Exhibit 2.1
50 pages
ASSET PURCHASE AGREEMENT
BETWEEN
BUCKEYE TECHNOLOGIES INC.
BKI HOLDING CORPORATION
BUCKEYE MT. XXXXX LLC
BUCKEYE FINLAND OY
BKI INTERNATIONAL INC.
AND
UPM-KYMMENE CORPORATION
WALKISOFT FINLAND OY
WALKISOFT USA, INC.
WALKISOFT DENMARK A/S
October 1, 1999
EXHIBITS
Exhibit A Asset Purchase Agreement between Walkisoft GmbH and Buckeye
Steinfurt GmbH
Exhibit B Tangible Personal Property
Exhibit C Assumed Liabilities
Exhibit D Form of Buyer Note
Exhibit E Pledge and Security Agreement
Exhibit F Purchase Price Allocation
Exhibit G Historical Financial Statements
Exhibit H Finnish Employee Reduction Schedule
Exhibit I Form of Opinion of Counsel to the Buyer
Exhibit J Transition Services Agreement
Exhibit K Form of Xxxx of Sale and Assignments
Exhibit L Form of Real Property Transfer Documents
Exhibit M Form of Intellectual Property Transfer Documents
Exhibit N Form of Assumption Agreement
Exhibit O Required Consents
Disclosure Schedule Exceptions to Representations and Warranties
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ASSET PURCHASE AGREEMENT
Agreement entered into as of October 1, 1999, by and between Buckeye
Technologies Inc., a Delaware corporation ("Buckeye Technologies"), BKI Holding
Corporation, a Delaware corporation ("BKI Holding"), Buckeye Mt. Xxxxx LLC., a
Delaware limited liability company ("Buckeye Mt. Xxxxx"), BKI International
Inc., a Delaware corporation ("BKI International"), and Buckeye Finland Oy, a
Finnish corporation ("Buckeye Finland"), (Buckeye Technologies, BKI Holding,
Buckeye Mt. Xxxxx, Buckeye International and Buckeye Finland are referred to
collectively hereinafter as the "Buyer"), and Walkisoft Finland Oy, a Finnish
corporation ("Walkisoft Finland"), Walkisoft USA, Inc., a Delaware corporation
("Walkisoft USA") and Walkisoft Denmark A/S, a Danish corporation ("Walkisoft
Denmark") (collectively, the "Seller") and UPM-Kymmene Corporation, a Finnish
corporation ("UPM"). The Buyer, Seller and UPM are referred to collectively
herein as the "Parties."
This Agreement contemplates a transaction in which the Buyer will purchase
substantially all of the assets (and assume certain of the liabilities) of the
Seller used in the Walkisoft Business in return for cash and the Buyer Note
except that the assets and assumed liabilities relating to Walkisoft GmbH shall
be purchased pursuant to the German Purchase Agreement, a copy of which is
attached hereto as Exhibit A.
Now, therefore, in consideration of the premises and the mutual promises herein
made, and in consideration of the representations, warranties, and covenants
herein contained, the Parties agree as follows.
1. Definitions.
"Acquired Assets" means all right, title, and interest in and to all of the
assets of the Seller used in its Walkisoft Business, including, but not limited
to, all of its (a) real property, leaseholds and subleaseholds therein,
improvements, fixtures, and fittings thereon, and easements (including signage
easements), rights-of-way, and other appurtenances thereto (such as appurtenant
rights in and to public streets), (b) tangible personal property (such as
machinery, equipment, Inventory, manufactured and purchased parts, goods in
process and finished goods, furniture, automobiles, trucks, tractors, trailers,
tools, jigs, dies, supplies, packaging materials, spare parts and components)
including all tangible property specifically set forth on Exhibit B attached
hereto, (c) Intellectual Property, goodwill associated therewith, licenses and
sublicenses granted and obtained with respect thereto, and rights thereunder,
remedies against infringements thereof, and rights to protection of interests
therein under the laws of all jurisdictions, (d) leases, subleases, and rights
thereunder, (e) agreements, contracts, instruments, Security Interests and
rights thereunder, (f) accounts receivables, (g) computer hardware, information
systems and related software, (h) claims, deposits, prepayments, refunds, causes
of action, choses in action, rights of recovery, rights of set off, and rights
of recoupment, (i) franchises, approvals, permits, licenses, orders,
registrations, certificates, variances, and similar rights obtained from
governments and governmental agencies, (j) books, records, ledgers, files
(including employee files), documents, correspondence, lists, plats,
architectural plans, drawings, and specifications, creative materials,
advertising and promotional materials, sales literature, customer files and
materials, studies, reports, operating procedure manuals regarding quality,
safety, processing and related matters, and other printed or written materials;
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and (k) all of the outstanding capital stock of Walkisoft France S.A.R.L.,
Walkisoft (U.K.) Limited, Walkisoft Italia S.r.l., and Walkisoft Iberica, S.A.
(collectively the "Sales Companies"); provided, however, that the Acquired
Assets shall not include (i) the corporate charter, qualifications to conduct
business as a foreign corporation, arrangements with registered agents relating
to foreign qualifications, taxpayer and other identification numbers, seals,
minute books, stock transfer books, blank stock certificates, and other
documents relating to the organization, maintenance, and existence of the Seller
as a corporation, (ii) all books and records legally required for tax or other
governmental purposes (provided Buyer shall have right to copy or have access to
such records), (iii) any of the rights of the Seller under this Agreement (or
under any side agreement between the Seller on the one hand and the Buyer on the
other hand entered into on or after the date of this Agreement), (iv) any
equipment of Seller used in the operation of the Walkisoft plant in Kotka,
Finland, (v) any assets of Seller used in operation of the Walkisoft plant in
Aarhus, Denmark, except all of the machinery and equipment comprising the
Walkisoft production line in Aarhus, Denmark and the spare parts and components
related thereto, (vi) any notes receivables of Seller, unless specifically
assumed by Buyer, (vii) any cash, cash equivalents, or marketable securities of
Seller, or (viii) any contracts or agreements with any independent sales agents,
unless expressly assumed by Buyer as an Assumed Liability.
