UNITED STATES
SECURITIES AND EXHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): October 13, 1999
Commission file number 33-60032
Buckeye Technologies Inc.
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(Exact name of registrant as specified in its charter)
Delaware 62-1518973
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(State or other jurisdiction of (I.R. S. Employer
incorporation or organization) Identification No.)
1001 Tillman Street, Memphis Tennessee 38112
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(Address of principal executive offices) (Zip Code)
901-320-8100
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(Registrant's telephone number, including area code)
Not applicable
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(Former name, former address and former fiscal year,
if changed since last report)
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Item 2. ACQUISITION OR DISPOSITION OF ASSETS
On October 1, 1999, Buckeye Technologies Inc., a Delaware Corporation,
and its subsidiaries (the Company) completed its acquisition of essentially all
of the assets of the Walkisoft division of UPM-Kymmene, pursuant to the terms of
the Asset Purchase Agreement, between the Company and UPM-Kymmene Corporation
and its Walkisoft subsidiaries (the Seller). The following discussion is only a
summary and is qualified in its entirety by reference to the Exhibits to this
Current Report on Form 8-K.
Walkisoft is a manufacturer of airlaid nonwoven materials which are
used in absorbent product areas such as feminine hygiene, adult incontinence and
baby wipes. Additional applications for Walkisoft's products are disposable
household tablecloths and napkins. Walkisoft has manufacturing facilities in Mt.
Holly, North Carolina and Steinfurt, Germany. The Company has purchased the
trade receivables, inventory, property, plant and equipment, intellectual
property and selected liabilities. The Company will continue to operate the
manufacturing facilities.
The purchase price, of approximately $120 million, includes $15 million
in working capital. The purchase price will be adjusted if the actual working
capital is less than or greater than the estimated $15 million. The amount of
consideration was determined as a result of negotiations between the Company and
the Seller. The acquisition will be recorded using the purchase method of
accounting. The allocation of the purchase price will be based on the respective
fair value of assets at the date of acquisition.
The Company made an initial payment of $26.1 million to the Seller on
the closing date and made a commitment to make four payments of $22 million each
to the Seller on the first through the fourth anniversary of the effective date
of the contract, plus accrued interest at an annual rate of 5%. The initial
payment was funded by borrowings from the Company's credit facility. Future
payments will be funded by borrowings from the credit facility or from the
Company's operating funds.
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Item 7. Financial Statements and Exhibits
(a) Financial statements of business acquired.
Not applicable
(b) Pro forma financial information
Not applicable
(c) Exhibits
2.1 Asset Purchase Agreement, dated October 1, 1999, between Buckeye
Technologies Inc., BKI Holdings Corporation, Buckeye Mt. Holly LLC,
Buckeye Finland Oy, BKI International Inc. and UPM-Kymmene Corporation,
Walkisoft Finland Oy, Walkisoft USA, Inc., Walkisoft Denmark A/S
2.2 German Purchase Agreement between Buckeye Technologies Inc., Buckeye
Steinfurt GmbH, Buckeye Holdings GmbH and Walkisoft GmbH,
UPM-Kymmene Oyj
3
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Buckeye Technologies Inc.
By: /S/ Date: ____________
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David H. Whitcomb
Senior Vice President, Finance and Accounting
4
Exhibit 2.1
50 pages
ASSET PURCHASE AGREEMENT
BETWEEN
BUCKEYE TECHNOLOGIES INC.
BKI HOLDING CORPORATION
BUCKEYE MT. HOLLY LLC
BUCKEYE FINLAND OY
BKI INTERNATIONAL INC.
AND
UPM-KYMMENE CORPORATION
WALKISOFT FINLAND OY
WALKISOFT USA, INC.
WALKISOFT DENMARK A/S
October 1, 1999
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EXHIBITS
Exhibit A Asset Purchase Agreement between Walkisoft GmbH and Buckeye
Steinfurt GmbH
Exhibit B Tangible Personal Property
Exhibit C Assumed Liabilities
Exhibit D Form of Buyer Note
Exhibit E Pledge and Security Agreement
Exhibit F Purchase Price Allocation
Exhibit G Historical Financial Statements
Exhibit H Finnish Employee Reduction Schedule
Exhibit I Form of Opinion of Counsel to the Buyer
Exhibit J Transition Services Agreement
Exhibit K Form of Bill of Sale and Assignments
Exhibit L Form of Real Property Transfer Documents
Exhibit M Form of Intellectual Property Transfer Documents
Exhibit N Form of Assumption Agreement
Exhibit O Required Consents
Disclosure Schedule Exceptions to Representations and Warranties
2.1-2
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ASSET PURCHASE AGREEMENT
Agreement entered into as of October 1, 1999, by and between Buckeye
Technologies Inc., a Delaware corporation ("Buckeye Technologies"), BKI Holding
Corporation, a Delaware corporation ("BKI Holding"), Buckeye Mt. Holly LLC., a
Delaware limited liability company ("Buckeye Mt. Holly"), BKI International
Inc., a Delaware corporation ("BKI International"), and Buckeye Finland Oy, a
Finnish corporation ("Buckeye Finland"), (Buckeye Technologies, BKI Holding,
Buckeye Mt. Holly, Buckeye International and Buckeye Finland are referred to
collectively hereinafter as the "Buyer"), and Walkisoft Finland Oy, a Finnish
corporation ("Walkisoft Finland"), Walkisoft USA, Inc., a Delaware corporation
("Walkisoft USA") and Walkisoft Denmark A/S, a Danish corporation ("Walkisoft
Denmark") (collectively, the "Seller") and UPM-Kymmene Corporation, a Finnish
corporation ("UPM"). The Buyer, Seller and UPM are referred to collectively
herein as the "Parties."
This Agreement contemplates a transaction in which the Buyer will purchase
substantially all of the assets (and assume certain of the liabilities) of the
Seller used in the Walkisoft Business in return for cash and the Buyer Note
except that the assets and assumed liabilities relating to Walkisoft GmbH shall
be purchased pursuant to the German Purchase Agreement, a copy of which is
attached hereto as Exhibit A.
Now, therefore, in consideration of the premises and the mutual promises herein
made, and in consideration of the representations, warranties, and covenants
herein contained, the Parties agree as follows.
1. Definitions.
"Acquired Assets" means all right, title, and interest in and to all of the
assets of the Seller used in its Walkisoft Business, including, but not limited
to, all of its (a) real property, leaseholds and subleaseholds therein,
improvements, fixtures, and fittings thereon, and easements (including signage
easements), rights-of-way, and other appurtenances thereto (such as appurtenant
rights in and to public streets), (b) tangible personal property (such as
machinery, equipment, Inventory, manufactured and purchased parts, goods in
process and finished goods, furniture, automobiles, trucks, tractors, trailers,
tools, jigs, dies, supplies, packaging materials, spare parts and components)
including all tangible property specifically set forth on Exhibit B attached
hereto, (c) Intellectual Property, goodwill associated therewith, licenses and
sublicenses granted and obtained with respect thereto, and rights thereunder,
remedies against infringements thereof, and rights to protection of interests
therein under the laws of all jurisdictions, (d) leases, subleases, and rights
thereunder, (e) agreements, contracts, instruments, Security Interests and
rights thereunder, (f) accounts receivables, (g) computer hardware, information
systems and related software, (h) claims, deposits, prepayments, refunds, causes
of action, choses in action, rights of recovery, rights of set off, and rights
of recoupment, (i) franchises, approvals, permits, licenses, orders,
registrations, certificates, variances, and similar rights obtained from
governments and governmental agencies, (j) books, records, ledgers, files
(including employee files), documents, correspondence, lists, plats,
architectural plans, drawings, and specifications, creative materials,
advertising and promotional materials, sales literature, customer files and
materials, studies, reports, operating procedure manuals regarding quality,
safety, processing and related matters, and other printed or written materials;
2.1-3
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and (k) all of the outstanding capital stock of Walkisoft France S.A.R.L.,
Walkisoft (U.K.) Limited, Walkisoft Italia S.r.l., and Walkisoft Iberica, S.A.
(collectively the "Sales Companies"); provided, however, that the Acquired
Assets shall not include (i) the corporate charter, qualifications to conduct
business as a foreign corporation, arrangements with registered agents relating
to foreign qualifications, taxpayer and other identification numbers, seals,
minute books, stock transfer books, blank stock certificates, and other
documents relating to the organization, maintenance, and existence of the Seller
as a corporation, (ii) all books and records legally required for tax or other
governmental purposes (provided Buyer shall have right to copy or have access to
such records), (iii) any of the rights of the Seller under this Agreement (or
under any side agreement between the Seller on the one hand and the Buyer on the
other hand entered into on or after the date of this Agreement), (iv) any
equipment of Seller used in the operation of the Walkisoft plant in Kotka,
Finland, (v) any assets of Seller used in operation of the Walkisoft plant in
Aarhus, Denmark, except all of the machinery and equipment comprising the
Walkisoft production line in Aarhus, Denmark and the spare parts and components
related thereto, (vi) any notes receivables of Seller, unless specifically
assumed by Buyer, (vii) any cash, cash equivalents, or marketable securities of
Seller, or (viii) any contracts or agreements with any independent sales agents,
unless expressly assumed by Buyer as an Assumed Liability.
"Adverse Consequences" means all actions, claims, judgments, orders, damages,
penalties, fines, costs, amounts paid in settlement, diminution in value,
Liabilities, obligations, Taxes, liens, losses, expenses, and fees, including
court costs and reasonable attorneys' fees and expenses, net of actual insurance
and other third party recoveries.
"Affiliate" means a Person that, directly or indirectly, through one or more
intermediaries, controls, or is controlled by or is under common control, with
another Person.
"Affiliated Group" means any affiliated group within the meaning of Code 1504(a)
or any similar group defined under a similar provision of state, local, or
foreign law.
"Assumed Liabilities" means (a) Trade Payables and Designated Accruals but only
to the extent included in the computation of Net Working Capital pursuant to
Section 2(g), (b) all obligations of the Seller under those agreements,
contracts, leases, licenses, and other arrangements referred to in the
definition of Acquired Assets entered into in the Ordinary Course of Business
and set forth on Exhibit C attached hereto, and (c) all other Liabilities and
obligations of the Seller set forth on Exhibit C attached hereto, provided,
however, that the Assumed Liabilities shall not include (i) any Liability of the
Seller for Taxes, (ii) any Liability of the Seller for the unpaid Taxes of any
Person (other than the Seller) under Reg. ' 1.1502-6 (or any similar provision
of state, local, or foreign law), as a transferee or successor, by contract, or
otherwise, (iii) any Environmental, Health and Safety Liabilities relating to a
time period at or prior to the Effective Date; (iv) any Liability to or on
account of any employee of Seller, including severance rights and benefits,
accrued prior to the Effective Date which are not expressly assumed by Buyer,
(v) any obligation of the Seller to indemnify any Person (including any of the
Seller's stockholders) by reason of the fact that such Person was a director,
officer, employee, or agent of the Seller or was serving at the request of any
such entity 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
document, bylaw, agreement, or otherwise), (vi) any Liability of the Seller for
2.1-4
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costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby, (vii) any Liability or obligation of the
Seller under this Agreement (or under any side agreement between the Seller on
the one hand and the Buyer on the other hand entered into on or after the date
of this Agreement); (viii) any Liability or obligation under any contracts or
agreements with any independent sales agents except to the extent any such
Liability or obligation is set forth on Exhibit C attached hereto, or (ix) any
other Liability of Seller, including any other Liability of Seller relating to
or arising out of the ownership or operation of Seller's business prior to the
Effective Date, except as specifically set forth in clauses (a), (b) and (c)
above.
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.
"Buyer" has the meaning set forth in the preface above.
"Buyer Note" has the meaning set forth in Section 2(c) below.
"CERCLA" means the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. ' 9601 et seq., as amended.
"Closing" has the meaning set forth in Section 2(d) below.
"Closing Date" has the meaning set forth in Section 2(d) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Controlled Group of Corporations" has the meaning set forth in Code ' 1563.
"Designated Accruals" shall mean those accruals incurred in the Ordinary Course
of Business and specifically assumed by Buyer as described in Exhibit C attached
hereto.
"Disclosure Schedule" has the meaning set forth in Section 3 below.
"Effective Date" shall mean as of the commencement of Seller's business on
October 1, 1999, or such other date as the Parties shall mutually determine.
"Employee Benefit Plan" means any (a) nonqualified deferred compensation or
retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan and any plan intended to be so qualified, (c)
qualified defined benefit retirement plan or arrangement which is an Employee
Pension Benefit Plan (including any Multiemployer Plan) and any plan intended to
be so qualified, or (d) Employee Welfare Benefit Plan or material fringe benefit
plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA ' 3(2) or
similar employee pension benefit plans under the laws of any jurisdiction
governing employees of Seller who shall become employees of Buyer hereunder.
2.1-5
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"Employee Welfare Benefit Plan" has the meaning set forth in ERISA ' 3(1) or
similar employee welfare benefit plans under the laws of any jurisdiction
governing employees of Seller who shall become employees of Buyer hereunder.
"Environmental, Health and Safety Liabilities" means any Liability or other
responsibility arising from or under Environmental, Health and Safety
Requirements and consisting of or relating to: (a) any environmental, health, or
safety matters or conditions (including on-site or off-site contamination,
occupational safety and health, and regulation of chemical substances or
products); (b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims and demands arising under
Environmental, Health and Safety Requirements; (c) financial responsibility
under Environmental, Health and Safety Requirements for cleanup costs or
corrective action, including any investigation, cleanup, removal, containment,
or other remediation or response actions (collectively, a "Cleanup") required by
applicable Environmental, Health and Safety Requirements and for any natural
resource damages; or (d) any other compliance, corrective, investigative, or
remedial measures required under Environmental, Health and Safety Requirements.
The terms "removal," "remedial," and "response action," has the same meaning as
used in CERCLA.
"Environmental, Health, and Safety Requirements" shall mean all federal, state,
local and foreign statutes, regulations, ordinances, all judicial and
administrative orders and determinations, all contractual obligations and all
common law concerning public health and safety, worker health and safety, and
pollution or protection of the environment, including without limitation all
those relating to the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control, or cleanup of any
hazardous materials, substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise or radiation, each as
amended and as now or hereafter in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"Extremely Hazardous Substance" has the meaning set forth in Section 302 of the
Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"Facilities" means any real property, leaseholds, or other interests currently
owned or operated by the Seller in North Carolina and any buildings, plants,
structures, or equipment (including motor vehicles, tank cars, and rolling
stock) currently owned or operated by the Seller in North Carolina.
"Fiduciary" has the meaning set forth in ERISA Section 3(21).
"Financial Statement" has the meaning set forth in Section 3(g) below.
"GAAP" means generally accepted accounting principles in the United States as in
effect from time to time and consistently applied.
"German Purchase Agreement" shall mean the Asset Purchase and Sale Agreement
attached hereto as Exhibit A between Walkisoft GmbH and Hohenstauffen
Vermogensverwaltungs GmbH, the name change of which to Buckeye Steinfurt GmbH
has been resolved but not yet registered (referred to herein as "Buckeye
Steinfurt GmbH").
2.1-6
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"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
"Hazardous Activities" means the distribution, generation, disposal, handling,
importing, management, manufacturing, processing, production, refinement,
release, storage, transfer, transportation, treatment, or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under,
about, or from the Facilities or any part thereof into the environment.
"Hazardous Materials" means any (a) "hazardous substance," "pollutants," or
"contaminant" (as defined in Sections 101(14) and (33) of CERCLA or the
regulations issued pursuant to Section 102 of CERCLA and found at 40 C.F.R.
Section 302), including any element, compound, mixture, solution or substance
that is or may be designated pursuant to Section 102 of CERCLA; (b) substance
that is or may be designated pursuant to Section 311(b)(2)(A) of the FWPCA; (c)
hazardous waste having the characteristics identified under or listed pursuant
to Section 3001 of the Resource Conservation and Recovery Act ("RCRA") or having
characteristics that may subsequently be considered under RCRA to constitute
hazardous waste; (d) substance containing petroleum, as that term is defined in
Section 9001(8) of RCRA; (e) toxic pollutant that is or may be listed under
Section 307(a) of FWPCA; (f) hazardous air pollutant that is or may be listed
under Section 112 of the Clean Air Act, as amended (42 U.S.C. Sections
7401,7412); (g) imminently hazardous chemical substance or mixture with respect
to which action has been or may be taken pursuant to Section 7 of the Toxic
Substances Control Act, as amended (15 U.S.C. Sections 2601, 2606); (h) source,
special nuclear, or by-product material as defined by the Atomic Energy Act of
1954, as amended (42 U.S.C. Section 2011 et seq.); (i) asbestos,
asbestos-containing material, or urea formaldehyde or material that contains it;
(j) waste oil and other petroleum products; and (k) any other toxic materials,
contaminants, or hazardous substances or wastes pursuant to any environmental
law.
"Initial Payment" has the meaning set forth in Section 2(c)(ii) below.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) subject to the provisions of Section 8(a), all
trademarks, service marks, trade dress, logos, trade names, corporate names, and
fictitious or assumed name registrations, together with all translations,
adaptations, derivations, and combinations thereof and including all goodwill
associated therewith, and all applications, registrations, and renewals in
connection therewith, (c) all copyrightable works, all copyrights, and all
applications, registrations, and renewals in connection therewith, (d) all mask
works and all applications, registrations, and renewals in connection therewith,
(e) all trade secrets and confidential business information (including ideas,
research and development, know-how, formulas, compositions, manufacturing and
production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists (including customer lists controlled
or owned by sales offices of Affiliates of Seller), pricing and cost
2.1-7
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information, and business and marketing plans and proposals), (f) all computer
software (including data and related documentation, but excluding any UPM
proprietary software used outside of the Walkisoft Business), (g) all other
proprietary rights, (h) all copies and tangible embodiments thereof (in whatever
form or medium), and (i) employee invention and discovery files and logs.
"Inventory" means (a) the raw materials and packaging materials used in the
Walkisoft Business of Seller, including wood pulp, other fibers, binders and
superabsorbent polymers, and (b) finished product.
"Knowledge" means actual knowledge after reasonable investigation of the
officers, directors and managers of Seller and the following other designated
persons: Berndt Brunow, Jaakko Rislakki, Erkki Numminen, Jaakko Palsanen, Tapani
Sointu, Juhani Ilvonen, Helmer Gustafsson, Pentti Kallio, and Sirpa-Helena
Sormunen.
"Liability" means any liability or obligation (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Minimum Net Working Capital" has the meaning set forth in Section 2(c) below.
"Most Recent Balance Sheet" means the balance sheet contained within the Most
Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in Section 3(g)
below.
"Most Recent Fiscal Month End" has the meaning set forth in Section 3(g) below.
"Most Recent Fiscal Year End" has the meaning set forth in Section 3(g) below.
"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
"Net Working Capital" means the aggregate value as of the Effective Date in U.S.
Dollars of (i) the Inventory and accounts receivable included in the Acquired
Assets, minus (ii) Trade Payables and Designated Accruals. For purposes of this
definition, Inventory shall be valued as of the Effective Date in U.S. Dollars
at the lower of (a) fair market value or (ii) the actual cost of the Inventory
reflected on the books and records of Seller (which shall be prepared in
accordance with GAAP), except that for purposes hereof, all spare parts, wires,
felts and fabrics, and other items carried as inventory on Seller's financial
records (other than Inventory) and used in the Walkisoft Business shall be
included in the calculation of Net Working Capital at an aggregate value of U.S.
$300,000. Accounts receivable shall be valued as of the Effective Date in U.S.
Dollars from the books and records of the Seller. In the event the Parties fail
to agree on the Inventory valuation, the Buyer and Seller will request their
respective independent accounting firms to resolve the issues, and if the
accounting firms fail to do so within sixty (60) days of the date the Parties
submit the issues to them, the Buyer and Seller will submit the unresolved
issues to arbitration in accordance with Section 11(a). To the extent any
currency conversions are required, the exchange rates in effect on the Frankfurt
Stock Exchange as of the close of business on the date immediately preceding the
Effective Date shall be used.
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"Ordinary Course of Business" means the ordinary course of business consistent
with past custom and practice (including with respect to quantity and
frequency).
"Other Agreements" shall mean (1) the German Purchase Agreement, (2) the Buyer
Note, (3) the Pledge and Security Agreement,(4) the Transition Services
Agreement, and (5) the other instruments and documents required by Seller and
Buyer hereunder or under the German Purchase Agreement at Closing.
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, an association, a
joint stock company, a trust, a joint venture, an unincorporated organization,
or a governmental entity (or any department, agency, or political subdivision
thereof).
"Pledge and Security Agreement" has the meaning set forth in Section 2(c) below.
"Prohibited Transaction" has the meaning set forth in ERISA ss. 406 and Code
ss. 4975.
"Purchase Price" has the meaning set forth in Section 2(c) below.
"Reportable Event" has the meaning set forth in ERISA ' 4043.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge, or
other security interest, other than (a) mechanic's, materialmen's, and similar
liens acceptable to Buyer, (b) liens for Taxes not yet due and payable, (c)
liens securing payments under capital lease arrangements, and (d) other liens
arising in the Ordinary Course of Business which are not material and which are
not incurred in connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Subsidiary" means any corporation with respect to which a specified Person (or
a Subsidiary thereof) owns a majority of the common stock or has the power to
vote or direct the voting of sufficient securities to elect a majority of the
directors.
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code ss. 59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
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"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Trade Payables" means all accounts payable incurred by Seller in the Ordinary
Course of Business.
"UPM Guaranty" has the meaning set forth in Section 11(q) below.
"Walkisoft Business" means of or pertaining to the operations of the business of
Walkisoft Finland, Walkisoft USA, Walkisoft Denmark, Walkisoft Steinfurt GmbH,
and the Sales Companies at any time prior to the Effective Date.
1. Basic Transaction.
(a) Purchase and Sale of Assets. Subject to the terms and
conditions of this Agreement, the Buyer agrees to purchase
from the Seller, and the Seller agrees to sell, transfer,
convey, and deliver to the Buyer, all of the Acquired Assets
on the Closing Date effective as of the Effective Date for the
consideration specified below in this Section 2.
(b) Assumption of Liabilities. Subject to the terms and conditions
of this Agreement, the Buyer agrees to assume and become
responsible for all of the Assumed Liabilities on the Closing
Date effective as of the Effective Date. The Buyer will not
assume or have any responsibility, however, with respect to
any other obligation or Liability of the Seller or any
predecessor entity not included within the definition of
Assumed Liabilities.
(c) Purchase Price. Subject to Section 2(g) and Section 10(c),
the Buyer agrees to pay to the Seller on the Closing Date
U.S. $ 44,600,000.00 (the "Purchase Price") by delivery of
(i) its promissory note (the "Buyer Note") in the form of
Exhibit D attached hereto in the aggregate principal amount
of U.S. $ 22,000,000.00, and (ii) cash for the balance of
the Purchase Price payable by wire transfer or delivery of
other immediately available funds ("Initial Payment").
Notwithstanding the foregoing, if the Net Working Capital
of Seller as of the Effective Date does not equal U.S.
$3,000,000.00 ("Minimum Net Working Capital"), the Purchase
Price shall be adjusted in accordance with Section 2(g).
As security for the Buyer Note, Buyer shall execute and
deliver to Seller a pledge with respect to the capital stock
of Buckeye Steinfurt and a Pledge and Security Agreement
with respect to the membership interest of Buckeye Mt. Holly
in the form attached hereto as Exhibit E.
(d) The Closing. The execution of all of the documents necessary
to consummate the transactions contemplated under this
Agreement shall take place at the offices of Oppenhoff &
Raedler in Cologne, Germany, commencing at 11:00 a.m. local
time on September 29, 1999, or such other date and/or
location as the Parties may mutually determine. The executed
documents shall be placed in escrow pursuant to an escrow
agreement to be approved by the Parties. The closing of
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the transactions contemplated by this Agreement (the
"Closing") shall be completed upon the satisfaction or waiver
of all conditions to the obligations of the Parties to
consummate the transactions contemplated hereby (the "Closing
Date"). To the extent the Closing Date occurs after October
31, 1999, Buyer shall pay Seller interest at five percent (5%)
per annum on the Initial Payment from the Effective Date
through the Closing Date.
