Exhibit B-3
OPTION AGREEMENT
BY AND BETWEEN
XXXXXXXX-XXXXX TISSUE COMPANY
AND
MOBILE ENERGY SERVICES COMPANY, L.L.C.
FEBRUARY 8, 2000
TABLE OF CONTENTS
Page
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ARTICLE I
1.1 Grant of Option 1
1.2 Option Term 1
1.3 Exercise of Option 2
1.4 Asset Purchase Agreement 2
1.5 Assignment 2
ARTICLE II
2.1 Ownership of Pulp Mill 3
2.2 Preservation Plan 3
2.3 Access 3
2.4 Casualty Loss 4
ARTICLE III
3.1 Notices 4
3.2 Delay and Waiver 5
3.3 Cumulative Remedies 5
3.4 Service of Process 5
3.5 Entire Agreement; Amendments 5
3.6 Jurisdiction and Venue 6
3.7 Waiver of Right to Jury Trial 6
3.8 Headings 6
3.9 Governing Law 6
3.10 Attorneys' Fees 6
3.11 Counterparts 6
3.12 Decision-Making by Parties 7
3.13 No Recourse to Affiliates 7
3.14 Conditions and Effect of Failure of Conditions of Settlement Agreement 7
3.15 Further Assurances 7
3.16 Certain Rules of Interpretation 7
Exhibits
Exhibit 1.1 - Pulp Mill Assets
Exhibit 1.2 - Qualified Owner and Qualified Operator
Exhibit 1.3 - Exercise Notice
Exhibit 1.4 - Asset Purchase Agreement
Exhibit 1.5 - Assignment Notice
Exhibit 2.2 - Preservation Plan
OPTION AGREEMENT
THIS OPTION AGREEMENT (including all Exhibits, the
"Agreement") is entered into as of the Interim Closing Date as defined in the
Settlement Agreement (as hereinafter defined), by and between XXXXXXXX-XXXXX
TISSUE COMPANY, a Pennsylvania corporation ("KCTC"), and MOBILE ENERGY SERVICES
COMPANY, L.L.C., an Alabama limited liability Company ("MESC").
A. KCTC and MESC have entered into that certain Settlement
Agreement dated as of February 8, 2000 (the "Settlement Agreement"), and the
form of this Agreement is attached as Exhibit S-1 to the Settlement Agreement.
B. KCTC is the owner of a pulp mill and related assets located
in Mobile, Alabama (the "KCTC Pulp Mill Facilities"), and pursuant to the
Settlement Agreement, KCTC has agreed to grant MESC an option to purchase from
KCTC certain assets comprising the KCTC Pulp Mill Facilities that are necessary
to operate an 800 ton per day pulp mill (the "New Pulp Mill" ), such assets
being identified on Exhibit 1.1 attached to this Agreement (the "Pulp Mill
Assets"). To the extent real property assets are included they are described in
the Asset Purchase Agreement defined in Section 1.3 of this Agreement.
For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, KCTC and MESC agree as follows:
ARTICLE I
GRANT AND EXERCISE OF OPTION
1.1 Grant of Option. Subject to the terms and conditions of
this Agreement, KCTC hereby grants to MESC or any assignee permitted under
Section 1.5 (MESC or any such assignee being referred to herein as the
"Optionee") an option (the "Option") to purchase from KCTC the Pulp Mill Assets.
In the event the Optionee exercises the Option, the total purchase price to be
paid by the Optionee in full consideration for the transfer of the Pulp Mill
Assets, in accordance with the Asset Purchase Agreement (as hereinafter defined)
shall be ten and 00/100 dollars ($10.00). This Agreement is entered into by the
parties in and for the consideration of the Settlement Agreement, and KCTC
acknowledges and agrees that such consideration is sufficient to support the
agreements of KCTC in this Agreement.
1.2 Option Term. Subject to the satisfaction of the conditions
specified in Section 1.3(a) and (b), the Option may be exercised by the Optionee
at any time after the Interim Closing Date and prior to 5:00 p.m., Mobile,
Alabama time on August 30, 2000 (the "Termination Time"). If the Optionee does
not exercise the Option prior to the Termination Time, the Option shall
terminate and be of no further force or effect at the Termination Time.
