) counsel to
American Tissue, (f) all appropriate regulatory agencies, (g) all entities
known to the Debtors to have expressed a BONA FIDE interest (in the Debtors'
business judgment) in a transaction with respect to the Acquired Assets during
the last six months, (h) all entities known to have asserted a Claim against,
or a Lien on, the Acquired
4
<PAGE>
Assets, (i) all parties to Assumed Contracts, (j) all federal, state and local
taxing authorities or recording offices which have a known interest in the
relief requested in the Motion; (k) the United States Attorney's office; (l)
the Securities and Exchange Commission and (m) the Internal Revenue Service.
H. Objections to the Motion were filed by the following: (i) Credit
Agricole Indosuez ("Credit Agricole"); (ii) Bankers Trust Company; (iii)
International Paper Company; (iv) Georgia-Pacific Corporation; (v) City of
Dallas, Dallas County, Corsicana ISD and Navarro County (the "Texas Taxing
Authorities"); (vi) Salt Lake County; (vii) City of Holyoke Gas & Electric
Department ("HGED"); and (viii) City of Holyoke (together with the Texas
Taxing Authorities, Salt Lake County and HGED, the "Tax Collectors").
I. No bids for the Acquired Assets were received in connection with
the Auction.
J. The Buyer has adequately demonstrated its financial wherewithal to
pay the Purchase Price and its commitment to close the transactions
contemplated by the Asset Purchase Agreement.
K. The highest and best price for the Acquired Assets is represented
by the Purchase Price under the Asset Purchase Agreement and it is therefore
in the best interest of the Debtors, their respective creditors, and their
respective estates that the Court enter this order (the "Sale Order")
authorizing and directing, under sections 105, 363, 365 and 1146 of the
Bankruptcy Code, (1) the Debtors who are party to the Asset Purchase Agreement
(the "Sellers") to enter into and comply with the terms and conditions of the
Asset Purchase Agreement; (2) the sale of the Acquired Assets to the Buyer,
free and clear of all Liens and Claims, except as permitted by the Asset
Purchase Agreement; and (3) Sellers, subject to payment of the Cure Amounts by
Buyer,
5
<PAGE>
to assume and assign to the Buyer, or its designees, the Assumed Contracts
described in the Asset Purchase Agreement.
L. Upon the issuance of this Sale Order and consent of the DIP
Lenders (1) each of the Sellers has full corporate power and authority, and is
directed forthwith, to execute and deliver the Asset Purchase Agreement and
all other documents contemplated thereby, including, without limitation, all
documents necessary to assign the Assumed Contracts, and the sale of the
Acquired Assets to the Buyer by the Sellers shall be deemed to have been duly
and validly authorized by all necessary corporate action of the Sellers; (2)
each of the Sellers has all the corporate power and authority necessary to
consummate the transactions contemplated by the Asset Purchase Agreement; and
(3) other than those consents expressly provided for in the Asset Purchase
Agreement, no consents, approvals or orders are required for the Sellers to
consummate the transactions contemplated by the Asset Purchase Agreement.
M. Approval of the Asset Purchase Agreement and consummation of the
sale of the Acquired Assets at this time are in the best interests of each of
the Debtors, their respective creditors, and their respective estates. The
Debtors intend to propose a plan or plans of reorganization under chapter 11
of the Bankruptcy Code. However, they have presented good and sufficient
business justification for the sale of the Acquired Assets and the assumption
and assignment of the Assumed Contracts pursuant to sections 363 and 365 of
the Bankruptcy Code in advance of, and in contemplation of, the confirmation
of such plan or plans of reorganization, in that, among other things:
(1) An expeditious sale of the Acquired Assets in accordance with the
procedures followed by the Debtors will enable the estates to realize
the highest possible price for the Acquired Assets, and in the absence
of a prompt sale the value of the Acquired Assets will likely decline
precipitously in value due to
6
<PAGE>
deteriorating market conditions, inadequate liquidity for necessary
operating and capital expenditures, and uncertainty about the future of
the Debtors' businesses; and
(2) Claims against the Debtors' estates will be minimized as a result
of the prompt consummation of a sale of the Acquired Assets and the
assumption of certain liabilities by American Tissue under the Asset
Purchase Agreement and the concomitant assumption and assignment of the
Assumed Contracts to American Tissue.