(e) Deliveries at the Closing. At the Closing, (i) the Seller
will deliver to the Buyer the various certificates,
instruments, and documents referred to in Section 6(a) below;
(ii) the Buyer will deliver to the Seller the various
certificates, instruments, and documents referred to in
Section 6(b) below; (iii) the Seller will deliver to the
Buyer (A) bill of sale and assignments in the form attached
as Exhibit K, real property transfer document in the
form attached as Exhibit L and Intellectual Property transfer
documents in the form attached as Exhibit M, and (B)
such other instruments of sale, transfer, conveyance, and
assignment as the Buyer and its counsel reasonably may
request; (iv) the Buyer will deliver to the Seller (A) an
assumption in the form attached as Exhibit N, and (B) such
other instruments of assumption as the Seller and its counsel
reasonably may request; and (v) the Buyer will deliver
to the Seller the consideration specified in Section 2(c)
above.
(f) Allocation. The Parties agree to allocate the Purchase Price
among the Acquired Assets described herein and in the German
Purchase Agreement for all purposes (including financial
accounting and tax purposes) in accordance with the schedule
attached hereto as Exhibit F.
(g) Purchase Price Adjustment. Prior to the Closing Date, Buyer
and Seller shall agree to an estimate of the Net Working
Capital as of the Effective Date (the "Estimated Working
Capital"), and at Closing, the Estimated Working Capital shall
be used to determine any adjustment to the Initial Payment
required under Section 2(c) above. If the Estimated Working
Capital is less than the Minimum Net Working Capital required
under Section 2(c) above, the Purchase Price shall be reduced
in an amount equal to such difference. If the Estimated
Working Capital is greater than the Minimum Net Working
Capital, the Purchase Price shall be increased in an amount
equal to the difference.
As soon as practicable following the Closing Date, but not later than
thirty (30) days thereafter, Buyer and Seller shall jointly determine
the actual amount of the Net Working Capital as of the Effective Date
and shall execute a certificate of their agreement as to the Net
Working Capital as of the Effective Date. In order to finally settle
any Purchase Price adjustments as required by comparing the actual Net
Working Capital as of the Effective Date to the Estimated Working
Capital, Buyer shall promptly deliver to Seller any Purchase Price
increase in U.S. Dollars in immediately available funds by wire
transfer or Seller shall promptly deliver to Buyer any Purchase Price
decrease in U.S. Dollars in immediately available funds by wire
transfer.
2. Representations and Warranties of the Seller. Each of Seller jointly
and severally represents and warrants to the Buyer that the statements
2.1-11
<PAGE>
contained in this Section 3 are correct and complete as of the date of
this Agreement and will be correct and complete as of the Effective
Date (as though made then and as though the Effective Date were
substituted for the date of this Agreement throughout this Section 3),
except as set forth in the disclosure schedule accompanying this
Agreement and initialed by the Parties (the "Disclosure Schedule"). The
Disclosure Schedule will be arranged in paragraphs corresponding to the
lettered and numbered paragraphs contained in this Section 3.
(a) Organization of the Seller. The Seller is a corporation duly
organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation.
(b) Authorization of Transaction. The Seller and UPM have the full
power and authority (including full corporate power and
authority) to execute and deliver this Agreement and the other
Agreements to be signed by Seller and UPM and to perform all
obligations hereunder or thereunder. Without limiting the
generality of the foregoing, the board of directors of the
Seller and, to the extent required, its shareholders have duly
authorized the execution, delivery, and performance of this
Agreement by the Seller. This Agreement constitutes, and upon
the execution thereof, the Other Agreements to be signed by
Seller and UPM will constitute the valid and legally binding
obligation of the Seller and UPM, as the case may be,
enforceable in accordance with their respective terms and
conditions.
(c) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the
transactions contemplated hereby (including the assignments
and assumptions referred to in Section 2 above), will
(i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or
other restriction of any government, governmental agency,
or court to which the Seller is subject or any provision
of the charter or bylaws of the Seller or (ii) conflict with,
result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right
to accelerate, terminate, modify, or cancel, or require
any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Seller is a
party or by which it is bound or to which any of its assets
is subject (or result in the imposition of any Security
Interest upon any of its assets). The Seller does not need
to give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any government
or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement
(including the assignments and assumptions referred to in
Section 2 above).
(d) Brokers' Fees. The Seller has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated by this
Agreement for which the Buyer could become liable or
obligated.
(e) Title to Assets. The Seller has good and marketable title to,
or a valid leasehold interest in, the properties and assets
used by it, located on its premises, or shown on the Most
Recent Balance Sheet or acquired after the date thereof, free
2.1-12
<PAGE>
and clear of all Security Interests, except for properties and
assets disposed of in the Ordinary Course of Business since
the date of the Most Recent Balance Sheet. Without limiting
the generality of the foregoing, the Seller has good and
marketable title to all of the Acquired Assets, free and clear
of any Security Interest or restriction on transfer.
(f) Subsidiaries. The Seller does not own, directly or indirectly,
any capital stock or other equity ownership or other interest
in any other Person.
(g) Financial Statements. Attached hereto as Exhibit E are the
following financial statements (collectively, the
"Financial Statements"): (i) audited or reviewed balance
sheets and statements of income, changes in stockholders'
equity, and cash flow (the "Audited Statements") as of
and for the fiscal years ended December 31, 1996,
December 31, 1997, and December 31, 1998 (the "Most Recent
Fiscal Year End") for Walkisoft USA; and (ii) unaudited
balance sheets and statements of income, changes in
stockholders' equity, and cash flow (the "Most Recent
Financial Statements") as of and for the eight (8) months
ended August 31, 1999 (the "Most Recent Fiscal Month
End") for Walkisoft USA. Except for normal year end
adjustments in the case of the Most Recent Financial
Statements, the Financial Statements (including the notes
thereto) have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered
thereby, present fairly the financial condition of
Walkisoft USA as of such dates and the results of operations
of Walkisoft USA for such periods, and are consistent with
the books and records of Walkisoft USA (which books and
records are correct and complete). Additionally, the
Audited Statements are correct and complete.
(h) Events Subsequent to Most Recent Fiscal Year End. Since the
Most Recent Fiscal Year End, there has not been any material
adverse change in the business, financial condition,
operations, or results of operations of the Seller. Without
limiting the generality of the foregoing, since that date:
(i) The Seller has not sold, leased, transferred, or
assigned any of its assets, tangible or intangible,
other than for a fair consideration in the Ordinary
Course of Business;
(ii) The Seller has not entered into any agreement,
contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) outside
the Ordinary Course of Business;
(iii) No person has accelerated, terminated, modified, or
canceled any agreement, contract, lease, or license
(or series of related agreements, contracts, leases,
and licenses) to which the Seller is a party or by
which it is bound;
(iv) The Seller has not imposed any Security Interest upon
any of its assets, tangible or intangible;
2.1-13
<PAGE>
(v) The Seller has not committed to make any capital
expenditure (or series of related capital
expenditures) either involving more than U.S.
$100,000 or outside the Ordinary Course of Business;
(vi) The Seller has not made any capital investment in,
any loan to, or any acquisition of the securities or
assets of, any other Person (or series of related
capital investments, loans, and acquisitions);
(vii) The Seller has not delayed or postponed the payment
of accounts payable and other Liabilities outside the
Ordinary Course of Business;
(viii) The Seller has not canceled, compromised, waived, or
released any right or claim (or series of related
rights and claims);
(ix) The Seller has not granted any license or sublicense
of any rights under or with respect to any
Intellectual Property except with respect to those
certain agreements to J.W. Suominen Oy and Havix,
Inc. set forth in the Disclosure Statement;
(x) The Seller has not experienced any damage,
destruction, or loss (whether or not covered by
insurance) to its property;
(xi) The Seller has not made any loan to, or entered into
any other transaction with, any of its directors,
officers, and employees outside the Ordinary Course
of Business;
(xii) The Seller has not changed its accounting methods;
(xiii) The Seller has not granted any increase in the base
compensation of any of its stockholders, directors,
officers, and employees outside the Ordinary Course
of Business;
(xiv) The Seller has not adopted, amended, modified, or
terminated any bonus, profit-sharing, incentive,
severance, or other plan, contract, or commitment for
the benefit of any of its stockholders, directors,
officers, and employees (or taken any such action
with respect to any other Employee Benefit Plan);
(xv) The Seller has not made any other change in
employment terms for any of its directors, officers,
and employees outside the Ordinary Course of
Business;
(xvi) There has not been any other occurrence, event,
incident, action, failure to act, or transaction
outside the Ordinary Course of Business involving the
Seller;
2.1-14
<PAGE>
(xvii) No significant customer of Seller has stated or
otherwise indicated its intention to cease doing
business with Seller prior to Closing or with Buyer
after Closing; and
(xviii) The Seller has not committed to any of the foregoing.
(i) Undisclosed Liabilities. The Seller does not have any
Liability (and there is no Basis for any present or future
action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against any of them giving rise to
any Liability), except for (i) Liabilities set forth on the
face of the Most Recent Balance Sheet (rather than in any
notes thereto) and (ii) Liabilities which have arisen after
the Most Recent Fiscal Month End in the Ordinary Course of
Business (none of which results from, arises out of, relates
to, is in the nature of, or was caused by any breach of
contract, breach of warranty, tort, infringement, or
violation of law).
(j) Legal Compliance. The Seller and its respective predecessors
and Affiliates have complied with all applicable laws
(including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder)
of federal, state, local, and foreign governments (and all
agencies thereof), and no action, suit, proceeding, hearing,
charge, complaint, claim, demand, or notice has been filed or
commenced against any of them alleging any failure so to
comply and neither Seller nor its Affiliates have any
Knowledge of any investigation regarding same.
(k) Tax Matters.
(i) The Seller has filed all Tax Returns that it was
required to file. All Taxes due and payable by the
Seller (whether or not shown on any Tax Return) have
been paid. No claim has ever been made by an
authority in a jurisdiction where the Seller does not
file Tax Returns that it is or may be subject to
taxation by that jurisdiction. There are no Security
Interests on any of the assets of the Seller that
arose in connection with any failure (or alleged
failure) to pay any Tax.
(ii) The Seller has withheld and paid all Taxes required
to have been withheld and paid in connection with
amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third
party.
(l) Real Property.
(i) Section 3(l)(i) of the Disclosure Schedule lists and
describes briefly all real property that the Seller
owns in North Carolina. With respect to each such
parcel of owned real property:
(A) the identified owner has good and marketable
title to the parcel of real property, free
and clear of any Security Interest,
easement, covenant, or other restriction,
except for installments of special
assessments not yet delinquent and recorded
easements, covenants, and other restrictions
which do not impair the current use,
occupancy, or value, or the marketability of
title, of the property subject thereto;
2.1-15
<PAGE>
(B) there are no pending or, to Seller's
Knowledge, threatened condemnation
proceedings, lawsuits, or administrative
actions relating to the property or other
matters affecting adversely the current use,
occupancy, or value thereof;
(C) the legal description for the parcel
contained in the deed thereof describes
such parcel fully and adequately, the
buildings and improvements are located
within the boundary lines of the described
parcels of land, are not in violation of
applicable setback requirements, zoning
laws, and ordinances (and none of the
properties or buildings or improvements
thereon are subject to "permitted
non-conforming use" or "permitted
non-conforming structure" classifications),
and do not encroach on any easement
which may burden the land, the land does
not serve any adjoining property for any
purpose inconsistent with the use of the
land, and the property is not located
within any flood plain or subject to any
similar type restriction for which any
permits or licenses necessary to the use
thereof have not been obtained;
(D) all Facilities have received all approvals
of governmental authorities (including
licenses and permits) required in connection
with the ownership or operation thereof and
have been operated and maintained in
accordance with applicable laws, rules, and
regulations;
(E) there are no leases, subleases, licenses,
concessions, or other agreements, written or
oral, granting to any party or parties the
right of use or occupancy of any portion of
the parcel of real property and no parties
(other than Seller) are in possession of any
portion of such real property;
(F) there are no outstanding options or rights
of first refusal to purchase the parcel of
real property, or any portion thereof or
interest therein;
(G) all Facilities located on the parcel of real
property are supplied with utilities and
other services necessary for the operation
of such Facilities, including gas,
electricity, water, telephone, sanitary
sewer, and storm sewer, all of which
services are adequate in accordance with all
applicable laws, ordinances, rules, and
regulations and are provided via public
roads or via permanent, irrevocable,
appurtenant easements benefitting the parcel
of real property; and
2.1-16
<PAGE>
(H) each parcel of real property abuts on and
has direct vehicular access to a public
road, or has access to a public road via a
permanent, irrevocable, appurtenant easement
benefitting the parcel of real property, and
access to the property is provided by paved
public right-of-way with adequate curb cuts
available.
(ii) Section 3(l)(ii) of the Disclosure Schedule lists and
describes briefly all real property leased or
subleased to the Seller. The Seller has delivered to
the Buyer correct and complete copies of the leases
and subleases listed in Section 3(1)(ii) of the
Disclosure Schedule (as amended to date). With
respect to each lease and sublease listed in Section
3(1)(ii) of the Disclosure Schedule:
(A) the lease or sublease is legal, valid,
binding, enforceable, and in full force
and effect;
(B) the lease or sublease will continue to be
legal, valid, binding, enforceable, and in
full force and effect on identical terms
following the consummation of the
transactions contemplated hereby (including
the assignments and assumptions referred to
in Section 2 above);
(C) no party to the lease or sublease is in
breach or default, and no event has occurred
which, with notice or lapse of time, would
constitute a breach or default or permit
termination, modification, or acceleration
thereunder;
(D) no party to the lease or sublease has
repudiated any provision thereof;
(E) there are no disputes, oral agreements, or
forbearance programs in effect as to the
lease or sublease;
(F) with respect to each sublease, the
representations and warranties set forth in
subsections (A) through (E) above are true
and correct with respect to the underlying
lease;
(G) the Seller has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or
encumbered any interest in the leasehold or
subleasehold;
(H) all Facilities leased or subleased
thereunder have received all approvals of
governmental authorities (including licenses
and permits) required in connection with the
operation thereof and have been operated and
maintained in accordance with applicable
laws, rules, and regulations; and
2.1-17
<PAGE>
(I) all Facilities leased or subleased
thereunder are supplied with utilities and
other services necessary for the operation
of said Facilities.
(m) Intellectual Property.
(i) The Seller owns or has the right to use pursuant to
license, sublicense, agreement, or permission all
Intellectual Property necessary for or currently used
in the operation of the business of the Seller as
presently conducted and as committed to be conducted
by Seller. Subject to Section 8(a), each item of
Intellectual Property owned or used by the Seller
immediately prior to the Closing hereunder will be
owned or available for use by the Buyer on identical
terms and conditions immediately subsequent to the
Closing hereunder. The Seller has taken all necessary
action to maintain and protect each item of
Intellectual Property that it owns or uses.
(ii) The Seller has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with
any Intellectual Property rights of third parties,
and to the Knowledge of Seller, Seller has not
received any charge, complaint, claim, demand, or
notice alleging any such interference, infringement,
misappropriation, or violation (including any claim
that the Seller must license or refrain from using
any Intellectual Property rights of any third party).
To the Knowledge of Seller, no third party has
interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual
Property rights of any of the Seller.
(iii) Section 3(m)(iii) of the Disclosure Schedule
identifies each patent or copyright or trademark
registration which has been issued to the Seller
with respect to any of its Intellectual Property,
identifies each pending patent application or
application for copyright or trademark registration
which the Seller has made with respect to any of
its Intellectual Property, and identifies each
license, agreement, or other permission which the
Seller has granted to any third party with respect
to any of its Intellectual Property (together with
any exceptions). The Seller has delivered to the
Buyer correct and complete copies of all such
patents, registrations, applications, licenses,
agreements, and permissions (as amended to date) and
has made available to the Buyer correct and complete
copies of all other written documentation evidencing
ownership and prosecution (if applicable) of each
such item. Section 3(m)(iii) of the Disclosure
Schedule also identifies each trade name, fictitious
or assumed name registration or unregistered
trademark used by the Seller in connection with any
of its businesses. With respect to each item of
Intellectual Property required to be identified in
Section 3(m)(iii) of the Disclosure Schedule:
2.1-18
<PAGE>
(A) the Seller possesses all right, title, and
interest in and to the item, free and clear
of any Security Interest, license, or other
restriction;
(B) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling,
or charge;
(C) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or
demand is pending or, to the Knowledge of
Seller, is threatened which challenges the
legality, validity, enforceability, use, or
ownership of the item; and
(D) except for Dan-Web and Scanweb, the Seller
has never agreed to indemnify any Person for
or against any interference, infringement,
misappropriation, or other conflict with
respect to the item.
(iv) Section 3(m)(iv) of the Disclosure Schedule
identifies each item of Intellectual Property that
any third party owns and that the Seller uses
pursuant to license, sublicense, agreement, or
permission. The Seller has delivered to the Buyer
correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended
to date). With respect to each item of Intellectual
Property required to be identified in Section
3(m)(iv) of the Disclosure Schedule (except for all
such licenses of Seller and/or UPM with
Dan-Webforming International A/S ("Dan-Web") and
Scanweb I/S ("Scanweb") with respect to which no such
representation is being made for purposes hereof):
(A) the license, sublicense, agreement, or
permission covering the item is legal,
valid, binding, enforceable, and in full
force and effect;
(B) the license, sublicense, agreement, or
permission will continue to be legal, valid,
binding, enforceable, and in full force and
effect on identical terms following the
consummation of the transactions
contemplated hereby;
(C) no party to the license, sublicense,
agreement, or permission is in breach or
default, and no event has occurred which
with notice or lapse of time would
constitute a breach or default or permit
termination, modification, or acceleration
thereunder;
(D) no party to the license, sublicense,
agreement, or permission has repudiated any
provision thereof;
(E) with respect to each sublicense, the
representations and warranties set forth in
subsections (A) through (D) above are true
and correct with respect to the underlying
license;
2.1-19
<PAGE>
(F) the underlying item of Intellectual Property
is not subject to any outstanding
injunction, judgment, order, decree, ruling,
or charge;
(G) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or
demand is pending or, to the Knowledge of
Seller, is threatened which challenges the
legality, validity, or enforceability of the
underlying item of Intellectual Property;
and
(H) the Seller has not granted any sublicense or
similar right with respect to the license,
sublicense, agreement, or permission except
as disclosed in Section 3(m)(iv) of the
Disclosure Schedule.
(v) To the Knowledge of Seller, the Buyer will not
interfere with, infringe upon, misappropriate, or
otherwise come into conflict with, any Intellectual
Property rights of third parties as a result of the
continued operation of Seller's businesses as
presently conducted and as committed to be conducted.
(n) Tangible Assets. The Seller owns or leases all buildings,
machinery, equipment, and other tangible assets necessary for
the conduct of its business as presently conducted. Each such
tangible asset is free from defects to the Knowledge of
Seller, has been maintained in accordance with normal industry
practice, is in normal operating condition and repair (subject
to normal wear and tear), and is suitable for the purposes for
which it presently is being used.
(o) Inventory. The Inventory of the Seller consists of (a) raw
materials and packaging materials used in the Walkisoft
Business of Seller, including wood pulp, other fibers, binders
and superabsorbent polymers and (b) finished product, all of
which is merchantable and fit for the purpose for which it was
procured or manufactured, and none of which is obsolete,
damaged, or defective, subject only to the reserve for
Inventory writedown set forth on the face of the Most Recent
Balance Sheet (rather than in any notes thereto) as adjusted
for the passage of time through the Closing Date in accordance
with the past custom and practice of the Seller.
(p) Contracts. Section 3(p) of the Disclosure Schedule lists the
following contracts and other agreements to which the Seller
is a party:
(i) any agreement (or group of related agreements) for
the lease of personal property to or from any Person
providing for lease payments;
(ii) any agreement (or group of related agreements) for
the purchase or sale of raw materials, commodities,
supplies, finished products, or other personal
property, or for the furnishing or receipt of
services, the performance of which will extend over a
period beyond December 31, 1999;
(iii) any agreement concerning a partnership or joint
venture;
2.1-20
<PAGE>
(iv) any agreement (or group of related agreements) to be
assumed by Buyer as an Assumed Liability pertaining
to any indebtedness for borrowed money or any
capitalized lease obligation;
(v) any agreement concerning confidentiality or
containing covenants that in any way purport to
restrict the business activity of the Seller or limit
the freedom of the Seller or its stockholders,
directors or officers to engage in any line of
business or to compete with any Person;
(vi) any intercompany agreement between any Seller and
their Affiliates;
(vii) any profit sharing, stock option, stock purchase,
stock appreciation, deferred compensation, severance,
or other material plan or arrangement for the benefit
of those current directors, officers, and employees
of Seller that will become employees of Buyer;
(viii) any collective bargaining agreement;
(ix) any agreement for Seller's employment of any salaried
individual on a full-time, part-time, consulting, or
other basis that will become employees of Buyer;
(x) any other agreement (or group of related agreements)
the performance of which involves consideration in
excess of U.S.$25,000; or
(xi) any written warranty, guaranty or other similar
undertaking with respect to contractual performance
by the Seller;
The Seller has delivered to the Buyer a correct and complete
copy of each written agreement listed in Section 3(p) of the
Disclosure Schedule (as amended to date) and a written summary
setting forth the terms and conditions of each oral agreement
referred to in Section 3(p) of the Disclosure Schedule. With
respect to each such agreement: (A) the agreement is legal,
valid, binding, enforceable, and in full force and effect; (B)
no party is in breach or default, and no event has occurred
which with notice or lapse of time would constitute a breach
or default, or permit termination, modification, or
acceleration, under the agreement; and (C) no party has
repudiated any provision of the agreement.
(q) Accounts Receivable. All accounts receivable of the Seller are
reflected properly on their books and records, are valid
receivables subject to no setoffs or counterclaims, are
current and collectible, and will be collected in accordance
with their terms at their recorded amounts.
(r) Insurance. Section 3(r) of the Disclosure Schedule sets forth
the following information with respect to each insurance
policy (including policies providing property, casualty,
liability, and workers' compensation coverage and bond and
surety arrangements) to which the Seller has been a party, a
named insured, or otherwise the beneficiary of coverage at any
time within the past three (3) years:
2.1-21
<PAGE>
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the
policyholder, and the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the
coverage was on a claims made, occurrence, or other
basis) and amount (including a description of how
deductibles and ceilings are calculated and operate)
of coverage; and
(v) a description of any retroactive premium adjustments
or other loss-sharing arrangements.
With respect to each such insurance policy and assuming due
enforceability with respect to the insuror: (A) the policy is
legal, valid, binding, enforceable, and in full force and
effect; (B) the policy will continue to be legal, valid,
binding, enforceable, and in full force and effect on
identical terms until the Closing Date; (C) neither the Seller
nor any other party to the policy is in breach or default
(including with respect to the payment of premiums or the
giving of notices), and no event has occurred which, with
notice or the lapse of time, would constitute such a breach or
default, or permit termination, modification, or acceleration,
under the policy; and (D) no party to the policy has
repudiated any provision thereof. Section 3(r) of the
Disclosure Schedule describes any self-insurance arrangements
affecting the Seller.
(s) Litigation. Section 3(s) of the Disclosure Schedule sets
forth each instance in which the Seller (i) is subject to
any outstanding injunction, judgment, order, decree,
ruling, or charge or (ii) is a party or, to the Knowledge of
Seller, is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before
any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any
arbitrator. None of the actions, suits, proceedings,
hearings, and investigations set forth in Section 3(s)
of the Disclosure Schedule could result in any adverse
change in the business, financial condition, operations,
results of operations, or future prospects of the Seller.
To the Knowledge of Seller, Seller has no reason to believe
that any such action, suit, proceeding, hearing, or
investigation may be brought or threatened against the Seller.
