EXHIBIT 2.1
PARTNERSHIP INTEREST SALE AGREEMENT
AGREEMENT dated as of October 15, 1997 by and among Dow Xxxxx
Virginia Company, Inc., a Delaware corporation ("DJ"), Newsprint, Inc.,
a Virginia corporation ("Newsprint") (each of DJ and Newsprint
sometimes being referred to herein as a "Selling Partner" and sometimes
being collectively referred to as the "Selling Partners"), and
Xxxxx-Xxxxx Industries, Inc., a Delaware corporation ("Xxxxx-Xxxxx").
WHEREAS, the Selling Partners are the sole limited partners in
Bear Island Paper Company, L.P., a Virginia limited partnership (the
"Partnership"), and parties to the Limited Partnership Agreement (the
"Limited Partnership Agreement") dated as of May 18, 1978, as amended,
among the Selling Partners and Xxxxx-Xxxxx; and
WHEREAS, each of the Selling Partners desires to sell its entire
partnership interest (the "Partnership Interest") in the Partnership to
Xxxxx-Xxxxx, and Xxxxx-Xxxxx desires to purchase such Partnership
Interests on the terms provided for herein.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, intending to be legally bound hereby, the parties
agree as follows:
I. SALE OF PARTNERSHIP INTERESTS
1.1 Partnership Interests. Subject to the terms and
conditions of this Agreement, at the Closing provided for herein each
of the Selling Partners agrees to sell, transfer and convey its entire
Partnership Interest to Xxxxx-Xxxxx, and Xxxxx-Xxxxx agrees to purchase
from each of the Selling Partners such Partnership Interest.
1.2 Consideration. (a) Subject to the terms and
conditions of this Agreement, and in reliance upon the representations,
warranties and agreements of the parties contained herein, and in
consideration of the sale and transfer of the Partnership Interest by
each of the Selling Partners to Xxxxx-Xxxxx, Xxxxx-Xxxxx shall pay at
Closing to each Selling Partner the sum of (i) the amount that each
Selling Partner would receive if the Partnership's Enterprise Value (as
defined below) were distributed as follows: (A) of the first
$48,765,000 of Enterprise Value, each of the Selling Partners would
receive $16,841,000; (B) of the next $39,658,000 of Enterprise Value,
each of the Selling Partners would receive $16,725,000; and (C) of the
remaining portion of Enterprise Value, each of the Selling Partners
would receive 35% (the "Partnership Percentage") of such remaining
portion; and (ii) the Additional Amount, defined in (c) below.
(b) The Partnership's Enterprise Value shall be equal to
(A) $255 million less (B) the sum of $47,776,594 and the amount of any
prepayment penalties paid by the Partnership pursuant to Sections 6.03
and 6.04 of the Indenture of Mortgage and Deed of Trust between the
Partnership and Sovran Bank, N.A. dated October 15, 1987 as a result of
the prepayment of the amount outstanding under such credit agreement
(the "Long-Term Debt") on the Closing Date. For purposes of
determining the amounts to be paid on the Closing Date, the amount of
such prepayment penalties shall be estimated in good faith by the Chief
Financial Officer of the Partnership.
(c) The Additional Amount for each Selling Partner shall
be an amount equal to 35% of the net income (but not net loss, if any)
of the Partnership for the period from June 1, 1997 through the Closing
Date and for purposes of determining the amounts to be paid on the
Closing Date shall be as estimated in good faith by the Chief Financial
Officer of the Partnership. The net income of the Partnership for such
period shall be determined in accordance with generally accepted
accounting principles, as applied consistent with the past practices of
the Partnership as applied to interim periods.
(d) The aggregate of the amounts referred to in Section
1.2(a) shall be paid to the Selling Partners at the Closing in
immediately available funds.
1.3 Closing Statement. (a) Not later than thirty (30)
days following the Closing Date, Xxxxx-Xxxxx shall deliver to each of
the Selling Partners a statement (the "Closing Statement"), which
Closing Statement shall include (i) the amount of net income of the
Partnership for the period from June 1, 1997 through the Closing Date,
(ii) a calculation of the Additional Amount, and (iii) the amount of
any prepayment penalty paid by the Partnership as a result of the
prepayment of the Long-Term Debt. The Closing Statement shall be
certified by the Chief Financial Officer of the Partnership and shall
be accompanied by such work papers and other relevant documents
relating to its preparation as the Selling Partners may reasonably
request.
