ASSET PURCHASE AGREEMENT
Asset Purchase Agreement, dated as of November 21, 1999 (the
"Agreement"), by and between Creative Expressions Group, Inc., a Delaware
corporation ("Seller"), with its principal place of business at 0000 Xxxxxxxxx
Xxxxxxx, Xxxxx 000, Xxxxxxxxxxxx, Xxxxxxx 00000, and The Xxxxx Group, Inc., a
Delaware corporation ("Buyer"), with its principal place of business at 0000
Xxxxx Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000.
RECITALS
WHEREAS, Seller is engaged in the business of marketing and selling
paper and plastic products to the party goods industry (the "Business"); and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, certain of the assets of the Business on the terms and conditions
set forth in this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties do hereby agree as
follows:
1. Purchase and Sale of Assets
1.1 Acquired Assets. On the terms and subject to the conditions of this
Agreement, Seller shall sell, transfer, assign and deliver to Buyer, and Buyer
shall purchase, acquire and accept from Seller, on an "as-is, where-is" basis
and without any representations and warranties, all of the right, title and
interest of Seller in and to (a) the intangible assets of Seller set forth on
Schedule 1.1 (the "Intangible Assets") (b) the Inventory (as hereinafter
defined) and (c) the Encumbered Inventory (as hereinafter defined)
(collectively, the "Acquired Assets").
1.2 Excluded Assets. Seller is not hereby selling, and Buyer is not
hereby purchasing, Seller's interest in any assets of Seller not set forth on
Schedule 1.1.
1.3 Transfer of Assets. (a) The transfer of the Intangible Assets and
the Inventory as contemplated by this Agreement shall be made by Seller free and
clear of all mortgages, pledges, security interests, liens, claims, charges,
liabilities, obligations and encumbrances (collectively, "Liens") of any kind or
nature whatsoever, and shall be effected by delivery to Buyer of an Assignment
and such other instruments of transfer and assignment as shall be necessary or
appropriate to transfer and assign the Intangible Assets and the Inventory to
Buyer and as shall be reasonably requested by Buyer.
(b) Except for those Liens set forth on Schedule 1.3(b), the transfer
of the Encumbered Inventory as contemplated by this Agreement shall be made by
Seller free and clear of all Liens of any kind or nature whatsoever, and shall
be effected by delivery to Buyer of such instruments of transfer and assignment
as shall be necessary or appropriate to transfer and assign the Encumbered
Inventory to Buyer and as shall be reasonably requested by Buyer.
(c) Seller shall, at any time and from time to time after the Closing
Date (as hereinafter defined), execute and deliver such other instruments of
transfer and assignment and do all such further acts and things as may be
reasonably requested by Buyer to transfer, assign
and deliver to Buyer or to aid and assist Buyer in collecting and reducing to
possession, any and all of the Acquired Assets, or to vest in Buyer good and
valid title to the Acquired Assets.
1.4 No Assumption of Liabilities. Except for those obligations, debts,
claims or liabilities set forth on Schedule 1.4 (the "Assumed Liabilities"), by
executing this Agreement and acquiring the Acquired Assets in the manner
contemplated hereunder, Buyer in no way assumes or becomes liable for any
obligation, debt, claim or liability of Seller.
2. Purchase Price and Payment; Allocation; Closing
2.1 Purchase Price and Payment. The aggregate purchase consideration
for the Acquired Assets (the "Purchase Price") shall be $41 million, payable to
Seller or its designee(s) as follows:
(a) Upon execution of this Agreement, Buyer shall make a contract
deposit having an agreed aggregate value of $3,612,602.38 as follows:
(i) $3,081,042.65 by canceling that certain Restated and
Amended Promissory Note, dated March 12, 1998, made by Seller
in favor of Buyer, in the original principal amount of $2.6
million and having an outstanding principal balance in such
amount as of the date hereof; and
(ii) $531,559.73 by canceling those certain warrants issued on
March 12, 1998 by Seller to Buyer for the purchase of 3.065
shares of common stock, par value $.01 per share, of Seller;
(b) At the Closing, in exchange for the assignment and transfer to
Buyer of the Intangible Assets, Buyer shall pay and deliver to Seller aggregate
consideration having an agreed aggregate value of $16 million as follows:
(i) cash in the amount of $12 million; and
(ii) $4 million by Buyer assigning to Seller, pursuant to
documentation reasonably satisfactory to Seller in form and
substance, that certain Promissory Note, dated March 24, 1998,
made by Cellu Tissue Corporation Natural Dam in favor of
Buyer, in the original principal amount of $3.75 million; and
(c) From time to time, but no later than sixty (60) days following the
Closing Date, Buyer shall pay the aggregate sum of $21,387,397.62 as follows:
(i) as Buyer purchases the Inventory, cash in the
aggregate amount of $16,387,397.62; and
(ii) when Buyer purchases the Encumbered Inventory, $5
million by the assumption by Buyer of the Assumed
Liabilities.