(t) Product Warranty. Except as set forth on the Disclosure
Schedule hereto, each product manufactured, sold, leased,
or delivered by the Seller has been in conformity with all
applicable contractual commitments and all express and
implied warranties, and the Seller has no Liability
(and to the Knowledge of Seller there is no Basis for any
present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against
any of them giving rise to any Liability) for replacement
or repair thereof or other damages in connection therewith.
No product manufactured, sold, leased, or delivered by the
2.1-22
<PAGE>
Seller is subject to any guaranty, warranty, or other
indemnity beyond the applicable standard terms and conditions
of sale or lease. Section 3(t) of the Disclosure Schedule
includes copies of the standard terms and conditions of sale
or lease for the Seller (containing applicable guaranty,
warranty, and indemnity provisions).
(u) Product Liability. Except as set forth on the Disclosure
Schedule hereto, the Seller has no Liability (and to the
Knowledge of Seller there is no Basis for any present or
future action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand against any of them giving
rise to any Liability) arising out of any injury to
individuals or property as a result of the ownership,
possession, or use of any product manufactured, sold, leased,
or delivered by the Seller.
(v) Employees. Except as set forth on the Disclosure Schedule
hereto, to the Knowledge of Seller (without reasonable
investigation), no executive, key employee, or group of
employees has any plans to terminate employment with the
Seller. The Seller is not a party to or bound by any
collective bargaining agreement, nor are there any pending
strikes, grievances, claims of unfair labor practices, or
other collective bargaining disputes. The Seller has not
committed any unfair labor practice. To the Knowledge of
Seller (without reasonable investigation), no organizational
effort is presently being made or threatened by or on behalf
of any labor union with respect to employees of any of the
Seller.
(w) Employee Benefits.
(i) Section 3(w) of the Disclosure Schedule lists each
Employee Benefit Plan that the Seller maintains or to
which the Seller contributes or may be obligated to
contribute, with respect to Walkisoft Employees. No
Employee Pension Benefit Plan that Seller and any
current or former domestic member of the Controlled
Group of Corporations which includes the Seller, as
contemplated by ' 414 of the Code, has incurred any
liability under Title IV of ERISA that would result
in any liability for, or loss to, Buyer.
(A) The requirements of Part 6 of Subtitle B of
Title I of ERISA and of Code ss. 4980B have
been substantially met with respect to each
such Employee Benefit Plan which is a
,,group health plan" within the meaning of
Code Section 5000.
(B) All premiums or other payments for all
periods ending on or before the Effective
Date have been paid with respect to each
such Employee Benefit Plan which is an
Employee Welfare Benefit Plan.
(C) The existing Employee Benefit Plan which is
intended to be maintained under Code Section
401(k) and in which Walkisoft USA, Inc. is a
2.1-23
<PAGE>
participating employer with respect to the
Walkisoft Employees has received a favorable
determination letter from the Internal
Revenue Service covering all legislation for
which the applicable remedial amendment
period has not expired, and nothing has
occurred or failed to occur to the Knowledge
of Seller which would impair the
tax-qualified status of such plan.
(D) The Seller has delivered to the Buyer
correct and complete copies of the plan
documents and summary plan descriptions, the
most recent determination letter received
from the Internal Revenue Service, the most
recent Form 5500 Annual Report, and all
related trust agreements, insurance
contracts, and other funding agreements
which implement each such Employee Benefit
Plan.
(ii) None of the Seller and the other members of the
Controlled Group of Corporations that includes the
Seller contributes to, ever has contributed to, or
ever has been required to contribute to any
Multiemployer Plan with respect to the Walkisoft
Employees or has or may have any Liability (including
withdrawal Liability) under any Multiemployer Plan.
(iii) The Seller does not maintain or contribute to any
Employee Welfare Benefit Plan providing medical,
health, or life insurance or other welfare-type
benefits for current or future retired or terminated
employees, their spouses, or their dependents (other
than in accordance with Code ' 4980B).
(x) Guaranties. The Seller is not a guarantor or otherwise liable
for any Liability or obligation (including indebtedness) that
would survive the Closing of any other Person.
(y) Environmental, Health, and Safety Matters. With respect to
the Acquired Assets;
(i) The Seller, and its respective Affiliates have
complied and are in compliance with all
Environmental, Health, and Safety Requirements.
(ii) Without limiting the generality of the foregoing, the
Seller and its respective Affiliates have obtained
and complied with, and are in compliance with, all
permits, licenses and other authorizations that are
required pursuant to Environmental, Health, and
Safety Requirements for the occupation of its
Facilities and the operation of its business; a list
of all such permits, licenses and other
authorizations is set forth on the Disclosure
Schedule 3(z).
(iii) Neither the Seller, nor its Affiliates has received
any written notice, report or other information
(including employee or third-party complaints or
threats) regarding any violation of Environmental,
Health, and Safety Requirements, or any liabilities
or potential liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise), including any
investigatory, remedial or corrective obligations,
relating to any of them or its Facilities arising
under Environmental, Health, and Safety Requirements.
2.1-24
<PAGE>
(iv) To the Knowledge of Seller, none of the following
exists at any property or facility owned or operated
by the Seller: (1) underground storage tanks, (2)
asbestos-containing material in any form or
condition, (3) materials or equipment containing
polychlorinated biphenyls, or (4) landfills, surface
impoundments, or disposal areas.
(v) Neither the Seller, nor its Affiliates has treated,
stored, disposed of, arranged for or permitted the
disposal of, transported, handled, or released any
Hazardous Materials , or owned or operated any
property or facility in a manner that has given or
would give rise to liabilities, including any
liability for response costs, corrective action
costs, personal injury, property damage, natural
resources damages or attorney fees, pursuant to
CERCLA, the Solid Waste Disposal Act, as amended
("SWDA") or any other Environmental, Health, and
Safety Requirements as they exist as of the Effective
Date.
(vi) Neither the Seller nor any of its Affiliates has,
either expressly or by operation of law, assumed or
undertaken any liability, including without
limitation any obligation for corrective or remedial
action, of any other Person relating to
Environmental, Health, and Safety Requirements.
(vii) To the Knowledge of Seller, no facts, events or
conditions relating to the past or present
Facilities, properties or operations of the Seller
or any of its respective predecessors will prevent,
hinder or limit continued compliance with
Environmental, Health, and Safety Requirements,
give rise to any investigatory, remedial or
corrective obligations pursuant to Environmental,
Health, and Safety Requirements, or give rise
to any other liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise) pursuant to
Environmental, Health, and Safety Requirements,
including without limitation any relating to onsite
or offsite releases or threatened releases of
hazardous materials, substances or wastes,
personal injury, property damage or natural
resources damage.
(z) Year 2000 Problem. With regard to the possibility that
computer programs and systems may not properly process dates
subsequent to December 31, 1999 (the "Y2K Problem"), Seller
represents and warrants that it has audited all of its
computer systems (including, but not limited to, systems which
operate the machinery and equipment at the Mt. Holly plant
operated by Walkisoft USA) and that to its Knowledge, such
systems are free from the Y2K Problem insofar as it may affect
the operations of the Walkisoft Business.
(aa) Certain Business Relationships With the Seller. None of the
stockholders of the Seller or their Affiliates owns any
asset, tangible or intangible, which is used in the business
of the Seller.
2.1-25
<PAGE>
(bb) Investment. The Seller (i) understands that the Buyer Note
has not been, and will not be, registered under the
Securities Act, or under any state securities laws, and is
being offered and sold in reliance upon federal and state
exemptions for transactions not involving any public
offering, (ii) is acquiring the Buyer Note solely for its own
account for investment purposes, and not with a view to the
distribution thereof, (iii) is a sophisticated investor
with knowledge and experience in business and financial
matters, (iv) has received certain information concerning
the Buyer and has had the opportunity to obtain additional
information as desired in order to evaluate the merits
and the risks inherent in holding the Buyer Note and, (v) is
able to bear the economic risk and lack of liquidity
inherent in holding the Buyer Note.
(cc) Sales Companies. Walkisoft France S.A.R.L. is duly organized,
validly existing and in good standing under the laws
of France, and all of the outstanding capital stock is
owned by UPM Industries S.A., an Affiliate of UPM.
Walkisoft Iberica S.A. is duly organized, validly existing
and in good standing under the laws of Spain, and all of
the outstanding capital stock is owned by Walkisoft Finland,
an Affiliate of UPM. Walkisoft Italia S.r.l. is duly
organized, validly existing and in good standing under the
laws of Italy, and all of the outstanding capital stock
is owned by Walkisoft Finland, an Affiliate of UPM.
Walkisoft (U.K.) Limited is duly organized, validly existing
and in good standing under the laws of United Kingdom,
and all of the outstanding capital stock is owned by
UPM-Kymmene UK, Plc., an Affiliate of UPM. As of the
Effective Date, Seller and UPM shall cause 100% of the
outstanding capital stock of the Sales Companies to be
transferred to BKI International Inc., free and clear of any
liens or encumbrances, and there shall exist no warrants,
options or other commitment with respect to the issuance
of any additional capital stock for any of such Sales
Companies. Each of the Sales Companies has been operated in
full compliance with all applicable laws and regulations.
As of the Effective Date, the Sales Companies shall have
no Liabilities whatsoever except for trade payables
incurred in the Ordinary Course of Business which shall not
exceed the current assets of the respective Sales Companies
and the Liabilities listed on Exhibit C and specifically
assumed by Buyer hereunder. Seller and UPM shall cause all
other Liabilities relating to the Sales Companies to be
discharged at their sole cost and expense. At Closing, UPM
shall cause the delivery of resignations of officers and
directors as requested by Buyer.
3. Representations and Warranties of the Buyer. The Buyer represents and
warrants to the Seller that the statements contained in this Section 4
are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 4), except as set forth in the Disclosure
Schedule. The Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this
Section 4.
(a) Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation except that
2.1-26
<PAGE>
Buckeye Mt. Holly is a limited liability company duly
organized, validly existing and in good standing under the
laws of the State of Delaware.
(b) Authorization of Transaction. The Buyer has full power and
authority (including full corporate power and authority) to
execute and deliver this Agreement and the other Agreements to
be signed by Buyer and to perform its obligations hereunder or
thereunder. Without limiting the foregoing, the board of
directors of Buyer has duly authorized the execution, delivery
and performance of this Agreement by Buyer. This Agreement
constitutes, and upon the execution thereof, the Other
Agreements to be signed by Buyer will constitute, the valid
and legally binding obligation of the Buyer, enforceable in
accordance with their respective terms and conditions.
(c) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the
transactions contemplated hereby (including the assignments
and assumptions referred to in Section 2 above), will
(i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or
other restriction of any government, governmental agency, or
court to which the Buyer is subject or any provision of
its charter or bylaws or (ii) conflict with, result in a
breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument,
or other arrangement to which the Buyer is a party or by
which it is bound or to which any of its assets is subject.
The Buyer does not need to give any notice to, make any
filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for
the Parties to consummate the transactions contemplated by
this Agreement (including the assignments and assumptions
referred to in Section 2 above).
(d) Brokers' Fees. The Buyer has no Liability or obligation to pay
any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for
which the Seller could become liable or obligated.
4. Pre-Closing Covenants. The Parties agree as follows with respect to the
period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use its commercially
reasonable efforts to take all action and to do all things
necessary, proper, or advisable in order to consummate and
make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the Closing
conditions set forth in Section 6 below).
(b) Notices and Consents. The Seller will give any notices to
third parties, and the Seller will obtain any third party
consents as set forth on Exhibit O. If the other party to the
contract to be assigned refuses its consent to the assignment
of the contract to the Buyer and the failure
2.1-27
<PAGE>
to obtain such required consent is waived by Buyer, the
respective contract shall be assigned as between Seller and
Buyer, with the effect that Buyer, to the extent that this is
legally permissible and practicable, shall perform the
contract and accept performance of the contract by the other
contractual party on behalf of Seller but for the account of
Buyer. If as a result of the sale and transfer of the Acquired
Assets and/or the Seller's inability to perform its
obligations under an assigned contract the other contractual
party terminates the contract with the Seller for failure to
obtain required consent and/or asserts a claim for breach of
contract, Seller shall indemnify Buyer from and against all
claims of such contractual party, and from all interest,
penalties and costs in connection therewith.
(c) Operation of Business. The Seller will not engage in any
practice, take any action, or enter into any transaction
outside the Ordinary Course of Business. Without limiting the
generality of the foregoing, the Seller will not (i) execute
any agreement that will survive Closing with another Seller or
Affiliate unless Buyer consents, (ii) negotiate any agreements
creating obligations after Closing in excess of U.S.$10,000
other than sales agreements and agreements for the purchase of
raw materials executed in the Ordinary Course of Business for
a period not to exceed December 31, 1999, unless Buyer
consents, or (iii) otherwise engage in any practice, take any
action, or enter into any transaction of the sort described in
Section 3(h) above.
(d) Preservation of Business. The Seller will use commercially
reasonable efforts to keep its business and properties
substantially intact, including its present operations,
physical Facilities, working conditions, and relationships
with lessors, licensors, suppliers, customers, and employees.
(e) Full Access. Subject to anticompetitive laws, the Seller will
permit representatives of the Buyer to have full access at all
reasonable times, and in a manner so as not to interfere with
the normal business operations of the Seller, to all premises,
properties, personnel, books, records (including Tax records),
contracts, and documents of or pertaining to each Seller.
(f) Title Insurance. The Buyer will obtain the following title
insurance commitments, policies, and riders in preparation for
the Closing:
(i) with respect to each parcel of real estate in North
Carolina that the Seller owns, an ALTA Owner's Policy
of Title Insurance Form B-1987 (or equivalent
policy reasonably acceptable to the Buyer if the
real property is located in a state in which an
ALTA Owner's Policy of Title Insurance Form B-1987
is not available) issued by a title insurer
reasonably satisfactory to the Buyer in such
amount as the Buyer reasonably may determine to be
the fair market value of such real property
(including all improvements located thereon),
insuring title to such real property to be in the
Buyer as of the Closing (subject only to the title
exceptions described above in Section 3(l)(i) and
in Section 3(l)(i) of the Disclosure Schedule).
2.1-28
<PAGE>
Each title insurance policy delivered under Section 5(f)(i) above shall
(A) insure title to the real property and all recorded easements
benefitting such real property, (B) contain an "extended coverage
endorsement" insuring over the general exceptions contained customarily
in such policies, (c) contain an ALTA Zoning Endorsement 3.1 (or
comparable equivalent), (D) contain an endorsement insuring that the
real property described in the title insurance policy is the same real
estate as shown on the Survey delivered with respect to such property,
(E) contain an endorsement insuring that each street adjacent to the
real property is a public street and that there is direct and
unencumbered pedestrian and vehicular access to such street from the
real property, (F) if the real property consists, of more than one
record parcel, contain a "contiguity" endorsement insuring that all of
the record parcels are contiguous to one another, and (G) contain a
"non-imputation" endorsement to the effect that title defects known to
the officers, directors, and stockholders of the owner prior to the
Closing shall not be deemed "facts known to the insured" for purposes
of the policy.
(g) Surveys. With respect to each parcel of real property in
North Carolina that the Seller owns and as to which a
title insurance policy is to be procured pursuant to
Section 5(f) above, the Buyer will procure in preparation for
the Closing a current survey of the real property
certified to the Buyer, prepared by a licensed surveyor and
conforming to current ALTA Minimum Detail Requirements for
Land Title Surveys (or comparable equivalent), disclosing
the location of all improvements, easements, party walls,
sidewalks, roadways, utility lines, and other matters
shown customarily on such surveys, and showing access
affirmatively to public streets and roads (the "Survey"). The
Survey shall not disclose any survey defect or encroachment
from or onto the real property which has not been cured
or insured over prior to the Closing.
(h) Notice of Developments. Each Party will give prompt written
notice to the other Party of any material adverse development
causing a breach of any of its own representations and
warranties in Section 3 and Section 4 above. No disclosure by
any Party pursuant to this Section 5(h), however, shall be
deemed to amend or supplement the Disclosure Schedule or to
prevent or cure any misrepresentation, breach of warranty, or
breach of covenant.
(i) Exclusivity. The Seller will not (i) solicit, initiate, or
encourage the submission of any proposal or offer from any
Person relating to the acquisition of any capital stock or
other voting securities, or any portion of the assets, of the
Seller (including any acquisition structured as a merger,
consolidation, or share exchange) or (ii) participate in any
discussions or negotiations regarding, furnish any information
with respect to, assist or participate in, or facilitate in
any other manner any effort or attempt by any Person to do or
seek any of the foregoing. The Seller will notify the Buyer
immediately if any Person makes any proposal, offer, inquiry,
or contact with respect to any of the foregoing.
2.1-29
<PAGE>
5. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The obligation of the
Buyer to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the
following conditions:
(i) the representations and warranties set forth in
Section 3 above shall be true and correct in all
material respects at and as of the Closing Date;
(ii) the relevant parties shall have entered into the
Other Agreements, including the German Purchase
Agreement, and the same shall be in full force and
effect;
(iii) the Seller shall have performed and complied with all
of its covenants hereunder and under the Other
Agreements in all material respects through the
Closing Date;
(iv) the Seller shall have procured all of the third party
consents specified in Section 5(b) above, and all of
the permits necessary for Buyer to own and operate
the Acquired Assets in the manner operated prior to
the Closing Date, and all licenses and approvals
necessary for Buyer to own and operate the Acquired
Assets shall have been obtained;
(v) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or
administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated
by this Agreement, (B) cause any of the transactions
contemplated by this Agreement to be rescinded
following consummation, or (c) affect adversely the
right of the Buyer to own the Acquired Assets or to
operate the former businesses of the Seller;
(vi) the Seller shall have delivered to the Buyer a
certificate to the effect that each of the conditions
specified above in Section 6(a)(i)-(v) is satisfied
in all respects;
(vii) the approval or waiver of preemptive rights necessary
for the transfer of the real property described in
the German Purchase Agreement, the discharge of all
land charges encumbering such real estate and the
registration of a priority notice with no
registrations having prior ranking not assumed by the
Buyer shall have been obtained for such real
property; and
(viii) all actions to be taken by the Seller in connection
with consummation of the transactions contemplated
hereby and all certificates, opinions, instruments,
and other documents required to effect the
transactions contemplated hereby will be satisfactory
in form and substance to the Buyer.
2.1-30
<PAGE>
The Buyer may waive any condition specified in this Section 6(a) if it
executes a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Seller. The obligation of the
Seller to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the
following conditions:
(i) the representations and warranties set forth in
Section 4 above shall be true and correct in all
material respects at and as of the Closing Date;
(ii) the relevant parties shall have entered into the
Other Agreements, including the German Purchase
Agreement, and the same shall be in full force and
effect;
(iii) the Buyer shall have performed and complied with all
of its covenants hereunder and under the Other
Agreements in all material respects through the
Closing;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or
administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated
by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be
rescinded following consummation (and no such
injunction, judgment, order, decree, ruling, or
charge shall be in effect);
(v) the Buyer shall have delivered to the Seller a
certificate to the effect that each of the conditions
specified above in Section 6(b)(i)-(iv) is satisfied
in all respects;
(vi) the Buyer shall have delivered to the Seller the
Initial Payment adjusted in accordance with the
provisions of this Agreement, the Buyer Note and the
Pledge and Security Agreement;
(vii) the Seller shall have received from counsel to the
Buyer an opinion in form and substance as set forth
in Exhibit I attached hereto, addressed to the
Seller, and dated as of the Closing Date;
(viii) all actions to be taken by the Buyer in connection
with consummation of the transactions contemplated
hereby and all certificates, opinions, instruments,
and other documents required to effect the
transactions contemplated hereby will be satisfactory
in form and substance to the Seller.
The Seller may waive any condition specified in this Section 6(b) if it
executes a writing so stating at or prior to the Closing.
2.1-31
<PAGE>
6. Termination.
(a) Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
(i) the Buyer and the Seller may terminate this Agreement
by mutual written consent at any time prior to the
Closing;
(ii) the Buyer may terminate this Agreement by giving
written notice to the Seller at any time prior to the
Closing (A) in the event the Seller has breached any
material representation, warranty, or covenant
contained in this Agreement in any material respect,
the Buyer has notified the Seller of the breach, and
the breach has continued without cure for a period of
30 days after the notice of breach or (B) if the
Closing shall not have occurred on or before December
31, 1999.
(iii) the Seller may terminate this Agreement by giving
written notice to the Buyer at any time prior to the
Closing (A) in the event the Buyer has breached any
material representation, warranty, or covenant
contained in this Agreement in any material respect,
the Seller has notified the Buyer of the breach, and
the breach has continued without cure for a period of
30 days after the notice of breach or (B) if the
Closing shall not have occurred on or before December
31, 1999.
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to Section 7(a) above, all rights and obligations of
the Parties hereunder shall terminate without any Liability of
any Party to any other Party (except for any Liability of any
Party then in breach).
7. Post-Closing Covenants.
(a) License of Walkisoft Name. Seller hereby grants to Buyer
the exclusive royalty-free right to use the trade name
"Walkisoft" for a period of five (5) years from the Effective
Date in all areas in which the Seller has used the trade
name or otherwise has rights in the trade name. Seller
hereby expressly releases Buyer, its agents,
employees, licensees and assigns from and against any and
all claims which Seller has or may have with respect to
use of the trade name "Walkisoft." From Effective Date and
thereafter for a period of five (5) years, Seller shall
not use or license to use or transfer to Persons other than
Buyer the "Walkisoft" trade name and thereafter it will
not use, license to use or transfer the "Walkisoft"
trade name in or to any similar business to that of Buyer.
Seller warrants that it has the full right and authority
to grant to Buyer the license to use the trade name
"Walkisoft."
(b) Noncompetition by Seller. Except as specified in Section 8(c)
below, for a period of five (5) years from and after the
Effective Date, neither any Seller nor any Affiliate of Seller
shall engage in, directly or indirectly, the airlaid nonwoven
business or any other business conducted
2.1-32
<PAGE>
by Seller as of the Effective Date (the "Restricted Business")
anywhere in the world (each of Parties hereto acknowledging
that the business as conducted by Seller is an expanding
global business with current worldwide sales); provided,
however, that no owner of less than 1% of the outstanding
stock of any publicly-traded corporation shall be deemed to
engage solely by reason thereof in the Restricted Business.
Notwithstanding the foregoing, Seller or an Affiliate of
Seller shall be permitted to acquire another business which
has an airlaid nonwoven division or subsidiary comprising not
more than 3% of the gross sales for such acquired business for
its last full fiscal year. In such event, Seller or its
applicable Affiliate shall use its best efforts to dispose of
the airlaid nonwoven division or subsidiary of the acquired
business as soon as commercially practicable to do so and as
part of such process, shall give Buckeye Technologies or its
Affiliates a right of first negotiation to acquire the airlaid
nonwoven division or subsidiary to be sold. To the extent
Buyer is unwilling to acquire such airlaid non-woven division
or subsidiary at such price and on such terms as offered by
Seller in writing to Buyer, then Seller may not sell such
business at a lower price or on more favorable terms than
offered to Buyer for at least one year following the date of
written offer from Seller to Buyer. If Seller or its Affiliate
is unable to sell such airlaid nonwoven division or subsidiary
after using commercially reasonable efforts or determines that
it is commercially impracticable to sell such airlaid nonwoven
division or subsidiary based on its integration with the
remaining acquired business, then in such event, Seller
covenants that neither Seller nor its Affiliates shall seek to
expand or otherwise invest in expansion of the airlaid
nonwoven division or subsidiary within the five-year period
following the Effective Date. If the final judgment of a court
of competent jurisdiction declares that any term or provision
of this Section 8(b) is invalid or unenforceable, the Parties
agree that the court making the determination of invalidity or
unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific
words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention
of the invalid or unenforceable term or provision, and this
Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment may be
appealed.
