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EXHIBIT 2
EXECUTION COPY
AMENDED AND RESTATED
ACQUISITION AGREEMENT
BY AND AMONG
PURICO (IOM) LIMITED,
RF & SON INC.,
RFS US INC.
AND
RFS ECUSTA INC.
AS BUYERS
AND
P. H. GLATFELTER COMPANY
AND
MOLLANVICK, INC.
AS SELLERS
AUGUST 9, 2001
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EXECUTION COPY
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS ............................................................................ 2
1.1. Defined Terms .................................................................. 2
ARTICLE II THE TRANSACTION .......................................................................12
2.1. Purchase and Sale ..............................................................12
2.2. Excluded Assets. ...............................................................15
2.3. Assumed Liabilities; Excluded Liabilities. .....................................16
2.4. The Closing. ...................................................................18
2.5. Purchase Price. ................................................................18
2.6. Purchase Price Adjustment ......................................................19
2.7. Escrow Account. ................................................................20
2.8. Consent of Third Parties; Further Assurances ...................................20
2.9. Shared Contracts. ..............................................................22
2.10. Customer Billing. ..............................................................22
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS ............................................22
3.1. Organization and Authority .....................................................22
3.2. Authorization; Binding Obligation ..............................................23
3.3. No Violations. .................................................................23
3.4. Financial Statements. ..........................................................23
3.5. Absence of Changes .............................................................24
3.6. Assets. ........................................................................25
3.7. Personal Property. .............................................................25
3.8. Permits, Licenses ..............................................................25
3.9. Compliance with Laws and Litigation. ...........................................26
3.10. Employee Matters. ..............................................................26
3.11. Agreements .....................................................................32
3.12. Environmental Matters ..........................................................32
3.13. No Undisclosed Liabilities .....................................................34
3.14. Warranty Claims. ...............................................................35
3.15. Inventory; Purchased Assets. ...................................................35
3.16. Real Estate ....................................................................35
3.17. Ownership of Subsidiaries. .....................................................40
3.18. Tax Matters. ...................................................................40
3.19. Business Intellectual Property .................................................41
3.20. Books and Records ..............................................................43
3.21. Accounts .......................................................................43
3.22. Disclosure .....................................................................43
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYERS ...............................................43
4.1. Organization and Authority ......................................................44
4.2. Authorization; Binding Obligation ...............................................44
4.3. No Violations. ..................................................................44
4.4. Litigation. .....................................................................44
4.5. Financing .......................................................................45
ARTICLE V CERTAIN COVENANTS .......................................................................45
5.1. Information .....................................................................45
5.2. Ancillary Agreements. ...........................................................46
5.3. Tax Reporting and Allocation of Consideration. ..................................47
5.4. Tax Matters. ....................................................................47
5.5. Employees and Employee Benefits .................................................50
5.6. Affiliate Matters. ..............................................................58
5.7. Notice. .........................................................................58
5.8. Conduct of the Business .........................................................59
5.9. Covenant Not to Compete; Nonsolicitation. .......................................60
5.10. Material Consents ...............................................................61
5.11. Notice to Customers .............................................................61
5.12. Confidentiality .................................................................61
5.13. Estoppel Certificates. ..........................................................62
5.14. Title Policies ..................................................................62
5.15. Survey ..........................................................................63
5.16. Accounts Receivable and Related Claims ..........................................63
5.17. Real Property Compliance Certificate ............................................63
5.18. Ecusta Stock. ...................................................................64
5.19. Asbestos Removal ................................................................64
ARTICLE VI CLOSING ................................................................................64
6.1. Conditions Precedent to Each Party's Obligations. ...............................65
6.2. Conditions Precedent to Buyers' Obligations. ....................................65
6.3. Conditions Precedent to Sellers' Obligations ....................................67
6.4. Sellers' Closing Deliveries .....................................................68
6.5. Buyers' Closing Deliveries. .....................................................72
ARTICLE VII INDEMNIFICATION AND SURVIVAL ..........................................................73
7.1. Survival. .......................................................................73
7.2. Indemnification By Sellers ......................................................73
7.3. Limitations of Indemnification By Sellers .......................................73
7.4. No Reliance .....................................................................75
7.5. Indemnification by Buyers .......................................................75
7.6. General Indemnification Procedures ..............................................75
7.7. Insurance Recoveries From Third Parties. ........................................77
7.8. Sole Remedies ...................................................................77
ARTICLE VIII TERM AND TERMINATION .................................................................77
8.1. Exclusive Dealing. ..............................................................77
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8.2. Term. ...........................................................................78
8.3. Termination. ....................................................................78
8.4. Procedures and Effect of Termination. ...........................................79
ARTICLE IX MISCELLANEOUS ..........................................................................79
9.1. Notices .........................................................................79
9.2. Expenses ........................................................................81
9.3. Entire Agreement. ...............................................................81
9.4. Assignment; Binding Effect; Severability ........................................81
9.5. Governing Law ...................................................................81
9.6. Execution in Counterparts .......................................................82
9.7. Public Announcement. ............................................................82
9.8. No Third Party Beneficiaries ....................................................82
9.9. Headings ........................................................................82
9.10. Further Assurances ..............................................................82
9.11. Amendment and Waiver ............................................................82
EXHIBITS
1.1 Sharing Agreement
2.1(e) License and Cross-License Agreement
2.3(a) Assumption Agreement
2.7 Escrow Agreement
3.10(o) Form of 1992 LTIP Award Agreement
6.2(j) Supply and Service Agreement
6.2(k) Administrative Services Agreement
6.4(g) Xxxx of Sale
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SCHEDULES
1.1-A Accounts Payable
1.1-B Business Products
1.1-C Legal Description of the Parking Lot
2.1 Permitted Encumbrances
2.1(c)(ii) Principal Equipment
2.1(c)(iii) Motor Vehicles
2.1(d)(i) Inventory
2.1(d)(iii) Contracts
2.1(d)(vi) Governmental Permits
2.1(d)(x) Miscellaneous Purchased Assets
2.2(d) Excluded Equipment
2.2(e) Excluded Contracts
2.2(f) Insurance Proceeds
2.3(a) Assumed Liabilities
2.3(b) Medical and Disability Plan and Workers' Compensation Claims
2.9 Shared Contracts
3.1 Organization of Sellers
3.3 Violations and Consents
3.4 Financial Statements and Accounting Principals
3.5 Absence of Changes
3.6 Title to Assets
3.7 Condition of Personal Property
3.8 Permits and Licenses
3.9 Compliance with Laws and Litigation
3.10(a) Agreements with Employees
3.10(b) Employee Benefit Plans
3.10(d) Benefit Plan Claims
3.10(f) Payments to Employees
3.10(g) Post-Retirement Benefits
3.10(h) Compliance with Employment Laws
3.10(i) Labor Disputes
3.10(l) Loss Report
3.10(o) Exception to 1992 LTIP Awards
3.10(p) Employment Agreements Not Terminable
3.10(r) Consultancy Contracts
3.11 Contracts
3.12(a) Environmental Permits and Compliance with Laws
3.12(b) Environmental Complaints
3.12(c) Environmental Notices
3.12(d) Hazardous Substances
3.12(e) CERCLA Sites
3.12(f) Released Hazardous Substances
3.12(g) Notice of Release of a Hazardous Substance
3.12(i) Environmental Assessments
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3.13 Undisclosed Liabilities
3.14 Warranty Claims
3.15(a) Location of Inventory
3.16(a)(i) Owned Real Estate
3.16(a)(iii) Owned Real Estate Notices
3.16(b)(i) Leased Real Estate
3.16(b)(ii) Possession of Leased Real Estate
3.16(b)(iii) Leased Real Estate Zoning Notices
3.16(b)(iv) Brokerage Fees Relating to Leases
3.16(b)(v) Leased Real Estate Termination
3.16(c)(i) Space Leases
3.16(d) Rights of First Refusal
3.17 Organization of Subsidiaries
3.18 Tax Matters
3.19(a) Business Intellectual Property
3.19(b) Enforcement
3.19(c) Infringement
3.19(e) Intellectual Property
3.19(g) Computer Software Matters
3.21 Accounts Receivable
4.1 Organization of Buyers
5.5(a) Employees
5.5(f) Actuarial Assumptions
6.2(l) Employment Agreements
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AMENDED AND RESTATED ACQUISITION AGREEMENT
THIS AMENDED AND RESTATED ACQUISITION AGREEMENT (the
"Agreement") is dated as of August 9, 2001 by and among P. H. Glatfelter
Company, a Pennsylvania corporation ("Glatfelter"), and Mollanvick, Inc., a
Delaware corporation ("Mollanvick" and, together with Glatfelter, the "Sellers"
and each, individually, a "Seller"), and Purico (IOM) Limited, an Isle of Man
limited liability company ("Purico"), RF & Son Inc., a Delaware corporation
("RF"), RFS US Inc., a Delaware corporation ("RFS US"), and RFS Ecusta Inc., a
Delaware corporation ("RFS Ecusta" and, together with Purico, RF and RFS US, the
"Buyers" and each, individually, a "Buyer").
Background
X. Xxxxxxxxxx is, among other things, engaged in the
manufacture and sale of tobacco papers, lightweight printing papers and other
specialty paper products through its Ecusta Division paper mill located in
Pisgah Forest near Asheville, North Carolina, U.S.A. (the "Ecusta Division") and
its wholly owned subsidiaries Ecusta Fibres Ltd., a Manitoba corporation
("Ecusta Canada"), and Ecusta Australia Pty. Limited, an Australian corporation
("Ecusta Australia" and, together with Ecusta Canada, the "Ecusta Subsidiaries")
(the "Business"), and Glatfelter has determined to sell the Business, including
the manufacturing and supply of cigarette papers, to Buyers.
X. Xxxxxxx and Buyers (other than RF) and Xxxxxx Xxxxxxxx &
Son Limited, a limited liability company organized under the laws of England,
entered into an Acquisition Agreement dated as of May 16, 2001 and now wish to
amend and restate that agreement and the disclosure schedules attached thereto
such that Sellers will transfer certain assets and liabilities of the Business
and all of the capital stock of the Ecusta Subsidiaries to Buyers and Buyers
will accept such assets and capital stock and assume such liabilities from
Sellers on the terms and conditions set forth herein. Sellers and Buyers are
simultaneously entering into a supply and service agreement, an intellectual
property agreement, an escrow agreement, a proceeds sharing agreement and other
ancillary agreements regarding certain actions relating to implementation of the
transactions contemplated hereby (the "Ancillary Agreements").
Terms
In consideration of the mutual representations, warranties,
covenants and agreements, and upon the terms and subject to the conditions
hereinafter set forth, the parties, intending to be legally bound, hereby agree
as follows:
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ARTICLE I
DEFINITIONS
1.1. Defined Terms. For the purposes of this Agreement, the following
words and phrases shall have the following meanings:
"Accounting Principles" shall have the meaning set forth in
Section 3.4.
"Accounts Payable" means all liabilities or obligations
outstanding as of the Effective Date that would be included in the net book
value of accounts payable related to the Ecusta Division that would be set forth
on a balance sheet of the Business as of the Effective Date prepared on a basis
consistent with the Accounting Principles, including those identified as of June
30, 2001 on Schedule 1.1-A and the Intercompany Payables, such accounts payable
to be recorded as current liabilities on the balance sheet of the Business as of
the Effective Date.
"Accounts Receivable" shall have the meaning set forth in
Section 2.1(d)(ii).
"Accrued Expenses" means all liabilities or obligations in
respect of the Business set forth on the Balance Sheet.
"Adjusted Transfer Amount" shall have the meaning set forth in
Section 5.5(f)(i).
"Administrative Services Agreement" shall have the meaning set
forth in Section 6.2(k).
"Affiliate" of a Person means any Person controlling,
controlled by, or under common control with, such Person. For purposes of this
definition, "control" means the power to direct the management and policies of a
Person, whether through the ownership of voting securities, by agreement or
otherwise.
"Agreement" shall have the meaning set forth in the
Introduction.
"Ancillary Agreements" shall have the meaning set forth in the
Introduction.
"Asbestos Removal Work" shall have the meaning set forth in
Section 5.19.
"Asset Acquisition Statement" shall have the meaning set forth
in Section 5.3.
"Assignment and Assumption of Leases" shall have the meaning
set forth in Section 6.4(h).
"Assumed Contracts" means the Contracts assumed by Buyer
pursuant to Section 2.1(d)(iii).
"Assumed Liabilities" shall have the meaning set forth in
Section 2.3(a).
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"Assumption Agreement" shall have the meaning set forth in
Section 2.3(a).
"Balance Sheet" shall mean the pro forma balance sheet as of
December 31, 2000 relating to the Business and attached hereto on Schedule 3.4.
"Beneficiary" means the person(s) or entity designated by an
employee, by operation of law or otherwise as the party entitled to
compensation, benefits, insurance coverage, payments, indemnification or any
other goods or services as a result of any liability, or claim under any Plans
or under any other employee benefit plan, program or policy.
"Xxxx of Sale" shall have the meaning set forth in Section
6.4(g).
"Break Fee" shall have the meaning set forth in Section
8.1(b).
"Business" shall have the meaning set forth in the
Introduction.
"Business Day" means a day which is not a Saturday, a Sunday
or a statutory or civic holiday in the Commonwealth of Pennsylvania.
"Business Employees" means all employees of the Business as of
the Closing Date, including those on Leaves of Absence or receiving workers'
compensation benefits, but excluding any employees of the Ecusta Subsidiaries
and Xxx Xxxx, Xxxx Xxxxxxxx and Xxxx Xxxxxx.
"Business Financial Statements" shall have the meaning set
forth in Section 3.4.
"Business Intellectual Property" means Intellectual Property
used or held for use primarily in connection with the Business.
"Business Products" means all products currently or proposed
by Sellers and the Ecusta Subsidiaries to be designed, developed, manufactured
or marketed by Sellers and the Ecusta Subsidiaries in connection with the
Business as of the Effective Date, including, without limitation, the products
set forth in Schedule 1.1-B.
"Business Records" shall have the meaning set forth in Section
2.1(d)(v).
"Buyers" shall have the meaning set forth in the Introduction.
"CERCLA" shall have the meaning set forth in Section 3.12(e).
"Claim Notice" shall have the meaning set forth in Section
7.6(a).
"Claim Response" shall have the meaning set forth in Section
7.6(a).
"Closing" means the closing of the transactions described in
Article VI.
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"Closing Date" means the date of the Closing as determined
pursuant to Section 2.4.
"Closing Inventory Amount" means the net book value of the
Inventory included in the Purchased Assets on the Effective Date.
"Closing Net Working Capital" shall have the meaning set forth
in Section 2.6(a).
"Closing Net Working Capital Statement" shall have the meaning
set forth in Section 2.6(a).
"Code" means the Internal Revenue Code of 1986, as amended.
"Contracts" shall have the meaning set forth in Section
2.1(d)(iii).
"Computer Software" means computer software including (to the
extent possessed by Glatfelter) source code, object code, firmware, operating
systems manuals, and specifications.
"Current Assets" shall mean any of the Purchased Assets which
are items of the type identified as current assets on the Balance Sheet.
"Current Liabilities" shall mean items of the type identified
as current liabilities on the Balance Sheet.
"Damage" means any and all losses, liabilities, damages,
penalties, obligations, awards, fines, deficiencies, diminution in value,
interest, claims (including third party claims, whether or not meritorious),
costs and expenses whatsoever (including reasonable attorneys', accountants' and
environmental consultants' fees and disbursements).
"Defense Notice" shall have the meaning set forth in Section
7.6(c).
"Disputed Items" shall have the meaning assigned in Section
2.6(b).
"Effective Date" shall mean the end of business on July 31,
2001.
"Encumbrance" shall mean any title encumbrance of any kind
whatsoever and includes any charge, title claim, security interest, community
property interest, mortgage, deed of trust, Lien, judgment, tax lien, sewer
rent, assessment, mechanics' or materialmen's liens, hypothecation, pledge, upon
the use, occupancy, operation or ownership of the property, assignment,
easement, servitude, right of way, restriction, tenancy, encroachment or burden
or any other title right or title claim and any restrictive covenant or other
title agreement, or restriction or limitation on the use, occupancy, operation
or ownership of the subject real property.
"Environmental Laws" shall have the meaning set forth in
Section 3.12(a).
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"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" means (i) any corporation included with
Sellers in a controlled group of corporations within the meaning of Section
414(b) of the Code; (ii) any trade or business (whether or not incorporated)
which is under common control with Sellers within the meaning of Section 414(c)
of the Code; (iii) any member of an affiliated service group of which Sellers
are members within the meaning of Section 414(m) of the Code; or (iv) any other
person or entity treated as an affiliate of Sellers under Section 414(o) of the
Code.
"Escrow Agreement" shall have the meaning set forth in Section
2.7.
"Estoppel Certificates" shall have the meaning set forth in
Section 5.13.
"Excluded Assets" shall have the meaning set forth in Section
2.2.
"Excluded Contracts" shall have the meaning set forth in
Section 2.2(e).
"Excluded Equipment" shall have the meaning set forth in
Section 2.2(d).
"Excluded Liabilities" shall have the meaning set forth in
Section 2.3(b).
"GAAP" means United States generally accepted accounting
principles.
"German Assets" shall mean the assets to be transferred to
Purico GmbH by Schoeller & Hoesch pursuant to the Supply and Service Agreement.
"Glatfelter Computer Software" means Computer Software that is
(i) owned by Glatfelter, (ii) used or proposed to be used in the Business as of
the Effective Date, and (iii) not included in the Business Intellectual
Property. Notwithstanding the foregoing, Glatfelter Computer Software shall not
include software relating exclusively to Glatfelter's salaried payroll or
accounts receivable business systems.
"Glatfelter Copyrights" means copyrights (except for
copyrights in the Glatfelter Computer Software) that are (i) used or proposed to
be used in the Business as of the Effective Date, and (ii) not included in the
Business Intellectual Property.
"Glatfelter Locations" means Glatfelter's York office location
and the Spring Grove and Neenah facility locations and any office or facility
locations of Schoeller & Hoesch or any subsidiary of Glatfelter other than the
Ecusta Subsidiaries.
"Governmental Authority" means the government of the United
States of America, Canada, Australia, Germany, Isle of Man, the United Kingdom,
the European Union or any other country or any state, province, municipality or
other political subdivision thereof or therein, or any court, tribunal, agency,
department, board, instrumentality, authority or commission (including
regulatory and administrative bodies) of any of the foregoing.
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"Governmental Permits" shall have the meaning set forth in
Section 2.1(d)(vi).
"Hazardous Substances" shall have the meaning set forth in
Section 3.12(b).
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
"including" or any variation thereof means "including without
limitation" and the term "including" or any variation thereof shall not be
construed to limit any general statement which it follows to the specific or
similar items or matters immediately following it.
"Indemnitee" shall have the meaning set forth in Section
7.6(a).
"Indemnitor" shall have the meaning set forth in Section
7.6(a).
"Independent Accountant" shall have the meaning set forth in
Section 2.6(b).
"Initial Payment" shall have the meaning set forth in Section
2.5(a).
"Intellectual Property" means (i) inventions, whether or not
patentable, reduced to practice or made the subject of one or more pending
Patent applications, and whether or not under design or development, (ii)
national and multinational statutory invention registrations, Patents and all
improvements to the inventions disclosed in each such registration or Patent,
(iii) trademarks, service marks, trade dress, logos, slogans, trade names and
corporate names (whether or not registered) in the United States and all other
nations throughout the world, including all variations, derivations,
combinations, registrations and applications for registration or renewals of the
foregoing and all goodwill associated therewith, (iv) copyrights (whether or not
registered) and registrations and applications for registration or renewals
thereof in the United States and all other nations throughout the world,
including all derivative works, moral rights, renewals, extensions, reversions
or restorations associated with such copyrights, now or hereafter provided by
law, regardless of the medium of fixation or means of expression, (v) Internet
domain names and registrations and applications for registration or renewals
thereof registered in the United States, Germany, Australia or Canada (e.g.,
associated with the .com, .de, .ca, .au, .net or .org top level domains) and all
other nations throughout the world, (vi) computer software (including source
code, object code, firmware, operating systems and specifications), (vii) trade
secrets and, whether or not confidential, business information (including
pricing and cost information, business and marketing plans and customer and
supplier lists) and know-how (including manufacturing and production processes
and techniques and research and development information), (viii) industrial
designs (whether or not registered), (ix) databases and data collections, (x)
copies and tangible embodiments of any of the foregoing, in whatever form or
medium (including electronic media), (xi) all rights to obtain and rights to
apply for Patents, and to register trademarks and copyrights, (xii) all rights
in all of the foregoing provided by treaties, conventions and common law, (xiii)
all rights to xxx or recover and retain damages and costs and attorneys' fees
for past, present and future infringement or misappropriation of any of the
foregoing, and (xiv) licenses to any of the foregoing.
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"Intercompany Payables" means any amounts owed by the Ecusta
Division to the Ecusta Subsidiaries.
"Inventory" shall have the meaning set forth in Section
2.1(d)(i).
"IRS" means the U.S. Internal Revenue Service.
"ITA Canada" shall have the meaning set forth in Section
5.4(h)(i).
"Leased Real Estate" shall have the meaning set forth in
Section 3.16(b)(i).
"Leases" shall have the meaning set forth in Section
3.16(b)(i).
"Leave of Absence" means an approved absence from employment
that is classified as sick time, personal leave, family leave, industrial leave
or Medical Leave.
"LIBOR" means the United States dollar percentage rate per
annum equal to the offered quotation which appears on the page of the Telerate
Screen which displays the British Bankers Association Interest Settlement Rate
for the currency of the relevant amount and for a three month term as of 11:00
a.m. London time on the date on which LIBOR is to be determined (or if not a
Business Day the last preceding Business Day), or if such page or such service
shall cease to be available, such other substitute or successor page or other
service for the purpose of displaying the British Bankers Association Interest
Settlement Rate for such currency.
"License and Cross-License Agreement" shall have the meaning
set forth in Section 2.1(e).
"Lien" means any mortgage, deed of trust, deed to secure debt,
lien (statutory or other), pledge, easement, restrictive covenant,
hypothecation, assignment, preference, security interest, or any other
encumbrance or charge on or affecting the subject asset or any portion thereof
or any Seller, or any interest in any of the foregoing, including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, the filing of any financing statement or similar instrument under the
UCC or comparable law of any other jurisdiction, domestic or foreign, and
mechanic's, materialmen's and other similar liens and encumbrances.
"LTIP" shall have the meaning set forth in Section 3.10(o).
"Manage" or "Management", when used with respect to Hazardous
Substances, has the meaning set forth in Section 3.12(b).
"Material Adverse Effect" means any change or effect (or
series of related changes or effects) which has resulted in or is reasonably
likely to have a material adverse change in or effect upon the business,
condition (financial or otherwise), properties or results of operations of the
Business.
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"Material Real Estate Impairment" shall mean (1) a material
adverse effect upon the value of (i) any of the Owned Real Estate so affected or
(ii) the Leased Real Estate so affected in the aggregate or (2) a material
impairment of or interference with the use of, or the conduct of the Business
at, (i) any of the Owned Real Estate so affected or (ii) the Leased Real Estate
so affected in the aggregate.
"Medical Leave" means an absence from employment that is
classified as short-term disability, long-term disability or permanent medical
leave.
"MIP" shall have the meaning set forth in Section 5.5(a).
"Multiemployer Plan" shall have the meaning ascribed thereto
in Sections 3(37) and 4001(a)(3) of ERISA.
"Net Working Capital" as of a given date shall mean the amount
calculated by subtracting the Current Liabilities attributable to the Ecusta
Division from the Current Assets attributable to the Ecusta Division as of that
date. For purposes of calculating Net Working Capital, inventory shall be valued
on the same basis as in the Balance Sheet. The Net Working Capital attributable
to the Ecusta Division as of the date of the Balance Sheet (the "Initial Working
Capital") was $26.26 million.
"Non-Assignable Assets" shall have the meaning set forth in
Section 2.8(a).
"Original Acquisition Agreement" shall have the meaning set
forth in Section 8.2.
"Owned Real Estate" shall have the meaning set forth in
Section 3.16(a)(i).
"Parking Lot" means the parcel of land adjacent to the Ecusta
Division currently used, in part, as a parking lot for the Ecusta Division as
described in Schedule 1.1-C attached hereto.
"Patents" means U.S. and non-U.S. patents, patent applications
and industrial design registrations together with any continuations,
continuations-in-part or divisional applications thereof, all patents and
industrial design registrations issuing thereon, and all patents industrial
design registrations and applications claiming priority therefrom (including
reissues, renewals and reexaminations of the foregoing).
"PBGC" shall have the meaning set forth in Section 3.10(g).
"PBO" shall have the meaning set forth in Section 5.5(f)(i).
"PCBs" shall have the meaning set forth in Section 3.12(b).
"Permits" shall have the meaning set forth in Section 3.12(a).
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"Permitted Encumbrances" means (i) the Encumbrances and
exceptions set forth in Schedule 2.1, (ii) Permitted Fee Title Exceptions, (iii)
imperfections in title or other matters that are not material in extent or
amount and which, individually or in the aggregate, do not materially interfere
with the conduct of the Business or with the use of the Purchased Assets and do
not materially affect the value of the Purchased Assets, taken collectively and
(iv) the liens of property taxes and assessments not yet due and payable.
"Permitted Fee Title Exception" shall have the meaning set
forth in Section 3.16(a)(ii).
"Person" means and includes any individual, corporation,
partnership, firm, association, joint venture, joint stock company, trust or
other entity, or any government or regulatory administrative or political
subdivision or agency, department or instrumentality thereof.
"Plans" shall have the meaning set forth in Section 3.10(b).
"Post-retirement Medical Benefits Side Letter" shall have the
meaning set forth in Section 9.3.
"Premises" means the Owned Real Estate (including the Parking
Lot) and the Leased Real Estate (including any facilities for Inventory stocking
and/or manufacturing support listed on Schedule 2.1(d)(i)).
"Principal Equipment" means all of the machinery and
equipment, fixtures, improvements, tooling, supplies, tools, dies and similar
capital items which are owned or leased by any Seller and are located at the
Premises or are located elsewhere and which are primarily used or held for use
in the conduct of the Business or which are in transit to or temporarily removed
from a location specified above and which would otherwise be included among the
items described above. Principal Equipment shall include, without limitation,
those specified items of machinery and equipment which are identified on
Schedule 2.1(c)(ii) but shall not include the Excluded Equipment.
"Purchase Price" means the payment to be made as provided in
Section 2.5(a).
"Purchased Assets" shall mean all of the fixed and non-fixed
assets, properties and rights of Glatfelter, including the Parking Lot, which
are primarily used in the conduct of the Ecusta Division (except in each case
for the Excluded Assets), wherever such assets, properties and rights are
located and whether such assets are real, personal or mixed, tangible or
intangible, matured or unmatured, known or unknown, contingent or fixed, and
whether or not any of such assets have any value for accounting purposes or are
carried or reflected on or specifically referred to in Glatfelter's books or
financial statements. The term "Purchased Assets," when used herein with respect
to any date prior to the Effective Date, shall be deemed to refer to the
properties and assets of Glatfelter that would constitute the "Purchased Assets"
hereunder if the
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Closing were to take place on such date. For the avoidance of doubt, the term
"Purchased Assets" shall not include the Shared Contracts.
"Reconciliation Amount" shall have the meaning set forth in
Section 2.6(c).
"Reconciliation Statement" shall have the meaning set forth in
Section 2.6(a).
"Release" shall have the meaning set forth in Section 3.12(f).
