ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of March 22,
1996, is made by and between XXXXX RIVER PAPER COMPANY, INC., a Virginia
corporation ("Seller") and THE XXXXX GROUP, INC., a Delaware corporation
("Xxxxx") and NEWCO, a Delaware corporation ("Newco").
W I T N E S S E T H :
WHEREAS, Seller's "Specialties Operations Division" ("Specialties
Operations Division") is engaged in the production and distribution of tissue,
paper plates, napkins, tablecovers, Party Goods, and related accessories; and
WHEREAS, Seller desires to sell, convey, assign, transfer and deliver
to Xxxxx and Newco, respectively, and Xxxxx intends to purchase and acquire the
assets and business of the Natural Dam and Long Beach Businesses and to assume
the Assumed Liabilities relating thereto and Newco intends to purchase and
acquire the assets and the business of the CEG Business and to assume the
Assumed Liabilities relating thereto, collectively comprising substantially all
of the assets of the Specialties Operations Division, upon the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, and agreements herein contained, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
1.01 DEFINITIONS. The following terms, as used herein, have the
following meanings:
"ACCOUNTS PAYABLE" means all current liabilities of Seller relating to
the Business outstanding as of the Closing Date, other than the Excluded
Liabilities, to the extent that such liabilities are included in the
determination of Closing Net Book Assets.
"ACCOUNTS RECEIVABLE" means all accounts receivable relating to the
Business existing as of the Closing Date, other than Intercompany Accounts
Receivable and the Long Beach Accounts Receivable.
"AFFILIATE" of a Person means a Person who, directly or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, such Person.
"ASSUMED LIABILITIES" has the meaning set forth in Section 3.01
hereof.
"ASSUMED TAXES" means all Taxes allocated or apportioned to Buyer
under Section 8.06 hereof.
"AUDITED FINANCIAL STATEMENTS" has the meaning set forth in Section
8.16 hereof.
"XXXX OF SALE" means one or more Bills of Sale in substantially the
form attached hereto as EXHIBIT A.
"BUSINESS" means the business as conducted by Seller and/or Xxxxx
River California Sub at the following locations: (i) Gouverneur, New York (the
"Natural Dam Business"); (ii) Long Beach, California (the "Long Beach
Business"); and (iii) Indianapolis, Indiana (the "CEG Business"); provided,
however, that the term Business shall not include the Club Business nor the
Commercial Business with the exception of custom print.
"BUYER" means (i) Xxxxx solely with respect to all matters under this
Agreement relating to the Natural Dam Business and the Long Beach Business and
the related Purchased Assets; and (ii) Newco solely with respect to all matters
under this Agreement relating to the CEG Business and the related Purchased
Assets.
"BUYER'S FSA" has the meaning set forth in Section 9.07 hereof.
"CALIFORNIA ASSETS" has the meaning set forth in Section 8.19 hereof.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"CLOSING" has the meaning set forth in Section 12.01 hereof.
"CLOSING DATE" has the meaning set forth in Section 12.01 hereof.
"CLOSING INVENTORY SCHEDULE" has the meaning set forth in Section 4.04
hereof.
"CLOSING NET BOOK ASSETS" means (i) the Purchased Assets minus (ii)
the Assumed Liabilities, to the extent included in the determination of the
Closing Net Book Assets and subject to the Purchase Price Adjustment and the
EBITDA Purchase Price Adjustment.
"CLOSING NET BOOK ASSETS STATEMENT" has the meaning set forth in
Section 4.03 hereof.
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"CLUB BUSINESS" means sales by Seller to so-called "Warehouse Clubs"
(i.e. Sams, Price/Costco and similar merchants).
"CLUB SUPPLY AGREEMENT" has the meaning set forth in Section 5.01
hereof.
"COLLECTIVE BARGAINING AGREEMENT" has the meaning set forth in Section
6.13 hereof.
"COMMERCIAL BUSINESS" means the sales of products manufactured at the
Long Beach Facility for resale/use by away from home businesses or institutions
as opposed to individual retail customers.
"CUP SUPPLY AGREEMENT" has the meaning set forth in Section 5.01
hereof.
"DAMAGES" has the meaning set forth in Section 13.01 hereof.
"DEPOSIT" has the meaning set forth in Section 4.02 hereof.
"EBITDA" has the meaning set forth in Section 4.06 hereof.
"EBITDA AMOUNT" has the meaning set forth in Section 4.06 hereof.
"EBITDA PURCHASE PRICE ADJUSTMENT" has the meaning set forth in
Section 4.06 hereof.
"EBITDA REVIEWING ACCOUNTANT" has the meaning set forth in Section
4.07 hereof.
"ENVIRONMENTAL CONDITIONS" means any and all acts, omissions, events,
circumstances, and conditions, including any pollution, contamination,
degradation, damage, or injury caused by, related to, or arising from or in
connection with the generation, use, handling, treatment storage, disposal
discharge, emission or release of Hazardous Materials.
"ENVIRONMENTAL EVENT" has the meaning set forth in Section 6.05
hereof.
"ENVIRONMENTAL LAWS" has the meaning set forth in Section 6.05 hereof.
"ENVIRONMENTAL LIABILITIES" means any and all liabilities,
responsibilities, claims, suits, losses, costs (including remedial, removal,
response, abatement, clean-up, investigative and/or monitoring costs and any
other related costs and expenses), other causes of action recognized now or at
any later time, damages, settlements, expenses, charges, assessments, liens,
penalties, fines, pre-judgment and post-judgment interest, attorneys' fees and
other legal costs incurred or imposed (i) pursuant to any agreement, order,
notice of responsibility, directive (including directives embodied in
Environmental Laws), injunction, judgment or similar documents (including
settlements) arising out of, in connection with, or under Environmental Laws,
or (ii)
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pursuant to any claim by a Governmental Entity or other Person for personal
injury, property damage, damage to natural resources, remediation, or payment
or reimbursement of response costs incurred or expended by such Governmental
Entity or Person pursuant to common law or statute, as a result of
Environmental Conditions.
"ENVIRONMENTAL PERMITS" means federal, state and local governmental
licenses, permits, and other authorizations and approvals, whether foreign or
domestic, that relate to the environment or to public health and safety or
worker health and safety as they may be affected by the environment.
"EQUIPMENT" means all machinery, equipment, furniture, fixtures,
vehicles (whether or not certificated), tools, supplies, spare parts and other
tangible personal property (other than to the extent constituting an Excluded
Asset), (a) located on the Real Property as of the date hereof and/or (b)
listed on Schedule 2.01(iii) hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" means any person, firm or entity (whether or not
incorporated) which, by reason of its relationship with Seller or any Affiliate
of Seller, is required to be aggregated with Seller or any Affiliate under
Sections 414(b), (c) or (m) of the Code or which, together with Seller or any
such Affiliate, is a member of a controlled group within the meaning of Section
4001 (a) of ERISA.
"EVALUATION MATERIAL" has the meaning set forth in Section 8.05
hereof.
"EXCHANGE ACT" means the Securities Act of 1933, as amended.
"EXCHANGE NOTES" has the meaning set forth in the Certificate of
Incorporation of Newco.
"EXCLUDED ASSETS" has the meaning set forth in Section 2.02 hereof.
"EXCLUDED INVENTORY" has the meaning set forth in the definition of
Inventory.
"EXCLUDED LIABILITIES" has the meaning set forth in Section 3.01(b)
hereof.
"FACILITIES" mean Seller's and/or Xxxxx River California Sub's
facilities at Gouverneur, New York, Long Beach, California and Indianapolis,
Indiana.
"FIXTURES AND IMPROVEMENTS" means the buildings and other improvements
referred to in the definition of Real Property.
"GAAP" means generally accepted accounting principles, consistently
applied.
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"GOVERNMENTAL ENTITY" has the meaning set forth in Section 6.05
hereof.
"GROUP" means a Person and such Person's Affiliates and their
respective directors, officers, employees, representatives, consultants,
stockholders, controlling persons and agents and each of the heirs, executors,
successors and assigns of any of the foregoing.
"HAZARDOUS MATERIALS" means any (i) petroleum or petroleum products,
(ii) hazardous substances as defined by ss. 101(14) of CERCLA and (iii) any
other chemical, substance or waste that is regulated by any Governmental Entity
under any Environmental Law.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"INDEMNIFIED PARTY" has the meaning set forth in Section 13.03 hereof.
"INDEMNIFYING PARTY" has the meaning set forth in Section 13.03
hereof.
"INSURANCE CLAIMS" has the meaning set forth in Section 2.01 hereof.
"INTELLECTUAL PROPERTY" means all patents, patent applications,
service marks, trademarks, trademark registrations, trademark applications,
copyrights, industrial design registrations, utility models, trade names,
whether or not registered (or by whatever name or designation), used by Seller
primarily in connection with the Business, and all proprietary data, and
technical or manufacturing know-how or information (and materials embodying
such information) so used by Seller, including inventions and trade secrets and
documentation thereof in whatever form.
"INTELLECTUAL PROPERTY INSTRUMENTS" means, collectively, Assignments
and License Agreements in the respective forms attached hereto as EXHIBIT B.
"INTERCOMPANY" means a transaction, obligation or account between
Seller, any Seller Affiliate, or any other Affiliate of Seller or their
divisions, on the one hand, and any of Seller, any Seller Affiliate or any
other Affiliate of Seller or their divisions, on the other hand, arising from
the conduct of the Business.
"INTERCOMPANY PAYABLES" means all Intercompany payables and other
Intercompany liabilities of the Business of whatever nature and regardless of
whether such liabilities would be treated as short-term or long-term on a
balance sheet prepared in accordance with GAAP.
"INTERCOMPANY ACCOUNTS RECEIVABLE" means all Intercompany receivables
of the Business of whatever nature.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended.
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"INVENTORY" means all the stores, packing and packaging materials,
supplies, raw materials, work in progress, and material held for resale, and
other inventories, including without limitation, all as are owned by Seller for
use in the Business and all as are located at, used in connection with,
acquired for, produced for, contained in or in transit to, through or from the
Real Property including, without limitation, those in warehouses or other
storage facilities outside the Real Property. Notwithstanding the foregoing the
term Inventory shall not include in respect of the Long Beach Business, (i) raw
materials, work-in-progress and finished goods relating to Commercial Business
products; or (ii) finished goods relating to Club Business products the
("Excluded Inventory").
"XXXXX RIVER CALIFORNIA SUB" has the meaning set forth in Section 8.19
hereof.
"LEASES" has the meaning set forth in Section 6.11 hereof.
"LIEN" means any mortgage, lien, pledge, charge, security interest,
encumbrance or restriction of any kind.
"LICENSES AND PERMITS" means federal, state and local governmental
licenses, permits, approvals and authorizations, whether foreign or domestic,
other than Environmental Permit.
"LONG BEACH ACCOUNTS RECEIVABLE" means Accounts Receivables relating
to the Long Beach Business.
"LONG BEACH BAG MACHINES" means machinery and equipment used for
production of paper bags at the Long Beach Facility and spare parts for such
machinery and equipment.
"MATERIAL CONTRACTS" has the meaning set forth in Section 6.12 hereof.
"MULTIEMPLOYER PLAN" means each Benefit Plan that is a multiemployer
plan, as defined in Section 3(37) of ERISA.
"PARTY CHANNEL" has the meaning set forth in Section 8.17 hereof.
"PARTY GOODS" means plates, cups, napkins, tablecovers, and other
paper and plastic favors and decorations which are decorated with thematic or
artistic graphics and which are sold in the Party Channel.
"PERMITS" means all franchises, licenses, authorizations, approvals,
permits (including Environmental Permits), consents or other rights granted by
Federal, state or local governmental authorities and all certificates of
convenience or necessity, immunities, privileges, licenses, consents, grants,
ordinances and other rights, of every character whatsoever, which are required
in the conduct of the Business.
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"PERMITTED EXCEPTIONS" has the meaning set forth in Section 6.10
hereof.
"PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
governmental or political subdivision or an agency of instrumentality thereof.
"PLATE TECHNOLOGY LICENSE OPTION" has the meaning set forth in Section
5.01 hereof.
"PREFERRED SHARES" has the meaning set forth in Section 4.02 hereof.
"PREFERRED SUPPLY AGREEMENT" has the meaning set forth in Section 5.01
hereof.
"PURCHASED ASSETS" has the meaning set forth in Section 2.01 hereof.
"PURCHASE PRICE" has the meaning set forth in Section 4.01 hereof.
"PURCHASE PRICE ADJUSTMENT" has the meaning set forth in Section 4.03
hereof.
"REAL PROPERTY" means the real property listed and/or described by
metes and bounds in Schedule 2.01(ii) hereto, together with the buildings,
fixtures and other improvements thereon and the easements, rights and other
appurtenances thereto belonging.
"REGULATORY APPROVALS" has the meaning set forth in Section 6.03
hereof.
"REVIEWING ACCOUNTANT" has the meaning set forth in Section 4.05
hereof.
"RELATED AGREEMENTS" has the meaning set forth in Article 5.01 hereof.
"SECTION 338(H)(10) ELECTION" means an election for federal income tax
purposes described in Section 338(h)(10) of the Internal Revenue Code with
respect to the stock of the Xxxxx River California Sub described in this
Agreement, including any elections required under Section 338(g) of the
Internal Revenue Code that are required to be made under applicable law when
making the Section 338(h)(10) Election.
"SECTION 338 FORMS" means all returns, documents, statements, and
other forms that are required to be submitted to any federal, state, county or
other governmental authority in connection with the Section 338(h)(10)
Election, including U.S. Internal Revenue Service Form 8023-A (together with
any schedules or attachments thereto that are required pursuant to Treasury
Regulations, including Section 1.338(h)(10)-l), and any comparable or similar
state, local or other governmental submissions.
"SELLER'S FSA" has the meaning set forth in Section 9.07 hereof.
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"SELLER'S PLANS" has the meaning set forth in Section 6.14 hereof.
"SHORT RUN" has the meaning set forth in Section 8.17 hereof.
"SPECIALTY OPERATIONS DIVISION" has the meaning set forth in the
recitals.
"TAXES" means all taxes, charges, fees, levies or other assessments,
including, without limitation, income, gross receipts, alternative minimum,
excise, property, real estate, sales, purchase, use, payroll (including
required withholdings), unemployment, and franchise taxes, imposed by any
Governmental Entity with respect to the Business or the Acquired Assets, but
excluding Transfer Taxes. Such term shall include any interest, penalties or
additions payable in connection with such taxes, charges, fees, levies or other
assessments and "Tax" shall mean one of the foregoing Taxes.