For purposes hereof, "Inventory" shall mean the first $20
million in book value of inventory acquired by Buyer, and "Encumbered Inventory"
shall mean the remaining $5 million in book value of inventory acquired by
Buyer, which Encumbered Inventory shall be acquired on the date on which Buyer
assumes the Assumed Liabilities and shall be subject to the Liens set forth on
Schedule 1.3(b).
2.2 Allocation of Purchase Price. Seller and Buyer agree to allocate
the Purchase Price among the Acquired Assets for all purposes (including
financial accounting and tax purposes) in accordance with the allocation
schedule attached hereto as Schedule 2.2.
2.3 Consummation of Transactions. The consummation of the transactions
provided for in Section 2.1(a) of this Agreement shall take place on the date
hereof. The consummation of the transactions provided for in Section 2.1(b) of
this Agreement (the "Closing") shall take place on December 3, 1999, or such
other date or time as may be fixed by mutual agreement of the parties (the
"Closing Date"). The consummation of the transactions provided for in Section
2.1(c) of this Agreement shall take place within sixty (60) days following the
Closing Date.
3. Satisfaction of Seller Trade Payables
3.1 Additional Assets. Following the indefeasible payment in full of
all Obligations (as defined in Amendment No. 3, dated September 21, 1999, to the
Revolving Credit, Term Loan and Security Agreement, dated as of March 12, 1998,
among Seller, the lenders named therein and PNC Bank, National Association, as
agent) and the indefeasible payment in full of all obligations of Seller to
Albion Alliance Mezzanine Fund, L.P., The Equitable Life Assurance Society of
the United States, and Cellu Tissue Holdings, Inc., respectively, and provided
that Buyer is not in default of any of its obligations under this Agreement, if
there shall be any outstanding trade payables (the "Seller Trade Payables") owed
to Buyer by Seller, Buyer shall at any time thereafter have the right, in its
sole discretion, to take possession of any current assets or non-current assets
of Seller (the "Additional Assets") in satisfaction of the Seller Trade
Payables; provided, however, that the aggregate value of the Additional Assets
shall not exceed the total amount of Seller Trade Payables.
3.2 Valuation. For purposes of computing the value of the Additional
Assets, current assets of Seller shall be valued at book value and non-current
assets of Seller shall be valued at appraised value.
4. Miscellaneous
4.1 Bulk Sales Laws. Buyer hereby waives compliance with the provisions
of any bulk transfer laws applicable to the transactions contemplated by this
Agreement. Seller agrees promptly and diligently to pay and discharge when due
or to contest or litigate all claims of creditors that are asserted against
Buyer by reason of any non-compliance with such laws.
4.2 Modifications. There can be no waiver of any of the terms and
conditions of this Agreement or any amendment hereof except as expressly set
forth in a writing signed by an authorized representative of Buyer and Seller.
No course of dealing and no trade custom shall be deemed to modify this
Agreement, and Seller's acknowledgment or confirmation of any writing from Buyer
which is in conflict with the terms and conditions hereof shall not constitute a
modification of this Agreement.
4.3 Survival. The provisions of this Agreement shall survive the
Closing and the delivery of the Assignment and any other instruments of
transfer, conveyance or assignment covering the Acquired Assets.
4.4 Governing Law. The laws of the State of New York, irrespective of
its choice of law principles, will govern the validity of this Agreement, the
construction of its terms and the interpretation and enforcement of the rights
and duties of the parties hereto.
4.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be an original as regards any party whose
signature appears thereon and all of which together will constitute one and the
same instrument.
4.6 Severability. If any provision of this Agreement, or the
application thereof, will for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances will be interpreted so as reasonably to effect
the intent of the parties hereto. The parties further agree to replace such void
or unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the greatest extent possible, the economic,
business and other purposes of the void or unenforceable provision.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
THE XXXXX GROUP, INC.
By: /s/ Xxxx X. Xxxxxxx
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Name:
Title:
CREATIVE EXPRESSIONS GROUP, INC.
By: /s/ Xxxx X. Xxxxxxx
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Name:
Title:
