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SECURITIES AND EXCHANGE 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) March 18, 1998
CROWN VANTAGE INC.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
VIRGINIA 1-13868 54-1752384
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
300 Lakeside Drive, Oakland CA 94612-3592
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (510) 874-3400
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Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On March 18, 1998 Crown Vantage Inc. and Crown Paper Co. entered into an
agreement with Fort James Corporation (formerly "James River Corporation of
Virginia") relating to Crown Vantage Inc.'s 11.45% Senior-Pay-in-Kind Notes
which are held by Fort James Corporation. This agreement is included as
exhibit 10.1 to this Form 8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
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Exhibit No. Description
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10.1 Option and Settlement Agreement dated March 18, 1998
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SIGNATURES
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 hereunto duly authorized.
CROWN VANTAGE INC.
/s/ Michael J. Hunter
March 25, 1998 -------------------------------------------
Michael J. Hunter
Vice President, Chief Accounting Officer
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EXHIBITS LISTING
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Exhibit No. Description
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10.1 Option and Settlement Agreement dated March 18, 1998
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OPTION AND SETTLEMENT AGREEMENT
OPTION AND SETTLEMENT AGREEMENT, dated as of March 18, 1998, among
Fort James Corporation, a Virginia corporation (formerly known as James River
Corporation of Virginia) ("Fort James"), Fort James Operating Company, a
Virginia corporation ("Fort James Operating"), Fort James Fiber Company, a
Virginia corporation (formerly known as James River Timber Corporation)
("FJT"), Fort James International Holdings, Ltd., a Virginia corporation
(formerly known as James River International Holdings Ltd.) ("FJI" and,
together with FJT, the "Fort James Subsidiaries"), Crown Vantage Inc., a
Virginia corporation ("Holdings"), and Crown Paper Co., a Virginia
corporation (the "Company").
INTRODUCTION
Certain capitalized terms used herein are defined in Article I.
The Fort James Subsidiaries are the holders of the 11.45% Senior Pay-
In-Kind Notes due September 1, 2007 of Holdings listed in Exhibit 1 hereto,
issued by Holdings pursuant to the Note Purchase Agreement, dated as of August
23, 1995, as amended (the "Purchase Agreement"), between Holdings and Fort James
(the "11.45% Notes").
Pursuant to this Agreement and in order to settle claims and
contingent claims by Holdings and the Company against the Fort James Entities,
and by the Fort James Entities against Holdings and the Company, relating to the
Contribution Agreement, the Related Agreements and the transactions effected
thereunder and contemplated thereby, (1) Fort James will, subject to the terms
and conditions set forth herein, cause the Fort James Subsidiaries to transfer
to Holdings and the Company (the "Crown Vantage Entities") an aggregate of
$33,000,000 in principal amount of the 11.45% Notes, together with $188,910 in
interest accrued thereon from March 1, 1998 to and including the date hereof
(collectively, the "Settlement Notes"), and (2) the Crown Vantage Entities and
the Fort James Entities will, subject to the terms and conditions set forth
herein, grant the releases specified in Article II.
Concurrently herewith, the Fort James Entities and the Crown Vantage
Entities are entering into an agreement, dated as of the date hereof (the
"Insurance Agreement"), to provide for the ongoing administration of, and the
allocation of insurance relating to, certain litigation claims, which Insurance
Agreement will become effective as provided therein.
The Fort James Subsidiaries desire to grant to Holdings, and Holdings
desires to acquire from the Fort James Subsidiaries, an option to purchase on
the terms and subject to the conditions set forth in this Agreement any and all
other 11.45% Notes of Holdings held by the Fort James Subsidiaries, together
with (a) any accrued interest thereon and any Secondary Notes issued in lieu of
the payment of such interest, and (b) any interest accrued on the Settlement
Notes and any Secondary Notes issued in lieu of payment of such interest from
and excluding the date hereof through the earlier of (1) the date of their
transfer to Holdings and the Company pursuant to Section 2.2 and (2) the date of
the Option Closing (as defined in Section 3.5) (the "Option Notes"). As used in
this Agreement, the term "Option Notes" shall (A) exclude the Set-
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tlement Notes and (B) include any and all other Secondary Notes held by the
Fort James Subsidiaries on the date hereof and any and all Secondary Notes
issued by Holdings after the date hereof and on or before the Option Closing,
together in each case with any accrued interest thereon.
Subject to the terms and conditions hereof, the Fort James Entities
and the Crown Vantage Entities wish to amend the Purchase Agreement, the 11.45%
Notes and the form of Indenture relating thereto by means of an amendment
agreement (the "Note Amendment") being executed concurrently herewith in the
form attached hereto as Exhibit 2, which will become effective as provided
therein.
In consideration of the mutual benefits to be derived from this
Agreement and of the representations, warranties, conditions, agreements and
promises contained herein and other good and valuable consideration, the
parties agree as follows:
ARTICLE I
DEFINITIONS
1.1. As used herein, the following terms have the following meanings:
"Company Indenture" means the Indenture, dated as of August 23, 1995,
between the Company and The Bank of New York, relating to $250,000,000 in
aggregate principal amount of the 11% Senior Subordinated Notes due 2005 of the
Company.
"Company Notes" means the 11% Senior Subordinated Notes due 2005 of
the Company issued pursuant to the Company Indenture.
"Contribution Agreement" means the Contribution Agreement, dated as of
August 15, 1995, among Fort James, Fort James Operating, Holdings and the
Company.
"Credit Agreement" means the $350,000,000 Credit Agreement, dated as
of August 15, 1995, as amended, among Holdings, the Company and the Banks listed
therein.
"Crown Vantage Entities" means, collectively, Holdings and the
Company.
"Encumbrances" means any or all options (other than the Option, as
defined in Section 3.1), pledges, charges, escrows, rights of first refusal,
mortgages, indentures, security interests, liens, restrictions on transfer,
claims or other encumbrances, agreements or arrangements of any nature or
character, whether written or oral and whether or not relating in any way to
credit or the borrowing of money.
"Fort James Entities" means, collectively, Fort James, Fort James
Operating and the Fort James Subsidiaries.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of August 23, 1995, among Holdings and the holders, from
time to time, of the 11.45% Notes.
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"Related Agreements" means the agreements listed in Section 5.1 of the
Contribution Agreement.
ARTICLE II
SETTLEMENT AND RELEASE
2.1. (a) The parties hereto agree and acknowledge that (1) the
provisions of the Contribution Agreement listed in Schedule 2.1(a) and (2) the
Related Agreements and other agreements listed in Schedule 2.1(a) (collectively,
the "Non-Terminated Provisions and Agreements") remain in full force and effect.
(b) The parties hereto agree and acknowledge that subject to
subparagraph (d) of this Section 2.1, (1) all provisions of the Contribution
Agreement other than those listed in Schedule 2.1(a) and (2) each of the Related
Agreements listed in Schedule 2.1(b) (collectively, the "Terminated Provisions
and Agreements") either have been, or hereby are, terminated (including any
provision in such a Related Agreement which, by its terms, would otherwise
survive such termination), without any further obligation thereunder on the part
of any party thereto.
(c) (1) The Crown Vantage Entities represent and warrant to the Fort
James Entities that, as of the date hereof, the Crown Vantage Entities know of
(A) no breaches or potential breaches by the Fort James Entities, (B) no claims
or potential claims by the Crown Vantage Entities against the Fort James
Entities, and (C) no facts, circumstances or events which would give rise to the
assertion of any such breach or any such claims, in each case under the Non-
Terminated Provisions and Agreements.
(2) The Fort James Entities represent and warrant to the Crown
Vantage Entities that, as of the date hereof, the Fort James Entities know of
(A) no breaches or potential breaches by the Crown Vantage Entities, (B) no
claims or potential claims by the Fort James Entities against the Crown Vantage
Entities, and (C) no facts, circumstances or events which would give rise to the
assertion of any such breach or any such claims, in each case under the Non-
Terminated Provisions and Agreements.
(d) The parties agree and acknowledge that (1) their respective
obligations set forth in the 11.45% Notes, the Purchase Agreement and the
Registration Rights Agreement, remain in full force and effect and shall be
unaffected by the other provisions of this Article II and (2) no releases of any
such obligations are being granted under this Article II or otherwise.
2.2. In consideration for, subject to and effective upon, the
effectiveness of the releases granted under Section 2.3, at the Settlement
Closing (as defined in Section 2.6), the Fort James Subsidiaries agree to sell,
transfer and deliver to Holdings an aggregate of $25,000,000 in principal amount
together with $143,114 in interest, and to the Company an aggregate of
$8,000,000 in principal amount together with $45,796 in interest, of the
Settlement Notes, respectively, free and clear of all Encumbrances.
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2.3. At the Settlement Closing, in consideration for, subject to, and
effective upon, such sale, transfer and delivery by the Fort James Subsidiaries
of the Settlement Notes to Holdings and the Company, and also in consideration
for the releases by the Fort James Entities set forth in Section 2.4, the
granting of the Option and the other agreements provided herein:
(a) Except to the extent specifically set forth in the Insurance
Agreement, each of Holdings and the Company for themselves, and each of their
respective officers, directors, agents, attorneys, employees, predecessors,
parents, subsidiaries, affiliates, and their respective heirs, executors,
administrators, successors and assigns (collectively, the "Crown Vantage
Affiliates"), and any person or entity acting for or on behalf of, or
claiming under, any of the foregoing (collectively with the Crown Vantage
Affiliates, the "Crown Vantage Releasors"), fully, finally and forever
releases and discharges each of the Fort James Entities, and each of their
past, present and future officers, directors, agents, attorneys, employees,
predecessors, parents, subsidiaries, affiliates and their respective heirs,
executors, administrators, successors and assigns and any person or entity
acting for or on behalf of, or claiming under, any of the foregoing
(collectively, the "Fort James Released Parties"), from all actions, causes,
and rights of action, suits, debts, sums of money, accounts, reckonings,
bonds, bills, specialties, covenants, contracts, controversies, agreements,
promises, variances, trespasses, damages, judgments, extents, executions,
losses, claims, liabilities and demands of any kind or nature whatsoever,
whether at law or in equity, (1) whether known (including known contingent
claims) or which should or could have been known, which any of the Crown
Vantage Releasors ever had or may have had, now have, or (based on events
that have already occurred and which currently are known or should or could
have been known by the Crown Vantage Releasors) hereafter can, shall or may
have, against any of the Fort James Released Parties for, upon or by reason
of any act, omission or other matter, cause or thing whatsoever from the
beginning of the world, arising out of, or in any way connected to, the
Non-Terminated Provisions and Agreements, and the transactions effected
pursuant thereto or contemplated thereby, and (2) whether known or unknown,
contingent or absolute, suspected or unsuspected, disclosed or undisclosed,
hidden or concealed, which any of the Crown Vantage Releasors ever had or may
have had, now have, or hereafter can, shall or may have, against any of the
Fort James Released Parties for, upon or by reason of any act, omission or
other matter, cause or thing whatsoever from the beginning of the world,
arising out of, or in any way connected to, the Terminated Provisions and
Agreements, the transactions effected pursuant thereto or contemplated
thereby, or any other matter in any way related thereto; provided that in no
event under this subparagraph (a) are any releases granted with respect to,
and the Crown Vantage Released Matters (as defined herein) shall not include,
claims relating to (A) any latent product defects, unknown as of the date
hereof, in products shipped to the Crown Vantage Entities by the Fort James
Entities or (B) trade payables owed to the Crown Vantage Entities and
incurred by the Fort James Entities in the ordinary course under
Non-Terminated Provisions and Agreements. The releases by the Crown Vantage
Releasors specified in this Section 2.3(a) are referred to herein as the
"Crown Vantage Released Matters."
(b) Each of Holdings and the Company on their own behalf, and on
behalf of the other Crown Vantage Affiliates, further agrees never to file or
institute against Fort James, or any other of the Fort James Released Parties,
any suit, charge, proceeding or action of any kind or nature whatsoever, whether
at law, in equity or otherwise, in or before any court, administra-
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tive agency, arbitral panel or other tribunal wherever situated asserting,
directly or indirectly, any claim, demand, cause or right of action of any
kind or nature whatsoever, arising out of, or in any way connected to, any
matter which is a Crown Vantage Released Matter. In the event that any
litigation of any kind or nature whatsoever is initiated by any of the Crown
Vantage Affiliates against any of the Fort James Released Parties, or in the
event any of the Crown Vantage Affiliates provides financial support in
connection with any such litigation by a Crown Vantage Releasor which is not
a Crown Vantage Affiliate, which litigation asserts a claim, demand, cause or
right of action, or other matter released as a Crown Vantage Released Matter,
the Fort James Released Parties sued in such litigation shall be entitled to
recover from the Crown Vantage Entities their reasonable attorneys' fees
incurred as a result of such litigation. This covenant not to sue shall not
apply to any action by either Holdings or the Company to enforce this
Agreement.
(c) Each of Holdings and the Company agrees to indemnify and hold
harmless each of the Fort James Released Parties against the full amount of
any liability, loss, damage, judgment or expense (including costs and
reasonable attorneys' fees incurred by the Fort James Released Parties)
incurred in connection with any claim, demand, cause or right of action, or
any other matter whatsoever: (1) brought by any Crown Vantage Affiliate
against any Fort James Released Party with respect to any Crown Vantage
Released Matter, (2) brought as a claim-over arising from any claim brought
by a Crown Vantage Affiliate against any third-party, who then asserts a
claim against a Fort James Released Party with respect to a Crown Vantage
Released Matter, (3) brought by any person or entity under any assignment or
other transfer of any kind from any Crown Vantage Affiliate with respect to
any Crown Vantage Released Matter, or (4) arising out of any breach of the
representations and warranties made in this Agreement by Holdings and the
Company. Each of Holdings and the Company agrees to pay to the Fort James
Entities the amount of any recovery by such Crown Vantage Entity in any
litigation brought by a Crown Vantage Affiliate or shareholder on behalf of
such Crown Vantage Entity with respect to a Crown Vantage Released Matter.
2.4. At the Settlement Closing, in consideration for, subject to,
and effective upon, the effectiveness of the releases granted under Section
2.3 and in consideration for the other agreements provided herein:
(a) Except to the extent specifically set forth in the Insurance
Agreement, each of the Fort James Entities for themselves, and each of their
respective officers, directors, agents, attorneys, employees, predecessors,
parents, subsidiaries, affiliates, and their respective heirs, executors,
administrators, successors and assigns (collectively, the "Fort James
Affiliates"), and any person or entity acting for or on behalf of, or
claiming under, any of the foregoing (collectively with the Fort James
Affiliates, the "Fort James Releasors"), fully, finally and forever releases
and discharges each of the Crown Vantage Entities, and each of their past,
present and future officers, directors, agents, attorneys, employees,
predecessors, parents, subsidiaries, affiliates and their respective heirs,
executors, administrators, successors and assigns and any person or entity
acting for or on behalf of, or claiming under, any of the foregoing
(collectively, the "Crown Vantage Released Parties"), from all actions,
causes, and rights of action, suits, debts, sums of money, accounts,
reckonings, bonds, bills, specialties, covenants, contracts, controversies,
agreements, promises, variances, trespasses, damages, judgments, extents,
executions,
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losses, claims, liabilities and demands of any kind or nature whatsoever,
whether at law or in equity, (1) whether known (including known contingent
claims) or which should or could have been known, which any of the Fort James
Releasors ever had or may have had, now have, or (based on events that have
already occurred and which currently are known or should or could have been
known by the Fort James Releasors) hereafter can, shall or may have, against
any of the Crown Vantage Released Parties for, upon or by reason of any act,
omission or other matter, cause or thing whatsoever from the beginning of the
world, arising out of, or in any way connected to, the Non-Terminated
Provisions and Agreements, and the transactions effected pursuant thereto or
contemplated thereby, and (2) whether known or unknown, contingent or
absolute, suspected or unsuspected, disclosed or undisclosed, hidden or
concealed, which any of the Fort James Releasors ever had or may have had,
now have, or hereafter can, shall or may have, against any of the Crown
Vantage Released Parties for, upon or by reason of any act, omission or other
matter, cause or thing whatsoever from the beginning of the world, arising
out of, or in any way connected to, the Terminated Provisions and Agreements,
the transactions effected pursuant thereto or contemplated thereby, or any
other matter in any way related thereto; provided that in no event under this
subparagraph (a) are any releases granted with respect to, and the Fort James
Released Matters (as defined herein) shall not include, claims relating to
any (A) latent defects, unknown as of the date hereof, in products shipped to
the Fort James Entities by the Crown Vantage Entities or (B) trade payables
owed to the Fort James Entities and incurred by the Crown Vantage Entities in
the ordinary course under Non-Terminated Provisions and Agreements. The
releases by the Fort James Releasors specified in this Section 2.4(a) are
referred to herein as the "Fort James Released Matters."