"TAX RETURNS" means all returns, declarations, reports, statements and
other documents required to be filed with any Governmental Entity in respect of
any Tax and "Tax Return" shall mean one of the foregoing Tax Returns.
"TITLE COMPANY" has the meaning set forth in Section 8.04 hereof.
"TRANSFERRED EMPLOYEES" has the meaning set forth in Section 9.01
hereof.
"TRANSFER TAXES" means all sales, transfer, use, gross receipts, value
added, registration, stamp and similar taxes or fees (excluding recording fees)
imposed by any Governmental Entity in connection with the, transfers by Seller
to Buyer of any of the Purchased Assets pursuant to this Agreement.
"TRANSITION SERVICES AGREEMENT" has the meaning set forth in Section
5.01 hereof.
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.01 PURCHASE AND SALE OF ASSETS. On the terms and subject to the
conditions hereinafter set forth, on the Closing Date, Seller shall sell,
convey, transfer, assign and deliver to Buyer and Buyer shall purchase from
Seller, for the Purchase Price, the Business and all Seller's right, title and
interest to and in all the assets and properties of Seller used primarily in
connection with the Business, tangible and intangible, real and personal, fixed
or contingent, wherever located, as the same shall exist on the Closing Date
(said assets and properties so to be sold, conveyed, transferred, assigned and
delivered being hereinafter collectively referred to as the "Purchased
Assets"), including, without limitation:
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(i) the Accounts Receivable;
(ii) the Real Property;
(iii) the Equipment;
(iv) the Inventory;
(v) the Leases;
(vi) all catalogues, brochures, sales literature, promotional
material and other selling materials pertaining primarily to
the Business;
(vii) copies of all papers, documents, instruments, books and
records, files, agreements, books of account and other records
directly pertaining to the Assets or the Business (including,
without limitation, customer invoices, customer lists, vendor
and supplier lists, drafts and other documents and materials
relating to customer transactions);
(viii) the Environmental Permits held by Seller that are assignable
and that relate solely to the Purchased Assets;
(ix) the Licenses and Permits held by Seller that are assignable
and that relate solely to the Purchased Assets;
(x) all rights and interests of Seller in, to and under any
contract, agreement, license, sales order, purchase order or
other commitment that is (a) a Material Contract or (b) in
writing and not required to be disclosed on Schedule 6.12
hereto, which Buyer has agreed to assume pursuant to paragraph
3.01(a) hereof (subject, however, to the provisions of
paragraph 3.01(b) hereof);
(xi) all Intellectual Property and the licenses and franchises with
respect thereto listed on Schedule 2.01(xi) hereto, together
with the goodwill and the business appurtenant thereto; and
all trade secrets, technology (including technology with
respect to which Seller is a sublicensee, in such case only
insofar as permitted under the applicable sublicense
agreement), processes, inventions, designs, drawings,
blueprints, specifications, patterns, royalties, privileges,
permits and all other similar intangible personal property, in
each case, pertaining primarily to the Business; subject,
however, to appropriate reservations and re-licenses from
Buyer to Seller regarding the Intellectual Property so
identified on Schedule 2.01(xi) hereto;
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(xii) cash in an amount equal to all condemnation proceeds and all
property and casualty insurance proceeds and claims (excluding
business interruption insurance), ("Insurance Claims"), plus
an amount equal to any deductible, with respect to the loss,
damage, destruction or condemnation of any of the tangible
Purchased Assets other than Inventories occurring between the
date of this Agreement and the Closing Date, but only to the
extent not applied by Seller to the repair, restoration or
replacement thereof on or prior to the Closing Date; provided,
however, that the Purchase Price shall not otherwise have been
adjusted by the parties to reflect any such condemnation or
casualty loss;
(xiii) all other assets and rights of every kind and nature, real or
personal, tangible or intangible, that are used by Seller
primarily in connection with the Business, including, without
limitation, all deposits, notes receivable, deferred charges
and prepaid expenses, bonds, claims, and causes of action,
except for assets and rights specifically excluded pursuant to
Section 2.02 hereof, and
(xiv) the stock of the Xxxxx River California Sub, should Seller
exercise the option to establish such Xxxxx River California
Sub, pursuant to Section 8.19 hereof.
2.02 EXCLUDED ASSETS. The following assets (collectively the "Excluded
Assets") are not included in the Purchased Assets:
(i) except as expressly provided in Section 2.01(xii) hereof, all
cash and cash equivalents, including cash on hand or in bank
accounts, certificates of deposit, commercial paper and
securities belonging to Seller;
(ii) all Intercompany Accounts Receivable;
(iii) all Long Beach Accounts Receivable;
(iv) the Long Beach Bag Machines;
(v) all Licenses and Permits that are not assignable or that do
not relate solely to the Purchased Assets;
(vi) the rights and interests of Seller in all Intellectual
Property unless listed on Schedule 2.01(xi) hereto;
(vii) goodwill appearing on Seller's books and records; and
(viii) the Excluded Inventory.
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ARTICLE III
ASSUMED AND EXCLUDED LIABILITIES
3.01 ASSUMED AND EXCLUDED LIABILITIES. (a) Except (i) with respect to
matters set forth in paragraph 3.01(b) hereof; or (ii) to the extent that Buyer
is entitled to indemnification in respect thereof pursuant to Article XIII
hereof, in which case, for purposes of said Article XIII, such liabilities and
obligations shall be deemed not to be assumed by Buyer hereunder, at the
Closing, Buyer will assume only the following liabilities and obligations which
relate to the Purchased Assets and are not paid or discharged at or before the
Closing:
(i) liabilities reflected on the Audited Financial Statements, minus
any such liabilities or obligations that have been, or are, paid
or discharged by Seller between December 31, 1995 and the Closing
Date, and liabilities or obligations incurred after December 31,
1995 and prior to the Closing Date to the extent included in the
determination of the Closing Net Book Assets;
(ii) liabilities and obligations of Seller relating to the Purchased
Assets to be performed after the Closing arising from the
Material Contracts, the Leases or any other lease, contract or
agreement relating to the Purchased Assets and not required to be
disclosed on Schedule 6.11 or Schedule 6.12 hereto other than
liabilities and obligations arising from breaches thereof prior
to the Closing; and
(iii) liabilities and obligations of Seller relating to Transferred
Employees including, without limitation, employee benefits
relating to Transferred Employees, to the extent included in the
determination of the Closing Net Book Assets.
The liabilities and obligations hereinabove listed, and to be assumed
by Buyer, are hereinafter referred to collectively as the "Assumed
Liabilities".
(b) Notwithstanding the provisions of paragraph 3.01(a), there are
expressly excluded from the Assumed Liabilities, and Buyer is not assuming, and
shall not be deemed to have assumed, and the determination of the Closing Net
Book Assets shall not reflect, any of the following liabilities and
obligations:
(i) liabilities for Taxes incurred by Seller in connection with the
operation of the Purchased Assets prior to and up to and
including the Closing Date or incurred by Seller with respect to
any of the transactions contemplated hereby, except to the extent
included in the determination of the Closing Net Book Assets;
(ii) liabilities and obligations of Seller arising from a breach by
Seller before the Closing of any contract or agreement relating
to the Purchased Assets, including, without limitation, the
Material Contracts and the Leases;
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(iii) liabilities and obligations arising under any contract or
agreement, including, without limitation, the Material Contracts
and the Leases, if the rights of Seller are, for any reason, not
transferred to, or the benefits thereunder are not otherwise made
available to, Buyer at the Closing. The provisions of this clause
(iii) shall not limit Seller's liability for the failure to
transfer any of the Material Contracts or the Leases as required
herein;
(iv) any liability or obligation, under the Collective Bargaining
Agreements or otherwise, in respect of severance or separation
pay or allowances for employees of Seller whose employment with
Seller was terminated on or prior to the Closing Date; and
(v) liabilities and obligations arising out of any action, suit or
proceeding based upon an event occurring, or a claim arising, up
to and including the Closing Date.
The liabilities and obligations hereinabove listed are to be retained
by Seller, and are hereinafter referred to collectively as the "Excluded
Liabilities".
ARTICLE IV
PURCHASE PRICE
4.01 PURCHASE PRICE. The aggregate purchase price for the Purchased
Assets shall be an amount equal to (a) the Closing Net Book Assets; minus, (b)
(i) $2,000,000; and (ii) any amounts attributable to goodwill as a result of
Seller's purchase price being greater than fair market value of assets acquired
(estimated by Seller to be approximately $100,000), subject to adjustment as
provided in Section 4.03 and Section 4.06 hereof (the "Purchase Price").
4.02 PAYMENT OF PURCHASE PRICE. (a) Simultaneously with the execution
of this Agreement, Buyer has paid to Seller, the sum of $1,000,000 (said sum,
together with interest accrued thereon, the "Deposit") by wire transfer of
immediately available funds. The Deposit shall be promptly deposited and
maintained in an interest bearing account during the term of this Agreement. In
the event that this Agreement is terminated by Buyer pursuant to Section
14.01(a) hereof, Seller shall promptly return the Deposit to an account
designated by Buyer. Upon the Closing or sooner termination of this Agreement,
the Deposit shall become the non-refundable property of Seller; subject,
however, to the foregoing sentence.
(b) On the Closing Date, in full consideration for the sale,
conveyance, transfer, assignment and delivery to Buyer of the Purchased Assets,
(subject, however, to the assumption of the Assumed Liabilities and adjustment
to the Purchase Price as provided in Section 4.03 and Section 4.06 hereof),
Buyer shall pay to Seller, the Purchase Price as follows:
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(i) $4,000,000 pursuant to a Senior Subordinated Note in the form of
EXHIBIT C annexed hereto and made a part hereof executed and
delivered by Xxxxx;
(ii) $5,000,000 pursuant to a Senior Subordinated Note in the form of
EXHIBIT D annexed hereto and made a part hereof executed and
delivered by Newco;
(iii) $8,000,000, subject to adjustment pursuant to Section 4.06
hereof, by delivery of shares of preferred stock of Newco (the
"Preferred Shares"; provided, however, that if the Preferred
Shares shall be exchanged for Exchange Notes pursuant to Section
4(b) of Part A of Article FIFTH of Newco's Certificate of
Incorporation, such term shall include the Exchange Notes) having
an aggregate liquidation preference in such amount; and
(iv) an amount which when added to the Deposit and the payments to be
made pursuant to clauses (i), (ii) and (iii) above shall equal
(x) the aggregate amount of shareholders equity reflected on the
balance sheets included in the Audited Financial Statements, as
adjusted to reflect (1) Excluded Assets and Excluded Liabilities
and operations relating thereto; and (2) the substitution of the
book carrying value of the Inventory of the CEG Business as of
the Closing Date, as reasonably estimated by Seller, for the book
carrying value of the Inventory of the CEG Business shown on the
balance sheets included in the Audited Financial Statements minus
(y) $2,000,000, by wire transfer of immediately available funds
to one or more accounts designated by Seller.
(c) If Newco shall, at any time prior to the redemption of the
Preferred Shares, merge with and into Xxxxx (i) all obligations of Newco under
the Senior Subordinated Note of Newco referred to in Section 4.02(b)(ii) hereof
will be assumed by Xxxxx and (ii) the Preferred Shares will be converted into
an equivalent amount of preferred shares of Xxxxx having identical terms (the
"Xxxxx Preferred Shares"). Upon such exchange all references in this Agreement
to the Preferred Shares shall mean the Xxxxx Preferred Shares.
(d) If Xxxxx, at any time prior to the redemption of the Preferred
Shares, effects an initial public offering (an "IPO") of its common stock
pursuant to the applicable provisions of the Exchange Act, Seller shall have
the option (the "Exchange Option") to exchange the Preferred Shares in whole
for common stock of Xxxxx upon and subject to the following terms and
conditions. Xxxxx shall give Seller notice (the "Exchange Notice") of its
intention to effect the IPO not less than sixty (60) days prior to the filing
of a Registration Statement with the Securities and Exchange Commission,
together with a copy of Xxxxx'x most recent audited financial statement. Seller
shall have the right to exercise the Exchange Option only by giving Xxxxx
notice thereof within fifteen (15) days following the date of the Exchange
Notice, time being of the essence. Unless timely exercised, the Exchange Option
shall automatically terminate and be of no further force or effect. If the
Exchange Option is timely exercised and the IPO shall be consummated, the
Preferred Shares shall be exchanged on the thirtieth (30th)
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day following the closing date of the IPO for common stock of Xxxxx having an
aggregate value equal to the Redemption Price, based upon the average closing
price for the initial twenty (20)-day period during which such shares shall be
publicly traded; provided, however, that such common stock shall be restricted
from being traded for a period of twenty-four (24) months following the date of
exchange. If the IPO shall not be successfully consummated, the exercise of the
Exchange Option, if timely exercised, shall be deemed rescinded and the
Exchange Option shall remain in full force and effect. Xxxxxx Xxxxxx, the
holder of not less than eighty-five (85%) percent of the issued and outstanding
shares of the capital stock of each of Newco and Xxxxx, hereby agrees to cause
Xxxxx to comply with its obligations under this paragraph. Xxxxxx Xxxxxx has
executed this Agreement in his individual capacity solely with respect to his
agreement in the preceding sentence.
4.03 PURCHASE PRICE ADJUSTMENT. After the Closing, the Purchase Price
shall be increased or decreased, as the case may be, by the amount, if any, by
which the Closing Net Book Assets shall be greater or less than the aggregate
amount of shareholders equity reflected on the balance sheets included in the
Audited Financial Statements as adjusted to reflect Excluded Assets and
Excluded Liabilities and operations relating thereto (the "Purchase Price
Adjustment").
Seller shall provide Buyer with a statement of the Closing Net Book
Assets (the "Closing Net Book Assets Statement") within sixty (60) days after
the Closing, together with a letter of Seller's independent certified public
accountants stating that such Statement has been prepared in accordance with
GAAP and fairly presents the Closing Net Book Assets. If the Purchase Price
Adjustment is a negative number, Seller shall, on or before fifteen (15) days
after the Purchase Price Adjustment becomes final pursuant to Section 4.05
hereof, make payment by wire transfer to one or more accounts designated by
Buyer in immediately available funds for the amount of the Purchase Price
Adjustment. If the Purchase Price Adjustment is a positive number, Buyer shall,
on or before fifteen (15) days after the Purchase Price Adjustment becomes
final pursuant to Section 4.05 hereof, make payment by wire transfer to Seller
in immediately available funds for the amount of the Purchase Price Adjustment.