(b) If the Selling Partners are both in agreement with
the amounts shown in the Closing Statement, any difference between the
amounts paid on the Closing Date and the amounts which would have been
paid on the Closing Date had the amounts shown in the Closing Statement
been used to compute the amounts paid on the Closing Date shall be paid
in immediately available funds by the party or parties from whom such
payment is owing to the other party or parties within two (2) business
days of the delivery of the Closing Statement. However, in the event
that one or both of the Selling Partners does not agree with the
amounts shown in the Closing Statement, such Selling Partner or
Partners, on the one hand, and Xxxxx-Xxxxx, on the other hand, shall
jointly appoint an independent accounting firm to arbitrate the
dispute. Xxxxx-Xxxxx, on the one hand, and the disputing Selling
Partner or Selling Partners, on the other hand, shall bear equally the
cost of retaining such accounting firm. The parties shall use their
best commercially reasonable efforts to resolve any such dispute within
thirty (30) days following the delivery of the Closing Statement. The
determination of the accounting firm shall be final and binding on all
parties. Any adjustment required as a consequence of the arbitration
shall be paid in immediately available funds within one (1) business
day of the termination of the arbitration.
1.4 Fair Value. The Selling Partners agree that the
consideration referred to in Section 1.2 above represents the fair
value of the Partnership Interests. Each of the Selling Partners
hereby expressly agrees and acknowledges that it shall not receive and
is not entitled to receive any further payments of any kind from the
Partnership or its partners.
II. CLOSING
2.1 Closing. Subject to the terms and conditions of this
Agreement, the closing of the transactions contemplated hereby (the
"Closing") shall occur at the offices of Skadden, Arps, Slate, Xxxxxxx
& Xxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, xx the day that is
two (2) business days following the satisfaction of the conditions to
Closing set forth in Article VI of this Agreement, or at such other
time and place as the parties may agree (the "Closing Date"), but in no
event shall the Closing occur after 5:00 p.m. (Eastern Standard Time)
on January 31, 1998.
2.2 Restructuring. Prior to the purchase of the
Partnership Interests pursuant to this Agreement, Xxxxx-Xxxxx may elect
to (i) transfer its interest in the Partnership to a limited liability
company wholly-owned by Xxxxx-Xxxxx, and/or (ii) convert the
Partnership from a limited partnership to a limited liability company
(collectively, the "Restructuring"). The Selling Partners will
reasonably cooperate with Xxxxx-Xxxxx and take any actions that
Xxxxx-Xxxxx may reasonably request in order to implement the
Restructuring, provided, that the Selling Partners will not be required
to take any actions that might adversely affect them or their
Partnership Interests, provided further that if any actions required to
be taken by the Selling Partners might be adverse, but not materially
adverse, the Selling Partners will take such actions if, prior to
taking such actions, they are fully indemnified by Xxxxx-Xxxxx to the
Selling Partners' satisfaction for any adverse consequences of such
actions. If Xxxxx-Xxxxx elects to proceed with the Restructuring, the
Restructuring will occur and become effective concurrently with, or
immediately prior to, the Closing.
2.3 Tax Certificate. Each of the Selling Partners shall
deliver to Xxxxx-Xxxxx at the Closing a certificate of such Selling
Partner's non-foreign status which complies with the requirements of
Section 1445 of the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations promulgated thereunder.
III. REPRESENTATIONS OF THE SELLING PARTNERS
Each of the Selling Partners hereby severally, but not
jointly, represents and warrants to Xxxxx-Xxxxx as follows:
3.1 Ownership of the Partnership Interest. Such Selling
Partner has the complete and unrestricted power, and the unqualified
right to sell, assign, transfer and deliver to Xxxxx-Xxxxx, good and
valid title to its Partnership Interest, free and clear of all liens,
claims, options, charges and encumbrances whatsoever (individually, an
"Encumbrance"), except any Encumbrance that may have resulted from any
liability of the Partnership. Evidence of the authority of each
Selling Partner to enter into this Agreement has been, or will be,
separately delivered to Xxxxx-Xxxxx, such evidence being certified
resolutions properly adopted by the Board of Directors and
shareholders, respectively, of such Selling Partner.
3.2 Valid and Binding Agreement. This Agreement
constitutes the valid and binding agreement of such Selling Partner,
enforceable in accordance with its terms. The officer signing on
behalf of such Selling Partner has the necessary corporate authority to
do so. No consent or approval of any court, governmental agency
(foreign, federal or state), or any other person or entity is required
in connection with the execution or consummation of the transactions
contemplated herein to permit such Selling Partner to carry out its
obligations hereunder.