(b) Each of the Fort James Entities on their own behalf, and on
behalf of the other Fort James Affiliates, further agrees never to file or
institute against any of the Crown Vantage Entities, or any other of the Crown
Vantage Released Parties, any suit, charge, proceeding or action of any kind or
nature whatsoever, whether at law, in equity or otherwise, in or before any
court, administrative agency, arbitral panel or other tribunal wherever situated
asserting, directly or indirectly, any claim, demand, cause or right of action
of any kind or nature whatsoever, arising out of, or in any way connected to,
any matter which is a Fort James Released Matter. In the event that any
litigation of any kind or nature whatsoever is initiated by any of the Fort
James Affiliates against any of the Crown Vantage Released Parties, or in the
event any of the Fort James Affiliates provides financial support in connection
with any such litigation by a Fort James Releasor which is not a Fort James
Affiliate, which litigation asserts a claim, demand, cause or right of action,
or other matter released as a Fort James Released Matter, the Crown Vantage
Released Parties sued in such litigation shall be entitled to recover from the
Fort James Entities their reasonable attorneys' fees incurred as a result of
such litigation. This covenant not to sue shall not apply to any action by any
Fort James Entity to enforce this Agreement.
(c) Each Fort James Entity agrees to indemnify and hold harmless
each of the Crown Vantage Released Parties against the full amount of any
liability, loss, damage, judgment or expense (including costs and reasonable
attorneys' fees incurred by the Crown Vantage Released Parties) incurred in
connection with any claim, demand, cause or right of action, or any other
matter whatsoever: (1) brought by any Fort James Affiliate against any Crown
Vantage Released Party with respect to any Fort James Released Matter, (2)
brought as a claim-over aris-
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ing from any claim brought by a Fort James Affiliate against any third-party,
who then asserts a claim against a Crown Vantage Released Party with respect
to a Fort James Released Matter, (3) brought by any person or entity under
any assignment or other transfer of any kind from any Fort James Affiliate
with respect to any Fort James Released Matter, or (4) arising out of any
breach of the representations and warranties made in this Agreement by the
Fort James Entities. Each Fort James Entity agrees to pay to the Crown
Vantage Entities the amount of any recovery received by such Fort James
Entity in any litigation brought by a Fort James Affiliate or shareholder on
behalf of such Fort James Entity with respect to a Fort James Released Matter.
2.5. It is understood and agreed that the settlement and releases
provided in this Agreement, when they become effective, will express the full
and complete settlement of the Crown Vantage Released Matters and the Fort
James Released Matters, respectively. Neither the execution and acceptance
of this Agreement nor the transfer of any 11.45% Notes or the payment of any
sums hereunder, constitutes in any manner, or is to be presumed, construed or
deemed to be an admission of liability, fault, wrongdoing, or misconduct, of
any kind, by any party, or as to the potential value of the Crown Vantage
Released Matters or the Fort James Released Matters, respectively, and may
not be used in evidence for any purpose in any litigation except to enforce
the terms of this Agreement. The parties hereto agree that in the event any
of them commences an action against the other in violation of the terms
hereof, this Agreement may be pleaded in bar of any such action, and the
party against whom such action is commenced shall be entitled to injunctive
relief.
2.6. (a) As used in this Agreement, the "Consent Effective Date"
shall be the date on which all of the consents required under the Credit
Agreement and the Company Indenture for Holdings and the Company to grant the
releases in exchange for the Settlement Notes under this Article II shall
have become effective in accordance with such agreements (the "Credit
Agreement Consents" and the "Indenture Consents", respectively).
(b) The closing for the consummation of the transactions
contemplated by this Article II (the "Settlement Closing") shall take place
at the offices of Howard, Darby & Levin, 1330 Avenue of the Americas, New
York, New York, at 10:00 A.M., New York City time, on the closing date (the
"Settlement Closing Date") specified in a notice from Holdings and the
Company to Fort James given within two business days of the Consent Effective
Date; PROVIDED that such closing date shall occur no more than five business
days from the Consent Effective Date.
2.7 Upon the occurrence of the Settlement Closing on the Settlement
Closing Date, the Insurance Agreement and the Note Amendment shall become
effective in accordance with their terms.
2.8. The obligations of the Fort James Entities at the Settlement
Closing to transfer the Settlement Notes in accordance with Section 2.2 and the
effectiveness of the releases granted under Section 2.4 are subject to the
satisfaction of the following conditions precedent, unless waived by Fort James:
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(a) The representations and warranties of Holdings and the Company
contained in this Agreement shall be true and correct as of the date hereof
and as of the Settlement Closing as if made on and as of the Settlement
Closing, and Holdings and the Company shall have performed and complied with
all covenants and agreements required to be performed or complied with by
them on or prior to the Settlement Closing.
(b) The Fort James Subsidiaries shall have received a certificate
of an executive officer of Holdings and the Company confirming the matters
set forth in subparagraph (a) of this Section 2.8.
(c) The Consent Effective Date shall have occurred.
2.9. The obligations of Holdings and the Company at the Settlement
Closing and the effectiveness of the releases granted under Section 2.3 are
subject to the satisfaction of the following conditions precedent, unless
waived by Holdings and the Company:
(a) Holdings and the Company shall have received the Settlement
Notes pursuant to Section 2.2, duly endorsed for transfer and delivery to
Holdings and the Company, as applicable.
(b) The representations and warranties of the Fort James Entities
contained in this Agreement shall be true and correct as of the date hereof
and as of the Settlement Closing as if made on and as of the Settlement
Closing, and the Fort James Entities shall have performed and complied with
all covenants and agreements required to be performed or complied with by
them on or prior to the Settlement Closing.
(c) Holdings and the Company shall have received a certificate of an
executive officer of the Fort James Entities confirming the matters set forth in
subparagraph (b) of this Section 2.9.
(d) The Consent Effective Date shall have occurred.
ARTICLE III
OPTION
3.1. (a) The Fort James Subsidiaries hereby grant to Holdings the
exclusive right to purchase all, but not less than all, of the Option Notes (the
"Option") at the price and on the other terms and conditions set forth herein.
(b) In consideration of the grant by the Fort James Subsidiaries of
the Option hereunder, Holdings agrees to pay $10.00 to the Fort James
Subsidiaries on the date hereof.
(c) The Option will expire and be of no further force and effect,
unless theretofore exercised, at 5:00 P.M., New York City time, on September 30,
1998 (the "Scheduled Expiration Date"). In no event will Holdings have the
right to exercise the Option after the Scheduled Expiration Date for any reason
whatsoever.
