FIRST AMENDMENT TO THE
ASSET PURCHASE AGREEMENT
BETWEEN XXXXX RIVER PAPER COMPANY, INC.
AND THE XXXXX GROUP, INC. AND NEWCO DATED MARCH 22, 1996
This First Amendment ("First Amendment") to the Asset Purchase Agreement
between Xxxxx River Paper Company, Inc. and The Xxxxx Group, Inc. and Newco
dated March 22, 1996 (the "Agreement"), dated May 6, 1996, is agreed between
the Xxxxx River Paper Company, Inc. ("Xxxxx River"), The Xxxxx Group, Inc.
("Xxxxx") and Creative Expressions Group, Inc., formerly known as Creative
Expressions, Inc. and referred to in the Agreement as Newco ("Creative
Expressions") and sets forth modifications to the Agreement intended by the
parties, and other than as expressly set forth herein, the Agreement is hereby
ratified and confirmed and shall remain unchanged in all other respects.
The parties hereto agree as follows:
1. Article 1.01 shall be modified by the insertion of new definitions as
follows:
"Deferred Licensed Inventory" shall have the meaning set forth in Article
4.02(e)."
"Deferred Real Property" shall have the meaning set forth in Article 4.02(f)."
"Long Beach Lease" shall mean a lease dated January 29, 1988 between Xxxxx
River-Norwalk, Inc. as Lessee, predecessor in interest to Xxxxx River Paper
Company, inc. and Xxxxxxx X. XxXxxxxx as Lessor, for property and plant located
at 00000 Xxxxxx Xxxx, Xxxxxx Xxxxxxxxx, Xxxxxxxxxx, as amended from time to
time in which is located the Long Beach Business."
2. The definition of "Inventory" shall be modified by the revision of the
second sentence in such definition as follows:
"Notwithstanding the foregoing, the term Inventory shall not include in respect
of the Long Beach Business (i) roll stock and work in progress at Long Beach
held for production of, and finished, colored napkins and (ii) finished goods
and work in progress relating to the Club Business products (the "Excluded
Inventory")."
3. Article 3.01(a)(ii) shall be modified by the insertion after the words "any
other lease", a parenthetical as follows:
"(other than the Long Beach Lease)"
4. Article 4.02(b) (i) is modified to provide for a $7,000,000 Senior
Subordinated Note in the form of Exhibit C. Exhibit C is modified to provide
for an interest rate of 10 percent per annum and to permit deferral of interest
payments for four years instead of five.
5. Article 4.02 (b) (ii) is modified to provide for a $2,000,000 Senior
Subordinated Note in the form of Exhibit D.
6. Article 4.02(b)(iv)(x) is modified by the insertion of the following words
after "Audited Financial Statements":
"less the book value of the Deferred Real Property"
7. Article 4.02(b)(iv)(x)(2) is modified by the insertion of the following
language after the words "Audited Financial Statements":
"less the total value of the Deferred Licensed Inventory"
8. Article 4.02 is modified by the insertion of a new subarticle (e) as
follows:
"(e) There shall be deducted from the amount called for in Article 4.02(b)(iv)
an amount (the "Deferred License Inventory Amount") equal to Seller's book
value of the CEG Inventory on the Closing Date of those products for which
Seller has been unable as of the Closing Date to provide a licensor's written
consent ("Licensor Consent") to the assignment to Buyer of the applicable
License Agreement identified on Schedule 6.12 to this Agreement (the "Deferred
Licensed Inventory"). These amounts, listed specifically by licensor on
Schedule 4.02(e), shall be paid by Buyer to Seller in immediately available
funds thirty days after Seller produces to Buyer the respective Licensor's
Consent. Seller shall diligently pursue the assignments of such licenses and
Buyer shall do nothing to interfere with the Seller's efforts, and shall
cooperate in any reasonable manner in such pursuit. Seller shall have no
authority to commit Buyer to any changes in the terms of any such license. No
action by the Buyer, such as discontinuance of the designs in question,
disposal of such Deferred Licensed Inventory, or other decision which Buyer may
make in regards to the Deferred Licensed Inventory shall diminish the payments
called for herein. Any Deferred Licensed Inventory for which Seller is unable
to produce a Licensor's Consent during the term of the respective license shall
be deducted from the Purchase Price."