If the Purchase Price Adjustment shall be paid by or to Xxxxx or Newco, as the
case may be, on the basis of the elements of the Purchase Price Adjustment
allocable to the Purchased Assets acquired by Xxxxx or Newco, respectively. All
payments of the Purchase Price Adjustment shall also include interest thereon
at the prime rate announced from time to time by The Chase Manhattan Bank N.A.
from the Closing Date through and including the date the Purchase Price
Adjustment is paid.
4.04 COUNT OF INVENTORY, MISC. (a) Seller and Buyer shall conduct a
joint physical count as of the Closing Date, to be reviewed or observed by
their respective independent certified public accounts, of the Inventory, or
employ such other procedures as Seller and Buyer may agree upon, in order to
determine the quantity, and the book carrying value. Based upon such joint
physical count, Seller shall prepare and deliver to Buyer as part of the
Closing Net Book Assets Statement, a statement, by item and quantity, of
Inventory (the "Closing Inventory
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Schedule") accompanied by a letter of agreed upon procedures of Seller's
independent certified public accountants to the effect that the Closing
Inventory Schedule has been prepared, in all material respects, in accordance
with this Section.
(b) The book carrying value of Inventories will be determined using
the FIFO valuation approach as consistently applied in prior periods.
4.05 RESOLUTION OF CLOSING NET BOOK ASSETS. Seller shall make
available to Buyer and, if Buyer elects, Buyer's independent certified public
accountants, at no expense, such of the facilities, books, records and
personnel of Seller related to the Business and such of the work papers of
Seller's independent certified public accountants as are reasonably requested
by Buyer to enable it to review and verify Seller's Closing Net Book Assets
calculation, including, without limitation, the Closing Inventory Schedule. In
the event that Buyer disputes Seller's calculations, it shall, within thirty
(30) days after delivery of the information requested pursuant to the preceding
sentence, deliver a notice to Seller (the "Dispute Notice") setting forth in
reasonable detail, including an estimated dollar amount, the basis of such
dispute; provided, however, that Buyer shall not have the right to dispute the
book carrying value of the Inventory of the CEG Business as of the Closing Date
except to the extent, if any, that the disputed amount of said book carrying
value exceeds $200,000. If the Dispute Notice is not delivered within such
thirty (30)-day period, then the Purchase Price Adjustment, as determined by
Seller, shall be final. In the event that the Dispute Notice is so delivered,
the parties shall negotiate to attempt to resolve the portion which is in
dispute and the portion which is not in dispute, together with interest accrued
thereon, shall be promptly paid by the party owing same. If the parties fail to
resolve any such dispute within thirty (30) days after receipt by Seller of the
Dispute Notice, the parties shall select a firm of independent certified public
accountants of national standing (the "Reviewing Accountant") to review the
portions of Seller's calculation which are subject to dispute or, if the
parties fail to agree upon a Reviewing Accountant within forty-five (45) days
after receipt by Seller of the Dispute Notice, such firm shall be selected by
lot from among all so-called "Big Six" firms not having (and not having
announced a pending combination with another firm having) a disqualifying
interest with respect to either party. The performance of any such firm as the
Reviewing Accountant under this or any other provision of this Agreement shall
not constitute a disqualifying interest. The parties shall make available to
the Reviewing Accountant all work papers and all other information and material
in their possession relating to the matters asserted in the Dispute Notice. The
Reviewing Accountant shall be instructed by the parties to use its best efforts
to deliver to the parties its determination within thirty (30) days after the
date of such submission of the dispute to the Reviewing Accountant. The
determination of the Reviewing Accountant shall be final and binding on the
parties. Each party shall bear its own expenses and the fees and expenses of
its own representatives and experts, including its independent accountant, in
connection with the preparation, review, dispute (if any) and final
determination of the Purchase Price Adjustment. The parties shall share equally
in the costs, expenses and fees of the Reviewing Accountant.
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4.06 EBITDA PURCHASE PRICE ADJUSTMENT. (a) After the Closing, in
addition to any adjustment to the Purchase Price pursuant to Section 4.03
hereof, the Purchase Price shall be (i) reduced by the amount by which the
product of 6 multiplied by the EBITDA Amount, shall be less than $36,000,000;
provided, however, that in no event shall such reduction exceed $6,000,000; and
(ii) increased by 20% of the amount by which the product of 6 multiplied by the
EBITDA Amount shall be greater than $36,000,000; provided, however, that in no
event shall such increase exceed $4,000,000 (the "EBITDA Purchase Price
Adjustment").
(b) Newco shall, on or before October 31, 1997, provide Seller with a
statement of earnings before interest, taxes, depreciation and amortization
("EBITDA") in respect of the operations of the CEG Business for the fiscal year
ending July 31, 1997 (the "EBITDA Amount"), together with (i) Newco's
uncombined income statement for the 12-month period ending July 31, 1997 and
balance sheet as of such date in the form required by Section 8.18(ii) hereof,
(ii) a schedule setting forth the calculation of the EBITDA Amount utilizing
accounting methods consistent with those utilized in preparation of the Audited
Financial Statements; and (iii) such other financial information as Seller may
reasonably request to verify the calculation of the EBITDA Amount.
Notwithstanding the foregoing, in the event that Newco (1) shall not install a
pre-press system included as contributing to Seller's 1996 and 1997 EBITDA
computations, the EBITDA Amount shall be increased by $650,000; and/or (2)
shall install profit-adding capital equipment not included as contributing to
Seller's 1996 and 1997 EBITDA computations, the EBITDA Amount shall be reduced
to the extent if any, that such equipment has a measurable effect on the EBITDA
Amount. If the EBITDA Purchase Price Adjustment is a negative number, Seller
shall, on or before fifteen (15) days after the EBITDA Purchase Price
Adjustment becomes final pursuant to Section 4.07 hereof make payment by
surrendering, transferring and assigning to Newco, Preferred Shares having a
liquidation preference equal to the EBITDA Purchase Price Adjustment, free and
clear of all Liens. If the EBITDA Purchase Price Adjustment is a positive
number, Newco shall, on or before fifteen (15) days after the EBITDA Purchase
Price Adjustment becomes final pursuant to Section 4.07 hereof, make payment by
issuing to Seller additional Preferred Shares having a liquidation preference
equal to the EBITDA Purchase Price Adjustment. Notwithstanding the foregoing,
(A) if Seller shall have exchanged the Preferred Shares for common stock of
Xxxxx in accordance with the provisions of paragraph 4.06(c) hereof, then
Seller or Newco, as the case may be, shall make a wire transfer in immediately
available funds to an account designated by the other, for the amount of the
EBITDA Purchase Price Adjustment; and (B) if the Preferred Shares shall have
been redeemed on or before December 31, 1996, then, (i) if Newco shall be
entitled to receive the EBITDA Purchase Price Adjustment, payment thereof shall
be effected by crediting the amount thereof against the outstanding principal
balance of the Senior Subordinated Note referred to in Section 4.02(b)(ii)
hereof, and (ii) the Purchase Price shall not be subject to increase as a
result of the EBITDA Purchase Price Adjustment. The EBITDA Purchase Price
Adjustment shall be deemed made as of November 1, 1997 notwithstanding the date
on which it becomes final pursuant to Section 4.07 hereof.
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4.07 RESOLUTION OF EBITDA AMOUNT. In the event that Seller disputes
Newco's calculations of the EBITDA Amount, Seller shall, within thirty (30)
days of delivery thereof, deliver a notice to Newco (the "EBITDA Dispute
Notice") setting forth in reasonable detail including an estimated dollar
amount, the basis of such dispute. If the EBITDA Dispute Notice is not
delivered within such thirty (30)-day period, then the EBITDA Purchase Price
Adjustment as determined by Newco, shall be final. In the event that the EBITDA
Dispute Notice is so delivered, the parties shall negotiate to attempt to
resolve the portion which is in dispute. If the parties fail to resolve any
such dispute within thirty (30) days after receipt by Newco of the EBITDA
Dispute Notice, the parties shall select a firm of independent certified public
accountants of national standing (the "EBITDA Reviewing Accountant") to review
the portions of Newco's calculation which are subject to dispute or, if the
parties fail to agree upon a EBITDA Reviewing Accountant within forty-five (45)
days after receipt by Newco of the EBITDA Dispute Notice, such firm shall be
selected by lot from among all so-called "Big Six" firms not having (and not
having announced a pending combination with another firm having) a
disqualifying interest with respect to either party. The performance of any
such firm as the Reviewing Accountant or the EBITDA Reviewing Accountant under
this or any other provision of this Agreement shall not constitute a
disqualifying interest. The parties shall make available to the EBITDA
Reviewing Accountant and to each other, all work papers and all other
information and material in their possession relating to the matters asserted
in the EBITDA Dispute Notice. The EBITDA Reviewing Accountant shall be
instructed by the parties to use its best efforts to deliver to the parties its
determination within thirty (30) days after the date of such submission of the
dispute to the EBITDA Reviewing Accountant. The determination of the EBITDA
Reviewing Accountant shall be final and binding on the parties. Each party
shall bear its own expenses and the fees and expenses of its own
representatives and experts, including its independent accountant, in
connection with the preparation, review, dispute (if any) and final
determination of the EBITDA Purchase Price Adjustment. The parties shall share
equally in the costs, expenses and fees of the EBITDA Reviewing Accountant.
ARTICLE V
RELATED AGREEMENTS
5.01 RELATED AGREEMENTS. In connection with the consummation of the
transaction contemplated by this Agreement Seller and Buyer shall, at the
Closing, enter into (a) a Supply Agreement (the "Club Supply Agreement")
substantially in the form of EXHIBIT E hereto; and (b) the Transition Services
Agreement (the "Transition Services Agreement") substantially in the form of
EXHIBIT F hereto; (c) a Cup Supply Agreement (the "Cup Supply Agreement")
substantially in the form of EXHIBIT K hereto; (d) a Plate Technology License
Option (the "Plate Technology License Option") substantially in the form of
EXHIBIT L hereto; and (e) a Preferred Supply Agreement (the "Supply Agreement")
substantially in the form of EXHIBIT M hereto. The foregoing Agreements are
hereinafter referred to collectively as the "Related Agreements".
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ARTICLE VI
REPRESENTATIONS AND WARRANTEES OF SELLER
Seller represents and warrants to Buyer the following:
6.01 ORGANIZATION; QUALIFICATION. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia and has corporate power and authority to own all of
its properties and assets and carry on its business as it is presently being
conducted. Seller is duly qualified and in good standing to do business in each
jurisdiction in which the Business makes such qualification necessary except in
those jurisdictions where the failure to be duly qualified and in good standing
would not have a material adverse effect on the Purchased Assets or the
operation thereof. If Seller exercises the election available to it pursuant to
Section 8.19 hereof, on the Closing Date Xxxxx River California Sub will be a
corporation duly organized, validly existing and in good standing under the
laws of Virginia.
6.02 AUTHORITY RELATIVE TO THIS AGREEMENT. Seller has the corporate
power and authority to execute and deliver this Agreement and the Related
Agreements and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the Related Agreements and the
consummation by Seller of the transactions contemplated hereby and thereby have
been duly authorized by the Board of Directors of Seller and no other corporate
proceedings on the part of Seller are necessary with respect thereto. Assuming
that Buyer has duly authorized the execution and delivery of this Agreement and
the Related Agreements, this Agreement constitutes, and the Related Agreements
when executed and delivered by Seller will constitute, valid and binding
obligations of Seller, enforceable in accordance with their terms except as the
same may be limited by (i) any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors, rights generally
or (ii) general principles of equity, whether considered in a proceeding in
equity or at law.
6.03 CONSENTS AND APPROVALS. Except (i) for filings with the Federal
Trade Commission and the United States Department of Justice under the HSR Act;
and (ii) as set forth in Schedule 6.03 hereto, there is no requirement
applicable to Seller to make any filing with or to obtain any permit,
authorization, consent or approval of any Governmental Entity ("Regulatory
Approvals") as a condition to the lawful consummation of the transactions
contemplated by this Agreement (other than as may be required by any applicable
"bulk sales" laws). Except as set forth in Schedule 6.03 hereto, there is no
requirement that any party to any Material Contract or Lease, or other
agreement to which Seller is a party or by which it is bound, consent to the
execution of this Agreement by Seller or the consummation of the transactions
contemplated by this Agreement, including, if Seller exercises the election
available to it pursuant to Section 8.19 hereof, the contribution to Xxxxx
River California Sub of certain tangible personal property and the sale of the
stock of such subsidiary to Buyer.
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6.04 NON-CONTRAVENTION. The execution and delivery by Seller of this
Agreement and the Related Agreements and consummation of the transactions
contemplated hereby and thereby, including, if Seller exercises the election
available to it pursuant to Section 8.19 hereof the contribution to Xxxxx River
California Sub of certain tangible personal property and the sale of the stock
of such subsidiary to Buyer do not and will not (i) violate or result in a
breach of any provision of the Articles of Incorporation or Bylaws of Seller,
(ii) result in a default (or give rise to any right of termination,
cancellation or acceleration) under the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, agreement, lease or other instrument
or obligation to which Seller is a party or by which Seller or any of the
Purchased Assets may be bound, including, without limitation, the Material
Contracts and the Leases or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Seller, the Business or any of the
Purchased Assets (other than any applicable "bulk sales" laws), excluding from
the foregoing clauses (ii) and (iii) such defaults and violations which would
not have a material adverse effect on the Purchased Assets or the Business.
6.05 ENVIRONMENTAL MATTERS. Except as set forth on Schedule 6.05
hereto, (a) Seller is, and conducts the Business, in material compliance with
the requirements of any laws, regulations, policies, guidelines, orders,
judgments or decrees of any federal, state, local or foreign court or
governmental authority applicable to or having jurisdiction over the Purchased
Assets (a "Governmental Entity") which relate to the environment or to public
health and safety or worker health and safety as they may be affected by the
environment ("Environmental Laws"); (b) Seller has not received written notice
of any claim, action, suit, proceeding, hearing or investigation, based on or
related to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling, or the emission, discharge, release or
threatened release into the environment, of any pollutant, contaminant, or
hazardous or toxic material or waste (collectively, an "Environmental Event")
relating to the Business, and (c) to Seller's knowledge, no notice of any
Environmental Event has been given to any Person that occupied the Real
Property prior to the date the Real Property was occupied by or used in the
Business. Except as set forth in Schedule 6.05 hereto, there are no facts,
events or conditions presently known to Seller which relate to the Business or
the Purchased Assets and which constitute an Environmental Condition or, with
the passage of time, could give rise to Environmental Liabilities or cause
Seller or Buyer to be obligated to clean up, remedy or otherwise restore to a
former condition, by itself or jointly with others, any contaminated surface
water, groundwater, soil or any natural resources associated therewith. Except
as set forth as Schedule 6.05 hereto and without limiting the generality of the
foregoing, Seller has not disposed of on or in the Premises any Hazardous
Materials.
6.06 LICENSES AND PERMITS. Except as set forth in Schedule 6.06
hereto, and except for those Licenses and Permits the failure to maintain which
would not have a material adverse effect upon the ownership or operation of the
Business or the Purchased Assets, Seller has all Licenses and Permits required
to own and operate the Business and the Purchased Assets as they are presently
being operated by Seller. If Seller exercises the election available to it
pursuant to Section 8.19 hereof on the Closing Date Xxxxx River California Sub
will have all licenses
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and permits required to own and operate the portion of the Long Beach Business
conducted by it and the California Assets. Schedule 6.06 hereto contains a
complete and correct list of all such Licenses and Permits, all of which are in
full force and effect. No notice of a material violation of any such License or
Permit has been received by Seller or, to the knowledge of Seller, recorded or
published, and no proceeding is pending or, to the knowledge of Seller
threatened, to revoke or limit any of them.
6.07 COMPLIANCE WITH LAWS. Except as set forth in Schedule 6.07
hereto, and excluding those matters referred to in Section 6.05 hereof relating
to environmental matters and those contained in Section 6.06 hereof relating to
Licenses and Permits, Seller has not received any notice alleging noncompliance
with any laws, regulations, policies, guidelines, orders, judgements or decrees
of any Governmental Entity applicable to the Purchased Assets including,
without limitation, those related to antitrust and trade matters, civil rights,
zoning and building codes, public health and safety, worker health and safety
and labor and nondiscrimination, which non-compliance could reasonably be
expected to affect, materially and adversely, the Purchased Assets.
6.08 LITIGATION. Except as set forth in Schedule 6.08 hereto, there
are no actions, suits, claims, investigations or proceedings (legal,
administrative or arbitrative) pending or, to the knowledge of Seller,
threatened against Seller, whether at law or in equity and whether civil or
criminal in nature, before any Governmental Entity or arbitrator, nor are there
any judgments, decrees or orders of any Governmental Entity or arbitrator
outstanding against Seller which have, or, if adversely determined, could
reasonably be expected to have a material adverse effect on the Purchased
Assets or which seek specifically to prevent, restrict or delay consummation of
the transactions contemplated hereby or fulfillment of any of the conditions of
this Agreement.
6.09 ABSENCE OF CHANGES. (a) Except as set forth in Schedule 6.09
hereto, since December 31, 1995, there has not been:
(i) any damage, destruction or loss (whether or not covered by
insurance) which affects the Purchased Assets;
(ii) a material change in the operation of the Purchased Assets other
than in the ordinary course of business; or
(iii) any sale or removal of any of the Purchased Assets other than in
the ordinary course of business.
(b) Except as otherwise set forth on Schedule 6.09 hereto, since
December 31, 1995, Seller has not with respect to the Business, other than in
the ordinary course of business:
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(i) incurred any material obligation or liability (whether fixed,
absolute, accrued, contingent, known or unknown, or otherwise, of
any kind or nature whatsoever);
(ii) mortgaged, pledged or subjected to any lien, security interest or
other encumbrance any of the Purchased Assets (other than
mechanic's, materialman's and similar statutory liens arising as
a matter of law and purchase money security interests);
(iii) transferred, leased or otherwise disposed of any Purchased
Assets or acquired any assets or properties to be used solely by
or in connection with the activities of the Business;
(iv) canceled or compromised any debt or claim related to the
Business;
(v) waived or released any rights of material value related to the
Business;
(vi) transferred or granted any rights under any concessions, leases,
licenses, sublicenses, agreements, patents, inventions,
trademarks, trade names, service marks or copyrights or with
respect to any know-how related to the Business;
(vii) made or granted any wage, salary or benefit increase or paid any
bonus applicable to any group or classification of employees
generally (except for bonuses which may be granted by Seller to
certain key employees in connection with the consummation of the
transaction contemplated by this Agreement and which shall be
payable by Seller), entered into or amended the terms of any
employment contract with, or made any loan to, or entered into or
amended the terms of any material transaction of any other nature
with, any officer or employee engaged in the operations of the
Business;
(viii) entered into any agreement or commitment to take any action
described in paragraphs (i) - (vii) of this paragraph 6.09(b); or
(ix) in any event suffered any change which would materially and
adversely affect the Purchased Assets or the Business, taken as a
whole.
6.10 TITLE TO PROPERTIES. (a) Except for Permitted Exceptions, Seller
has good and marketable title to all of the Real Property free and clear of any
liens, charges, pledges, security interests or other encumbrances. The term
"Permitted Exceptions" as used in this Agreement means only (i) statutory liens
for current taxes or assessments not yet due and payable; (ii) mechanics',
carriers', workers', repairers' and other similar liens arising or incurred in
the ordinary course of business relating to obligations as to which there is no
default on the part of Seller not in excess of $100,000 in the aggregate;
(iii) exceptions that would be shown on current surveys of the Real Property;
provided, however, that the same do not render title
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unmarketable; (iv) the Leases that affect the Real Property; and (v) the
conditions of title identified on Schedule 6.10 hereto; provided, however, that
the same are not violated by the buildings and improvements on the Real
Property and do not adversely and materially affect the value or the continued
use of the Real Property for the conduct of the Business.
(b) Seller has good title to all of the personal property, tangible
and intangible, which is a part of the Purchased Assets, free and clear of all
Liens.
6.11 LEASES. Schedule 6.11 hereto sets forth a complete list of each
agreement to lease into which Seller has entered, whether as lessor or lessee,
in connection with the ownership or operation of the Real Property or the
Equipment which relates to either real or personal property other than written
leases of real or personal property which may be canceled upon not more than
sixty (60) days notice and require the payment of not more than $1,000 per
month. If Seller exercises the election available to it pursuant to Section
8.19 hereof, on the Closing Date Xxxxx River California Sub will have all
Leases relating to the Long Beach Business. The agreements listed in Schedule
6.11 hereto and leases, if any, referred to in the preceding sentence and not
required to be set forth on said Schedule, are referred to herein as "Leases."
Except as set forth in Schedule 6.11 hereto, neither Seller nor any other party
thereto has breached any Lease and, to the knowledge of Seller, no event has
occurred which, with the giving of notice or the passage of time, or both, will
cause a default under, or permit the termination, modification or acceleration
of any Lease by any party thereto.
6.12 MATERIAL CONTRACTS. Schedule 6.12 hereto sets forth a complete
and correct list of each contract, agreement or commitment of Seller, other
than the Leases:
(i) upon which the Business or the ownership or operation of any
substantial part of the Purchased Assets is dependent or which,
if breached, could reasonably be expected to affect, materially
and adversely, the Business or the Purchased Assets;
(ii) which relates to the Business or the Purchased Assets and extends
for more than one year from the Closing Date except for any such
contract, agreement or commitment which may be canceled upon not
more than sixty (60) days notice and requires the payment of not
more than $10,000; or
(iii) which provides for the sale, after the Closing Date and other
than in the ordinary course of business, of any of the Purchased
Assets.
Each of the foregoing is referred to in this Agreement as a "Material
Contract." Except as set forth in Schedule 6.12 hereto, all of the Material
Contracts are in full force and effect, no Material Contract has been breached
and to the knowledge of Seller no event has occurred which, with or without the
giving of notice or the passage of time or both, would constitute a default by
any party thereto. If Seller exercises the election available to it pursuant to
Section
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8.19 hereof, on the Closing Date Xxxxx River California Sub will have all
Material Contracts relating to the Long Beach Business.
6.13 LABOR MATTERS. Schedule 6.13 hereto sets forth a complete and
correct list of each collective bargaining agreement (each a "Collective
Bargaining Agreement") covering employees of Seller employed in connection with
the ownership and operation of the Purchased Assets. Except as set forth on
Schedule 6.13 hereto:
(i) there are no controversies pending, or to the knowledge of
Seller, threatened between Seller and any of its employees which
affect, or can reasonably be expected to affect, materially and
adversely, the ownership or operation of the Purchased Assets or
the financial condition of the Business from and after the
Closing Date or relate to any specific effort to prevent,
restrict or delay consummation of the transactions contemplated
by this Agreement;
(ii) there are no unresolved third step labor union grievances or
unfair labor practice or labor arbitration proceedings pending
or, to the knowledge of Seller, threatened with respect to the
Business which affect, or can reasonably be expected to affect,
materially and adversely, the ownership or operation of the
Purchased Assets or the financial condition of the Business from
and after the Closing Date or relate to any specific effort to
prevent, restrict or delay consummation of the transactions
contemplated by this Agreement; and
(iii) to the knowledge of Seller, there are no organizational efforts
currently being made or threatened involving any employee of
Seller engaged in the Business.
6.14 EMPLOYEE BENEFIT PLANS. (a) Schedule 6.14 hereto lists all of the
employee benefit plans and programs including, without limitation, all
retirement, savings and other pension plans, all health, severance, insurance,
disability and other employee welfare plans and all incentive, vacation and
other similar plans that are maintained by Seller with respect to employees of
Seller engaged in the Business ("Seller's Plans").
(b) Seller has complied and currently is in compliance, both as to
form and operation, with the applicable provisions of ERISA and the Internal
Revenue Code, respectively, with respect to each employee benefit plan within
the meaning of Section 3(3) ERISA, maintained by Seller or to which Seller
contributes or is required to contribute in respect of employees of Seller
engaged in the Business or in which any employee of Seller engaged in the
Business participates.
(c) Each of the Seller Plans that is intended to qualify under Section
401 (a) of the Internal Revenue Code does so qualify and is exempt from
taxation pursuant to Section 501(a) of the Internal Revenue Code, and Seller
has received favorable and unrevoked determination letters from the Internal
Revenue Service to that effect.
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(d) Except as set forth on Schedule 6.14 hereto, (i) Seller has not,
with respect to the Business, maintained contributed to or been required to
contribute to, nor do any of its employees engaged in the Business participate
in, a "multiemployer plan" (as defined in Section 3(37) of ERISA); (ii) no
amount is due or owing from Seller on account of any multiemployer plan or on
account of any withdrawal therefrom with respect to the Business or such
employees; and (iii) no withdrawal liability would result with respect to the
Business if there were a partial or complete withdrawal from any such
multiemployer plan as of the Closing Date.
(e) Except as set forth on Schedule 6.14 hereto and as may be required
under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended,
Seller does not maintain any post-retirement health and life insurance plans on
behalf of employees engaged in the Business.
6.15 FINDERS. Except as set forth on Schedule 6.15 hereof, no broker,
finder or investment banker is entitled to any fee or commission from Seller
for services rendered on behalf of Seller in connection with the transactions
contemplated by this Agreement.
6.16 FINANCIAL STATEMENTS. Schedule 6.16 hereto contains the combining
and combined unaudited financial statements, consisting of a balance sheet
(excluding Excluded Assets and Excluded Liabilities), income statement and
statement of cash flows (excluding operations relating to the Excluded Assets),
for each Business for the year ended December 31, 1995. Such financial
statements present fairly the financial position and results of operations of
each Business as of the date and for the period indicated in accordance with
GAAP.
6.17 USE OF REAL PROPERTY. The Real Property is used and operated in
compliance and conformity with all applicable Leases, Material Contracts,
Licenses and Permits, except for such noncompliance or nonconformity as would
not, individually or in the aggregate, have a material adverse effect on the
operations or financial condition of the Business from and after the Closing
Date. Seller has not received notice of any material violation of any
applicable zoning or building regulation, ordinance or other law, order,
regulation or requirement relating to the conduct of the Business or to the
Real Property.
6.18 CONDITION OF ASSETS. The Real Property and Equipment used in the
ordinary course of business are in a reasonable state of repair and operating
condition (ordinary wear and tear excepted).
6.19 ACCOUNTS RECEIVABLE. The Accounts Receivable reflected on the
unaudited financial statements of the Business referred to in Section 6.16
hereof arose from bona fide transactions, and no further goods or services are
required to be provided in order to entitle Seller or its assignee to collect
such Accounts Receivable in full. Such Accounts Receivable have not been
assigned or pledged to any other person, corporation or other entity and, to
the knowledge of Seller, no defense or set-off has been asserted by any account
obligor.
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6.20 INSURANCE. Seller represents that the Real Property and
improvements thereto and the contents thereof, including, without limitation,
the Equipment and Inventory, whether covered directly or as the assets of a
corporation acquired by Seller by stock transfer, are insured as of the date
hereof for replacement value under all risk property insurance, Seller
retaining $200,000 of each loss (other than Yankee dryers and turbines over
10,000 xxxxx which have a $1,000,000 retention). All such policies will remain
in force between the date hereof and the Closing Date. All premiums have been
paid, and no notice of cancellation or termination has been received with
respect to any such policy.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
OF XXXXX AND NEWCO
Xxxxx and Newco severally, represent and warrant to Seller the
following:
7.01 ORGANIZATION; QUALIFICATION. Xxxxx is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and Xxxxx has the corporate power and authority to own all of its
properties and assets and to carry on the business contemplated by the
transactions described in this Agreement. Xxxxx is duly qualified and in good
standing to do business in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification necessary except in those jurisdictions where the failure to
be duly qualified and in good standing would not have a material adverse effect
on Xxxxx or the business conducted by Xxxxx. Xxxxx has heretofore delivered to
Seller complete and correct copies of its Articles of Incorporation and Bylaws,
as currently in effect.
7.02 AUTHORITY RELATIVE TO THIS AGREEMENT. Xxxxx has the corporate
power and authority to execute and deliver this Agreement and the Related
Agreements and to consummate the transactions contemplated hereby and thereby.