"Adverse Consequences" means all actions, claims, judgments, orders, damages,
penalties, fines, costs, amounts paid in settlement, diminution in value,
Liabilities, obligations, Taxes, liens, losses, expenses, and fees, including
court costs and reasonable attorneys' fees and expenses, net of actual insurance
and other third party recoveries.
"Affiliate" means a Person that, directly or indirectly, through one or more
intermediaries, controls, or is controlled by or is under common control, with
another Person.
"Affiliated Group" means any affiliated group within the meaning of Code 1504(a)
or any similar group defined under a similar provision of state, local, or
foreign law.
"Assumed Liabilities" means (a) Trade Payables and Designated Accruals but only
to the extent included in the computation of Net Working Capital pursuant to
Section 2(g), (b) all obligations of the Seller under those agreements,
contracts, leases, licenses, and other arrangements referred to in the
definition of Acquired Assets entered into in the Ordinary Course of Business
and set forth on Exhibit C attached hereto, and (c) all other Liabilities and
obligations of the Seller set forth on Exhibit C attached hereto, provided,
however, that the Assumed Liabilities shall not include (i) any Liability of the
Seller for Taxes, (ii) any Liability of the Seller for the unpaid Taxes of any
Person (other than the Seller) under Reg. ' 1.1502-6 (or any similar provision
of state, local, or foreign law), as a transferee or successor, by contract, or
otherwise, (iii) any Environmental, Health and Safety Liabilities relating to a
time period at or prior to the Effective Date; (iv) any Liability to or on
account of any employee of Seller, including severance rights and benefits,
accrued prior to the Effective Date which are not expressly assumed by Buyer,
(v) any obligation of the Seller to indemnify any Person (including any of the
Seller's stockholders) by reason of the fact that such Person was a director,
officer, employee, or agent of the Seller or was serving at the request of any
such entity as a partner, trustee, director, officer, employee, or agent of
another entity (whether such indemnification is for judgments, damages,
penalties, fines, costs, amounts paid in settlement, losses, expenses, or
otherwise and whether such indemnification is pursuant to any statute, charter
document, bylaw, agreement, or otherwise), (vi) any Liability of the Seller for
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costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby, (vii) any Liability or obligation of the
Seller under this Agreement (or under any side agreement between the Seller on
the one hand and the Buyer on the other hand entered into on or after the date
of this Agreement); (viii) any Liability or obligation under any contracts or
agreements with any independent sales agents except to the extent any such
Liability or obligation is set forth on Exhibit C attached hereto, or (ix) any
other Liability of Seller, including any other Liability of Seller relating to
or arising out of the ownership or operation of Seller's business prior to the
Effective Date, except as specifically set forth in clauses (a), (b) and (c)
above.
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.
"Buyer" has the meaning set forth in the preface above.
"Buyer Note" has the meaning set forth in Section 2(c) below.
"CERCLA" means the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. ' 9601 et seq., as amended.
"Closing" has the meaning set forth in Section 2(d) below.
"Closing Date" has the meaning set forth in Section 2(d) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Controlled Group of Corporations" has the meaning set forth in Code ' 1563.
"Designated Accruals" shall mean those accruals incurred in the Ordinary Course
of Business and specifically assumed by Buyer as described in Exhibit C attached
hereto.
"Disclosure Schedule" has the meaning set forth in Section 3 below.
"Effective Date" shall mean as of the commencement of Seller's business on
October 1, 1999, or such other date as the Parties shall mutually determine.
"Employee Benefit Plan" means any (a) nonqualified deferred compensation or
retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan and any plan intended to be so qualified, (c)
qualified defined benefit retirement plan or arrangement which is an Employee
Pension Benefit Plan (including any Multiemployer Plan) and any plan intended to
be so qualified, or (d) Employee Welfare Benefit Plan or material fringe benefit
plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA ' 3(2) or
similar employee pension benefit plans under the laws of any jurisdiction
governing employees of Seller who shall become employees of Buyer hereunder.
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"Employee Welfare Benefit Plan" has the meaning set forth in ERISA ' 3(1) or
similar employee welfare benefit plans under the laws of any jurisdiction
governing employees of Seller who shall become employees of Buyer hereunder.
"Environmental, Health and Safety Liabilities" means any Liability or other
responsibility arising from or under Environmental, Health and Safety
Requirements and consisting of or relating to: (a) any environmental, health, or
safety matters or conditions (including on-site or off-site contamination,
occupational safety and health, and regulation of chemical substances or
products); (b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims and demands arising under
Environmental, Health and Safety Requirements; (c) financial responsibility
under Environmental, Health and Safety Requirements for cleanup costs or
corrective action, including any investigation, cleanup, removal, containment,
or other remediation or response actions (collectively, a "Cleanup") required by
applicable Environmental, Health and Safety Requirements and for any natural
resource damages; or (d) any other compliance, corrective, investigative, or
remedial measures required under Environmental, Health and Safety Requirements.
The terms "removal," "remedial," and "response action," has the same meaning as
used in CERCLA.
"Environmental, Health, and Safety Requirements" shall mean all federal, state,
local and foreign statutes, regulations, ordinances, all judicial and
administrative orders and determinations, all contractual obligations and all
common law concerning public health and safety, worker health and safety, and
pollution or protection of the environment, including without limitation all
those relating to the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control, or cleanup of any
hazardous materials, substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise or radiation, each as
amended and as now or hereafter in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"Extremely Hazardous Substance" has the meaning set forth in Section 302 of the
Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"Facilities" means any real property, leaseholds, or other interests currently
owned or operated by the Seller in North Carolina and any buildings, plants,
structures, or equipment (including motor vehicles, tank cars, and rolling
stock) currently owned or operated by the Seller in North Carolina.