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9. Article 4.02 is further modified by the insertion of a new Sub Article (f)
as follows:
"(f) As called for in Article 4.02(b)(iv)(x), on the Closing Date there shall
be deducted from the Purchase Price the sum of Six Hundred Thirty Thousand
Dollars and No Cents ($630,000.00) which is Seller's book value of Parcels II,
III, IV and V shown on the Survey of property located in Indianapolis, Indiana
prepared by Xxxxxx X. Xxxxxxx, Inc. (the "Deferred Real Property") delivered
pursuant to this Agreement by Seller to Buyer. Buyer hereby agrees to accept a
Special Warranty Deed in the form attached hereto as Exhibit S conveying the
Deferred Real Property and to pay to Seller the sum of Five Hundred Thousand
Dollars and No Cents ($500,000.00) in immediately available funds within thirty
days after Seller has provided to Buyer reasonable evidence that it has
complied with the obligations undertaken by Seller in Article 6.05(b). This
obligation shall survive this Agreement indefinitely."
10. Intentionally omitted.
11. Article 5.01 is amended to insert after the last word of the first sentence
in such Article:
" a Sandwich Bag Supply Agreement ("Sandwich Bag Agreement") substantially in
the form of Exhibit N hereto; a Consigned Inventory Agreement ("Consigned
Inventory Agreement") substantially in the form of Exhibit O hereto; a Printed
Plate Stock Supply Agreement ("Plate Agreement") substantially in the form of
Exhibit P hereto; an Immunity From Suit statement from Xxxxx River Paper
Company, Inc. to Creative Expressions substantially in the form of Exhibit Q
hereto"; a Napkin Supply Agreement ("Napkin Agreement") substantially in the
form of Exhibit R hereto; a deed to the Deferred Real Property ("Deferred
Property Deed") substantially in the form of Exhibit S hereto; and a Lease for
the Deferred Real Property in the form of Exhibit T hereto."
12. Article 6.05 is amended to redesignate the existing Article 6.05 as Article
6.05(a) and to insert a new Article 6.05(b) as follows:
"Seller hereby agrees to remove from the Deferred Real Property three gasoline
tanks and one heating fuel oil tank as described in an ENSR Report to Seller
and to remediate soil and/or water contamination associated with those tanks
and the "stained soil" north and east of the auto body shop and east of The
Gold Warehouse in said report to reasonable compliance with Environmental Laws
("Completion"). Such removal and remediation shall be commenced within sixty
days of the Closing and shall be conducted diligently by the Seller until
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Completion. Seller shall bear all costs and expenses and Environmental
Liabilities arising from the activities set forth in this Article 6.05(b)."
13. Article 8.22 is added as an amendment to Article 8 as follows:
"8.22 Use of Xxxxx River Names (a) On or before 180 days following the Closing,
Buyer (i) remove all names, logos or marks which include the words "Xxxxx
River", "Xxxxx River Corporation", "Dixie" "JR", or "JRC" (the "Designations")
from or render the same illegible on all dyes, molds and printing plates used
by Buyer or their successors or assigns, and shall discontinue production of
any asset or any material bearing those Designations. Buyer shall be permitted
to use the Designations with respect to packaging, Inventory or
work-in-progress or finished goods on which such Designations are imprinted or
affixed up to and including the day preceding the second anniversary of the
Closing. Buyer shall use reasonable efforts to sell such Inventory within
twenty-four months of the Closing. At the end of the twenty-four month period,
an executive officer of Buyer shall notify Seller that the obligations set
forth herein regarding the Designations have been met. Except as expressly
permitted in this Article 8.22, neither Buyer nor any of its affiliates shall
use the Designations or any confusingly similar xxxx or name; (b) the license
granted herein shall be royalty-free and non-exclusive and shall be limited to
those products which bear or upon which production equipment prints the
Designations as of the Closing; (c) Seller shall have the right to control the
quality of all the products with which the either licensee uses each xxxx and
both licensees agree that the standard of quality for such products shall equal
or exceed the standard of quality for such products at the date of the Closing;
(d) Seller shall have the right to make reasonable inspections of the processes
and materials of manufacture used by either licensee from time to time to
assure the consistent level of quality required hereby; (e) Buyer hereby agrees
that nothing herein shall grant to Buyer any right, title or interest in the
trademarks and designations subject to this license and that any goodwill
resulting from or relating to use of the marks shall inure to the benefit of
Seller; (f) if, in its reasonable judgment, Seller determines that Buyer or its
successors or permitted assigns have failed to maintain the quality standards
called for herein, Seller shall give Buyer notice of breach, and if within
thirty days the breach has not been cured, Seller may terminate the license
granted herein without further notice; (g) the licenses granted herein shall
not be assigned, transferred or sublicensed without the express prior written
approval of Seller, which may be withheld in its sole discretion; provided,
however, that Seller hereby consents to the assignment of the licenses granted
hereby to each of The CIT Group/Credit Finance, Inc. and the IBJ Xxxxxxxx Bank
& Trust Company, as Agent, and on the condition that such assignees, and any of
their respective further assignees (which further assignments shall be subject
to Seller's prior written approval) shall agree in writing to be bound by the
terms set forth herein."