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3.2. The Option shall be exercised only by Holdings giving written
notice to Fort James and the Fort James Subsidiaries during the period from
and including the date hereof to and including the Scheduled Expiration Date
of the Option, stating that (a) the Option is exercised without condition or
qualification and (b) performance of Holdings' obligations with respect to
the Option at the Option Closing will be subject to no conditions or
qualifications (except for the conditions precedent set forth in Section
3.8), and specifying a scheduled closing date for the sale and purchase of
the Option Notes. No partial exercise of the Option shall be permitted.
Such closing date must be a date not less than five days nor more than 30
days from the date on which the Option is exercised (or the next succeeding
business day if such day is a Saturday, Sunday or holiday), it being
understood that if Holdings requests a period shorter than five days in order
to accommodate a simultaneous closing with other financing transactions
necessary to exercise the Option, the Fort James Entities will use reasonable
best efforts to facilitate such schedule.
3.3. (a) In the event Holdings exercises the Option, in exchange for
the payment under Section 3.3(b), the Fort James Subsidiaries agree to sell,
transfer and deliver to Holdings the Option Notes at the Option Closing (as
defined in Section 3.5), free and clear of all Encumbrances.
(b) In exchange for the sale, transfer and delivery to Holdings of
the Option Notes at the Option Closing, Holdings agrees to pay to the Fort James
Subsidiaries $80,000,000 (the "Purchase Price"). The Purchase Price shall be
allocated among the Fort James Subsidiaries in the manner directed by Fort James
in writing at least two business days prior to the Option Closing.
3.4. The Purchase Agreement shall terminate at the Option Closing upon
consummation of the transactions contemplated by this Agreement following
exercise of the Option.
3.5. The closing for the consummation of the transactions contemplated
by this Article III upon exercise of the Option (the "Option Closing") shall
take place at the offices of Howard, Darby & Levin, 1330 Avenue of the Americas,
New York, New York, at 10:00 A.M., New York City time, on the closing date
specified in Holdings' notice under Section 3.2.
3.6. Holdings agrees that it shall fund the Purchase Price only
from (1) cash on hand, (2) the proceeds of an offering or offerings of
Holdings' capital stock (common or preferred) either in the public or private
markets, (3) sales of assets by Holdings or any of its subsidiaries in one or
more transactions (so long as any such sales along with the exercise of this
Option will materially improve Holdings' balance sheet), or (4) any
combination of any or all of the sources of funds specified in clauses (1),
(2), and (3) of this Section 3.6. In no event shall Holdings fund the
Purchase Price from borrowings under any new or existing indebtedness of
Holdings or any of its subsidiaries.
3.7. The obligations of the Fort James Subsidiaries at the Option
Closing are subject to the satisfaction of the following conditions precedent,
unless waived by Fort James:
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(a) The Fort James Subsidiaries shall have received the Purchase
Price pursuant to Section 3.3(b) by wire transfer of immediately available funds
to an account or accounts designated in writing to Holdings at least two
business days prior to the Option Closing or by such other method as may be
acceptable to the Fort James Entities in their sole discretion.
(b) The representations and warranties of Holdings and the Company
contained in this Agreement shall be true and correct as of the date hereof and
as of the Option Closing as if made on and as of the Option Closing, and
Holdings and the Company shall have performed and complied with all covenants
and agreements required to be performed or complied with by them on or prior to
the Option Closing.
(c) The Fort James Subsidiaries shall have received a certificate of
an executive officer of Holdings and the Company confirming the matters set
forth in subparagraph (b) of this Section 3.7.
(d) The Settlement Closing Date shall have occurred.
3.8. The obligations of Holdings at the Option Closing are subject to
the satisfaction of the following conditions precedent, unless waived by
Holdings.
(a) Holdings shall have received the Option Notes pursuant to Section
3.3(a), duly endorsed for transfer and delivery to Holdings.
(b) The representations and warranties of the Fort James Entities
contained in this Agreement shall be true and correct as of the date hereof and
as of the Option Closing as if made on and as of the Option Closing, and the
Fort James Entities shall have performed and complied with all covenants and
agreements required to be performed or complied with by them on or prior to the
Option Closing.
(c) Holdings shall have received a certificate of an executive
officer of the Fort James Entities confirming the matters set forth in
subparagraph (b) of this Section 3.8.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1. Each of the Fort James Entities jointly and severally
represents and warrants to Holdings and the Company as follows:
(a) Each Fort James Entity is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its organization.
(b) The execution and delivery by each Fort James Entity of this
Agreement, the Insurance Agreement and the Note Amendment, in each case to the
extent such entity is a party to such agreement, and the consummation of the
transactions contemplated hereby and thereby, have been duly and validly
authorized by all necessary corporate action on the part of such Fort James
Entity. Each Fort James Entity has all requisite corporate power and authority
-10-
<PAGE>
to enter into this Agreement, the Insurance Agreement and the Note Amendment,
in each case to the extent such entity is a party to such agreement, and to
consummate the transactions contemplated hereby and thereby and such Fort
James Entity has duly executed and delivered this Agreement, the Insurance
Agreement and the Note Amendment. Each of this Agreement, the Insurance
Agreement and the Note Amendment is the valid and binding obligation of such
Fort James Entity, enforceable against such Fort James Entity in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other laws of general applicability relating
to or affecting creditors' rights and to general equity principles.
(c) The execution and delivery by each Fort James Entity of this
Agreement, the Insurance Agreement and the Note Amendment, in each case to
the extent such entity is a party to such agreement, and the performance of
the transactions contemplated hereby and thereby, do not and will not (1)
violate, conflict with or result in a breach of any provision of the
certificate of incorporation or by-laws of such Fort James Entity, (2)
violate, conflict with or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) or give rise to any right of termination,
cancellation or acceleration under, or result in the creation of any
Encumbrance upon any of the properties of such Fort James Entity under, any
note, bond, mortgage, indenture, deed of trust, license, franchise, permit,
lease, contract, agreement or other instrument to which such Fort James
Entity of any of its properties may be bound, (3) violate or result in a
breach of any order, injunction, judgment, ruling, law or regulation of any
court or governmental authority applicable to such Fort James Entity or any
of its properties, or (4) require any order, consent, approval or
authorization of, or notice to, or declaration, filing, application,
qualification or registration with, any governmental or regulatory authority,
or any other third party.
(d) The Fort James Subsidiaries hold the 11.45% Notes listed in
Exhibit 1. Since the date of original issuance of such 11.45% Notes to the
Fort James Subsidiaries, none of the Fort James Subsidiaries has transferred,
sold, offered to sell, granted any option (other than the Option) for the
sale of, assigned, pledged, granted any security interest in, or otherwise
disposed of, any of such 11.45% Notes.
(e) None of the Fort James Entities nor, to their knowledge, any
of the other Fort James Releasors, has assigned or transferred, or purported
to assign or transfer, in whole or in part, voluntarily, involuntarily or by
operation of law, any claim or other matter released and discharged pursuant
to this Agreement, or any portion thereof, and each of the Fort James
Entities and, to their knowledge, each of the other Fort James Releasors have
sole, complete and entirely unencumbered right, title and interest in and to
the claims and other matters released and discharged by such party herein.
(f) Each of the Fort James Entities (1) has received independent
legal advice in this matter and is entering into this Agreement and the releases
provided herein freely and voluntarily, wholly upon its own judgment, belief and
knowledge, and (2) except as expressly set forth herein, does not rely, and has
not relied, upon any representation, warranty, omission, promise or statement
made by any of the other parties hereto, or anyone else, with respect to this
Agreement.
-11-
<PAGE>
4.2. Each of Holdings and the Company represents and warrants to the
Fort James Entities as follows:
(a) Each of Holdings and the Company is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Virginia.
(b) The execution and delivery by Holdings and the Company of this
Agreement, the Insurance Agreement and, in the case of Holdings, the Note
Amendment, and the consummation of the transactions contemplated hereby and
thereby, have been duly and validly authorized by all necessary corporate action
on the part of Holdings and the Company. Each of Holdings and the Company has
all requisite corporate power and authority to enter into this Agreement, the
Insurance Agreement and, in the case of Holdings, the Note Amendment, and to
consummate the transactions contemplated hereby and thereby, and each of
Holdings and the Company has duly executed and delivered this Agreement, the
Insurance Agreement and, in the case of Holdings, the Note Amendment. Each of
this Agreement, the Insurance Agreement and, in the case of Holdings, the Note
Amendment is the valid and binding obligation of each of Holdings and the
Company, enforceable against each of Holdings and the Company in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
(c) The execution and delivery by each of Holdings and the Company of
this Agreement, the Insurance Agreement and, in the case of Holdings, the Note
Amendment, and, except for the exercise by Holdings of the Option and the
requirement to obtain the Credit Agreement Consents and the Indenture Consents,
the performance of the transactions contemplated hereby and thereby, do not and
will not (1) violate, conflict with or result in a breach of any provision of
the certificate of incorporation or by-laws of Holdings or the Company, (2)
violate, conflict with or result in a breach of any provision of, or constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) or give rise to any right of termination, cancellation or
acceleration under, or result in the creation of any Encumbrance upon any of the
properties of Holdings or the Company or any of their subsidiaries under, any
note, bond, mortgage, indenture, deed of trust, license, franchise, permit,
lease, contract, agreement or other instrument to which Holdings or the Company
or any of their subsidiaries or any of their respective properties may be bound,
(3) violate or result in a breach of any order, injunction, judgment, ruling,
law or regulation of any court or governmental authority applicable to Holdings
or the Company or any of their properties, or (4) require any order, consent,
approval or authorization of, or notice to, or declaration, filing, application,
qualification or registration with, any governmental or regulatory authority, or
any other third party.
(d) Neither Holdings nor the Company, nor, to their knowledge, any of
the other Crown Vantage Releasors, has assigned or transferred, or purported to
assign or transfer, in whole or in part, voluntarily, involuntarily or by
operation of law, any claim or other matter released and discharged pursuant to
this Agreement, or any portion thereof, and each of Holdings and the Company
and, to their knowledge, each of the other Crown Vantage Releasors has sole,
-12-
<PAGE>
complete and entirely unencumbered right, title and interest in and to the
claims and other matters released and discharged by such party herein.
(e) Each of Holdings and the Company (1) has received independent
legal advice in this matter and is entering into this Agreement and the releases
provided herein freely and voluntarily, wholly upon its own judgment, belief and
knowledge, and (2) except as expressly set forth herein, does not rely, and has
not relied, upon any representation, warranty, omission, promise or statement
made by any of the other parties hereto, or anyone else, with respect to this
Agreement.
ARTICLE V
COVENANTS
5.1. (a) The parties hereto agree to take all commercially reasonable
actions as are necessary to effectuate this Agreement, the Insurance Agreement,
the Note Amendment, and the transactions contemplated hereby and thereby.
(b) Without limiting the foregoing, Holdings and the Company shall
use commercially reasonable efforts to seek to obtain the Credit Agreement
Consents and the Indenture Consents.
(c) Fort James shall have the right to review and comment upon those
portions (but no other portions) of the written materials used to solicit the
Credit Agreement Consents and the Indenture Consents that describe this
Agreement or the matters covered hereby.
(d) In the event that the Indenture Consents are obtained pursuant to
a consent solicitation that does not involve any consents, waivers or amendments
under the Company Indenture other than the Indenture Consents (and subject to
the occurrence of the Settlement Closing and the effectiveness of the
transactions contemplated in Article II hereof), Fort James will pay to the
Company an amount equal to 50% of reasonable and customary amounts paid by
Holdings or the Company in cash to holders of the Company Notes for the purpose
of obtaining the Indenture Consent of such holders (the "Consent Payments"). It
is understood that for purposes of the preceding sentence, the Consent Payments
shall not include any payment of principal or interest on the Company Notes, or
any legal, investment banking, accounting, printing, mailing, postage or other
costs or expenses of any kind incurred by Holdings or the Company in connection
therewith. This Section 5.1(d) will obligate Fort James only if, prior to
commencing the solicitation of the Indenture Consents, the Company advises Fort
James of the proposed Consent Payment and obtains Fort James' consent with
respect thereto, which consent will not be unreasonably withheld.
5.2. During the term of this Agreement, the Fort James Subsidiaries
shall not (1) transfer, sell, offer to sell, grant any option (other than the
Option) for the sale of, assign, pledge, grant any security interest in, or
otherwise dispose of, any of the Settlement Notes or the Option Notes, or (2)
exercise any right under Article IX of the Purchase Agreement (including,
without limitation, any right to issue any notice of an exchange under
Section 9.1 of the Purchase
-13-
<PAGE>
Agreement). Any notice of exchange pursuant to such Section 9.1 heretofore
given by any Fort James Entity is hereby revoked.
5.3. Each of the Fort James Entities, on the one hand, and Holdings
and the Company, on the other hand, agrees that money damages may not be a
sufficient remedy for any actual or threatened breach of this Agreement by any
of them, and that, in addition to all other remedies, the Fort James Entities,
on the one hand, and Holdings and the Company, on the other hand, shall be
entitled to specific performance and injunctive or other equitable relief as a
remedy for any such actual or threatened breach, without the necessity of proof
of damages.
5.4. (a) Fort James unconditionally and irrevocably guarantees the
prompt performance by each of the other Fort James Entities of each of their
respective obligations under this Agreement.
(b) Holdings unconditionally and irrevocably guarantees the prompt
performance by the Company of its obligations under this Agreement.
5.5. Each of the Fort James Entities hereby consents to and approves
actions taken by Holdings and the Company which are necessary for them to take
in order to perform their obligations under this Agreement for purposes of
Article V of the Purchase Agreement, and each of the Fort James Entities hereby
waives compliance by Holdings and the Company with such Article to the extent
such actions violate or conflict with any provision in such Article.
5.6. The parties shall agree upon the text of any press release to be
issued by either party in connection with the execution of this Agreement.
ARTICLE VI
TERMINATION
6.1. This Agreement shall terminate and be of no force or effect if
the Settlement Closing Date does not occur prior to November 1, 1998.
ARTICLE VII
MISCELLANEOUS
7.1. All notices under this Agreement shall be in writing and shall be
delivered personally or shall be sent by prepaid registered or certified mail,
or confirmed overnight delivery by Federal Express or similar carrier, or
confirmed telecopy transmission, addressed as set forth below or as either party
may have designated by notice to the other:
-14-
<PAGE>
If to the Fort James Entities:
Fort James Corporation
Fort James Operating Company
Fort James Fiber Company
Fort James International Holdings, Ltd.
c/o Fort James Corporation
P.O. Box 89
Deerfield, Illinois 60015
Telecopy: (804) 343-4846
Attention: General Counsel
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telecopy: (212) 403-2000
Attention: Patricia A. Vlahakis, Esq.
If to Holdings or the Company:
Crown Vantage Inc.
300 Lakeside Drive, 14th Floor
Oakland, California 94612
Telecopy: (510) 874-3595
Attention: Chief Financial Officer
with a copy to:
Howard, Darby & Levin
1330 Avenue of the Americas
New York, New York 10019
Telecopy: (212) 841-1010
Attention: William R. Collins, Esq.
7.2. Except as provided herein, no party may assign this Agreement or
its rights hereunder without the prior written consent of each other party.
Holdings shall have the right to assign its right to exercise the Option
hereunder to any person, firm, corporation or other entity; provided that no
such assignment shall relieve Holdings of its obligations hereunder and Fort
James shall have no obligations to such assignee hereunder other than delivery
of the Option Notes upon payment of the exercise price.
7.3. This Agreement embodies and constitutes the entire understanding
among the parties with respect to the matters specifically provided herein and,
subject to Section 2.1
-15-
<PAGE>
hereof, all prior agreements, understandings, representations and statements,
oral or written, are merged into this Agreement. Neither this Agreement nor
any provision hereof may be waived, modified, amended, discharged or
terminated, except as otherwise specifically set forth herein or except by an
instrument signed by the party against whom the enforcement of such waiver,
modification, amendment, discharge or termination is sought, and then only to
the extent set forth in such instrument.
7.4. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE (WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS PRINCIPLES THEREOF).
7.5. Each of the parties agrees and submits to the personal
jurisdiction of the courts of the State of Delaware, both state and federal, and
further agrees that the sole forum and venue for any action or proceeding under,
in connection with or relating to this Agreement shall be the state or federal
courts in Delaware.
7.6. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto, their respective successors and permitted assigns
and, to the extent set forth in Article II, this Agreement shall benefit the
Fort James Released Parties and the Crown Vantage Released Parties.
7.7. This Agreement may be executed in any number of counterparts, and
each such counterpart hereof shall be deemed to be an original instrument, but
all such counterparts together shall constitute but one agreement.
-16-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
FORT JAMES CORPORATION
By: /s/ C.A. Cutchins IV
-----------------------------------
Name: C.A. Cutchins IV
Title: Senior Vice President
FORT JAMES OPERATING COMPANY
By: /s/ C.A. Cutchins IV
-----------------------------------
Name: C.A. Cutchins IV
Title: Senior Vice President
FORT JAMES FIBER COMPANY
By: /s/ C.A. Cutchins IV
-----------------------------------
Name: C.A. Cutchins IV
Title: Senior Vice President
FORT JAMES INTERNATIONAL
HOLDINGS, LTD.
By: /s/ C.A. Cutchins IV
-----------------------------------
Name: C.A. Cutchins IV
Title: President
CROWN VANTAGE INC.
By: /s/ R. Neil Stuart
-----------------------------------
Name: R. Neil Stuart
Title: Senior Vice President
& Chief Financial Officer
-17-
<PAGE>
CROWN PAPER CO.
By: /s/ R. Neil Stuart
-----------------------------------
Name: R. Neil Stuart
Title: Senior Vice President
& Chief Financial Officer
-18-
<PAGE>
EXHIBIT 1
11.45% SENIOR PAY-IN-KIND NOTES DUE 2007
<TABLE>
<CAPTION>
NOTE # AMOUNT
------ ------
<S> <C> <C>
Fort James Fiber Company (formerly known 1 $ 39,867,000.00
as James River Timber Corporation) 4 2,383,000.00
7 2,418,000.00
10 2,557,000.00
13 2,703,000.00
16 2,858,000.00
---------------
Total FJ Fiber $ 52,786,000.00
---------------
---------------
Fort James International Holdings, Ltd. 2 $ 50,000,000.00
(formerly known as James River 3 10,133,000.00
International Holdings Ltd.) 5 2,989,000.00
6 605,000.00
8 3,033,000.00
9 614,000.00
11 3,207,000.00
12 649,000.00
14 3,390,000.00
15 687,000.00
17 3,584,000.00
18 726,000.00
---------------
Total FJ International $ 79,617,000.00
---------------
---------------
Total Fort James Subsidiaries $132,403,000.00
---------------
---------------
</TABLE>
-19-
<PAGE>
FIRST AMENDMENT TO 11.45% SENIOR PAY-IN-KIND NOTES
FIRST AMENDMENT, dated as of March 18, 1998, among Crown Vantage
Inc., a Virginia corporation (the "Company"), Fort James Corporation, a
Virginia corporation (formerly known as James River Corporation of Virginia)
(the "Purchaser"), Fort James Fiber Company, a Virginia corporation (formerly
known as James River Timber Corporation) ("Fort James Timber"), Fort James
International Holdings, Ltd., a Virginia corporation (formerly known as James
River International Holdings Ltd.) ("Fort James International"), which amends
(1) the Note Purchase Agreement, dated as of August 23, 1995 (the "Original
Agreement"), between the Company and the Purchaser, (2) the form of Indenture
set forth as Exhibit B thereto (the "Indenture") and (3) the related 11.45%
Senior Pay-In-Kind Notes due September 1, 2007 (the "11.45% Notes") issued by
the Company to Fort James Timber and Fort James International pursuant to the
Original Agreement (the "Original Notes").
WHEREAS, pursuant to an Option and Settlement Agreement dated as of
the date hereof among the parties hereto and Crown Paper Co., a Virginia
corporation (the "Option and Settlement Agreement"), such parties have
provided for certain agreements with respect to the 11.45% Notes; and
WHEREAS, subject to the occurrence of the Settlement Closing (as
defined in the Option and Settlement Agreement), the parties hereto desire to
amend the Original Agreement and the Original Notes in certain respects as
hereinafter set forth.
All capitalized terms used in this Amendment which are not
otherwise defined in this Amendment shall have the respective meanings set
forth in the Original Agreement. References to "the Agreement" or "this
Agreement" and "the Notes" or "this Note" contained in the Original
Agreement, the Original Notes and this Amendment shall mean the Original
Agreement and the Original Notes as amended by this Amendment.
In consideration of the mutual benefits to be derived from this
Amendment and of the agreements and promises contained herein and in the
Option and Settlement Agreement and other good and valuable consideration,
the parties agree that effective upon the occurrence of the Settlement
Closing on the Settlement Closing Date:
1. Exhibit A to the Original Agreement will be amended by
deleting the eleventh paragraph (the second complete paragraph on page A-4)
of Exhibit A and inserting in its place the following paragraph:
The Notes are subject to redemption at any time, at the
option of the Company, in whole or in part, on not less than
30 nor more than 60 days' prior notice to the Holders by
first-class mail in amounts of at least $5 million in
principal amount at a redemption price (expressed as a
percentage of the principal amount) equal to the Fair Market
Price, together with accrued and unpaid interest, if any, to
the Redemption Date (subject to the right of Holders of
re-
-20-
<PAGE>
cord on applicable Regular Record Dates or Special Record
Dates to receive interest due on an Interest Payment Date).
As used herein, "Fair Market Price" means the fair market
value of the Notes (expressed as a percentage of the
principal amount) as determined pursuant to the appraisal
procedures described below in this paragraph.
Contemporaneously with the Company's notice of redemption
("Notice") to Holders under this paragraph, the Company
shall notify the Holders of its selection of an investment
bank of international standing to act as an appraiser.
Within five days of the Holders' receipt of such Notice, the
Holders shall give the Company written notice of their
selection of an investment bank of international standing to
act as an appraiser. The two selected investment banks
shall, within 10 days, agree upon a third investment bank of
international standing to act as an appraiser. If the two
selected investment banks cannot agree on a third investment
bank of international standing, such third investment bank
shall be selected by lot from among four candidates, two to
be nominated by each of the selected investment banks. The
selected appraisers shall independently appraise the fair
market value of the Notes within 15 days of the selection of
the third appraiser and the average of the two appraisals
which are closest in value shall be conclusively deemed to
be the fair market value of the Notes. In connection with
the first two such Notices, each of the Company and the
Holders, respectively, shall bear the fees and expenses of
the investment bank selected by it or them, and the fees and
expenses of the third investment bank shall be shared
equally by the Company and the Holders. The Company shall
bear all fees and expenses of the three investment bankers
in connection with any subsequent Notice. The three
selected investment banks shall cooperate with one another
to arrive jointly at the fair market value of the Notes
within 15 days of the selection of the third investment
bank.