(c) Walkisoft Finland Oy. Buyer agrees that Seller may continue
the operation of the Walkisoft plant in Kotka, Finland for up
to six (6) months after the Effective Date. By the end of the
six (6) month period, Seller must either (i) sell the
equipment at the Kotka plant to third parties who are not in
competition with Buyer or (ii) elect to continue operating the
equipment to produce products which are not in competition
with Buyer. In either event, Seller agrees to seek Buyer's
prior written approval regarding whether the sale of the
equipment or the continued production at the Kotka Plant would
be in competition with Buyer, and Buyer's decision shall be
determinative of the issue as long as it is not unreasonably
given or withheld.
2.1-33
<PAGE>
(d) Buyer Note. The Buyer Note will be imprinted with a legend
substantially in the following form:
THE PAYMENT OF PRINCIPAL AND INTEREST ON THIS NOTE IS SUBJECT TO
CERTAIN RECOUPMENT AND SET-OFF PROVISIONS SET FORTH IN THE ASSET
PURCHASE AGREEMENT DATED AS OF OCTOBER 1, 1999 (THE "AGREEMENT")
BETWEEN THE ISSUER OF THIS NOTE AND THE PERSON TO WHOM THIS NOTE
ORIGINALLY WAS ISSUED, AMONG OTHERS. THIS NOTE WAS ORIGINALLY ISSUED ON
OCTOBER 1, 1999, AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED. THE TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN
RESTRICTIONS SET FORTH IN THE AGREEMENT. THE ISSUER OF THIS NOTE WILL
FURNISH A COPY OF THESE PROVISIONS TO THE HOLDER HEREOF WITHOUT CHARGE
UPON WRITTEN REQUEST.
If Seller desires to transfer Buyer Note to an Affiliate, Seller first
must furnish the Buyer with (a) a written opinion satisfactory to the
Buyer in form and substance from counsel satisfactory to the Buyer to
the effect that the holder may transfer the Buyer Note as desired
without registration under the Securities Act and (b) a written
undertaking executed by the desired transferee satisfactory to the
Buyer in form and substance agreeing to be bound by the offset and
recoupment provisions and the restrictions on transfer contained
herein.
(e) Accounts Receivable. If Buyer is unable after reasonable
efforts to collect the accounts receivable comprising Acquired
Assets within sixty (60) days after the stated date for
payment, Seller shall purchase such accounts receivable at the
U.S. value assigned to such accounts as of the Effective Date.
(f) Further Assurances. From time to time after the Closing Date,
each party, at the request of the other and without
further consideration, agrees to execute and deliver or to
cause to be executed and delivered at its expense (a)
such other instruments of transfer as reasonably may be
requested by Buyer to more effectively transfer to Buyer the
right, title and interest in or to the Acquired Assets
contemplated by this Agreement (including assignments of
Intellectual Property and procurement of third-party
consents where required) or (b) such other instruments of
assumption by Buyer for Assumed Liabilities as contemplated
by this Agreement and (c) to take or cause to be taken
such further or other action as may reasonably be necessary
or appropriate in order to effectuate the transactions
contemplated by this Agreement.
(g) Sales Rebates or Discounts. Seller shall remain liable for or
receive benefit from, as the case may be, its pro rata share
of any sales or purchase discounts or rebates which are
payable after Closing for the period up to the Effective Date.
(h) Product Warranty. As a service to Seller, Buyer agrees to use
its reasonable efforts to rectify and/or remedy on Seller's
behalf and at Seller's expense any items manufactured by
Seller prior to the Effective Date which are claimed to be
covered by a warranty of Seller. Upon receipt of reasonable
documentation from Buyer, Seller shall promptly reimburse
Buyer for all costs reasonably
2.1-34
<PAGE>
expended in rectifying or remedying the claim. To the extent
such costs are anticipated to be in excess of U.S. $10,000 for
a particular warranty claim, Buyer shall notify Seller in
advance of remedying the warranty claim to advise Seller of
the claim and the anticipated expenses associated therewith.
Buyer shall remedy or replace the item with the consent of
Seller, which shall not be unreasonably withheld, provided
that upon Seller's failure to object within five (5) business
days following receipt of Buyer's notice to Seller of the
claim, Buyer may proceed to rectify or remedy the claim at
Seller's expense. The Parties acknowledge that Designated
Accruals contains a reserve for warranty claims which shall be
charged against prior to reimbursement by Seller. The Parties
further acknowledge that Buyer is providing this warranty
service as an accommodation to Seller and such agreement shall
not constitute an assumption by Buyer of any Liability that
does not constitute an Assumed Liability under this Agreement.
(i) Access to Records. Each of the Parties after the Closing Date
shall permit the other full access at reasonable times, and in
a manner so as not to interfere with normal business
operations, to all books, records (including tax records),
contracts and documents pertaining to the operation of
Seller's business prior to the Effective Date.
(j) Payment to Dan-Web. Within five (5) banking days after the
Closing Date, UPM and Buckeye Technologies each agree to pay
or cause to be paid U.S. $1,400,000 to Dan-Web, for a total of
U.S. $2,800,000 as required by Section 7.1 of the Buckeye
License agreement dated July 13, 1999, between UPM, Buckeye
Technologies, Dan-Web and Scanweb. Further, if the Closing
Date shall not have occurred before January 1, 2000, UPM and
Buckeye each agree to pay or cause to be paid U.S. $100,000 to
Dan-Web within five (5) days thereafter, for a total of U.S.
$200,000 as required by Section 7.1 of said Buckeye License
Agreement.
(k) UPM-Raflatac, Inc. Property. UPM shall cause its Affiliate,
UPM-Raflatac, Inc., to sell and Buyer shall purchase all of
the approximately 46 acres of real property contiguous or in
close proximity to Seller's Facilities at a price of $650,000
payable in cash at closing which shall be held within thirty
(30) days following the Closing Date. The same provisions and
obligations of the Parties regarding title, title insurance,
survey and expense sharing regarding the Facilities shall
similarly apply to the sale hereunder.
8. Indemnification
(a) Survival; Right to Indemnification Not Affected by Knowledge.
All of the representations, warranties, covenants and
obligations in this Agreement and the various Disclosure
Schedules referred to herein, the supplements to such
Disclosure Schedules, and any other certificate or document
delivered pursuant to this Agreement and the German
Purchase Agreement shall survive the Closing and continue in
full force and effect forever thereafter (subject to
any applicable statutes of limitations). The right to
indemnification, payment of the amount of Adverse
Consequences or other remedy based on such representations,
2.1-35
<PAGE>
warranties, covenants, and obligations will not be affected by
any investigation conducted with respect to, or any Knowledge
acquired (or capable of being acquired) at any time, whether
before or after the execution and delivery of this Agreement
or the Closing Date, with respect to the accuracy or
inaccuracy of or compliance with, any such representation,
warranty, covenant, or obligation. The waiver of any condition
based on the accuracy of any representation or warranty, or on
the performance of or compliance with any covenant or
obligation, will not affect the right to indemnification,
payment of the amount of Adverse Consequences or other remedy
based on such representations, warranties, covenants, and
obligations.
(b) Indemnification Provisions for Benefit of the Buyer.
(1) Each of Seller, jointly and severally, will indemnify and hold
harmless the Buyer and Buckeye Technologies (the indemnified
persons are sometimes hereinafter referred to collectively as
the "Indemnified Persons" and the indemnifying parties are
sometimes hereinafter referred to collectively as the
"Indemnifying Party") for, and will pay to the Indemnified
Persons the amount of, any Adverse Consequence arising,
directly or indirectly, from or in connection with:
(i) any breach of any representation or warranty made by
the Seller in this Agreement, including the
Disclosure Schedule (but without giving effect to any
supplement to the Disclosure Schedule made subsequent
to the signing hereof), or any other certificate or
document delivered by the Sellers pursuant to this
Agreement;
(ii) any breach by the Seller of any covenant or
obligation of such Seller in this Agreement;
(iii) any product shipped or manufactured by, or any
services provided by, the Seller prior to the
Effective Date;
(iv) any Liability for infringement of any Lemelson patent
relating to the use of the Acquired Assets before the
Effective Date and with respect to Buckeye Mt. Holly
only, after the Effective Date;
(v) any Liability of UPM, Seller, or any predecessor of
Seller or any of their respective Affiliates or
otherwise arising out of or relating to the ownership
and operation of the Walkisoft Business prior to the
Effective Date which is not an Assumed Liability; or
(vi) any Liability of one or more of the Sales Companies
arising out of or relating to the operation of their
respective businesses prior to the Effective Date
except for trade payables incurred in the Ordinary
Course of Business and any Liabilities specifically
assumed by Buyer and listed on Schedule C attached
hereto.
2.1-36
<PAGE>
The remedies provided in this Section 9(b)(1) will be the exclusive
remedy that may be available to the Indemnified Persons relating to the
matters covered herein except as set forth in Section 11(o) and except
that (i) indemnification relating to Liability of Seller for unpaid
Taxes pertaining to any period of time prior to the Effective Date
shall be governed exclusively by Section 9(b)(2) below and (ii)
indemnification for the Environmental, Health and Safety Liabilities,
Hazardous Materials, and Hazardous Activities pertaining to a time
period prior to the Effective Date shall be governed exclusively by
Section 9(b)(3) below.
(2) Each Seller, jointly and severally, agrees to indemnify the
Indemnified Persons from and against the entirety of any
Adverse Consequences the Indemnified Persons may suffer
resulting from, arising out of, relating to, in the nature of,
or caused by any Liability of the Seller for unpaid Taxes
relating to any period in time prior to the Effective Date.
(3) Each Seller, jointly and severally, will indemnify and hold
harmless the Indemnified Persons for, and will pay to the
Indemnified Persons the amount of, any Adverse Consequences
(including costs of cleanup, containment, or other
remediation) arising, directly or indirectly, from or in
connection with:
(i) any Environmental, Health, and Safety Liabilities
arising out of or relating to: (A) the ownership,
operation, or condition at any time on or prior to
the Effective Date of the Facilities or any other
properties and assets (whether real, personal, or
mixed and whether tangible or intangible) in which
the Seller has or had an interest, (B) any Hazardous
Materials or other contaminants that were present
on the Facilities or such other properties and
assets at any time on or prior to the Effective
Date; (C) any Hazardous Materials or other
contaminants, wherever located, that were generated,
transported, stored, treated, released, or otherwise
handled by the Seller or by any other Person for
whose conduct they are or may be held responsible at
any time on or prior to the Effective Date, or (D)
any Hazardous Activities that were conducted by the
Seller or by any other Person for whose conduct they
are or may be held responsible; or
(ii) any bodily injury (including illness, disability,
and death, and regardless of when any such bodily
injury occurred, was incurred, or manifested
itself), personal injury, property damage
(including trespass, nuisance, wrongful eviction,
and deprivation of the use of real property), or
other damage of or to any Person, including any
employee or former employee of the Seller or any
other Person for whose conduct they are or may be
held responsible, in any way arising from any
Hazardous Activity conducted with respect to
the Facilities or the operation of the business by
Seller prior to the Effective Date, or from
Hazardous Material that was (A) present on or before
the Effective Date on or at the Facilities (or
present on any other property, if such Hazardous
Material emanated from any of the Facilities and was
present on any of the Facilities on or prior to the
Effective Date) or (B) released by the Seller or
any other Person for whose conduct they are or may
be held responsible, at any time on or prior to the
Effective Date.
2.1-37
<PAGE>
(iii) If any investigation, removal or remedial action is
required by Environmental, Health and Safety
Requirements ("Required Action") and the Seller is
Liable to the Buyer for the Environmental, Health
and Safety Liabilities giving rise to the Required
Action under the terms of Section 9(b)(3) above,
Seller shall be entitled to undertake said Required
Action so long as (a) Seller provides reasonable
notice to Buyer before commencing such Required
Action (b) Seller performs such Required Action in
accordance with the Environmental, Health and Safety
Requirements; (c) Seller performs the Required
Action, in accordance with any requirements of any
governmental agency having jurisdiction over the
administration and enforcement of the Environmental,
Health and Safety Requirements, (d) Seller performs
the Required Action in a manner so as not to
interfere, to the extent reasonably practicable,
with the Buyer's operation of business, and
(e) Seller undertakes the Required Action and uses
commercially reasonable efforts to complete the
Required Action in a timely and expeditious manner.
If the Seller fails to meet the foregoing conditions,
the Buyer shall be entitled to perform the Required
Action at Seller's expense. If the Buyer and Seller
dispute either the extent to which there is a
Required Action or Seller's Liability with respect
to the Required Action or whether the Seller has
failed to meet any of the conditions set forth above
which would entitle Buyer to perform the Required
Action, the Parties agree to submit such issue to
arbitration pursuant to Section 11(a) hereof. In the
event that Seller performs the Required Action,
Seller shall keep Buyer reasonably informed of the
progress of such Required Action and shall provide
copies to Buyer of the results of any Required
Action, all correspondence from or to any
governmental entity pertaining to the Required
Action, and all reports and other documentation
pertaining to such Required Action. Buyer shall
provide access to the property at reasonable times
to allow Seller to perform any Required Action.
(c) Indemnification Provisions for Benefit of the Seller. In
the event the Buyer breaches any of its representations,
warranties, and covenants contained herein, then the
Buyer agrees to indemnify the Seller from and against the
entirety of any Adverse Consequences the Sellers may
suffer through and after the date of the claim for
indemnification (including any Adverse Consequences the
Seller may suffer after the end of any applicable survival
period) resulting from, arising out of, relating to, in
the nature of, or caused by the breach. Further, Buyer
agrees to hold harmless and indemnify Seller from and against
any Adverse Consequences arising out of the operation
of the business by Buyer following the Effective Date or
the failure by Buyer to discharge or perform any Assumed
Liabilities or the breach by Buyer of the Worker Adjustment
Retraining Notification Act or any other plant closure
law applicable to Walkisoft USA.
2.1-38
<PAGE>
(d) Time Limitations. If the Closing occurs, the Seller will have
no Liability (for indemnification or otherwise) with
respect to any representation or warranty, except as set
forth below, unless on or before the second (2nd)
anniversary of the Effective Date, the Buyer notifies the
Sellers of a claim specifying the factual basis of that
claim in reasonable detail to the extent then known by the
Buyer. With respect to environmental matters covered
under Section 3(y) or indemnification for environmental
matters covered under Section 9(b)(3), the time limitations
set forth above shall be extended to the fifth (5th)
anniversary of the Effective Date except that no time
limitation shall apply to any breach of representation or
warranty with respect to environmental matters covered
under Section 3(y), or indemnification for environmental
matters covered under Section 9(b)(3) of which any Seller
had Knowledge at any time prior to the Effective Date. With
respect to Tax matters covered under Section 3(k) and
title matters covered under Section 3(e), the time limitation
set forth above shall be extended to the expiration of
the applicable statute of limitations for such tax or title
matter. If the Closing occurs, the Buyer will have no
Liability (for indemnification or otherwise) with respect to
any representation or warranty, unless on or before the
second (2nd) anniversary of the Effective Date, the Seller
notifies the Buyer of a claim specifying the factual
basis of that claim in reasonable detail to the extent then
known by the Seller.
(e) Limitation on Amount C Seller. The Seller shall have no
Liability for indemnification for indirect or consequential
losses and damages with respect to matters described in
9(b)(1)(i) unless such matter involves a breach of
Section 3(e) or involves gross negligence or wilful
misconduct by Seller, UPM or any of their respective
Affiliates and the term Adverse Consequences shall be
interpreted accordingly. Further, the Seller shall have no
Liability for indemnification for any individual claim
pursuant to Section 9(b)(1)(i) if the Adverse Consequence
for such individual claim is less than U.S. $25,000. Seller
shall have no Liability for indemnification with respect to
the matters described in Section 9(b)(1)(i) and which exceed
the foregoing $25,000 de minimus limitation, until the
total of all Adverse Consequences with respect to such claims
under this Agreement and similar claims for breaches of
representations and warranties under the German Purchase
Agreement exceed U.S. $300,000 in the aggregate, at which
time, the Seller shall be liable to the Indemnified Persons
for the entire amount of such Adverse Consequences
(subject, however, to the $25,000 de minimus limitation)
in excess of U.S. $300,000. However, the foregoing
$300,000 limitation will not apply to any breach of the
Seller's representations and warranties of which any Seller
or UPM had Knowledge at any time prior to the Effective Date.
The maximum aggregate total amount of indemnification that Seller shall
be Liable under this Agreement with respect to the matters described in
Sections 9(b)(1)(i) and 9(b)(3) and similar matters under the German
Purchase Agreement shall in all events be limited to U.S. $20,000,000
except with respect to fraud or any intentional breach by any Seller,
UPM or any of their respective Affiliates of any representation,
warranty, covenant or obligation, and the Seller will be jointly and
severally liable for all Adverse Consequences suffered by the Buyer
2.1-39
<PAGE>
with respect to such fraud or intentional breach. The maximum aggregate
total amount of indemnification that Seller shall be Liable under this
Agreement with respect to all matters described in Section 9(b) and
similar matters under the German Purchase Agreement shall in all events
be limited to U.S. $105,000,000.
(f) Limitation on Amount -- Buyer. Buyer shall have no liability
for indemnification for any individual claim pursuant
to Section 9(c) if the Adverse Consequences for such
claim is less than U.S. $25,000. The Buyer will have no
Liability (for indemnification or otherwise) with respect to
the matters described in Section 9(c) and which exceed
the $25,000 de minimus limitation until the total of all
Adverse Consequences with respect to such claims under this
Agreement and similar claims under the German Purchase
Agreement exceed U.S. $300,000, at which time, the Buyer
shall be liable to the Indemnified Persons for the entire
amount of such Adverse Consequences (subject, however, to
the $25,000 de minimus limitation) in excess of U.S. $300,000.
However, this Section (9)(f) will not apply to any breach
of any of the Buyer's representations and warranties of
which the Buyer had Knowledge at any time prior to Closing
Date. The maximum aggregate total amount of indemnification
that Buyer shall be Liable under Section 9(c) of this
Agreement for breaches of representations and warranties and
under the German Purchase Agreement for similar matters shall
in all events be limited to U.S. $20,000,000 except with
respect to fraud or any intentional breach by any Buyer of
any representation, warranty, covenant or obligation,
and the Buyer will be jointly and severally liable for all
Adverse Consequences suffered by Seller with respect to such
fraud or intentional breach.
(g) Recoupment Under the Buyer Note. Upon notice to Seller
specifying in reasonable detail the basis for such
set-off, the Seller shall have thirty (30) days to agree or
disagree with Buyer's claim for set-off. The Buyer may
set-off any amount to which Seller agrees that Buyer is
entitled under this Section 9 against amounts otherwise
payable under the Buyer Note or the obligations owing to
Seller on account of the German Purchase Agreement. The
exercise of such right of set-off by the Buyer will not
constitute an event of default under the Buyer Note or the
German Purchase Agreement. As to any amount that Seller
disputes as being entitled to set-off by providing notice to
Buyer of such disputed amount within said thirty (30) day
period, Buyer shall pay such disputed amount to a mutually
agreed upon escrow agent to hold until the dispute is
resolved by mutual agreement of the Parties or pursuant to
the arbitration provisions of Section 11(a). Any interest
earned in escrow shall be paid to the Party receiving the
principal from escrow, or such part attributable thereto.
(h) Procedure for Indemnification--Third Party Claims
(1) Promptly after receipt by an Indemnified Person under
this Section 9 of notice of the commencement of any
proceeding against it, such Indemnified Person will,
if a claim is to be made against an Indemnifying
2.1-40
<PAGE>
Party under this Section 9, give notice to the
Indemnifying Party of the commencement of such claim,
but the failure to notify the Indemnifying Party will
not relieve the Indemnifying Party of any liability
that it may have to any Indemnified Person, except to
the extent that the Indemnifying Party demonstrates
that the defense of such action is prejudiced by the
Indemnified Person's failure to give such notice.
(2) If any proceeding referred to in Section 9(f)(1) is
brought against an Indemnified Person and it gives
notice to the Indemnifying Party of the commencement
of such proceeding, the Indemnifying Party will,
unless the claim involves Taxes, be entitled to
participate in such proceeding and, to the extent
that it wishes (unless (i) the Indemnifying Party is
also a party to such proceeding and the Indemnified
Person determines in good faith that joint
representation would be inappropriate, or (ii) the
Indemnifying Party fails to provide reasonable
assurance to the Indemnified Person of its financial
capacity to defend such proceeding and provide
indemnification with respect to such proceeding), to
assume the defense of such proceeding with counsel
satisfactory to the Indemnified Person and, after
notice from the Indemnifying Party to the Indemnified
Person of its election to assume the defense of such
proceeding, the Indemnifying Party will not, as long
as it diligently conducts such defense, be liable to
the Indemnified Person under this Section 9 for any
fees of other counsel or any other expenses with
respect to the defense of such proceeding, in each
case subsequently incurred by the Indemnified Person
in connection with the defense of such proceeding,
other than reasonable costs of investigation. If the
Indemnifying Party assumes the defense of a
proceeding, (i) it will be conclusively established
for purposes of this Agreement that the claims made
in that proceeding are within the scope of and
subject to indemnification; (ii) no compromise or
settlement of such claims may be effected by the
Indemnifying Party without the Indemnified Person's
consent unless (A) there is no finding or admission
of any violation of the law or any violation of the
rights of any Person and no effect on any other
claims that may be made against the Indemnified
Person, and (B) the sole relief provided is monetary
damages that are paid in full by the Indemnifying
Party; and (iii) the Indemnified Person will have no
liability with respect to any compromise or
settlement of such claims effected without its
consent. If notice is given to an Indemnifying Party
of the commencement of any proceeding and the
Indemnifying Party does not, within ten days after
the Indemnified Person's notice is given, give notice
to the Indemnified Person of its election to assume
the defense of such proceeding, the Indemnifying
Party will be bound by any determination made in such
proceeding or any compromise or settlement effected
by the Indemnified Person.
2.1-41
<PAGE>
(3) Notwithstanding the foregoing, if an Indemnified
Person determines in good faith that there is a
reasonable probability that a proceeding may
adversely affect it or its Affiliates other than as a
result of monetary damages for which it would be
entitled to indemnification under this Agreement, the
Indemnified Person may, by notice to the Indemnifying
Party, assume the exclusive right to defend,
compromise, or settle such proceeding, but the
Indemnifying Party will not be bound by any
determination of a proceeding so defended or any
compromise or settlement effected without its consent
(which may not be unreasonably withheld).
(i) Procedure for Indemnification--Other Claims. A claim for
indemnification for any matter not involving a third-party
claim may be asserted by notice to the party from whom
indemnification is sought.
(j) Coordination with German Purchase Agreement. The Parties agree
that they shall not cause any actions to be taken under this
Agreement or the German Purchase Agreement which would cause
the aggregate limitation provisions of Section 9(e) to be
exceeded.
(k) Overlapping Indemnification Obligations. To the extent Buyer
shall have any claim for indemnification involving both a
matter described in 9(b)(1)(i) and any other provision of
9(b), the portion of such claim involving 9(b) other than
9(b)(1)(i) shall not be subject to the limitations contained
in 9(d) or 9(e) unless specifically provided therein.
(l) Release. Buyer agrees that as of the fifth anniversary of the
Effective Date, Buyer waives, releases, acquits, and
forever discharges Seller, its officers, directors, partners,
employees or agents, of and from any and all claims, actions,
causes of action, demands, rights, damages, costs, expenses
or compensation whatsoever, direct or indirect, known or
unknown, foreseen or unforeseen, which Buyer may have on or
after that date relating to or arising out of any
Environmental, Health, and Safety Requirements. This Release
shall not be effective until the date five years after the
Effective Date and shall not apply to claims for which Buyer
has given Seller notice pursuant to Section 9(d) hereof
prior to that date or to any claim for breach of
representation or warranty with respect to environmental
matters covered under Section 3(y) or indemnification for
environmental matters covered under Section 9(b)(3) of which
any Seller had Knowledge at any time prior to the
Effective Date.