3.3 No Violation. The execution, delivery and
performance of this Agreement by such Selling Partner will not (i)
result in a breach of any of the terms or provisions of, or constitute
a default under, the certificate of incorporation or by-laws of such
Selling Partner or any indenture or other agreement or instrument to
which such Selling Partner is a party, (ii) constitute a default under
any mortgage, deed of trust, or other encumbrance to which such Selling
Partner or its property is subject, or (iii) conflict with, or result
in a breach of, any law, order, judgment, decree or regulation binding
on such Selling Partner.
3.4 Selling Partner's Knowledge. As of the date hereof,
such Selling Partner has no actual knowledge of any material breach of
any representation or warranty of Xxxxx-Xxxxx set forth in this
Agreement.
IV. REPRESENTATIONS OF XXXXX-XXXXX
Xxxxx-Xxxxx hereby represents and warrants to each of the
Selling Partners as follows:
4.1 Valid and Binding Agreement. This Agreement
constitutes the valid and binding agreement of Xxxxx-Xxxxx, enforceable
in accordance with its terms. The officer signing on behalf of
Xxxxx-Xxxxx has the necessary corporate authority to do so. No consent
or approval of any court, governmental agency (foreign, federal or
state), or any other person or entity is required in connection with
the execution or consummation of the transactions contemplated herein
to permit Xxxxx-Xxxxx to carry out its obligations hereunder.
4.2 No Violation. The execution, delivery and
performance of this Agreement by Xxxxx-Xxxxx will not (i) result in a
breach of any of the terms or provisions of, or constitute a default
under, the certificate of incorporation or by-laws of Xxxxx-Xxxxx or
any indenture or other agreement or instrument to which Xxxxx-Xxxxx is
a party, (ii) constitute a default under any mortgage, deed of trust,
or other encumbrance to which Xxxxx-Xxxxx or its property is subject,
or (iii) conflict with, or result in a breach of, any law, order,
judgment, decree or regulation binding on Xxxxx-Xxxxx.
4.3 Financial Statements. To the knowledge of
Xxxxx-Xxxxx, the unaudited balance sheet of the Partnership as of May
31, 1997, the related statements of income, changes in partners' equity
and cash flow and internal management accounts or reports for the
period (collectively, the "Interim Financial Statements"), and the
audited balance sheets of the Partnership as of December 31, 1996 and
1995, and the related statements of income, changes in partners' equity
and cash flows for the years then ended, including any footnotes
thereto (collectively, the "Financial Statements"), fairly present in
all material respects the financial position of the Partnership as of
the dates indicated and the results of its operations and cash flows
for the periods indicated, and, in the case of the Interim Financial
Statements, subject to normal year-end adjustments which, to the
knowledge of Xxxxx-Xxxxx, are not expected to be material. To the
knowledge of Xxxxx-Xxxxx, the Interim Financial Statements and the
Financial Statements have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the
periods covered thereby and in accordance with the books and records of
the Partnership maintained in accordance with historical practice
(except that the Interim Financial Statements do not contain footnote
disclosure that otherwise would be required by generally accepted
accounting principles).
4.4 Disclosure. To Xxxxx-Xxxxx'x knowledge, none of the
documents or materials set forth on Schedule 4.4 to this Agreement,
which have been furnished to the Selling Partners in connection with
the consummation of the transactions contemplated by this Agreement
contains any untrue statement of a material fact by the Partnership or
omits to state a material fact necessary in order to make statements
contained herein or therein, in light of the circumstances in which
they were made, not misleading. As of the date of this Agreement,
there is no fact which Xxxxx-Xxxxx has not disclosed to either of the
Selling Partners and of which Xxxxx-Xxxxx has knowledge which
materially positively affects, or could reasonably be expected to
materially positively affect, the business or assets of the Partnership
or the operations, financial condition or prospects of the Partnership;
it being understood that for purposes of such representation,
Xxxxx-Xxxxx shall be deemed to have disclosed, and the Selling Partners
shall be deemed to have possession and otherwise be aware of, all
information relating to the paper and newsprint industries generally,
and to general economic conditions, which would reasonably be expected
to be known by participants in such industries or is otherwise
generally publicly available. Xxxxx-Xxxxx has furnished to the Selling
Partners all material information relating to offers made by third
parties to acquire the Partnership Interests or all or a material
portion of the assets of the Partnership.