N. The sale of the Acquired Assets to Buyer is a prerequisite to the
Debtors' ability to confirm and consummate a plan or plans of reorganization
or liquidation. The sale of the Acquired Assets is a sale in contemplation of
a plan and, accordingly, a transfer pursuant to section 1146(c) of the
Bankruptcy Code, which shall not be taxed under any law imposing a stamp tax
or a sale, transfer or any other similar tax.
O. The Asset Purchase Agreement represents the highest and best offer
for the Acquired Assets and the Purchase Price thereunder is fair and
reasonable and constitutes fair consideration and reasonably equivalent value
under the Bankruptcy Code and applicable state law.
P. As a condition to the purchase of the Acquired Assets by the
Buyer, the Buyer requires that the Acquired Assets be sold free and clear of
all Liens and Claims (except those specifically assumed by American Tissue or
otherwise permitted under the Asset Purchase Agreement), and that American
Tissue has no liability for any liabilities of the Debtors (except those
specifically assumed by American Tissue or otherwise permitted under the Asset
Purchase Agreement). American Tissue would not enter into and consummate the
sale, thus adversely affecting the Debtors' estates and their respective
creditors and interfering with the Debtors' reorganization efforts, if the
sale of the Acquired Assets to American Tissue were not free and clear of all
Liens and Claims against and in the Debtors and the Acquired Assets, other
than as
7
<PAGE>
specifically provided in the Asset Purchase Agreement, or if American Tissue
were or would be liable for liabilities of the Debtors other than as
specifically assumed by American Tissue or otherwise permitted under the Asset
Purchase Agreement.
Q. The assumption and assignment to American Tissue of the Assumed
Contracts, pursuant to section 365 of the Bankruptcy Code, is in the best
interest of each of the Debtors and its creditors and estate, and represents a
prudent exercise of each Debtor's business judgment. The cure amounts (the
"Cure Amounts") to be paid by the Debtors with respect to certain of the
Assumed Contracts, listed on Exhibit A hereto, as to which the Debtors gave
notice of proposed cure amounts more than seven days prior to the Sale
Hearings, are hereby established in the amounts set forth on Exhibit A. The
Cure Amounts for the Assumed Contracts not listed on Exhibit A will be
determined by this Court at a separate hearing to be held on the 25th day of
September, 2000 at 3:00 p.m. ("the Cure Hearing"). The Cure Amounts will be
the sole amounts necessary to cure all defaults, if any, and to pay all actual
or pecuniary losses that have resulted from such defaults, under the Assumed
Contracts. The Buyer has provided adequate assurance of the Buyer's future
performance under the Assumed Contracts within the meaning of sections 365(b)
(1) (C) and (f) (2) (B) of the Bankruptcy Code.
R. The Net Proceeds (as defined below) from the sale of the Acquired
Assets shall be paid in accordance with the DIP Order (as defined below) and
after the DIP Obligations (as defined below) are paid in full, shall be paid
in reduction of the Debtors' obligations to the Prepetition Lenders (as
defined below) and, as provided herein, to the Tax Collectors.
S. The Asset Purchase Agreement has been proposed by American Tissue
in good faith in accordance with the standards of applicable law and IN RE
ABBOTTS DAIRIES OF PENNSYLVANIA, INC., 788 F.2d 143 (3d Cir. 1986). American
Tissue is not affiliated with any of
8
<PAGE>
the Debtors. American Tissue is a good faith purchaser under section 363(m) of
the Bankruptcy Code and, as such, is entitled to the protections afforded
thereby. No party has engaged in any conduct that would cause or permit the
Asset Purchase Agreement to be avoided under section 363(n) of the Bankruptcy
Code.