The execution and delivery by Xxxxx of this Agreement and the Related
Agreements and the consummation by it of the transactions contemplated hereby
and thereby have been duly authorized by the Board of Directors of Xxxxx and no
other corporate proceedings on the part of Xxxxx are necessary with respect
thereto. Assuming that Seller has duly authorized the execution and delivery of
this Agreement and the Related Agreements, this Agreement constitutes, and the
Related Agreements when executed and delivered by Xxxxx will constitute, valid
and binding obligations of Xxxxx, enforceable in accordance with their terms
except as the same may be limited by (i) any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors' rights generally
or (ii) general principles of equity, whether considered in a proceeding in
equity or at law.
7.03 CONSENTS AND APPROVALS. Except for filings with the Federal Trade
Commission and the United States Department of Justice under the HSR Act, there
is no requirement
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applicable to Xxxxx to make any filing with, or to obtain any permit,
authorization, consent or approval of, any Governmental Entity as a condition
to the lawful consummation of the transactions contemplated by this Agreement
There is no requirement that any party to any agreement to which Xxxxx is a
party or by which it is bound consent to the consummation of the transactions
contemplated by this Agreement.
7.04 NON-CONTRAVENTION. The execution and delivery by Xxxxx of this
Agreement and the Related Agreements and the consummation of the transactions
contemplated hereby and thereby, do not and will not (i) violate or result in a
breach of any provision of the Articles of Incorporation or Bylaws of Xxxxx,
(ii) result in a default (or give rise to any right of termination,
cancellation or acceleration) under the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, agreement, lease or other instrument
or obligation to which Xxxxx is a party, or by which Xxxxx or the business
conducted by Xxxxx may be bound, or (iii) violate any order, writ injunction,
decree, statute, rule or regulation applicable to Xxxxx, or to the businesses
conducted by Xxxxx, excluding from the foregoing causes (ii) and (iii) such
defaults and violations which would not have a material adverse effect on the
business or properties of Xxxxx.
7.05 LITIGATION. Except as set forth in Schedule 7.05 hereto, there
are no actions, suits, claims, investigations or proceedings (legal,
administrative or arbitrative) pending or, to the knowledge of Xxxxx,
threatened against Xxxxx, whether at law or in equity and whether civil or
criminal in nature, before any Governmental Entity or arbitrator, nor are there
any judgments, decrees or orders of any Governmental Entity or arbitrator
outstanding against Xxxxx which have, or if adversely determined, could
reasonably be expected to have a material adverse effect on the earnings,
assets, financial condition or operations of the business conducted by Xxxxx,
or which seek specifically to prevent, restrict or delay consummation of the
transactions contemplated hereby or fulfillment of any of the conditions of
this Agreement.
7.06 FINANCIAL STATEMENTS. Xxxxx has heretofore delivered to Seller a
copy of Xxxxx'x Financial Statements for the years ended July 30, 1995 and July
31, 1994 and Independent Auditors Report. There has not been any material
adverse change since the date of such Financial Statements in the business,
condition, properties or assets of Xxxxx.
7.07 TAXES. Xxxxx has filed all Tax Returns and reports required by it
to be filed and paid and discharged all taxes, assessments and governmental
charges levied upon it or its income, profits and properties except those which
are not delinquent or which are being contested in good faith by appropriate
proceedings and for the payment of which adequate reserves have been provided.
7.08 FINDERS. No broker, finder or investment banker is entitled to
any fee or commission from Xxxxx in connection with the transactions
contemplated by this Agreement.
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7.09 ORGANIZATION; QUALIFICATION. Newco is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and Newco has the corporate power and authority to own all of its
properties and assets and to carry on the business contemplated by the
transactions described in this Agreement. Newco is duly qualified and in good
standing to do business in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification necessary except in those jurisdictions where the failure to
be duly qualified and in good standing would not have a material adverse effect
on Newco or the business conducted by Newco. True and complete copies of
Newco's Certificate of Incorporation and Bylaws are annexed hereto as EXHIBIT J
and made a part hereof.
7.10 AUTHORITY RELATIVE TO THIS AGREEMENT. Newco has the corporate
power and authority to execute and deliver this Agreement and the Related
Agreements and to consummate the transactions contemplated hereby and thereby.
The execution and delivery by Newco of this Agreement and the Related
Agreements and the consummation by it of the transactions contemplated hereby
and thereby have been duly authorized by the Board of Directors of Newco and no
other corporate proceedings on the part of Newco are necessary with respect
thereto. Assuming that Seller has duly authorized the execution and delivery of
this Agreement and the Related Agreements, this Agreement constitutes, and the
Related Agreements when executed and delivered by Newco win constitute, valid
and binding obligations of Newco, enforceable in accordance with their terms
except as the same may be limited by (i) any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors' rights generally
or (ii) general principles of equity, whether considered in a proceeding in
equity or at law.
7.11 CONSENTS AND APPROVALS. Except for filings with the Federal Trade
Commission and the United States Department of Justice under the HSR Act, there
is no requirement applicable to Newco to make any filing with, or to obtain any
permit, authorization, consent or approval of, any Governmental Entity as a
condition to the lawful consummation of the transactions contemplated by this
Agreement. There is no requirement that any party to any agreement to which
Newco is a party or by which it is bound consent to the consummation of the
transactions contemplated by this Agreement.
7.12 NON-CONTRAVENTION. The execution and delivery by Newco of this
Agreement and the Related Agreements and the consummation of the transactions
contemplated hereby and thereby, do not and will not (i) violate or result in a
breach of any provision of the Articles of Incorporation or Bylaws of Newco,
(ii) result in a default (or give rise to any right of termination,
cancellation or acceleration) under the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, agreement lease or other instrument
or obligation to which Newco is a party, or by which Newco or the business
conducted by Newco may be bound, or (iii) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Newco, or to the businesses
conducted by Newco, excluding from the foregoing causes (ii) and (iii) such
defaults and violations which would not have a material adverse effect on the
business or properties of Newco.
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7.13 LITIGATION. There are no actions, suits, claims, investigations
or proceedings (legal, administrative or arbitrative) pending or, to the
knowledge of Newco, threatened against Newco, whether at law or in equity and
whether civil or criminal in nature, before any Governmental Entity or
arbitrator, nor are there any judgments, decrees or orders of any Governmental
Entity or arbitrator outstanding against Newco which have, or if adversely
determined, could reasonably be expected to have a material adverse effect on
the earnings, assets, financial condition or operations of the business
conducted by Newco, or which seek specifically to prevent, restrict or delay
consummation of the transactions contemplated hereby or fulfillment of any of
the conditions of this Agreement.
7.14 FINDERS. No broker, finder or investment banker is entitled to
any fee or commission from Newco in connection with the transactions
contemplated by this Agreement.
7.15 401(K) ROLLOVER. Buyer's 401(K) plans permit or will permit
rollover contributions within the meaning of Section 402(c) of the Internal
Revenue Code.
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.01 MANAGEMENT OF PURCHASED ASSETS. From the date hereof until the
Closing, Seller shall: (a) operate and maintain the Real Property and Equipment
in the ordinary course of business as historically conducted; (b) manage the
amounts of Purchased Assets constituting assets and Assumed Liabilities
constituting liabilities in the ordinary and usual course of business and in a
manner consistent with past practices such that the amounts of such assets and
liabilities acquired or assumed by Buyer hereunder are substantially equal to
the amounts thereof on December 31, 1995; (c) operate the Business only in the
usual, regular and ordinary manner and, to the extent consistent with such
operations, use its best efforts to preserve the current business organization
of the Business intact, keep available the services of those officers and
employees currently engaged in the operations of the Business and preserve its
present relationships with customers of, and all other persons having business
dealings with, the Business; (d) maintain its books of account and records in
the usual, regular and ordinary manner, on a basis consistent with past
practice, and use its best efforts to comply with all laws applicable to it and
to the conduct of the Business and perform all its material obligations without
default; and (e) with Buyer's assistance and cooperation, but at the expense of
Seller, promptly apply for or otherwise seek and use commercially reasonable
efforts to obtain all authorizations, consents, waivers and approvals as may be
required in connection with the assignment of the Material Contracts and the
Leases.
8.02 FORBEARANCES BY SELLER. Except as contemplated by this Agreement,
Seller will not, from the date hereof until the Closing, without the prior
consent of Buyer: (a) sell, dispose of or transfer any of the Purchased Assets
except in the ordinary course of business; (b) amend,
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modify or cancel any Material Contract or Lease; or (c) enter into any
agreement to do any of the things described in clauses (a) or (b).
8.03 INVESTIGATION OF PURCHASED ASSETS. From and after the date hereof
until the Closing, and subject to the provisions of Section 8.05 hereof, Seller
will afford Buyer and its attorneys, accountants, financial advisors and other
representatives access at all reasonable times to its officers, employees,
properties, contracts, books and records to the extent relating to the
Purchased Assets. In addition Seller will furnish Buyer with such data as Buyer
may reasonably request concerning the Purchased Assets.
8.04 TITLE AND SURVEY. Buyer shall, at its own expense, proceed
promptly to order and obtain current title insurance policies or commitments
with respect to the Real Property. Buyer shall deliver copies of each title
commitment from Commonwealth Land Title Insurance Company (the "Title Company")
to Seller within ten (10) days after receipt thereof by Buyer. Seller shall, at
its own expense, provide Buyer with current surveys of the Real Property not
less than ten (10) days prior to the Closing.
8.05 CONFIDENTIALITY. Pursuant to the provisions of this Agreement,
Seller has supplied and will supply Buyer with certain documents and
information for use in investigating the ownership and operation of the
Purchased Assets. Such material is hereinafter referred to as 'Evaluation
Material". Buyer agrees to hold in confidence any Evaluation Material it has
received or will receive and not to disclose all or any part of such material
to anyone except its financial advisors, investment bankers, officers,
directors, employees or other representatives who need such information to
perform their respective duties and who have been informed of the confidential
nature of such material and directed to treat it confidentially. If this
Agreement is terminated, Seller and Buyer will return to the other, or cause to
be destroyed and will not retain or permit any person to whom it has given
copies thereof to retain, the originals or any copies of any documents
constituting a part of the Evaluation Material furnished to it or any notes or
memoranda prepared using such Evaluation Material and after termination both
Seller and Buyer will continue to honor the confidentiality agreements
contained herein, and will not use or disclose, directly or indirectly, any
information obtained from the Evaluation Material. Notwithstanding the
foregoing, Buyer may use and disclose any such information to the extent that
(i) it had acquired such information on a non-confidential basis prior to
receipt thereof from Seller, (ii) such information has become generally
available to the public, (iii) such information is provided to Buyer by a third
party who has obtained such information other than as a result of a breach of
this Agreement. Furthermore, Buyer may disclose such information to the extent
that it is required to do so in order to comply with a governmental or judicial
order or decree or as reasonably necessary to secure financing for the
operation of the Purchased Assets, but upon receiving notice that any such
order or decree is being sought, it will promptly notify Seller and will, at
Seller's expense, cooperate with the Seller's efforts, if any, to contest the
issuance of such order or decree.
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8.06 TAXES AND RECORDING FEES. All property taxes and special
assessments payable in respect of any of the Real Property transferred in
connection with the transactions contemplated hereby shall be prorated between
the parties on the basis of actual days elapsed between the commencement of the
current fiscal tax year and the Closing, based on a 365-day year and as so
reflected on the Closing Net Book Assets Statement. All recording fees
associated with the transfer of the Real Property contemplated hereby will be
borne by Buyer. All other sales and Transfer Taxes and fees (including filing
fees, if any) incurred in connection with this Agreement and the transactions
contemplated hereby will be borne by Seller, including, without limitation, any
such Transfer Taxes and fees payable in connection with the sale of the stock
of the Xxxxx River California Sub to Buyer. Additionally, Seller shall pay all
Taxes resulting from the making of the Section 338(h)(10) Election (and any
comparable election under state or local tax law). Buyer and Seller will file
all necessary tax returns and other documents required to be filed with respect
to all such taxes and filing fees. Buyer and Seller will cooperate with each
other to the extent necessary to enable each to make such filings and join in
the execution of any tax returns or other documents as may be necessary to
enable Buyer and Seller to comply with the provisions of this Section.
8.07 PRORATION OF LEASE PAYMENTS, UTILITY CHARGES AND OTHER PAYMENTS.
Any installment of rent due on any of the Leases and any utility or similar
charge payable with respect to the period in which the Closing occurs shall be
prorated between the parties hereto on the basis of the actual number of days
applicable to pre-Closing and post-Closing occupancy or use and as so included
in the determination of the Closing Net Book Assets. On or before the date that
is sixty (60) days after the Closing Date, Seller will deliver to Buyer a
schedule showing the proration of such amounts and Buyer shall pay Seller the
amounts shown due on such schedule within sixty (60) days of receipt of such
schedule.
8.08 ALLOCATION OF PURCHASE PRICE. The Purchase Price has been agreed
upon by the parties and the values assigned to the various assets which
constitute the Purchased Assets are listed in Schedule 8.08 hereto. Seller and
Buyer agree that the values reflected in Schedule 8.08 hereto were separately
established as a result of good faith bargaining and that in reporting the
transactions contemplated by this Agreement to the Internal Revenue Service, as
is required by Section 1060 of the Internal Revenue Code, they will use such
prices and cooperate with each other in meeting the requirements of the
Internal Revenue Code and the regulations promulgated thereunder. Each of Buyer
and Seller shall timely complete and file a Form 8593 Asset Acquisition
Statement of Allocation consistent with such allocation, shall provide a copy
of such form to the other party hereto and shall file a copy of such form with
its federal income tax return for the period that includes the Closing Date.
Each of Buyer and Seller further agrees not to take any position inconsistent
with such allocation for any tax or financial accounting or reporting purpose.
8.09 BULK SALES LAWS. Seller will indemnify and hold harmless Buyer
from any and all claim relating to provisions of the "bulk sales laws" of any
state or other jurisdiction which
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may be applicable to the transactions contemplated hereby and from all costs
(including reasonable attorneys' fees) incurred in the defense of any claims
made under such laws.
8.10 MATERIALS RECEIVED AFTER CLOSING. Following the Closing Buyer may
open all mail, telegrams and other communications and packages it receives
which are addressed to Seller and deal with the contents thereof in its
discretion to the extent that the contents thereof relate to the Purchased
Assets or the Assumed Liabilities. Buyer agrees to deliver to Seller all other
such material it receives which is addressed to Seller and does not relate to
such assets or liabilities.