4.5 Conduct of Business. Since May 31, 1997, the
Partnership has not taken, and Xxxxx-Xxxxx has not caused the
Partnership to take, any actions outside the ordinary course of
business or inconsistent with past practices, except as contemplated by
this Agreement, including but not limited to the following:
(a) the creation, incurring or assumption of any debt,
liability or obligation, direct, indirect, whether accrued, absolute,
contingent or otherwise, relating to the business of the Partnership,
and which is material to the business of the Partnership;
(b) with respect to any executive officer of the
Partnership, other than in the ordinary course of business (i) any
increase in the rate or terms of compensation payable or to become
payable, (ii) the payment or agreement to pay any pension, retirement
or other employee benefit nor required by any existing plan, agreement
or arrangement, or (iii) the commitment to any additional pension,
bonus, incentive, deferred compensation or other employee benefit plan,
agreement or arrangement, or the increase in the rate or terms of any
such plan, agreement or arrangement which currently exists;
(c) the waiver or release of any material right of value
relating to the business of the Partnership;
(d) the alteration of, or increase in services provided
under, any maintenance or service agreement of the Partnership, other
than in the ordinary course of business, consistent with the past
practices of the Partnership;
(e) the acceleration of any expense of the Partnership;
(f) any expenditure of capital relating to the business
of the Partnership, other than in the ordinary course of business,
consistent with the past practices of the Partnership;
(g) any material alteration in the manner of keeping the
books, accounts or records of the Partnership, or in the accounting
practices therein reflected, except as required by law or generally
accepted accounting principles; or
(h) any agreement to take any of the foregoing actions.
V. RELATED MATTERS; COVENANTS
5.1 Funding. Xxxxx-Xxxxx shall use its best commercially
reasonable efforts to obtain the funds necessary to consummate the
transactions contemplated by this Agreement. Xxxxx-Xxxxx shall provide
the Selling Partners with written or oral weekly progress reports as to
the status of the potential financing and shall appropriately respond
to any questions that the Selling Partners may have with respect to
such financing. In addition, Xxxxx-Xxxxx shall cooperate and use
reasonable efforts in making available to the Selling Partners
representatives of the Toronto Dominion Bank, TD Securities (U.S.A.),
Inc., Salomon Brothers, Inc and Xxxx Xxxxxxx Life Insurance Company
(the "Prospective Lenders"), subject to the availability of such
representatives, to discuss the status of the financings and to
appropriately respond to any questions that the Selling Partners may
have with respect to such financings at such times as either of the
Selling Partners may reasonably request. Xxxxx-Xxxxx also shall
promptly provide the Selling Partners with copies of any documents
relating to the financing, or current drafts thereof, provided to or by
any of the Prospective Lenders as the Selling Partners may reasonably
request.
5.2 Transfer Taxes. Xxxxx-Xxxxx shall be responsible for
the payment, if any, of 50 percent (50%) of all sales, use, transfer,
recording, ad valorem and other similar taxes and fees attributable to
the sale of the Selling Partners' Partnership Interests hereunder, and
the remaining 50 percent (50%) of any such taxes or fees shall be paid
by the Selling Partners.
5.3 Conduct of Business. The parties agree that the
business of the Partnership shall be conducted in the ordinary course
and consistent with past practices in all material respects between the
date hereof and the Closing Date and that during such period
Xxxxx-Xxxxx shall not cause or permit the Partnership to take any of
the actions set forth in Section 4.5. The Selling Partners shall not
take any action that may have the effect of causing a dissolution of
the Partnership.
5.4 Distributions. Xxxxx-Xxxxx shall not permit the
Partnership to make any distributions, in cash or kind, to either
Selling Partner or to Xxxxx-Xxxxx, or to any of their respective
affiliates, between the date hereof and the Closing Date.
5.5 No Dispositions. The Selling Partners shall not, nor
shall they enter into any agreement (other than this Agreement) to,
directly or indirectly, sell, convey, pledge, encumber, assign or
otherwise transfer in any manner all or any portion of the Partnership
Interests prior to the Closing or termination of this Agreement.
5.6 Section 754 Election. Each of the Selling Partners
acknowledges that the Partnership or its successor intends to make an
election pursuant to Section 754 of the Internal Revenue Code of 1986,
as amended (the "Election"), to step up the basis of Partnership assets
as a result of the sale of the Selling Partners' Partnership Interests
and agrees to cooperate with the Partnership in making such election
by, among other things, providing to the Partnership such information
as is necessary to enable the Partnership to determine the basis of its
assets following the Election.
5.7 Fees and Expenses. The parties hereto shall bear
their own respective fees and expenses incurred in connection with the
preparation for and consummation of the transactions contemplated by
this Agreement. None of the fees or expenses that may be incurred by
the parties hereto in connection with this Agreement or obtaining the
financing for the purchase of the Selling Partners' Partnership
Interests (such as any third party costs of environmental due diligence
and costs of accountants and counsel, including those of the
Partnership) shall be borne by the Partnership.