T. In the absence of a stay of this Sale Order, the Buyer will be
acting in good faith within the meaning of section 363(m) of the Bankruptcy
Code in consummating the transactions contemplated by the Asset Purchase
Agreement, including the assumption by the Debtors and assignment to American
Tissue of the Assumed Contracts, at any time after the entry of this Sale
Order.
U. The sale and transfer of the Acquired Assets and the assignment of
the Assumed Contracts contemplated by the Asset Purchase Agreement (1) are or
will be legal, valid and effective transfers of property of the Debtors'
estates to American Tissue, and (2) vest or will vest American Tissue with all
right, title and interest of the Debtors in and to the Acquired Assets and
Assumed Contracts free and clear of all Liens and Claims under sections 363(f)
and 105 of the Bankruptcy Code, other than as specifically provided in the
Asset Purchase Agreement.
V. The term "Acquired Assets" in the Asset Purchase Agreement and in
this Order shall not include any accounts receivable sold by the Debtors
pursuant to that certain Receivable Purchase Agreement among the Debtor and
Notepad Funding Corporation dated as of May 29, 1996.
W. American Tissue will sustain irreparable damage and harm unless
the injunctions specified in the ordering paragraphs below are entered. All
the elements necessary for the imposition of these injunctions have been
established.
9
<PAGE>
X. All of the provisions of this Sale Order are nonseverable and
mutually dependent.
NOW THEREFORE, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED THAT:
1. The Sale Motion is approved.
2. All objections to the Sale Motion or the relief requested therein
that have not been withdrawn, waived, or settled, and all reservations of
rights included therein, are overruled on the merits.
3. The terms and conditions of the Asset Purchase Agreement are
hereby approved in all respects. Pursuant to the provisions of sections 105,
363 and 365 of the Bankruptcy Code, the Debtors are hereby authorized and
directed to consummate the sale transaction pursuant to and in accordance with
the terms and conditions of the Asset Purchase Agreement. No further consent,
approval or order is required for the sale of the Acquired Assets or the
assumption and assignment of the Assumed Contracts, except as specified in the
Asset Purchase Agreement.
4. By the issuance of this Order, each of the Sellers is authorized
and directed to execute and deliver, and empowered and directed fully to
perform under, consummate and implement, the Asset Purchase Agreement,
together with all additional instruments and documents that may be reasonably
necessary or desirable to implement the Asset Purchase Agreement, and to take
all further actions as may reasonably be requested by American Tissue for the
purpose of assigning, transferring, granting, conveying and conferring to
American Tissue or its designees, or reducing to American Tissue or its
designees' possession, any or all of the Acquired Assets, or as otherwise may
be necessary or appropriate to the performance of the obligations as
contemplated by the Asset Purchase Agreement.
10
<PAGE>
5. Pursuant to sections 105(a) and 363(f) of the Bankruptcy Code,
the Acquired Assets shall be transferred to American Tissue upon and
effective as of the Closing (and receipt by the Debtors of the Purchase
Price) and, except as specifically specified in the Asset Purchase Agreement,
shall be free and clear of all Liens and Claims. All such Liens and Claims
(including, without limitation, Liens and Claims in respect of the DIP
Obligations and the Prepetition Obligations (as such terms are defined
below)) shall be released, terminated and discharged as to the Acquired
Assets and shall attach to the proceeds of the sale paid by the Buyer in the
order of their priority, with the same validity, force and effect they now
have as against the Acquired Assets. Notwithstanding the foregoing, the
Debtors may pay out of the Purchase Price (i) reasonable, usual, customary
and necessary costs of closing the sale of the Acquired Assets and (ii) any
amounts due to the Buyer under section 2.3 of the Asset Purchase Agreement.