"Fiduciary" has the meaning set forth in ERISA Section 3(21).
"Financial Statement" has the meaning set forth in Section 3(g) below.
"GAAP" means generally accepted accounting principles in the United States as in
effect from time to time and consistently applied.
"German Purchase Agreement" shall mean the Asset Purchase and Sale Agreement
attached hereto as Exhibit A between Walkisoft GmbH and Hohenstauffen
Vermogensverwaltungs GmbH, the name change of which to Buckeye Steinfurt GmbH
has been resolved but not yet registered (referred to herein as "Buckeye
Steinfurt GmbH").
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"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
"Hazardous Activities" means the distribution, generation, disposal, handling,
importing, management, manufacturing, processing, production, refinement,
release, storage, transfer, transportation, treatment, or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under,
about, or from the Facilities or any part thereof into the environment.
"Hazardous Materials" means any (a) "hazardous substance," "pollutants," or
"contaminant" (as defined in Sections 101(14) and (33) of CERCLA or the
regulations issued pursuant to Section 102 of CERCLA and found at 40 C.F.R.
Section 302), including any element, compound, mixture, solution or substance
that is or may be designated pursuant to Section 102 of CERCLA; (b) substance
that is or may be designated pursuant to Section 311(b)(2)(A) of the FWPCA; (c)
hazardous waste having the characteristics identified under or listed pursuant
to Section 3001 of the Resource Conservation and Recovery Act ("RCRA") or having
characteristics that may subsequently be considered under RCRA to constitute
hazardous waste; (d) substance containing petroleum, as that term is defined in
Section 9001(8) of RCRA; (e) toxic pollutant that is or may be listed under
Section 307(a) of FWPCA; (f) hazardous air pollutant that is or may be listed
under Section 112 of the Clean Air Act, as amended (42 U.S.C. Sections
7401,7412); (g) imminently hazardous chemical substance or mixture with respect
to which action has been or may be taken pursuant to Section 7 of the Toxic
Substances Control Act, as amended (15 U.S.C. Sections 2601, 2606); (h) source,
special nuclear, or by-product material as defined by the Atomic Energy Act of
1954, as amended (42 U.S.C. Section 2011 et seq.); (i) asbestos,
asbestos-containing material, or urea formaldehyde or material that contains it;
(j) waste oil and other petroleum products; and (k) any other toxic materials,
contaminants, or hazardous substances or wastes pursuant to any environmental
law.
"Initial Payment" has the meaning set forth in Section 2(c)(ii) below.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) subject to the provisions of Section 8(a), all
trademarks, service marks, trade dress, logos, trade names, corporate names, and
fictitious or assumed name registrations, together with all translations,
adaptations, derivations, and combinations thereof and including all goodwill
associated therewith, and all applications, registrations, and renewals in
connection therewith, (c) all copyrightable works, all copyrights, and all
applications, registrations, and renewals in connection therewith, (d) all mask
works and all applications, registrations, and renewals in connection therewith,
(e) all trade secrets and confidential business information (including ideas,
research and development, know-how, formulas, compositions, manufacturing and
production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists (including customer lists controlled
or owned by sales offices of Affiliates of Seller), pricing and cost
2.1-7
information, and business and marketing plans and proposals), (f) all computer
software (including data and related documentation, but excluding any UPM
proprietary software used outside of the Walkisoft Business), (g) all other
proprietary rights, (h) all copies and tangible embodiments thereof (in whatever
form or medium), and (i) employee invention and discovery files and logs.
"Inventory" means (a) the raw materials and packaging materials used in the
Walkisoft Business of Seller, including wood pulp, other fibers, binders and
superabsorbent polymers, and (b) finished product.
"Knowledge" means actual knowledge after reasonable investigation of the
officers, directors and managers of Seller and the following other designated
persons: Xxxxxx Xxxxxx, Jaakko Rislakki, Xxxxx Xxxxxxxx, Jaakko Palsanen, Xxxxxx
Xxxxxx, Xxxxxx Xxxxxxx, Xxxxxx Xxxxxxxxxx, Xxxxxx Xxxxxx, and Sirpa-Xxxxxx
Xxxxxxxx.
"Liability" means any liability or obligation (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Minimum Net Working Capital" has the meaning set forth in Section 2(c) below.
"Most Recent Balance Sheet" means the balance sheet contained within the Most
Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in Section 3(g)
below.
"Most Recent Fiscal Month End" has the meaning set forth in Section 3(g) below.
"Most Recent Fiscal Year End" has the meaning set forth in Section 3(g) below.
"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
"Net Working Capital" means the aggregate value as of the Effective Date in U.S.
Dollars of (i) the Inventory and accounts receivable included in the Acquired
Assets, minus (ii) Trade Payables and Designated Accruals. For purposes of this
definition, Inventory shall be valued as of the Effective Date in U.S. Dollars
at the lower of (a) fair market value or (ii) the actual cost of the Inventory
reflected on the books and records of Seller (which shall be prepared in
accordance with GAAP), except that for purposes hereof, all spare parts, wires,
xxxxx and fabrics, and other items carried as inventory on Seller's financial
records (other than Inventory) and used in the Walkisoft Business shall be
included in the calculation of Net Working Capital at an aggregate value of U.S.
$300,000. Accounts receivable shall be valued as of the Effective Date in U.S.