9. Offer of Employment.
(a) North Carolina Personnel. Buyer shall offer employment as of
the Effective Date to all of the Seller's personnel at
the Walkisoft plant in Mt. Holly, North Carolina USA
(collectively, "Walkisoft Employees"). The offer of
employment shall be on terms comparable to the terms under
which such Walkisoft Employees are currently employed by
Seller subject, however, to Buyer's right to make some
organizational changes where Buyer deems appropriate. Except
as otherwise agreed in writing, the costs and expenses of
such Walkisoft Employees as of the Effective Date shall not
constitute Assumed Liabilities and shall remain the
2.1-42
<PAGE>
obligation of and be paid by Seller, including all costs
associated with compensation, benefits, reimbursements,
pensions and severance payments. Further, any such Walkisoft
Employee who does not accept Buyer's offer of employment shall
remain an employee of Seller, which shall have sole
responsibility for all costs related to employment, including
severance and termination payments.
(b) Accrued Employee Liabilities. In the event Buyer agrees in
writing to assume any accrued Liabilities relating to the
Walkisoft Employees described in Section 10(a), Buyer's
auditors will determine in accordance with GAAP, labor law,
and employment rules, regulations and contracts the amount of
such accrued Liabilities and such Liability shall become an
Assumed Liability and shall be included as Designated Accruals
when computing Net Working Capital.
(c) Finnish Employees. Buyer shall offer employment to the five
(5) persons in the research and development group at the
Walkisoft plant in Kotka, Finland and the nine (9) persons in
the engineering group in Valkeakoski, Finland on terms
comparable to the terms under which such persons are currently
employed by Seller subject, however, to Buyer's right to make
some organizational changes where Buyer deems appropriate. For
each such person that accepts employment, the Designated
Accruals shall be increased by the amounts set forth on
Exhibit H up to an aggregate amount of $450,000. Buckeye
Finland will employ such persons.
(d) COBRA Liability. Seller shall remain responsible under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended (COBRA), by reason of any qualifying event which
occurs on or prior to the Effective Date with respect to
employees of Seller and its Affiliates, or beneficiaries or
dependents thereof.
(e) Without limiting the generality of Section 10(a), Buyer shall
establish, effective as of the Effective Date, for the
benefit of the Walkisoft Employees employed by Buyer as of
such date ("New Buyer Plan") a retirement plan with a
cash or deferred feature which is intended to be qualified
under Sections 401 (a) and 401 (k) of the Internal Revenue
Code. Effective as of the Effective Date, or as soon
thereafter as is administratively practicable, Seller and
Buyer shall take all actions necessary to cause the account
balances of the Walkisoft Employees employed by Buyer as of
the Effective Date to be transferred from the Walkisoft USA,
Inc. Savings Plan to the New Buyer Plan, provided that prior
to such transfer, Buyer provides Seller with evidence
acceptable to Seller that the New Buyer Plan is or will be
amended to be "qualified" for purposes of Section 401 (a)
of the Code and that its related trust is or will be amended
to be tax exempt under Code Section 501 (a). As soon as
practicable after the Closing, but in any event within the
applicable remedial amendment period set forth in Treas.
Reg.ss. 1.401 (b). Buyer shall submit to the Internal Revenue
Service an accurate and complete application for a
determination as to the qualified status of the new Buyer
Plan and shall make any amendments to the New Buyer Plan as
the Internal Revenue Service may require as a condition to
issuing a favorable determination letter.
2.1-43
<PAGE>
(f) Buyer will recognize the service of each Walkisoft Employee
with Walkisoft USA and/or UPM for purposes of eligibility and
vesting under the New Buyer Plan and any welfare benefit plan
for which Buyer assumes insured coverage from Seller.
(g) Seller shall be responsible for all claims for welfare
benefits which are incurred prior to the Effective Date by
any Walkisoft Employee (or the eligible dependent of any
Employee) that are payable under the terms and conditions
of any Employee Welfare Benefit Plan. Buyer shall be
responsible for all claims for welfare benefits which are
incurred from and after the Effective Date by any
Walkisoft Employee (or any eligible dependent of any such
Employee) that are payable under the terms and conditions of
any employee welfare benefit plan maintained by the Buyer for
Walkisoft Employees employed by Buyer. For purpose of this
Section, a claim for welfare benefits shall be deemed to be
incurred, when the death or disability occurs, or other
expense giving rise to the claim is incurred. The Buyer shall
assume Principal Health Care of the Carolinas group contract
#303137; Principal Life Insurance Co. (dental) account
#N98977-1, Shenandock Life (Life, AD&D, STD, LTD) policy
#003008021-00001 (the "transferred contracts"). Any such
transferred contracts shall recognize copayments and
deductibles paid by such Employee or dependent under such
assumed coverages prior to the Effective Date and shall not
exclude any preexisting conditions of any such Employee or
dependent that were not excluded under the assumed
coverages immediately prior to the Effective Date.
10. Miscellaneous.
(a) Arbitration. Any controversy or claim arising out of or
relating to this Agreement, the German Purchase Agreement
or their breach, not satisfied through negotiation, shall
be settled by binding arbitration in accordance with the
arbitration rules of the International Chamber of Commerce
by an arbitration tribunal consisting of one arbitrator.
The place of arbitration shall be in Cologne, Germany,
except that if the matter relates only to a dispute under
this Agreement and does not involve the German Purchase
Agreement, the arbitration shall be held in Wilmington,
Delaware. Judgment upon the award rendered by the arbitrator
may be entered in any court having jurisdiction. As soon as
reasonably practical after submission of a demand for binding
arbitration, Buyer and Seller shall select one arbitrator,
agreeable to all parties. This arbitrator will be selected
from lists prepared by the International Chamber of
Commerce. From the list the Parties will rank the
arbitrators which are acceptable. The highest ranking
acceptable candidate will be selected. If no arbitrators
from the list composed by the International Chamber of
Commerce are acceptable to either of the Parties, the
International Chamber of Commerce will compile a second
list. If the Parties are unable to agree from a second
list, the arbitrator will be selected by the International
Chamber of Commerce. The results of the arbitrator's finding
will be binding on the Parties. As part of any award, the
arbitrator may include an award of attorneys fees to the
prevailing party. English shall be the language used for
any arbitration.
2.1-44
<PAGE>
(b) Press Releases and Public Announcements. No Party shall issue
any press release or make any public announcement relating to
the subject matter of this Agreement prior to the Closing
without the prior written approval of the other Party;
provided, however, that any Party may make any public
disclosure it believes in good faith is required by applicable
law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party
will use its best efforts to advise the other Party prior to
making the disclosure).
(c) No Third-Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties
and their respective successors and permitted assigns.
(d) Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement between
the Parties and supersedes any prior understandings,
agreements, or representations by or between the Parties,
written or oral, to the extent they related in any way to the
subject matter hereof.
(e) Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein
and their respective successors and permitted assigns. No
Party may assign either this Agreement or any of its rights,
interests, or obligations hereunder without the prior written
approval of the other Party; provided, however, that the
Buyer may, with the prior written consent of Seller, not to
be unreasonably withheld, (i) assign any or all of its
rights and interests hereunder to one or more of its
Affiliates and (ii) designate one or more of its Affiliates
to perform its obligations hereunder (in any or all of which
cases the Buyer nonetheless shall remain responsible for the
performance of all of its obligations hereunder). The
parties acknowledge that BKI Holding shall acquire all
Intellectual Property relating to the Acquired Assets,
Buckeye Mt. Holly shall acquire all Acquired Assets and
assume all Assumed Liabilities relating to the Walkisoft USA
operations and the machinery and equipment comprising the
Walkisoft production line in Aarhus, Denmark, BKI
International shall acquire all of the capital stock of the
Sales Companies, and Buckeye Finland shall acquire and
assume the Cooperation Agreement dated February 4, 1998
between Walkisoft Finland Oy and Havix Corporation.
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but
all of which together will constitute one and the same
instrument.
(g) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice,
request, demand, claim, or other communication hereunder shall
2.1-45
<PAGE>
be deemed duly given if (and then two business days after) it
is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended
recipient as set forth below:
If to the Seller: Reko Aalto-Setala, Company Secretary
UPM-Kymmene, Group Head Office
Etelaesplanadi 2
FIN-00101Helsinki, Finland
Tel +358 204 15 111
Fax +358 204 15 110
If to the Buyer: Henry P. Doggrell, Sr. Vice President
Buckeye Technologies Inc.
1001 Tillman Street
Memphis, TN 38112
Telephone No. 901-320-8220
Fax No. 901-320-8139
Copy to: Ben C. Adams, Jr.
Baker, Donelson, Bearman & Caldwell, P.C.
165 Madison Avenue, Suite 2000
Memphis, TN 38103
Telephone No. 901-577-2307
Fax No. 901-577-0714
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of
Delaware, USA without giving effect to any choice or conflict
of law provision or rule (whether of the State of Delaware,
USA or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the
State of Delaware, USA.
(j) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing
and signed by the Buyer and the Seller. The Seller may consent
to any such amendment at any time prior to the Closing with
the prior authorization of its board of directors. No waiver
by any Party of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not,
shall be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder
or affect in any way any rights arising by virtue of any prior
or subsequent such occurrence.
(k) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the
2.1-46
<PAGE>
remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(l) Expenses. Each of the Buyer, the Seller, and UPM will bear its
own costs and expenses (including legal fees and expenses)
incurred in connection with this Agreement and the
transactions contemplated hereby. Further, Seller shall pay
all costs and expenses necessary to transfer and record the
Intellectual Property assignments to Buyer which shall be
coordinated by Buyer, and for transfer taxes for the North
Carolina real property conveyance. Buyer shall pay for title
insurance and survey costs for the North Carolina real
property conveyance. Any other transfer taxes shall be
administered and paid by Buyer and reimbursed one-half by
Seller.
(m) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue
of the authorship of any of the provisions of this
Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the
context requires otherwise. The word "including" shall
mean including without limitation. Nothing in the
Disclosure Schedule shall be deemed adequate to disclose an
exception to a representation or warranty made herein
unless the Disclosure Schedule identifies the exception
with particularity and describes the relevant facts in
detail. Without limiting the generality of the foregoing,
the mere listing (or inclusion of a copy) of a document
or other item shall not be deemed adequate to disclose an
exception to a representation or warranty made herein
(unless the representation or warranty has to do with the
existence of the document or other item itself). The
Parties intend that each representation, warranty,
and covenant contained herein shall have independent
significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect,
the fact that there exists another representation,
warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity)
which the Party has not breached shall not detract from or
mitigate the fact that the Party is in breach of the first
representation, warranty, or covenant.
(n) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein
by reference and made a part hereof.
(o) Specific Performance. Each of the Parties acknowledges and
agrees that the other Party would be damaged irreparably
in the event any of the provisions of this Agreement are not
performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the Parties
agrees that the other Party shall be entitled to an
injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any
2.1-47
<PAGE>
state thereof having jurisdiction over the Parties and the
matter, in addition to any other remedy to which it may be
entitled, at law or in equity. Notwithstanding the foregoing,
Seller shall not be subject to specific performance for any
breach of representation or warranty under this Agreement
which shall be governed exclusively by the indemnification
provisions of Section 9 except to the extent such breach
involves Section 3(e), fraud or gross negligence by Seller.
(p) Bulk Transfer Laws. The Buyer acknowledges that the Seller
will not comply with the provisions of any bulk transfer laws
of any jurisdiction in connection with the transactions
contemplated by this Agreement.
(q) Passing of Title. Legal title with respect to the Acquired
Assets to be transferred hereunder shall pass on the Closing
Date by delivery of the instruments and receipt of the
consideration therefor. Equitable title and risk of loss shall
pass on the Effective Date. Income, liabilities and expenses
occurring or incurred from the operations of Seller as of the
Effective Date shall be for the account of Buyer.
(r) Joinder and Guaranty. UPM joins in this Agreement for the
purpose of: (i) confirming and guaranteeing the
representations and warranties of Seller contained in this
Agreement; (ii) confirming and guaranteeing the
performance and ratification of the indemnity obligations of
Seller contained in this Agreement; (iii) confirming
and guaranteeing the performance by Seller of post-closing
covenants (collectively the "Guaranteed Obligations");
and (iv) joining in this Agreement for the specific
obligations attributable to UPM hereunder. In the event that
the Seller does not fully, faithfully and promptly perform
each and every covenant, agreement, warranty, obligation
and undertaking required to be kept, met, observed and
performed under and pursuant to the terms of the Guaranteed
Obligations, UPM will, immediately and without delay,
correct and cure such default; and if, as the direct or
indirect result of such default, Buyer suffers or sustains
any loss, cost, damage or expense, then and in any such
event, UPM shall reimburse Buyer, promptly upon demand, for
the entire amount of such loss, cost, damage or expense,
subject to any applicable limitations contained in Section 9
above. Buyer shall be entitled to enforce payment and
performance of the Guaranteed Obligations directly against
UPM in accordance with the terms of Section 11 (a) of
this Agreement, without first exhausting any right or
remedy which Buyer may have against Seller. Buyer shall be
under no obligation, at any time, to resort first to, make
demand on, file a claim against, or exhaust its remedies
against the Seller.
2.1-48
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
BUCKEYE TECHNOLOGIES INC.
By:
Title:
BKI HOLDING CORPORATION
By:
Title:
BUCKEYE MT. HOLLY LLC
By:
Title:
BUCKEYE FINLAND OY
By:
Title:
BKI INTERNATIONAL INC.
By:
Title:
WALKISOFT FINLAND OY
By:
Title:
WALKISOFT USA, INC.
By:
Title:
2.1-49
<PAGE>
WALKISOFT DENMARK A/S
By:
Title:
UPM-KYMMENE CORPORATION
By:
Title:
By:
Title:
2.1-50
Exhibit 2.2
45 pages
GERMAN PURCHASE AGREEMENT
BETWEEN
BUCKEYE TECHNOLOGIES INC.
BUCKEYE STEINFURT GmbH
BUCKEYE HOLDINGS GmbH
AND
WALKISOFT GMBH
UPM-KYMMENE OYJ
<PAGE>
PREAMBLE
1. Whereas, the Seller, an indirect wholly-owned subsidiary of UPM, is
engaged in the production and worldwide distribution of non-wovens
(Vliesstoffe) and related products. Seller conducts its business from
its partly owned and partly leased facilities in Steinfurt.
2. Whereas, the Buyer is a wholly-owned subsidiary of Buckeye Holdings,
the registered share capital of which amounts to 25,000, consists
of two shares in the par value of 12,500 each and is fully paid
in.
3. Whereas, Buckeye Holdings is a wholly-owned subsidiary of Buckeye Inc.,
the registered share capital of which amounts to 25,000, consists
of two shares in the par value of 12,500 each and is fully paid
in.
4. Whereas, the Seller is interested in selling and transferring and the
Buyer, based upon the representations and warranties and other
indemnities made by the Seller in this Agreement, is interested in
buying the business of the Seller with all assets, contracts and
personnel, except as specifically excluded from the purchase hereafter
as well as certain liabilities as specified hereinafter (such business
hereinafter referred to as the "Sold Business") on the terms and
conditions set forth in this Agreement.
5. Whereas, the German Federal Cartel Office has cleared the transactions
agreed herein by clearance letter dated August 26, 1999, a copy of
which is attached hereto as Annex I.
NOW THEREFORE, the parties hereby agree as follows:
2.2-2
<PAGE>
1. Definitions.
"Accounts Receivable" has the meaning set forth in Section 2 (a) (iv)
below.
"Acquired Assets" has the meaning set forth in Section 2 below.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, diminution in value, Liabilities, obligations, Taxes, liens,
losses, expenses, and fees, including court costs and attorneys' fees and
expenses, net of any actual insurance or other third party recoveries.
"Affiliated Companies" has the meaning set forth in Section 3(b)(i)
below.
"Ancillary Agreements" shall mean the following agreements:
(1) The Notarial Deed attached hereto as Exhibit A;
(2) Share Pledge Agreement attached hereto as Exhibit B;
"Assigned Contracts" has the meaning set forth in Section 4(a) below.
"Assumed Liabilities" has the meaning set forth in Section 3(a) below.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
"Buyer" has the meaning set forth in the preface above.
"Closing" has the meaning set forth in Section 10(c) below.
"Closing Date" has the meaning set forth in Section 10(c) below.
"Code" means the German Tax Code (Abgabenordnung - AO), as amended.
"Designated Accruals" shall mean those accrued liabilities incurred in
the Ordinary Course of Business and specifically assumed by Buyer as described
in Exhibit C attached hereto.
2.2-3
<PAGE>
"Disclosure Schedule" has the meaning set forth in Section 6 below.
"Effective Date" has the meaning set forth in Section 2(a) below.
"Environmental, Health and Safety Liabilities" means any Liability or
other responsibility arising from or under Environmental, Health and Safety
Requirements and consisting of or relating to: (a) any environmental, health, or
safety matters or conditions (including on-site or off-site contamination,
occupational safety and health, and regulation of chemical substances or
products); (b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims and demands arising under
Environmental, Health and Safety Requirements; (c) financial responsibility
under Environmental, Health and Safety Requirements for cleanup costs or
corrective action, including any investigation, cleanup, removal, containment,
or other remediation or response actions (collectively, a "Cleanup") required by
applicable Environmental, Health and Safety Requirements and for any natural
resource damages; or (d) any other compliance, corrective, investigative, or
remedial measures required under Environmental, Health and Safety Requirements.
"Environmental, Health, and Safety Requirements" shall mean all
federal, state, local and foreign statutes, regulations, ordinances and other
provisions having the force or effect of law or administrative decree
(Rechtsverordnung), all judicial and administrative orders and determinations,
all contractual obligations and all legal provisions concerning public health
and safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or Cleanup of any hazardous materials, substances
or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation, each as amended and as now or
hereafter in effect.
"Facilities" means any real property, leaseholds, or other interests
currently owned or operated by the Seller in Steinfurt and any buildings,
plants, structures, or equipment (including motor vehicles, tank cars, and
rolling stock) currently owned or operated by the Seller in Steinfurt.
"Financial Statements" has the meaning set forth in Section 6(g) below.
"GAAP" means accounting, valuation and depreciation principles
generally accepted in the Federal Republic of Germany as in effect from time to
time and consistently applied.
"Hazardous Activities" means the distribution, generation, disposal,
handling, importing, management, manufacturing, processing, production,
refinement, release, storage, transfer, transportation, treatment, or use
(including any withdrawal or other use of groundwater) of
2.2-4
<PAGE>
Hazardous Materials in, on, under, about, or from the Facilities or any part
thereof into the environment.
"Hazardous Materials" means any toxic materials, pollutants,
contaminants or radioactive, water endangering or other hazardous substances or
wastes of any kind whatsoever.
"Initial Payment" has the meaning set forth in Section 5(d) below.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) subject to the provisions of Section 12 (a), all
trademarks, service marks, trade dress, logos, trade names, and corporate names
and fictitious or assumed name registrations, together with all translations,
adaptations, derivations, and combinations thereof and including all goodwill
associated therewith, and all applications, registrations, and renewals in
connection therewith, (c) all copyrightable works, all copyrights, and all
applications, registrations, and renewals in connection therewith, to the extent
these are transferable, (d) all mask works and all applications, registrations,
and renewals in connection therewith, (e) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and proposals),
(f) all computer software (including data and related documentation), but
excluding any UPM proprietary software used outside of the Sold Business, (g)
all other proprietary rights, (h) all copies and tangible embodiments thereof
(in whatever form or medium) and (i) employee invention and discovery files and
logs.
"Inventory" has the meaning set forth in Section 2(a)(iii) below.
"Knowledge" means actual knowledge after reasonable investigation of
the officers, directors and managers of the Seller (including, without
limitation, Frej Nygard) and the following other designated persons: Berndt
Brunow, Jaakko Rislakki, Erkki Numminen, Jaakko Palsanen, Tapani Sointu, Juhani
Ilvonen, Helmer Gustafsson, Pentti Kallio and Sirpa-Helena Sormunen.
"Liability" means any obligation or liability (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated, and whether due or to
become due including any liability for Taxes.
"Minimum Net Working Capital" has the meaning set forth in Section
5(c) below.
"Most Recent Balance Sheet" means the balance sheet contained within
the Most Recent Financial Statements.
2.2-5
<PAGE>
"Most Recent Financial Statements" has the meaning set forth in
Section 6(g) below.
"Most Recent Fiscal Month End" has the meaning set forth in Section
6(g) below.
"Most Recent Fiscal Year End" has the meaning set forth in Section
6(g) below.
"Net Working Capital" means the aggregate value as of the Effective
Date in U.S. Dollars of (i) the Inventory and accounts receivable (net of any
customer pre-payments) assigned to the Buyer hereunder, minus (ii) Trade
Payables and Designated Accruals. For purposes of this definition, Inventory
shall be valued as of the Effective Date in U.S. Dollars at the lower of (a)
fair market value or (b) the actual cost of the Inventory reflected on the books
and records of Seller (which shall be prepared in accordance with GAAP), except
that for the purpose hereof, all spare parts, wires, felts, fabrics and other
items carried as inventory on Seller's financial records (other than Inventory)
and used in the Sold Business shall not be taken into account. Accounts
receivable shall be valued as of the Closing Date in U.S. Dollars from the books
and records of the Seller. In the event the Parties fail to agree on the
Inventory valuation, the Buyer and Seller will request their respective
independent accounting firms to resolve the issues, and if the accounting firms
fail to do so within sixty (60) days of the date the Parties submitted the
issues to them, the Buyer and Seller will submit the unresolved issues to an
expert arbitrator to be appointed upon application of either party by the
President of the Institut der Wirtschaftsprufer in Deutschland e.V. (Institute
of Chartered Accountants), Dusseldorf. To the extent any currency conversions
are required, the exchange rates in effect on the Frankfurt Stock Exchange as of
the close of business on the date immediately preceding the Effective Date shall
be used.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Person" means an individual, a civil law partnership (GbR), a general
or limited partnership (Personenhandelsgesellschaft), a corporation
(Kapitalgesellschaft), an association (Verein), a trust, a joint venture, an
unincorporated organization, or a governmental entity (or any department,
agency, or political subdivision thereof).
"Share Pledge Agreement" is the agreement attached as Exhibit B.
"Purchase Price" has the meaning set forth in Section 5(a) below.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's/materialmen's
(Werkunternehmerpfandrecht), landlord's liens (Vermieterpfandrecht), and similar
liens acceptable to Buyer, (b) liens for Taxes not yet due and payable, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
2.2-6
<PAGE>
"Seller" has the meaning set forth in the preface above.
"Sold Business" has the meaning set forth in Section 4 of the Preamble
hereof.
"Sold Real Estate" has the meaning set forth in Section 2(a)(i) below.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or other
tax, charge and/or other public due of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Trade Payables" means all accounts payable incurred by Seller in the
Ordinary Course of Business.
2. Sale and Transfer of the Acquired Assets
(a) With effect of October 1, 1999, 0.00 hrs (the "Effective Date"), the
Seller hereby sells to the Buyer, who accepts such sale, the entire
tangible and intangible assets owned by the Seller on the Effective
Date, except as specifically excluded from the sale and purchase
pursuant to other provisions of this Agreement (such sold assets
hereinafter referred to as the "Acquired Assets").
The Acquired Assets shall include:
(i) the real estate registered at the Magistrates Court of
Steinfurt in the Land Register for Burgsteinfurt, Sheet Nos.
4518 and 4321 together with all buildings, fixtures and
improvements located on, and forming part of, such real estate
and all rights pertaining thereto (hereinafter referred to as
the "Sold Real Estate") as follows:
2.2-7
<PAGE>
(ai) Sheet No. 4518
Entry Size (sqm)
No. Boundary Field (Flur)/ Description
(Gemarkung) Lot (Flurstuck)
1 Burgsteinfurt 43/214 fields 9,001
Meteler Stiege
The following encumbrance is registered on the Sold Real
Estate in Part II of the Land Register:
Encumbered
Entry No. Real Estate
Entry No. Encumbrance Holder
1 1 limited personal Stadtwerke
servitude (duty Steinfurt
to tolerate a gas GmbH,
pipeline) Steinfurt
No encumbrances are registered in Part III of the Land Register.