Notwithstanding the foregoing, in the event that there is an amount owed to
Buyer under Section 2.3(f) of the Asset Purchase Agreement, then such amount
shall be remitted to the Debtors, for payment to the Buyer in accordance with
the Asset Purchase Agreement, first by the Prepetition Agent (to the extent
that the Prepetition Agent received Net Proceeds) and second by the DIP Agent
(to the extent that the DIP Agent received the Net Proceeds). Further,
notwithstanding anything set forth in this Sale Order to the contrary, the
Liens and Claims of the Texas Taxing Authorities shall be preserved against
the Acquired Assets to the extent of their current validity, extent and
priority and only to the extent necessary to secure the pro-rated
post-closing taxes against the Acquired Assets assumed by the Buyer.
6. With the exception of any liabilities specifically assumed under
the Asset Purchase Agreement, all persons and entities, including, but not
limited to, all debt securityholders, equity securityholders, governmental,
tax and regulatory authorities, lenders,
11
<PAGE>
trade and other creditors, holding Liens or Claims of any kind and nature
against any or in of the Debtors or with respect to the Acquired Assets,
arising under or out of or in connection with or in any way relating to the
Debtors, the Acquired Assets, the operations of the Debtors' businesses prior
to the Closing or the transfer of the Acquired Assets to Buyer, are hereby
barred, estopped and permanently enjoined from asserting such Liens and
Claims against the Acquired Assets or the Buyer or any of its property, its
successors, designees or assigns, or their respective affiliates,
shareholders, members, officers, directors or trustees or any of their
respective property.
7. Each of the Sellers is hereby authorized and directed in
accordance with section 365 of the Bankruptcy Code to (a) assume and assign
to the Buyer, effective upon the Closing, each of the Assumed Contracts
pursuant to the provisions of section 365 of the Bankruptcy Code, in each
case free and clear of all Claims and Liens, and (b) execute and deliver to
American Tissue such documents or other instruments as may be necessary to
assign and transfer the Assumed Contracts to American Tissue.
8. The Cure Amount of each Assumed Contract is, effective upon the
Closing, an Assumed Liability. Buyer shall promptly pay all Cure Amounts as
required under section 365 of the Bankruptcy Code and Buyer shall have no
liability or obligation arising or accruing prior to the date of the Closing
under the Assumed Contracts, other than the Cure Amounts. Other than with
respect to payment of the Cure Amount, if any, each non-Debtor party to an
Assumed Contract shall be, and hereby is, barred, estopped and permanently
enjoined from asserting against the Buyer, its property or the Acquired
Assets, any default thereon which arose or accrued prior to the Closing Date
or seeking to enforce or collect any money on account of any default thereon
which arose or accrued prior to the Closing, whether by way of affirmative
claim, counterclaim, defense, setoff or otherwise. The assumption and
assignment to American Tissue,
12
<PAGE>
or its designees, of the Assumed Contracts, as provided in the Asset Purchase
Agreement, constitutes adequate assurance of future performance thereunder
consistent with section 365 of the Bankruptcy Code.
9. The Assumed Contracts shall, upon assignment to the Buyer, be
valid, binding and in full force and effect and enforceable by the Buyer in
accordance with their respective terms, notwithstanding any provision of any
Assumed Contract (including those of the type described in sections 365(b)(2)
and (f) of the Bankruptcy Code) that prohibits, restricts or conditions such
transfer and, pursuant to section 365(k) of the Bankruptcy Code, the Debtors
shall be relieved from any further liability with respect to the Assumed
Contracts after such assignment, and each non-Debtor party to such Assumed
Contract shall be, and hereby is, barred, estopped and permanently enjoined
from asserting any prior default thereon or seeking to enforce or collect any
portion of the Cure Amount, if any, against the Sellers.
10. Upon the Closing Date and after the receipt of the Purchase
Price, except as set forth in paragraph 5, all Liens or Claims against the
Acquired Assets shall, without the necessity of further action on the part of
any creditor, be deemed released and discharged. On the Closing Date, the
creditors of each of the Debtors, including the DIP Lenders and the
Prepetition Lenders, are authorized and directed to execute such documents
and take all other actions as may be necessary to document the release of
their Liens on or Claims against the Acquired Assets, if any, as such Liens
or Claims may have been recorded or may otherwise exist.