Dollars from the books and records of the Seller. In the event the Parties fail
to agree on the Inventory valuation, the Buyer and Seller will request their
respective independent accounting firms to resolve the issues, and if the
accounting firms fail to do so within sixty (60) days of the date the Parties
submit the issues to them, the Buyer and Seller will submit the unresolved
issues to arbitration in accordance with Section 11(a). To the extent any
currency conversions are required, the exchange rates in effect on the Frankfurt
Stock Exchange as of the close of business on the date immediately preceding the
Effective Date shall be used.
2.1-8
"Ordinary Course of Business" means the ordinary course of business consistent
with past custom and practice (including with respect to quantity and
frequency).
"Other Agreements" shall mean (1) the German Purchase Agreement, (2) the Buyer
Note, (3) the Pledge and Security Agreement,(4) the Transition Services
Agreement, and (5) the other instruments and documents required by Seller and
Buyer hereunder or under the German Purchase Agreement at Closing.
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, an association, a
joint stock company, a trust, a joint venture, an unincorporated organization,
or a governmental entity (or any department, agency, or political subdivision
thereof).
"Pledge and Security Agreement" has the meaning set forth in Section 2(c) below.
"Prohibited Transaction" has the meaning set forth in ERISA ss. 406 and Code
ss. 4975.
"Purchase Price" has the meaning set forth in Section 2(c) below.
"Reportable Event" has the meaning set forth in ERISA ' 4043.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge, or
other security interest, other than (a) mechanic's, materialmen's, and similar
liens acceptable to Buyer, (b) liens for Taxes not yet due and payable, (c)
liens securing payments under capital lease arrangements, and (d) other liens
arising in the Ordinary Course of Business which are not material and which are
not incurred in connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Subsidiary" means any corporation with respect to which a specified Person (or
a Subsidiary thereof) owns a majority of the common stock or has the power to
vote or direct the voting of sufficient securities to elect a majority of the
directors.
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code ss. 59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
2.1-9
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Trade Payables" means all accounts payable incurred by Seller in the Ordinary
Course of Business.
"UPM Guaranty" has the meaning set forth in Section 11(q) below.
"Walkisoft Business" means of or pertaining to the operations of the business of
Walkisoft Finland, Walkisoft USA, Walkisoft Denmark, Walkisoft Steinfurt GmbH,
and the Sales Companies at any time prior to the Effective Date.
1. Basic Transaction.
(a) Purchase and Sale of Assets. Subject to the terms and
conditions of this Agreement, the Buyer agrees to purchase
from the Seller, and the Seller agrees to sell, transfer,
convey, and deliver to the Buyer, all of the Acquired Assets
on the Closing Date effective as of the Effective Date for the
consideration specified below in this Section 2.
(b) Assumption of Liabilities. Subject to the terms and conditions
of this Agreement, the Buyer agrees to assume and become
responsible for all of the Assumed Liabilities on the Closing
Date effective as of the Effective Date. The Buyer will not
assume or have any responsibility, however, with respect to
any other obligation or Liability of the Seller or any
predecessor entity not included within the definition of
Assumed Liabilities.
(c) Purchase Price. Subject to Section 2(g) and Section 10(c),
the Buyer agrees to pay to the Seller on the Closing Date
U.S. $ 44,600,000.00 (the "Purchase Price") by delivery of
(i) its promissory note (the "Buyer Note") in the form of
Exhibit D attached hereto in the aggregate principal amount
of U.S. $ 22,000,000.00, and (ii) cash for the balance of
the Purchase Price payable by wire transfer or delivery of
other immediately available funds ("Initial Payment").
Notwithstanding the foregoing, if the Net Working Capital
of Seller as of the Effective Date does not equal U.S.
$3,000,000.00 ("Minimum Net Working Capital"), the Purchase
Price shall be adjusted in accordance with Section 2(g).
As security for the Buyer Note, Buyer shall execute and
deliver to Seller a pledge with respect to the capital stock
of Buckeye Steinfurt and a Pledge and Security Agreement
with respect to the membership interest of Buckeye Mt. Xxxxx
in the form attached hereto as Exhibit E.
(d) The Closing. The execution of all of the documents necessary
to consummate the transactions contemplated under this
Agreement shall take place at the offices of Oppenhoff &
Xxxxxxx in Cologne, Germany, commencing at 11:00 a.m. local
time on September 29, 1999, or such other date and/or
location as the Parties may mutually determine. The executed
documents shall be placed in escrow pursuant to an escrow
agreement to be approved by the Parties. The closing of
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the transactions contemplated by this Agreement (the
"Closing") shall be completed upon the satisfaction or waiver
of all conditions to the obligations of the Parties to
consummate the transactions contemplated hereby (the "Closing
Date"). To the extent the Closing Date occurs after October
31, 1999, Buyer shall pay Seller interest at five percent (5%)
per annum on the Initial Payment from the Effective Date
through the Closing Date.
(e) Deliveries at the Closing. At the Closing, (i) the Seller
will deliver to the Buyer the various certificates,
instruments, and documents referred to in Section 6(a) below;
(ii) the Buyer will deliver to the Seller the various
certificates, instruments, and documents referred to in
Section 6(b) below; (iii) the Seller will deliver to the
Buyer (A) xxxx of sale and assignments in the form attached
as Exhibit K, real property transfer document in the
form attached as Exhibit L and Intellectual Property transfer
documents in the form attached as Exhibit M, and (B)
such other instruments of sale, transfer, conveyance, and
assignment as the Buyer and its counsel reasonably may
request; (iv) the Buyer will deliver to the Seller (A) an
assumption in the form attached as Exhibit N, and (B) such
other instruments of assumption as the Seller and its counsel
reasonably may request; and (v) the Buyer will deliver
to the Seller the consideration specified in Section 2(c)
above.