(aii) Sheet No. 4321
Entry Size
No. Boundary Field/ Description (sqm)
Lot
10 Burgsteinfurt 43/395 building and vacant 2,538
area agriculture and
forestry,
Meteler Stiege,
Dieselstra(beta)e 16
11 Burgsteinfurt 43/396 building and vacant 11,294
area, commercial and
industrial businesses,
Meteler Stiege,
Dieselstra(beta)e 16
2.2-8
<PAGE>
Entry Size
No. Boundary Field/ Description (sqm)
Lot
12 Burgsteinfurt 43/397 building and vacant 49,762
area, commercial and
industrial businesses,
Meteler Stiege,
Dieselstra(beta)e 16
The following encumbrance is registered on the Sold Real
Estate in Part II of the Land Register:
Encumbered
Entry Real Estate
No. Entry No. Encumbrance Holder
1 12 priority notice in City of
order to secure the Steinfurt
claim regarding the
retransfer of title
No encumbrances are registered in Part III of the Land
Register.
(ii) all other tangible fixed assets owned by the Seller on the
Effective Date, including all machinery and equipment, tools,
fixtures, fittings, vehicles, EDP hardware, plant and office
equipment, spare parts, supplies, small value items and all
other tangible fixed assets, whether located on the Sold Real
Estate, in warehouses or sales and service offices of the
Seller in other locations, with German or foreign distributors
or agents of the Seller, with suppliers and/or customers of
the Seller or with third parties; Exhibit D hereto contains a
list of such tangible fixed assets as of September 27, 1999;
(iii) all inventories of raw materials and packaging materials (in
particular including, without limitation, wood pulp, other
fibers, binders and superabsorbent polymers) and finished
products and services and merchandise owned by the Seller on
the Effective Date, wherever located, including but not
limited to consignment stocks kept with customers and the
2.2-9
<PAGE>
warehouses located at Rheine, Bremen, Bremerhaven, Brake,
Pforzheim, Borghorst and Liverpool UK, as set forth in Exhibit
E hereto (hereinafter referred to as "Inventory");
(iv) all accounts receivable, net of customer pre-payments
pursuant to Section 2(b) below (hereinafter referred to as
"Accounts Receivable"), all other rights and claims of any
type, including but not limited to those from all other
pre-payments, deposits, those for the transfer of title to
assets of the type sold hereunder and those for the exclusive
or non-exclusive use or joint use of tangible and intangible
assets of any type whatsoever, all rights and claims resulting
from contracts taken over by the Buyer pursuant to Section 4
below, all insurance claims, all claims for the payment of
subsidies, grants and comparable benefits and all other
current assets, all to the extent that they are owned by the
Seller on the Effective Date, except as specifically excluded
from the sale and purchase in other provisions of this
Agreement; all ancillary and preferential rights within the
meaning ofss. 401 German Civil Code and all supporting rights
and ancillary security rights existing in respect of the
accounts receivable, rights and claims sold pursuant to this
paragraph (iv);
(v) all Intellectual Property, transferable public and private
concessions, permissions, authorizations and licenses,
transferable EDP software, goodwill, supplier and customer
relations and other intangible assets, all to the extent that
they are owned by the Seller on the Effective Date, except as
specifically excluded from the sale and purchase in other
provisions of this Agreement;
(vi) all books and business records (other than corporate records),
drawings, supplier and customer lists, sales aids and
literature and other documentation owned by the Seller on the
Effective Date, except as specifically excluded from the sale
and purchase in other provisions of this Agreement;
(b) The following assets of the Seller shall be specifically excluded from the
sale and purchase:
(i) all shares, if any, in other companies, other securities and
other financial investments;
(ii) all claims for the reimbursement of taxes for the period
prior to the Effective Date;
(iii) any notes receivables of Seller, unless specifically assumed
by Buyer, any cash, cash equivalents (including customer
pre-payments) or marketable securities of Seller.
2.2-10
<PAGE>
(c) The following is hereby agreed in respect of the Sold Real Estate:
(i) The Buyer assumes the encumbrance listed in Part II of the
Land Register/Sheet No. 4518 referred to in Section 2
(a) (i) (ai) above.
The Buyer does not assume the encumbrance listed in Part II of
the Land Register/Sheet No. 4321 referred to in Section 2 (a)
(i) (aii), which shall be deleted. Seller undertakes to
procure that the City of Steinfurt provide all declarations
required for such deletion in proper legal form as soon as
possible after the date hereof.
The Buyer assumes building restrictions, servitudes predating
the present Land Register system which are not registered in
the Land Register, neighboring restrictions and other
encumbrances and obligations not apt to be registered in the
Land Register, if any. Other encumbrances of any type
whatsoever, including but not limited to those in Parts II and
III of the Land Register, shall not be assumed by the Buyer
(except for the one referred to in Section 2 (a) (i) (ai)
above).
(ii) Benefits, costs and risks shall pass to the Buyer as of the
Effective Date.
(iii) Development costs, assessments and charges according to the
Community Charges Code (Kommunalabgabengesetz) for measures
which have been carried out prior to the Effective Date shall
be borne by the Seller. All other such costs, assessments and
charges shall be borne by the Buyer.
(d) (i) The Seller and the Buyer undertake to transfer the Sold Real
Estate to the Buyer, and the Seller undertakes to grant a
priority notice (Auflassungs-vormerkung) pursuant to ss. 883
Civil Code in respect of the Sold Real Estate by establishing
as soon as possible after the date hereof the Notarial Deed
before the German Notary Axel Rodert or Konrad Adenauer or
their official deputies in Cologne, substantially in
accordance with the draft set forth in Exhibit A hereto.
(ii) The Seller and the Buyer hereby agree that title to, and
possession of, the Acquired Assets (except the Sold Real
Estate, the transfer of which is covered in paragraph (i)
above), shall pass to the Buyer as of the Effective Date. The
transfer of possession shall be effected by a joint inspection
and delivery of such assets. To the extent that any such
assets are in the possession of third parties, the Seller
hereby assigns to the Buyer, who accepts such assignment, its
entire rights and claims against such third parties for the
delivery of such assets.
2.2-11
<PAGE>
(iii) To the extent that separate or particular documents or
instruments or any other steps are required or useful to
effect or document the transfer of the assets sold to the
Buyer pursuant to this Agreement, the parties agree to execute
all such documents and instruments and take all such steps
without further compensation promptly upon request by any
party.
(e) The Seller shall co-operate with the Buyer in notifying after the
Effective Date the debtors of rights and claims sold to the Buyer
pursuant to this Agreement and/or any other third parties who hold
title to, or rights in, or are in possession of, the assets sold to the
Buyer pursuant to this Agreement.
3. Assumption of Obligations and Liabilities and Indemnification of the
Seller and the Buyer
(a) With effect of the Effective Date the Buyer hereby assumes the
following obligations and Liabilities of the Seller pertaining
exclusively to the Sold Business which exist on the Effective Date:
(i) all Trade Payables and Designated Accruals of the Seller which
exist on the Effective Date, except as specifically excluded
from the assumption pursuant to other provisions of this
Agreement, but only to the extent included in the computation
of the Net Working Capital pursuant to Section 5 (c) below;
(ii) all obligations and Liabilities resulting from the contracts
and other arrangements taken over by the Buyer pursuant to
Section 4 below, but only to the extent they (x) have been
incurred in the Ordinary Course of Business and (y) are listed
in Exhibit G hereto
(the obligations and Liabilities pursuant to paras (i) and
(ii) above hereinafter collectively referred to as "Assumed
Liabilities").
(b) All other obligations and Liabilities of the Seller, whether accrued,
absolute, contingent or otherwise which exist on the Effective Date or
arise thereafter from acts, omissions or circumstances prior to the
Effective Date, shall be specifically excluded from the assumption,
including, without limitation thereto:
(i) all obligations and Liabilities (other than Trade Payables) to
UPM and its associated companies within the meaning of ss.ss.
15 et seq. of the German Stock Corporation Act other than the
Seller (UPM and such associated companies hereinafter referred
to as "Affiliated Companies");
2.2-12
<PAGE>
(ii) all obligations and Liabilities regarding Taxes payable in
respect of the period prior to the Effective Date,
irrespective of when the underlying claims may arise or may be
raised with the Seller or the Buyer, as well as all
obligations, if any, for the repayment of subsidies, grants
and comparable benefits;
(iii) all obligations and Liabilities under product liability and/or
contractual warranty regulations or arrangements arising from
products produced in the period prior to the Effective Date;
(iv) all obligations and Liabilities arising from or under
Environmental, Health and Safety Requirements.
(c) The provisions in Sections 2(e) above and Section 4(c)(i) and (ii) and 4(d)
below shall apply mutatis mutandis.
(d) (i) The Buyer undertakes to indemnify the Seller and UPM after the
Effective Date from and against all obligations and
Liabilities of the Seller and from all interest, penalties
and costs in respect thereof which (x) the Buyer has
assumed pursuant to the express provisions of this
Agreement or (y) result from the conduct of the Sold Business
by the Buyer after the Effective Date.
(ii) The Seller undertakes to indemnify the Buyer after the
Effective Date from and against all obligations and
Liabilities of the Seller and from all interest, penalties and
costs in respect thereof which the Buyer has not assumed
pursuant to this Agreement.
4. Assignment of Contracts.
(a) Effective as of the Effective Date, the Seller hereby assigns and the
Buyer hereby takes over those contracts (including written and verbal
contracts, agreements, orders arrangements as well as pending offers
made by or to the Seller) of the Seller pertaining exclusively or
primarily to the Sold Business as described hereinbelow, with all
rights and claims as well as all obligations and Liabilities resulting
therefrom, except as specifically excluded from the assignment pursuant
to other provisions of this Agreement (the "Assigned Contracts").
The Assigned Contracts shall only include the following contracts
existing on the Effective Date:
(i) all employment and other contracts with all employees and
workers employed by the Seller on the Effective Date,
including the employment with Seller's sole managing director
Mr. Kim Schulte, except as provided otherwise in Section 4 (b)
2.2-13
<PAGE>
(i) below, all as listed in Exhibit F hereto. Exhibit F
contains complete and correct lists of all such employees,
and, to the extent applicable, their pension benefits, their
signature authorizations, the material contract terms of all
employees and workers.
The Seller and the Buyer acknowledge that the employment
relationships with these employees and workers, with all
rights and obligations, will pass to the Buyer pursuant to ss.
613a Civil Code as a result of the purchase of the Sold
Business as of the Effective Date as a matter of law;
(ii) all contracts of the Seller with suppliers and customers
listed in Exhibit G hereto as well as all pending offers made
by or to the Seller made in the Ordinary Course of Business;
(iii) the contracts of the Seller with distributors, agents and
advisers listed in Exhibit G hereto;
(iv) the license and co-operation contracts of the Seller listed
in Exhibit G hereto;
(v) those lease, leasing and rental contracts of the Seller and
its contracts with public utilities listed in Exhibit G
hereto;
(b) All other contracts of the Seller shall be specifically excluded from the
assignment, including, without limitation:
(i) all employment or other contracts with any present or former
employee or worker of the Seller who is not listed in Exhibit
F. If the employment of any employee or worker ends on the
Effective Date, he shall also not belong to the personnel
whose employment and other contracts are hereby assigned to
the Buyer;
(ii) all contracts between the Seller and Affiliated Companies
except for contracts of the type set forth in Section (a) (ii)
to (v) above listed in Exhibit G.;
(iii) all contracts covering or relating to assets and/or
obligations and liabilities which have been excluded from the
sale and purchase pursuant to Sections 2 and 3 above.
(c) (i) The parties shall use their best efforts to obtain the
consents of the other contractual parties to the assignments
of the Assigned Contracts.
(ii) If the other party to an Assigned Contract refuses its
consent to the assignment of such contract to the Buyer,
the respective contract shall be assigned in the
2.2-14
<PAGE>
internal relationship between the Seller and the Buyer, with
the consequence that the Buyer, to the extent that this is
legally permissible and in practice possible, shall
perform the Assigned Contract and accept performance of such
contract by the other contractual party on behalf
of the Seller but for the account of the Buyer. If as a
result of the sale and transfer of the Sold Business
and/or the Seller's inability to perform his obligations
under Assigned Contracts the other contractual party
terminates the contract with the Seller for cogent reason
and/or asserts a claim for breach of contract, the
Seller shall indemnify the Buyer from and against all
claims of such contractual party, including but not
limited to claims pursuant toss. 89b Commercial Code, and
from all interest, penalties and costs in connection
therewith. This paragraph (ii) shall not apply in the cases
covered by paragraph (iii) below.
(iii) If an employee or worker passing to the Buyer pursuant to ss.
613a Civil Code should refuse to be transferred, such employee
or worker (and all contractual arrangements of any type
whatsoever existing between the Seller and such employee or
worker) shall remain with the Seller and his continued
employment and termination shall be the Seller's
responsibility at the Seller's discretion.
In the event that employees or workers other than those listed
in Exhibit F hereto claim employment by the Buyer from the
Buyer, the Seller shall indemnify the Buyer from and against
all liabilities relating to or arising from the employment of
such employees as well as their termination.
(iv) To the extent that insurance contracts cover the Seller's
business and the business of Affiliated Companies, the parties
shall make appropriate arrangements to ensure that the
Seller's business continues to be properly insured and the
Buyer is not burdened with any premium covering insurance of
the business of Affiliated Companies.
(d) Rights and obligations under the Assigned Contracts, irrespective of
whether the assignment takes effect in the relation to the other
contractual party or only in the internal relation between the Seller
and the Buyer, shall concern the Seller for the period until the
Effective Date and the Buyer for the period thereafter.
5. Purchase Price.
(a) Subject to Section 5(c) below, the consideration (hereinafter referred
to as "Purchase Price") for the sale and transfer of the Sold Business
pursuant to this Agreement as well as all other obligations assumed by
the Seller and UPM in this Agreement shall amount to US$ 75,400,000 (in
words: US-dollars seventy-five-million four hundred thousand) .
2.2-15
<PAGE>
(b) Allocation. The parties agree to allocate the Purchase Price among the
assets described herein for all purposes (including financial
accounting and tax purposes) in accordance with the schedule attached
hereto as Exhibit H.
(c) Purchase Price Adjustment. If the Net Working Capital of Seller
as of the Effective Date does not equal US$ 12,000,000
("Minimum Net Working Capital"), the Purchase Price shall be adjusted
in accordance with this paragraph (c). Prior to the Closing Date,
Buyer and Seller shall agree to an estimate of the Net Working
Capital as of the Effective Date (the "Estimated Working Capital"),
and at Closing, the Estimated Working Capital shall be used to
determine any adjustment to the Initial Payment required under
Section 5 (d) (i) below. If the Estimated Working Capital is less
than the Minimum Net Working Capital required under this Section 5 (c),
the Purchase Price shall be reduced in an amount equal to such
difference. If the Estimated Working Capital is greater than the
Minimum Net Working Capital, the Purchase Price shall be
increased in an amount equal to the difference.
As soon as practicable following the Effective Date, but not later than
thirty (30) days thereafter, Buyer and Seller shall jointly determine
the actual amount of the Net Working Capital as of the Effective Date
and shall execute a certificate of their agreement as to the Net
Working Capital as of the Effective Date. In order to finally settle
any Purchase Price adjustments as required by comparing the actual Net
Working Capital as of the Effective Date to the Estimated Working
Capital, Buyer shall promptly deliver to Seller any Purchase Price
increase in U.S. Dollars in immediately available funds by wire
transfer or Seller shall promptly deliver to Buyer any Purchase Price
decrease in U.S. Dollars in immediately available funds by wire
transfer.
(d) The Purchase Price shall be due and payable as follows:
(i) An amount of US$ 9,400,000 (in words: US-dollars nine million
four hundred thousand) shall be paid on the Closing Date (the
"Initial Payment").
(ii) an amount of US$ 22,000,000 (in words: US-dollars twenty
two million) on the second anniversary of the Effective
Date;
(iii) an amount of US$ 22,000,000(in words: US-dollars twenty two
million) on the third anniversary of the Effective Date;
(iv) an amount of US$ 22,000,000(in words: US-dollars twenty two
million) on the fourth anniversary of the Effective Date.
As security for the Seller's rights under this Section 5, Buckeye
Holdings shall execute and deliver to Seller the Share Pledge Agreement
in the form attached hereto as Exhibit B. Buckeye Inc. hereby
2.2-16
<PAGE>
guarantees Buyer's performance of its obligations pursuant to this
Section 5 and Section 3 (d)(i) above.
(e) The Initial Payment shall not bear interest, except that to the extent
the Closing Date occurs after October 31, 1999, Buyer shall pay Seller
interest at 5% p.a. on the Initial Payment from the Effective Date
through the Closing Date. The Purchase Price payments pursuant to
Section (d)(ii) through (d)(iv) shall bear interest for the time
between the Effective Date and the date of payment at the rate of 5 %
p.a. and the interest shall be paid on the outstanding balance of the
Purchase Price on each anniversary of the Effective Date until the
Purchase Price is paid in full.
(f) Payments to the Seller shall be made by wire transfer to the account
no. 233362-264 of UPM with Merita Bank, Helsinki, Finland (SWIFT Code:
MRIT FIHH), with releasing effect vis-a-vis the Seller.
(g) The Parties operate on the assumption that the transactions as agreed
herein are exempt from German value added tax pursuant to ss. 1 Section
1 a Turnover Tax Act (UStG). To the extent that the transactions as
agreed herein, despite the parties' expectations, are subject to value
added tax, the Buyer shall pay the value added tax in addition to the
Purchase Price. The value added tax shall be due and payable as soon as
the Buyer has received from the Seller an invoice which conforms to the
provision of Section 14 Turnover Tax Act. The parties shall use their
best efforts to settle any value added tax obligation in agreement with
the tax authorities without payment by way of set-off. The Seller
undertakes not to opt in favor of the value added tax in respect of any
part of the transactions agreed herein.
(h) Seller, Buyer, and Buckeye Holdings hereby agree that Buckeye Holdings
assumes all of Buyer's obligations vis-a-vis the Seller under this
Section 5 by virtue of an assumption of debt with debt releasing effect
(Schuldubernahme mit befreiender Wirkung) and Buckeye Holdings and
Buyer are in agreement that such assumption of debt shall be treated as
a contribution into the capital reserves of Buyer within the meaning of
ss. 272 Sec. II No. 4 German Commercial Code.
6. Representations and Warranties of the Seller.
The Seller represents and warrants to the Buyer as an independent
promise of guarantee that the statements contained in this Section 6
are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 6), except as set forth in the disclosure
schedule accompanying this Agreement and initialed by the Parties (the
"Disclosure Schedule"). The Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 6.
2.2-17
<PAGE>
(a) Organization of the Seller. The Seller is a GmbH (limited liability
company) duly organized, validly existing, and in good standing under
the laws of the Federal Republic of Germany.
(b) Authorization of Transaction. The Seller and UPM have the full power
and authority (including full corporate power and authority) to execute
and deliver this Agreement and the other Agreements to be signed by
Seller and UPM and to perform all obligations hereunder or thereunder.
Without limiting the generality of the foregoing, the shareholders of
the Seller have duly authorized the execution, delivery, and
performance of this Agreement by the Seller. This Agreement constitutes
the valid and legally binding obligation of the Seller and UPM, as the
case may be, enforceable in accordance with its respective terms and
conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated
hereby (including the assignments and assumptions referred to in
Sections 3 and 4 above), will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court
to which the Seller is subject or any provision of the charter or
bylaws of the Seller or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Seller is a party or by
which it is bound or to which any of its assets is subject (or result
in the imposition of any Security Interest upon any of its assets).
The Seller does not need to give any notice to, make any filing with,
or obtain any authorization, consent, or approval of any government
or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement (including the
assignments and assumptions referred to in Sections 3 and 4 above).
(d) Brokers' Fees. The Seller has no Liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Buyer could
become liable or obligated.
(e) Title to Assets. The Seller has good and marketable title to, or a
valid leasehold interest in, the properties and assets used by it,
located on its premises, or shown on the Most Recent Balance Sheet or
acquired after the date thereof, free and clear of all Security
Interests, except for properties and assets disposed of in the Ordinary
Course of Business since the date of the Most Recent Balance Sheet.
Without limiting the generality of the foregoing, the Seller has good
and marketable title to all of the Acquired Assets, free and clear of
any Security Interest or restriction on transfer.
2.2-18
<PAGE>
(f) Subsidiaries. The Seller does not own, directly or indirectly, any
capital stock or other equity ownership or other interest in any other
Person.
(g) Financial Statements. Seller has delivered to the Buyer the following
financial statements (collectively, the "Financial Statements"):
(i) audited balance sheets and statements of income (the "Audited
Statements") as of and for the fiscal years ended December 31, 1996,
December 31, 1997, and December 31, 1998 (the "Most Recent Fiscal
Year End") for the Seller; and (ii) unaudited balance sheets and
statements of income (the "Most Recent Financial Statements") as of
and for the six (6) months ended June 30, 1999 (the "Most Recent
Fiscal Month End") for the Seller. Except for normal year end
adjustments in the case of the Most Recent Financial Statements, the
Financial Statements (including the notes thereto) have been prepared
in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby, present fairly the financial condition of
the Seller as of such dates and the results of operations of the
Seller for such periods, and are consistent with the books and
records of the Seller (which books and records are correct and
complete). Additionally, the Audited Statements are correct and
complete.
(h) Events Subsequent to Most Recent Fiscal Year End. Since the Most Recent
Fiscal Year End, there has not been any material adverse change in the
business, financial condition, operations or results of operations of
the Seller. Without limiting the generality of the foregoing, since
that date:
(i) The Seller has not sold, leased, transferred, or assigned any
of its assets, tangible or intangible, other than for a fair
consideration in the Ordinary Course of Business;
(ii) The Seller has not entered into any agreement, contract,
lease, or license (or series of related agreements, contracts,
leases, and licenses) outside the Ordinary Course of Business;
(iii) No person has accelerated, terminated, modified, or canceled
any agreement, contract, lease, or license (or series of
related agreements, contracts, leases, and licenses) to which
the Seller is a party or by which it is bound;
(iv) The Seller has not imposed any Security Interest upon any
of its assets, tangible or intangible;
(v) The Seller has not committed to make any capital expenditure
(or series of related capital expenditures) either involving
more than U.S. $100,000 or outside the Ordinary Course of
Business;
(vi) The Seller has not made any capital investment in, any loan
to, or any acquisition of the securities or assets of, any
other Person (or series of related capital investments, loans,
and acquisitions);
2.2-19
<PAGE>
(vii) The Seller has not delayed or postponed the payment of
accounts payable and other Liabilities outside the Ordinary
Course of Business;
(viii) The Seller has not canceled, compromised, waived, or released
any right or claim (or series of related rights and claims);
(ix) The Seller has not granted any license or sublicense of any
rights under or with respect to any Intellectual Property;
(x) The Seller has not experienced any damage, destruction, or
loss (whether or not covered by insurance) to its property;
(xi) The Seller has not made any loan to, or entered into any other
transaction with, any of its directors, officers, and
employees outside the Ordinary Course of Business;
(xii) The Seller has not changed its accounting methods;
(xiii) The Seller has not granted any increase in the base
compensation of any of its stockholders, directors, officers,
and employees outside the Ordinary Course of Business;
(xiv) The Seller has not adopted, amended, modified, or terminated
any bonus, profit-sharing, incentive, severance, or other
plan, contract, or commitment for the benefit of any of its
stockholders, directors, officers, and employees (or taken any
such action with respect to any other Employee Benefit Plan);
(xv) The Seller has not made any other change in employment terms
for any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xvi) There has not been any other occurrence, event, incident,
action, failure to act, or transaction outside the Ordinary
Course of Business involving the Seller;
(xvii) To the Knowledge of Seller, no significant customer of Seller
has stated or otherwise indicated its intention to cease doing
business with Seller prior to Closing or with Buyer after
Closing; and
(xviii) The Seller has not committed to any of the foregoing.