"Remediation" means investigation, cleanup, remedial action or
other response action.
"Resolution Period" shall have the meaning set forth in
Section 2.6(b).
"Response Period" shall have the meaning set forth in Section
7.5(a).
"Returns" means all returns, declarations, reports,
statements, claims for refunds, information returns and other documents required
under a Tax Law to be filed with a Governmental Authority in respect of Taxes,
and includes any Forms W-2, 1099 or similar documents required under any Tax Law
to be provided to a person other than a Governmental Authority (and "Return"
means any one of the foregoing Returns).
"Schoeller & Hoesch" means Schoeller & Hoesch GmbH & Co. KG, a
Federal Republic of Germany partnership.
"Sellers' 401(k) Plan" shall have the meaning set forth in
Section 5.5(h).
"Sellers" shall have the meaning set forth in the
Introduction.
"Sellers DB Plans" shall have the meaning set forth in Section
5.5(f).
"Sellers' Superannuation Fund" shall have the meaning set
forth in Section 3.10(s)(i).
"Shared Contract" shall have the meaning set forth in Section
2.9.
"Sharing Agreement" means the agreement between Glatfelter and
Buyers as of the date hereof regarding the sharing of proceeds relating to the
sale of the Parking Lot or the Unproductive Land in substantially the form
attached hereto as EXHIBIT 1.1.
"Side Letter" means the letter agreement executed among the
parties hereto as of the date hereof and in connection herewith which sets forth
an allocation of the Purchase Price among the Purchased Assets, the German
Assets and the Ecusta Stock.
"Single Employer Plan" shall have the meaning ascribed thereto
in Section 4001(a)(15) of ERISA.
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"SIS" shall have the meaning set forth in Section 3.10(s)(v).
"Space Leases" shall have the meaning set forth in Section
3.16(c)(i).
"Statement of Allocation" shall have the meaning set forth in
Section 5.3.
"Straddle Period Taxes" shall have the meaning set forth in
Section 5.4(e).
"subsidiary" means as to any Person, a corporation or other
entity of which shares of stock or other equity ownership interests having
ordinary voting power to elect a majority of the board of directors or other
managers of such corporation or other entity are at the time owned, directly or
indirectly, through one or more intermediaries, or both, by such Person.
"Supercalender" means the stand alone calender stack, a
finishing device which uses pressure loaded rolls to form a nip that imparts
smoothness and/or caliper reduction to a sheet of paper, that is currently owned
by Glatfelter and located at the Ecusta Division.
"Supply and Service Agreement" shall have the meaning set
forth in Section 6.2(j).
"Surveyor" shall have the meaning set forth in Section 5.15.
"Surveys" shall have the meaning set forth in Section 5.15.
"Taxes" means all federal, state, local, foreign and other net
income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, lease, service, add on or alternative minimum tax,
occupancy, withholding, payroll, fringe benefits, employment, excise, severance,
stamp, value added, goods and services, occupation, premium, property
(including, without limitation, real property taxes and any assessments, special
or otherwise), windfall profits, customs, duties or other taxes, fees,
assessments or charges of any kind whatever, together with any interest and any
penalties, additions to tax or additional amounts with respect thereto (and
"Tax" means any one of the foregoing Taxes).
"Tax Law" means a statute, regulation or administrative rule
or judicial opinion enacted, issued or promulgated for the determination,
imposition, assessment, reporting or collection of any Tax.
"Threshold Amount" shall have the meaning set forth in Section
3.10(n).
"Title Company" shall have the meaning set forth in Section
5.14.
"Title Policies" shall have the meaning set forth in Section
5.14.
"Transfer Amount" shall have the meaning set forth in Section
5.5(f)(i).
"Transfer Plan" shall have the meaning set forth in Section
5.5(f)(ii).
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"Transfer Taxes" shall have the meaning set forth in Section
5.4(g).
"Transferred Employee" shall have the meaning set forth in
Section 5.5(a).
"Transferred Pension Participants" shall have the meaning set
forth in Section 5.5(f)(i).
"Unproductive Land" shall mean the unproductive land owned by
Glatfelter near the Ecusta Division, excluding the Parking Lot, subject to the
Sharing Agreement.
"Voluntary Participation" shall have the meaning set forth in
Section 7.6(c).
ARTICLE II
THE TRANSACTION
2.1. Purchase and Sale.
(a) Purchase and Sale of Stock of Ecusta Canada. Upon the
terms and subject to the conditions of this Agreement, on the Closing Date,
Glatfelter shall sell, assign, convey and deliver to Purico or Purico's nominee,
and Purico shall purchase from Glatfelter, all of the outstanding shares of
capital stock of Ecusta Canada (the "Ecusta Canada Stock"), free and clear of
any Encumbrances.
(b) Purchase and Sale of Stock of Ecusta Australia. Upon the
terms and subject to the conditions of this Agreement, on the Closing Date,
Glatfelter and Mollanvick shall sell, assign, convey and deliver to Purico or
Purico's nominee, and Purico shall purchase from Glatfelter and Mollanvick, all
of the issued shares in Ecusta Australia (the "Ecusta Australia Stock" and,
together with the Ecusta Canada Stock, the "Ecusta Stock"), free and clear of
any Encumbrances.
(c) Purchase and Sale of Fixed Assets of Ecusta. Upon the
terms and subject to the conditions of this Agreement, on the Closing Date,
Glatfelter shall sell, transfer, assign, convey and deliver to RFS US, and RFS
US shall purchase from Glatfelter, all of Glatfelter's right, title and interest
in those Purchased Assets that are fixed assets of the Ecusta Division as a
going concern, as the same shall exist on the Closing Date, including:
(i) the Premises, including the Parking Lot;
(ii) all of the Principal Equipment and any rights to
the warranties and licenses received from the manufacturers and distributors of
the Principal Equipment and to any related claims, credits, rights of recovery
and set-off with respect to such items, subject, as applicable, to the rights
set forth in Schedule 2.1(c)(ii);
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(iii) all of the motor vehicles, whether or not
licensed or registered to operate on public highways, including automobiles,
trucks, self-propelled carts and other motorized lifting, material handling or
transporting equipment and all spare parts, fuel and other supplies, tools and
other items used in the operation or maintenance thereof which are owned or
leased by Glatfelter and located at the Premises or elsewhere and which are used
or held for use in the conduct of the Business, or which are in transit to or
temporarily removed from a location specified above and which would otherwise be
included among the items described above, and any rights to the warranties
received from suppliers or manufacturers of such items described above, and any
related claims, credits, rights of recovery and set-off with respect thereto,
including without limitation all such vehicles, spare parts, fuel and other
supplies, tools and other items and other rights set forth on Schedule
2.1(c)(iii); and
(iv) all of the furniture and office equipment,
including desks, tables, chairs, file cabinets and other storage devices,
communications equipment, computers and office supplies, which are owned or
leased by Glatfelter and located at the Premises and which are used or held for
use in the conduct of the Business, or which are located other than at the
Premises and which are primarily used or held for use in the conduct of the
Business, or which are in transit to or temporarily removed from a location
specified above and which would otherwise be included among the items identified
above.
(d) Purchase and Sale of Non-Fixed Assets of Ecusta. Upon the
terms and subject to the conditions of this Agreement, on the Closing Date,
Glatfelter shall sell, transfer, assign, convey and deliver to RFS Ecusta, and
RFS Ecusta shall purchase from Glatfelter, all of Glatfelter's right, title and
interest in all Purchased Assets, other than those in 2.1(c) and 2.1(e) hereof,
of the Ecusta Division as a going concern and the goodwill related thereto, as
the same shall exist on the Closing Date, including:
(i) all inventory, wherever located (including
inventory in transit), including, without limitation, all the raw materials,
work in process, recycled materials, finished products, supplies and spare parts
located at the Premises or elsewhere and primarily used or held for use in the
conduct of the Business, including items of the type and nature of the materials
identified as inventory in the Business Financial Statements, a summary as of
March 31, 2001 of which and the principal locations of which are set forth in
Schedule 2.1(d)(i) (the "Inventory") and any rights to the warranties received
from suppliers and any related claims, credits, rights of recovery and set-off
with respect to such Inventory;
(ii) all of the accounts, notes and finance
receivables generated by the Business and existing as of the close of business
on the Closing Date, including, without limitation, all funds, refunds,
receivables, credits, offsets, or reimbursements, claims, debts, obligations and
such other rights, together with all accrued interest thereon, existing as of
the close of business on the Closing Date to the extent and in the amounts that
such items would be reflected as accounts or notes receivable (or as any other
asset related thereto) on a balance sheet of the Business as of the Closing Date
prepared in accordance with the Accounting Principles (the "Accounts
Receivable");
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(iii) except as provided in Sections 2.9 and 5.5, all
of the rights and obligations under the contracts, contractual rights,
agreements, leases, Leases, purchase orders, warranty rights, sales orders and
instruments which primarily relate to the Business, including those identified
as of the Effective Date on Schedule 2.1(d)(iii), and including those (i) for
the lease (from Persons other than Glatfelter or any Affiliate of Glatfelter) of
machinery and equipment, real property, motor vehicles, or furniture and office
equipment or other property used or held for use in the conduct of the Business,
(ii) for the provision (by Persons other than Glatfelter or any Affiliate of
Glatfelter) of goods or services used or held for use in the conduct of the
Business, (iii) for the sale of goods or performance of services by the
Business, (iv) which restrain or restrict any Person from directly or indirectly
competing with the Business or from disclosing confidential or Business
Intellectual Property, and (v) any such contracts, agreements, instruments and
leases entered into by Glatfelter or any Affiliate of Glatfelter between May 16,
2001 and the Closing Date which relate to the Business (collectively, the
"Contracts");
(iv) copies of all mailing lists, customer lists and
supplier lists and all sales and marketing or packaging materials specific to
the Ecusta Division and/or Ecusta Subsidiaries, equipment maintenance records,
warranty information, records of plant operations and the source and disposition
of materials used and produced therein, manuals of operation, and other similar
proprietary or confidential information of Glatfelter used or held for use in
the conduct of the Business, and with respect to the Premises, all building
plans, blueprints, renderings or surveys to the extent in the possession of
Sellers or the Ecusta Subsidiaries;
(v) copies of all books and records of Glatfelter
primarily relating to the Business including, without limitation, all discs,
tapes and other media storing data and other information and the software and
information management systems used or held for use in the conduct of the
Business, including any documentation and manuals related thereto (the materials
described in subsections (iv) and (v) of this Section 2.1(d) hereinafter being
referred to as "Business Records");
(vi) all of the governmental permits, licenses,
certificates of inspection, certificates of occupancy, building permits,
variances, approvals, authorizations and other licenses (including Permits)
relating to the use or occupancy of the Premises, issued to Sellers with respect
to the Business or which are used by Sellers in, or otherwise necessary or
material to, the operation of the Business, the use by Sellers of the Premises,
or the conduct of the Business at the Premises, or which are otherwise required
by law to be transferred to Buyers (the "Governmental Permits") including those
Governmental Permits which are described and identified in Schedule 2.1(d)(vi)
and Schedule 3.12(a);
(vii) all rights of Glatfelter to any insurance
proceeds relating to the damage, destruction or impairment of assets or other
rights described in this Section 2.1(d) which would have been Purchased Assets
but for such damage, destruction or impairment prior to the Closing and any
award relating to a condemnation or eminent domain proceeding except as provided
in Section 2.2(d);
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(viii) all of the rights, claims or causes of action
of Glatfelter against third Persons to the extent they relate to the Purchased
Assets or the Assumed Liabilities;
(ix) all assets other than fixed assets (other than
Excluded Assets) reflected in the Balance Sheet together with all replacements
thereof, all expansions, enhancements and modifications thereto and all assets
(other than Excluded Assets) of like character that have been or are acquired by
Glatfelter subsequent to such balance sheet date and on or prior to the Closing
Date, primarily for use in the Business, except to the extent such assets have
been disposed of on or after such date;
(x) all the items, if any, listed on Schedule
2.1(d)(x); and
(xi) all cash and cash equivalents of the Ecusta
Division.
(e) Purchase and Sale of the Business Intellectual Property.
Upon the terms and subject to the conditions of this Agreement, on the Closing
Date, Sellers shall transfer, assign, grant, convey and deliver to RF and RF
shall accept from Sellers, all rights in and to the Business Intellectual
Property except those items of Business Intellectual Property subject to and
explicitly set forth in the license and cross-license agreement attached hereto
as EXHIBIT 2.1(e) (the "License and Cross-License Agreement").
2.2. Excluded Assets. It is hereby expressly acknowledged and agreed
that the Purchased Assets shall not include, and Sellers are not selling,
transferring or assigning to Buyers, and Buyers are not purchasing or acquiring
from Sellers, the properties and assets of Sellers listed below (such properties
and assets collectively the "Excluded Assets"):
(a) all of the assets located at the Glatfelter Locations,
provided, however, that such assets have not been relocated to the Glatfelter
Locations for the purpose of avoiding their transfer with the Business to
Buyers;
(b) any claim, right or interest of Sellers in and to any
refund for Taxes for any periods ended prior to the Closing Date;
(c) all of the assets of the Ecusta Subsidiaries (such assets
being transferred in connection with the purchase and sale of the Ecusta Stock
hereunder and not separately therefrom);
(d) the Supercalender and any of equipment that is located at
the Premises and listed on Schedule 2.2(d) (the "Excluded Equipment");
(e) all of the contracts, contractual rights, agreements, and
other instruments set forth on Schedule 2.2(e) (the "Excluded Contracts") and
all Shared Contracts;
(f) all of the rights of Glatfelter to the insurance proceeds
set forth on Schedule 2.2(f) relating to currently pending claims for certain
equipment damage and repairs;
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(g) minute books, stock transfer books, and other corporate
books and records relating to Glatfelter and any Glatfelter subsidiary other
than the Ecusta Subsidiaries;
(h) the Unproductive Land;
(i) the Plans and other policies, programs and agreements set
forth on Schedule 3.10(a) which relate to the Transferred Employees; and
(j) all of the rights, claims or causes of action of Sellers
against third Persons to the extent they do not relate to the Business or they
relate primarily to the Excluded Assets or the Excluded Liabilities.
2.3. Assumed Liabilities; Excluded Liabilities.
(a) On the Closing Date, upon the terms and conditions of this
Agreement, RFS Ecusta shall execute and deliver to Glatfelter an assumption
agreement in the form set forth as EXHIBIT 2.3(a) (the "Assumption Agreement")
pursuant to which Glatfelter shall assign and transfer to RFS Ecusta, and RFS
Ecusta shall assume and agree to pay, perform or otherwise discharge, in
accordance with their respective terms and subject to the respective conditions
thereof and subject to the provisions of Section 2.3(b), all of the Assumed
Liabilities. As used herein, "Assumed Liabilities" means any and all liabilities
of Glatfelter in respect of the Ecusta Division, whether direct or indirect,
known or unknown, or absolute or contingent, to the extent arising out of or
primarily relating to the conduct of the Ecusta Division or the ownership and
operation of the Purchased Assets, including (i) the obligations and liabilities
set forth under the heading "Assumed Liabilities" on Schedule 2.3(a), (ii) the
obligations specifically assumed by RFS Ecusta pursuant to Section 2.9, (iii)
all obligations and liabilities arising from, relating to or in connection with
events or actions primarily relating to the Ecusta Division and occurring after
the Effective Date and (iv) the Intercompany Payables, but excluding the
Excluded Liabilities.
(b) Buyers shall not assume or be obligated to pay, perform or
otherwise discharge any of the following obligations or liabilities of Sellers
or any of their Affiliates, whether or not related to the Business and whether
direct or indirect, known or unknown, or absolute or contingent (all of such
obligations and liabilities not so assumed being herein called the "Excluded
Liabilities"):
(i) any obligations or liabilities (including Taxes)
of any Seller or any of its Affiliates incurred by any Seller or any of its
Affiliates in connection with the conduct of their respective businesses other
than the Business;
(ii) any obligations of any Seller or any of its
Affiliates arising under this Agreement;
(iii) any intercompany payables and liabilities or
obligations of any kind between either of the Ecusta Subsidiaries and any of the
Sellers other than the Intercompany Payables;
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(iv) any liabilities or obligations to the extent
related to Excluded Assets;
(v) all of the liabilities of the Ecusta Subsidiaries
(such liabilities being assumed in connection with the purchase and sale of the
Ecusta Stock hereunder and not separately therefrom);
(vi) any liability for Taxes incident to or arising
from the consummation of the transactions contemplated under this Agreement
(other than Transfer Taxes the liability for which is allocated between Buyers
and Sellers under Section 5.4(g));
(vii) any liability for any Taxes of any
consolidated, combined or unitary group of which any Seller or Ecusta Subsidiary
is or was a member, including (but not limited to) any liability pursuant to
Treasury Regulation Section 1.1502-6 or any analogous state, local or foreign
tax provisions;
(viii) any liability for Taxes of another Person
resulting from an agreement entered into by any Seller or Ecusta Subsidiary on
or prior to the Closing Date, pursuant to which any Seller or Ecusta Subsidiary
has an obligation in respect of the Taxes of such other Person;
(ix) any liability in respect of the Plans or any
other employee benefit or compensation arrangement set forth on Schedule 3.10(a)
except as is specifically provided in Section 5.5, and any liability allocated
to Sellers pursuant to Section 5.5;
(x) any liability or obligation of any Seller, Ecusta
Canada or Ecusta Australia or any of their respective Affiliates for
indemnification of, or advancement of expenses or payment of insurance proceeds
to, any present or former director or officer of (or other person serving in a
fiduciary capacity at the request of) any Seller, Ecusta Canada or Ecusta
Australia or any of their Affiliates based upon an actual or alleged breach of
fiduciary duty of such person prior to the Closing Date;
(xi) other than with respect to claims arising from
violations of Environmental Laws or contamination at the properties owned,
operated or leased in connection with the operation of the Business, all
liabilities and obligations arising out of, resulting from or relating to
claims, whether founded upon negligence, strict liability in tort or other
similar legal theory (but not breach of warranty), seeking compensation or
recovery for or relating to injury to person or damage to property arising out
of the conduct of the Business before the Closing Date, except for claims
covered under Sellers' medical and disability plans or under workers'
compensation, including those claims listed on Schedule 2.3(b), but only to the
extent such claims are covered under Sellers' medical and disability plans or
under workers' compensation;
(xii) any liability or obligation arising out of or
relating to any business or product line formerly owned or operated by any
Seller or any predecessor thereof but not so owned or operated as of the Closing
Date;
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(xiii) any liability or obligation arising out of, or
related to, any indemnification or other provision under any contract or other
agreement pursuant to which any sale or disposition was made of any business or
product line formerly owned or operated by any Seller or any predecessor thereof
but not presently so owned or operated;
(xiv) any liability or obligation of any Seller or
any of its Affiliates arising out of matters occurring, or obligations incurred,
after the Closing;
(xv) any liabilities or obligations of any Seller or
any of its Affiliates for any professional, financial advisory or consulting
fees and expenses incident to or arising out of the negotiation, preparation,
approval or authorization of this Agreement and the transactions contemplated
hereby, or any other proposed transaction for the direct or indirect sale of the
Business or any portion thereof, including without limitation, the fees,
expenses and disbursements of Sellers' counsel and accountants (including
accountants fees, expenses and disbursements in connection with the preparation
of the Business Financial Statements);
(xvi) the liabilities and obligations of Sellers
pursuant to Section 2.6(c) and any liability or obligation of any Seller or any
of its Affiliates arising out of any Shared Contract;
(xvii) any liability or obligation of any Seller or
any of its Affiliates to the extent the amount of such liability or obligation
is covered by a policy of insurance or other indemnity agreement maintained by
or for the benefit of any Seller or any of its Affiliates, unless the rights
under such policy of insurance or indemnity agreement have been assigned to
Buyers;
(xviii) any liability or obligation of any Seller or
any of its Affiliates for funded debt and indebtedness for borrowed money,
including obligations evidenced by notes, bonds, debentures or similar
instruments, and including any guaranties of any of the foregoing;
(xix) any liability or obligation to which any Buyer,
any Purchased Assets or the Business becomes subject that would not otherwise
constitute an Assumed Liability arising as a result of failure by Sellers to
comply with bulk sales laws or any similar law;
(xx) any liability or obligation for which Sellers
have agreed to indemnify Buyers under the Ancillary Agreements; and
(xxi) any liability or obligation designated as an
Excluded Liability on any Schedule to this Agreement.
2.4. The Closing. The Closing shall take place at the offices of
Dechert, 0000 Xxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx on such date as shall be
mutually agreed upon by the parties hereto (such date being herein called the
"Closing Date") and the effective time of the transactions contemplated hereby
shall be deemed to be the end of business on the Closing Date.
2.5. Purchase Price.
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(a) The aggregate purchase price (the "Purchase Price") for
the Ecusta Stock, the Purchased Assets and the German Assets and the other
agreements of Sellers stated herein shall be (i) $25.8 million (the "Initial
Payment") (subject to the adjustments set forth in Section 2.6), plus (ii) a sum
equal to the actual cost of any new equipment to be used in Business paid by
Sellers during the period beginning March 31, 2001 and ending as of the Closing
Date, the cost of which has been approved by Buyers in writing, plus (iii) the
assumption of the Assumed Liabilities. The Initial Payment shall be allocated as
set forth in the Side Letter. The Purchase Price shall be subject to an
adjustment to the extent the Closing Net Working Capital is less than or greater
than $26.26 million as provided in this Article II.
(b) The Initial Payment shall be paid in full at the Closing
by Buyers in cash by wire transfer of immediately available funds as follows:
(i) $2.0 million into an escrow account pursuant to the Escrow Agreement, (ii)
$700,000 into an escrow account pursuant to Section 5.4(h) of this Agreement,
and (iii) $23.1 million into an account specified by Glatfelter at least three
(3) Business Days prior to the Closing.
2.6. Purchase Price Adjustment.
(a) Within thirty (30) days after the Closing, Sellers will
deliver to RF (i) a statement of the Net Working Capital (as defined in Section
1.1) of the Ecusta Division (the "Closing Net Working Capital Statement")
setting forth the Net Working Capital of the Ecusta Division, excluding any
Accounts Payable related to outstanding checks, as of the Effective Date (the
"Closing Net Working Capital") and (ii) a reconciliation statement (the
"Reconciliation Statement") accounting for the cash receipts and disbursements
for the Business in reasonable detail from the Effective Date up to and
including the Closing Date. The Closing Net Working Capital Statement and
Reconciliation Statement shall be prepared in accordance with the Accounting
Principles. Buyers will provide to Sellers and to their officers, employees,
counsel and other representatives, upon request (subject to any limitations that
are reasonably required to preserve any applicable attorney-client privilege),
reasonable access to their officers and employees and reasonable access for
inspection and copying of any information existing at or after the Closing Date,
and will make their officers and employees available, to the extent such
availability does not unreasonable interfere with the conduct of the Business,
for the sole purpose of enabling and as reasonably necessary to enable the
Sellers to prepare the Closing Net Working Capital Statement and the
Reconciliation Statement.
(b) If, within thirty (30) days after the delivery of the
Closing Net Working Capital Statement and the Reconciliation Statement, RF
determines in good faith that the Closing Net Working Capital Statement or the
Reconciliation Statement has not been prepared in accordance with the Accounting
Principles, RF shall deliver to Glatfelter within such period written notice
specifying in reasonable detail all disputed items and the basis therefor
(collectively, the "Disputed Items"). The failure by RF to provide such notice
of Disputed Items to Glatfelter within such period will constitute RF's
acceptance of the Closing Net Working Capital Statement or the Reconciliation
Statement, as applicable. Sellers and Buyers shall, within ten (10) days
following the delivery of such notice of Disputed Items (the "Resolution
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Period"), negotiate in good faith to resolve such Disputed Items to their mutual
satisfaction. At the conclusion of the Resolution Period, Sellers and Buyers
shall refer all unresolved Disputed Items in writing to KPMG, or such other
national independent accounting firm (which has not previously been engaged by
either Sellers or Buyers for the preparation of such party's audited financial
statements) as RF and Glatfelter shall mutually agree upon (the "Independent
Accountant"). In connection with the resolution of any Disputed Items, the
Independent Accountant shall have access to all documents, records, work papers,
facilities and personnel necessary to perform its function as arbitrator. The
arbitration before the Independent Accountant shall be conducted in accordance
with the commercial arbitration rules of the American Arbitration Association.
The Independent Accountant shall make a determination with respect to each
Disputed Item within fifteen (15) days after its engagement by Buyers and
Sellers to resolve such Disputed Items, which determination shall be made on the
basis of whether the Closing Net Working Capital Statement or the Reconciliation
Statement, as applicable, has been prepared in accordance with the Accounting
Principles and accurate mathematical calculations. All determinations by the
Independent Accountant shall be final, binding and conclusive on the parties
hereto, and judgment may be entered on the award of the Independent Accountant
with respect to any Disputed Item. On the resolution of the Disputed Items, the
Closing Net Working Capital Statement or the Reconciliation Statement, as
applicable, shall be revised to reflect such resolution. Sellers and Buyers
shall each pay one-half of all of the costs incurred in connection with the
engagement of the Independent Accountant.
(c) If the Closing Net Working Capital (as determined by the
Closing Net Working Capital Statement and adjusted by the resolution of the
Disputed Items, if any) (i) exceeds $26.26 million, Buyers shall, within ten
(10) days after a final determination of the Closing Net Working Capital, pay to
Glatfelter, by wire transfer of immediately available funds, an amount equal to
80% of such excess amount, or (ii) is less than $26.26 million, Glatfelter
shall, within ten (10) days after a final determination of the Closing Net
Working Capital, pay to Buyers by wire transfer of immediately available funds
an amount equal to such deficiency. If payment pursuant to this Section 2.6(c)
is not timely made, the amounts to be paid pursuant to the resolution or award
of the Independent Accountant shall bear interest at the rate of LIBOR + 1% per
annum from the date of receipt of the resolution judgment or award until the
date of payment. In addition, the net amount of the cash receipts and
disbursements (the "Reconciliation Amount") will be paid (A) by Glatfelter to
Buyers if the amount of cash receipts exceeds the amount of cash disbursements
and (B) by Buyers to Glatfelter if the amount of cash disbursements exceeds the
amount of cash receipts, any such payment pursuant to (A) or (B) to be made by
wire transfer of immediately available funds within ten (10) days after a final
determination of the Reconciliation Amount.
2.7. Escrow Account. The parties hereto agree at the Closing to enter
into the escrow agreement substantially in the form attached hereto as EXHIBIT
2.7 (the "Escrow Agreement").
2.8. Consent of Third Parties; Further Assurances.
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(a) From time to time following the Closing, Sellers shall
execute and deliver, or cause to be executed and delivered, to Buyers such
additional instruments of conveyance and transfer as Buyers may reasonably
request or as may be otherwise reasonably necessary to more effectively convey
or transfer to, and vest in, Buyers and put Buyers in possession of, any part of
the Purchased Assets. Nothing in this Agreement shall be construed as an attempt
or agreement to assign any asset, contract, lease, permit, license or other
right which would otherwise be included in the Purchased Assets but which is by
its terms or by law nonassignable without the consent of the other party or
parties thereto or any Governmental Authority unless such consent shall have
been given, or as to which all the remedies for the enforcement thereof enjoyed
by Glatfelter, any other Seller or the Business would not, as a matter of law,
pass to RF or any other Buyer as an incident of the assignments provided for by
this Agreement (the "Non-Assignable Assets"). Glatfelter agrees to use its
commercially reasonable best efforts to obtain such consent promptly. At such
time as any Non-Assignable Asset is properly assigned to RF, such Non-
Assignable Asset shall become a Purchased Asset. After the Closing, and at
Buyers' sole expense, Sellers will make available to Buyers such financial
information as is necessary in order to permit Buyers to comply with securities
law, financial and tax reporting and accounting requirements.
(b) Following the Closing and until the earlier of such time
as such Non- Assignable Assets may be properly assigned to RF or the date six
months after the Effective Date, such Non-Assignable Assets shall be held by
Glatfelter in trust for RF and the covenants and obligations thereunder shall be
performed by RF in the name of Glatfelter and all benefits and obligations
existing thereunder shall be for the account of RF. During such period, (i)
Buyers shall perform or procure that the relevant Buyer or Ecusta Subsidiary
shall perform all the obligations of such Buyer or Ecusta Subsidiary in
connection with the Non-Assignable Assets and indemnify Glatfelter on an
after-tax basis against all liability and all costs reasonably incurred by
Glatfelter arising in connection with any such Non-Assignable Assets and (ii)
Glatfelter shall take or cause to be taken such action in its name or otherwise
as RF may reasonably request, at such Buyer entity's expense, so as to provide
RF with the benefits of the Non-Assignable Assets and to effect collection of
money or other consideration to become due and payable under the Non-Assignable
Assets and Glatfelter shall promptly pay over to RF all money or other
consideration received by it (or its Affiliates) in respect of all
Non-Assignable Assets. Following the Closing, Glatfelter authorizes RF to the
extent permitted by applicable law and the terms of the Non-Assignable Assets,
at such Buyer entity's expense, to perform all of the obligations and receive
all of the benefits under the Non-Assignable Assets and appoints RF its
attorney-in-fact to act in its name on its behalf (and on behalf of its
Affiliates) with respect thereto.
(c) Notwithstanding anything in this Agreement to the
contrary, this Agreement shall not constitute an agreement by Glatfelter to
assign or delegate, or by RF to assume and agree to pay, perform or otherwise
discharge, any Non-Assignable Asset if an attempted assignment, delegation or
assumption thereof without the consent of a third Person (including, without
limitation, any Governmental Authority) thereto would constitute a breach
thereof unless and until such consent is obtained.
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2.9. Shared Contracts. Subject to the terms of the Ancillary
Agreements, to the extent any of the Contracts relates both to the Business and
to other businesses of Glatfelter but primarily to other businesses of
Glatfelter (the "Shared Contracts"), such Shared Contracts are set forth on
Schedule 2.9 and shall not be assigned to Buyers. At Buyers' request, with
respect to any Shared Contract, Sellers shall use commercially reasonable best
efforts to obtain the agreement of the other party or parties to any Shared
Contract to enter into a separate agreement with Buyers with respect to the
matters covered by such Shared Contract that relate to the Business. Buyers
shall be responsible for fulfilling the obligations under the Shared Contracts
related to or arising from benefits received by Buyers pursuant to the Shared
Contracts as contemplated by the Administrative Services Agreement.
2.10. Customer Billing. In the event that any Seller or any of its
Affiliates receives payment after the Closing Date on invoices relating to the
Business, such Seller will promptly notify the appropriate Buyer of such receipt
and will promptly remit, or will cause such Affiliate to promptly remit, such
payment to the appropriate Buyer. In the event that any Buyer or any of its
Affiliates receives payment after the Closing Date on invoices issued by any
Seller relating to product sold or services rendered by businesses other than
the Business, such Buyer will promptly notify the appropriate Seller of such
receipt and will promptly remit, or will cause such Affiliate to promptly remit,
such payment to the appropriate Seller.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Except where the Closing Date is specifically set forth below, Sellers
hereby jointly and severally represent and warrant to Buyers, as of the
Effective Date, as follows, subject in each case to the attached Schedules and
provided that each exception set forth in the Schedules shall be deemed to
qualify each representation and warranty that is specifically identified (by
cross-reference or otherwise) in any Schedule or with respect to which the
relevance of such exception is apparent on the face of the disclosure of such
exception as set forth in the Schedules:
3.1. Organization and Authority. Each Seller and Ecusta Subsidiary is a
corporation duly organized, validly existing and in good standing, under the
laws of the jurisdictions set forth in Schedule 3.1, and each Seller and Ecusta
Subsidiary has full corporate power and corporate authority, to execute and
deliver this Agreement and the Ancillary Agreements and transactions or
documents contemplated thereby, and effect the transactions contemplated hereby
and thereby and has duly authorized the execution, delivery and performance of
this Agreement and the Ancillary Agreements and transactions or documents
contemplated thereby by all necessary corporate and partnership action. Sellers
and the Ecusta Subsidiaries have all corporate power and corporate authority,
necessary to carry on the Business as now conducted and to own or lease and
operate its properties as and in the places where such Business is now conducted
and such properties are now owned, leased or operated.
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3.2. Authorization; Binding Obligation. As of the Closing Date, this
Agreement has been duly executed and delivered by Sellers, and constitutes the
valid and legally binding obligations of Sellers, enforceable against them in
accordance with its terms.
3.3. No Violations. Except as disclosed on Schedule 3.3:
(a) The execution, delivery and performance of this Agreement
and the Ancillary Agreements by Sellers and the consummation of the transactions
contemplated hereby and thereby do not and will not (i) result in a breach or
violation of any provision of the charter or by-laws or other governing document
of any Seller or Ecusta Subsidiary, (ii) result in a material violation of any
statute, rule, regulation or ordinance applicable to any Seller or Ecusta
Subsidiary or the assets of any Seller or Ecusta Subsidiary, (iii) subject to
the receipt of any consents of third Persons described in Section 3.3(b),
violate or result in a breach of or constitute an event of default (or an event
which might, upon the passage of time or the giving of notice, or both,
constitute an event of default) under any provision of, result in acceleration
or cancellation of any obligation under, or give rise to a right by any party to
terminate or amend its obligations under, any mortgage, deed of trust,
conveyance to secure debt, note, loan, indenture, lien, Governmental Permit,
material lease, agreement, contract, license, instrument, or other material
arrangement or commitment (1) to which any Seller or Ecusta Subsidiary is a
party or (2) which relates to the Business or the Purchased Assets, (iv) violate
any order, judgment, decree, rule or regulation of any court or any governmental
agency or body (A) having jurisdiction over any Seller or Ecusta Subsidiary or
any of their respective assets or properties and (B) having jurisdiction over
the Business or the Purchased Assets, or (v) violate any Lease or Permitted
Encumbrance, except, in the case of Sections 3.3(a)(iii) and (iv), for consents,
orders, judgments or authorizations where failure of compliance would not
individually or in the aggregate have a material adverse effect on or delay the
ability of Sellers to consummate the transactions contemplated hereby or have a
Material Adverse Effect on the Business.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Person is required by any Seller
or Ecusta Subsidiary in connection with the execution and delivery of this
Agreement and the Ancillary Agreements or the consummation of the transactions
contemplated hereby or thereby, except for consents disclosed on Schedule 3.3
and except for such consents, approvals, orders or authorizations,
registrations, declarations or filings where failure of compliance would not
individually or in the aggregate have a material adverse effect on or delay the
ability of Sellers to consummate the transactions contemplated hereby or have a
Material Adverse Effect on the Business.
3.4. Financial Statements. Attached hereto as Schedule 3.4 are (i) the
consolidated financial statements of the Business together with the Ecusta
Export Trading Company, a company formed under the laws of Bermuda and a
wholly-owned subsidiary of Glatfelter, for and as at the three years ended
December 31, 1998, 1999 and 2000, (ii) financial statements of Ecusta Canada,
for and as at the three years ended December 31, 1998, 1999, and 2000, (iii)
financial statements of Ecusta Canada, as required to be filed by applicable
law, for and as at the tax years ended July 31, 2000, (iv) financial statements
of Ecusta Australia, as required to be
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filed by applicable law, for and as at the three tax years ended November 30,
1998, 1999 and 2000, and (v) the Balance Sheet, (such financial statements of
the Business being referred to collectively herein as the "Business Financial
Statements"). The Business Financial Statements have been compiled from and are
in all material respects in accordance with Sellers' books and records for the
Business and (i) fairly present the financial condition, assets and liabilities
of the Business as of their respective dates and the results of operations of
the Business for the periods then ended and (ii) (A) with regard to the Ecusta
Division, have been prepared in accordance with GAAP consistently applied, (B)
with regard to Ecusta Australia, have been prepared in accordance with
Australian accounting standards consistently applied, and, (C) with regard to
the financial statements of Ecusta Canada that are required to be filed by
applicable law, have been prepared in accordance with Canadian tax reporting
standards consistently applied, except as set forth on Schedule 3.4 attached
hereto (the "Accounting Principles"). The Business Financial Statements reflect
a lump sum allocation of expenses for certain common support functions performed
predominately outside of the Premises which includes such items as general and
administrative support and marketing and sales support. Since January 1, 1998
the methodology of making such allocations has not changed in any material
respect. During the five fiscal years ended December 31, 2000, there has not
been any material change in the method of accounting or keeping of books of
account or accounting practices with respect to the Business.
3.5. Absence of Changes. Except as disclosed on Schedule 3.5, since
December 31, 2000:
(a) Sellers and the Ecusta Subsidiaries have (i) conducted the
Business only in the usual and ordinary course and (ii) operated the Business in
accordance with past practices;
(b) there has not been any material change (or series of
changes) in the business, condition (financial or otherwise), properties,
assets, results of operations or prospects of the Business;
(c) no Seller or Ecusta Subsidiary has made or promised to
make any increase in any salaries, rates of pay or other compensation or
benefits of any Business Employees or Ecusta Subsidiary employees, except for
customary increases and progressions for employees consistent with past
practices which increases and progressions were made in the ordinary course of
business or changes in benefits generally provided to Sellers' or the Ecusta
Subsidiaries' occupational and/or management employees;
(d) the Business has not suffered any damage, destruction or
loss (whether or not covered by insurance) of any tangible assets or properties
which would have been included as Purchased Assets or are owned by the Ecusta
Subsidiaries in excess of $25,000;
(e) the Business has not suffered any strike or other labor
trouble that has had or would reasonably be expected to have a Material Adverse
Effect on the relationship between any Seller or Ecusta Subsidiary and the
Business Employees or Ecusta Subsidiary employees, and has not entered into any
material agreement or material negotiation with any labor union or
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other collective bargaining representative of any Business Employees or Ecusta
Subsidiary employees;
(f) there has not been any change or, to the knowledge of any
Seller or Ecusta Subsidiary, any threat of any change in any of its relations
with, or any loss or, to the knowledge of any Seller or Ecusta Subsidiary,
threat of loss of any of the suppliers, distributors or customers who account
for more than 5% of the source of supply or sales of the Business or which,
individually or in the aggregate, has had or reasonably would be expected to
have a Material Adverse Effect;
(g) there has not been any cancellation, expiration,
non-renewal or waiver of any right under any contract, lease, Lease, agreement,
license or permit which cancellation, expiration, non-renewal or waiver, has had
or could reasonably be expected to have a Material Adverse Effect or a Material
Real Estate Impairment;
(h) there has not been any sale, transfer or other disposition
of, or subjection to any Encumbrance of, any assets, properties or rights of the
Business that in the aggregate is in excess of $5,000, except for Permitted
Encumbrances, sales of inventory or obsolete or damaged equipment or retirement
of equipment, in each case in the ordinary course of business consistent with
past practice, and no substantial item of tangible property used in the Business
has been transferred to any of the Glatfelter Locations; and
(i) no Ecusta Subsidiary has declared or paid any dividend or
other distribution, undertaken a capital reduction or repurchased any of its
share capital.
3.6. Assets. Except as disclosed on Schedule 3.6, Sellers and the
Ecusta Subsidiaries have, and upon consummation of the transactions contemplated
by this Agreement, Buyers will have, good and marketable title to, or leasehold
interest in, all of the Purchased Assets and the assets of the Ecusta
Subsidiaries (other than the Non-Assignable Assets) free and clear of any
Encumbrance except for Permitted Encumbrances.
3.7. Personal Property. Except as set forth on Schedule 3.7, the items
of personal property included in the Purchased Assets and owned or leased or
otherwise used in relation to the Business by Sellers or the Ecusta Subsidiaries
are in good operating condition, free of any defects (except those resulting
from normal wear and operation) which individually or in the aggregate,
reasonably would be expected to have a Material Adverse Effect.
3.8. Permits, Licenses.
(a) Other than with respect to Environmental Laws addressed by
Section 3.12 hereunder and except as set forth on Schedule 2.1(d)(vi), Schedule
3.8 or Schedule 3.12(a), to the knowledge of Sellers and the Ecusta
Subsidiaries, there are no Governmental Permits or other consents or
authorizations necessary for or used to carry on the Business as now being
conducted or to use and occupy any one or more of the Premises as now being
used, which are required by currently effective laws, rules or regulations.
Except as set forth on Schedule 3.8, Sellers and the
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Ecusta Subsidiaries have all material Governmental Permits or other consents or
authorizations necessary for or used to carry on the Business as now being
conducted or to use and occupy any one or more of the Premises as now being used
which are required by currently effective laws, rules or regulations, Sellers
and the Ecusta Subsidiaries are and have been in compliance with such
Governmental Permits or other consents or authorizations, and all such
Governmental Permits or other consents or authorizations are readily
transferable to Buyers.
(b) Other than with respect to Environmental Laws addressed by
Section 3.12 hereunder and except as set forth on Schedule 2.1(d)(vi) or
Schedule 3.12(a), to the knowledge of Sellers and the Ecusta Subsidiaries, there
are no Governmental Permits, licenses, certificates of inspection, certificates
of occupancy or other consents or authorizations necessary for the use and
occupancy of the Premises as currently utilized which are required by currently
effective laws, rules or regulations. Except as set forth on Schedule 3.8,
Sellers and the Ecusta Subsidiaries have all material Governmental Permits,
licenses, certificates of inspection, certificates of occupancy or other
consents or authorizations necessary for the use and occupancy of the Premises
as utilized which are required by currently effective laws, rules or regulations
and all such Governmental Permits, licenses, certificates of inspection,
certificates of occupancy or other consents or authorizations are readily
transferable to Buyers.
3.9. Compliance with Laws and Litigation. Other than with respect to
Environmental Laws addressed by Section 3.12 hereunder and except as set forth
on Schedule 3.9, to the knowledge of any Seller or Ecusta Subsidiary, with
respect to the Business or use currently made of the Premises, Sellers and the
Ecusta Subsidiaries are in compliance with all applicable laws, rules,
regulations, ordinances, decrees, orders, judgments, permits and licenses of or
from governmental authorities, including, without limitation, those relating to
the use and operation of any one or more of the Premises. Except as set forth on
Schedule 3.9, there are no actions, suits, proceedings or governmental
investigations pending or, to the knowledge of Sellers or any Ecusta Subsidiary,
threatened against them with respect to the Business or the Purchased Assets or
Assumed Liabilities, or the use currently made of the Premises.
3.10. Employee Matters.
(a) Except as described in Schedule 3.10(a), no Seller or
Ecusta Subsidiary is, in respect of any Transferred Employee or Ecusta
Subsidiary employee, a party to or bound by any written or oral:
(i) collective bargaining agreements (including any
side letter or adjunct agreements thereto); employment agreements; consulting,
advisory, or service agreements; deferred compensation agreements;
confidentiality agreements; noncompetition agreements; termination agreements;
severance agreements; retention agreements; change of control agreements; or
similar agreements or policies;
(ii) agreements or arrangements with any Business
Employee (other than agreements disclosed in response to Section 3.10(a)(i)) or
any employee or director of an Ecusta Subsidiary; or
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(iii) stock option, stock appreciation, restricted
stock, phantom stock, stock purchase, bonus, or other incentive plans or
agreements.
(b) Except as described in Schedule 3.10(b), with respect to
the Transferred Employees, neither Sellers nor any ERISA Affiliate maintains, is
required to contribute to, or is subject to any liability with respect to, any
"employee benefit plan," as such term is defined in Section 3(3) of ERISA,
whether or not subject to ERISA. Except as described in Schedule 3.10(b), with
respect to the Transferred Employees, neither Sellers nor any ERISA Affiliate
has at any time sponsored, maintained, contributed to nor been required to
contribute to any Single Employer Plan or any Multiemployer Plan. Neither
Sellers nor any ERISA Affiliate is or has been required to contribute to any
Multiemployer Plan with respect to any of its employees. Each of the plans
described in Schedule 3.10(b) (the "Plans") which is intended to qualify under
Section 401(a) of the Code is tax-qualified and has received a favorable
determination letter from the IRS as to its qualification under the Code that
takes into account the changes required under the Tax Reform Act of 1986, and
each trust forming a part of any such Plan is exempt from taxation under Section
501(a) of the Code. Except as set forth in Schedule 3.10(b), each of the Plans,
other than Multiemployer Plans, complies in form in all material respects and
has been administered in all material respects in accordance with all applicable
requirements of law and regulations thereunder. No determination letter with
regard to the Plans has been revoked and, to the knowledge of Sellers, there is
no reason for such revocation.
(c) Sellers and each affiliated entity has complied in all
material respects with the applicable health care continuation requirements of
Section 601, et seq., of ERISA and Section 4980B of the Code with respect to the
Business Employees, and Sellers will continue to maintain one or more Plans that
are "group health plans" as defined in Section 4980B(g) of the Code and Section
607 of ERISA for the required coverage period, provided, however, that Sellers
reserve the right to amend the terms of such group health plans; provided,
further, that such amendment will not reduce or eliminate coverage or levels of
benefits so as to result in Buyers having any liability as a successor employer
under COBRA.
(d) Except as described in Schedule 3.10(d), there is no
pending or, to the knowledge of Sellers, threatened claim which alleges any
violation of any Plan or any requirement of applicable law and regulations
thereunder (i) by or on behalf of any Plans or fiduciaries of any Plans or (ii)
by any employee or any participant or beneficiary against any Plan. Without
limiting the generality of the foregoing, the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby will not
give rise to or subsequently result in any liability on the part of Buyers, or
any affiliate of Buyers, or any of the officers, directors, or employees of any
Buyer, under Sections 404, 406, 409, 502, 4069, 4201, et seq. of ERISA or
Section 4975 of the Code. Furthermore, Sellers have complied (in all material
respects) with, shall be responsible for and has the obligation for satisfying
any notice requirements in respect of events occurring, services rendered or
compensation paid on or prior to the Closing Date which are required by ERISA
and the Code regarding its Plans, including without limitation notices required
by Sections 204(h), 606, and 4043 of ERISA and 4980B of the Code.
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(e) All contributions required to have been made by Sellers
and each "related person" (as defined in Section 414 of the Code) to any Plan
under the terms of any such Plan or pursuant to any applicable collective
bargaining agreement or requirement of law or any regulations thereunder have
been made within the time prescribed by such Plan, collective bargaining
agreement, or requirement of law or any regulations thereunder.
(f) Except as specifically described in Schedule 3.10(f), the
consummation of the transactions contemplated by this Agreement will not (i)
entitle any Transferred Employee or Ecusta Subsidiary employee to severance pay,
unemployment compensation, or any similar payment, or (ii) accelerate the time
of payment or vesting or increase the amount of any compensation or benefits due
to any such Transferred Employee or Ecusta Subsidiary employee.
(g) Except as described in Schedule 3.10(g), no Transferred
Employee is or may become entitled to post-employment benefits of any kind by
reason of employment in the Business, including, without limitation, death, life
insurance, or medical benefits (whether or not insured), other than (i) coverage
mandated by Section 4980B of the Code, or (ii) retirement benefits payable under
any Plan qualified under Section 401(a) of the Code. Sellers represent that,
except as provided for in the Post-retirement Medical Benefits Side Letter, no
Transferred Employee will be eligible for post-retirement medical coverage
(other than as required by COBRA) from Sellers even if he or she had attained
age 55 as of the Effective Date. Except as otherwise provided in section 5.5(a),
(f), (i), (j), (k) or (m) of this Agreement, the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereunder will
not result at any time in any obligation or liability under any of the Plans
(with respect to accrued benefits or otherwise) of Buyers to any Business
Employee or Transferred Employee, any employee or former employee of any ERISA
Affiliate, any of the Plans, any plan of any type maintained by any ERISA
Affiliate or the Pension Benefit Guaranty Corporation (the "PBGC"). No amendment
to, termination of, or withdrawal from any Multiemployer Plan or any plans
subject to Title IV of ERISA or Section 302(c)(11) of ERISA at any time before,
on or after the Effective Date by Seller or any ERISA Affiliate will subject
Buyers to any liability to any such plan, the PBGC or the IRS, to any Business
Employee, to any employee or former employee of any ERISA Affiliate, or to any
other Person. None of the Purchased Assets are subject to any Liens arising
under Sections 302(f) of ERISA or Section 412(n) of the Code.
(h) Except as set forth in Schedule 3.10(h), solely with
regard to the operation of the Business, Sellers and the Ecusta Subsidiaries
have complied in all material respects with all requirements of law or any
regulations thereunder pertaining to the employment of employees, including,
without limitation, those relating to prices, wages, hours, employment
practices, sexual harassment, discrimination, labor relations, collective
bargaining, and operation of its business and is not liable for any arrears of
wages or any Tax or penalty for failure to comply with any of the foregoing.
(i) Except as set forth on Schedule 3.10(i), at the present
time and during the past three years, with regard to the operation of the
Business, (A) no unfair labor practice complaint or charge against any Seller or
Ecusta Subsidiary has been brought before, or, to the
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knowledge of Sellers and the Ecusta Subsidiaries, threatened by, the National
Labor Relations Board or similar entity or agency in Canada or Australia or any
other government agency or court in any jurisdiction; (B) there has not occurred
or, to the knowledge of Sellers and the Ecusta Subsidiaries, been threatened any
labor strike, dispute, picketing, slowdown, stoppage, or other similar labor
activity against or involving any Seller or Ecusta Subsidiary; (C) no Seller or
Ecusta Subsidiary is or has been party to any collective bargaining agreement
and there are no labor unions or other organizations representing, purporting to
represent, or attempting to represent any employee; (D) no Seller or Ecusta
Subsidiary is or has been a party to, or affected by or threatened with, any
union organizing or election activity or any dispute or controversy with a union
involving its employees; (E) no Seller or Ecusta Subsidiary has experienced any
material labor difficulty; and (F) no Seller or Ecusta Subsidiary has knowledge
that Sellers' or the Ecusta Subsidiaries' relations with its employees are other
than satisfactory. To the knowledge of Sellers and the Ecusta Subsidiaries, no
employee of any Seller or Ecusta Subsidiary intends to terminate employment with
any of Sellers or the Ecusta Subsidiaries or the Business.
(j) Sellers and the Ecusta Subsidiaries maintain policies or
practices, with respect to the Business, on the proper classification for all
employees, leased employees, consultants and independent contracts, for all
purposes (including, without limitation, for all Tax purpose and for purposes of
determining eligibility to participate in any Plans.)
(k) With respect to any Transferred Employee, neither Buyers
nor Sellers will be obligated to make any now existing payments that, separately
or in the aggregate (whether in connection with any termination of employment or
otherwise) would result in an "excess parachute payment" within the meaning of
section 280G of the Code.
(l) Except as disclosed on Schedule 3.10(l) hereto, no
Business Employee has suffered, during the ninety (90) day period preceding the
Closing Date, an "employment loss" within the meaning of Section 1(a)(6) of the
Worker Adjustment and Retraining Notification Act, 29 U.S.C. Section 2101(a)(6).
(m) No Transferred Employee is eligible to participate in (i)
the P.H. Glatfelter Company Supplemental Executive Retirement Plan or (ii) the
P.H. Glatfelter Company Salaried Employee Stock Ownership Plan. With respect to
any Transferred Employee, there are no accrued, unpaid liabilities with respect
to the Profit-Sharing Plan of P.H. Glatfelter Company (Ecusta Salaried Group)
and Buyers shall have no obligations with respect to such plan.
(n) Sellers have provided true and correct copies of all Plans
and other programs, policies and agreements, the liabilities of which have been
specifically accrued as a liability on the Balance Sheet with respect to
Transferred Employees. The accrued liabilities which will become the liabilities
of Buyers upon Closing, pursuant to and in accordance with Section 5.5 hereof,
have been accurately accrued and estimated as liabilities on the Balance Sheet
pursuant to reasonable actuarial and other assumptions and methodologies. At
Closing, Sellers will provide all the reasonably necessary additional
information regarding Transferred Employees in order to ensure the
cost-efficient and expedient transfer of such accrued liabilities
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to Buyers pursuant to and in accordance with Section 5.5. Any difference in the
actual liabilities from such estimated liabilities accrued on the Balance Sheet
shall be the sole responsibility and liability of Buyers; provided, however,
that solely with respect to accrued liabilities for long-term disability
benefits for Transferred Employees on long-term disability status as of the
Effective Date, in the event that Buyers' aggregate costs for accrued long-term
disability benefits for such Transferred Employees should exceed the estimated
dollar amount with respect to such accrued liabilities set forth on the balance
sheet as of the Effective Date (the "Threshold Amount"), then Sellers shall
reimburse Buyers for 80% of said excess costs. Such reimbursement obligation
shall be contingent on Buyers' provision of information reasonably satisfactory
to Sellers making it possible for Sellers to determine that Buyers' actual costs
in fact exceed the Threshold Amount.
(o) Except as provided in Schedule 3.10(o), all awards under
the 1992 Key Employee Long-Term Incentive Plan ("LTIP") have been made pursuant
to the form of award agreement provided by Sellers to Buyers and attached hereto
as EXHIBIT 3.10(o).
(p) Except as set forth in Schedule 3.10(p), no Seller, with
respect to a Business Employee, or Ecusta Subsidiary has entered into any
contract of employment which cannot be terminated on thirty (30) days notice at
a cost for any such contract of $5,000 or less.
(q) Each Ecusta Subsidiary has complied in all material
respects with each obligation imposed on it by, and each order and award made
under, any statute, regulation and collective bargaining agreement relevant to
the relations between it and the Ecusta Subsidiary employees or a trade union or
the terms of employment of the Ecusta Subsidiary employees.
(r) Except as set forth on Schedule 3.10(r), no Seller, with
respect to a Business Employee, or Ecusta Subsidiary is a party to a consultancy
contract with a term of twelve (12) months or more under which annual fees in
excess of $5,000 are payable.
(s) Superannuation.
(i) Sellers have given or, as of the Closing Date,
will have delivered to Buyers true, complete and, where relevant, duly executed
copies of:
(1) the governing rules of the MLC Master
Trust, a sub-plan of which relates to the employees of Ecusta Australia
("Sellers' Superannuation Fund");
(2) the most recent interim income and
expenditure statement and the most recent annual report issued to members of the
Sellers' Superannuation Fund by the trustee of the Sellers' Superannuation Fund;
and
(3) the current member booklet prepared in
respect of the Sellers' Superannuation Fund.
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(ii) There is no default in the payment of
contributions to the Sellers' Superannuation Fund on the part of the Ecusta
Australia or any other person who is required to contribute to the Sellers'
Superannuation Fund.
(iii) The Sellers' Superannuation Fund is properly
and fully funded so as to provide superannuation benefits to all persons
entitled (whether presently or prospectively) to them under the terms of the
governing rules of the Sellers' Superannuation Fund.
(iv) To Sellers' knowledge, Ecusta Australia does not
have any liability to pay any amount by way of superannuation guarantee charge
pursuant to the Superannuation Guarantee Charge Xxx 0000, or any other amount by
reason of the application of the Superannuation Guarantee (Administration) Xxx
0000, in respect of any of its employees for the current contribution period or
for any earlier contribution period. In this paragraph, the terms employee and
contribution period have the meanings given to those terms under the
Superannuation Guarantee (Administration) Xxx 0000.