(f) Allocation. The Parties agree to allocate the Purchase Price
among the Acquired Assets described herein and in the German
Purchase Agreement for all purposes (including financial
accounting and tax purposes) in accordance with the schedule
attached hereto as Exhibit F.
(g) Purchase Price Adjustment. Prior to the Closing Date, Buyer
and Seller shall agree to an estimate of the Net Working
Capital as of the Effective Date (the "Estimated Working
Capital"), and at Closing, the Estimated Working Capital shall
be used to determine any adjustment to the Initial Payment
required under Section 2(c) above. If the Estimated Working
Capital is less than the Minimum Net Working Capital required
under Section 2(c) above, the Purchase Price shall be reduced
in an amount equal to such difference. If the Estimated
Working Capital is greater than the Minimum Net Working
Capital, the Purchase Price shall be increased in an amount
equal to the difference.
As soon as practicable following the Closing Date, but not later than
thirty (30) days thereafter, Buyer and Seller shall jointly determine
the actual amount of the Net Working Capital as of the Effective Date
and shall execute a certificate of their agreement as to the Net
Working Capital as of the Effective Date. In order to finally settle
any Purchase Price adjustments as required by comparing the actual Net
Working Capital as of the Effective Date to the Estimated Working
Capital, Buyer shall promptly deliver to Seller any Purchase Price
increase in U.S. Dollars in immediately available funds by wire
transfer or Seller shall promptly deliver to Buyer any Purchase Price
decrease in U.S. Dollars in immediately available funds by wire
transfer.
2. Representations and Warranties of the Seller. Each of Seller jointly
and severally represents and warrants to the Buyer that the statements
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contained in this Section 3 are correct and complete as of the date of
this Agreement and will be correct and complete as of the Effective
Date (as though made then and as though the Effective Date were
substituted for the date of this Agreement throughout this Section 3),
except as set forth in the disclosure schedule accompanying this
Agreement and initialed by the Parties (the "Disclosure Schedule"). The
Disclosure Schedule will be arranged in paragraphs corresponding to the
lettered and numbered paragraphs contained in this Section 3.
(a) Organization of the Seller. The Seller is a corporation duly
organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation.
(b) Authorization of Transaction. The Seller and UPM have the full
power and authority (including full corporate power and
authority) to execute and deliver this Agreement and the other
Agreements to be signed by Seller and UPM and to perform all
obligations hereunder or thereunder. Without limiting the
generality of the foregoing, the board of directors of the
Seller and, to the extent required, its shareholders have duly
authorized the execution, delivery, and performance of this
Agreement by the Seller. This Agreement constitutes, and upon
the execution thereof, the Other Agreements to be signed by
Seller and UPM will constitute the valid and legally binding
obligation of the Seller and UPM, as the case may be,
enforceable in accordance with their respective terms and
conditions.
(c) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the
transactions contemplated hereby (including the assignments
and assumptions referred to in Section 2 above), will
(i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or
other restriction of any government, governmental agency,
or court to which the Seller is subject or any provision
of the charter or bylaws of the Seller or (ii) conflict with,
result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right
to accelerate, terminate, modify, or cancel, or require
any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Seller is a
party or by which it is bound or to which any of its assets
is subject (or result in the imposition of any Security
Interest upon any of its assets). The Seller does not need
to give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any government
or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement
(including the assignments and assumptions referred to in
Section 2 above).
(d) Brokers' Fees. The Seller has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated by this
Agreement for which the Buyer could become liable or
obligated.
(e) Title to Assets. The Seller has good and marketable title to,
or a valid leasehold interest in, the properties and assets
used by it, located on its premises, or shown on the Most
Recent Balance Sheet or acquired after the date thereof, free
2.1-12
and clear of all Security Interests, except for properties and
assets disposed of in the Ordinary Course of Business since
the date of the Most Recent Balance Sheet. Without limiting
the generality of the foregoing, the Seller has good and
marketable title to all of the Acquired Assets, free and clear
of any Security Interest or restriction on transfer.
(f) Subsidiaries. The Seller does not own, directly or indirectly,
any capital stock or other equity ownership or other interest
in any other Person.
(g) Financial Statements. Attached hereto as Exhibit E are the
following financial statements (collectively, the
"Financial Statements"): (i) audited or reviewed balance
sheets and statements of income, changes in stockholders'
equity, and cash flow (the "Audited Statements") as of
and for the fiscal years ended December 31, 1996,
December 31, 1997, and December 31, 1998 (the "Most Recent
Fiscal Year End") for Walkisoft USA; and (ii) unaudited
balance sheets and statements of income, changes in
stockholders' equity, and cash flow (the "Most Recent
Financial Statements") as of and for the eight (8) months
ended August 31, 1999 (the "Most Recent Fiscal Month
End") for Walkisoft USA. Except for normal year end
adjustments in the case of the Most Recent Financial
Statements, the Financial Statements (including the notes
thereto) have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered
thereby, present fairly the financial condition of
Walkisoft USA as of such dates and the results of operations
of Walkisoft USA for such periods, and are consistent with
the books and records of Walkisoft USA (which books and
records are correct and complete). Additionally, the
Audited Statements are correct and complete.
(h) Events Subsequent to Most Recent Fiscal Year End. Since the
Most Recent Fiscal Year End, there has not been any material
adverse change in the business, financial condition,
operations, or results of operations of the Seller. Without
limiting the generality of the foregoing, since that date:
(i) The Seller has not sold, leased, transferred, or
assigned any of its assets, tangible or intangible,
other than for a fair consideration in the Ordinary
Course of Business;
(ii) The Seller has not entered into any agreement,
contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) outside
the Ordinary Course of Business;
(iii) No person has accelerated, terminated, modified, or
canceled any agreement, contract, lease, or license
(or series of related agreements, contracts, leases,
and licenses) to which the Seller is a party or by
which it is bound;
(iv) The Seller has not imposed any Security Interest upon
any of its assets, tangible or intangible;
2.1-13
(v) The Seller has not committed to make any capital
expenditure (or series of related capital
expenditures) either involving more than U.S.
$100,000 or outside the Ordinary Course of Business;
(vi) The Seller has not made any capital investment in,
any loan to, or any acquisition of the securities or
assets of, any other Person (or series of related
capital investments, loans, and acquisitions);
(vii) The Seller has not delayed or postponed the payment
of accounts payable and other Liabilities outside the
Ordinary Course of Business;
(viii) The Seller has not canceled, compromised, waived, or
released any right or claim (or series of related
rights and claims);
(ix) The Seller has not granted any license or sublicense
of any rights under or with respect to any
Intellectual Property except with respect to those
certain agreements to X.X. Xxxxxxxx Oy and Havix,
Inc. set forth in the Disclosure Statement;
(x) The Seller has not experienced any damage,
destruction, or loss (whether or not covered by
insurance) to its property;
(xi) The Seller has not made any loan to, or entered into
any other transaction with, any of its directors,
officers, and employees outside the Ordinary Course
of Business;
(xii) The Seller has not changed its accounting methods;
(xiii) The Seller has not granted any increase in the base
compensation of any of its stockholders, directors,
officers, and employees outside the Ordinary Course
of Business;
(xiv) The Seller has not adopted, amended, modified, or
terminated any bonus, profit-sharing, incentive,
severance, or other plan, contract, or commitment for
the benefit of any of its stockholders, directors,
officers, and employees (or taken any such action
with respect to any other Employee Benefit Plan);
(xv) The Seller has not made any other change in
employment terms for any of its directors, officers,
and employees outside the Ordinary Course of
Business;
(xvi) There has not been any other occurrence, event,
incident, action, failure to act, or transaction
outside the Ordinary Course of Business involving the
Seller;
2.1-14
(xvii) No significant customer of Seller has stated or
otherwise indicated its intention to cease doing
business with Seller prior to Closing or with Buyer
after Closing; and
(xviii) The Seller has not committed to any of the foregoing.
(i) Undisclosed Liabilities. The Seller does not have any
Liability (and there is no Basis for any present or future
action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against any of them giving rise to
any Liability), except for (i) Liabilities set forth on the
face of the Most Recent Balance Sheet (rather than in any
notes thereto) and (ii) Liabilities which have arisen after
the Most Recent Fiscal Month End in the Ordinary Course of
Business (none of which results from, arises out of, relates
to, is in the nature of, or was caused by any breach of
contract, breach of warranty, tort, infringement, or
violation of law).
(j) Legal Compliance. The Seller and its respective predecessors
and Affiliates have complied with all applicable laws
(including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder)
of federal, state, local, and foreign governments (and all
agencies thereof), and no action, suit, proceeding, hearing,
charge, complaint, claim, demand, or notice has been filed or
commenced against any of them alleging any failure so to
comply and neither Seller nor its Affiliates have any
Knowledge of any investigation regarding same.
(k) Tax Matters.
(i) The Seller has filed all Tax Returns that it was
required to file. All Taxes due and payable by the
Seller (whether or not shown on any Tax Return) have
been paid. No claim has ever been made by an
authority in a jurisdiction where the Seller does not
file Tax Returns that it is or may be subject to
taxation by that jurisdiction. There are no Security
Interests on any of the assets of the Seller that
arose in connection with any failure (or alleged
failure) to pay any Tax.
(ii) The Seller has withheld and paid all Taxes required
to have been withheld and paid in connection with
amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third
party.
(l) Real Property.
(i) Section 3(l)(i) of the Disclosure Schedule lists and
describes briefly all real property that the Seller
owns in North Carolina. With respect to each such
parcel of owned real property:
(A) the identified owner has good and marketable
title to the parcel of real property, free
and clear of any Security Interest,
easement, covenant, or other restriction,
except for installments of special
assessments not yet delinquent and recorded
easements, covenants, and other restrictions
which do not impair the current use,
occupancy, or value, or the marketability of
title, of the property subject thereto;
2.1-15
(B) there are no pending or, to Seller's
Knowledge, threatened condemnation
proceedings, lawsuits, or administrative
actions relating to the property or other
matters affecting adversely the current use,
occupancy, or value thereof;
(C) the legal description for the parcel
contained in the deed thereof describes
such parcel fully and adequately, the
buildings and improvements are located
within the boundary lines of the described
parcels of land, are not in violation of
applicable setback requirements, zoning
laws, and ordinances (and none of the
properties or buildings or improvements
thereon are subject to "permitted
non-conforming use" or "permitted
non-conforming structure" classifications),
and do not encroach on any easement
which may burden the land, the land does
not serve any adjoining property for any
purpose inconsistent with the use of the
land, and the property is not located
within any flood plain or subject to any
similar type restriction for which any
permits or licenses necessary to the use
thereof have not been obtained;
(D) all Facilities have received all approvals
of governmental authorities (including
licenses and permits) required in connection
with the ownership or operation thereof and
have been operated and maintained in
accordance with applicable laws, rules, and
regulations;
(E) there are no leases, subleases, licenses,
concessions, or other agreements, written or
oral, granting to any party or parties the
right of use or occupancy of any portion of
the parcel of real property and no parties
(other than Seller) are in possession of any
portion of such real property;
(F) there are no outstanding options or rights
of first refusal to purchase the parcel of
real property, or any portion thereof or
interest therein;
(G) all Facilities located on the parcel of real
property are supplied with utilities and
other services necessary for the operation
of such Facilities, including gas,
electricity, water, telephone, sanitary
sewer, and storm sewer, all of which
services are adequate in accordance with all
applicable laws, ordinances, rules, and
regulations and are provided via public
roads or via permanent, irrevocable,
appurtenant easements benefitting the parcel
of real property; and
2.1-16
(H) each parcel of real property abuts on and
has direct vehicular access to a public
road, or has access to a public road via a
permanent, irrevocable, appurtenant easement
benefitting the parcel of real property, and
access to the property is provided by paved
public right-of-way with adequate curb cuts
available.