Notwithstanding any such termination, MESC acknowledges that it received
adequate consideration to support its agreements in the Settlement Agreement.
1.3 Exercise of Option. In order to exercise the Option, (a)
Optionee must deliver written notice of its election to exercise the Option to
KCTC prior to the Termination Time in the manner set forth in Section 3.1 of
this Agreement, and in the form set forth in Exhibit 1.3 (the "Exercise
Notice"), and (b) an asset purchase agreement, in form and substance acceptable
to both KCTC and MESC (the "Asset Purchase Agreement") shall have been finalized
on or before June 30, 2000 and attached to this Agreement as Exhibit 1.4.
1.4 Asset Purchase Agreement. If the Optionee exercises the
Option granted by this Agreement, the Optionee and KCTC shall enter into the
Asset Purchase Agreement attached as Exhibit 1.4 to this Agreement on the date
set by the Optionee which shall be no later than sixty (60) days following the
date of delivery of the Exercise Notice. The closing of the Asset Purchase
Agreement shall be subject to the satisfaction (or waiver by KCTC in its sole
discretion) of the following conditions:
(a) all transactions contemplated to have occurred on or
before the Closing Date under the Settlement Agreement shall have
occurred as required under the Settlement Agreement;
(b) the Optionee, or any entity that the Optionee, directly or
indirectly, wholly owns, (i) is a Qualified Owner as defined in Exhibit
1.3 to this Agreement and (ii) is or has employed a Qualified Operator
as defined in Exhibit 1.3 to this Agreement; and
(c) such Qualified Operator has entered into an operations and
maintenance agreement (on customary terms and conditions, and which
contains a warranty as to the Qualified Operator's performance
thereunder), pursuant to which such Qualified Operator agrees to
operate the New Pulp Mill (the "O&M Agreement").
1.5 Assignment. At any time on or prior to the Termination
Time, the Optionee may assign its rights and obligations under this Agreement to
an entity that meets the requirements of Section 1.4(b)(i). If Optionee elects
to assign its rights and obligations under this Agreement, it shall deliver a
written notice of such assignment to KCTC in the manner set forth in Section 3.1
of this Agreement. Such notice shall be substantially in the form attached to
this Agreement as Exhibit 1.5 (the "Assignment Notice"). Except as may be
specifically provided otherwise in the Assignment Notice if such an assignment
is made by Optionee and such obligations are assumed by the assignee, the
assignee identified in such Assignment Notice shall become the Optionee under
this Agreement, and thereafter the assignor shall have no rights or obligations
under this Agreement.
ARTICLE II
OWNERSHIP, MAINTENANCE AND ACCESS
2.1 Ownership of Pulp Mill Assets. KCTC represents, warrants,
covenants and agrees to and with Optionee that, except as specifically set forth
in the Asset Purchase Agreement attached to this Agreement, KCTC has, and upon
the closing of the Asset Purchase Agreement, Optionee will have, good and
marketable title to, or valid, enforceable and transferable rights to use, all
of the Pulp Mill Assets, free and clear of all liens, claims and encumbrances.
2.2 Pulp Mill Preservation Plan Executive Overview. During the
period from the Effective Date until the earliest of (i) the Termination Time,
unless the Optionee exercises the Option prior to the Termination Time, or (ii)
the closing of the Asset Purchase Agreement (such period, the "Option Period"),
but in no event beyond October 30, 2000, KCTC agrees to make commercially
reasonable efforts to preserve and protect the assets comprising the Pulp Mill
Assets in accordance with the Preservation Plan attached to this Agreement as
Exhibit 2.2 (the "Preservation Plan"). MESC acknowledges and agrees that KCTC's
substantial compliance with the terms and conditions of the Preservation Plan
will satisfy fully the requirements of this Section 2.2 so long as any failure
to comply completely does not result in an adverse effect on the Pulp Mill
Assets. It is further understood that KCTC shall not be responsible for loss or
damage due to (i) degradation in the condition of the Pulp Mill Assets due to
their lack of use since September 1, 1999, provided that KCTC has substantially
complied with the requirements of the Preservation Plan, or (ii) Optionee's or
its representatives' inspection, testing or use of the Pulp Mill Assets. Prior
to the Termination Time, the costs of implementing and complying with the
Preservation Plan will be paid by KCTC. On and after the Termination Time, the
costs of implementing and complying with the Preservation Plan will be paid by
Optionee.