5.8 Long-Term Debt Repayment. Xxxxx-Xxxxx shall take all
actions necessary to prepay the Long-Term Debt contemporaneously with
the Closing.
5.9 Xxxx-Xxxxx-Xxxxxx. Each of the parties will file any
Notification and Report Forms and related material that it may be
required to file with the Federal Trade Commission and the Antitrust
Division of the United States Department of Justice under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and will use all commercially reasonable efforts to obtain
an early termination of the applicable waiting period, and will make
any further filings pursuant thereto that may be necessary or advisable
in connection therewith.
VI. CONDITIONS TO CLOSING
6.1 Conditions to Obligations of the Selling Partners.
The obligations of the Selling Partners to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction on
or prior to the Closing Date of the following conditions:
(a) the representations and warranties of Xxxxx-Xxxxx
contained herein shall be true and accurate in all material respects on
the date of this Agreement and on the Closing Date;
(b) Xxxxx-Xxxxx shall have performed in all material
respects all the covenants and agreements required to be performed by
it prior to the Closing Date;
(c) no order or injunction of any court or governmental
authority shall be in effect which shall restrain, enjoin or otherwise
prevent the consummation of any of the transactions contemplated
hereby, and all applicable waiting periods (and any extensions thereof)
under the HSR Act shall have expired or otherwise been terminated;
(d) the transactions contemplated by the Timberlands
Partnership Interest Sale Agreement of even date herewith by and among
the Selling Partners and Xxxxx-Xxxxx shall be closed contemporaneously;
(e) each of the Selling Partners shall have received
evidence in a form and substance reasonably satisfactory to it that it
has been released of any and all guaranties made by it in connection
with the Partnership; and
(f) Xxxxx-Xxxxx shall have caused the Long-Term Debt to
have been contemporaneously repaid.
6.2 Conditions to Obligations of Xxxxx-Xxxxx. The
obligation of Xxxxx-Xxxxx to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction on or prior to
the Closing Date of the following conditions:
(a) the representations and warranties of the Selling
Partners contained herein shall be true and accurate in all material
respects on the date of this Agreement and on the Closing Date;
(b) the Selling Partners shall have performed in all
material respects all the covenants and agreements required to be
performed by them prior to the Closing Date;
(c) no order or injunction of any court or governmental
authority shall be in effect which shall restrain, enjoin or otherwise
prevent the consummation of any of the transactions contemplated
hereby, and all applicable waiting periods (and any extensions thereof)
under the HSR Act shall have expired or otherwise been terminated; and
(d) Xxxxx-Xxxxx shall have closed on the funds necessary
to consummate the transactions contemplated by this Agreement;
provided, however, that Xxxxx-Xxxxx'x failure to satisfy this condition
6.2(d) will not eliminate the assessment of the Dilution Percentage (as
hereinafter defined) if any of the conditions required to assess the
Dilution Percentage are met under the provisions of Article VIII of
this Agreement.
VII. MISCELLANEOUS
7.1 Survival. All representations, warranties and
agreements made in this Agreement or pursuant hereto (including
Sections 7.7 and 8.2) shall survive indefinitely following the Closing,
except that the representations and warranties made by Xxxxx-Xxxxx in
Sections 4.3, 4.4 and 4.5 shall expire and have no further force or
effect after the first anniversary of the Closing Date and,
accordingly, the Selling Partners shall not be indemnified for breaches
of such representations and warranties discovered after such first
anniversary. None of the representations, warranties and agreements
made in this Agreement or pursuant hereto shall survive the termination
of this Agreement, except this Section 7.1 shall not limit any covenant
or agreement which by its terms contemplates performance after the
termination of this Agreement.
7.2 Further Assurance and Cooperation. From time to time
at the request of any party to this Agreement and without further
consideration, each party will execute and deliver such documents and
take such action as may reasonably be requested in order to consummate
more effectively the transactions contemplated by this Agreement.
7.3 Assignment; Parties in Interest; Execution in
Counterparts. This Agreement and the rights, interests and obligations
hereunder may not be assigned by any party hereto without the prior
written consent of the other parties hereto, except that Xxxxx-Xxxxx
may assign the right to purchase the Selling Partners' Partnership
Interests to a wholly-owned subsidiary (including, without limitation,
a limited liability company formed in connection with the
Restructuring), provided that Xxxxx-Xxxxx shall remain responsible for
all obligations hereunder. This Agreement will be binding upon, inure
to the benefit of and be enforceable by the parties and their
respective successors and assigns. This Agreement may be executed in
one or more counterparts, but all such counterparts shall constitute
one and the same instrument.