2. Exhibit B to the Original Agreement will be amended by
deleting the fourth paragraph of Section 203(a) of Exhibit B (the last
paragraph of page 28) and inserting in its place the following paragraph:
The Securities are subject to redemption at any time,
at the option of the Company, in whole or in part, on not
less than 30 nor more than 60 days' prior notice to the
Holders by first-class mail in amounts of at least
$5 million in principal amount at a redemption price
(expressed as a percentage of the principal amount) equal to
the Fair Market Price, together with accrued and unpaid
interest, if any, to the Redemption Date (subject to the
right of Holders of record on applicable Regular Record
Dates or Special Record Dates
-21-
<PAGE>
to receive interest due on an Interest Payment Date).
As used herein, "Fair Market Price" means the fair market
value of the Securities (expressed as a percentage of the
principal amount) as determined pursuant to the appraisal
procedures described below in this paragraph. Contemporaneously
with the Company's notice of redemption ("Notice") to Holders
under this paragraph, the Company shall notify the Holders of
its selection of an investment bank of international standing
to act as an appraiser. Within five days of the Holders' receipt
of such Notice, the Holders shall give the Company written notice
of their selection of an investment bank of international
standing to act as an appraiser. The two selected
investment banks shall, within 10 days, agree upon a third
investment bank of international standing to act as an
appraiser. If the two selected investment banks cannot
agree on a third investment bank of international standing,
such third investment bank shall be selected by lot from
among four candidates, two to be nominated by each of the
selected investment banks. The selected appraisers shall
independently appraise the fair market value of the
Securities within 15 days of the selection of the third
appraiser and the average of the two appraisals which are
closest in value shall be conclusively deemed to be the fair
market value of the Securities. In connection with the
first two such Notices, each of the Company and the Holders,
respectively, shall bear the fees and expenses of the
investment bank selected by it or them, and the fees and
expenses of the third investment bank shall be shared
equally by the Company and the Holders. The Company shall
bear all fees and expenses of the three investment bankers
in connection with any subsequent Notice. The three
selected investment banks shall cooperate with one another
to arrive jointly at the fair market value of the Securities
within 15 days of the selection of the third investment
bank.
3. Each of the Original Notes and each Secondary Note heretofore
issued under the Purchase Agreement will be amended by deleting the eleventh
paragraph (the second complete paragraph on page 4) of each of the Original
Notes and each Secondary Note heretofore issued under the Purchase Agreement
and inserting in its place the following paragraph:
The Notes are subject to redemption at any time, at the
option of the Company, in whole or in part, on not less than
30 nor more than 60 days' prior notice to the Holders by
first-class mail in amounts of at least $5 million in
principal amount at a redemption price (expressed as a
percentage of the principal amount) equal to the Fair Market
Price, together with accrued and unpaid interest, if any, to
the Redemption Date (subject to the right of Holders of
record on applicable Regular Record Dates or Special Record
Dates
-22-
<PAGE>
to receive interest due on an Interest Payment Date).
As used herein, "Fair Market Price" means the fair market
value of the Notes (expressed as a percentage of the
principal amount) as determined pursuant to the appraisal
procedures described below in this paragraph.
Contemporaneously with the Company's notice of redemption
("Notice") to Holders under this paragraph, the Company
shall notify the Holders of its selection of an investment
bank of international standing to act as an appraiser.
Within five days of the Holders' receipt of such Notice, the
Holders shall give the Company written notice of their
selection of an investment bank of international standing to
act as an appraiser. The two selected investment banks
shall, within 10 days, agree upon a third investment bank of
international standing to act as an appraiser. If the two
selected investment banks cannot agree on a third investment
bank of international standing, such third investment bank
shall be selected by lot from among four candidates, two to
be nominated by each of the selected investment banks. The
selected appraisers shall independently appraise the fair
market value of the Notes within 15 days of the selection of
the third appraiser and the average of the two appraisals
which are closest in value shall be conclusively deemed to
be the fair market value of the Notes. In connection with
the first two such Notices, each of the Company and the
Holders, respectively, shall bear the fees and expenses of
the investment bank selected by it or them, and the fees and
expenses of the third investment bank shall be shared
equally by the Company and the Holders. The Company shall
bear all fees and expenses of the three investment bankers
in connection with any subsequent Notice. The three
selected investment banks shall cooperate with one another
to arrive jointly at the fair market value of the Notes
within 15 days of the selection of the third investment
bank.
4. Except as provided herein, all provisions of the Agreement and
the Notes remain unmodified and in full force and effect.
5. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS PRINCIPLES THEREOF).
6. This Amendment may be executed in any number of counterparts,
and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
-23-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment as of the date first above written.
CROWN VANTAGE INC.
By:
---------------------------------------
Name:
Title:
FORT JAMES CORPORATION
By:
---------------------------------------
Name:
Title:
FORT JAMES FIBER COMPANY
By:
---------------------------------------
Name:
Title:
FORT JAMES INTERNATIONAL
HOLDINGS, LTD.
By:
---------------------------------------
Name:
Title:
-24-
<PAGE>
NON-TERMINATED PROVISIONS AND AGREEMENTS
SCHEDULE 2.1(a)
---------------
- --------------------------------------------------------------------------------
SURVIVING SECTIONS OF
CONTRIBUTION
AGREEMENT STATUS
- --------------------------------------------------------------------------------
Article I Definitions survive to the extent they apply to
other surviving provisions in this
Schedule 2.1(a).
- --------------------------------------------------------------------------------
Section 2.4 - Additional Covenants survive as to both parties.
Payments
(b) Insurance proceeds
for Assumed Liabilities
(c) Retrospective
premium adjustments
(d) Post-Spin railroad
or pollution policy
bonus/refund
- --------------------------------------------------------------------------------
Section 8.4(a) and (b) - Covenant survives as to both parties.
Post-Spin mail handling
- --------------------------------------------------------------------------------
Section 8.5 - Retention of Covenant survives as to both parties.
Books and Records
- --------------------------------------------------------------------------------
Section 8.7 - Confidentiality Covenant survives as to both parties.
- --------------------------------------------------------------------------------
Section 8.10(a) and (b) - Survives to extent any as yet unidentified Newco
Further assurances Assets required to be conveyed or Assumed
Liabilities required to be assumed. Parties
know of none as of March 18, 1998.
- --------------------------------------------------------------------------------
Section 8.12 - Instruments of Survives to extent any as yet unidentified Newco
Conveyance Assets required to be conveyed or Assumed
Liabilities required to be assumed. Parties
know of none as of March 18, 1998.
- --------------------------------------------------------------------------------
Section 8.13(a) and (b) - Survives to extent any as yet unidentified
Assignment of Contracts contract assignment not yet effected. Parties
know of none as of March 18, 1998.
- --------------------------------------------------------------------------------
Section 9.1 - ISRA Covenants survive in accordance with their terms
Obligations/Liabilities as to both parties.
(Milford)
Section 9.2
- --------------------------------------------------------------------------------
-25-
<PAGE>
NON-TERMINATED PROVISIONS AND AGREEMENTS
SCHEDULE 2.1(a) (CONT'D)
------------------------
- --------------------------------------------------------------------------------
SURVIVING SECTIONS OF
CONTRIBUTION
AGREEMENT STATUS
- --------------------------------------------------------------------------------
Section 10.1(a)(iv) The category of retirees defined in this Section
and (v) -Newco Employees 10.1(a)(iv) and (v) is an obligation of Crown
Vantage. While the parties know of no
individuals as of March 18, 1998 who are in this
category but have not yet been identified, the
parties acknowledge that one or more such
individuals may be identified in the future.
Any such future identified individual is
referred to herein as a "Newly Identified
Retiree."
- --------------------------------------------------------------------------------
The following sections See above
survive ONLY to the
extent they apply to
Newly Identified
Retirees and require
further actions under
such provisions to
reflect that such
retirees have been
newly identified.
Section 10.1(c)
Section 10.4 - Assumption of
Liabilities
Section 10.6(d) - Hourly
Pension Plans
Section 10.6(m)
Section 10.6(n)
Section 10.7(c) - Salaried
Pension Plans
Section 10.8(b) - ESOP
Transfer of assets
from JRSPP
Section 10.10 - Worker's
Compensation
- --------------------------------------------------------------------------------
-26-
<PAGE>
NON-TERMINATED PROVISIONS AND AGREEMENTS
SCHEDULE 2.1(a) (CONT'D)
------------------------
- --------------------------------------------------------------------------------
SURVIVING SECTIONS OF
CONTRIBUTION
AGREEMENT STATUS
- --------------------------------------------------------------------------------
Section 10.11(d) - Welfare See above
Benefit Plan
Section 10.11(e)
Section 10.13(d) -
Nonqualified Plans
- --------------------------------------------------------------------------------
Section 10.16 - Indemnity Covenant survives as to both parties as it
relates to all of Article X.
- --------------------------------------------------------------------------------
Section 11.1 - Intellectual Covenant survives as to both parties.
Property
(c) - Perpetual Licenses
(f) - Access to personnel
or records
(g) - Further assurances
(h) - Confidentiality
(i) - Permitted successors
(j) - Use of licensed marks
- --------------------------------------------------------------------------------
Section 15.1(a) fourth Under Section 15.1 (a), the survival period for
sentence - ONLY representations and warranties has terminated.
Under the fourth sentence, any covenants which
under this Schedule 2.1(a) survive, will also
survive for purposes of Article XV.
- --------------------------------------------------------------------------------
Section 15.2(a)(ii) Indemnity Survives ONLY as to covenants which survive
under this Schedule 2.1(a).
- --------------------------------------------------------------------------------
-27-
<PAGE>
NON-TERMINATED PROVISIONS AND AGREEMENTS
SCHEDULE 2.1(a) (CONT'D)
------------------------
- --------------------------------------------------------------------------------
SURVIVING SECTIONS OF
CONTRIBUTION
AGREEMENT STATUS
- --------------------------------------------------------------------------------
Section 15.2(a)(iii) - This indemnity survives.
Indemnity for liabilities
retained/not discharged
- --------------------------------------------------------------------------------
Section 15.3(a)(ii) Indemnity Survives ONLY as to covenants which survive
under this Schedule 2.1(a).
- --------------------------------------------------------------------------------
Section 15.3(a)(iii) This indemnity survives.
Indemnity for liabilities
assumed
- --------------------------------------------------------------------------------
Remainder of Article XV Survives to extent applicable to surviving parts
of Sections 15.1, 15.2 and 15.3.
- --------------------------------------------------------------------------------
Section 18.1 - Notices Survives as to both parties.
- --------------------------------------------------------------------------------
Section 18.2 - Interpretations Survives as to both parties.
- --------------------------------------------------------------------------------
Section 18.4 - Miscellaneous Survives as to both parties.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RELATED
AGREEMENT
(INCLUDES CROSS-
REFERENCE TO SECTION
5.1 OF CONTRIBUTION
AGREEMENT) STATUS
- --------------------------------------------------------------------------------
Tax Agreement - 5.1(d) Continues in effect in accordance with its
terms.
- --------------------------------------------------------------------------------
Cottonwood Pedigreed CV has sold southern cottonwood plantation;
Plant Material Sharing buyer has agreed to assume obligations.
Agreement - 5.1(e) Paperwork in progress.
- --------------------------------------------------------------------------------
-28-
<PAGE>
NON-TERMINATED PROVISIONS AND AGREEMENTS
SCHEDULE 2.1(a) (CONT'D)
------------------------
RELATED
AGREEMENT
(INCLUDES CROSS-
REFERENCE TO SECTION
5.1 OF CONTRIBUTION
AGREEMENT) STATUS
- --------------------------------------------------------------------------------
St. Francisville FJ has given one-year termination notice.
Product Supply Meanwhile FJ continues to purchase.
Agreement (Consumer
Products Division) -
5.1(g)
- --------------------------------------------------------------------------------
St. Francisville Continues in effect in accordance with its
Product Supply terms.
Agreement (Packaging
Business Division) -
5.1(h)
- --------------------------------------------------------------------------------
Pulp Technology Continues in effect in accordance with its
Services Agreement- terms.
5.1(j)
- --------------------------------------------------------------------------------
Pulp Purchase Starting 4/98, CV tonnage purchases will be
Agreement - 5.1(l) reduced by letter agreement. Parties currently
negotiating an extension beyond 10/98.
- --------------------------------------------------------------------------------
Parchment/Kalamazoo Continues in effect in accordance with its
Landfill Agreement - terms.
5.1(n)
- --------------------------------------------------------------------------------
Allocation Agreement - Continues in effect in accordance with its
5.1(p) terms.
- --------------------------------------------------------------------------------
Confidentiality Continues in effect in accordance with its
Agreement - 5.1(t) terms.
- --------------------------------------------------------------------------------
Pension Funding Ongoing.
Agreement - 5.1(u)
- --------------------------------------------------------------------------------
Northeast Roundwood Continues in effect in accordance with its
Supply Agreement - terms.
5.1(x)
- --------------------------------------------------------------------------------
Guaranty Support Two remaining IDBs -- W. Feliciana $.6 mm and
Agreement - 5.1(y) $1 mm. Continues in effect in accordance with
its terms.
- --------------------------------------------------------------------------------
Eureka Trademark Continues in effect in accordance with its
Agreement - 5.1(z) terms.
- --------------------------------------------------------------------------------
-29-
<PAGE>
NON-TERMINATED PROVISIONS AND AGREEMENTS
SCHEDULE 2.1(a) (CONT'D)
------------------------
- --------------------------------------------------------------------------------
NEW AGREEMENTS STATUS
- --------------------------------------------------------------------------------
Parchment Environmental Continues in effect in accordance with its
Agreement dated October 3, terms.
1997
- --------------------------------------------------------------------------------
-30-
<PAGE>
TERMINATED PROVISIONS AND AGREEMENTS
SCHEDULE 2.1(b)
---------------
- ------------------------------------------------------
RELATED
AGREEMENT
(INCLUDES CROSS-REFERENCE TO SECTION
5.1 OF CONTRIBUTION AGREEMENT) STATUS
- ------------------------------------------------------
Transition Services Agreement - 5.1(a) Terminated
- ------------------------------------------------------
Information Technology Services Terminated
Agreement - 5.1(b)
- ------------------------------------------------------
Assignment and Assumption Agreement - Terminated
5.1(c)
- ------------------------------------------------------
Berlin Product Supply Agreement - Terminated
5.1(f)
- ------------------------------------------------------
Offices Sharing Agreement - 5.1(i) Terminated
- ------------------------------------------------------
Pulp Sales Transition Agreement - Terminated
5.1(k)
- ------------------------------------------------------
Environmental Services Agreement - Terminated
5.1(m)
- ------------------------------------------------------
Technical Services Agreement - 5.1(o) Terminated
- ------------------------------------------------------
Packaging Papers Supply Agreement - Terminated
5.1(q)
- ------------------------------------------------------
Naheola Product Supply Agreement - Terminated
5.1(r)
- ------------------------------------------------------
Equipment Removal Agreement - 5.1(s) Terminated
- ------------------------------------------------------
St. Francisville Wood Chip Supply Terminated
Agreement - 5.1(v)
- ------------------------------------------------------
-31-
<PAGE>
TERMINATED PROVISIONS AND AGREEMENTS
SCHEDULE 2.1(b) (CONT'D)
------------------------
- ------------------------------------------------------
RELATED
AGREEMENT
(INCLUDES CROSS-REFERENCE TO SECTION
5.1 OF CONTRIBUTION AGREEMENT) STATUS
- ------------------------------------------------------
St. Francisville Roundwood Supply and Terminated
Cutting Rights Agreement - 5.1(w)
- ------------------------------------------------------
KVP Parchment Lease Agreement - 5.1(aa) Terminated
- ------------------------------------------------------
KVP Parchment Agreement - 5.1(bb) Terminated
- ------------------------------------------------------
-32-