2.3 Access. During the Option Period, KCTC agrees that, upon
reasonable notice from Optionee, it shall provide Optionee and its
representatives reasonable access to the Pulp Mill Assets, which shall include,
without limitation, access to all books, records, files, reports and other
reasonably available materials that relate to the Pulp Mill Assets. During the
Option Period, KCTC further agrees to leave intact the Data Room known as the
"Xxxxx Stock Trailer" located at KCTC Pulp Mill Facilities (the "Data Room") and
to provide Optionee and its representatives, subject to a confidentiality
agreement with KCTC, reasonable access to such Data Room upon reasonable notice.
KCTC further agrees to make available for interview by Optionee and its
representatives direct and indirect employees of KCTC, whether full or part time
or permanent or temporary, upon reasonable terms and conditions, taking into
account the ordinary business duties and assignments of such employees and
without disruption to their current job responsibilities. Upon Optionee's
request, KCTC shall provide to Optionee a list of key personnel formerly
employed by KCTC in connection with the KCTC Pulp Mill Facilities including the
last known contact addresses and telephone numbers of such personnel. Optionee
expressly recognizes, however, that KCTC has no obligation to make available to
Optionee or its representatives any former employee of KCTC. Optionee shall
assume, and shall hold KCTC harmless from, all risk of injury (other than injury
attributable to KCTC's negligence or willful misconduct) to (i) the Optionee's
or its representatives' personnel who visit the Pulp Mill Assets or (ii) KCTC's
property. Notwithstanding the foregoing, Optionee and its representatives may
not conduct any on-site environmental studies or inspections without the prior
express written consent of KCTC.
2.4 Casualty Loss. In the event of a casualty loss howsoever
occurring to some or all of the Pulp Mill Assets prior to the Termination Date,
KCTC shall have no obligation to repair or restore the affected assets. Optionee
may obtain insurance coverage on the Pulp Mill Assets if Optionee desires to do
so, and if necessary and requested by Optionee, KCTC shall maintain insurance on
the Pulp Mill Assets at Optionee's expense.
ARTICLE III
MISCELLANEOUS
3.1 Notices. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given (a) when received, if
personally delivered; (b) when transmitted, if transmitted by telecopy, subject
to the sender's facsimile machine receiving the correct answer back of the
addressee and confirmation of uninterrupted transmission by a transmission
report or the recipient confirming by telephone to sender that it has received
the facsimile message; or (c) upon receipt, if sent for next day delivery to a
domestic address by recognized overnight delivery service (e.g., Federal
Express) or if sent by certified or registered mail, return receipt requested.
In each case, notice shall be sent to each party as follows:
KCTC: Xxxxxxxx Xxxxx Tissue Company
0000 Xxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxxx, Esquire
Telecopy: (000) 000-0000
with a copy of any notice to: Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Esquire
Telecopy: (000) 000-0000
MESC: Mobile Energy Services Company, L.L.C.
000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: President
Telecopy: (000) 000-0000
with a copy of any notice to: Xxxxxxxx Xxxxxxx L.L.P.
000 Xxxxxxxxx Xxxxxx, X.X. Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxxxx, Esquire
Telecopy: (000) 000-0000
and:
Xxxxxxx & Xxxxx L.L.P.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esquire
Telecopy: (000) 000-0000
and:
CIBC World Markets
000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx
Telecopy: (000) 000-0000
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others, pursuant to this Section 3.1.
3.2 Delay and Waiver. No delay or omission by a party to
exercise any right, power or remedy accruing upon the occurrence of any breach
or default by the other party under this Agreement shall impair any such right,
power or remedy, nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or default
thereafter occurring, nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on
the part of a party hereto of any breach or default by the other party under
this Agreement, or any waiver on the part of a party hereto of any provision or
condition of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing.
3.3 Cumulative Remedies. All rights and remedies of either
party hereto are cumulative of each other and of every other right or remedy
such party may otherwise have at law or in equity, and the exercise of one or
more rights or remedies shall not prejudice or impair the concurrent or
subsequent exercise of other rights or remedies.