(v) To Sellers' knowledge, the Sellers'
Superannuation Fund:
(1) is a regulated superannuation funds
under Superannuation Industry (Supervision) Xxx 0000 ("SIS"); and
(2) has at all times whilst the Sellers'
Superannuation Fund has been in existence satisfied the conditions for a fund to
obtain the maximum taxation concessions available to complying superannuation
funds including the superannuation fund conditions under SIS.
(vi) To Sellers' knowledge, the Sellers'
Superannuation Fund:
(1) has, in respect of a year of income
received a notice in writing pursuant to Part 5 of SIS or the relevant
provisions of predecessor legislation (as the case may be) to the effect that
the Sellers' Superannuation Fund satisfied the superannuation fund conditions in
relation to a relevant year of income of the Sellers' Superannuation Fund; and
(2) has not received a notice revoking any
such notice referred to in paragraph (a) above and Sellers have no reason to
believe that the Australian Prudential Regulation Authority will revoke such
notice in the future.
(vii) There are no arrangements (whether described as
a "minimum" or "guaranteed" benefit or otherwise) in place in respect of any
employee of Ecusta Australia under which the superannuation benefit payable in
respect of the employee is to be greater than the amount calculated under the
provisions of the governing rules of the Sellers' Superannuation Fund.
(viii) Sellers are not aware of any complaints,
disputes, demands, claims or proceedings in relation to the Sellers'
Superannuation Fund (including complaints by members
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or former members) or any circumstances which are reasonably likely to give rise
to any such complaints, disputes, demands, claims or proceedings.
(ix) Sellers have disclosed, or will disclose prior
to Closing, to Buyers, the level of contributions that Ecusta Australia is
liable to make in respect of each of its employees and Ecusta Australia is under
no obligation to contribute any greater amount. Sellers are not aware of any
circumstances under which Ecusta Australia could become so liable in the future.
3.11. Agreements. Schedule 3.11 contains a complete and correct list of
all outstanding Contracts (other than the Excluded Contracts and the Shared
Contracts) (a) which have unexpired terms of more than one (1) year and cannot
be terminated by the Seller or Ecusta Subsidiary which is a party thereto
without penalty or payment on thirty (30) days notice or less; (b) which would
require over the full term thereof payments by or to any Seller or Ecusta
Subsidiary or the Business of more than $100,000; or (c) pursuant to which there
were payments by or to any Seller or Ecusta Subsidiary or the Business of more
than $100,000 for the calendar year ended December 31, 2000. True and correct
copies of the Contracts (other than the Excluded Contracts) listed on Schedule
3.11 have been delivered or made available to Buyers. Each of such Contracts is
valid, binding and enforceable against the Seller or Ecusta Subsidiary which is
a party thereto and, to the knowledge of Sellers and the Ecusta Subsidiaries,
the other parties thereto, in accordance with its terms, and is in full force
and effect. Except as set forth in Schedule 3.11, Sellers and the Ecusta
Subsidiaries, and, to the knowledge of Sellers and the Ecusta Subsidiaries, each
of the other parties thereto, have performed in all material respects all
obligations required to be performed by them under, and are not in default in
any material respect under, any of such Contracts, and no event has occurred
which, with notice or lapse of time, or both, would constitute such a default.
Except as disclosed on Schedule 3.11, no Seller or Ecusta Subsidiary has
received any written claim from any other party to any such Contract that any
Seller or Ecusta Subsidiary has breached any obligations to be performed by it
thereunder, or is otherwise in default or delinquent in performance thereunder.
Except as disclosed on Schedule 3.11, there are no contracts relating to the
Business to which any Ecusta Subsidiary is a party that contain any provision
relating to the change in control of such Ecusta Subsidiary, and there are no
contracts relating to the Business to which any Seller is a party that contain
any provision restricting the assignment of such contracts by the Seller. There
are no agreements not to compete binding upon any Seller or Ecusta Subsidiary
which affect or restrict the conduct of the Business as currently conducted by
Sellers and the Ecusta Subsidiaries or could reasonably be expected to affect or
restrict the conduct of the Business as currently conducted by Buyers after the
Closing.
3.12. Environmental Matters.
(a) Except as set forth on Schedule 3.12(a), Sellers and the
Ecusta Subsidiaries hold all permits, certificates, licenses, approvals,
registrations and authorizations ("Permits") required under all applicable
statutes, rules, regulations, ordinances and orders of any governmental entity
relating to the protection of human health and the environment and the
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Management of Hazardous Substances (each as defined below) ("Environmental
Laws") in connection with the Business and all properties primarily owned,
operated or leased in connection with the operation of the Business, and all of
such Permits are in full force and effect. All such Permits are listed on
Schedule 3.12(a) and any that are not transferable also are listed on Schedule
3.12(a) and are so designated. Sellers and the Ecusta Subsidiaries have made
timely application for renewals of all such Permits for which Environmental Laws
require that applications must be filed on or before the Closing to maintain
such Permits in full force and effect. Neither Sellers nor the Ecusta
Subsidiaries have any reason to believe that such renewals will not be issued in
the ordinary course or will require payment of money (other than customary
renewal fees, emission fees or permitting fees for wastewater discharges, air
emissions or hazardous waste activities) or imposition of conditions not
currently contained in such Permits which are reasonably likely to result in a
Material Adverse Effect. Sellers and the Ecusta Subsidiaries will use best
efforts to prepare and file all applications for permit transfers, if any, in
adequate time for transfer to occur prior to Closing hereunder, and Buyers shall
cooperate with Sellers in doing so.
(b) Except as set forth on Schedule 3.12(b), Sellers and the
Ecusta Subsidiaries have, in connection with the Business, complied with and are
not in violation of Environmental Laws. Except as set forth on Schedule 3.12(b),
no notice, citation, summons or order has been issued, no complaint has been
filed, no penalty has been assessed, and, to the knowledge of Sellers and the
Ecusta Subsidiaries, no investigation or review is pending or threatened by any
governmental or other entity: (i) with respect to any alleged violation of any
Environmental Laws applicable to the Business and all properties primarily
owned, operated or leased in connection with the operation of the Business; or
(ii) with respect to any alleged failure to have any Permit required in
connection with the Business and all properties primarily owned, operated or
leased in connection with the operation of the Business; or (iii) with respect
to any use, possession, generation, treatment, storage, recycling,
transportation or disposal (collectively, "Management" or "Manage") of any
Hazardous Substances by or on behalf of the Business, Sellers and the Ecusta
Subsidiaries or any predecessors in interest in connection with the operation of
the Business and all properties primarily owned, operated or leased in
connection with the operation of the Business. For purposes of this Agreement,
"Hazardous Substances" shall mean "hazardous substances" or "contaminants" as
defined pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Sections 9601-75, as amended, "regulated
substances" or "hazardous waste" as defined pursuant to the Resource
Conservation and Recovery Act, 42 U.S.C. Sections 6991-6991I, as amended
(and, in each case, substances regulated by similar laws in Canada and Australia
as such laws govern Sellers' or the Ecusta Subsidiaries' activities in those
jurisdictions), polychlorinated biphenyls ("PCBs"), urea formaldehyde foam
insulation, petroleum, petroleum by-products, asbestos and asbestos- containing
materials, radioactive materials and any other hazardous, toxic or polluting
substance, materials or waste regulated by any Governmental Authority with
jurisdiction or under applicable Environmental Laws.
(c) Except as set forth on Schedule 3.12(c), no Seller or
Ecusta Subsidiary has received any written request for information, notice of
claim, demand or notification that it or the
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Business is or may be potentially responsible with respect to any Remediation
with respect to the presence or any threatened or actual Release (as defined
below) of any Hazardous Substance in connection with the Business or any
properties formerly or currently primarily owned, operated or leased in
connection with the operation of the Business.
(d) Except as set forth on Schedule 3.12(d), no PCBs, asbestos
or asbestos-containing materials are present at any property primarily owned,
operated or leased in connection with the operation of the Business, nor are
there any underground storage tanks, active or abandoned, at any property
primarily owned, operated or leased in connection with the operation of the
Business by Sellers or the Ecusta Subsidiaries.
(e) Except as set forth on Schedule 3.12(e), no Hazardous
Substance Managed by or on behalf of any Seller or Ecusta Subsidiary or in
connection with the operation of the Business has come to be located at any site
which is listed or proposed for listing under the National Priority List
promulgated pursuant to the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended ("CERCLA"), the Comprehensive
Environmental Response, Compensation and Liability Information System
("CERCLIS") or on any similar state list.
(f) Except as set forth on Schedule 3.12(f), no Hazardous
Substance has been released, spilled, leaked, discharged, or disposed of,
pumped, poured, emitted, emptied, injected, leached, dumped or allowed to escape
("Released") at, on, about or under any property now or formerly primarily
owned, operated or leased by any Seller or Ecusta Subsidiary or any predecessor
in interest in connection with the operation of the Business in violation of
Environmental Laws or in a manner which has created a condition which has or
could require remediation, investigation or other response activity under
Environmental Laws.
(g) Except as set forth on Schedule 3.12(g), no oral or
written notification of a Release or threat of Release of a Hazardous Substance
has been filed by or on behalf of any Seller or Ecusta Subsidiary or in relation
to any property primarily owned, operated or leased in connection with the
operation of the Business by any Seller or Ecusta Subsidiary.
(h) Sellers and the Ecusta Subsidiaries have provided to
Buyers access to all environmental inspection reports, investigation reports,
studies, audits, tests, data, or other analyses (the "Environmental Reports")
conducted, generated or created in connection with the operation of the Business
or the environmental condition of all properties primarily owned, operated or
leased by Sellers or the Ecusta Subsidiaries in connection with the operation of
the Business and which are in Sellers' or the Ecusta Subsidiaries' possession,
custody or control.
(i) None of the matters identified on Schedule 3.12(i) will
result in any Damages to Buyers.
3.13. No Undisclosed Liabilities. No Seller (with respect to the
Business) or Ecusta Subsidiary has any liability or obligation of any nature,
whether due or to become due, absolute, contingent or otherwise, including
liabilities for or in respect of federal, state and local taxes and
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any interest or penalties relating thereto, except (a) to the extent reflected
as a liability on the Balance Sheet, (b) liabilities incurred in the ordinary
course of business consistent with past practices since January 1, 2001, (c)
liabilities which, individually or in the aggregate, have not had or reasonably
could not be expected to have a Material Adverse Effect, (d) liabilities
disclosed on Schedule 3.13 and (e) the Excluded Liabilities.
3.14. Warranty Claims. Sellers and the Ecusta Subsidiaries have paid
(whether in money, property or services) any claims relating to breaches of
express or implied warranties (excluding claims founded upon negligence, strict
liability in tort or other similar legal theory) made with respect to Business
Products for the years ended December 31, 1998, 1999 and 2000 and such amounts
are not in excess of 1% of sales of the Business for such years, respectively.
Except as set forth on Schedule 3.14, there are no pending or, to the knowledge
of Sellers and the Ecusta Subsidiaries, threatened claims for the breach of any
express or implied warranty made with respect to Business Products, except for
individual claims which involve claims for money, property or services of less
than $10,000.
3.15. Inventory; Purchased Assets.
(a) All Inventory is located at the locations specified on
Schedule 3.15(a) and all such Inventory that is not located on the Premises is
identified as belonging to the Business.
(b) The Purchased Assets, German Assets and Ecusta Stock,
taken together with the Non-Assignable Assets (to the extent to which Buyers
will receive the benefits thereof under Section 2.6) and Buyers' rights under
the Ancillary Agreements, constitute substantially all of the assets,
properties, agreements, licenses, Intellectual Property and other rights which
are necessary to enable Buyers after the Closing to manufacture the Business
Products in a manner consistent with Sellers' and the Ecusta Subsidiaries' past
practices during the last three (3) fiscal years or otherwise operate the
Business after the Closing.
3.16. Real Estate.
(a) Owned Property.
(i) Schedule 3.16(a)(i) sets forth a list of all of
the real estate owned by any one or more of Sellers and the Ecusta Subsidiaries
and material to the continued operations of the Business (such real estate,
together with all beneficial, appurtenant easements and other beneficial rights
appurtenant thereto and with all fixtures attached thereto or forming a part
thereof, is collectively referred to herein as the "Owned Real Estate"), and
includes a legal description of each parcel of the Owned Real Estate.
Notwithstanding anything to the contrary contained in this Agreement, Sellers
and the Ecusta Subsidiaries have good, and marketable fee simple title (without
conditions for defeasance) to the Owned Real Estate comprised of such parcels,
including the buildings, structures, fixtures and improvements situated thereon
or forming a part thereof and have rights to enjoy the beneficial rights
appurtenant thereto, and it is insurable as such at customary title rates by the
Title Company. Sellers and the Ecusta Subsidiaries have made available to Buyers
copies of all (A) title insurance policies and/or
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commitments therefor, (B) land title surveys, (C) documents and instruments
creating or governing the aforesaid appurtenances, (D) any leases binding on any
Seller or Ecusta Subsidiary, including all amendments, modifications and
extensions, and together with all subordination, non-disturbance and/or
attornment agreements, to the extent binding on Sellers or the Ecusta
Subsidiaries or any brokerage commission agreements related thereto, to the
extent binding on Sellers or the Ecusta Subsidiaries, Estoppel Certificates, to
the extent binding on Sellers or the Ecusta Subsidiaries and any other documents
related thereto, to the extent binding on Sellers or the Ecusta Subsidiaries,
and (E) licenses, certificates of occupancy, plans, specifications, reports,
appraisals, studies and permit applications, communications and correspondence
for applications or approvals, to the extent the foregoing relate to the use,
ownership, occupancy or operation of the Owned Real Estate, and to the extent
the items described in (A), (B), (C) or (E) are in the possession or control of
any of Sellers or any of their Affiliates. No labor or materials have been
provided for the improvements of any of the Owned Real Estate which could create
or give rise to any valid mechanic's, materialman's warehouseman's or similar
valid lien right affecting the Owned Real Estate, except for labor and materials
for which full payment has or will be made. All improvements on the Owned Real
Estate (including all fixtures and mechanical systems) are in working order, do
not encroach upon easements, other real estate, or rights of other parties in
interest, and serve only the Owned Real Estate transferred to Buyers, except for
items not in working order, encroachments and improvements serving other real
estate that individually or in the aggregate do not cause a Material Real Estate
Impairment. All utilities, including without limitation, electricity, gas,
water, satellites, microwave, and other communication devises have been adequate
to service the continued operations of the Business. Each Owned Real Estate
fronts on or otherwise has direct access for vehicular and pedestrian ingress,
egress and regress to a public street. Each Owned Real Estate parcel constitutes
a separate, independent and free standing tax parcel, subdivision parcel and
zoning parcel or is comprised of parcels which in the aggregate constitute a
separate independent and free standing tax parcel, subdivision parcel and zoning
parcel, the legal descriptions of which are the same in all material respects
and none of such parcels of Owned Real Estate use or rely upon any other parcel
for such qualification as separate, independent and free standing. The
representation and warranty contained in the foregoing sentence shall not apply
to the Owned Real Estate located in Australia.
(ii) The Owned Real Estate is free and clear of all
Encumbrances, including, without limitation, security interests, any conditional
sale or other title or interest retention agreements or arrangements, options to
purchase, rights of first refusal, liens, encumbrances, mortgages, pledges,
assessments, easements, covenants, restrictions, reservations, defects in title,
encroachments and other burdens, leases (except for the leases described in
Scheduled 3.16 (c)), rights of occupancy binding on Sellers or the Ecusta
Subsidiaries, deed restrictions, chattel mortgages and collateral security
arrangements, rights of way, building use restrictions, claims of parties in
interest under principles of prescriptive or adverse possession, setbacks, yard
or height limits or, except for the following (collectively, "Permitted Fee
Title Exceptions"): (A) those matters that do not, and would not, have a
Material Real Estate Impairment on the Owned Real Estate and do not, and would
not, cause the Owned Real Estate to be unmarketable, (B) zoning or land use
ordinances (subject to the compliance obligations in
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Sections 3.8 and 3.9) and other applicable laws, if any, none of which,
individually or in the aggregate, to the knowledge of any Seller or Ecusta
Subsidiary would have a Material Real Estate Impairment, (C) liens for ad
valorem real property taxes and assessments not yet due and payable, (D) liens
that will be paid off at Closing, and (E) matters for which Sellers or the
Ecusta Subsidiaries can cause the Title Company to insure over at Sellers' or
the Ecusta Subsidiaries' sole cost and expense.
(iii) Except as set forth on Schedule 3.16(a)(iii),
no Seller or Ecusta Subsidiary has received written notice from or has any
knowledge of any governmental authority, quasi-governmental authority, insurance
company which has issued a policy with respect to any of the Owned Real Estate
or any board of fire underwriters or other body performing similar functions or
any other Person which (A) relates to or alleges a violation of or nonconformity
with any zoning, building, safety, subdivision, wetlands or other similar law,
code, rule, regulation, ordinance, permit, license, certificate, covenant,
restriction or condition with respect to any of the Owned Real Estate or the use
thereof, or (B) requests the performance of any repairs, alterations or other
work to or in any of the Owned Real Estate, which violations, repairs,
nonconformity, alterations or other work have not yet been cured or performed,
as applicable. Sellers and the Ecusta Subsidiaries have received no notice of
any pending condemnation, expropriation, eminent domain, or similar proceeding
affecting any of the Owned Real Estate and, to the knowledge of Sellers and the
Ecusta Subsidiaries, no such action, proceeding or litigation is threatened. The
sale of the Owned Real Estate to Buyers does not and will not violate or
conflict with the requirements of any subdivision or any land use plan currently
applicable to the Owned Real Estate.
(b) Real Estate Leases.
(i) Schedule 3.16(b)(i) sets forth a list of all of
the leases or rights of occupancy pursuant to which Sellers and the Ecusta
Subsidiaries (or any of them) lease or sublease any real property or interest
therein material to the continued operations of the Business (collectively, as
heretofore modified, amended or extended, the "Leases"), including the
identification of each of the lessors thereof and the street addresses of all of
the real estate demised under any of the Leases (including warehouses for
inventory) (collectively, the "Leased Real Estate"). Except as set forth on
Schedule 3.16(b)(i), one or more of Sellers or the Ecusta Subsidiaries is the
lessee under all Leases, and no party other than one or more of the Sellers or
Ecusta Subsidiaries or any of their Affiliates has any right to possession,
occupancy or use of any of the Leased Real Estate that has been granted by any
of the Sellers or the Ecusta Subsidiaries. Copies of (A) leasehold title
insurance policies and commitments therefor, land title surveys, licenses,
certificates of occupancy, plans, specifications, reports, appraisals, studies,
permit applications, communications and correspondence for applications or
approvals relating to the use, ownership, occupancy or operation of the Leased
Real Estate and other documents, pertaining to the use, ownership, occupancy or
operation of the Leased Real Estate, if any, that are in the possession or
control of any of Sellers or the Ecusta Subsidiaries, and (B) each of the
Leases, including all amendments, modifications and extensions, and together
with all subordination, non-disturbance and/or attornment agreements, to the
extent binding on Sellers or
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the Ecusta Subsidiaries or any brokerage commission agreements, to the extent
binding on Sellers or the Ecusta Subsidiaries related thereto, Estoppel
Certificates, to the extent binding on Sellers or the Ecusta Subsidiaries and,
to the extent binding on any of the Sellers or Ecusta Subsidiaries, recognition
agreements, prime lessor or leasehold mortgage documents and any other documents
related thereto and (C) any other material agreements relating to the Leases to
the extent binding on Seller or any of the Ecusta Subsidiaries have been made
available by Sellers and the Ecusta Subsidiaries to Buyers. Each of the Leases
described in Schedule 3.16(b)(i) is valid and in full force and effect and is
binding and enforceable in accordance with its terms, subject to bankruptcy and
other laws affecting creditors' rights. Except as set forth on Schedule
3.16(b)(i), no Seller or Ecusta Subsidiary has received any written notice or
has knowledge of any material default under any provision of any of the Leases
which default remains uncured. There is no material default by any Seller or any
Ecusta Subsidiary in the payment of rent under any Lease beyond any applicable
notice and cure period. No Seller or Ecusta Subsidiary has given notice to any
other party to any of the Leases that such party is in default under any of the
provisions thereof which default remains uncured. No other party to any Lease
has given notice under any Lease to the Sellers or the Ecusta Subsidiaries which
could result in remedies that limit, diminish, or eliminate lessee's rights
under the Lease.
(ii) Except as set forth in Schedule 3.16(b)(ii),
Sellers and the Ecusta Subsidiaries are in actual possession of the Leased Real
Estate. Sellers and the Ecusta Subsidiaries have not caused any Encumbrances to
be created on the Leased Real Estate, including, without limitation, security
interests, any conditional sale or other title or interest retention agreements
or arrangements, options to purchase, rights of first refusal, liens,
encumbrances, mortgages, pledges, assessments, easements, covenants,
restrictions, reservations, defects in title, encroachments and other burdens,
leases, subleases, rights of occupancy, deed restrictions, chattel mortgages and
collateral security arrangements, rights of way, building use restrictions,
exceptions, variances, claims of parties in interest under principles of
prescriptive or adverse possession, setbacks, yard or height limits or
reservations of any nature whatsoever.
(iii) Except as set forth on Schedule 3.16(b)(iii),
no Seller or Ecusta Subsidiary has received written notice from or has any
knowledge of any governmental authority, quasi-governmental authority, insurance
company which has issued a policy with respect to any of the Leased Real Estate
or any board of fire underwriters or other body performing similar functions or
any other Person which (A) relates to or alleges a violation of or nonconformity
with any zoning, building, safety, subdivision, wetlands or other similar law,
code, rule, regulation, ordinance, permit, license, certificate, covenant,
restriction or condition with respect to any of the Leased Real Estate or the
use thereof, or (B) requests the performance of any material repairs,
alterations or other work to or in any of the Leased Real Estate, which
violations repairs, nonconformity, alterations or other work have not yet been
cured or performed, as applicable. Sellers received no notice of any pending
condemnation, expropriation, eminent domain, or similar proceeding affecting any
of the Leased Real Estate and, to the knowledge of Sellers and the Ecusta
Subsidiaries, no such action, proceeding or litigation is threatened.
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(iv) Except as set forth on Schedule 3.16(b)(iv),
there are no brokerage commissions or finder's fees due from any of Sellers or
Ecusta Subsidiary which are currently due and unpaid with regard to any of the
Leases or the Leased Real Estate, or which will become due at any time in the
future with regard to the Leases or the Leased Real Estate.
(v) Except as set forth on Schedule 3.16(b)(v), there
have been no casualties or, to the knowledge of Sellers and the Ecusta
Subsidiaries, condemnation or eminent domain proceedings which could result in
the termination by any landlord pursuant to the terms of such lease or pursuant
to the written agreement of the landlord and tenant or, to the knowledge of
Sellers and the Ecusta Subsidiaries, in the exercise by any mortgagee of payment
of casualty proceeds or condemnation or eminent domain awards for purposes other
than reconstruction or replacement of the Leased Real Estate.
(c) Space Leases.
(i) Schedule 3.16(c)(i) sets forth a list of all of
the space leases or rights of occupancy pursuant to which Sellers and the Ecusta
Subsidiaries (or any of them) lease any of the Owned Real Estate or Leased Real
Estate or interest therein to any Affiliate or third party (collectively, as
heretofore modified, amended or extended, the "Space Leases"), including the
identification of each of the tenants thereof. Copies of (A) each of the Space
Leases, including, to the extent binding on any Seller or Ecusta Subsidiary, all
amendments, modifications and extensions, and, to the extent binding on any
Seller or Ecusta Subsidiary, together with all subordination, non-disturbance
and/or attornment agreements or any brokerage commission agreements related
thereto, Estoppel Certificates, recognition agreements, prime lessor or
leasehold mortgage documents and, to the extent binding on any Seller or Ecusta
Subsidiary, any other documents related thereto and (B) to the extent binding on
any Seller or Ecusta Subsidiary, any other material agreements relating to the
Space Leases have been made available by Sellers and the Ecusta Subsidiaries to
Buyers. Each of the Space Leases described in Schedule 3.16(c)(i) is valid and
in full force and effect and is binding and enforceable in accordance with its
terms, subject to bankruptcy and other laws affecting creditor's rights. Except
as set forth on Schedule 3.16(c)(i), no Seller or Ecusta Subsidiary has received
any written notice or has knowledge of any material default under any provision
of any of the Space Leases which default remains uncured.
(ii) Except as set forth on Schedule 3.16(c)(ii),
there are no brokerage commissions or finder's fees due from any Seller or
Ecusta Subsidiary which are currently due and unpaid with regard to any of the
Space Leases, or which will become due at any time in the future with regard to
the Space Leases.
(d) Except as set forth on Schedule 3.16(d), there are no
enforceable rights of first refusal or enforceable options to purchase all or a
portion of the Owned Real Estate. To the knowledge of Sellers and the Ecusta
Subsidiaries, there are no conditions precedent required of Buyers for the
perpetuation of government approvals held by Sellers upon transfer of such the
Purchased Assets which would result in a Material Real Estate Impairment.
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3.17. Ownership of Subsidiaries. Each Ecusta Subsidiary is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, which jurisdiction is set forth opposite
its name on Schedule 3.17. Each Ecusta Subsidiary has all requisite power and
authority to own or lease its properties and assets as now owned or leased and
to carry on its business as and where now being conducted. The copies of the
articles of incorporation and bylaws, as amended to the Effective Date, of each
Ecusta Subsidiary have been delivered to Buyers and are true, correct and
complete and are in full force and effect. The currently authorized, issued and
outstanding shares of capital stock of each Ecusta Subsidiary in existence on
the Effective Date and the record and beneficial holders as of the Effective
Date of such shares are set forth on Schedule 3.17. All of such outstanding
shares have been duly authorized and validly issued, are fully paid and
nonassessable, are directly or indirectly owned by Sellers free and clear of all
liens, claims, security interests, pledges, charges, equities, options,
restrictions and encumbrances of whatsoever nature, were not issued in violation
of any pre-emptive rights or the terms of any agreement or other understanding
binding upon either of Ecusta Canada or Ecusta Australia or upon Seller, and
were issued in compliance with all applicable securities laws and regulations.
There are no outstanding options, warrants, rights, agreements, calls,
commitments, preemptive rights or demands of any character relating to the
capital stock of either of Ecusta Canada or Ecusta Australia and no securities
convertible into or exchangeable for any of such capital stock.
3.18. Tax Matters. Except as set forth on Schedule 3.18:
(a) Sellers have (i) filed all Returns required to be filed
with respect or relating to, in connection with or arising out of the Business
and each Return is true, complete and accurate and (ii) timely paid all Taxes
with respect or relating to, in connection with or arising out of the Business.
(b) There are no liens with respect to Taxes upon the
Purchased Assets other than customary liens for current Taxes not yet due and
payable.
(c) Each of Ecusta Canada and Ecusta Australia has (i) duly
filed or provided, or has had filed or provided on its behalf, all Returns
required to be filed by it, and each such Return is true, complete and accurate;
(ii) paid, or has had paid on its behalf, all Taxes required to be paid; and
(iii) in accordance with GAAP provided for, in its books of account and related
records, liability for all other current Taxes not yet paid.
(d) There is no action, suit, proceeding or claim currently
pending regarding Taxes with respect to Ecusta Canada or Ecusta Australia. No
Return of Ecusta Canada or Ecusta Australia is being examined by, and no written
notification of intention to examine has been received from, any Governmental
Authority. No issue raised by any Governmental Authority in connection with any
Return with respect to Taxes of Ecusta Canada or Ecusta Australia is currently
pending. No presently effective waiver or extension of any statute of limitation
with respect to Taxes has been given by or requested from Ecusta Canada or
Ecusta Australia. Glatfelter has delivered to Buyers true and complete copies of
all income and gains tax Returns filed by Ecusta Canada and Ecusta Australia for
the six years ending on or prior to the Effective
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Date and copies of all communications with any authority responsible for the
administration of Taxes so far as they may relate to any audit, examination or
similar proceeding related to Taxes.
(e) There is no ruling issued to either of (or closing
agreement to which is a party) concerning Taxes from (or with) any Governmental
Authority which would have continuing material effect on either of Ecusta Canada
or Ecusta Australia after the Effective Date.
(f) Neither Ecusta Canada nor Ecusta Australia is a party to
any tax sharing or similar agreement in respect of Taxes of a Person other than
Glatfelter.
(g) No event, act or matter has occurred or is taken to have
occurred which had or will have the effect of reducing the cost base of any
asset of Ecusta Australia under the ITAA36 or the ITAA97, including without
limitation any loss transfer, debt forgiveness or anything that gives rise to an
"alteration time" within the meaning of Subdivision 165-CD of the ITAA97.
(h) Ecusta Australia has complied with the provisions of Part
IIAA of the ITAA36 and has maintained records of franking debits and franking
credits which are sufficient for the purposes of that legislation. No asset of
Ecusta Australia has been the subject of (i) a claim for rollover relief under
Part IIIA of the ITAA36 or Chapter 3 of the ITAA97 or (ii) the operation of
section 160ZZS of the ITAA36 or Division 149 of the ITAA97.
(i) There is no lien or security interest in favor of any
Governmental Authority on any of the assets of either of Ecusta Canada or Ecusta
Australia that arose in connection with the failure (or alleged failure) to pay
any Tax except for customary liens for current Taxes not yet due and payable.
(j) Sellers, Ecusta Canada and Ecusta Australia have withheld
and remitted all Taxes required to be withheld and remitted with respect to
payments made to employees and other persons.
3.19. Business Intellectual Property.
(a) Schedule 3.19(a) sets forth a true and complete list of
all Patents, trademarks, service marks, trade names, and registrations and
applications for registration of copyrights, trademarks, service marks, trade
names, trade dress and domain names used or held for use primarily in connection
with the Business. Schedule 3.19(a) also sets forth a true and complete list of
all material licenses, sublicenses, consents and other agreements (whether
written or otherwise) (i) pertaining to any Business Intellectual Property, and
(ii) by which Sellers license or otherwise authorize a third party to use such
Business Intellectual Property. To the knowledge of Sellers or the Ecusta
Subsidiaries, no Seller or Ecusta Subsidiary or any other party is in breach of
or default under any such license or other agreement and each such license or
other agreement is now and immediately following the Closing shall be valid and
in full force and effect.
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(b) Except as indicated in Schedule 3.19(b), Sellers own or
have the exclusive right to use, and have the right to bring actions for the
infringement or other violation of, all Business Intellectual Property and the
Glatfelter Copyrights and the Glatfelter Computer Software. Except as indicated
in Schedule 3.19(b), all of the Patents, trademark and service xxxx
registrations, copyright registrations, and domain name registrations indicated
in Schedule 3.19(a) are valid and in full force, are held of record in the name
of Glatfelter free and clear of all liens, encumbrances and other claims, and
are not the subject of any cancellation or reexamination proceeding or any other
proceeding challenging their extent or validity. Except as explicitly indicated
in Schedule 3.19(b), Glatfelter is the applicant of record in all Patent
applications, and applications for trademark, service xxxx, trade dress,
industrial design, and copyright registration indicated in Schedule 3.19(a), and
no opposition, extension of time to oppose, interference, rejection, or refusal
to register has been received in connection with any such application.
(c) Except as set forth in Schedule 3.19(c), no judicial or
administrative proceeding of any kind is pending or, to the knowledge of Sellers
and the Ecusta Subsidiaries, has been threatened by any third party against any
Seller or Ecusta Subsidiary involving rights to the Business Intellectual
Property or any Intellectual Property licensed to Buyers pursuant to the
Ancillary Agreements. Sellers and the Ecusta Subsidiaries have not received any
written notice of any infringement or liability for the use of Intellectual
Property rights of others with respect to any Business Intellectual Property or
any Intellectual Property licensed to Buyers pursuant to the Ancillary
Agreements at any time within the last year. The operation of the Business does
not and shall not, as a result of the transactions contemplated hereby and the
Business Intellectual Property and Intellectual Property licensed to Buyers
pursuant to the Ancillary Agreements do not and shall not, as a result of the
transactions contemplated hereby, to the knowledge of Sellers and the Ecusta
Subsidiaries, infringe, dilute or otherwise violate the Intellectual Property
rights of any third party, and no claim has been made, notice given, or dispute
arisen to that effect. Sellers and the Ecusta Subsidiaries do not have any
pending claims that a third party has violated or infringed any of the Business
Intellectual Property or any Intellectual Property licensed to Buyers pursuant
to the Ancillary Agreements.
(d) Sellers and the Ecusta Subsidiaries have taken reasonable
steps in accordance with normal industry practice to maintain the
confidentiality of all confidential Business Intellectual Property and
confidential Intellectual Property licensed to Buyers pursuant to the Ancillary
Agreements.
(e) Except as set forth on Schedule 3.19(e), the Intellectual
Property transferred or licensed to Buyers pursuant to this Agreement and the
Ancillary Agreements is sufficient to produce the Business Products that are
produced, marketed or sold by Sellers and the Ecusta Subsidiaries as of the
Effective Date, including such Business Products for which product development
by Sellers or the Ecusta Subsidiaries is substantially complete.
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(f) To the knowledge of Sellers and the Ecusta Subsidiaries,
no Seller or Ecusta Subsidiary has any liabilities or obligations with respect
to the Business arising out of, resulting from or relating to claims for
infringement of any third party Intellectual Property.
(g) Except as set forth in Schedule 3.19(g), Sellers and the
Ecusta Subsidiaries have tested with commercially reasonable frequency all
computer software except for mainframe computer software used in the Business
with commercially available anti-virus programs, and based on such testing and
also with regard to mainframe computer software, to the knowledge of Sellers and
the Ecusta Subsidiaries, the computer software used in the Business does not
contain any viruses, "worms," cancelbots, disabling or malicious code, or other
anomalies that would materially impair its functionality.
3.20. Books and Records. The books and records of Sellers, as they
relate to the Business, and each Ecusta Subsidiary are complete and correct in
all material respects and Sellers and the Ecusta Subsidiaries have made
available to Buyers for examination the originals or true and correct copies of
all documents material to the Business and all other documents material to the
Business which Buyers have requested in connection with the transactions
contemplated by this Agreement.
3.21. Accounts. Except as set forth in Schedule 3.21, the Accounts
Receivable all have arisen from bona fide transactions in the ordinary course of
business, and there are no offsets or credits that may be applied against the
Accounts Receivable. All Accounts Payable of the Business have arisen from bona
fide transactions in the ordinary course of business and are to be paid in
accordance with normal trade practice. Except as set forth in Schedule 3.21,
none of the Accounts Receivable are in dispute or subject to any reduction or
counterclaim.
3.22. Disclosure. The representations, warranties and statements of
Sellers and the Ecusta Subsidiaries contained in this Agreement and the
Ancillary Agreements and in the certificates, exhibits and schedules delivered
by Sellers and the Ecusta Subsidiaries to Buyers pursuant to this Agreement or
any Ancillary Agreement do not contain any untrue statement of a material fact,
and, when taken together, do not omit to state a material fact required to be
stated therein or necessary in order to make such representations, warranties or
statements not misleading in light of the circumstances under which they were
made.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYERS
Buyers hereby jointly and severally represent and warrant to Sellers,
as of the Effective Date, as follows, subject in each case to the attached
Schedules and provided that each exception set forth in the Schedules shall be
deemed to qualify each representation and warranty that is specifically
identified (by cross-reference or otherwise) in any Schedule or with respect to
which the relevance of such exception is apparent on the face of the disclosure
of such exception as set forth in the Schedules:
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4.1. Organization and Authority. Each Buyer is a company duly
organized, validly existing and in good standing under the laws of the
jurisdiction set forth on Schedule 4.1, and each Buyer has full corporate power
and corporate authority to execute and deliver this Agreement and the Ancillary
Agreements to which it is a party and to effect the transactions contemplated
hereby and thereby and has duly authorized the execution, delivery and
performance of this Agreement and the Ancillary Agreements by all necessary
corporate action. Each Buyer has all corporate power and corporate authority
necessary to carry on its business as now being conducted and to own or lease
and operate its properties as and in the places where such business is now
conducted and such properties are now owned, leased or operated.
4.2. Authorization; Binding Obligation. As of the Closing Date, this
Agreement and the Ancillary Agreements have been duly executed and delivered by
Buyers and are the valid and legally binding obligations of Buyers, enforceable
against them in accordance with their terms.
4.3. No Violations.
(a) The execution, delivery and performance of this Agreement
and the Ancillary Agreements by Buyers and the consummation of the transactions
contemplated hereby and thereby do not and will not (i) result in a breach or
violation of any provision of the charter or by-laws or other governance
document of any Buyer or in a material violation of any statute, rule,
regulation or ordinance applicable to any Buyer or (ii) violate or result in a
breach of or constitute an event of default (or an event which might, upon the
passage of time or the giving of notice, or both, constitute an event of
default) under any provision of, result in acceleration or cancellation of any
obligation under, or give rise to a right by any party to terminate or amend its
obligations under, any mortgage, deed of trust, conveyance to secure debt, note,
loan, indenture, lien, material lease, agreement, instrument, order, judgment,
decree or other material arrangement or commitment to which any Buyer is a party
or by which its assets or properties are bound, or violate any order, judgment,
decree, rule or regulation of any court or any governmental agency or body
having jurisdiction over any Buyer or any of its assets or properties, except
for such consents, approvals, orders or authorizations, registrations,
declarations or filings where failure of compliance would not, individually or
in the aggregate, have a material adverse effect on the ability of Buyers to
consummate the transactions contemplated hereby.
(b) No consent, approval, order or authorization of or
registration, declaration or filing with, any Person is required by any Buyer in
connection with the execution and delivery of this Agreement or the Ancillary
Agreements or the consummation of the transactions contemplated hereby or
thereby, except for such consents, approvals, orders or authorizations,
registrations, declarations or filings where failure of compliance would not,
individually or in the aggregate, have a material adverse effect on the ability
of Buyers to consummate the transactions contemplated hereby.
4.4. Litigation. There are no actions, suits, proceedings or
governmental investigations pending or, to the knowledge of Buyers, threatened
against them that, individually
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or in the aggregate, would have or reasonably would be expected to have a
material adverse effect on the ability of Buyers to consummate the transaction
contemplated hereby.
4.5. Financing. Each Buyer has resources available to fund the Purchase
Price allocated to it pursuant to the Side Letter and this Agreement.
ARTICLE V
CERTAIN COVENANTS
5.1. Information.
(a) Sellers and Buyers will provide to each other and to their
respective officers, employees, counsel and other representatives, upon request
(subject to any limitations that are reasonably required to preserve any
applicable attorney-client privilege), reasonable access to their respective
officers and employees, reasonable access to the Premises and reasonable access
for inspection and copying of all Business Records, Governmental Permits,
Contracts and any other information existing at the Closing Date and relating to
the conduct of the Business, and will make their respective officers and
employees available, to the extent such availability does not unreasonably
interfere with the conduct of the Business by Buyers, or the conduct of its
business by Sellers, as the case may be, as is reasonably necessary to enable
the party requesting such information to: (i) comply with reporting, filing or
other requirements related to the conduct of the Business and imposed on such
party by any local, state or federal court, agency or regulatory body or taxing
authority; (ii) assert or defend any claims or allegations in any arbitration or
in any administrative or legal proceeding related to the conduct of the Business
other than claims or allegations which one party to this Agreement has asserted
against the other; or (iii) subject to clause (ii) above, perform its
obligations under this Agreement. Sellers and Buyers shall each maintain all of
the foregoing information in accordance with their normal document retention
policies and if either party desires to destroy or dispose of any of the
foregoing which are material to the other party at any time prior to the third
anniversary of the Closing or at such later date as required by law, such party
will offer first in writing at least 60 days prior to such destruction or
disposition to surrender them to the other party.
(b) Subject to applicable law, Sellers agree to make available
to Buyers, for inspection and copying by Buyers, all employment and personnel
records (including medical records, subject to reasonable confidentiality
restrictions) and information relating to any Transferred Employee hired by any
Buyer.
(c) The party requesting the information and assistance
provided in clauses (a) and (b) of this Section 5.1 shall reimburse the other
party for all out-of-pocket costs and expenses incurred by such party in
providing such information and in rendering such assistance. The access to
files, books and records contemplated by this Section 5.1 shall be during normal
business hours and upon not less than two Business Days prior written request
and shall be subject to such reasonable limitations as the party having custody
or control thereof may impose
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to preserve the confidentiality of information contained therein. Buyers agrees
to preserve all Business Records and Governmental Permits delivered to it by
Sellers for at least three (3) years after the Closing Date or such later date
as is required by law.
(d) Prior to the Closing Date, Sellers will provide current
and historical data, in a commercially reasonable format, as required for Buyers
to maintain and operate the accounts receivable and salaried payroll systems for
the Business. Such data shall be transmitted on a test basis by Sellers to
Buyers and confirmed as properly received by Buyers at least ten (10) days prior
to the Closing Date.
(e) Buyers and Sellers shall use all reasonable efforts to
file, as soon as practicable after the date of this Agreement, all notices,
reports and other documents required to be filed with any Governmental Authority
with respect to transactions contemplated hereby, and to submit promptly any
additional information requested by any such Governmental Authority. Without
limiting the generality of the foregoing, Buyers and Sellers shall prepare and
file the notifications required under the HSR Act, in connection with the
transactions contemplated hereby. Buyers and Sellers shall respond as promptly
as practicable to (i) any inquiries or requests received from the Federal Trade
Commission or the Department of Justice for additional information or
documentation and (ii) any inquiries or requests received from any state
attorney general or other Governmental Authority in connection with antitrust or
related matters. Each of Buyers and Sellers shall (1) give the other parties
prompt notice of the commencement of any legal proceeding by or before any
Governmental Authority with respect to the transactions contemplated hereby, (2)
keep the other parties informed as to the status of any such legal proceeding,
and (3) promptly inform the other parties of any communication to or from the
Federal Trade Commission, the Department of Justice or any other Governmental
Authority regarding the transactions contemplated hereby. Buyers and Sellers
will consult and cooperate with one another, and will consider in good faith the
views of one another, in connection with any analysis, appearance, presentation,
memorandum, brief, argument, opinion or proposal made or submitted in connection
with any legal proceeding under or relating to the HSR Act or any other federal
or state antitrust or fair trade law. In addition, except as may be prohibited
by any Governmental Authority or by any legal requirement, in connection with
any legal proceeding under or relating to the HSR Act or any other federal or
state antitrust or fair trade law or any other similar legal proceeding, each of
Buyers and Sellers agree to permit authorized representatives of the other
parties to be present at each meeting or conference relating to any such legal
proceeding and to have access to and be consulted in connection with any
document, opinion or proposal made or submitted to any Governmental Authority in
connection with any such legal proceeding.
5.2. Ancillary Agreements. On or prior to the Closing Date, Buyers
shall execute and deliver to Sellers and Sellers shall execute and deliver to
Buyers the Ancillary Agreements and such other ancillary agreements as are
necessary to the consummation of the transactions contemplated therein and in
this Agreement.
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5.3. Tax Reporting and Allocation of Consideration. Buyers and Sellers
recognize their mutual obligations pursuant to Section 1060 of the Code to
timely file IRS Form 8594 with each of their respective federal income tax
returns and to comply with any similar provision of foreign law (the "Asset
Acquisition Statement"). Accordingly, Buyers and Sellers agree to cooperate in
the preparation of the Asset Acquisition Statement for timely filing in each of
their respective federal income tax returns and any applicable foreign tax
return in accordance with a written statement (the "Statement of Allocation")
prepared in accordance with the Side Letter and setting forth an allocation of
the Purchase Price among the Purchased Assets, the German Assets and the Ecusta
Stock, and the covenants not to compete and not to solicit contained in Section
5.10 in accordance with the provisions of Section 1060 of the Code and the
Treasury Regulations thereunder. On or before the Closing, Buyers shall prepare
and deliver to Glatfelter a proposed Statement of Allocation. If Glatfelter
approves the Statement of Allocation, then, unless otherwise prohibited by law,
all federal, state and local income tax returns of Buyers and Sellers shall be
filed consistently with the allocations made pursuant to the Statement of
Allocation. If Glatfelter does not approve the Statement of Allocation, Buyers
and Glatfelter shall make good faith efforts to agree on the allocation of the
consideration among the Purchased Assets, the German Assets, the Ecusta Stock
and the covenants. If Buyers and Glatfelter, after good faith negotiations,
cannot agree on the allocation of the consideration within 120 days following
the Closing Date, then no Statement of Allocation shall be prepared, and each
party shall prepare and file its tax returns in accordance with its own
allocations. Sellers and Buyers acknowledge and agree that (x) Sellers will be
responsible for and perform all tax withholding, payment and reporting duties
with respect to any wages and other compensation paid by Sellers to any Business
Employee in connection with the operation of the Business prior to the Closing;
and (y) Buyers will be responsible for and perform all tax withholding, payment
and reporting duties with respect to any wages and other compensation paid by
Buyers to any Business Employee in connection with the operation of the Business
after the Closing. Sellers and Buyers agree to follow the Standard Procedure
specified in Rev. Proc. 96-60, whereby, among other things, each will be
responsible for the reporting duties with respect to its own wages and
compensation to employees in connection with the operation of the Business.
5.4. Tax Matters.
(a) Sellers will be responsible for the preparation and filing
of all Returns of Ecusta Canada and Ecusta Australia that are due (giving effect
to valid extensions) on or before the Closing Date. Sellers shall make all
payments required with respect to any such Return as shown or required to be
shown thereon. All Returns for which Sellers are responsible pursuant to this
Section 5.4(a) shall be prepared in a manner consistent with past practice,
unless otherwise prohibited by applicable law.
(b) Buyers will be responsible for the preparation and filing
of all other Returns of the Ecusta Subsidiaries or relating to the Business.
Buyer will make all payments required with respect to any such Return. All
Returns for which Buyers are responsible pursuant to this Section 5.4(b) and
that include a portion of a taxable period beginning before the Closing
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Date shall be prepared in a manner consistent with past practice, unless
otherwise required by applicable law.
(c) For purposes of this Agreement, Taxes of Ecusta Canada or
Ecusta Australia for the period up to and including the Closing Date and for the
period beginning on the day after Closing Date shall be apportioned on a per
diem basis in the case of any such Taxes not measured or measurable in whole or
in part with reference to net or gross income, sales or receipts, capital
expenses or compensation expenses, and all other such Taxes shall be determined
on the basis of an interim closing of the books of each of Ecusta Canada and
Ecusta Australia as of the end of the Closing Date. Notwithstanding the
foregoing methods of apportionment, any Taxes of Ecusta Canada and Ecusta
Australia that are attributable to transactions that occur (or are deemed to
occur) on the Closing Date but after the Closing and are not in the ordinary
course of respective businesses of Ecusta Canada and Ecusta Australia shall be
allocated to and paid or caused to be paid by Buyers but only to the extent such
transactions are attributable to actions taken by Buyers that are not in the
ordinary course of the respective businesses and excluding the transaction
contemplated by this Agreement.
(d) Sellers and Buyers shall provide reasonable cooperation
and information to each other in connection with (i) the preparation or filing
of any Return, amended Return, Tax election, Tax consent or certification, or
any claim for a Tax refund, (ii) any determination of liability for Taxes, and
(iii) any audit, examination or other proceeding in respect of Taxes related to
the Ecusta Subsidiaries or the Business. Buyers shall not make (or cause to be
made) any election under Section 338 of the Code with respect to the purchase of
the Ecusta Stock without the consent of Glatfelter. Such cooperation shall
include providing copies of all relevant Returns, together with accompanying
schedules and related work papers, documents relating to determinations by any
Governmental Authority, records containing the ownership and tax basis of
property and any records required to be maintained under Section 6038A of the
Code which either party may possess. Sellers and Buyers shall make available on
a reasonable basis employees of the Sellers or Buyers, as the case may be, whose
reasonable out of pocket costs, if any, such as travel and lodging, shall be
reimbursed by the party to which such employees are made available. Sellers and
Buyers shall at their own cost and expense preserve all Returns, schedules, work
papers and all material records or other documents relating thereto until the
expiration of any applicable statute of limitations, including extensions
thereof, provided that notice of such extension is given to the party which did
not grant the extension. Sellers and Buyers shall not destroy or otherwise
dispose of any Returns, schedules, work papers, information, records and
documents without first providing the other party a reasonable opportunity to
review and copy the same. The party requesting such information, records and
documents shall bear the reasonable out-of-pocket costs and expenses incurred in
connection with providing the same. Any information obtained under this Section
5.4 shall be kept confidential, except as may be otherwise necessary in
connection with the filing of Returns, claims for a Tax refund or in conducting
any audit, examination or other proceeding in respect of Taxes.
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(e) Sellers shall have the right, at their own expense, to
control any audit or examination by any Governmental Authority, to initiate any
claim for refund, to amend any Return, or to contest, resolve and defend against
any assessment, notice of deficiency, or other adjustment or proposed adjustment
relating to any Taxes for any taxable period ending on or before the Closing
Date, except that Sellers shall consult with Buyers and obtain Buyers' consent
(which consent shall not be unreasonably withheld) as to any of the foregoing if
Buyers or the Business may be adversely affected by such action. Buyers shall
promptly notify Sellers of the receipt of all notices, audits, examinations or
other proceedings, information or document requests, requests for conferences,
meetings, interviews or testimony of employees of Buyers or Ecusta Canada or
Ecusta Australia and other correspondence in respect of Taxes related to Ecusta
Canada or Ecusta Australia or the Business for any taxable period ending on or
before the Closing Date. Sellers shall have the right, at its own expense to
participate in all conferences, meetings, interviews or testimony of employees
of Buyers or Ecusta Canada or Ecusta Australia and other correspondence in
respect of Taxes related to the Business for any taxable period ending on or
before the Closing Date. With respect to any audit or other proceeding relating
to Taxes for taxable periods that begin before and end after the Closing Date
("Straddle Period Taxes"), Sellers shall have the right, at their own expense,
to participate (i) in all conferences, meetings or proceedings with any
Governmental Authority, the subject matter of which is or includes Straddle
Period Taxes and (ii) in all appearances before any court, the subject matter of
which is or includes Straddle Period Taxes. Buyers agree not to settle or
compromise any issue relating to Straddle Period Taxes without Glatfelter's
consent (which consent shall not be unreasonably withheld) unless Buyers first
waive, in writing, any rights to indemnification it may have under this
Agreement relating to such Straddle Period Taxes.
(f) Effective as of the Closing Date, Sellers shall cause any
tax sharing agreements to which any Ecusta Subsidiary is a party to be
terminated as to such Ecusta Subsidiary and such Ecusta Subsidiary shall have no
current or continuing obligations under any such agreement after the Closing
Date.
(g) Taxes and Fees. Sales taxes, transfer taxes, stamp taxes,
conveyance taxes, excise taxes, mortgage taxes, intangible taxes, documentary
recording taxes, value added taxes, goods and services, license and registration
fees, and recording fees imposed by any Governmental Authority, if any, imposed
upon the transfer of the Purchased Assets, the German Assets, Ecusta Stock or
the assumption of the Assumed Liabilities hereunder and the filing of any
instruments (the "Transfer Taxes") shall be divided equally between Buyers and
Sellers.
(h) Canadian Customs and Revenue Agency Certificate.
(i) Sellers shall deliver to Buyers on or before the
Closing Date (A) a certificate of compliance issued by the Canadian Customs and
Revenue Agency (the "CCRA") under subsection 116(2) of the Income Tax Act
(Canada) (the "ITA Canada") that certifies that the sale of the Ecusta Canada
Stock is exempt from taxation under the 1980 Income and Capital Tax Convention
between Canada and the United States of America, as amended by protocols, or
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(B) a certificate issued under subsection 116(2) of the ITA Canada that an
amount must be remitted to the Receiver General of Canada.
(ii) If a certificate described in section
5.4(h)(i)(B) is delivered at Closing, Buyer shall remit the amount required to
be withheld pursuant to such certificate to the Receiver General of Canada.
(iii) If a certificate is not delivered to Buyers
pursuant to Section 5.4(h)(i) above, Buyers shall be entitled to withhold from
the portion of the Initial Payment allocated to the Ecusta Canada Stock pursuant
to the Side Letter an amount required by applicable law.
(iv) Where Buyers have withheld any amount under
Section 5.4(h)(iii) above and Sellers deliver to Buyers, after the Closing Date
and within thirty (30) days after the end of the month in which Buyers acquired
the Ecusta Canada Stock, a certificate issued by the CCRA under subsection
116(2) of the ITA Canada, Buyers shall pay forthwith to Sellers any amount that
Buyers have withheld that is not required to be paid to the Receiver General of
Canada by reason of such certificate.
(v) Where Buyers have withheld any amount under
Section 5.4(h)(iii) above and no certificate has been delivered to Buyers by
Sellers under Section 5.4(h)(i) above, such amount shall be paid by Buyers to
the Receiver General of Canada under subsection 116 of the ITA Canada. Buyers
shall not remit any such amounts before the end of the period described in
Section 5.4(h)(iv).
(vi) Any amount paid by Buyers to the Receiver
General of Canada under Sections 5.4(h)(iv) or (v) above shall be credited to
Buyers as a payment to Sellers on account of the Purchase Price.
(vii) Any amounts withheld by Buyers pursuant to the
applicable law described in this Section 5.4(h) will be deposited in an interest
bearing account until such time as such amounts are remitted to the Receiver
General of Canada, and all interest received during any such period from the
account shall be remitted to Sellers.
5.5. Employees and Employee Benefits.
(a) Schedule 5.5(a) contains a true and complete list as of
May 16, 2001 showing the names, title, hire date and current annual salary
rates, commissions and incentive compensation (including, without limitation,
outstanding awards under the LTIP, P.H. Glatfelter Company Management Incentive
Plan ("MIP") and any retention agreements), as applicable, total 2000 earnings,
status (full or part-time, active or inactive, whether as a result of a Leave of
Absence or disability, specifying long-term or short-term) of all Business
Employees. With respect to all Business Employees, Buyers shall offer to hire,
as of the Closing Date, subject only to completion of an employment application
and a Form I-9, and the truthfulness thereof, and any drug testing to the extent
required by a requirement of law or any regulation thereunder, the
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Business Employees as of the close of business on the Closing Date including
without limitation the Business Employees on Leave of Absence or workers'
compensation leave. Each Business Employee who accepts an offer of employment
from Buyers shall become an employee of Buyers (the "Transferred Employees").
Beginning on the first Business Day following the execution of this Agreement,
Sellers shall provide or make available to Buyers, to the extent permitted by
applicable law, such information regarding the Transferred Employees as is
contained in Sellers' personnel records, including without limitation
information regarding accrued or incurred but unpaid liabilities (as of the
Closing Date) for wages, vacations, deferred compensation,
medical/dental/vision, workers' compensation, disability and other welfare
benefit claims. Sellers shall provide or make available such records as may be
reasonably requested by Buyers. Immediately following the Effective Date and if
the estimates of accrued liabilities on the Balance Sheet have been determined
in accordance with reasonable actuarial and other assumptions and methodologies,
Buyers shall assume responsibility and liability for the amounts of accrued or
incurred but unpaid salary or wages, commissions, vacations, matching
contributions to the Sellers' 401(k) plans (but not the plans themselves), and
non- qualified deferred compensation (as applicable) and accrued or incurred but
unpaid claims for employee benefits (including without limitation accrued or
incurred but unpaid claims for medical, workers' compensation, and short- and
long-term disability including payments with respect to medical and income
replacement benefits due or payable after the Effective Date with respect to
disabilities occurring before the Effective Date) as of the Effective Date, with
respect only to the Business Employees who become Transferred Employees at the
rate in effect on the Effective Date or, as applicable, in accordance with the
terms of Sellers' benefit plans as of the Effective Date. If estimates of such
accrued liabilities on the Balance Sheet have been determined in accordance with
reasonable actuarial and other assumptions and methodologies, Buyers shall
assume, subject to Section 3.10(n), all such liabilities without regard to
whether the actual liabilities are less or more than the amounts disclosed with
respect to such liabilities on the Balance Sheet. Buyers and Buyers' benefit
plans shall be solely responsible for benefits for illnesses or injuries
(including without limitation workers' compensation and short- and long- term
disability) with respect to any illness or injury suffered after the Effective
Date by a Business Employee who becomes a Transferred Employee (except to the
extent that a Business Employee who becomes a Transferred Employee is covered by
Sellers' group medical plan pursuant to COBRA in connection with a qualifying
event occurring on or before the Closing Date). To the extent that Sellers'
welfare benefits are provided by means of insurance, Sellers shall be
responsible for payment of all premiums due for periods on or before the
Effective Date and Buyer, if it assumes such insurance contracts, shall be
responsible for all premiums due for periods after the Effective Date. If Buyers
and Sellers agree that any accrued but unpaid compensation or benefits to be
assumed hereunder by Buyer as of the Effective Date will be paid by Sellers
through their own payroll or benefit plans, Buyers shall reimburse Sellers for
such payments, including related payroll taxes as applicable. Subject to the
same limitations of indemnification in Section 7.3, Buyers agree to indemnify,
defend and hold harmless Sellers (and each of Sellers' officers and employees,
as applicable) against, and reimburse Sellers for, any loss that Sellers may at
any time suffer or incur, or be subject to, with respect to all such obligations
for accrued or incurred but unpaid compensation or benefits assumed by Buyers as
aforesaid. Sellers' human resources department shall cooperate with Buyers to
effect an orderly
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and cost effective transfer of the above-described obligations. Sellers shall,
and shall cause its Affiliates to, use reasonable efforts to cause the employees
described in the first sentence of this Section 5.5 to make available their
employment services to Buyers.
(b) (i) The initial base pay of each Transferred Employee
shall be the same as the base pay of such Transferred Employee on the Effective
Date, which may reflect an across-the-board percentage increase in the base pay
of salaried employees between May 16, 2001 and the Closing Date, any such
percentage increase being agreed by Sellers and Buyers prior to the Closing
Date. Except as provided in paragraph (b)(ii) below, (A) all other terms of
employment of each Transferred Employee shall be determined by Buyers in their
sole discretion, except as limited by this Section 5.5, and (B) nothing herein
shall constitute an agreement to assume or be bound by any employment agreement
or employee plan, or previous or existing collective bargaining agreement
between any Seller and any representative of the Business Employees. Employment
with any Buyer will be at-will, and Buyers shall have the right to terminate the
employment of any Transferred Employee at any time, for any reason, and, except
as limited by this Section 5.5, to change the terms of such Transferred
Employee's wages, salaries, and benefits consistent with law, subject to
obligations of Buyers to such Transferred Employee under any collective
bargaining agreement or by a requirement of law or any regulation thereunder.
Effective as of the Closing Date and extending to but not beyond September 30,
2001 (or through such period required by an assumed collective bargaining
agreement with respect to unionized Transferred Employees, if earlier), Buyers
shall provide for the coverage of Transferred Employees under one or more
medical plans or programs providing benefits similar to the medical plans
covering such Transferred Employees immediately prior to the Closing Date and at
similar costs. Buyers shall use commercially reasonable best efforts to cause
their Plans that are welfare benefit plans to waive restrictions on coverage of
such Transferred Employees on account of waiting periods or pre-existing
conditions, provided, however, that no such waiver shall apply to preexisting
conditions of any Transferred Employee that was excluded from coverage under
Sellers' medical plans as of the Closing Date. With respect to any "employee
welfare benefit plans" and/or "employee pension benefit plans" (within the
meaning of Section 3(1) and 3(2) of ERISA, respectively, and including without
limitation short-term and long-term disability benefits, severance benefits and
salary continuation in the event of illness or injury) established or maintained
by Buyers on and after the Closing Date for the benefit of the Transferred
Employees and/or their eligible dependents or beneficiaries, Buyers shall
ensure, for purposes of any length of service requirements, waiting periods, or
vesting periods in any such plan for which a Transferred Employee may be
eligible on or after the Closing Date, that service by such Transferred Employee
with Sellers shall be treated as service with Buyers to the extent Sellers
recognized such service.
(ii) Notwithstanding the foregoing Section 5.5(b)(i),
subject to any applicable legal restrictions, Buyers shall assume the Collective
Bargaining Agreement between P.H. Xxxxxxxxxx Co. Ecusta Division Pisgah Forest,
North Carolina and United Paperworkers International Union AFL-CIO and Its
Affiliated Local No. 1971 (effective October 7, 1996 to October 1, 2001).
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(c) Sellers shall remain solely responsible for all
liabilities relating to, arising out of, or resulting from (i) the requirements
of Section 4980B of the Code to provide continuation of health care coverage
under any of its Plans in respect of the Business Employees and their qualified
beneficiaries and dependents, to the extent related to a qualifying event
occurring on or before the Closing Date, and (ii) claims for workers'
compensation benefits, except to the extent such claims have been assumed by
Buyers under Section 5.5, arising in connection with any occupational injury or
disease occurring on or prior to the Effective Date. Buyers shall provide
continuation health care coverage of Section 4980B of the Code to any
Transferred Employee and his qualified beneficiaries who incur a qualifying
event after the Closing Date. Buyers shall only be responsible for any
obligation with respect to the Transferred Employees under the Worker Adjustment
Retraining and Notification Act of 1988 and any applicable state or local
equivalent arising or accruing after the Closing Date and Sellers shall be
responsible for any such obligation arising or accruing on or before the Closing
Date.
(d) Except as expressly and specifically set forth in Section
5.5(a), (f), (i), (j), (k) and (m), Sellers shall be responsible for (i)
Sellers' employee benefit plans or any benefit obligations and liabilities
arising under Sellers' employee benefit plans, (ii) any other "employee pension
benefit plan" at any time maintained, contributed to, or to which contributions
were required, by Sellers or any of their Affiliates that together with any of
them is treated as a single employer for purposes of Section 412 of the Code or
Title IV of ERISA, (iii) COBRA coverage for Business Employees, former Business
Employees or non-Transferred Employees, and their respective eligible
beneficiaries for qualifying events occurring on or prior to the Closing Date,
(iv) any employment, wrongful discharge, unfair labor practice, claims by
Business Employees relating to acts or omissions occurring prior to the
Effective Date or other labor-related claim made by a Business Employee with
respect to an event occurring on or prior to the Effective Date, (v) improper
worker classification of any employee or independent contractor with respect to
the Business who is or was in the service of any Seller on or prior to the
Effective Date, and (vi) coverage under any welfare benefit plan for Business
Employees or former Business Employees or any non-Transferred Employees whose
employment is terminated as of the Effective Date, and their respective eligible
beneficiaries, that retired or are otherwise terminated from service on or prior
to the Effective Date (unless otherwise required by an applicable collective
bargaining agreement).
(e) Sellers shall cause, as of the Closing Date, all
Transferred Employees to be 100% vested in all individual account balances (as
of such date) under the P.H. Glatfelter Company 401(k) Savings Plan or the P.H.
Glatfelter Company 401(k) Savings Plan For Ecusta Hourly Employees or any other
defined contribution employee pension benefit plans (as defined in Section 3(2)
of ERISA) maintained, sponsored, contributed to or participated in by Sellers.
(f) The provisions of this Section 5.5(f) shall, except as
otherwise specifically provided herein, be separately and individually
applicable to each of the P. H. Glatfelter Company Retirement Plan for Hourly
Employees and P. H. Glatfelter Company Retirement Plan for Salaried Employees,
as if the same were repeated in full with respect to each such plan. Each
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such plan is hereinafter individually referred to as the "Sellers DB Plan" and
collectively as the "Sellers DB Plans."
(i) The qualified actuary of each Sellers DB Plan
shall determine the aggregate accrued benefit obligation and the projected
benefit obligation, as defined in Statement of Financial Accounting Standards
No. 87 of the Financial Accounting Standards Board, as of the Closing Date,
relating to the benefit (whether or not vested) of each of the Transferred
Employees on the Closing Date ("Transferred Pension Participants"), based on
their service, for benefit accrual purposes, under Sellers DB Plans as of the
Closing Date, and using the actuarial assumptions set forth in Schedule 5.5(f)
to this Agreement (the demographic data set forth on such schedule being as of
May 16, 2001), provided that the determination of such amounts shall take into
account (A) any future benefit increases which have been agreed to by Sellers on
or before the Closing Date, (B) prior service crediting obligations, (C)
contingent event benefit obligations, (D) early retirement benefits, and (E)
benefit increases adopted, but not yet reflected in the funding of each of
Sellers DB Plans. The aggregate accrued and projected benefit obligation amounts
so determined (but not the actuarial assumptions described above which underlie
such determination) shall be subject to the review and the concurrence of an
actuary designated by Buyers. In the event that the actuaries referred to in
this section shall disagree with respect to the determinations described in the
immediately preceding sentence and the parties to this Agreement do not agree on
resolution of such disagreement, such actuaries shall appoint a third actuary,
the cost of which shall be shared equally by both parties, whose determination
shall be binding (absent manifest error). If such actuaries cannot agree on a
third independent actuary, then the President of the Society of Actuaries shall
appoint such third party actuary. With respect to both of Sellers DB Plans, in
the aggregate, the greater of (i) the projected benefit obligation (the "PBO")
as of the Closing Date plus $10 million (it being agreed by the parties that the
PBO is equal to $38 million as of May 16, 2001) and (ii) the amount required to
be transferred by section 414(l) of the Code as determined by Sellers' actuary
(but subject to review and concurrence of Buyers' actuary as stated above) shall
be hereinafter referred to as the "Transfer Amount." The portion of such
Transfer Amount allocable from each of Sellers DB Plans shall be identified by
Sellers' actuary, provided that such allocation does not preclude or prohibit
Buyers from determining the allocation of the Transfer Amount in respect of each
Transfer Plan. The Sellers DB Plan shall, on and after the Closing Date, invest
the Transfer Amount in an interest bearing money market account or similar fixed
income investment (provided that such investment yields interest at no less than
the prevailing LIBOR rate), and such Transfer Amount, as increased by interest
earned through the actual date of transfer with respect to such fixed income
investment, shall be hereinafter referred to as the "Adjusted Transfer Amount."
(ii) As of the Closing Date, Buyers shall cause all
Transferred Pension Participants to be covered under a defined benefit pension
plan or plans of Buyers intending to be tax-qualified and adopted for such
purpose (which plan or plans, to the extent permitted by applicable law or
regulation, may have terms and provisions different from those contained in
Sellers DB Plans) but which shall in all events ensure that all Transferred
Pension Participants receive, subject to the transfer of assets from the Sellers
DB Plan(s) described herein,
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immediately after the Closing Date a benefit under such plan or plans of Buyer
which is equal to or greater than the benefit such Transferred Pension
Participants would have been entitled to receive immediately before the Closing
Date under the applicable Sellers DB Plan. The defined benefit pension plan or
plans adopted by Buyers pursuant to the preceding sentence (the "Transfer Plan"
or "Transfer Plans") shall credit each Transferred Pension Participant with all
service with Sellers or any of their affiliates prior to the Closing Date for
purposes of eligibility for membership, eligibility for the payment of benefits,
vesting and benefit accrual and shall recognize all compensation of each such
individual from Sellers or any of its affiliates prior to the Closing Date on
the same basis as such service and compensation was recognized under Sellers DB
Plans immediately prior to the Closing Date.
(iii) Within 180 days after the Closing Date, Buyers
shall provide Sellers with copies of each Transfer Plan as applicable and an
executed trust agreement between Buyers and a corporate trustee designated by
Buyers, together with certified copies of resolutions of the boards of directors
of Buyers adopting each Transfer Plan and authorizing the execution and delivery
of the trust agreement and the submission of each Transfer Plan promptly to the
Internal Revenue Service and to take such actions as may be required in order to
obtain a determination that each Transfer Plan is qualified under Section 401(a)
of the Code. Within thirty days after Sellers' receipt of such documents,
Sellers shall cause the trustee of the trust under each Sellers DB Plan to
transfer to the trustee of the trust under each Transfer Plan an amount equal to
the Adjusted Transfer Amount determined under Section 5.5(f)(i) above, reduced
by the amount of any distributions made (including a claim for reasonable costs
in connection with processing such distributions which would otherwise have been
payable by Buyer had the Adjusted Transfer Amount been transferred immediately
upon the Closing Date) from the trust under Sellers DB Plan in respect of
Transferred Pension Participants from and after the Closing Date. If the
Adjusted Transfer Amount exceeds the amount required to be transferred pursuant
to section 414(l) of the Code, such excess shall be allocated among the Transfer
Plans in manner determined by Buyers pursuant to reasonable actuarial and other
assumptions determined by Buyers' actuary. Upon receipt of the Adjusted Transfer
Amount by the trustee of each Transfer Plan, Buyers agree that the Transfer Plan
shall be subject to all the liabilities accrued under Sellers DB Plan and still
unpaid with respect to the Transferred Pension Participants immediately prior to
the Closing Date. During the period commencing with the Closing Date and ending
with the transfer of assets as aforesaid, (A) any amounts becoming payable to or
in respect of Transferred Pension Participants under each Transfer Plan shall be
paid from the trust under each Sellers DB Plan, as applicable, and (B) Sellers
and the fiduciaries acting with respect to each Sellers DB Plan shall continue
to act as the fiduciaries thereof for the participants thereunder, including the
Transferred Pension Participants.
(iv) Nothing herein contained shall limit Buyers'
right to amend or terminate each Transfer Plan.
(v) Sellers shall have the right to make an estimated
transfer under Section 5.5(f)(iii) above at any time after the Closing Date. If
Sellers have transferred too few assets in the initial transfer, the balance
shall be subject to interest at the rate set forth therein.
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To the extent Sellers have transferred too many assets, Buyers shall pay
interest on the balance at the same rate (not to exceed $10,000 in the
aggregate). In order to accommodate the transfers under this Section 5.5(f)(v),
Sellers shall notify Buyers at least 60 days prior to any transfer. Sellers
shall file IRS Form 5310A with the Internal Revenue Service, if required. Buyers
shall likewise file IRS Form 5310A with the Internal Revenue Service, if
required. Sellers shall also file any and all such reports or notices and other
information with the PBGC as is required by law or requested by the PBGC, and
Buyers shall cooperate reasonably with Sellers in their efforts to do so.
(vi) Sellers shall provide any and all information
reasonably required by Buyers or each Transfer Plan trustee or plan
administrator and/or actuary designated by Buyers relating to benefits accrued
under each Sellers DB Plan by the Transferred Employees and all such information
shall be true, complete and accurate.
(vii) The parties hereto shall cooperate in the
administration of each Sellers DB Plan and each Transfer Plan to the extent
required to ensure that the payments of benefits to Transferred Employees is
appropriately coordinated.
(g) Subject to the same limitations of indemnification set
forth in Section 7.3, in addition to any other remedies that may be available to
Buyers under the Agreement, Sellers hereby agree to indemnify, defend and hold
harmless Buyers against, and reimburse Buyers for, any loss that Buyers may at
any time suffer or incur, or become subject to, as a result of or in connection
with (i) Sellers' employee benefit plans or any benefit obligations and
liabilities arising under Sellers' employee benefit plans, other than
liabilities transferred pursuant to this Section 5.5, (ii) any other "employee
pension benefit plan" at any time maintained, contributed to, or to which
contributions were required, by Sellers or any of their Affiliates that together
with any of them is treated as a single employer for purposes of Section 412 of
the Code or Title IV of ERISA, (iii) COBRA coverage for Business Employees and
former Business Employees, or non-Transferred Employees, and their respective
eligible beneficiaries for qualifying events occurring on or prior to the
Closing Date, (iv) any employment, wrongful discharge, unfair labor practice, or
other labor-related claim made by a Business Employee with respect to an event
occurring on or prior to the Effective Date, (v) improper worker classification
of any employee or independent contractor who is or was in the service of
Sellers with respect to the Business on or prior to the Effective Date, and (vi)
coverage under any welfare benefit plan for Transferred Employees, former
Business Employees or non-Transferred Employees, and their respective eligible
beneficiaries, that retired or are otherwise terminated from service on or prior
to the Effective Date (unless otherwise required by an applicable collective
bargaining agreement).
(h) Sellers hereby agree that the transactions contemplated by
this Agreement constitute an event described in Section 401(k)(10)(A)(ii) of the
Code and that, pursuant to such section and Section 401(k)(2)(B)(i)(II) of the
Code, amounts held in trust by Sellers' 401(k) cash or deferred savings plans,
including without limitation the P. H. Glatfelter Company 401(k) Savings Plan
for Ecusta Hourly Employees and the P. H. Glatfelter Company 401(k) Savings Plan
(the "Sellers' 401(k) Plans") for the benefit of participants who are or shall
become
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Transferred Employees shall be distributed to any such Transferred Employee (or
his or her beneficiary, if applicable) who requests such a distribution after
the Closing Date. Such distribution shall otherwise be in accordance with the
terms of Sellers' 401(k) Plans and applicable.
(i) No Transferred Employees are eligible to participate in
the P.H. Glatfelter Company Supplemental Executive Retirement Plan. With respect
to Transferred Employees who, as of the Closing Date, have (i) unpaid deferred
compensation under the MIP or an accrued benefit under the MIP Adjustment
Supplement under the P.H. Glatfelter Company Supplemental Management Pension
Plan, Buyers shall, if the estimates of accrued liabilities on the Balance Sheet
have been determined in accordance with reasonable actuarial and other
assumptions and methodologies, succeed to Sellers' obligations to pay or provide
such benefits in accordance with the terms of the MIP or the MIP Adjustment
Supplement as accrued as of the Closing Date (provided, however, that a
Transferred Employee who accepts employment with Buyer shall not be considered
to have terminated employment as of the Closing Date for this purpose). Buyers
agree to indemnify, defend and hold harmless Sellers, and each of Sellers'
officers and employees, with respect to, and/or reimburse Sellers for, any such
payment obligations assumed by Buyers as aforesaid.
(j) With respect to any Transferred Employee who is a party to
a retention agreement with Glatfelter, Buyers shall, if the estimates of accrued
liabilities on the Balance Sheet have been determined in accordance with
reasonable actuarial and other assumptions and methodologies, succeed to
Glatfelter's obligations under said retention agreement, to the extent not
satisfied as of the Effective Date. If such retention agreement provides for the
award of shares of Glatfelter restricted stock, Glatfelter shall deliver such
shares of restricted stock (or a pro-rated portion thereof) when and if provided
for under the terms of the retention agreement, and Buyers shall reimburse
Glatfelter with respect to the fair market value of such restricted stock as of
the date so distributed.
(k) With respect to Transferred Employees who, as of the
Closing Date, have been granted stock options under the LTIP, Glatfelter shall
permit such Transferred Employees to be able to exercise such stock options to
the extent vested on the Closing Date at any time prior to the date which is the
earlier of (A) six months following the Closing Date, or (B) the stated
expiration date of the option.
(l) With respect to Transferred Employees who, as of the
Closing Date, have been granted awards of restricted stock under the LTIP for
which the "Restriction Period" (as defined by such Plan) with respect to such
stock has not expired as of the Closing Date, Glatfelter shall cause a pro-rated
portion of such restricted stock to be vested and non-forfeitable as of the
Closing Date, equal to the ratio that the Transferred Employee's period of
service from the beginning of the Restriction Period (described in his
restricted stock award) through the Closing Date bears to the full Restriction
Period applicable to the award. Such shares of restricted stock shall otherwise
be distributable in accordance with the terms and conditions of the award and
the LTIP, and Buyers shall, if the estimates of accrued liabilities on the
Balance
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Sheet have been determined in accordance with reasonable actuarial and other
assumptions and methodologies, reimburse Glatfelter with respect to the fair
market value of any restricted stock actually distributed to any Transferred
Employee as of the date so distributed.
(m) If the estimates of accrued liabilities for
post-retirement medical benefits on the Balance Sheet have been determined in
accordance with reasonable actuarial and other assumptions and methodologies,
Buyers shall indemnify, defend and hold harmless Sellers, and each of Sellers'
officers and employees, against any claim made by any Transferred Employee,
spouse or eligible dependent (to the extent such spouse or eligible dependent
was eligible for coverage under Sellers' retirement medical program on May 16,
2001), other than any Transferred Employee who is the subject of a collective
bargaining agreement, for post-retirement medical costs incurred by Sellers in
respect of any such claim to the extent that such cost (as determined and
limited by reference to the type and level of benefits provided under Sellers'
post-retirement medical program on May 16, 2001 as amended with respect to
eligibility only by the proposed resolutions attached as Exhibit A to the
Post-retirement Medical Benefits Side Letter) exceeds the amount of the medical
benefit provided by Buyers in respect of such claim to such Transferred
Employee, spouse or eligible dependent, as applicable, under Buyers' active or
post-retirement medical program, if any. Post-retirement medical benefits for
Transferred Employees subject to the collective bargaining agreement assumed by
Buyers under Section 5.5(b)(ii) hereof shall be provided pursuant to the terms
of such agreement.
(n) For avoidance of doubt, Buyers shall not assume the actual
Plans and other programs, policies and agreements listed on Schedule 3.10(a).
5.6. Affiliate Matters. After May 16, 2001 but prior to Closing, the
Ecusta Subsidiaries shall not declare or pay and Sellers shall not permit the
declaration or payment of a dividend or other distribution by or from Ecusta
Canada or Ecusta Australia to any Person, and neither Ecusta Canada nor Ecusta
Australia shall undertake a capital reduction or redemption. Prior to Closing,
Sellers shall cause the termination of any contract, agreement or other
arrangement between Glatfelter and either of the Ecusta Subsidiaries without
compensation to either party thereto for such termination.
5.7. Notice. Each party will promptly notify the other parties in
writing of any event or fact which represents a breach of any of their
representations, warranties, covenants or agreements hereunder. Sellers shall
notify Buyers promptly of the occurrence of any of the following:
(a) a fire or other casualty causing damage to the Premises;
(b) receipt of notice of eminent domain proceedings or
condemnation of all or any part of the Premises;
(c) receipt of a notice from any governmental authority or
insurance underwriter relating to the condition, use or occupancy of the
Premises or any real property
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adjacent to the Premises or setting forth any requirements with respect thereto,
to the extent material;
(d) receipt or delivery of any default, to the extent it could
result in limitation, diminution or termination of the rights of any Seller or
Ecusta Subsidiary, or termination notice or claim of offset or defense to the
payment of rent from any tenant of the Owned Real Estate or any subtenant of the
Leased Real Estate;
(e) receipt of any notice of default from the holder of any
lien or security interest in the Premises or any portion thereof;
(f) a change in more than 25% of the occupancy of the leased
premises of the Owned Real Estate;
(g) notice of any actual or threatened material litigation
against any Seller or affecting or relating to the Premises;
(h) the commencement of any strike, lock-out, boycott or other
labor trouble affecting the Premises; or
(i) receipt of any tax assessment disputes (pending or
threatened) prior to Closing and Sellers will not agree to any changes in the
real estate tax assessment, nor settle, withdraw or otherwise compromise any
pending claims with respect to prior tax assessments without Buyers' prior
written consent, such consent not to be unreasonably withheld, conditioned or
delayed. If any proceedings shall result in any reduction of assessment and/or
tax for the tax year in which the Closing occurs, it is agreed that the amount
of tax savings or refund for such tax year less the fees and disbursements in
connection with such proceedings, shall be apportioned between the parties as of
the date real estate taxes are apportioned under this Agreement.
5.8. Conduct of the Business. Sellers hereby jointly and severally
covenant to Buyers that, from the date hereof to the Closing Date, Sellers and
the Ecusta Subsidiaries will conduct the Business only in the ordinary course
and consistent with past practice, except as otherwise required herein. Sellers
will not cause or permit any Encumbrance on the Purchased Assets or the assets
of the Ecusta Subsidiaries through the Closing Date. Without limiting the
generality of the foregoing, Sellers hereby jointly and severally covenant to
Buyers that, solely insofar as the Business is concerned, Sellers and the Ecusta
Subsidiaries will:
(a) preserve the business organization of each Ecusta
Subsidiary and of Glatfelter as it relates to the Ecusta Division intact and
maintain their respective books of account and records in their usual, regular
and ordinary manner, consistent with its past practice, so far as they relate to
the Business;
(b) use their commercially reasonable best efforts to keep
available the services of the present officers and directors of each Ecusta
Subsidiary and the Ecusta Division
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and preserve intact each Sellers' and the Ecusta Subsidiaries' relationships
with respective suppliers, customers, employees, creditors and others having
business dealings with respect to the Business;
(c) timely perform and comply with, in all material respects,
the provisions of all contracts, commitments or other obligations relating to or
affecting the Purchased Assets or the Business;
(d) maintain and keep the Purchased Assets and the assets of
all Ecusta Subsidiaries in at least as good condition and repair, ordinary wear
and tear excepted, as the condition and repair of the Purchased Assets and the
assets of the Ecusta Subsidiaries as of the date hereof;
(e) pay when due all Taxes of each Ecusta Subsidiary imposed
on it or its income, profit or assets or otherwise required to be paid by it,
and pay when due any liability or charge of any Seller which, if unpaid, might
become a lien or charge upon any of the Purchased Assets, except to the extent
any such Tax, liability or charge is being contested in good faith through
appropriate proceedings;
(f) maintain in full force and effect and comply with, in all
material respects, all permits, certificates, licenses, approvals and
authorizations required under all laws in connection with the Business, and
comply with all laws, rules and regulations applicable to the Business; and
(g) use their commercially reasonable best efforts to maintain
the current management of the Business.
5.9. Covenant Not to Compete; Nonsolicitation.
(a) From and after the Closing Date, Sellers will not and will
cause their Affiliates not to, for its own account or for the account of others,
directly or indirectly, own, manage, operate, join, control or participate in
the ownership, management, operation or control of any business conducting
business under the name "Ecusta," or any variant thereof. For a period of five
years from and after the Closing Date, Sellers will not and will cause their
Affiliates (other than natural persons) not to, other than in the performance of
Sellers' obligations under the Ancillary Agreements, for its own account or for
the account of others, directly or indirectly (i) engage in any business which
competes with the cigarette papers segment of the Business (other than Xxxxx
Plug Wrap, Tobacco Wrapper or Mouth Piece Base), or (ii) own, manage, operate,
join, control or participate in the ownership, management, operation or control
of any person or entity who or which at any relevant time during such period is
engaged in any business which competes with the cigarette papers segment of the
Business (other than Xxxxx Plug Wrap, Tobacco Wrapper or Mouth Piece Base). For
the purposes of this Section 5.9, "Xxxxx Plug Wrap" means the heavyweight, high
stiffness cigarette paper product that is used as filter tip paper in the
manufacture of recessed filter cigarettes; "Tobacco Wrapper" means the
lightweight, fleece-type cigarette paper product that is used to wrap tobacco in
the
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manufacture of tobacco sticks, which are then inserted into cigarette tubes in
order to create a cigarette; and "Mouth Piece Base" means the heavyweight, high
stiffness cigarette paper product that, after application of a heat sealable
coating, is used as filter tip paper in the manufacture of recessed filter
cigarettes.