7.4 Entire Agreement. This Agreement and the documents
referred to herein or delivered pursuant hereto which form a part
hereof, contain the entire understanding of the parties with respect to
its subject matter. There are no restrictions, agreements, promises,
warranties, covenants or undertaking other than those expressly set
forth herein or therein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to its
subject matter.
7.5 Law Governing. This Agreement will be governed by
and construed in accordance with the laws of the Commonwealth of
Virginia
7.6 Specific Performance. Each of the parties hereto
acknowledges and agrees that the other parties hereto would be
irreparably damaged in the event any of the provisions of this
Agreement were not performed in accordance with their specific terms or
were otherwise breached. Accordingly, each of the parties hereto
agrees that it shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any
action instituted in any court of the United States or any state
thereof having subject matter jurisdiction, in addition to any other
remedy to which a party may be entitled, at law or in equity.
7.7 Indemnification. (a) Xxxxx-Xxxxx (the "Buyer
Indemnifying Party") shall indemnify and hold each of the Selling
Partners (each a "Seller Indemnified Party") harmless from and against
all claims, demands, losses, obligations, liabilities, damages and
reasonable costs and expenses, including attorneys' fees and expenses
(individually, a "Loss," and collectively, "Losses"), that either of
the Seller Indemnified Parties shall incur or suffer which result from
or relate to (i) any breach of any representation or warranty of the
Buyer Indemnifying Party contained in this Agreement; (ii) any breach
of or failure to perform, any covenant or agreement of the Buyer
Indemnifying Party contained in this Agreement; (iii) the business or
assets of the Partnership; or (iv) any alleged liability under Section
50-73.43 of the Virginia Revised Uniform Limited Partnership Act or any
successor provision as a result of the sale to Xxxxx-Xxxxx of the
Selling Partners' Partnership Interests pursuant to this Agreement.
(b) Each Selling Partner (each a "Seller Indemnifying
Party") shall indemnify and hold Xxxxx-Xxxxx (the "Buyer Indemnified
Party") harmless from and against all Losses that the Buyer Indemnified
Party shall incur or suffer which result from or relate to (i) any
breach of any representation or warranty of such Selling Partner
contained in this Agreement; and (ii) any breach of, or failure to
perform, any covenant or agreement of such Selling Partner contained in
this Agreement.
(c) The Seller Indemnifying Party and the Buyer
Indemnifying Party are each referred to herein as an "Indemnifying
Party," and the Buyer Indemnified Party and the Seller Indemnified
Party are each referred to herein as an "Indemnified Party." The
Indemnified Party shall promptly notify the Indemnifying Party of any
Loss for which indemnification is sought under this Agreement. If such
Loss is initiated by a third party, the Indemnifying Party shall have
the right, but not the obligation, at its own expense, to assume the
defense thereof with counsel reasonably acceptable to the Indemnified
Party. In connection with any such third party Loss which the
Indemnifying Party has elected to defend, (i) the Indemnified Party
shall have the right to participate, at its own expense, and (ii) the
parties hereto shall cooperate with each other and provide each other
with access to relevant books and records in their possession. No
third party Loss shall be settled without the prior written consent of
the Indemnified Party.
(d) Notwithstanding the foregoing, no Indemnifying Party
shall have any liability to any Indemnified Party pursuant to this
Section 7.7 unless and until the total amount of Losses suffered by the
Indemnified Party shall exceed $100,000, in which case the amount of
Losses for which indemnity may be sought shall be limited to the amount
in excess of $100,000.
7.8 Knowledge of Xxxxx-Xxxxx. Whenever a representation
and warranty contained in this Agreement is made to the "knowledge of
Xxxxx-Xxxxx," it shall mean all facts and conditions which are actually
known by Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxx Xxxxxxxx or Xxx Xxxxxxxxx
(individually, an "Insider") or which should have been known by a
prudent manager holding the position of an Insider with access to the
books and records of the Partnership or Xxxxx-Xxxxx.
7.9 Knowledge of a Selling Partner. The "actual
knowledge" of Newsprint for purposes of Section 3.4 shall mean all
facts and conditions which are actually known by Boisfeuillet Xxxxx,
Xx., Xxxxxx Xxxxxxx and Xxxxxx Xxxxx, and the "actual knowledge" of DJ
for purposes of Section 3.4 shall mean all facts and conditions which
are actually known by Xxxxx X. Xxxxx and Xxxxxxx X. Xxxxxxx.