8.11 RETENTION OF BOOKS AND RECORDS. (a) On and after the Closing
Date, Buyer will permit Seller or its representatives and agents at reasonable
times during business hours to inspect all the files, books, records and
accounts of the Business held by Buyer, as well as provide Seller with access
to, and the cooperation of, any employee having knowledge of the information
therein contained, if such inspection, access and cooperation are reasonably
necessary (i) to respond to a governmental investigation or for the defense by
Seller of any litigation relating to the Business prior to the Closing Date or
(ii) for accounting reviews or audits or for judicial or administrative
proceedings or determinations relating to the liability of Seller for Taxes for
periods prior to the Closing Date.
(b) Buyer shall retain and maintain substantially in the condition in
which the same shall exist on the Closing Date, and shall not dispose of, any
business records of the Business transferred to Buyer pursuant to this
Agreement (including all machine sensible records, such as computer tapes,
disks, diskettes, etc., which are considered books and records within the
meaning of Internal Revenue Code Section 6001, in accordance with Internal
Revenue Procedure 91-59 or such amending or superseding guidance as issued by
the Internal Revenue Service) until the later to occur of (i) the expiration of
the applicable tax statute of limitations, including extensions thereof, and
(ii) the seventh (7th) anniversary of the Closing Date; provided, however,
that, after such date, Buyer shall give Seller written notice of its intention
to dispose of any part thereof, specifying the items to be disposed of in
reasonable detail. Seller may, within a period of sixty (60) days from receipt
of any such notice, notify Buyer of its desire to retain one or more of the
items to be disposed of. Buyer shall, upon receipt of such a notice from
Seller, deliver to Seller, at Seller's expense, the items specified therein.
8.12 EXPENSES. Except as otherwise provided in this Agreement all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby will be paid by the party incurring such costs
and expenses.
8.13 PUBLIC ANNOUNCEMENTS. The parties will consult with one another
before issuing any press releases or otherwise making any public statements
with respect to this Agreement and the transactions contemplated hereby and
will not issue any such press release or make any such public statement without
the consent of the other unless such action is required by law or by the New
York Stock Exchange.
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8.14 EFFORTS TO CONSUMMATE. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its reasonable best efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate, as promptly as
practicable, the transactions contemplated hereby, including but not limited
to, the obtaining of all necessary consents, waivers, authorizations, orders
and approvals of third parties, whether private or governmental, required of it
to enable it to comply with the conditions precedent to consummating the
transactions contemplated by this Agreement. Each party agrees to cooperate
fully with each of the other parties in assisting them to comply with the
provisions of this Section. Notwithstanding the foregoing, no party hereto
shall be required to initiate any litigation, make any substantial payment or
incur any material economic burden, except for a payment otherwise then
required of it to obtain any consent, waiver, authorization, order or approval.
8.15 FURTHER ASSURANCES. Seller will use its reasonable best efforts
to implement the provisions of this Agreement, and for such purpose, at the
request of Buyer will, at or after the Closing, without further consideration,
promptly execute and deliver such additional documents as Buyer may reasonably
deem necessary or desirable in order to consummate more effectively the
transactions contemplated hereby and to vest in Buyer title to the Purchased
Assets free and clear of any Liens other than the Permitted Exceptions.
8.16 ADDITIONAL FINANCIAL STATEMENTS. Seller, at its sole cost and
expense, will deliver to Buyer (i) on or before March 15, 1996, the audited
combined financial statements for the Natural Dam and Long Beach Businesses and
audited financial statements for the CEG Business (excluding Excluded Assets
and Excluded Liabilities and operations relating thereto), consisting of a
balance sheet, income statement and statement of cash flows and footnotes to
such financial statements as of and for the year ended December 31, 1995
prepared by Seller's independent certified public accountants (the "Audited
Financial Statements"), together with comparable unaudited combining financial
statements for the Natural Dam and Long Beach Businesses as of and for the year
ended December 31, 1995, prepared in accordance with GAAP and certified by
Seller's chief financial officer; (ii) on or before May 15, 1996, comparable
audited financial statements and footnotes thereto for the CEG Business as of
and for the year ended December 31, 1994; and (iii) if Xxxxx shall give Seller
notice of its intention to effect an initial public offering of its common
stock pursuant to the applicable provisions of the Exchange Act, on or before
the date which shall be sixty (60) days following the date of such notice,
comparable audited combined financial statements and footnotes thereto for the
Natural Dam and Long Beach Businesses, together with comparable unaudited
combining financial statements as of and for the year ended December 31, 1994,
prepared in accordance with GAAP and certified by Seller's chief financial
officer; provided, however, that such Financial Statements are reasonably
required for such offering. Any delay in providing the Audited Financial
Statements shall allow Buyer the right to extend the dates set forth in Section
12.01 hereof by the number of days following March 15, 1996 that such Audited
Financial Statements are delivered.
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8.17 NON-COMPETITION. (a) Seller hereby agrees that for a period of
three (3) years following the Closing Date, neither Seller nor any of its
Affiliates, shall directly or indirectly, manufacture or sell in the United
States (i) through the so-called "Party Channel" (defined as retail outlets
selling primarily paper and plastic decorative products for special occasions),
Party Goods which compete with the CEG Business, except any such direct sales
to Hallmark Cards, Inc.; (ii) Short Run custom imprint placemats or napkins
which compete with the Long Beach Business; or (iii) parent roll deep-tone
tissue, or otherwise compete with the Natural Dam Business with respect to any
customer of the Natural Dam Business as of or within the period of twelve (12)
months preceding, the Closing Date. The restrictions contained in clauses (i)
and (ii) of this Section shall not apply to any business acquired by Seller or
any Affiliate of Seller following the Closing Date; provided, however, that the
aggregate revenues of such business relating to such restricted activities
shall not be in excess of ten (10%) percent of the aggregate revenues of such
business. The term "Short Run" means 150,000 for customers of Seller as of the
date of this Agreement and 200,000 for customers or business opened or created
following the date of this Agreement.
(b) Seller acknowledges that Buyer would be irreparably harmed by any
breach of this Section, and that there would be no adequate remedy at law or in
damages to compensate Buyer for any such breach.
8.18 FINANCIAL REPORTS. Xxxxx, for so long as the Preferred Shares or
either of the Senior Subordinated Notes referred to in Sections 12.03(ii) or
12.03(iii) hereof shall remain outstanding, and Newco, for so long as the
Preferred Shares or the Senior Subordinated Note referred to in Section 12.03
(iii) hereof shall remain outstanding, shall each provide to Seller the
following financial reports:
(i) As soon as practicable, and in any event no later than sixty (60)
days after the end of each quarterly period (commencing October
31, 1996) other than the last quarterly period, a balance sheet
of such company (consolidated with subsidiaries, if any), as of
the end of such quarterly period, income statement and statement
of cash flows, of such company from the beginning of the fiscal
year to the end of the quarterly period, (consolidated with
subsidiaries, if any), setting forth in comparative format with
the corresponding period in the preceding fiscal year, prepared
in accordance with GAAP and certified by the chief financial
officer of such company; and
(ii) As soon as practicable, and in any event not later than ninety
(90) days after the end of each fiscal year, a balance sheet of
such company (consolidated with subsidiaries, if any), income
statement and statement of cash flows as of the end of the fiscal
year, in a comparative format with the preceding fiscal year,
prepared in accordance with GAAP, together with a report thereon
by independent public accountants of recognized standing selected
by such company.
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8.19 XXXXX RIVER CALIFORNIA SUB. Prior to the Closing, Seller may, at
its sole election, establish a newly-formed wholly-owned subsidiary (the "Xxxxx
River California Sub") and contribute to the Xxxxx River California Sub any or
all of the tangible personal property owned by Seller and used exclusively in
connection with the Long Beach Business (the "California Assets"). Seller shall
not transfer to the Xxxxx River California Sub, or permit the Xxxxx River
California Sub to incur or assume, any liability except for liabilities that
would be Assumed Liabilities had the Xxxxx River California Sub not been
created. If Seller determines to establish the Xxxxx River California Sub under
this Section, Seller shall contribute the California Assets to the Xxxxx River
California Sub immediately prior to the Closing. Buyer shall cause the name of
Xxxxx River California Sub to be changed immediately following the Closing so
as to remove the words Xxxxx River therefrom.
8.20 SECTION 338(H)(10) ELECTION. The provisions of this Section shall
only apply if Xxxxx River determines to form the Xxxxx River California Sub.
(a) Buyer and Seller agree to make timely, effective and irrevocable
Section 338(h)(10) Elections with respect to the Xxxxx River California Sub as
set forth in this Agreement, as well as any Section 338(h)(10) Elections (or
corresponding or similar elections) for state or local purposes, and to file
such elections in accordance with applicable regulations. The provisions of
this Agreement shall apply to any such elections that Buyer makes for state or
local purposes.
(b) Seller shall file a consolidated federal income tax return with
the Xxxxx River California Sub for the tax year beginning on January 1, 1996
and ending on and including the date of the Closing. Seller is eligible to make
an election under Section 338(h)(10) of the Internal Revenue Code (and any
comparable election under state or local tax law) with respect to the Xxxxx
River California Sub. Buyer and Seller shall make or cause to be made the
Section 338(h)(10) Elections (and any comparable election under state or local
tax law) and shall take no position contrary thereto unless required to do so
pursuant to a final determination by any taxing authority or judicial
proceeding.
(c) Seller shall be responsible for preparing and filing all Section
338 Forms in accordance with the terms of this Agreement. Seller shall furnish
copies of the Section 338 Forms to Buyer for Buyer's approval at least 25
business days before the date such Section 338 Forms are required to be filed.
Buyer shall execute and deliver to Seller such documents or forms as Seller
reasonably requests to complete the Section 338 Forms, properly and in a timely
fashion.
(d) Buyer and Seller agree that the deemed sale price of the
California Assets determined in accordance with Treasury Regulation Section
1.338(h)(10)-l(f) will be determined within 120 days after the Closing and the
parties will file the forms required under the Internal Revenue Code and the
regulations thereunder in a manner substantially consistent with the allocation
of values pursuant to such Section.
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8.21 TAX MATTERS. (a) Any agreement between Seller and the Xxxxx River
California Sub regarding the allocation of payment of taxes or amounts in lieu
of taxes shall be deemed terminated at and as of the Closing.
(b) Buyer will be responsible for the preparation and filing of all
federal, state and local franchise, property, payroll, and other non-income tax
returns, and all income tax returns of the Xxxxx River California Sub arising
for all periods as to which such tax returns are due after the Closing. Buyer
will make all payments required with respect to any such tax returns and Seller
will reimburse Buyer for all such payments to the extent that they relate to
periods ending on or before the Closing Date and are not reflected on the
Closing Net Book Assets Statement.
ARTICLE IX
EMPLOYEES AND EMPLOYEE MATTERS
9.01 TRANSFERRED EMPLOYEES. Attached hereto as Schedule 9.01 is a list
of the employees who are employed by Seller engaged in the operations of the
Business and current annual compensation rates, as of the most recent date for
which such information is available. As of the Closing, Buyer shall offer (i)
employment with Buyer to all union employees who are employed by Seller in
connection with the operations of the Business immediately before the Closing;
and (ii) employment with Buyer to such non-union employees who are employed by
Seller in connection with the operations of the Business as Buyer shall so
elect in its sole discretion. Buyer shall, not less than twenty (20) days prior
to the Closing Date, provide Seller with a list of non-union employees to whom
Buyer intends to offer employment with Buyer. Such employees who become
employees of Buyer are hereinafter referred to as "Transferred Employees" and
shall be deemed to have become employees of Buyer as of the time the Closing
becomes effective; provided, however, that any employee employed by Seller in
connection with the operations of the Business who becomes employed by Buyer
pursuant to this Section 9.01 and who is inactive as of the Closing, shall
become a Transferred Employee as of the date such employee commences employment
with Buyer. Seller hereby agrees that for a period of three (3) years following
the Closing Date, neither Seller nor any Affiliate of Seller shall employ nor
solicit to employ any Transferred Employee. Notwithstanding the foregoing,
Seller shall have the right to, prior to the Closing, offer employment to those
employees of Seller engaged in the operation of the Business on the date hereof
listed on Schedule 9.01 hereto.
9.02 COLLECTIVE BARGAINING AGREEMENTS. Seller acknowledges that (a)
Local 687 of the United Paperworkers International Union (the "UPI") has been
recognized as the exclusive collective bargaining representative of the
bargaining unit of hourly employees engaged in the Natural Dam Business; (b)
Local 388M of the Graphic Communications Union, District Council No. 2 Union
(the "GC Union") has been recognized as the exclusive
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collective bargaining representative of the bargaining unit of hourly employees
engaged in the Long Beach Business; and (c) Local 1105 of the UPI, AFL-CIO-CLC
Union (the "UPI-AFL Union") has been recognized as the exclusive collective
bargaining representative of the bargaining unit of hourly employees engaged in
the CEG Business. Buyer hereby agrees to attempt in good faith to enter into an
agreement with each Union, subject to and effective upon the Closing, under
which: (i) Buyer shall assume the applicable Collective Bargaining Agreement
between Seller and such Union listed on Schedule 9.02 hereto, subject to the
following changes: (a) the substitution of a Buyer-sponsored defined
contribution savings plan for the Seller-sponsored pension and savings plans
provided for in such Collective Bargaining Agreement, and (b) the substitution
of Buyer-sponsored welfare benefit plans reasonably equivalent for the
Seller-sponsored welfare benefit plans provided for in such Collective
Bargaining Agreement.
9.03 EMPLOYEE BENEFIT PLANS. (a) Except as otherwise provided in
Section 9.02 hereof, Buyer shall provide the Transferred Employees with
employee benefit plans, programs and arrangements which are substantially
similar to those provided to similarly situated employees of Buyer, and such
employees will cease participating in any Seller Plans as of the Closing (or
such later date for Transferred Employees who are inactive as of the Closing).
Other than as provided in Section 9.03(d) hereof Buyer shall recognize the
service with Seller before the Closing Date of both hourly and salaried
Transferred Employees as if such service had been with Buyer, for the purposes
of seniority rights, eligibility for benefits, or level of benefits, including
but not limited to vacation and severance rights.