(ii) Section 3(l)(ii) of the Disclosure Schedule lists and
describes briefly all real property leased or
subleased to the Seller. The Seller has delivered to
the Buyer correct and complete copies of the leases
and subleases listed in Section 3(1)(ii) of the
Disclosure Schedule (as amended to date). With
respect to each lease and sublease listed in Section
3(1)(ii) of the Disclosure Schedule:
(A) the lease or sublease is legal, valid,
binding, enforceable, and in full force
and effect;
(B) the lease or sublease will continue to be
legal, valid, binding, enforceable, and in
full force and effect on identical terms
following the consummation of the
transactions contemplated hereby (including
the assignments and assumptions referred to
in Section 2 above);
(C) no party to the lease or sublease is in
breach or default, and no event has occurred
which, with notice or lapse of time, would
constitute a breach or default or permit
termination, modification, or acceleration
thereunder;
(D) no party to the lease or sublease has
repudiated any provision thereof;
(E) there are no disputes, oral agreements, or
forbearance programs in effect as to the
lease or sublease;
(F) with respect to each sublease, the
representations and warranties set forth in
subsections (A) through (E) above are true
and correct with respect to the underlying
lease;
(G) the Seller has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or
encumbered any interest in the leasehold or
subleasehold;
(H) all Facilities leased or subleased
thereunder have received all approvals of
governmental authorities (including licenses
and permits) required in connection with the
operation thereof and have been operated and
maintained in accordance with applicable
laws, rules, and regulations; and
2.1-17
(I) all Facilities leased or subleased
thereunder are supplied with utilities and
other services necessary for the operation
of said Facilities.
(m) Intellectual Property.
(i) The Seller owns or has the right to use pursuant to
license, sublicense, agreement, or permission all
Intellectual Property necessary for or currently used
in the operation of the business of the Seller as
presently conducted and as committed to be conducted
by Seller. Subject to Section 8(a), each item of
Intellectual Property owned or used by the Seller
immediately prior to the Closing hereunder will be
owned or available for use by the Buyer on identical
terms and conditions immediately subsequent to the
Closing hereunder. The Seller has taken all necessary
action to maintain and protect each item of
Intellectual Property that it owns or uses.
(ii) The Seller has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with
any Intellectual Property rights of third parties,
and to the Knowledge of Seller, Seller has not
received any charge, complaint, claim, demand, or
notice alleging any such interference, infringement,
misappropriation, or violation (including any claim
that the Seller must license or refrain from using
any Intellectual Property rights of any third party).
To the Knowledge of Seller, no third party has
interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual
Property rights of any of the Seller.
(iii) Section 3(m)(iii) of the Disclosure Schedule
identifies each patent or copyright or trademark
registration which has been issued to the Seller
with respect to any of its Intellectual Property,
identifies each pending patent application or
application for copyright or trademark registration
which the Seller has made with respect to any of
its Intellectual Property, and identifies each
license, agreement, or other permission which the
Seller has granted to any third party with respect
to any of its Intellectual Property (together with
any exceptions). The Seller has delivered to the
Buyer correct and complete copies of all such
patents, registrations, applications, licenses,
agreements, and permissions (as amended to date) and
has made available to the Buyer correct and complete
copies of all other written documentation evidencing
ownership and prosecution (if applicable) of each
such item. Section 3(m)(iii) of the Disclosure
Schedule also identifies each trade name, fictitious
or assumed name registration or unregistered
trademark used by the Seller in connection with any
of its businesses. With respect to each item of
Intellectual Property required to be identified in
Section 3(m)(iii) of the Disclosure Schedule:
2.1-18
(A) the Seller possesses all right, title, and
interest in and to the item, free and clear
of any Security Interest, license, or other
restriction;
(B) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling,
or charge;
(C) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or
demand is pending or, to the Knowledge of
Seller, is threatened which challenges the
legality, validity, enforceability, use, or
ownership of the item; and
(D) except for Xxx-Web and Scanweb, the Seller
has never agreed to indemnify any Person for
or against any interference, infringement,
misappropriation, or other conflict with
respect to the item.
(iv) Section 3(m)(iv) of the Disclosure Schedule
identifies each item of Intellectual Property that
any third party owns and that the Seller uses
pursuant to license, sublicense, agreement, or
permission. The Seller has delivered to the Buyer
correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended
to date). With respect to each item of Intellectual
Property required to be identified in Section
3(m)(iv) of the Disclosure Schedule (except for all
such licenses of Seller and/or UPM with
Xxx-Webforming International A/S ("Xxx-Web") and
Scanweb I/S ("Scanweb") with respect to which no such
representation is being made for purposes hereof):
(A) the license, sublicense, agreement, or
permission covering the item is legal,
valid, binding, enforceable, and in full
force and effect;
(B) the license, sublicense, agreement, or
permission will continue to be legal, valid,
binding, enforceable, and in full force and
effect on identical terms following the
consummation of the transactions
contemplated hereby;
(C) no party to the license, sublicense,
agreement, or permission is in breach or
default, and no event has occurred which
with notice or lapse of time would
constitute a breach or default or permit
termination, modification, or acceleration
thereunder;
(D) no party to the license, sublicense,
agreement, or permission has repudiated any
provision thereof;
(E) with respect to each sublicense, the
representations and warranties set forth in
subsections (A) through (D) above are true
and correct with respect to the underlying
license;
2.1-19
(F) the underlying item of Intellectual Property
is not subject to any outstanding
injunction, judgment, order, decree, ruling,
or charge;
(G) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or
demand is pending or, to the Knowledge of
Seller, is threatened which challenges the
legality, validity, or enforceability of the
underlying item of Intellectual Property;
and
(H) the Seller has not granted any sublicense or
similar right with respect to the license,
sublicense, agreement, or permission except
as disclosed in Section 3(m)(iv) of the
Disclosure Schedule.