11. This Sale Order (a) is and shall be effective as a determination
that, on the Closing Date and except as specially provided in the Asset
Purchase Agreement and paragraph 5 of this Sale Order, all Liens and Claims
existing on the Acquired Assets before the Closing have been unconditionally
released, discharged and terminated, and that the conveyances described
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herein have been effected, and (b) is and shall be binding upon and govern
the acts of all entities including without limitation, all filing agents,
filing officers, title agents, title companies, recorders of mortgages,
recorders of deeds, registrars of deeds, administrative agencies,
governmental departments, secretaries of state, federal, state, and local
officials, and all other persons and entities who may be required by
operation of law, the duties of their office, or contract, to accept, file,
register or otherwise record or release any documents or instruments, or who
may be required to report or insure any title or state of title in or to any
of the Acquired Assets.
12. Each and every federal, state and local governmental agency or
department hereby is directed to accept any and all documents and instruments
necessary and appropriate to consummate the transactions contemplated by the
Asset Purchase Agreement.
13. If any person or entity (other than the DIP Lenders and the
Prepetition Lenders) that has filed financing statements, mortgages,
mechanics liens, LIS PENDENS or other documents or agreements evidencing
Liens or Claims against or in the Acquired Assets shall not have delivered to
the Sellers prior to the Closing, in proper form for filing and executed by
the appropriate parties, termination statements, instruments of satisfaction,
or releases of all Liens or other interests which the person or entity has
with respect to the Acquired Assets or otherwise, each Seller is hereby
authorized and directed to execute and file such statements, instruments,
releases and other documents on behalf of the person or entity with respect
to the Acquired Assets, and Buyer is hereby authorized to file, register or
otherwise record a certified copy of this Sale Order, which, once filed,
registered or otherwise recorded, shall constitute evidence of the release of
all Liens or Claims against or in the Acquired Assets of any kind or nature
whatsoever.
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14. All entities who are presently, or on the Closing Date may be,
in possession of some or all of the Acquired Assets are hereby directed to
surrender possession of said Acquired Assets to American Tissue on the
Closing Date.
15. Except as otherwise expressly provided in the Asset Purchase
Agreement, the Guaranty and related instruments or as otherwise provided in
this Sale Order, American Tissue shall have no liability or responsibility
for any liability or other obligation of the Sellers arising under or related
to the Acquired Assets other than for the Purchase Price. Without limiting
the effect of the foregoing, the transfer of the Acquired Assets and the
assignment of the Assumed Contracts do not and will not subject American
Tissue to any liability for claims against any Seller or the Acquired Assets,
including, but not limited to, claims for successor or vicarious liability,
by reason of such transfer under the laws of the United States, any state,
territory or possession thereof or the District of Columbia applicable to
such transactions. American Tissue shall not be deemed, as a result of any
action taken in connection with the Asset Purchase Agreement, to: (a) be the
successor of any of the Debtors; (b) have, DE FACTO or otherwise, merged with
or into any of the Debtors; (c) be a mere continuation or substantial
continuation of any of the Debtors or the enterprise of any of the Debtors;
or (d) be responsible for any liability of any of the Debtors or for payment
of any benefit accruing to any of the Debtors, except as specifically
provided for in the Asset Purchase Agreement.
16. This Court retains jurisdiction (a) to enforce and implement the
terms and provisions of the Asset Purchase Agreement, all amendments thereto,
any waivers and consents thereunder, and each of the agreements executed in
connection therewith, (b) to compel delivery of the Acquired Assets to
American Tissue, (c) to enforce the assumption and assignment of the Assumed
Contracts, (d) to resolve any disputes arising under or related to the Asset
Purchase
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Agreement, (e) to interpret, implement and enforce the provisions of this
Sale Order and (f) to protect American Tissue against any Claims and Liens
against the Sellers or the Acquired Assets.