(b) Buyer shall not assume any obligation under or with respect to any
Seller Plan, and all benefits under any Seller Plan shall be paid by Seller
pursuant to the terms of such Plan.
(c) Buyer, except for any pension plan maintained by Buyer, shall
treat service of hourly Transferred Employees with Seller, before the Closing,
as if such service had been with Buyer for purposes of seniority rights and
benefits under the Collective Bargaining Agreement covering such Transferred
Employees.
(d) Credited Service. Seller shall cause each Seller Plan which is a
"pension plan" within the meaning of Section 3(2) of ERISA, or any successor
plan thereto, to be amended to provide credit for Transferred Employees for
purposes of vesting only with respect to benefits accrued prior to the Closing
for their years of service with Buyer or any of its Affiliates on or after the
Closing. Buyer or any of its Affiliates shall recognize prior service with
Seller to the extent recognized under Seller's corresponding plans for such
Transferred Employees prior to the Closing as service with Buyer or any of its
Affiliates in connection with (i) any welfare benefit plan for purposes of any
waiting period and eligibility purposes only and (ii) any pension plan for
purposes of eligibility and vesting only in which such Transferred Employees
elect to participate and which is available by Buyer or any of its Affiliates
following the Closing.
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9.04 PENSION PLANS. (a) No assets or liabilities with respect to
Transferred Employees shall be transferred, as a result of this Agreement, from
Seller's hourly or salaried pension plans to any pension plan maintained or
established by Buyer. Seller shall retain the obligation under the terms of
Seller's pension plans to provide benefits accrued by Transferred Employees
prior to the Closing.
(b) Buyer shall be solely responsible for any benefits accrued by
Transferred Employees after the Closing Date under any pension plan maintained
by Buyer with respect to such employees.
9.05 WELFARE BENEFIT PLANS. (a) Buyer shall be liable for welfare
benefit claims incurred by Transferred Employees under Buyer's welfare benefit
plans after the Closing Date. Seller shall retain liability for welfare benefit
claims incurred by Transferred Employees under Seller's welfare benefit plans
on or prior to the Closing Date. For purposes of this Section, a medical
benefit claim shall be considered to be incurred at the time the medical
service to which the claim relates is rendered.
(b) Buyer will maintain its welfare benefit plans as a continuation of
Seller's welfare benefit plans, so that Buyer will give Transferred Employees
credit under its plans for payments made under Seller's welfare benefit plans
for purposes of deductibles and maximum out-of-pocket limits.
9.06 SEVERANCE. Buyer or one of its Affiliates shall provide payments
upon termination of employment to any non-union Transferred Employee terminated
by Buyer or one of its Affiliates without cause which are at least equal to the
severance pay that such employee would have received under the terms of the
Xxxxx River Salary Continuation Plan for non-union Employees with respect to
such Transferred Employee's periods of employment or salary grade with Seller
and, in addition, in accordance with Buyer's severance policy with respect to
such Transferred Employee's period of employment with Buyer.
9.07 FLEX PLANS. Effective as of the Closing, Buyer will establish or
provide a Code Section 125 flexible benefits program ("Buyer's FSA") providing
benefits that are the same as those available under the Xxxxx River Flexible
Benefits Program ("Seller's FSA"). Effective as of the Closing, Buyer shall
assume all obligations to pay all unpaid claim of the Transferred Employees
participating in Seller's FSA as of the Closing. Each Transferred Employee
shall be credited as of the Closing Date under Buyer's FSA with the remaining
amounts available for reimbursement for each elected benefit equal to such
remaining amounts as were credited under Seller's FSA with respect to such
person immediately prior to the Closing. Buyer shall give effect under Buyer's
FSA to calendar year 1996 salary reduction elections made by Transferred
Employees with respect to Seller's FSA and no new benefit elections for 1996
will be allowed to the Transferred Employees except as otherwise provided by
Buyer's FSA in the event of a change in family status.
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9.08 WORKER'S COMPENSATION. Seller will retain liability for all
worker's compensation claims that arise from events that occurred before the
Closing. Buyer will assume liability for all worker's compensation claims made
by Transferred Employees that arise from events that occur on or after the
Closing.
9.09 RETENTION OF LIABILITIES. Seller shall retain all liability and
be responsible for any direct and indirect costs, claims, liabilities or losses
with respect to (i) the Seller Plans, including any post-employment or
post-retirement health or welfare benefits provided under any such Plan, (ii)
any employee or former employee of Seller who is not a Transferred Employee,
and (iii) liability arising in connection with the termination of employment on
or prior to the Closing of any employee of Seller, including, without
limitation, costs arising under or with respect to WARN.
9.10 ADMINISTRATION. Buyer and Seller will each make its appropriate
employees available to the other at such reasonable times as may be necessary
for the proper administration by the other of any and all matters relating to
employee benefits and worker's compensation claims affecting Transferred
Employees.
9.11 NO THIRD PARTY BENEFICIARIES. No provision contained in this
Article shall create any third party beneficiary or other rights in any
employee or former employee of Seller (or any corrective bargaining
representative, beneficiary or dependent thereof) in respect of continued
employment or to resume employment with either Buyer or the Business and no
such provision shall create any such rights in any such persons in respect of
any benefits that may be provided under any employee benefit plan or
arrangement that may be established by Buyer.
9.12 401(K) ROLLOVER. Transferred Employees will have the opportunity
to rollover their total account balance in Seller's 401(k) Plans, to Buyer's
401(k) Plans, based on the provisions of Buyer's Plans. Apart from the portion
of those accounts subject to outstanding loans, the rollover shall be made in
cash. Any outstanding plan loans to Transferred Employees under Seller's 401(k)
Plans shall be transferred in kind with the underlying accounts. The account
balances of Transferred Employees shall be valued as of the date on which the
transfer is made. The account balances of Transferred Employees in Seller's
Stock Plus Plan shall share in the earnings, appreciation and depreciation of
the investment funds in which the accounts are invested for the period between
the Closing and the date on which the transfer is made.
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ARTICLE X
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated
by this Agreement shall be subject, to the extent not waived, to the following
conditions.
10.01 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller contained in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and as of the Closing as
though made at and as of such date, and Seller shall have delivered to Buyer a
certificate to that effect signed by an executive officer of Seller.
10.02 PERFORMANCE OF THIS AGREEMENT. Seller shall have performed in
all material respects all obligations and complied in au material respects with
all conditions required of it by this Agreement and shall have delivered to
Buyer a certificate to that effect signed by an executive officer of Seller.
10.03 CORPORATE AUTHORIZATION. All corporate action required to be
taken by Seller in connection with the transactions contemplated by this
Agreement shall have been taken, all documents incident thereto shall be
reasonably satisfactory in substance and form to Buyer and Buyer shall have
received such originals or copies of such documents as it may reasonably
request.
10.04 CONSENTS AND APPROVALS. All consents, authorizations, orders or
approvals of governmental or regulatory authorities and of individuals or
business entities which Seller is required to obtain in order to be able to
convey, assign, transfer and deliver the Purchased Assets to Buyer shall have
been obtained and all waiting periods specified by law with respect thereto
have passed, including, without limitation, the applicable waiting period under
the HSR Act.
10.05 INJUNCTION, LITIGATION, ETC. No order of any court or
governmental agency shall be in effect which restrains or prohibits the
consummation of the transactions contemplated by this Agreement, or which would
materially limit or affect the ability of Buyer to own or control the Purchased
Assets, and there shall not have been threatened, nor shall there be pending,
any action or proceeding by or before any such court or governmental agency
seeking to prohibit or delay or challenging the validity of the transactions
contemplated by this Agreement.
10.06 LEGISLATION. No statute, rule or regulation shall have been
proposed or enacted which prohibits or might prohibit, restrict or delay the
consummation of the transactions contemplated by this Agreement.
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10.07 TITLE INSURANCE; SURVEY. Buyer shall have diligently pursued and
received ALTA Form 1990 Owner's Policies of Title insurance, or commitments to
issue the same, updated to the Closing Date, issued by the Title Company in
policy amounts reasonably acceptable to Buyer insuring or committing to insure
at regular rates that Buyer or its designated Affiliate will upon Closing have
good and marketable title to the Real Property, subject only to the Permitted
Exceptions.
10.08 OPINION OF COUNSEL FOR SELLER. Buyer shall have received an
opinion from General Counsel for Seller, in substantially the form attached
hereto as EXHIBIT I.
10.09 CONSENTS AND AGREEMENTS. Buyer shall have been furnished with
the written consents and permits in forms acceptable to Buyer of any and all
persons, including, without limitation, Governmental Entities required to be
obtained prior to the consummation of the transactions contemplated hereby.
10.10 LANDLORD ESTOPPEL CERTIFICATES AND LANDLORD WAIVERS. Buyer shall
have been furnished with Landlord Estoppel Certificates, or such other
certificates or statements acceptable to Buyer, and Landlord Waivers
substantially in the respective forms attached hereto as EXHIBIT H hereto,
executed in respect of each of the Leases and dated not more than fifteen (15)
days prior to the Closing Date.
10.11 CHANGES. The amount of the shareholders equity reflected on the
balance sheet of each Business included in the Audited Financial Statements
shall not be less than ninety (90%) percent of the amount of the shareholders
equity reflected on the balance sheet of such Business included in the
unaudited financial statements referred to in Section 6.16 hereof.
ARTICLE XI
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller to consummate the transactions contemplated
by this Agreement shall be subject, to the extent not waived, to the following
conditions.
11.01 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer contained in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and as of the Closing,
as though made as of and at such date, and Buyer shall have delivered to Seller
a certificate to that effect signed by an executive officer of Buyer.
11.02 PERFORMANCE OF THIS AGREEMENT. Buyer shall have performed in all
material respects all obligations and complied in all material respects with
all conditions required of
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Buyer by this Agreement and shall have delivered to Seller a certificate to
that effect signed by an executive officer of Buyer.
11.03 CORPORATE AUTHORIZATION. All corporate action required to be
taken by Buyer in connection with the transactions contemplated by this
Agreement shall have been taken, all documents incident thereto shall be
reasonably satisfactory in substance and form to Seller, and Seller shall have
received all such originals or copies of such documents as it may reasonably
request.
11.04 CONSENTS AND APPROVALS. All consents, authorizations, orders or
approvals of governmental or regulatory authorities and of individuals or
business entities which Seller is required to obtain in order to consummate the
transactions contemplated by this Agreement shall have been obtained by Seller
and all waiting periods specified by law with respect thereto shall have
passed, including, without limitation, the applicable waiting period under the
HRS Act.
11.05 INJUNCTION, LITIGATION, ETC. No order of any court or
governmental agency shall be in effect which restrains or prohibits the
consummation of the transactions contemplated by this Agreement and there shall
not have been threatened, nor shall there be pending, any action or proceeding
by or before any such court or governmental agency seeking to prohibit or delay
or challenging the validity of the transactions contemplated by this Agreement.
11.06 LEGISLATION. No statute, rule or regulation shall have been
proposed or enacted which does, prohibits or might prohibit, restrict or delay
the consummation of the transactions contemplated by this Agreement.
11.07 OPINION OF COUNSEL FOR BUYER. Seller shall have received an
opinion from Xxxxxx X. Xxxxxxxx, counsel for Buyer, substantially in the form
attached hereto as EXHIBIT G.
ARTICLE XII
CLOSING AND DELIVERIES
12.01 TIME AND PLACE OF CLOSING. The closing (the "Closing") shall
take place at the offices of Seller in Richmond, Virginia at 10:00 am. local
time on April 29, 1996, subject, however, to (i) Buyer's right to adjourn the
Closing to a date not later than May 17, 1996; and (ii) the provisions of
Section 8.16 hereof (the date on which the Closing takes place being
hereinafter referred to as the "Closing Date"). If the Closing takes place, the
Closing and all of the transactions contemplated by this Agreement, shall be
deemed to have occurred simultaneously and become effective as of 11:59 p.m. on
the day preceding the Closing Date.
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12.02 DELIVERIES BY SELLER. At the Closing, Seller shall deliver to
Buyer, in executed form, the following:
(i) special warranty deeds duly executed and in recordable form
conveying to Buyer good and marketable title to the Real
Property, subject only to the Permitted Exceptions;
(ii) bills of sale and assignments and such other documents (in form
satisfactory to Buyer and suitable for filing, registration or
recording, if applicable) as may be necessary to transfer to
Buyer the remainder of the Purchased Assets;
(iii) the Related Agreements;
(iv) the Certificates required by Sections 10.01 and 10.02 hereof;
(v) evidence that the corporate action described in Section 10.03
hereof has been taken and copies of the consents required by
Sections 10.04 and 10.09 hereof,
(vi) the opinion of counsel required by Section 10.08 hereof;
(vii) the Landlord Estoppel Certificates or other statements
acceptable to Buyer, and Landlord Waivers described in Section
10.10 hereof;
(viii) a letter, in form and content reasonably satisfactory to Buyer,
from Seller's independent certified public accountants preparing
the Audited Financial Statements and the additional audited
financial statements referred to in Section 8.16 hereof,
consenting to the inclusion of such audited financial statements
in each offering memorandum or registration statement relating to
one or more private placements or public offerings of debt and/or
equity of Buyer or any Affiliate of Buyer; subject, however, to
review of such documents as is reasonable and customary in the
public accounting profession;
(ix) an instrument, in form and content reasonably satisfactory to
Newco, pursuant to which Seller shall grant Newco, its successors
and assigns, immunity from suit under United States Patent
Numbers 4,721,500 issued 1/26/1988; 4,609,140 issued 9/21/1986;
4,721,499 issued 1/26/1988 and 4,606,496 issued 8/19/1986 as to
the plate forming apparatus currently in operation at the
Indianapolis, Indiana Facility; provided, however, that
modifications to such apparatus which substantially increase the
strength of the plates produced at such Facility and which
infringe upon the foregoing Patents, will not be within the scope
of such Immunity From Suit; and
(x) such additional documents as Buyer may reasonably require.
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12.03 DELIVERIES BY BUYER. At the Closing Buyer shall deliver to
Seller the following:
(i) the payment on account of the Purchase Price described in Section
4.02(b)(iv) hereof,
(ii) the Senior Subordinated Note in the form of EXHIBIT C required by
Section 4.02(b)(i) hereof,
(iii) the Senior Subordinated Note in the form of EXHIBIT D required
by Section 4.02(b)(ii) hereof,
(iv) the Preferred Shares;
(v) an executed instrument of assumption of liabilities pursuant to
which Buyer shall assume all of the Assumed Liabilities;
(vi) the certificates required by Sections 11.01 and 11.02 hereof;
(vii) executed Related Agreements;
(viii) evidence that the corporate action described in Section 11.03
hereof has been taken;
(ix) copies of the consents required by Section 11.04 hereof.