(b) For a period of five years from and after the Closing
Date, Sellers will not and will cause their Affiliates not to, directly or
indirectly, solicit or attempt to solicit any person or entity who is or has
been a significant customer of the Business at any time during the five (5)
calendar years prior to such period or during such period to cease or reduce its
particular business relationship with the Business for products supplied to it
by the Business, including but not limited to Xxxxx & Co., Inc.
(c) The restrictive covenants contained in this Section are
covenants independent of any other provision of this Agreement and the existence
of any claim which any party to this Agreement may allege against any other
party to this Agreement, whether based on this Agreement or otherwise, shall not
prevent the enforcement of these covenants. Each of Sellers and Buyers agree
that the others' remedies at law for any breach or threat of breach of the
provisions of this Section 5.9 will be inadequate, and that each party shall be
entitled to an injunction or injunctions to prevent breaches of the provisions
of this Section 5.9 and to enforce specifically the terms and provisions hereof,
in addition to any other remedy to which such party may be entitled at law or
equity. In the event of litigation regarding the covenant not to compete, the
prevailing party in such litigation shall, in addition to any other remedies the
prevailing party may obtain in such litigation, be entitled to recover from the
other party its reasonable legal fees and out of pocket costs incurred by such
party in enforcing or defending its rights hereunder. The length of time for
which this covenant not to compete shall be in force shall not include any
period of violation or any other period required for litigation during which the
party seeking to enforce this covenant seeks to enforce this covenant. Should
any provisions of this Section 5.9 be adjudged to any extent invalid by any
competent tribunal, such provision will be deemed modified to the extent
necessary to make it enforceable.
5.10. Material Consents. Sellers and the Ecusta Subsidiaries agree to
use their respective commercially reasonable best efforts to obtain prior to the
Closing all of the consents of third Persons which have been disclosed, or are
required to be disclosed, on Schedule 3.3, which consents shall be in forms
reasonably satisfactory to Buyers.
5.11. Notice to Customers. Sellers agree, in consultation with Buyers,
to promptly notify customers of the Business of the consummation of the
transactions contemplated by this Agreement and to reasonably assist Buyers, at
Buyers' expense, in making arrangements with such customers for the payment of
Buyers' accounts receivable (other than the Accounts Receivable) in a manner
satisfactory to Buyers.
5.12. Confidentiality. Sellers and the Ecusta Subsidiaries, on one
hand, and Buyers, on the other hand, hereby agree that none of their Affiliates
or any of their respective directors, officers, employees, managers, equity
owners, agents, consultants, partners, interest holders or representatives shall
use or disclose to any third party any Business Intellectual Property or other
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confidential or proprietary information in their possession or control with
regard to the Business. The obligations of this Section 5.12 shall not apply to
Buyers after the Closing Date or to information which (i) is or becomes
generally available to the public without breach of the commitment provided for
in this Section; (ii) becomes available to any of the parties on a
nonconfidential basis from a third party not known by the party hereto to be
bound by a confidentiality agreement with any of other parties hereto; or (iii)
is required to be disclosed by law, order or regulation of a court or tribunal
or governmental authority; provided, however, that, in any such case, the party
required to disclose the information shall notify appropriate other parties
hereto as early as reasonably practicable prior to disclose to allow other
parties to take appropriate measures to preserve the confidentiality of such
information; provided, further, that this Agreement and its terms shall remain
confidential after the Closing Date except to the extent necessary to consummate
the transactions contemplated hereby and except as required by applicable law.
5.13. Estoppel Certificates. Sellers shall use reasonable efforts to
obtain, prior to the Closing, at Sellers' sole expense, estoppel certificates
and lessor lien waivers (such estoppel certificates and waivers not to be
conditioned on any increased rental, other payment, reduced term, or other
change of lease terms), if applicable, in a form and substance reasonably
acceptable to Buyers and their lenders (the "Estoppel Certificates"), from each
real property lessor listed on Schedule 3.16 or any other lien-holder of any
kind related to the Business.
5.14. Title Policies. Sellers shall cooperate with Buyers for Buyers to
obtain on or prior to the Closing, at standard rates, either (i) good and valid,
irrevocable ALTA extended form title insurance policies (or signed pro forma
policies) (collectively, the "Title Policies") issued by Fidelity National Title
Insurance Company, or another nationally recognized title company or companies
reasonably acceptable to Buyer (collectively, the "Title Company") or (ii) an
attorney's opinion of the status of title which shall not be subject to any
imputed knowledge of Sellers and the Ecusta Subsidiaries, in the case of the
Title Policies referred to in clause (i) above insuring (or committing the Title
Company to insure) Buyers' fee title to each parcel of the Owned Real Estate as
indicated on Schedule 3.16(a)(i), in such amounts which are at least equal to
the stated values in Schedule 3.16(a)(i), subject to no Encumbrances other than
the Permitted Fee Title Exceptions as such apply to the particular Owned Real
Estate transferred and insured, together with such endorsements as are customary
for commercial transactions of this type in such jurisdiction including without
limitation a comprehensive endorsement with respect to easements and
restrictions of record and no mechanic's liens. Each of the Title Policies shall
be effective for the benefit of Buyers as of the date and time of the recording
of the deed to the parcel or parcels of the Owned Real Estate, as applicable to
which it relates. The cost of obtaining such Title Policies shall be paid
equally by Sellers and Buyers. Notwithstanding anything to the contrary
contained herein, in lieu of Title Policies, Sellers shall obtain and deliver to
Buyers no later than thirty (30) days prior to Closing all information and
undertake all actions necessary for Buyers, to obtain on or prior to the
Closing, at standard rates, (i) with respect to Owned Real Estate located in
Canada and Australia, a certificate of title, similar in form and substance to
those certificates customarily received for a real estate transaction in the
applicable real estate market of similar size and nature, and (ii) with respect
to Owned Real Estate located
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in Canada, an opinion of local counsel with respect to title issues, similar
form and substance to those certificates customarily received for a real estate
transaction in the applicable real estate market of similar size and nature.
5.15. Survey. Sellers shall cooperate with Buyers for Buyers to obtain
on or prior to the Closing, as built surveys of each parcel of the Owned Real
Estate (the "Surveys") prepared by surveyors registered in the jurisdiction in
which the surveyed property is located and otherwise satisfactory to Buyers (the
"Surveyor") in accordance with the 1999 minimum standard detail requirements for
ALTA/ACSM surveys (or similar requirements for the Owned Real Estate located in
Australia and Canada), including without limitation Table A items 2-4, 6,
7(b)(1) and (c), 8-10, 11(b) and 13, dated as of a date after January 20, 2001
showing, with respect to each parcel of the Owned Real Estate and the
appurtenances to such parcel, access to and from a dedicated and accepted public
right-of-way, the correct location and dimensions of all improvements (including
fences and driveways), all plottable easements, rights-of-way and setback lines,
the correct location and dimensions of all alleys and streets, all other
plottable matters of record or visible on the ground affecting such parcel of
the Owned Real Estate, and such other information as may be reasonably requested
by Buyers. The Surveys shall: (i) show that other than Permitted Fee Title
Exceptions, as such apply to the particular Premises transferred and insured,
all structures and other improvements on the Premises are (A) within the lot
lines and do not encroach upon the properties of any other Person, and (B) in
compliance with applicable zoning laws relating to setback and height
restrictions, (ii) show no Encumbrances other than Permitted Fee Title
Exceptions, as such apply to the particular Premises transferred and insured,
(iii) be certified to Sellers and the Ecusta Subsidiaries; Buyers and their
assigns and any mortgage lender to the same, and the Title Company, (iv) comply
with any reasonable requirements imposed by the Title Company as a condition to
the removal of any survey exception from the general exceptions to the Title
Policy covering such of the Owned Real Estate as is shown on the property
surveyed and (v) show the total acreage of the particular Premises transferred
and insured; provided, however, that with respect to clauses (A) and (B), the
surveys may show encroachments or noncompliance that do not individually or in
the aggregate have a Material Real Estate Impairment. The cost of obtaining such
Surveys shall be paid equally by Sellers and Buyers. Buyers shall use
commercially reasonable efforts to obtain within a reasonable time period a
survey for the Owned Real Estate located in North Carolina.
5.16. Accounts Receivable and Related Claims. From and after the
Closing, Sellers (i) shall use their commercially reasonable best efforts to
assist Buyers, upon Buyers' reasonable request, in collecting the Accounts
Receivable and (ii) shall not (A) without the prior written consent of Buyers,
which consent shall not be unreasonably withheld or delayed, waive or settle any
claims or rights which constitute Purchased Assets, including, without
limitation, claims with respect to Accounts Receivable or (B) take any action to
interfere with or impair the collection by Buyers of any claims or rights which
constitute Purchased Assets, including, without limitation, claims with respect
to Accounts Receivable.
5.17. Real Property Compliance Certificate. Within fourteen (14) days
after Sellers delivery to Buyers of the survey for the Owned Real Estate located
in North Carolina, with
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respect to the Owned Real Estate located in North Carolina, Sellers shall
provide Buyers with either (i) a certificate or letter from the appropriate
local governmental authorities, (ii) a zoning report prepared by Planning &
Zoning Resource Corporation containing such firm's customary assumptions and
qualifications, or (iii) a zoning opinion from local counsel, each indicating
the Owned Real Estate located in North Carolina is in compliance with applicable
zoning restrictions, without reliance upon continuing non-conforming use or
variances if the effect of such non-conforming use or variance would be to
result in a Material Real Estate Impairment after a casualty to the existing
improvements on the Owned Real Estate located in North Carolina (any one of the
items referred to in clauses (i), (ii) and (iii), the "Real Property Compliance
Certificates").
5.18. Ecusta Stock.
(a) After Closing and until the Ecusta Stock is registered in
the name of Purico or Purico's nominee, Sellers shall convene and attend general
meetings of the Ecusta Subsidiaries, vote at those meetings as directed by
Purico and take all other action in the capacity of registered holders of the
Ecusta Stock as Purico may lawfully require by written notice.
(b) Sellers shall cause the registration of the transfer of
the Ecusta Stock within five (5) days after the Closing Date.
5.19. Asbestos Removal. Sellers agree, at their sole cost and expense,
to remove all asbestos and asbestos-containing materials from those portions of
the Ecusta Division paper mill which are not used as part of the Business as of
the Closing Date and which are listed on Schedule 5.19 (the "Asbestos Removal
Work"). Sellers agree to perform the Asbestos Removal work as soon as reasonably
practicable; however, Buyers acknowledge that the Asbestos Removal Work may not
be completed before the Closing Date and agree to provide Sellers and Sellers'
asbestos removal contractor sufficient access to the facility after the Closing
Date to enable Sellers to perform the Asbestos Removal Work. Sellers shall
complete all such Asbestos Removal Work within one (1) year of the Closing Date
and, until such time as the Asbestos Removal Work is completed, Sellers shall,
their sole cost and expense, manage and maintain all such asbestos and
asbestos-containing materials in compliance with all applicable Environmental
Laws and other laws, rules and regulations. Sellers further agree that all such
Asbestos Removal Work shall be performed subject to the conditions governing
Remediation contained in Section 7.3(c)(ii).
ARTICLE VI
CLOSING
If Closing occurs and this amendment and restatement thereby becomes
effective in accordance with Section 8.2 hereunder, the following conditions and
required deliveries are deemed to be fully satisfied and waived:
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6.1. Conditions Precedent to Each Party's Obligations. The respective
obligations of each party to consummate the transactions contemplated by this
Agreement and the Ancillary Agreements shall be conditioned upon (a) approval or
early termination of the waiting period under the HSR Act; (b) express or
presumed clearance by competent German Merger Control Authority; and (c) no
order, statute, rule, regulation, executive order, stay, decree, judgment or
injunction having been enacted, entered, promulgated or enforced by any court,
governmental authority or regulatory body which restrains, prohibits or prevents
the consummation of the transactions contemplated hereunder.
6.2. Conditions Precedent to Buyers' Obligations. Buyers' obligation to
consummate the transactions contemplated by this Agreement and the Ancillary
Agreements shall be subject to the fulfillment of each of the following
additional conditions, any one or more of which may be waived in writing by
Buyers:
(a) Performance. Sellers and the Ecusta Subsidiaries shall
have performed in all material respects their obligations and covenants under
this Agreement required to be performed on or prior to the Closing Date pursuant
to the terms hereof.
(b) Bringdown of Representations and Warranties. Those
representations and warranties of Sellers contained in this Agreement that are
qualified by materiality shall be true, complete and correct in all respects and
those representations and warranties of Sellers contained in this Agreement not
so qualified by materiality shall be true, complete and correct in all material
respects on and as of the Effective Date, with the same force and effect as
though made on and as of the Effective Date, except to the extent such
representations and warranties are made as of a specific date, in which case
such representations and warranties shall be true and correct in all material
respects as of such date, and Buyers shall have received a certificate to such
effect signed by Glatfelter and each Seller in form and substance reasonably
acceptable to Buyer.
(c) Secretary's Certificate of Sellers. Each Seller shall have
delivered to Buyers a certificate, dated as of the Closing Date, in form and
substance reasonably satisfactory to Buyers, of the Secretary or an Assistant
Secretary of such Seller certifying (i) that attached thereto is a complete and
correct copy of the articles of incorporation or other document of formation of
such Seller and each Ecusta Subsidiary in which it has an ownership interest, as
amended to date, (ii) that attached thereto is a complete and correct copy of
the by-laws of such Seller, as amended to date, (iii) that attached thereto is a
complete and correct copy of resolutions adopted by the board of directors
and/or stockholders of such Seller, authorizing the execution, delivery and
performance of this Agreement and the Ancillary Agreements executed in
connection herewith by such Seller and the transfer of the Purchased Assets or
Ecusta Stock to Buyers hereunder, and that such resolutions, approvals and
consents have not been amended or modified in any respect and remain in full
force and effect as of the Closing Date, and (iv) that the persons named therein
are duly elected, qualified and acting officers of such Seller and that set
forth therein is a genuine signature or true facsimile thereof for each such
officer.
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(d) Good Standing Certificates of Sellers. Each Seller and
Ecusta Canada shall have delivered to Buyers a certificate of good standing
dated not more than twenty days before the Closing Date, certifying that such
Seller is a corporation in good standing in its jurisdiction of formation.
(e) Litigation. No order of any court of administrative agency
shall be in effect which restrains or prohibits the transactions contemplated
hereby or which would materially limit or adversely affect Buyers' ownership or
control of any of the Purchased Assets, the German Assets, the Ecusta Stock or
the operation of the Business, and there shall not have been threatened, nor
shall there by pending, any action or proceeding by or before any court or
Governmental Authority or other regulatory or administrative agency or
commission challenging any of the transactions contemplated by this Agreement or
seeking monetary relief by reason of the consummation of such transactions or
which might have a Material Adverse Effect.
(f) Securities Filings. All filings and government approvals
necessary to be made or obtained by Sellers in order to convey the Ecusta Stock
shall have been so made or obtained.
(g) Liens. Buyers shall have received evidence of the
cancellation and release of all Liens in respect of the Purchased Assets and the
Ecusta Stock along with evidence of the termination of any UCC-1 financing
statements acceptable to Buyers in their reasonable discretion.
(h) Absence of Material Adverse Effect. After the date hereof
there shall not have occurred nor shall there exist any event or condition,
which individually or in the aggregate, has had or reasonably could be expected
to have a Material Adverse Effect or Material Real Estate Impairment.
(i) Appraisal. Buyers shall have received an appraisal of the
Purchased Assets reflecting the orderly liquidation appraised value of presently
functioning machinery and equipment on a dismantled and removed basis of $35
million or more.
(j) Ancillary Agreements. Sellers shall have duly executed and
delivered to Buyers or, in the case of the Supply and Service Agreement, Sellers
shall have caused its subsidiary, Papierfabrik Schoeller & Hoesch GmbH & Co. KG,
to duly execute and deliver to Buyers, a supply and service agreement
substantially in the form attached hereto as EXHIBIT 6.2(j) (the "Supply and
Service Agreement"), the Escrow Agreement, the License and Cross-License
Agreement and such other Ancillary Agreements as may be necessary to consummate
the transactions contemplated by this Agreement.
(k) Administrative Services. Sellers shall have duly executed
and delivered to Buyers the administrative services agreement for administrative
services substantially in the form attached hereto as EXHIBIT 6.2(k) (the
"Administrative Services Agreement").
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(l) Satisfactory Instruments of Transfer. Sellers shall have
delivered to Buyers a duly executed Xxxx of Sale, Assumption Agreement and other
conveyance documents, including without limitation intellectual property
assignment and transfer documents, whereby Sellers' right, title and interest in
and to all of the Ecusta Stock, Purchased Assets and Business Intellectual
Property have been transferred and delivered to Buyers free and clear of any
Encumbrances other than Permitted Encumbrances and Permitted Fee Title
Exceptions and Encumbrances on the Leased Real Estate other than Encumbrances
caused to be created by Sellers or the Ecusta Subsidiaries, as applicable.
Sellers shall have delivered to Buyers all instruments and documents required on
Sellers' part to effectuate and consummate the transactions contemplated hereby,
including all of the items set forth in Section 6.4, in form and substance
reasonably acceptable to Buyers and their counsel.
(m) Required Consents. All consents listed or required to be
listed on Schedule 3.3 shall have been obtained in form and substance reasonably
satisfactory to Buyers, and all Permits listed or required to be listed on
Schedule 2.1(d)(vi) have been transferred or reissued, as necessary, to enable
the Buyers to operate the Business after the Closing.
(n) Opinion of Counsel. Buyers shall have received an opinion
of Sellers' counsel reasonably satisfactory to Buyers.
(o) Title Policies; Opinions of Counsel; Certificates of
Title. Title Company shall have furnished to Buyers Title Policies for the Owned
Real Estate located in North Carolina in accordance with Section 5.14 hereof.
Local counsel shall have furnished to Buyers certificates of title for the Owned
Real Estate located in Canada and Australia in accordance with Section 5.14
hereof and an opinion of counsel for the Owned Real Estate located in Canada in
accordance with Section 5.14 hereof.
6.3. Conditions Precedent to Sellers' Obligations. Sellers' obligation
to consummate the transactions contemplated hereby shall be subject to the
fulfillment of each of the following additional conditions, any one or more of
which may be waived in writing by Sellers:
(a) Performance. Buyers shall have performed in all respects
their obligations and covenants under this Agreement required to be performed on
or prior to the Closing Date pursuant to the terms hereof;
(b) Bringdown of Representations and Warranties. The
representations and warranties of Buyers contained in this Agreement shall be
true, complete and correct in all material respects on and as of the Effective
Date, with the same force and effect as though made on and as of the Effective
Date, except to the extent such representations and warranties are made as of a
specific date, in which case such representations and warranties shall be true
and correct in all material respects as of such date, and Sellers shall have
received a certificate to such effect signed by each Buyer in form and substance
reasonably acceptable to Sellers.
(c) Secretary's Certificates of Buyers. Each Buyer shall have
delivered to Sellers a certificate, dated as of the Closing Date, in form and
substance reasonably satisfactory
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to Sellers, of the Secretary or an Assistant Secretary of such Buyer certifying
(i) that attached thereto is a complete and correct copy of the articles of
incorporation or other document of formation of such Buyer, as amended to date,
(ii) that attached thereto is a complete and correct copy of the by-laws of such
Buyer, as amended to date, (iii) that attached thereto is a complete and correct
copy of resolutions adopted by the board of directors and/or stockholders of
such Buyer, authorizing the execution, delivery and performance of this
Agreement and the Ancillary Agreements executed in connection herewith by such
Buyer and that such resolutions, approvals and consents have not been amended or
modified in any respect and remain in full force and effect as of the Closing
Date, and (iv) that the persons named therein are duly elected, qualified and
acting officers of such Buyer and that set forth therein is a genuine signature
or true facsimile thereof for each such officer.
(d) Good Standing Certificates of Buyers. RF, RFS US and RFS
Ecusta shall have delivered to Sellers a certificate of good standing dated not
more than twenty days before the Closing Date, certifying that such Buyer is a
corporation in good standing in its jurisdiction of formation.
(e) Litigation. No order of any court of administrative agency
shall be in effect which restrains or prohibits the transactions contemplated
hereby and there shall not have been threatened, nor shall there by pending, any
action or proceeding by or before any court or Governmental Authority or other
regulatory or administrative agency or commission challenging any of the
transactions contemplated by this Agreement or seeking monetary relief by reason
of the consummation of such transactions or which might have a Material Adverse
Effect.
(f) Ancillary Agreements. Buyers shall have duly executed and
delivered to Sellers the Supply and Service Agreement, the Escrow Agreement and
the License and Cross-License Agreement and such other Ancillary Agreements as
may be necessary to consummate the transactions contemplated by this Agreement.
(g) Assumption Documents. Buyers shall have delivered to
Sellers a duly executed Assumption Agreement.
(h) Opinion of Counsel. Sellers shall have received an opinion
of Buyers' counsel reasonably satisfactory to Sellers.
6.4. Sellers' Closing Deliveries. On the Closing Date, Sellers shall
deliver, or execute and deliver, to Buyers:
(a) a Bringdown Certificate relating to Sellers'
representations and warranties hereunder;
(b) Secretary's Certificates of Sellers;
(c) Good Standing Certificates of Sellers and Ecusta Canada;
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(d) UCC-1 Lien termination statements, if any;
(e) the Ancillary Agreements;
(f) the Assumption Agreement with respect to the Assumed
Liabilities;
(g) a Xxxx of Sale substantially in the form set forth in
EXHIBIT 6.4(g) (the "Xxxx of Sale") with respect to the Purchased Assets (other
than the Non-Assignable Assets);
(h) special warranty deeds in the customary and proper form
for recording duly executed and acknowledged deeds so as to convey to Buyers
good and marketable title to the Owned Real Estate free and clear of all
Encumbrances other than Permitted Fee Title Exceptions (other than for Owned
Real Estate which is being acquired in connection with the acquisition of the
Ecusta Stock);
(i) all of the consents of third Persons described on Schedule
3.3;
(j) any documents or instruments as Buyers may reasonably
request or as may be otherwise necessary or desirable to evidence and effect the
sale, assignment, transfer, conveyance and delivery of the Purchased Assets
(other than the Non-Assignable Assets) to Buyers and to put Buyers in actual
possession or control of the Purchased Assets (other than the Non-Assignable
Assets);
(k) all Leases, tenant files, tenant correspondence and repair
records;
(l) all licenses, contract documents, and other Personal
Property;
(m) certificates executed by Glatfelter and Mollanvick in form
reasonably satisfactory to Buyers stating respectively, under penalties of
perjury, such entity's United States taxpayer identification number and that
such entity is not a foreign person for purposes of Section 1445 of the Code;
(n) such affidavit of title or other certifications as shall
be reasonably and customarily required by the Title Company to insure Buyers'
fee and leasehold titles, as applicable, to the Owned Real Estate as set forth
in Section 5.14, and to provide affirmative endorsements as set forth in Section
5.14;
(o) all keys and combinations to all locks to the Premises;
(p) as provided in Section 6.2(o) hereof;
(q) the following items relating to Ecusta Australia;
(i) instruments of transfer of the Ecusta Australia
Stock in favor of Purico or its nominee which have been duly executed by the
respective holders of the Ecusta Australia Stock and are in registrable form;
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(ii) the share certificates for the Ecusta Australia
Stock;
(iii) any other documents which are necessary to vest
full legal and beneficial ownership of the Ecusta Australia Stock in Purico;
(iv) the certificates of incorporation of Ecusta
Australia (and any certificate of incorporation on change of name of Ecusta
Australia) and certificates for all registered business names;
(v) the common seal (and any duplicate common seal)
of Ecusta Australia;
(vi) all available copies of the constitution of
Ecusta Australia;
(vii) the balance sheets and profit and loss
statements of Ecusta Australia, and consolidated balance sheets and profit and
loss statements of Ecusta Australia, as at, and for the period ended on November
30, 2000.
(viii) the minute books and other records of meetings
or resolutions of shareholders or directors of Ecusta Australia;
(ix) all registers and other statutory records,
cheque books, books of account, trading and financial records, copies of
taxation returns and notices of assessment, title documents, mortgages, leases,
agreements, insurance policies, certificates and other papers and records of
Ecusta Australia (in all cases in good order and fully and accurately maintained
up to Closing in accordance with any applicable legal requirements);
(x) a list of the authorized signatories of each bank
account of Ecusta Australia;
(xi) all permits and licenses issued to Ecusta
Australia under any law relating to its business activities;
(xii) the written resignations of each current
director, secretary and public officer of Ecusta Australia requested by Purico,
which resignations must acknowledge that they take effect without any
entitlement to compensation (for loss of office or otherwise) as a result;
(xiii) evidence that a duly convened meeting of the
directors of Ecusta Australia was held at which it was resolved:
(1) in the case of Ecusta Australia, that
each of the transfers of the Ecusta Australia Stock have been approved for
registration (subject only to the payment of stamp duty) and that, upon
registrations, the appropriate share certificate will be issued in the name of
Purico or its nominees;
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(2) to transact such other business as
Purico may reasonably require;
(r) the following items relating to Ecusta Canada;
(i) instruments of transfer of the Ecusta Canada
Stock in favor of Purico or its nominee which have been duly executed by the
respective holders of the Ecusta Canada Stock and are in registrable form;
(ii) the share certificates for the Ecusta Canada
Stock;
(iii) any other documents which are necessary to vest
full legal and beneficial ownership of the Ecusta Canada Stock in Purico;
(iv) the certificates of incorporation of Ecusta
Canada (and any certificate of incorporation on change of name of Ecusta Canada)
and certificates for all registered business names;
(v) the common seal (and any duplicate common seal)
of Ecusta Canada;
(vi) all available copies of the constitution of
Ecusta Canada;
(vii) the balance sheets and profit and loss
statements of Ecusta Canada, and consolidated balance sheets and profit and loss
statements of Ecusta Canada, as at, and for the period ended on December 31,
2000.
(viii) the minute books and other records of meetings
or resolutions of shareholders or directors of Ecusta Canada;
(ix) all registers and other statutory records,
cheque books, books of account, trading and financial records, copies of
taxation returns and notices of assessment, title documents, mortgages, leases,
agreements, insurance policies, certificates and other papers and records of
Ecusta Canada (in all cases in good order and fully and accurately maintained up
to Closing in accordance with any applicable legal requirements);
(x) a duly completed authority for the alteration of
the signatories of each bank account of Ecusta Canada in the manner required by
Purico by written notice before the Closing Date;
(xi) all permits and licenses issued to Ecusta Canada
under any law relating to its business activities;
(xii) the written resignations of each current
director, secretary and public officer of Ecusta Canada requested by Purico,
which resignations must acknowledge that
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they take effect without any entitlement to compensation (for loss of office or
otherwise) as a result;
(xiii) evidence that a duly convened meeting of the
directors of Ecusta Canada was held at which it was resolved:
(1) in the case of Ecusta Canada, that each
of the transfers of the Ecusta Canada Stock have been approved for registration
and that, upon registrations, the appropriate share certificate will be issued
in the name of the Buyers or their nominees;
(2) to transact such other business as
Purico may reasonably require;
(s) an Opinion of Sellers' counsel;
(t) the Real Property Compliance Certificates as set forth in
Section 5.17 hereof;
(u) title certificates to all of the motor vehicles included
in the Purchased Assets pursuant to Section 2.1(c)(iii) duly endorsed for
transfer to Buyers.