17. Nothing contained in any plan of reorganization (or liquidation)
confirmed in these cases or the order of confirmation confirming any plan of
reorganization (or liquidation), nor any order dismissing any case or
converting it to a chapter 7 liquidation shall conflict with or derogate from
the provisions of the Asset Purchase Agreement, any document or instrument
executed in connection therewith, or the terms of this Sale Order.
18. American Tissue is a purchaser of the Acquired Assets in good
faith as determined in accordance with applicable law, including without
limitation, IN RE ABBOTS DAIRIES OF PENNSYLVANIA, INC., 788 F.2d 143 (3d Cir.
1986), and is entitled to all of the protections afforded by section 363(m)
of the Bankruptcy Code.
19. In the absence of a stay of this Sale Order, if American Tissue
elects to close under the Asset Purchase Agreement at any time after entry of
this Sale Order, then, with respect to the Asset Purchase Agreement,
including the assumption and assignment of the Assumed Contracts approved and
authorized herein, American Tissue shall be entitled to the protections of
section 363(m) of the Bankruptcy Code if this Sale Order or an authorization
contained herein is reversed or modified on appeal.
20. Except as expressly provided herein, the terms and provisions of
the Asset Purchase Agreement, together with the terms and provisions of this
Sale Order, shall be binding in all respects upon, and shall inure to the
benefit of, each of the Debtors, its estate and its creditors, and American
Tissue, and their respective affiliates, successors and assigns, and any
affected third parties including, but not limited to, all non-Debtor parties
to the Assumed
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<PAGE>
Contracts to be assigned to American Tissue pursuant to the Asset Purchase
Agreement and persons asserting a claim against or interest in any Debtor's
estate or any of the Acquired Assets to be sold to American Tissue pursuant
to the Asset Purchase Agreement, notwithstanding any subsequent appointment
of any trustee for a Debtor under any chapter of the Bankruptcy Code, as to
which trustee such terms and provisions likewise shall be binding in all
respects.
21. The allocation of the Purchase Price, as set forth in section
3.9 of the Asset Purchase Agreement, shall be binding only upon the Debtors
and the Buyer and shall not be binding upon any other party.
22. The failure specifically to include any particular provisions of
the Asset Purchase Agreement or any of the documents, agreements or
instruments executed in connection therewith in this Sale Order shall not
diminish or impair the efficacy of such provision, document, agreement or
instrument, it being the intent of the Court that the Asset Purchase
Agreement and each such document, agreement or instrument be authorized and
approved in its entirety.
23. The Asset Purchase Agreement and any related agreements,
documents or other instruments may be modified, amended or supplemented by
the parties thereto in accordance with the terms thereof without further
order of the Court, provided that any such modification, amendment or
supplement does not have a material adverse effect on the Debtors' estates
and provided further that the Agent for the DIP Lenders (as defined below)
agrees in writing to any such modification, amendment or supplement.
24. The transfer of the Acquired Assets pursuant to the Asset
Purchase Agreement is a transfer pursuant to 11 U.S.C. Section 1146(c) and,
accordingly, shall not be taxed under any law imposing a stamp tax or a sale,
transfer or any other similar tax.
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25. Pursuant to Bankruptcy Rules 6004(g) and 7062, this Sale Order
shall not be stayed for 10 days after entry and shall be effective and
enforceable immediately upon entry.
26. Except to the extent necessary to establish the Escrow Account,
the Debtors are hereby authorized and directed to distribute the Net Proceeds
(as defined below) immediately upon the Debtors' receipt thereof as follows:
FIRST, to Bankers Trust Company ("BTCo") as Agent for the lenders (the "DIP
Lenders") under the Debtor-in-Possession Credit Agreement dated as of January
18, 2000 and related documents (as such credit agreement and related
documents have been amended from time to time, the "DIP Loan Documents")
approved by order of this Court dated February 9, 2000 (the "DIP Order") to
be applied in reduction of the Debtors' obligations to BTCo in its capacity
as Agent for the DIP Lenders and to the DIP Lenders under the DIP Agreement
and the DIP Order (the "DIP Obligations"); and SECOND, after the DIP
Obligations are satisfied in full, to BTCo as Agent for the lenders (the
Prepetition Lenders") under the July 8, 1996 Credit Agreement and related
documents (as such Credit Agreement and related documents have been amended
from time to time, the "Prepetition Loan Documents") to be applied in
reduction of the Debtors' obligations to BTCo as Agent for the Prepetition
Lenders (in such capacity, the "Prepetition Agent") and to the Prepetition
Lenders under the DIP Order, other orders of this Court and the Prepetition
Loan Documents (the "Prepetition Obligations").