(i) Undisclosed Liabilities. The Sold Business does not include any
Liability (and there is no Basis for any present or future action,
suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against any of them giving rise to any Liability), except for
2.2-20
<PAGE>
(i) Liabilities set forth on the face of the Most Recent Balance Sheet
(rather than in any notes thereto) and (ii) Liabilities which have
arisen after the Most Recent Fiscal Month End in the Ordinary Course of
Business (none of which results from, arises out of, relates to, is in
the nature of, or was caused by any breach of contract, breach of
warranty, tort, infringement, or violation of law).
(j) Legal Compliance. The Seller and its respective predecessors and
Affiliated Companies have complied with all applicable laws (including
rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, local, and
foreign governments (and all agencies thereof), and no action, suit,
proceeding, hearing, charge, complaint, claim, demand, or notice has
been filed or commenced against any of them alleging any failure so
to comply and neither Seller nor the Affiliated Companies have any
Knowledge of any investigation regarding same.
(k) Tax Matters.
(i) The Seller has filed all Tax Returns that it was required to
file. All Taxes due and payable by the Seller (whether or not
shown on any Tax Return) have been paid. No claim has ever
been made by an authority in a jurisdiction where the Seller
does not file Tax Returns that it is or may be subject to
taxation by that jurisdiction. There are no Security Interests
on any of the assets of the Seller that arose in connection
with any failure (or alleged failure) to pay any Tax.
(ii) The Seller has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor,
stockholder, or other third party.
(l) Real Property.
(i) Section 2(a)(i) above contains a complete and correct list of
all built-up and vacant real estate owned by the Seller, all
rights of the Seller in or to real estate and all buildings,
improvements and construction owned by the Seller on real
estate owned by third parties which were reflected in the
Audited Statements as per the Most Recent Fiscal Year End or
have been acquired by the Seller in the meantime.
(A) The Seller has not disposed of, or taken any steps to
dispose of, the Sold Real Estate or any part thereof
and is not under any commitment to dispose of it in
whole or in part.
(B) Except for those listed in Section 2(a)(i) above, the
Sold Real Estate is not subject to any encumbrances,
restrictions or rights of third parties, whether or
not registered in the Land Register, and no
2.2-21
<PAGE>
application for the registration of any encumbrance,
restriction or right of third parties in the Land
Register has been filed, nor has the Seller granted,
or is committed to grant, any such rights to third
parties or has subjected, or is committed to subject,
the Sold Real Estate to any encumbrance or
restriction.
(C) The Sold Real Estate constitutes the entire plant
area of the Seller. All buildings, improvements and
constructions on the Sold Real Estate (hereinafter
"Plant Buildings") are in good and serviceable
condition, normal wear and tear excepted. The Plant
Buildings neither encroach on property owned by
third parties, nor are they in violation of any
rights of third parties or municipal zoning plans or
other legal provisions. All permits required for
the Plant Buildings have been properly granted. The
condition and the present use of the Sold Real Estate
including the Plant Buildings do not violate any
building regulations or restrictions and are
unobjectionable within the meaning of the applicable
administrative and other legal provisions.
(D) All Plant Buildings have received all approvals of
governmental authorities (including licenses and
permits) required in connection with the ownership or
operation thereof and have been operated and
maintained in accordance with applicable laws, rules,
and regulations;
(E) There are no leases, subleases, licenses,
concessions, or other agreements, written or oral,
granting to any party or parties the right of use or
occupancy of any portion of the parcel of real
property and no parties (other than Seller) are in
possession of any portion of such real property;
(F) There are no outstanding options or rights of first
refusal to purchase the parcel of real property, or
any portion thereof or interest therein;
(G) All Plant Buildings located on the parcel of real
property are supplied with utilities and other
services necessary for the operation of such Plant
Buildings, including gas, electricity, water,
telephone, sanitary sewer, and storm sewer, all of
which services are adequate in accordance with all
applicable laws, ordinances, rules, and regulations
and are provided via public roads or via permanent,
irrevocable, appurtenant easements benefiting the
parcel of real property; and
(H) Each parcel of real property abuts on and has direct
vehicular access to a public road, or has access to a
public road via a permanent, irrevocable, appurtenant
easement benefiting the parcel of real property, and
access to the property is provided by paved public
right-of-way with adequate curb cuts available.
2.2-22
<PAGE>
(ii) Section 6 (l) (ii) of the Disclosure Schedule lists and
describes briefly all real property leased or subleased to the
Seller. The Seller has delivered to the Buyer correct and
complete copies of the leases and subleases listed in Section
(l) (ii) of the Disclosure Schedule (as amended to date). With
respect to each lease and sublease listed in Section 6 (l)
(ii) of the Disclosure Schedule:
(A) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(B) the lease or sublease will continue to be legal,
valid, binding, enforceable, and in full force and
effect on identical terms following the consummation
of the transactions contemplated hereby (including
the assignments and assumptions referred to in
Sections 3 and 4 above);
(C) no party to the lease or sublease is in breach or
default, and no event has occurred which, with notice
or lapse of time, would constitute a breach or
default or permit termination, modification, or
acceleration thereunder;
(D) no party to the lease or sublease has repudiated any
provision thereof;
(E) there are no disputes, oral agreements, or
forbearance programs in effect as to the lease or
sublease;
(F) with respect to each sublease, the representations
and warranties set forth in subsections (A) through
(E) above are true and correct with respect to the
underlying lease;
(G) the Seller has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any
interest in the leasehold or subleasehold;
(H) all Plant Buildings leased or subleased thereunder
have received all approvals of governmental
authorities (including licenses and permits) required
in connection with the operation thereof and have
been operated and maintained in accordance with
applicable laws, rules, and regulations; and
(I) all Plant Buildings leased or subleased thereunder
are supplied with utilities and other services
necessary for the operation of said Facilities.
(m) Intellectual Property.
2.2-23
<PAGE>
(i) The Seller owns or has the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property
necessary for or currently used in for the operation of the
business of the Seller as presently conducted and as committed
to be conducted by Seller. Each item of Intellectual Property
owned or used by the Seller immediately prior to the Closing
hereunder will be owned or available for use by the Buyer on
identical terms and conditions immediately subsequent to the
Closing hereunder. The Seller has taken all necessary action
to maintain and protect each item of Intellectual Property
that it owns or uses.
(ii) The Seller has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any
Intellectual Property rights of third parties, and to the
Knowledge of Seller, Seller has not received any charge,
complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation
(including any claim that the Seller must license or refrain
from using any Intellectual Property rights of any third
party). To the Knowledge of Seller, no third party has
interfered with, infringed upon, misappropriated, or otherwise
come into conflict with any Intellectual Property rights of
any of the Seller.
(iii) Section 6 (m) (iii)of the Disclosure Schedule identifies each
patent or copyright or trademark registration which
has been issued to the Seller with respect to any of its
Intellectual Property, identifies each pending patent
application or application for copyright or trademark
registration which the Seller has made with respect to any of
its Intellectual Property, and identifies each license,
agreement, or other permission which the Seller has granted
to any third party with respect to any of its Intellectual
Property (together with any exceptions). The Seller has
delivered to the Buyer correct and complete copies of all
such patents, registrations, applications, licenses,
agreements, and permissions (as amended to date) and has
made available to the Buyer correct and complete copies of
all other written documentation evidencing ownership and
prosecution (if applicable) of each such item. Section 6
(m) (iii) of the Disclosure Schedule also identifies each
trade name, fictitious or assumed name registration or
unregistered trademark used by the Seller in connection with
any of its businesses. With respect to each item of
Intellectual Property required to be identified in Section 6
(m) (iii) of the Disclosure Schedule:
(A) the Seller possesses all right, title, and interest
in and to the item, free and clear of any Security
Interest, license, or other restriction;
(B) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling,
or charge;
(C) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to
2.2-24
<PAGE>
the Knowledge of Seller, is threatened which
challenges the legality, validity, enforceability,
use, or ownership of the item; and
(D) except for Dan Webforming International A/S
("Dan-Web") and Scanweb I/S ("Scanweb"), the Seller
has never agreed to indemnify any Person for or
against any interference, infringement,
misappropriation, or other conflict with respect to
the item.
(iv) Section 6 (m) (iv) of the Disclosure Schedule identifies each
item of Intellectual Property that any third party owns and
that the Seller uses pursuant to license, sublicense,
agreement, or permission. The Seller has delivered to the
Buyer correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended to date).
With respect to each item of Intellectual Property required to
be identified in Section 6 (m) (iv) of the Disclosure Schedule
(except for all such licenses of Seller and/or UPM with
Dan-Web and Scanweb with respect to which no such
representation is being made for purposes hereof):
(A) the license, sublicense, agreement, or permission
covering the item is legal, valid, binding,
enforceable, and in full force and effect;
(B) the license, sublicense, agreement, or permission
will continue to be legal, valid, binding,
enforceable, and in full force and effect on
identical terms following the consummation of the
transactions contemplated hereby;
(C) no party to the license, sublicense, agreement, or
permission is in breach or default, and no event has
occurred which with notice or lapse of time would
constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(D) no party to the license, sublicense, agreement, or
permission has repudiated any provision thereof;
(E) with respect to each sublicense, the representations
and warranties set forth in subsections (A) through
(D) above are true and correct with respect to the
underlying license;
(F) the underlying item of Intellectual Property is not
subject to any outstanding injunction, judgment,
order, decree, ruling, or charge;
(G) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to
the Knowledge of Seller, is threatened which
challenges the legality, validity, or enforceability
of the underlying item of Intellectual Property; and
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<PAGE>
(H) the Seller has not granted any sublicense or similar
right with respect to the license, sublicense,
agreement, or permission except as disclosed in
Section 6 (m) (iv) of the Disclosure Schedule.
(v) To the Knowledge of Seller, Buyer will not interfere with,
infringe upon, misappropriate, or otherwise come into conflict
with, any Intellectual Property rights of third parties as a
result of the continued operation of Seller's businesses as
presently conducted and as committed to be conducted.
(n) Tangible Assets.
The Seller owns or leases all buildings, machinery, equipment, and
other tangible assets necessary for the conduct of its business as
presently conducted. Each such tangible asset is free from defects to
the Knowledge of Seller, has been maintained in accordance with normal
industry practice, is in normal operating condition and repair (subject
to normal wear and tear), and is suitable for the purposes for which it
presently is being used.
(o) Inventory.
The Inventory of the Seller consists of (a) raw materials and packaging
materials used in the Sold Business of Seller, including wood pulp,
other fibers, binders and superabsorbent polymers and (b) finished
product, all of which is merchantable and fit for the purpose for which
it was procured or manufactured, and none of which is obsolete,
damaged, or defective, subject only to the reserve for Inventory
writedown set forth on the face of the Most Recent Balance Sheet
(rather than in any notes thereto) as adjusted for the passage of time
through the Closing Date in accordance with the past custom and
practice of the Seller.
(p) Contracts.
Section 6 (p) of the Disclosure Schedule lists the following contracts
and other agreements to which the Seller is a party:
(i) any agreement (or group of related agreements) for the lease
of personal property to or from any Person providing
for lease payments;
(ii) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies,
finished products, or other personal property, or for the
furnishing or receipt of services, the performance of which
will extend over a period beyond December 31, 1999;
2.2-26
<PAGE>
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) to be assumed
by Buyer as an Assumed Liability pertaining to any
indebtedness for borrowed money or any capitalized lease
obligation;
(v) any agreement concerning confidentiality or containing
covenants that in any way purport to restrict the business
activity of the Seller or limit the freedom of the Seller or
its stockholders, directors or officers to engage in any line
of business or to compete with any Person;
(vi) any intercompany agreement between any Seller and their
Affiliated Companies;
(vii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other
material plan or arrangement for the benefit of those current
directors, officers, and employees of Seller that will become
employees of Buyer;
(viii) any collective bargaining agreement;
(ix) any agreement for Seller's employment of any salaried
individual on a full-time, part-time, consulting, or other
basis that will become employees of Buyer;
(x) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of
U.S.$25,000; or
(xi) any written warranty, guaranty or other similar undertaking
with respect to contractual performance by the Seller;
The Seller has delivered to the Buyer a correct and complete copy of
each written agreement listed in Section 6 (p) of the Disclosure
Schedule (as amended to date) and a written summary setting forth the
terms and conditions of each oral agreement referred to in Section 6
(p) of the Disclosure Schedule. With respect to each such agreement:
(A) the agreement is legal, valid, binding, enforceable, and in full
force and effect; (B) no party is in breach or default, and no event
has occurred which with notice or lapse of time would constitute a
breach or default, or permit termination, modification, or
acceleration, under the agreement; and (C) no party has repudiated any
provision of the agreement.
(q) Accounts Receivable. All accounts receivable of the Seller are
reflected properly on its books and records, are valid receivables
subject to no setoffs or counterclaims, are current and collectible,
and will be collected in accordance with their terms at their recorded
amounts.
2.2-27
<PAGE>
(r) Insurance. Section 6 (r) of the Disclosure Schedule sets forth the
following information with respect to each insurance policy (including
policies providing property, casualty, liability, and workers'
compensation coverage and bond and surety arrangements) to which the
Seller has been a party, a named insured, or otherwise the beneficiary
of coverage at any time within the past three (3) years:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder, and
the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the coverage was
on a claims made, occurrence, or other basis) and amount
(including a description of how deductibles and ceilings are
calculated and operate) of coverage; and
(v) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
With respect to each such insurance policy and assuming due
enforceability with respect to the insurer: (A) the policy is legal,
valid, binding, enforceable, and in full force and effect; (B) the
policy will continue to be legal, valid, binding, enforceable, and in
full force and effect on identical terms until the Closing Date; (C)
neither the Seller nor any other party to the policy is in breach or
default (including with respect to the payment of premiums or the
giving of notices), and no event has occurred which, with notice or the
lapse of time, would constitute such a breach or default, or permit
termination, modification, or acceleration, under the policy; and (D)
no party to the policy has repudiated any provision thereof. Section 6
(r) of the Disclosure Schedule describes any self-insurance
arrangements affecting the Seller.
(s) Litigation. Section 6 (s)of the Disclosure Schedule sets forth each
instance in which the Seller (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii)
is a party or, to the Knowledge of Seller, is threatened to be made a
party to any action, suit, proceeding, hearing, or investigation
of, in, or before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator. None of the actions, suits, proceedings, hearings, and
investigations set forth in Section 6 (s) of the Disclosure Schedule
could result in any adverse change in the business, financial
condition, operations, results of operations, or future prospects of
2.2-28
<PAGE>
the Seller. To the Knowledge of Seller, Seller has no reason to
believe that any such action, suit, proceeding, hearing, or
investigation may be brought or threatened against the Seller.
(t) Product Warranty. Except as set forth on the Disclosure Schedule
hereto, each product manufactured, sold, leased, or delivered
by the Seller has been in conformity with all applicable
contractual commitments and all express and implied warranties,
and the Seller has no Liability (and, to the Knowledge of Seller,
there is no Basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any Liability) for replacement or repair
thereof or other damages in connection therewith. No product
manufactured, sold, leased, or delivered by the Seller is subject to
any guaranty, warranty, or other indemnity beyond the applicable
standard terms and conditions of sale or lease. Section 6 (t) of the
Disclosure Schedule includes copies of the standard terms and
conditions of sale or lease for the Seller (containing applicable
guaranty, warranty, and indemnity provisions).
(u) Product Liability. Except as set forth on the Disclosure Schedule
hereto, the Seller has no Liability (and, to the Knowledge of Seller,
there is no Basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against any
of them giving rise to any Liability) arising out of any injury to
individuals or property as a result of the ownership, possession, or
use of any product manufactured, sold, leased, or delivered by the
Seller.
(v) Employees. Except as set forth on the Disclosure Schedule hereto, to
the Knowledge of Seller (without reasonable investigation), no
executive, key employee, or group of employees has any plans to
terminate employment with the Seller. The Seller is not a party to or
bound by any collective bargaining agreement, nor are there any pending
strikes, grievances, claims of unfair labor practices, or other
collective bargaining disputes. The Seller has not committed any unfair
labor practice. To the Knowledge of Seller (without reasonable
investigation), no organizational effort is presently being made or
threatened by or on behalf of any labor union with respect to employees
of the Seller.
(w) Employee Benefits.
(i) Section 6 (w) of the Disclosure Schedule lists each individual
or collective agreement providing for benefits for the
employees of the Seller of any kind whatsoever to which the
Seller is a party or which applies to the Seller or to which
the Seller contributes or may be obligated to contribute (the
"Employee Benefit Plan").
2.2-29
<PAGE>
(A) Each such Employee Benefit Plan complies in form and
in operation in all respects with the applicable
laws.
(B) All required reports and descriptions have been filed
or distributed appropriately with respect to each
such Employee Benefit Plan.
(C) All contributions (including all employer
contributions and employee salary reduction
contributions) which are due have been paid to each
such Employee Benefit Plan and all contributions for
any period ending on or before the Effective Date
which are not yet due have been paid to each such
Employee Benefit Plan or accrued in accordance with
the statutory requirements.
(D) The Seller has delivered to the Buyer correct and
complete copies of the plan documents and summary
plan descriptions and all related agreements,
insurance contracts, and other funding agreements
which implement each such Employee Benefit Plan.
(ii) With respect to each Employee Benefit Plan that the Seller and
the Controlled Group of Corporations which includes the Seller
maintains or ever has maintained or to which any of them
contributes:
(A) No such Employee Benefit Plan has been completely or
partially terminated. No proceeding to terminate any
such Employee Benefit Plan has been instituted or, to
the Knowledge of Seller, threatened.
(B) No action, suit, proceeding, hearing, or
investigation with respect to the administration or
the investment of the assets of any such Employee
Benefit Plan (other than routine claims for benefits)
is pending or, to the Knowledge of Seller,
threatened. Seller has no Knowledge of any Basis for
any such action, suit, proceeding, hearing, or
investigation.
(x) Guarantees. The Seller is not a guarantor or otherwise liable for any
Liability or obligation (including indebtedness) of any other Person
that would survive the Closing.
(y) Environmental, Health, and Safety Matters. With respect to the
Acquired Assets;
(i) The Seller, and its respective Affiliated Companies have
complied and are in compliance with all Environmental, Health,
and Safety Requirements.
2.2-30
<PAGE>
(ii) Without limiting the generality of the foregoing, the Seller
and its respective Affiliated Companies have obtained and
complied with, and are in compliance with, all permits,
licenses and other authorizations that are required pursuant
to Environmental, Health, and Safety Requirements for the
occupation of its Facilities and the operation of its
business; a list of all such permits, licenses and other
authorizations is set forth on the Disclosure Schedule 6 (y).
(iii) Neither the Seller, nor its Affiliated Companies has received
any written notice, report or other information (including
employee or third-party complaints or threats) regarding any
violation of Environmental, Health, and Safety Requirements,
or any liabilities or potential liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise), including
any investigatory, remedial or corrective obligations,
relating to any of them or its Facilities arising under
Environmental, Health, and Safety Requirements.
(iv) To the Knowledge of Seller, none of the following exists at
any property or facility owned or operated by the Seller: (1)
underground storage tanks, (2) asbestos-containing material in
any form or condition, (3) materials or equipment containing
polychlorinated biphenyls, or (4) landfills, surface
impoundments, or disposal areas.
(v) Neither the Seller, nor its Affiliated Companies has treated,
stored, disposed of, arranged for or permitted the disposal
of, transported, handled, or released any Hazardous Materials,
or owned or operated any property or facility in a manner that
has given or would give rise to liabilities, including any
liability for response costs, corrective action costs,
personal injury, property damage, natural resources damages or
attorney fees, pursuant to any Environmental, Health, and
Safety Requirements as they exist as of the Effective Date.
(vi) Neither this Agreement nor the consummation of the transaction
that is the subject of this Agreement will result in any
obligations for site investigation or cleanup, or notification
to or consent of government agencies or third parties,
pursuant to any of the Environmental, Health, and Safety
Requirements.
(vii) Neither the Seller nor any of its Affiliated Companies has,
either expressly or by operation of law, assumed or undertaken
any liability, including without limitation any obligation for
corrective or remedial action, of any other Person relating to
Environmental, Health, and Safety Requirements.
(viii) To the Knowledge of the Seller, no facts, events or conditions
relating to the past or present Facilities, properties or
operations of the Seller or any of its respective predecessors
will prevent, hinder or limit continued compliance with
Environmental, Health, and Safety Requirements, give rise to
any investigatory, remedial or corrective obligations pursuant
2.2-31
<PAGE>
to Environmental, Health, and Safety Requirements, or give
rise to any other liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise) pursuant to
Environmental, Health, and Safety Requirements, including
without limitation any relating to onsite or offsite releases
or threatened releases of hazardous materials, substances or
wastes, personal injury, property damage or natural resources
damage.
(z) Year 2000 Problem. With regard to the possibility that computer
programs and systems may not properly process dates subsequent to
December 31, 1999 (the "Y2K Problem"), Seller represents and warrants
that it has audited all of its computer systems (including, but not
limited to, systems which operate the machinery and equipment at the
Steinfurt plant operated by Seller) and that, to its Knowledge, such
systems are free from the Y2K Problem insofar as it may affect the
operations of the Sold Business.
(aa) Certain Business Relationships With the Seller. None of the
stockholders of the Seller or their Affiliated Companies owns
any asset, tangible or intangible, which is used in the business of
the Seller.
7. Representations and Warranties of the Buyer. The Buyer represents and
warrants to the Seller that the statements contained in this Section 7
are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 7), except as set forth in the Disclosure
Schedule. The Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this
Section 7.
(a) Organization of the Buyer. The Buyer is a GmbH (limited liability
company) duly organized, validly existing, and in good standing under
the laws of the Federal Republic of Germany.
(b) Authorization of Transaction. The Buyer has full power and authority
(including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations thereunder. This
Agreement constitutes the valid and legally binding obligation of the
Buyer, enforceable in accordance with its terms and conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated
hereby (including the assignments and assumptions referred to in
Sections 3 and 4 above), will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling,
charge, or other restriction of any government, governmental agency,
or court to which the Buyer is subject or any provision of its
charter or bylaws or (ii) conflict with, result in a breach of,
2.2-32
<PAGE>
constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Buyer is a party or
by which it is bound or to which any of its assets is subject.
Except for approval from the German Cartel Office attached hereto as
Annex 1, the Buyer does not need to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement
(including the assignments and assumptions referred to in Sections 3
and 4 above).
(d) Brokers' Fees. The Buyer has no Liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Seller could
become liable or obligated.
8. Performance and Liability.
(a) UPM hereby joins the Seller as co-debtor with the consent of the other
parties. The Seller and UPM shall be jointly and severally liable for
the performance of this Agreement and for all claims of the Buyer
against the Seller and/or UPM of any type whatsoever pursuant to this
Agreement, including indemnifying Buyer pursuant to Section 3 (d) (ii)
above.
(b) Survival. Any claims by the Buyer against the Seller for breach of the
representations and warranties pursuant to Section 6 above shall become
time-barred as follows:
(i) Claims relating to environmental matters covered under
Section 6 (y) and Section 13 shall become time-barred five
years after the Closing Date;
(ii) Claims relating to defects in the legal title to Acquired
Assets shall become time-barred according to the statutory
provisions;
(iii) Claims relating to taxes shall become time-barred six months
after the applicable statute of limitations for such tax
matter has expired;
(iv) Any other claims shall become time-barred two years after
Closing Date.
(c) All other claims of the Buyer pursuant to this Agreement, including
without limitation claims relating to the indemnities pursuant to
Section 3 (d)(ii) shall, to the extent not explicitly otherwise
provided herein, become time-barred according to the statutory
provisions.