(x) a certificate from the Secretary of State of Delaware as to the
good standing of Buyer in the states of Delaware, Vermont and
Wisconsin (and other applicable jurisdictions) as of the most
recent date obtainable;
(xi) the opinion of counsel required by Section 11.07 hereof; and
(xii) such additional documents as Seller may reasonably request.
ARTICLE XIII
SURVIVAL OF REPRESENTATIONS,
INDEMNIFICATION
13.01 INDEMNIFICATION BY SELLER. Subject to the limitations contained
in this Article III, Seller will indemnify and hold Buyer harmless from any
damage, loss, liability or expense
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(including, without limitation, reasonable expenses of investigation and
reasonable attorneys' fees) ("Damages") arising out of:
(a) any misrepresentation contained in, omission from or breach of a
representation and warranty made by Seller in this Agreement;
(b) any Environmental Liabilities related to pre-Closing Environmental
Conditions including, without limitation, Environmental Liabilities related to
the matters identified on Schedule 6.05 hereto;
(c) the breach of any agreement of Seller contained in this Agreement
(but not the Related Agreements which shall stand on their own); and
(d) any liability or obligation of Seller not specifically assumed by
Buyer pursuant to this Agreement including, without limitation, any liability
relating to the actions and proceedings identified on Schedule 6.08 hereto.
13.02 INDEMNIFICATION BY BUYER. Subject to the limitations contained
in this Article XIII, Buyer will indemnify and hold Seller harmless from any
Damages arising out of:
(i) any misrepresentation contained in, omission from or breach of a
representation and warranty made by Buyer in this Agreement;
(ii) the breach of any agreement of Buyer contained this Agreement
(but not the Related Agreements, which will stand on their own);
and
(iii) the failure of Buyer to perform any obligation specifically
assumed by it pursuant to the terms of this Agreement.
13.03 CONDITIONS OF INDEMNIFICATION. The respective obligations and
liabilities of Seller and Buyer (the "Indemnifying Party"), from one to the
other (the "Indemnified Party") under Section 13.01 and Section 13.02 hereof
with respect to claims resulting from the assertion of liability by third
parties shall be subject to the following terms and conditions:
(a) within twenty (20) days after receipt of notice of commencement of
any action or the assertion in writing of any claim by a third party, the
Indemnified Party shall give the Indemnifying Party notice thereof together
with a copy of such claim, process or other legal pleading, and the
Indemnifying Party shall have the right to undertake the defense thereof by
representatives of its own choosing;
(b) in the event that the Indemnifying Party, by the 30th day after
receipt of notice of any such claim (or, if earlier, by the tenth day preceding
the day on which an answer or other pleading must be served in order to prevent
judgment by default in favor of the person asserting
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such claim), does not elect to defend such claim, the Indemnified Party will
(upon further notice to the Indemnifying Party) have the right to undertake the
defense, compromise or settlement of such claim on behalf of and for the
account and risk of the Indemnifying Party, subject to the right of the
Indemnifying Party to assume the defense of such claim at any time prior to
settlement, compromise or final determination thereof, provided that the
Indemnifying Party shall be given at least fifteen (15) days' prior notice of
the effectiveness of any such proposed settlement or compromise;
(c) anything in this Section 13.03 to the contrary notwithstanding (i)
if there is a reasonable probability that a claim may materially and adversely
affect the Indemnifying Party other than as a result of money damages or other
money payments, the Indemnifying Party shall have the right, at its own cost
and expense, to compromise or settle such claim, but (ii) the Indemnifying
Party shall not without the prior consent of the Indemnified Party, settle or
compromise any claim or consent to the entry of any judgment (i) which imposes
any restrictions of any nature on the Indemnified Party; or (ii) which does not
include as an unconditional term thereof the giving by the claimant or the
plaintiff to the Indemnified Party a release from all liability in respect of
such claim; and
(d) in connection with any such indemnification, the Indemnified Party
will cooperate in all reasonable requests of the Indemnifying Party.
13.04 CONDITIONS OF SELLER'S INDEMNIFICATION. Notwithstanding anything
in this Article XIII to the contrary, Seller shall not be obligated to
indemnify and hold harmless Buyer (i) for breaches of any of the
representations and warranties contained in Article VI hereof, other than those
contained in Section 6.05 hereof, unless the aggregate amount of Damages to
Buyer with respect thereto shall exceed $200,000, in which case Seller shall be
responsible for the full amount of such Damages, and (ii) in the case of a
breach of the representations and warranties contained in Section 6.05 hereof,
unless the aggregate amount of Damages with respect thereto shall exceed
$200,000, in which case Seller shall be responsible for the amount by which
such Damages exceed $200,000. For purposes of calculating the Damages set forth
in clauses (i) and (ii) above, Damages of less than $10,000 with respect to any
single claim and $50,000 in the aggregate with respect to all such claims, as
to clause (i) and Damages of less than $20,000 with respect to any single claim
and $50,000 in the aggregate with respect to all such claims, as to clause (ii)
shall not be counted toward the $200,000 thresholds described therein.
Notwithstanding the foregoing, the exclusions and limitations contained in this
Section 13.04 shall not apply to Damages arising in connection with Sections
3.01(b), 4.03, 4.05, 4.06, 4.07, 6.05 (with respect to the matters identified
on Schedule 6.05 hereto), 6.08 (with respect to the actions and proceedings
identified on Schedule 6.08 hereto), 6.14, 6.15, 8.06, 8.07, 8.17, 8.21, 9.04,
9.05, 9.09, 9.11, 15.01 and 15.03 hereof. The maximum liability of Seller under
this Article XIII shall not exceed the Purchase Price.
13.05 SURVIVAL OF REPRESENTATIONS. Subject as set forth below, all
representations and warranties and indemnities made by any party hereto in this
Agreement or pursuant hereto shall
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survive for a period of fifteen (15) calendar months following the Closing
Date; provided, however, that the representations and warranties of Seller
contained in (a) Section 6.05 hereof and the indemnities with respect thereto
shall survive for a period of five (5) years following the Closing Date; and
(b) Sections 8.06 and 8.21 hereof and the indemnities with respect thereto
shall survive until the expiration of the applicable tax statute of
limitations, including extensions thereof.
ARTICLE XIV
TERMINATION
14.01 TERMINATION. This Agreement may be terminated at any time prior
to the Closing Date:
(a) by Buyer, if the conditions set forth in Article X hereof shall
not have been complied with or performed in any material respect through no
fault of Buyer, and such noncompliance or nonperformance shall not have been
waived by Buyer or, cured or eliminated (or by its nature cannot be cured or
eliminated) by Seller on or before April 30, 1996.
(b) by Seller, if the conditions set forth in Article XI hereof shall
not have been complied with or performed in any material respect through no
fault of Seller, and such noncompliance or nonperformance shall not have been
waived by Seller or, cured or eliminated (or by its nature cannot be cured or
eliminated) by Buyer on or before April 30, 1996; subject, however, to the
provisions of Section 8.16 hereof; or
(c) by Buyer or Seller, in the event the Closing Date has not occurred
on or prior to the close of business on April 30, 1996; subject, however, to
the provisions of Section 8.16 hereof, or such later date as the parties hereto
may agree in writing (unless such event has been caused by the breach of this
Agreement by the party seeking such termination).
14.02 EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to Section 14.01 hereof, this Agreement shall thereafter
become void and have no effect, and no party hereto shall have any liability to
any other party hereto or its stockholders or directors or officers in respect
thereof except as provided in Sections 4.02(a) and 8.05 hereof. Notwithstanding
the foregoing, nothing herein shall relieve any party from liability for any
willful breach hereof; provided, however, that Seller's sole remedy for any
willful breach hereof by Buyer shall be limited to the termination of this
Agreement and receipt of the Deposit as liquidated damages, and not as a
penalty.
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ARTICLE XV
MISCELLANEOUS
15.01 BULK TRANSFER LAWS. Subject to the provisions of Section 13.01
hereof Buyer hereby waives compliance by Seller with any applicable "bulk
transfer" laws, including, without limitation, the bulk transfer provisions of
the Uniform Commercial Code of any state, or any similar statute, with respect
to the transactions contemplated hereby.
15.02 EXPENSES, ETC. Whether or not the transactions contemplated by
this Agreement are consummated, Seller, on the one hand, and Buyer, on the
other hand, shall not have any obligation to pay any of the fees and expenses
of the other party incident to the negotiation, preparation and execution of
this Agreement, including the fees and expenses of counsel, accountants,
investment bankers and other experts. Seller, on the one hand, and Buyer, on
the other hand, will indemnify the other and hold the other harmless from and
against any claims for finders fees or brokerage commissions in relation to or
in connection with such transactions as a result of any agreement or
understanding between such indemnifying party and any third party.
15.03 RISK OF LOSS. Prior to the Closing, the risk of loss or damage
to, or destruction of, any of the property utilized in the Business, including
the Purchased Assets, shall remain with Seller, and the legal doctrine of
equitable conversion shall not be applicable to this Agreement or to any of the
transactions contemplated hereby. Seller covenants and agrees that, in the
event of damage or destruction to any of the Purchased Assets by fire or other
casualty between the date hereof and the Closing Date, Seller shall, at its
election, (i) restore such Purchased Assets to an operating condition at least
equal to that as of the date hereof or (ii) assign to Buyer any and all
proceeds of insurance policies in respect of such damage or destruction
(whether for property damage or otherwise) and pay to Buyer the aggregate
amount of any deductibles in respect of such insurance policies (which payment
shall be made by set-off against the amount otherwise payable by Buyer to
Seller pursuant to Section 4.02(b)(iv) hereof).
15.04 EXECUTION IN COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
15.05 NOTICES. All notices, consents, elections and approvals that are
required or may be given pursuant to the term of this Agreement shall be
effective only if in writing and shall be sufficient in all respects if (i)
delivered personally, (ii) or mailed by registered or certified mail postage
prepaid, (iii) sent via a nationally recognized overnight courier or (iv) sent
via facsimile confirmed in writing to the recipient, in each case as follows:
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If to Seller, to it at: Xxxxx River Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxx X. Xxxxxxxxx, III
Vice President
Fax: 804/000-0000
with a copy to: Xxxxx River Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxxx
Associate General Counsel
Fax: 804/000-0000
If to Buyer, to it at: The Xxxxx Group, Inc.
0000 Xx. Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx Xxxxx
Chief Financial Officer
Fax: 414/000-0000
with a copy to: Xxxxxx X. Xxxxxxxx, Esq.
Box USA
000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Fax: 914/000-0000
or to such other address or addresses as Seller, on the one hand, or Buyer, on
the other hand, shall have designated by like notice to the other.
15.06 WAIVERS. Seller, on the one hand, and Buyer, on the other hand,
may, by notice to the other, (i) extend the time for the performance of any of
the obligations or other actions of the other under this Agreement; (ii) waive
any inaccuracies in the representations or warranties of the other contained in
this Agreement or in any document delivered pursuant to this Agreement; (iii)
waive compliance with any of the conditions or covenants of the other contained
in this Agreement; or (iv) waive performance of any of the obligations of the
other under this Agreement. Except as provided in the preceding sentence, no
action taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of Seller, on the one hand, and Buyer, on the
other hand, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representations, warranties, covenants or
agreements contained in this Agreement. The waiver by Seller, on the one hand,
and Buyer, on the other
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hand, of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach.
15.07 AMENDMENTS, SUPPLEMENTS, ETC. At any time this Agreement may be
amended or supplemented by such additional agreements, articles or certificates
as may be determined by the parties hereto to be necessary, desirable or
expedient to further the purposes of this Agreement, or to clarify the
intention of the parties hereto, or to add to or modify the covenants, terms or
conditions hereof or to effect or facilitate any governmental approval or
acceptance of this Agreement or to effect or facilitate the filing or recording
of this Agreement or the consummation of any of the transactions contemplated
hereby. Any such instrument must be in writing and signed by all parties.
15.08 ENTIRE AGREEMENT. This Agreement and its Exhibits and Schedules,
the Related Agreements and the documents executed on the Closing Date in
connection herewith, constitute the entire agreement among the parties hereto
with respect to the subject matter hereof and supersede all prior agreements
and understandings, oral and written, between the parties hereto with respect
to the subject matter hereof. No representation, warranty, promise, inducement
or statement of intention has been made by any party that is not embodied in
this Agreement or such other documents, and neither Seller, on the one hand,
nor Buyer and Parent, on the other hand, shall be bound by, or be liable for,
any alleged representation, warranty, promise, inducement or statement of
intention not embodied herein or therein.
15.09 AVAILABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York (to the extent not
preempted by federal law).
15.10 PUBLICITY. The parties hereto agree to cooperate in issuing any
press release or other public announcement concerning this Agreement or the
transactions contemplated hereby. Each party shall furnish to the other drafts
of all such press releases or announcements prior to their release. Nothing
contained herein shall prevent any party at any time from furnishing any
information required by law or by any Governmental Entity.
15.11 BINDING EFFECT; BENEFITS. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Notwithstanding anything contained in this
Agreement to the contrary, nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement
15.12 ASSIGNABILITV. Neither this Agreement nor any of the parties'
rights hereunder shall be assignable by any party hereto without the prior
written consent of the other party hereto. Notwithstanding the foregoing, Buyer
shall have the right to assign all or any of its rights hereunder to one or
more Affiliates of Buyer.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the parties hereto as of the date first above written.
XXXXX RIVER CORPORATION
By: /s/ Xxx X. Xxxxxxxxx, III
------------------------------
Name: Xxx X. Xxxxxxxxx, III
Title: Vice President
THE XXXXX GROUP., INC. NEWCO
By: /s/ Xxxxxx Xxxxx By /s/ Xxxxxx Xxxxxx
------------------------------- -------------------------------
Name: Xxxxxx Xxxxx Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer Title: Chief Executive Officer
Xxxxxx Xxxxxx, solely with respect
to the agreement expressed by him
in Section 4.02(d) hereof
/s/ Xxxxxx Xxxxxx
----------------------------------
Xxxxxx Xxxxxx
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