(v) evidence of the revocation of all existing authorities to
operate bank accounts and the approval of new authorities in favor of the
persons nominated by Purico;
6.5. Buyers' Closing Deliveries. On the Closing Date, Buyers shall
deliver, or execute and deliver, to Sellers:
(a) a Bringdown Certificate relating to Buyers'
representations and warranties hereunder;
(b) Secretary's Certificates of Buyers;
(c) Good Standing Certificates of RF, RFS US and RFS Ecusta;
(d) the Ancillary Agreements;
(e) the Assumption Agreement;
(f) the Initial Amount;
(g) any documents or instruments as Sellers may reasonably
request or as may be otherwise necessary or desirable to evidence and effect the
assumption by Buyers of the Assumed Liabilities; and
(h) an Opinion of Buyers' counsel.
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ARTICLE VII
INDEMNIFICATION AND SURVIVAL
7.1. Survival. The representations and warranties of Sellers and Buyers
contained in this Agreement and all statements contained in any Schedule hereto
or any certificate delivered pursuant to this Agreement shall be deemed to
constitute representations and warranties of the parties making or delivering
the same. All such representations and warranties shall survive the Closing
hereunder for a period of eighteen (18) months with the following exceptions:
(a) the representations and warranties in Section 3.12 (Environmental Matters)
shall survive for a period of five (5) years after the Closing, provided,
however, that the representation and warranty contained in Section 3.12(i) shall
survive for a period of ten (10) years after Closing; (b) the representations
and warranties in Section 3.18 (Tax Matters) shall survive until the termination
date of the period of the applicable statute of limitations, including the
applicable statutes in Australia and Canada; (c) the representations and
warranties in Sections 3.6, 3.16 and 3.17 relating to title to the Ecusta Stock,
the Purchased Assets and the German Assets and the provisions in Section 8.1
shall survive indefinitely; and (d) any obligation for amounts reimbursable by
Sellers for long term disability benefits in excess of the Threshold Amount
provided in Section 3.10(n) shall survive indefinitely.
7.2. Indemnification By Sellers. Sellers hereby agree to indemnify and
hold harmless Buyers from and against any Damages arising out of or resulting
from any of the following:
(a) the Excluded Liabilities;
(b) the breach by Sellers of any representation or warranty
contained in this Agreement or in the Ancillary Agreements; and
(c) the breach by Sellers of any covenant contained in this
Agreement or in the Ancillary Agreements.
7.3. Limitations of Indemnification By Sellers. Notwithstanding any
other provision of this Agreement to the contrary, the right of Buyers to
indemnification under Section 7.2 shall be subject to the following provisions:
(a) No indemnification shall be payable pursuant to Section
7.2(b) above to any Buyer for the breach by any Seller of any representation or
warranty unless the total of all such claims exceeds $1,000,000 in the
aggregate, whereupon the amount of such claims in excess of $1,000,000 shall be
recoverable in accordance with the terms hereof; provided, however, no
deductible shall apply to Tax claims, to claims pursuant to Sections 3.5(i) or
5.6 hereunder, to amounts reimbursable by Sellers for long term disability
benefits in excess of the Threshold Amount provided in Section 3.10(n), or to
Item 4 on Schedule 3.12(i).
(b) The maximum aggregate liability of Sellers to provide
indemnification pursuant to Section 7.2(b) hereof as a result of a breach of the
representations and warranties
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contained in Section 3.12 shall not exceed $17.5 million and for all other
claims for breaches of representations and warranties under Section 7.2(b)
hereto shall not exceed $2 million; provided, however, that notwithstanding the
foregoing, there shall be no limitation of the maximum aggregate liability of
Sellers indemnification obligations to Buyers relating to Excluded Liabilities
(including, without limitation, Taxes), the representations and warranties in
Sections 3.5(i), 3.6, 3.10(n), 3.16, 3.17, 3.18 and 5.6, and the Ecusta Stock,
the Purchased Assets and the German Assets.
(c) No indemnification whatsoever shall be payable to any
Buyer for the breach after the Effective Date by any Seller of any
representation or warranty of any Seller contained in Article III hereunder. The
intention of the addition of this Section 7.3(c) to this Agreement by means of
the restatement of this Agreement is to change the date on which the
representations and warranties of Sellers contained in Article III must be
accurate from the Closing Date to the Effective Date so that breaches as of the
Closing Date will not give rise to an indemnification obligation unless the
breach also existed as of the Effective Date. Nothing contained in this Section
7.3(c) shall affect whatsoever the indemnification obligation of any Seller to
any Buyer for any breach of any covenant contained in this Agreement.
(d) Additional Environmental Provisions.
(i) Damages incurred under Section 3.12(i) of this
Agreement must be reasonably documented and must be necessary in order to comply
with the least stringent obligations under applicable Environmental Laws or to
resolve any claim raised by a third party.
(ii) With respect to any claim by Buyers for
environmental matters the resolution of which involves Remediation on any
property owned, operated or leased in connection with the operation of the
Business, Sellers shall have the right, upon timely written notice, to conduct
such Remediation provided (1) Sellers are and acknowledge that they are paying
fully for such Remediation; (2) Sellers conduct such Remediation in a manner,
consistent with applicable legal requirements, which minimizes interruption,
interference or disruption to the operation of the Business to the extent
reasonably practicable; and (3) Sellers permit Buyers and the Business
participation in the determination of the Remediation objectives and methods
(including participation in discussions with Governmental Authorities or third
parties) and keeps Buyers and the Business fully informed of the progress of the
Remediation. Buyers agree to provide Sellers' Remediation contractors sufficient
access to the facility after the Closing Date to enable Sellers to perform the
Remediation activities contemplated by this Section. Without limiting the
generality of the foregoing, Sellers agree to provide Buyers and the Business
with the opportunity to observe all activities undertaken by or on behalf of
Sellers; provide reasonable advance notice to Buyers and the Business of any
access requirements and meetings with any Governmental Authority concerning the
Remediation, and permit Buyers and representatives of the Business to attend and
participate in such meetings; comply with all Environmental Laws in the conduct
of the Remediation; and promptly, upon completion of any on-site activities,
restore any adversely affected portions of the properties to substantially their
predisturbed condition such that Buyers can continue the operation of the
Business in the manner in which such
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Business was conducted prior to the commencement of the on-site activities.
Seller will indemnify Buyers from and against any Damages arising out of or
resulting from Seller's or its representatives' conduct of the Remediation.
(iii) Buyers agree to cooperate with Sellers' efforts
to assert and prosecute any claims against Sellers' insurers for any Damages for
environmental matters including for the breach of any representations and
warranties in Section 3.12; it being understood, however, that none of Buyers'
claims for such Damages shall be limited by the success of any such insurance
claim or action or the amount of any recovery.
7.4. No Reliance. Buyers acknowledge that they have not relied on any
representations or warranties other than those expressly set forth in this
Agreement and the exhibits, schedules and certificates attached, delivered or
referenced pursuant hereto or any written materials made available to Buyers or
their representatives in connection with Buyers' due diligence.
7.5. Indemnification by Buyers. Buyers hereby agrees to indemnify and
hold harmless Sellers from and against any Damages arising out of or resulting
from (a) the Assumed Liabilities or (b) the breach by Buyers of any
representation, warranty or covenant contained in this Agreement or in any
Ancillary Agreement.
7.6. General Indemnification Procedures.
(a) In the event that any party incurs or suffers any Damages
with respect to which indemnification may be sought by such party pursuant to
this Article VII, the party seeking indemnification (the "Indemnitee") must
assert the claim by giving written notice (a "Claim Notice") to the party from
whom indemnification is sought (the "Indemnitor"). The Claim Notice must state
the nature, basis and amount (if known) of the claim in reasonable detail based
on the information available to the Indemnitee and, if the Claim Notice is being
given with respect to a third party claim, it must be accompanied by a copy of
any written notice of the third party claimant. If the Claim Notice is being
given by reason of any third party claim, it shall be given in a timely manner
but in no event more than 30 days after the filing or other written assertion of
any such claim against the Indemnitee, but the failure of the Indemnitee to give
the Claim Notice within such time period shall not relieve the Indemnitor of any
liability for indemnification under this Article VII, except to the extent that
the Indemnitor is prejudiced thereby. If the amount of the claim is not known at
the time the Claim Notice is given, the Indemnitee shall also give notice of
such amount to the Indemnitor at such time as the amount of the claim is
reasonably ascertainable. Each Indemnitor to whom a Claim Notice is given shall
respond to any Indemnitee that has given a Claim Notice (a "Claim Response")
within 90 days (the "Response Period") after the date that the Claim Notice is
received by Indemnitor. Any Claim Response shall specify whether or not the
Indemnitor given the Claim Response disputes the claim described in the Claim
Notice in whole or in part. If any Indemnitor fails to give a Claim Response
within the Response Period, such Indemnitor shall be deemed not to dispute the
claim described in the related Claim Notice. If any Indemnitor elects not to
dispute a claim described in a Claim Notice, then such claim shall be
conclusively deemed to be an obligation of
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such Indemnitor. If any Indemnitor shall be obligated to indemnify an Indemnitee
hereunder, such Indemnitor shall pay to such Indemnitee within 30 days after the
last day of the applicable Response Period (or at such later time as the amount
is ascertainable) the amount to which such Indemnitee shall be entitled. If
there shall be a dispute as to the amount or manner of indemnification under
this Agreement, the Indemnitor and the Indemnitee shall seek to resolve such
dispute through negotiations and, if such dispute is not resolved within 20
days, the Indemnitee may pursue whatever legal remedies may be available for the
recovery of the Damages claimed from any Indemnitor. If any Indemnitor fails to
pay all or any part of any indemnification obligation on or before the later to
occur of (x) 30 days after the last day of the applicable Response Period, and
(y) if the Claim Notice relates to Damages that have not been liquidated as of
the date of the Claim Notice, the date on which all or any part of such Damages
shall have become liquidated and determined, then the Indemnitor shall also be
obligated to pay to the Indemnitee interest on the unpaid amount for each day
during which the obligation remains unpaid at an annual rate of LIBOR plus 1%.
(b) The Indemnitee shall provide to the Indemnitor on request
all information and documentation reasonably necessary to support and verify any
Damages that the Indemnitee believes give rise to the claim for indemnification
hereunder and shall give the Indemnitor reasonable access to all books, records
and personnel in the possession or under the control of the Indemnitee that
would have bearing on such claim.
(c) Except as hereinafter provided, in the case of third party
claims for which indemnification is sought, the Indemnitor shall have the
option: (x) to conduct any proceedings or negotiations in connection therewith,
(y) to take all other steps to settle or defend any such claim (provided that
the Indemnitor shall not settle any such claim without the consent of the
Indemnitee (which consent shall not be unreasonably withheld, it being
understood that it shall not be unreasonable for the Indemnitee to withhold its
consent from any settlement which (1) commits the Indemnitee to take, or to
forbear to take, any action, or (2) does not provide for a complete release of
the Indemnitee by such third party)), and (z) to employ counsel to contest any
such claim or liability in the name of the Indemnitee or otherwise. In any
event, the Indemnitee shall be entitled to participate at its own expense and by
its own counsel (a "Voluntary Participation") in any proceedings relating to any
third party claim. The Indemnitor shall, within 45 days of receipt of the Claim
Notice, notify the Indemnitee of its intention to assume the defense of the
claim (a "Defense Notice"). Until the Indemnitee has received the Defense
Notice, the Indemnitee shall take reasonable steps to defend (but may not
settle) the claim. If the Indemnitor declines to assume the defense of any such
claim or fails to give a Defense Notice within 45 days after receipt of the
Claim Notice, the Indemnitee shall defend against the claim but shall not settle
such claim without the consent of the Indemnitor (which consent shall not be
unreasonably withheld). The expenses of all proceedings, contests or lawsuits
(other than those incurred in a Voluntary Participation) with respect to claims
as to which a party is entitled to indemnification under this Article VII shall
represent indemnifiable Damages under this Agreement. Regardless of which party
shall assume the defense of the claim, the parties shall cooperate fully with
one another in connection therewith. Notwithstanding the foregoing, the
Indemnitor shall not be entitled (except with the consent of
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the Indemnitee) to take any of the actions referred to in clauses (x), (y) or
(z) of the first sentence of this subparagraph unless: (a) the third party claim
involves solely monetary damages; and (b) the Indemnitor shall have expressly
agreed in writing that, as between the Indemnitor and the Indemnitee, the
Indemnitor shall be solely obligated to satisfy and discharge such third party
claim. Damages payable hereunder shall be appropriately adjusted to reflect the
receipt of insurance proceeds, tax benefits and detriments and proceeds received
with respect to condemnation, expropriation or eminent domain proceedings.
(d) Any amounts paid pursuant to this Article VII shall be
treated as an adjustment to the Purchase Price.
7.7. Insurance Recoveries From Third Parties. To the extent it would
otherwise reduce the Indemnitee's claims against the Indemnitor, the Indemnitee
shall use commercially reasonable best efforts to (i) file, or cause to be
filed, claims for all Damages incurred that the Indemnitee determines, in its
reasonable discretion, may be recoverable under insurance policies, (ii) pursue
all claims for indemnification, contribution or other recoveries, whether for
breach of contract or otherwise, under agreements with third parties and (iii)
pursue all rights for contribution or other recoveries against third parties
afforded under applicable laws, statutes, ordinances and regulations of the
United States of America or any state, commonwealth, city, county or
municipality thereof. Any settlement with any such insurer in respect of Damages
may be made by the Indemnitee only with the consent of the Indemnitor. No right
of subrogation shall accrue hereunder to any insurer or other party.
7.8. Sole Remedies. The remedies of this Article VII are the exclusive
remedies for claims among the parties to this Agreement arising from any
liabilities associated with the transactions contemplated hereunder except as
provided in the following sentence. Each Seller and each Buyer expressly waives
any claim arising out of the Purchased Assets, Ecusta Stock or Business
Intellectual Property that it may have against any other party to this Agreement
under any statute or other law, other than claims under this Agreement,
including without limitation claims under CERCLA; provided, however, that Buyers
do not waive any claim against Sellers arising out of or relating to alleged
fraudulent conduct on the part of Sellers.
ARTICLE VIII
TERM AND TERMINATION
8.1. Exclusive Dealing.
(a) Through the period beginning as of the date hereof through
the date of termination of this Agreement, Sellers and Ecusta Subsidiaries shall
not (nor will they permit any of their officers, directors, agents,
representatives (including bankers and attorneys) or affiliates to), directly or
indirectly, take any of the following actions with any party other than Buyers
or any of their Affiliates: (a) solicit or respond to any request for
information or any offer or inquiry from any other person regarding, or enter
into any discussions, negotiations, agreements, understandings or arrangements
for, the acquisition of (i) any or all of the Purchased Assets
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(other than the sale of Business Products in the ordinary course of business
consistent with past practice), (ii) any of the Ecusta Stock, (iii) any of the
German Assets (other than the sale of inventory in the ordinary course of
business consistent with past practice) or (iv) the Parking Lot, (b) solicit or
respond to any request for information or any offer or inquiry from any other
person regarding, or enter into any discussions, negotiations, agreements,
understandings or arrangements for the establishment of an arrangement for, the
distribution of the Business Products, or (c) disclose the existence or content
of the discussions between the parties hereto or the existence of this Agreement
or the Ancillary Agreements; provided, however, that the restrictions set forth
in clause (a) shall not be applicable to actions taken in response to any
unsolicited offer where compliance with these restrictions would cause a
violation of the fiduciary duties of Glatfelter's board of directors as
determined by the board of directors after consulting with nationally recognized
counsel; and provided, further, that the restrictions in clause (c) shall not be
applicable in the event that Glatfelter determines that it is required by law or
by the rules of the New York Stock Exchange to make such disclosure. In the
event that after the date hereof Sellers shall receive any request, offer or
proposal, directly or indirectly, of the type referred to in clauses (a) or (b)
above, Sellers shall promptly inform Buyers of such offer or proposal.
(b) Glatfelter agrees to pay Buyers a fee of $3 million (the
"Break Fee") if Sellers or their Affiliates, representatives, agents, directors
or officers take any action that would violate Section 8.1(a) but for the fact
that such action is taken in response to an unsolicited offer where compliance
with the restrictions in Section 8.1(a) would cause a violation of the fiduciary
duties of Glatfelter's board of directors; provided, however, that such Break
Fee shall be payable upon the closing of any such transaction with such
unsolicited offeror or its affiliates or associates.
8.2. Term. Notwithstanding any provision to the contrary herein or the
date of execution of this document, this amendment and restatement of the
Acquisition Agreement dated as of May 16, 2001 between the parties hereto (other
than RF) and Xxxxxx Xxxxxxxx & Son Limited (the "Original Acquisition
Agreement") shall become effective only on the Closing.
8.3. Termination. Except with respect to provisions that expressly
survive the termination of this Agreement, this Agreement may be terminated at
any time prior to Closing:
(a) by mutual written agreement of Buyers and Sellers;
(b) by Buyers (provided that none of Buyers is in material
breach of this Agreement), by written notice to Sellers, at any time (i) if the
representations and warranties of Sellers in this Agreement were incorrect in
any material respect when made, or (ii) if any Seller is in breach in any
material respect of any of its covenants or agreements in this Agreement that is
not cured within ten (10) days after receiving written notice of such breach
from Buyers (a "Sellers Breach");
(c) by Sellers (provided that none of Sellers is in material
breach of this Agreement), by written notice to Buyers, at any time (i) if the
representations and warranties of
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Buyers in this Agreement were incorrect in any material respect when made or
(ii) if any Buyer is in breach in any material respect of any of its covenants
or agreements in this Agreement that is not cured within ten (10) days after
receiving written notice of such breach from Sellers (collectively, a "Buyers
Breach");
(d) by Buyers or Sellers if a court of competent jurisdiction
or governmental or regulatory body shall have issued an order, decree or ruling,
or taken any other action, restraining, enjoining or otherwise prohibiting the
Closing of the transactions contemplated hereby and such order, decree, ruling
or other action shall have become final and non-appealable;
(e) by Buyers if a Material Adverse Event or Material Real
Estate Impairment has occurred since the date hereof; and
(f) by Buyers or Sellers if the transactions contemplated
hereby are not consummated on or before August 14, 2001; and
(g) by Sellers if, as of July 13, 2001, Buyers have not either
(i) delivered to Glatfelter a copy of the appraisal pursuant to Section 6.2(i)
hereunder or (ii) waived, in a writing delivered to Sellers, the receipt of the
appraisal under Section 6.2(i) as a condition of Closing hereunder.
8.4. Procedures and Effect of Termination. If this Agreement is
terminated as provided herein, no party shall have any liability or further
obligation to any other party under the terms of this Agreement or otherwise,
provided that is such termination shall result from the breach by the
non-terminating party of any representation or warranty, or the failure of the
non-terminating party to perform a covenant of this Agreement, such party shall
be fully liable for any and all damages incurred or suffered by the other
parties as a result of such failure. Notwithstanding the foregoing, the
provisions of Section 8.1 shall survive the termination of this Agreement in
accordance with their terms.
ARTICLE IX
MISCELLANEOUS
9.1. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given (i) if shipped outside of
the United States, two Business Days after delivery to DHL or other
internationally recognized two-day international express carrier, if sent for
immediate delivery with fee prepaid; (ii) if shipped within the United States,
one Business Day after delivery to Federal Express or other nationally
recognized overnight express carrier, if sent for overnight delivery with fee
prepaid, (iii) upon receipt if sent via facsimile with receipt confirmed, or
(iv) upon receipt if delivered personally, addressed as follows or to such other
address or addresses of which the respective party shall have notified the
others:
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If to Sellers, to:
P. H. Xxxxxxxxxx Company
00 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Fax No.: 000.000.0000
With a copy to:
Xxxxxxx Xxxxx Xxxxxxx & Ingersoll, LLP
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx, Xx., Esq.
Fax No.: 000.000.0000
If to Buyers, to:
Purico (IOM) Limited
Analyst House
20-26 Peel Road
Xxxxxxx, Isle of Man
IM 99 1AP
United Kingdom
Attn: Xxxx Xxxxx
Fax No.: 000.00.000.0000
With copies to:
Xxxxxx Xxxxx Limited
Environment House
0 Xxxxx Xxxx
Xxxxxxxxxx
XX0 0XX
Xxxxxx Xxxxxxx
Attn: N. R. Puri
Fax No.: 000.00.000.000.0000
Dechert
0000 Xxxx Xxxxxxxx Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxxxxxxx X. Xxxxxx, Esq.
Fax No.: 000.000.0000
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9.2. Expenses. Except as otherwise provided in this Agreement, each
party to this Agreement will bear all the fees, costs and expenses which are
incurred by it in connection with the transactions contemplated hereby, whether
or not such transactions are consummated.
9.3. Entire Agreement. The agreement of the parties, which is comprised
of this Agreement and the Schedules hereto and the documents referred to herein
and the Post-retirement Medical Benefits Side Letter dated as of the date
hereof from Buyers to Sellers (the "Post-retirement Medical Benefits Side
Letter"), sets forth the entire agreement and understanding between the parties
and supersedes any prior agreement or understanding, written or oral, relating
to the subject matter of this Agreement, including but not limited to the
Original Acquisition Agreement.
9.4. Assignment; Binding Effect; Severability. This Agreement may not
be assigned by any party hereto without the written consent of the other party;
provided, however, that any Buyer may assign its rights hereunder as collateral
security to any bona fide financial institution which is engaged in financing in
the ordinary course providing financing to consummate the transactions
contemplated hereby or to fund working capital requirements or any financial
institution which is engaged in financing in the ordinary course through whom
such financing is refunded, replaced, or refinanced and any of the foregoing
financial institutions may, in enforcing their rights in connection with such
financing, assign such Buyer's rights or cause such Buyer to assign its rights
hereunder in connection with a sale of such Buyer or its parent or the business
in the form then being conducted by such Buyer substantially as an entirety; and
provided, further, any Buyer may assign its rights hereunder, in whole or in
part, but subject to all limitations contained herein, to one or more
subsidiaries or Affiliates of such Buyer, provided that, in any such case, such
Buyer gives Sellers prior written notice of such assignment. This Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
successors, legal representatives and permitted assigns of each party hereto.
The provisions of this Agreement are severable, and in the event that any one or
more provisions are deemed illegal or unenforceable the remaining provisions
shall remain in full force and effect unless the deletion of such provision
shall cause this Agreement to become materially adverse to any party, in which
event the parties shall use commercially reasonable best efforts to arrive at an
accommodation which best preserves for the parties the benefits and obligations
of the offending provision.
9.5. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the Commonwealth of Pennsylvania without regard
to its conflict of laws principles. If any provision of this Agreement is
determined to contravene the laws of the Commonwealth of Pennsylvania, it shall
be deemed to be modified to the extent necessary to comply with any such law or,
if such modification is not possible under any such law, shall be deemed to be
null and void, but shall not affect the obligations of the parties hereto under
any other provision of this Agreement. The parties hereto consent to the
exclusive jurisdiction of the Federal District Court of the Middle District of
Pennsylvania for all claims related to this Agreement.
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9.6. Execution in Counterparts. This Agreement may be executed in any
number of counterparts with the same effect as if the signatures thereto were
upon one instrument.
9.7. Public Announcement. Neither Sellers nor Buyers shall, without the
approval of the other parties hereto, make any press release or other public
announcement concerning the terms of the transactions contemplated by this
Agreement, except as and to the extent that any such party shall be so obligated
by law, in which case such party shall use its commercially reasonable best
efforts to advise the other parties thereof and the parties shall use their
commercially reasonable best efforts to cause a mutually agreeable release or
announcement to be issued; provided that the foregoing shall not preclude
communications or disclosures necessary to (a) implement the provisions of this
Agreement (including the Financing) or (b) comply with accounting, securities
laws and Securities and Exchange Commission disclosure obligations.
9.8. No Third Party Beneficiaries. Nothing in this Agreement, express
or implied, is intended to or shall (a) confer on any Person other than the
parties hereto and their respective successors or permitted assigns any rights
(including third party beneficiary rights), remedies, obligations or liabilities
under or by reason of this Agreement, or (b) constitute the parties hereto as
partners or as participants in a joint venture. This Agreement shall not provide
third parties with any remedy, claim, liability, reimbursement, cause of action
or other right in excess of those existing without reference to the terms of
this Agreement.
9.9. Headings. The headings preceding the text of the sections and
subsections hereof are inserted solely for convenience of reference, and shall
not constitute a part of this Agreement, nor shall they affect its meaning,
construction or effect.
9.10. Further Assurances. Each party shall cooperate and take such
action as may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby.
9.11. Amendment and Waiver. The parties may by mutual agreement amend
this Agreement in any respect, and any party, as to such party, may (a) extend
the time for the performance of any of the obligations of any other party, (b)
waive any inaccuracies in representations by any other party, (c) waive
compliance by any other party with any of the agreements contained herein and
performance of any obligations by such other party, and (d) waive the
fulfillment of any condition that is precedent to the performance by such party
of any of its obligations under this Agreement. To be effective, any such
amendment or waiver must be in writing and be signed by the party against whom
enforcement of the same is sought.
[Remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF, each Buyer and each Seller has caused this
Agreement to be duly executed on its behalf by its duly authorized officer as of
the day and year first written above.
SELLERS
P. H. GLATFELTER COMPANY
By: /s/ Xxxxxx X. Xxxx
--------------------------------------
Name: Xxxxxx X. Xxxx
Title: Chief Strategy Officer
MOLLANVICK, INC.
By: /s/ Xxxxxx X. Xxxx
--------------------------------------
Name: Xxxxxx X. Xxxx
Title: President
BUYERS
PURICO (IOM) LIMITED
By: /s/ Xxxxxxx Xxxx
--------------------------------------
Name: Xxxxxxx Xxxx
Title: Director
RF & SON INC.
By: /s/ Xxxxxxx Xxxx
--------------------------------------
Name: Xxxxxxx Xxxx
Title: Chairman
RFS US INC.
By: /s/ Xxxxxxx Xxxx
--------------------------------------
Name: Xxxxxxx Xxxx
Title: Chairman
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RFS ECUSTA INC.
By: /s/ Xxxxxxx Xxxx
--------------------------------------
Name: Xxxxxxx Xxxx
Title: Chairman
Acknowledged and Agreed:
XXXXXX XXXXXXXX & SON LIMITED
By: /s/ N. R. Puri
--------------------------------------
Name: N. R. Puri
Title: Authorized Person
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SCHEDULE
As permitted by Item 601(b)(2) of Regulation S-K, the Registrant has
omitted filing the Exhibits and the Schedules to the Amended and Restated
Acquisition Agreement as part of Exhibit 2 to this Form 8-K or as additional
exhibits to this Form 8-K. The list of Exhibits on page iii of the Amended and
Restated Acquisition Agreement and the list of Schedules on pages iv and v of
the Amended and Restated Acquisition Agreement, respectively, identify the
contents of such omitted Exhibits and Schedules. As required by Item 601(b)(2),
the Registrant agrees to furnish supplementally a copy of any such omitted
Exhibit or Schedule to the Commission upon request.