27. As used herein, "Net Proceeds" shall mean shall mean all
proceeds (cash or non-cash) paid at any time pursuant to the Asset Purchase
Agreement or this Order less (a) reasonable, usual, customary and necessary
costs of closing the sale of the Assets and (b) amounts necessary to satisfy
Permitted Encumbrances (as defined in the DIP Agreement) relating only to
those assets that comprise Acquired Assets.
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28. As adequate protection for their interests as provided in the
DIP Order, the Prepetition Agent and the Prepetition Lenders are hereby
granted replacement liens in all of the Debtors' remaining property in an
amount equal to Net Proceeds which are not turned over to the Prepetition
Agent. The Texas Taxing Authorities are hereby granted replacement liens in
all of the Debtors' remaining property on account of taxes related to the
Acquired Assets, such replacement liens to be of the same priority, validity
and extent as the Texas' Taxing Authorities' liens existing on the date of
Closing.
29. Notwithstanding anything contained herein to the contrary, the
Debtors shall establish a separate interest-bearing escrow account (the
"Escrow Account") with the DIP Agent in the amount of $1,000,000 from the
proceeds of the sale of the Acquired Assets, and the liens of the DIP Lenders
and the Prepetition Lenders and any liens of the Tax Collectors shall attach
to such proceeds to the same extent, validity and priority as such liens
existed on the Acquired Assets on the date of closing of the Sale (without
the need for any further filings). The Debtors shall provide advance notice
and opportunity to object to the DIP Lenders, the Prepetition Lenders and the
Tax Collectors prior to making any distributions from the Escrow Account. The
Court is making no determination whatsoever regarding the allowance or the
extent, validity and priority of the claims and liens of the Tax Collectors.
The parties shall use their best efforts to agree within 60 days after the
Closing as to the extent, validity and priority of such claims and liens and,
if agreement cannot be reached as to the claims and liens of any Tax
Collector by such
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time, the Debtors shall promptly apply to this Court for resolution of such
liens and claims. If agreement is reached in writing between the applicable
Tax Collector, the DIP Agent, the Prepetition Agent and the Debtors, the
Debtors may disburse funds from the Escrow Account in accordance with such
agreement without further order of this Court.
-----------------------------
UNITED STATES DISTRICT JUDGE
Dated: September ___, 2000
Wilmington, Delaware
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EXHIBIT H
FORM OF CURE NOTICE
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
IN RE )
)
AMERICAN PAD & PAPER COMPANY, ) CHAPTER 11
WR ACQUISITION, INC., )
AMERICAN PAD & PAPER COMPANY )
OF DELAWARE, INC., ) CASE NOS. 00-00066 (RRM)
AP&P MANUFACTURING, INC., ) THROUGH 00-00072 (RRM)
AMERICAN PAD & PAPER SALES )
COMPANY, INC., )
AP&P FINANCING COMPANY, INC., AND ) JOINTLY ADMINISTERED UNDER
AMERICAN PAD AND PAPER ) CASE NO. 00-00066 (RRM)
FOREIGN SALES CORPORATION, )
)
DEBTORS. )
NOTICE OF ASSUMPTION AND ASSIGNMENT
OF EXECUTORY CONTRACTS AND CURE AMOUNTS
PLEASE TAKE NOTICE that on August ___, 2000, American Pad & Paper
Company and its affiliated debtors-in-possession in the above-captioned cases
(the "Debtors") filed and served the Motion for Order Approving the Sale of
the Assets Related to the Debtors' AMPAD and Forms Divisions Free and Clear
of Liens, Claims, Interests, and Encumbrances Under Sections 105, 363 and 365
of the Bankruptcy Code, Subject to Higher and Better Bids (the "Sale
Motion"). The Sale Motion has been scheduled for hearing before the United
States District Court at 800 King Street, Wilmington, Delaware at __:00 _.m.
on September 6, 2000 (the "Sale Hearing").