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14. Article 9.01 is revised to read:
"9.01 Transferred Employees. Attached hereto as Schedule 9.01(a) is a list of
employees who are employed by Seller engaged in the operations of the Business,
as of the most recent date preceding this Agreement. 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 elect in its sole discretion. Prior to the Closing, Buyer shall provide
to Seller a list of inactive union employee and active non-union employees to
whom Buyer does not intend to offer employment, and such list shall be attached
hereto as Schedule 9.01(b). Seller shall provide to Buyer a list of all union
and non-union employees engaged in the operations of the Business as of the
Closing and delete therefrom those employees set forth on Schedule 9.01(b), and
the resulting list shall be attached hereto as Schedule 9.01(c). The employees
who appear on Schedule 9.01(c) shall become employees of Buyer as of the
Closing and are hereinafter referred to as "Transferred Employees". Any
employee engaged in the operations of the Business who is inactive as of the
Closing shall become a Transferred Employee as of the date such employee
commences active employment with Buyer, which decision shall be and in all
respects is within the discretion of 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 any Transferred Employee. Notwithstanding the
foregoing, Seller shall have the right to employ any non-union employee who is
not set forth on Schedule 9.01(C).
15. Article 9.05 (b) is revised by the insertion of a new sentence as follows:
"Buyer shall not impose on Transferred Employees pre-existing condition
provisions, proof of insurability requirements, or any similar conditions or
requirements which would delay commencement of Transferred Employees'
participation in or limit Transferred Employees' level of coverage under any of
Buyer's welfare benefit plans (within the meaning of Article 3 (1) of ERISA)."
16. Article 12.03 shall be modified by the addition of a new sub Article
12.03(xiii) as follows:
"(xiii) an executed lease in the form attached herto as Exhibit T"
17. All references in Article 14.01 to April 30, 1996 shall be changed to May
31, 1996.
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18. The parties acknowledge that Creative Expressions have only recently
changes its corporate name from Creative Expressions, Inc. to Creative
Expressions Group, Inc. and agree that all documents making reference to, or
executed by, "Creative Expressions, Inc." shall equally refer to, and be deemed
to have been executed in the name of, "Creative Expressions Group, Inc.".
19. The name Xxxxx River Corporation appearing in the signature block on the
signature page of the Asset Purchase Agreement is intended to mean and to refer
to Xxxxx River Paper Company, Inc. and is hereby replaced by the name Xxxxx
River Paper Company, Inc."
20. The Closing shall be deemed to have occurred as of 11:59 P.M. eastern
daylight savings time on, and the Closing Date shall be deemed to be, May 5,
1996.
In all other respects, the Asset Purchase Agreement is ratified and confirmed
and remains unchanged.
The Xxxxx Group, Inc. Xxxxx River Paper Company, Inc.
By /s/ Xxxxxx Xxxxx By /s/ Xxx X. Xxxxxxxxx, III
-------------------------------- --------------------------------
Xxxxxx Xxxxx Xxx X. Xxxxxxxxx, III
Title: Executive Vice President Title: Vice President
Creative Expressions Group, Inc.
By /s/ Xxxxxx Xxxxx
--------------------------------
Xxxxxx Xxxxx
Title: Executive Vice President
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