7.10 Notice. All notices, requests and other
communications hereunder shall be sufficient if given in writing and
either personally delivered, sent by a nationally recognized overnight
courier or sent by telecopy, addressed as follows, and shall be
effective only when actually received:
If to Newsprint: with a copy to:
Newsprint, Inc. Shaw, Pittman, Xxxxx & Xxxxxxxxxx
c/o The Washington Post 0000 X Xxxxxx, X.X.
0000 00xx Xxxxxx, X.X. Xxxxxxxxxx, X.X. 00000
Washington,D.C. 20071 Tel: (000) 000-0000
Tel: (000) 000-0000 Fax: (000) 000-0000
Fax: (000) 000-0000 Attn: Xxxxxx X. XxXxxxxxx, Esq.
Attn: Xxxx Xxxxxxxxxxx, Esq.
if to DJ: with a copy to:
Dow Xxxxx Virginia Company, Inc. Shaw, Pittman, Xxxxx & Xxxxxxxxxx
c/o Dow Xxxxx & Company, Inc. 0000 X Xxxxxx, X.X.
World Xxxxxxxxx Xxxxxx Xxxxxxxxxx, X.X. 00000
000 Xxxxxxx Xxxxxx, 00xx Xxxxx Tel: (000) 000-0000
Xxx Xxxx, XX 00000 Fax: (000) 000-0000
Tel: (000) 000-0000 Attn: Xxxxxx X. XxXxxxxxx, Esq.
Fax: (000) 000-0000
Attn: Xx. Xxxxx X. Xxxxx
if to Xxxxx-Xxxxx: with a copy to:
Xxxxx-Xxxxx Industries, Inc. Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
00 Xxxxx Xxxxx Xxxx 000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000 Xxx Xxxx, XX 00000
Tel: (000) 000-0000 Tel: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
Attn: Mr. Xxxxx Xxxxx Attn: Xxxxxxx X. Xxxxxxx, Esq.
VIII. TERMINATION
8.1 Termination Rights. This Agreement may be terminated in
any of the following circumstances:
(a) Upon the mutual agreement of the parties.
(b) By a nonbreaching party concurrently with the
termination of the Partnership Interest Sale Agreement, dated as of
October 15, 1997, among the parties with respect to the Bear Island
Timberlands Company, L.P. in accordance with the terms thereof.
(c) By a Selling Partner at any time after a Selling Partner
has been advised by Xxxxx-Xxxxx that commercial banking, investment
banking or lending services of entities other than one or more of the
Prospective Lenders will be required to obtain funds sufficient to
consummate the transactions contemplated by this Agreement; provided
that it is agreed and understood that the Prospective Lenders may at
their election include other banks, underwriters, agents and syndicates
as part of their customary selling efforts.
(d) By a Selling Partner at any time after a Selling Partner
has notified Xxxxx-Xxxxx in writing that Xxxxx-Xxxxx is in material
breach of any provision of this Agreement, unless Xxxxx-Xxxxx has cured
such breach within three (3) business days of receiving such notice.
(e) By Xxxxx-Xxxxx at any time after Xxxxx-Xxxxx has
notified a Selling Partner in writing that the Selling Partner is in
material breach of any provision of this Agreement, unless the Selling
Partner has cured such breach within three (3) business days of
receiving such notice.
(f) By a Selling Partner on or after November 30, 1997,
unless prior to November 30, 1997 a Selling Partner has received a
certificate, which shall be reasonably based, from Xxxxx-Xxxxx, dated
after November 20, 1997, certifying that, as of the date of such
certificate, Xxxxx-Xxxxx has no current knowledge of any issue that
would reasonably be expected to prevent the financing necessary for the
transactions contemplated by this Agreement from being received on or
prior to December 31, 1997; provided, however, that the certificate may
list an issue which could be expected to not be resolved until after
December 31, 1997 if (i) the issue involves an action of the type
described in clause (iv) of paragraph (g) below, and (ii) Xxxxx-Xxxxx
certifies that it will use all commercially reasonable efforts to
resolve such issue prior to December 31, 1997.