PLEASE TAKE FURTHER NOTICE that pursuant to the Sale Motion, the
Debtors shall assume and assign to Pad & Paper of America LLC or one or more
of its affiliates (the "Buyer") any executory contract or unexpired lease
between the Debtors and those persons or entities
<PAGE>
shown on the attached Schedule A, including but not limited to any current or
unexpired purchase order, or any unexpired lease (the "Assumed Contracts").
The assumption and assignment of the Assumed Contracts shall be effective
upon the closing of the sale pursuant to the Sale Motion. The Debtors' books
and records indicate that the monetary defaults (the "Cure Amounts") with
respect to the Assigned Agreements, if any, are as set forth on Schedule A.
PLEASE TAKE FURTHER NOTICE that objections, if any, to either the
assignment and assumption of the Assumed Contracts or the Cure Amounts must
be in writing, filed with the Clerk of the United States Bankruptcy Court at
824 Market Street, 5th Floor, Wilmington, DE 19801, and served so as to be
actually received the following parties no later than 4:00 p.m. (Eastern
Standard Time) on August 23, 2000: (i) counsel for the Creditors' Committee,
David S. Rosner, Esq., Kasowitz, Benson, Torres & Friedman, 1301 Avenue of
the Americas, New York, NY 10019; (ii) counsel for the Buyer, Nicholas J.
Kaiser, Esq., Mandel Resnik & Kaiser P.C., 220 East 42 Street, New York, New
York 10017 and Laurie Selber Silverstein, Potter Anderson & Corroon LLP, 1313
North Market Street, 6th Floor, Wilmington, Delaware 19801; (iii) counsel for
the Agent for the Debtors' prepetition and postpetition bank lenders, Richard
Stern, Esq., Luskin, Stern & Eisler LLP, 330 Madison Avenue, New York, NY
10017; and (iv) undersigned counsel for the Debtors.
PLEASE TAKE FURTHER NOTICE THAT if an objection is timely filed and
served, the objection will be heard at the Sale Hearing. In the event no
objection is timely filed and actually received, the assignment and
assumption of the Assigned Agreements shall be effective as of the Closing of
the sale under the Sale Motion (the "Effective Date"), and the Cure Amount
set forth on Schedule A shall be controlling and shall be the cure amount
required under 11 U.S.C. Section-365(b) notwithstanding anything to the
contrary in any Assumed Contract, and the non-
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debtor party to the Assumed Contract shall be forever barred from asserting
any other claim prior to the assignment against the Debtors, the Assets or
the Buyer (or another winning bidder) as to the Assumed Contract. The Cure
Amount will be paid by the Buyer (or other winning bidder) on or as soon as
practicable after the Effective Date.
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Dated: Wilmington, Delaware
August ___, 2000
RICHARDS, LAYTON & FINGER, P.A.
-------------------------------
Mark D. Collins (No. 2981)
One Rodney Square
P.O. Box 551
Wilmington, Delaware 19899
Telephone: (302) 658-6541
Telecopy: (302) 658-6548
- and -
GIBSON, DUNN & CRUTCHER LLP
Michael A. Rosenthal P.C.
2100 McKinney Avenue, Suite 1100
Dallas, Texas 75201
Telephone: (214) 698-3100
Telecopy: (214) 698-3400
- and -
GIBSON, DUNN & CRUTCHER LLP
D.J. Baker
M. Natasha Labovitz
200 Park Avenue
New York, New York 10166
Telephone: (212) 351-4000
Telecopy: (212) 351-4035
CO-COUNSEL TO THE DEBTORS AND DEBTORS IN
POSSESSION
4