3.4 Service of Process. Each party agrees that service of any
process, pleading, notice or other papers may be made in the manner specified in
Section 3.1(a) or (c) hereof, unless service of process by different method is
required under applicable law or applicable court rules and each party
irrevocably waives any right to object to service of process given in the manner
specified in Section 3.1(a) or (c) hereof.
3.5 Entire Agreement; Amendments. This Agreement and any
agreement, document or instrument attached hereto or referred to herein
integrate all the terms and conditions mentioned herein or incidental hereto and
supersede all oral negotiations and prior writings in respect to the subject
matter hereof. This Agreement may only be amended or modified by an instrument
in writing signed by each of the parties hereto.
3.6 Jurisdiction and Venue. Each party hereto agrees that the
United States District Court for the Southern District of New York (the
"Southern District of New York") shall have exclusive jurisdiction over any
dispute between the parties related to this Agreement. The parties also agree
that venue of any action brought by the parties relating to this Agreement shall
be proper in the Southern District of New York. The parties agree not to
challenge the venue of any action brought in the Southern District of New York
and each party agrees to request that the venue of any action brought in any
court other than the Southern District of New York be transferred to the
Southern District of New York, and the parties agree not to challenge such
request. Notwithstanding anything in this Section 3.6, if jurisdiction in the
Southern District of New York is not maintained, exclusive jurisdiction and
venue of any action, lawsuit or proceeding between the parties relating to this
Agreement shall be the United States Bankruptcy Court for the Southern District
of Alabama.
3.7 WAIVER OF RIGHT TO JURY TRIAL. THE PARTIES HEREBY
KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER
OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE SETTLEMENT DOCUMENTS (AS
DEFINED IN THE SETTLEMENT AGREEMENT), OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF THE PARTIES HERETO.
THIS PROVISION IS A MATERIAL INDUCEMENT FOR EACH OF THE PARTIES TO ENTER INTO
THIS AGREEMENT.
3.8 Headings. The headings of the various Articles and
Sections of this Agreement are for convenience of reference only and shall not
modify, define or limit any of the terms or provisions hereof.
3.9 Governing Law. This Agreement shall be construed,
interpreted and the rights of the parties determined in accordance with the laws
of the State of New York, except with respect to matters of law concerning the
internal corporate affairs of any entity which is a party to or the subject of
this Agreement, and as to those matters the law of the jurisdiction under which
the respective entity derives its powers shall govern.
3.10 Attorneys' Fees. If any party to this Agreement brings a
court action to enforce its rights under this Agreement, the prevailing party in
any such action shall be entitled to recover its costs and expenses, including
reasonable attorneys' fees, incurred in connection with such action, including
any appeal of such action.
3.11 Counterparts. This Agreement may be signed in
multiple originals and/or using counterpart signature pages. All such
multiple originals shall constitute but one and the same document.
3.12 Decision-Making by Parties. Except where this Agreement
expressly provides for a different standard, whenever this Agreement provides
for a determination, decision, permission, consent or approval of a party, the
party shall promptly make such determination, decision, grant or withholding of
permission, consent or approval in a commercially reasonable manner and without
unreasonable delay. Any denial of consent required to be made in a commercially
reasonable manner shall include in reasonable detail the reason for denial or
aspect of the request that was not acceptable.
3.13 No Recourse to Affiliates. This Agreement is solely and
exclusively between the parties hereto, and any obligations created herein shall
be the sole obligations of the parties hereto. No party shall have recourse to
any parent, subsidiary, partner, joint venturer, affiliate, director or officer
of any other party for performance of said obligations unless the obligations
are assumed in writing by the entity or individual against whom recourse is
sought.
3.14 Conditions and Effect of Failure of Conditions of
Settlement Agreement. This Agreement has been entered pursuant to the Settlement
Agreement. If the conditions to the Settlement Agreement contained in Section 18
thereof do not occur, then this Agreement, other than this Section 3.14, shall
be null and void in accordance with Section 19 of the Settlement Agreement.
3.15 Further Assurances. The parties hereto agree to cooperate
in all reasonable respects necessary to consummate the transactions contemplated
by this Agreement, and each will take all reasonable actions within its
authority to secure the cooperation of its affiliates.