(g) By a Selling Partner on or after December 31, 1997,
unless prior to December 31, 1997 a Selling Partner has received a
certificate, which shall be reasonably based, from Xxxxx-Xxxxx
certifying that (i) all necessary loan agreements relating to the
financing have been executed by all parties; (ii) the underwriting or
purchase agreements relating to the issuance of any securities relating
to the financing has been fully negotiated and is, except for
execution, completed; (iii) prospective investors have "circled" or
otherwise indicated their commitment to purchase the requisite dollar
amount of securities to be issued in connection with the financing; and
(iv) the only outstanding actions necessary to be taken before the
Closing can occur, which shall be listed and described in the
certificate, shall be actions which do not involve the exercise of any
material discretion on the part of any person and are capable of being,
and reasonably expected to be, completed on or before January 31, 1998.
At the time Xxxxx-Xxxxx provides the Selling Partner such certificate,
Xxxxx-Xxxxx shall also provide the Selling Partner a copy of the loan
agreement and/or underwriting or purchase agreement referred to in such
certificate.
(h) By any party after January 31, 1998.
8.2 Effect of Termination. (a) Subject to paragraph (b)
below, upon a rightful termination of this Agreement by a Selling
Partner pursuant to Section 8.1(b), (c), (d), (f) or (g) or by any
party pursuant to Section 8.1(h), including as a result of the waiting
period under the HSR Act not having expired by January 31, 1998,
Xxxxx-Xxxxx shall be assessed a dilution of 2.5% of its interest in the
Partnership (the "Dilution Percentage") to be distributed equally to
the Selling Partners. In the event that the dilution is assessed in
accordance with this Section 8.2, the parties hereto agree that they
will take the necessary actions to amend the Limited Partnership
Agreement to reduce Xxxxx-Xxxxx'x interest in the Partnership (i.e.,
Xxxxx-Xxxxx'x share of the Partnership's profits, losses and
distributions as set forth in Section 3.2 of the Limited Partnership
Agreement) by the Dilution Percentage and to increase the partnership
interest of each of the Selling Partners by one half (1/2) of the
Dilution Percentage or 1.25% (the " Amendment"). Xxxxx-Xxxxx hereby
grants to each of the Selling Partners and their successors and assigns
a limited power of attorney (which the parties acknowledge shall be
deemed to be coupled with an interest) for the purpose of executing any
and all documents, instruments and certificates that are necessary to
effect the Amendment; provided, however, that Xxxxx-Xxxxx shall be
notified at least five (5) business days prior to a Selling Partner's
use of this proposed power of attorney.
(b) Xxxxx-Xxxxx shall not be assessed the Dilution
Percentage if the termination of this Agreement results from one or
more Prospective Lenders being unable or unwilling to provide funds
necessary to consummate the transactions contemplated by this Agreement
primarily due to one or more of the following reasons that arose after
the date of this Agreement: (i) a fire or earthquake, hurricane or
comparable physical event beyond the control of Xxxxx-Xxxxx causing
material damage to the Partnership's properties; provided that
Xxxxx-Xxxxx'x negligence or misconduct did not materially contribute to
the extent of the damage caused by such event; or (ii) a proceeding is
begun under a governmental authority's power of eminent domain with
respect to a material portion of the Partnership's properties.
(c) The parties acknowledge and agree that time is of the
essence with respect to the expected dates for Closing as set forth in
this Article VIII and that the assessment of the Dilution Percentage as
set forth in Section 8.2 hereof are reasonable and justifiable
liquidated damages for the failure of the Closing to occur in a timely
manner.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first written.
DOW XXXXX VIRGINIA COMPANY, INC.
By: /s/ Xxxxx X. Xxxxx
__________________________
Name: ____________________
Title: ___________________
NEWSPRINT, INC.
By: /s/ Xxxxxx Xxxxx
__________________________
Name: Xxxxxx Xxxxx
Title: President
XXXXX-XXXXX INDUSTRIES, INC.
By: /s/ Xxxxxx Xxxxx
__________________________
Name: Xxxxxx Xxxxx
Title: Executive Vice President
Partnership Interest Sale Agreement
Schedule 4.4
Financial Statements (as defined in the Partnership Interest Sale
Agreement)
Interim Financial Statements (as defined in the Partnership Interest
Sale Agreement)
Bowater's Letter of Intent, dated July 25, 1997, to purchase the
business and assets of Bear Island Paper Company, L.P. and Bear Island
Timberlands Company, L.P. (the "Partnerships")
Bowater's Proposed Asset Purchase Agreement, dated August 12, 1997, for
the Partnerships
T.D. Securities Engagement Letter, dated August 29, 1997
T.D. Securities Commitment Letters, dated August 29, 1997, relating to
$120 million in bank debt and sale of $100 million in high yield bonds
Salomon Brothers Letter, relating to sale of $ 195 million in high
yield bonds