(d) Limitation on Amount-- Seller. The Seller shall have no Liability
for claims under the representations and warranties pursuant to
Section 6 above for indirect or consequential losses and damages
2.2-33
<PAGE>
unless such claims involve a breach of Section 6 (e) or involve gross
negligence or willful misconduct by Seller, UPM or Affiliated
Companies and the term Adverse Consequences shall be interpreted
accordingly. Further, the Seller shall have no liability for any
individual claim under the representation and warranties pursuant to
Section 6 above, if the Adverse Consequences for such individual claim
is less than US$ 25,000. Seller shall have no liability for claims
under the representation and warranties pursuant to Section 6
above, which exceed the forgoing US$ 25,000 de minimis until the
total of all Adverse Consequences with respect to such claims under
the representation and warranties pursuant to Section 6 above exceeds
U.S. $300,000 in the aggregate, at which time, the Seller shall be
liable to the Buyer for the entire amount of such Adverse Consequences
(subject, however, to the US$ 25,000 de minimis limitation) in excess
of US$ 300,000. However, the foregoing US$ 300,000 limitation will not
apply to any breach of the Seller's representations and warranties
of which the Seller or UPM had Knowledge at any time prior to the
Effective Date. The maximum aggregate total amount of
indemnification for which Seller shall be liable under the
representation and warranties pursuant to Section 6 and with
respect to the environmental indemnification provided in Section 13
shall in all events be limited to U.S. $20,000,000 except with
respect to fraud or any intentional breach by the Seller or UPM of any
representation, warranty, covenant or obligation, and the Seller
will be liable for all Adverse Consequences suffered by the Buyer
with respect to such fraud or intentional breach. The maximum
aggregate total amount of indemnification under the representation
and warranties pursuant to Section 6 above and Section 3 (d) (ii)
above shall in all events be limited to US$105,000,000.
(d) The provisions in para. (c) above shall apply mutatis mutandis to all
claims of the Seller pursuant to this Agreement.
(e) Every right of rescission (Wandlung and Rucktritt) shall be excluded.
ss.ss. 123, 476 and 826 BGB (German Civil Code) shall not be affected.
(f) (i) Any review, inspection and investigation of or on behalf
of the Buyer shall neither affect the Seller's and UPM's
obligations, representations and warranties hereunder nor the
right of the Buyer to raise claims on the basis of such
obligations, representations and warranties.
(ii) Claims of the Buyer against the Seller and UPM on the basis of
the representations and warranties of the Seller and UPM in
this Agreement which concern events or due dates prior to the
Effective Date can only be raised to the extent that the
damages giving rise to such claims have not already been
reflected in the Net Working Capital Statement.
(g) Set off. Upon notice to Seller specifying in reasonable detail the
basis for such set-off, the Seller shall have thirty (30) days to agree
or disagree with Buyer's claim for set-off. The Buyer may set-off any
amount to which Seller agrees that Buyer is entitled under this
2.2-34
<PAGE>
Agreement against amounts otherwise owing to Seller on account of this
Agreement. As to any amount that Seller disputes as being entitled to
set-off by providing notice to Buyer of such disputed amount within
said thirty (30) day period, Buyer shall pay such disputed amount to a
mutually agreed upon escrow agent to hold until the dispute is resolved
by mutual agreement of the Parties or pursuant to the arbitration
provisions of Section 14(a). Any interest earned in escrow shall be
paid to the Party receiving the principal from escrow, or such part
attributable thereto.
(h) The parties are in agreement that Buyer may interrupt any of the
statutes of limitation pursuant to Section 8 (b) above by virtue of a
reasonably substantiated notice to the Seller. Any stricter
requirements under German law are hereby waived.
9. Pre-Closing Covenants.
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing.
(a) General. Each of the Parties will use its best efforts to take all
action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the Closing
conditions set forth in Section 10 below).
(b) Operation of Business. The Seller will not engage in any practice, take
any action, or enter into any transaction outside the Ordinary Course
of Business. Without limiting the generality of the foregoing, the
Seller will not (i) execute any agreement that will survive Closing
with another Seller or Affiliate unless Buyer consents, (ii) negotiate
any agreements creating obligations after Closing in excess of
U.S.$10,000 other than sales agreements and agreements for the purchase
of raw materials executed in the Ordinary Course of Business for a
period not to exceed December 31, 1999, unless Buyer consents, or (iii)
otherwise engage in any practice, take any action, or enter into any
transaction of the sort described in Section 6 (h) above.
(c) Preservation of Business. The Seller will use commercially reasonable
efforts to keep its business and properties substantially intact,
including its present operations, physical Plant Buildings, working
conditions, and relationships with lessors, licensors, suppliers,
customers, and employees.
(d) Full Access. Subject to anticompetitive laws, the Seller will permit
representatives of the Buyer to have full access at all reasonable
times, and in a manner so as not to interfere with the normal business
operations of the Seller, to all premises, properties, personnel,
books, records (including Tax records), contracts, and documents of or
pertaining to each Seller.
2.2-35
<PAGE>
(e) Notice of Developments. Each Party will give prompt written notice to
the other Party of any material adverse development causing a breach of
any of its own representations and warranties in Section 6 and Section
7 above. No disclosure by any Party pursuant to this Section 9(e),
however, shall be deemed to amend or supplement the Disclosure Schedule
or to prevent or cure any misrepresentation, breach of warranty, or
breach of covenant.
(f) Exclusivity. The Seller will not (i) solicit, initiate, or encourage
the submission of any proposal or offer from any Person relating to the
acquisition of any capital stock or other voting securities, or any
portion of the assets, of the Seller (including any acquisition
structured as a merger, consolidation, or share exchange) or (ii)
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in
any other manner any effort or attempt by any Person to do or seek any
of the foregoing. The Seller will notify the Buyer immediately if any
Person makes any proposal, offer, inquiry, or contact with respect to
any of the foregoing.
10. Closing, Conditions to Close.
(a) Conditions to Obligation of the Buyer. The obligation of the Buyer to
consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 6
above shall be true and correct in all material respects
at and as of the Closing Date;
(ii) the Seller shall have performed and complied with all of its
covenants hereunder in all material respects through the
Closing Date;
(iii) the Seller shall have procured the permits necessary for Buyer
to own and operate the Acquired Assets in the manner operated
prior to the Closing Date, and all licenses and approvals
necessary for Buyer to own and operate the Acquired Assets
shall have been obtained;
(iv) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction or before
any arbitrator wherein an unfavorable injunction, judgment,
order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this
Agreement, (B) cause any of the transactions contemplated by
this Agreement to be rescinded following consummation, or (c)
affect adversely the right of the Buyer to own the Acquired
Assets or to operate the former businesses of the Seller;
(v) the Notarial Deed attached hereto as Exhibit A shall have been
notarized and the priority notice pursuant to Section 2 (d)(i)
2.2-36
<PAGE>
above shall have been registered with the Land Registry of the
Magistrates Court of the City of Steinfurt with no
registrations having prior ranking not assumed by the Buyer;
(vi) the consent of the City of Steinfurt to the sale and transfer
of the Sold Real Estate to the Buyer in accordance with this
Agreement has been obtained;
(vii) the waiver by the city of Steinfurt of the encumbrance
referred to in Section 2(a)(i)(aii) above has been obtained.
(viii) the waiver of preemptive rights necessary for the transfer
of the Sold Real Estate have been obtained; and
(ix) all actions to be taken by the Seller in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will
be satisfactory in form and substance to the Buyer.
The Buyer may waive any condition specified in this Section 10(a)
if it executes a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Seller. The obligation of the Seller to
consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 7
above shall be true and correct in all material respects
at and as of the Closing Date;
(ii) the Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the
Closing;
(iii) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction or before
any arbitrator wherein an unfavorable injunction, judgment,
order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this
Agreement or (B) cause any of the transactions contemplated by
this Agreement to be rescinded following consummation (and no
such injunction, judgment, order, decree, ruling, or charge
shall be in effect);
(iv) Buckeye Holdings shall have duly executed the Share Pledge
Agreement;
(v) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will
be satisfactory in form and substance to the Seller.
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<PAGE>
The Seller may waive any condition specified in this Section 10(b)
if it executes a writing so stating at or prior to the Closing.
(c) Closing. The consummation of the transactions contemplated in this
Agreement (the "Closing") shall take place at the offices of Oppenhoff
& Radler in Cologne or any other place(s) the parties may agree
commencing at 11.00 a.m. local time within three business days after
the conditions precedent referred to in Section 10(a)(iii), (v), (vi)
and (vii) have been fulfilled (the "Closing Date").
At the Closing,
(i) the Buyer and the Seller shall agree on the Estimated Net
Working Capital
(ii) the Buyer shall deliver to the Seller the Initial Payment
adjusted in accordance with the provisions of this Agreement;
(iii) Buyer and Seller shall instruct the Notary Public, who
notarized the Notarial Deed attached hereto as Exhibit A to
file all outstanding applications required in order to perfect
the title transfer with the competent Land Registry.
11. Termination.
(a) Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
(i) the Buyer and the Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(ii) the Buyer may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing (A) in
the event the Seller has breached any material representation,
warranty, or covenant contained in this Agreement in any
material respect, the Buyer has notified the Seller of the
breach, and the breach has continued without cure for a period
of 30 days after the notice of breach or (B) if the Closing
shall not have occurred on or before December 31, 1999.
(iii) the Seller may terminate this Agreement by giving written
notice to the Buyer at any time prior to the Closing (A) in
the event the Buyer has breached any material representation,
warranty, or covenant contained in this Agreement in any
material respect, the Seller has notified the Buyer of the
breach, and the breach has continued without cure for a period
of 30 days after the notice of breach or (B) if the Closing
shall not have occurred on or before December 31, 1999.
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<PAGE>
(b) Effect of Termination. If any Party terminates this Agreement pursuant
to Section 11 (a) above, all rights and obligations of the Parties
hereunder shall terminate without any Liability of any Party to any
other Party (except for any Liability of any Party then in breach).
12. Post-Closing Covenants.
(a) License of Walkisoft Name. Seller hereby grants to Buyer the exclusive
royalty-free right to use the trade name "Walkisoft" and trademark
for a period of five (5) years from the Effective Date in all areas
in which the Seller has used the trade name or otherwise has rights in
the trade name. Seller hereby expressly releases Buyer, its agents,
employees, licensees and assigns from and against any and all
claims which Seller has or may have with respect to use of the
trade name "Walkisoft." From Effective Date and thereafter for a
period of five (5) years, Seller shall not use or license to use or
transfer to Persons other than Buyer the "Walkisoft" trade name and
thereafter it will not use, license to use or transfer
the "Walkisoft" trade name in or to any similar business to that of
Buyer. Seller warrants that it has the full right and authority to
grant to Buyer the license to use the trade name "Walkisoft."
(b) Noncompetition by Seller. Except for a six months period following
the Effective Date to transition the Kotka, Finland plant out of
the Walkisoft business, for a period of five (5) years from and
after the Effective Date, neither the Seller nor any Affiliated
Company of Seller shall engage in, directly or indirectly, the
airlaid nonwoven business or any other business conducted by Seller
as of the Effective Date (the "Restricted Business") anywhere in
the world (each of Parties hereto acknowledging that the business as
conducted by Seller is an expanding global business with current
worldwide sales); provided, however, that no owner of less than 1% of
the outstanding stock of any publicly-traded corporation shall be
deemed to engage solely by reason thereof in the Restricted Business.
Notwithstanding the foregoing, Seller or an Affiliated Company
shall be permitted to acquire another business which has an airlaid
nonwoven division or subsidiary comprising not more than 3 % of the
gross sales for such acquired business for its last full fiscal
year. In such event, Seller or its applicable Affiliated Company
shall use its best efforts to dispose of the airlaid nonwoven
division or subsidiary of the acquired business as soon as commercially
practicable to do so and as part of such process, shall give Buckeye
Inc. or its affiliated companies within the meaning ofss.ss.15 et
seq. German Stock Corporation Act a right of first negotiation to
acquire the airlaid nonwoven division or subsidiary to be sold.
To the extent Buyer is unwilling to acquire such airlaid non-woven
division or subsidiary at such price and on such terms as offered by
Seller in writing to Buyer, then Seller may not sell such business at
a lower price or on more favorable terms than offered to Buyer for at
least one year following the date of written offer from Seller to
2.2-39
<PAGE>
Buyer. If Seller or its Affiliate is unable to sell such airlaid
nonwoven division or subsidiary after using commercially reasonable
efforts or determines that it is commercially impracticable to sell
such airlaid nonwoven division or subsidiary based on its integration
with the remaining acquired business, then in such event,
Seller covenants that neither Seller nor its Affiliated Companies
shall seek to expand or otherwise invest in expansion of the airlaid
nonwoven division or subsidiary within the five-year period following
the Effective Date. If the final judgment of a court of competent
jurisdiction declares that any term or provision of this Section 12(b)
is invalid or unenforceable, the Parties agree that the court making
the determination of invalidity or unenforceability shall have the
power to reduce the scope, duration, or area of the term or provision,
to delete specific words or phrases, or to replace any invalid or
unenforceable term or provision with a term or provision that is valid
and enforceable and that comes closest to expressing the intention of
the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time
within which the judgment may be appealed.
(c) Accounts Receivable. If Buyer is unable after reasonable efforts to
collect the accounts receivable transferred hereunder within sixty (60)
days after the stated date for payment, Seller shall purchase such
accounts receivable at the U.S.$ value assigned to such accounts as of
the Effective Date.
(d) Sales Rebates or Discounts. Seller shall remain liable for or receive
benefit from, as the case may be, its pro rata share of any sales or
purchase discounts or rebates which are payable after Closing for the
period up to the Effective Date.
(e) Product Warranty. As a service to Seller, Buyer agrees to use its
reasonable efforts to rectify and/or remedy on Seller's behalf and at
Seller's expense any items manufactured by Seller prior to the
Effective Date which are claimed to be covered by a warranty of
Seller. Upon receipt of reasonable documentation from Buyer, Seller
shall promptly reimburse Buyer for all costs reasonably expended in
rectifying or remedying the claim. To the extent such costs are
anticipated to be in excess of U.S. $10,000 for a particular warranty
claim, Buyer shall notify Seller in advance of remedying the warranty
claim to advise Seller of the claim and the anticipated expenses
associated therewith. Buyer shall remedy or replace the item with
the consent of Seller, which shall not be unreasonably withheld,
provided that upon Seller's failure to object within five (5)
business days following receipt of Buyer's notice to Seller of the
claim, Buyer may proceed to rectify or remedy the claim at Seller's
expense. The Parties acknowledge that Designated Accruals contains
a reserve for warranty claims which shall be charged against prior to
reimbursement by Seller. The Parties further acknowledge that Buyer
is providing this warranty service as an accommodation to Seller and
such agreement shall not constitute an assumption by Buyer of any
Liability that does not constitute an Assumed Liability under this
Agreement.
2.2-40
<PAGE>
(f) Access to Records. Each of the Parties after the Closing Date shall
permit the other full access at reasonable times, and in a manner so as
not to interfere with normal business operations, to all books, records
(including tax records), contracts and documents pertaining to the
operation of Seller's business prior to the Effective Date.
(g) Tax Matters. Tax matters of the Seller (including appeals) concerning
the period through the Effective Date shall be handled by the Seller.
However, the Buyer shall be notified in time of, and be given an
opportunity to comment on, tax and other administrative audits. Binding
declarations to the tax authorities which may have consequences for the
Buyer shall be made by the Seller only in agreement with the Buyer.
13. Environmental Indemnity.
The Seller will indemnify and hold harmless the Buyer and Buckeye
Technologies (the indemnified persons are sometimes hereinafter
referred to collectively as the ,,Indemnified Persons") for, and will
pay to the Indemnified Persons the amount of, any Adverse Consequence
arising, directly or indirectly, from or in connection with:
(i) any Environmental, Health, and Safety Liabilities arising out
of or relating to: (A) the ownership, operation, or
condition at any time on or prior to the Effective Date of
the Facilities or any other properties and assets
(whether real, personal, or mixed and whether tangible or
intangible) in which the Seller has or had an interest,
(B) any Hazardous Materials or other contaminants that were
present on the Facilities or such other properties and
assets at any time on or prior to the Effective Date; (C) any
Hazardous Materials or other contaminants, wherever
located, that were generated, transported, stored, treated,
released, or otherwise handled by the Seller or by any
other Person for whose conduct they are or may be held
responsible at any time on or prior to the Effective Date, or
(D) any Hazardous Activities that were conducted by the
Seller or by any other Person for whose conduct they are or
may be held responsible; or
(ii) any bodily injury (including illness, disability, and death,
and regardless of when any such bodily injury occurred,
was incurred, or manifested itself), personal injury,
property damage (including trespass, nuisance, wrongful
eviction, and deprivation of the use of real property), or
other damage of or to any Person, including any employee
or former employee of the Seller or any other Person for
whose conduct they are or may be held responsible, in any
way arising from or allegedly arising from any Hazardous
Activity conducted with respect to the Facilities or the
operation of the business by Seller prior to the Effective
Date, or from Hazardous Material that was (A) present on
or before the Effective Date on or at the Facilities (or
present on any other property, if such Hazardous Material
emanated from any of the Facilities and was present on any of
the Facilities on or prior to the Effective Date) or
(B) released by the Seller or any other Person for whose
2.2-41
<PAGE>
conduct they are or may be held responsible, at any time on
or prior to the Effective Date. The Buyer will be entitled to
control any cleanup, and any related proceeding.
(iii) If any investigation, removal or remedial action is required
by Environmental, Health and Safety Requirements
("Required Action") and the Seller is Liable to the Buyer
for the Environmental, Health and Safety Liabilities
giving rise to the Required Action under the terms of this
Section 13, Seller shall be entitled to undertake said
Required Action so long as (a) Seller provides reasonable
notice to Buyer before commencing such Required Action;
(b) Seller performs such Required Action in accordance with
the Environmental, Health and Safety Requirements; (c)
Seller performs the Required Action, in accordance with
any requirements of any governmental agency having
jurisdiction over the administration and enforcement of the
Environmental, Health and Safety Requirements; (d)
Seller performs the Required Action in a manner so as not to
interfere, to the extent reasonably practicable, with
the Buyer's operation of business, and (e) Seller undertakes
the Required Action and uses commercially reasonable
efforts to complete the Required Action in a timely and
expeditious manner. If the Seller fails to meet the
foregoing conditions, the Buyer shall be entitled to perform
the Required Action at Seller's expense. If the Buyer
and Seller dispute either the extent to which there is a
Required Action or Seller's Liability with respect to the
Required Action or whether the Seller has failed to meet any
of the conditions set forth above which would entitle
Buyer to perform the Required Action, the Parties agree to
submit such issue to arbitration pursuant to Section 14
(a) hereof. In the event that Seller performs the Required
Action, Seller shall keep Buyer reasonably informed of
the progress of such Required Action and shall provide copies
to Buyer of the results of any Required Action, all
correspondence from or to any governmental entity
pertaining to the Required Action, and all reports and other
documentation pertaining to such Required Action. Buyer
shall provide access to the property at reasonable times to
allow Seller to perform any Required Action.
14. Miscellaneous.
(a) Arbitration. Any controversy or claim arising out of or relating to
this Agreement, not satisfied through negotiation, shall be settled
by binding arbitration in accordance with the Rules of Conciliation
and Arbitration of the International Chamber of Commerce by an
arbitration tribunal consisting of one arbitrator. The place of
arbitration shall be in Cologne, Germany. Judgment upon the award
rendered by the arbitrator may be entered in any court having
jurisdiction. As soon as reasonably practical after submission of
a demand for binding arbitration, Buyer and Seller shall select one
arbitrator, agreeable to all parties. This arbitrator will be
selected from lists prepared by the International Chamber of Commerce.
2.2-42
<PAGE>
From the list the Parties will rank the arbitrators which are
acceptable. The highest ranking acceptable candidate will be
selected. If no arbitrators from the list composed by the
International Chamber of Commerce are acceptable to either of the
Parties, the International Chamber of Commerce will compile a second
list. If the Parties are unable to agree from a second list, the
arbitrator will be selected by the International Chamber of Commerce.
The results of the arbitrator's finding will be binding on the
Parties. As part of any award, the arbitrator may include an
award of attorneys fees to the prevailing party. English shall be
the language used for any arbitration.
(b) The Notary's fees and transfer taxes connected with the execution and
consummation of this Agreement shall be borne by the Buyer. The costs
of the transfer of any Intellectual Property shall be borne by the
Seller, with the transfer process being managed by the Buyer. Apart
therefrom, each contractual party shall bear its own costs and taxes
and the costs of its advisers and auditors. The costs connected with
the performance of the merger control proceedings with the Federal
Cartel Office shall be borne by the Buyer.
(c) Changes and amendments to this Agreement as well as declarations to be
made hereunder shall be valid only if made in writing unless a notarial
deed is legally required. This shall also apply to any change of this
provision.
(d)
(i) The Seller and UPM shall advise the Buyer and Buckeye Inc. of
a person or legal entity which is authorized to make and
accept with legally binding effect for the Seller and UPM all
declarations under this Agreement or in consummation hereof.
The Seller and UPM appoint as such joint agent:
Reko Aalto-Setala, Company Secretary
UPM-Kymmene, Group Head Office
Business Development
Etelaesplanadi 2
FIN-00101Helsinki, Finland
Tel +358 204 15 111
Fax +358 204 15 110
A change of the person or address of an agent appointed by the
Seller and UPM shall be effective for the Buyer only one month
after the date on which it has been notified of such change.
Until the lapse of such period the authority of the previous
agent as well as his address shall be deemed to continue. The
obligation to nominate a joint agent pursuant to paragraph (a)
above shall apply until October 1, 2004.
2.2-43
<PAGE>
(ii) The Buyer and Buckeye Inc. shall advise the Seller and UPM of
a person or legal entity which is authorized to make and
accept with legally binding effect for the Buyer and Buckeye
Inc. all declarations under this Agreement or in consummation
hereof.
The Buyer and Buckeye Inc. appoint as such joint agent:
Henry P. Doggrell, Sr. Vice President
Buckeye Technologies Inc.
1001 Tillman Street
Memphis, TN 38112
Telephone No. 901-320-8220
Fax No. 901-320-8139
Copy to: Ben C. Adams, Jr.
Baker, Donelson, Bearman & Caldwell, P.C.
165 Madison Avenue, Suite 2000
Memphis, TN 38103
Telephone No. 901-577-2307
Fax No. 901-577-0714
and Copy to: Dr. Klaus Marinus Hoenig
Oppenhoff & Radler
Hohenstaufenring 62
D- 50674 Cologne
Germany
Telephone No.: +49-221-2091-0
Fax No.: +49-221-2091 -435
The provisions pursuant to para. (i), second paragraph, above shall
apply mutatis mutandis.
(e) No announcement of any kind to the media or any other indefinite group
of persons shall be made prior to the Effective Date in respect of the
subject matter of this Agreement except as specifically agreed between
UPM and Buckeye Inc. or if such announcement is required by law or
administrative or judicial order.
(f) If a provision of this Agreement should be or become invalid or not
contain a necessary regulation, the validity of the other provisions of
this Agreement shall not be affected thereby. The invalid provisions
2.2-44
<PAGE>
shall be replaced and the gap be filled by a legally valid arrangement
which corresponds as closely as possible to the intentions of the
parties or what would have been the intentions of the parties according
to the aim and purpose of this Agreement if they had recognized the
gap.
(g) The Exhibits to this Agreement shall form an integral part of this
Agreement. The headings in this Agreement shall only serve the purpose
of easier orientation and are of no consequence for the contents and
interpretation of this Agreement. Statements in one provision of, or
Exhibit to, this Agreement shall be deemed to have been made also for
the purposes of all other provisions of, and Exhibits to, this
Agreement.
(h) This Agreement shall be governed by German law.
IN WITNESS THEREOF this Notarial Deed including its Annex, all its Exhibits and
the Disclosure Schedule hereto - with the exception of the lists of items
(Verzeichnisse) contained in the Exhibits D, E, F, G and in the Disclosure
Schedule and in the list attached thereto, for which the persons appeared have
renounced to have them read aloud and which were submitted to the notice of the
persons appeared and which were signed by them on each page - has been read
aloud to the persons appeared and this Notarial Deed, its Annex, all its
Exhibits and the Disclosure Schedule was confirmed and approved by the persons
appeared. The persons appeared then signed this Deed. All this was done at the
day herebelow written in the presence of me, the Notary Public, who also signed
this Deed and affixed my offical Seal.
Basel, this 1st (first) day of October, 1999 (nineteen hundred and ninety-nine)
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