3.16 Certain Rules of Interpretation. The singular includes
the plural and the plural includes the singular. Unless the context clearly
requires otherwise, "or" is not exclusive. The words "include," "includes" and
"including" are not limiting. The words "hereof," "herein" and "hereunder" and
words of similar import refer to this Agreement as a whole and not to any
particular provision, unless otherwise indicated. This Agreement is the result
of negotiations between, and has been reviewed by, the respective parties to
this Agreement and their respective counsel. Accordingly, this Agreement shall
be deemed to be the product of all parties thereto, and there shall be no
presumption that an ambiguity should be construed in favor of or against either
party solely as a result of such party's actual or alleged role in the drafting
of this Agreement.
EXECUTED and DELIVERED by KCTC and MESC as of the Interim
Closing Date.
XXXXXXXX-XXXXX TISSUE COMPANY
By:
Name:
Title:
MOBILE ENERGY SERVICES COMPANY, L.L.C.
By:
Name:
Title:
Option FINAL.doc
EXHIBIT 1.1
Pulp Mill Assets
EXHIBIT 1.2
Qualified Owner and Qualified Operator
"Qualified Operator" shall mean (a) a person that on or prior to the date of
assessment, has (i) entered into an O&M Agreement; and (ii) has either (x)
operated any pulp mill similar to, or of greater size and complexity than, the
New Pulp Mill for an aggregate of not less than 3 years within the last 5 years,
or (y) has available one or more managers who have experience in the operation
of any pulp mill similar to, or of greater size and complexity than, the New
Pulp Mill for an aggregate of not less than 3 years within the last 5 years; (b)
any of Georgia-Pacific Corporation, a Georgia corporation ("Georgia Pacific"),
MESC, or any entity directly or indirectly wholly owned by the foregoing named
entities; or (c) any other person reasonably acceptable to KCTC.
"Qualified Owner" shall mean (a) a person that has demonstrated it has $30
million of cash equity that will be used to fund the New Pulp Mill; (b) any of
Georgia Pacific, MESC, Credit Suisse First Boston Corporation, a Delaware
corporation or Enron Corp., an Oregon corporation, or any entity directly or
indirectly wholly owned by the foregoing named entities; or (c) any other person
reasonably acceptable to KCTC.
KCTC shall be provided with information reasonably necessary to determine if a
person is a Qualified Operator or a Qualified Owner.
EXHIBIT 1.3
Exercise Notice
______________, 2000
Xxxxxxxx Xxxxx Tissue Company
0000 Xxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxxx, Esq.
Re: Exercise of Option
Ladies and Gentlemen:
Pursuant to Section 1.3 of that certain Option Agreement dated
____________________, 2000 between Xxxxxxxx Xxxxx Tissue Company and Mobile
Energy Services Company, L.L.C. (the "Option Agreement"), notice is hereby given
that the undersigned, being the Optionee (as defined in the Option Agreement),
as of this date, exercises the Option (as defined in the Option Agreement) and
that the requirements of Section 1.3 of the Option Agreement have been
satisfied.
The Optionee hereby certifies that the Optionee, or any entity in which the
Optionee owns directly or indirectly a majority interest, (a) is a Qualified
Owner (as defined in the Option Agreement) and (b) is or has employed a
Qualified Operator (as defined in the Option Agreement).
Sincerely,
By:
Name:
Title:
EXHIBIT 1.4
Asset Purchase Agreement
[To Be Attached On Or Before June 30, 2000]
EXHIBIT 1.5
Assignment Notice
_____________, 2000
Xxxxxxxx Xxxxx Tissue Company
0000 Xxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxxx, Esq.
Re: Assignment
Ladies and Gentlemen:
Pursuant to Section 1.5 of that certain Option Agreement dated as of
_____________, 2000 between Xxxxxxxx Xxxxx Tissue Company and Mobile Energy
Services Company, L.L.C. (the "Option Agreement"), notice is hereby given that
the undersigned, as of this date, has assigned its rights as Optionee (as
defined in the Option Agreement) to _______________ (the "Assignee"). The
undersigned hereby certifies that the Assignee or any entity in which the
Assignee owns, directly or indirectly, a majority interest (a) is a Qualified
Owner (as defined in the Option Agreement) and (b) is or has employed a
Qualified Operator (as defined in the Option Agreement).
Sincerely,
Mobile Energy Services Company, L.L.C.
By:
Name:
Title:
EXHIBIT 2.2
Preservation Plan