(v) To the Knowledge of Seller, the Buyer will not
interfere with, infringe upon, misappropriate, or
otherwise come into conflict with, any Intellectual
Property rights of third parties as a result of the
continued operation of Seller's businesses as
presently conducted and as committed to be conducted.
(n) Tangible Assets. The Seller owns or leases all buildings,
machinery, equipment, and other tangible assets necessary for
the conduct of its business as presently conducted. Each such
tangible asset is free from defects to the Knowledge of
Seller, has been maintained in accordance with normal industry
practice, is in normal operating condition and repair (subject
to normal wear and tear), and is suitable for the purposes for
which it presently is being used.
(o) Inventory. The Inventory of the Seller consists of (a) raw
materials and packaging materials used in the Walkisoft
Business of Seller, including wood pulp, other fibers, binders
and superabsorbent polymers and (b) finished product, all of
which is merchantable and fit for the purpose for which it was
procured or manufactured, and none of which is obsolete,
damaged, or defective, subject only to the reserve for
Inventory writedown set forth on the face of the Most Recent
Balance Sheet (rather than in any notes thereto) as adjusted
for the passage of time through the Closing Date in accordance
with the past custom and practice of the Seller.
(p) Contracts. Section 3(p) of the Disclosure Schedule lists the
following contracts and other agreements to which the Seller
is a party:
(i) any agreement (or group of related agreements) for
the lease of personal property to or from any Person
providing for lease payments;
(ii) any agreement (or group of related agreements) for
the purchase or sale of raw materials, commodities,
supplies, finished products, or other personal
property, or for the furnishing or receipt of
services, the performance of which will extend over a
period beyond December 31, 1999;
(iii) any agreement concerning a partnership or joint
venture;
2.1-20
(iv) any agreement (or group of related agreements) to be
assumed by Buyer as an Assumed Liability pertaining
to any indebtedness for borrowed money or any
capitalized lease obligation;
(v) any agreement concerning confidentiality or
containing covenants that in any way purport to
restrict the business activity of the Seller or limit
the freedom of the Seller or its stockholders,
directors or officers to engage in any line of
business or to compete with any Person;
(vi) any intercompany agreement between any Seller and
their Affiliates;
(vii) any profit sharing, stock option, stock purchase,
stock appreciation, deferred compensation, severance,
or other material plan or arrangement for the benefit
of those current directors, officers, and employees
of Seller that will become employees of Buyer;
(viii) any collective bargaining agreement;
(ix) any agreement for Seller's employment of any salaried
individual on a full-time, part-time, consulting, or
other basis that will become employees of Buyer;
(x) any other agreement (or group of related agreements)
the performance of which involves consideration in
excess of U.S.$25,000; or
(xi) any written warranty, guaranty or other similar
undertaking with respect to contractual performance
by the Seller;
The Seller has delivered to the Buyer a correct and complete
copy of each written agreement listed in Section 3(p) of the
Disclosure Schedule (as amended to date) and a written summary
setting forth the terms and conditions of each oral agreement
referred to in Section 3(p) of the Disclosure Schedule. With
respect to each such agreement: (A) the agreement is legal,
valid, binding, enforceable, and in full force and effect; (B)
no party is in breach or default, and no event has occurred
which with notice or lapse of time would constitute a breach
or default, or permit termination, modification, or
acceleration, under the agreement; and (C) no party has
repudiated any provision of the agreement.
(q) Accounts Receivable. All accounts receivable of the Seller are
reflected properly on their books and records, are valid
receivables subject to no setoffs or counterclaims, are
current and collectible, and will be collected in accordance
with their terms at their recorded amounts.
(r) Insurance. Section 3(r) of the Disclosure Schedule sets forth
the following information with respect to each insurance
policy (including policies providing property, casualty,
liability, and workers' compensation coverage and bond and
surety arrangements) to which the Seller has been a party, a
named insured, or otherwise the beneficiary of coverage at any
time within the past three (3) years:
2.1-21
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the
policyholder, and the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the
coverage was on a claims made, occurrence, or other
basis) and amount (including a description of how
deductibles and ceilings are calculated and operate)
of coverage; and
(v) a description of any retroactive premium adjustments
or other loss-sharing arrangements.
With respect to each such insurance policy and assuming due
enforceability with respect to the insuror: (A) the policy is
legal, valid, binding, enforceable, and in full force and
effect; (B) the policy will continue to be legal, valid,
binding, enforceable, and in full force and effect on
identical terms until the Closing Date; (C) neither the Seller
nor any other party to the policy is in breach or default
(including with respect to the payment of premiums or the
giving of notices), and no event has occurred which, with
notice or the lapse of time, would constitute such a breach or
default, or permit termination, modification, or acceleration,
under the policy; and (D) no party to the policy has
repudiated any provision thereof. Section 3(r) of the
Disclosure Schedule describes any self-insurance arrangements
affecting the Seller.
(s) Litigation. Section 3(s) of the Disclosure Schedule sets
forth each instance in which the Seller (i) is subject to
any outstanding injunction, judgment, order, decree,
ruling, or charge or (ii) is a party or, to the Knowledge of
Seller, is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before
any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any
arbitrator. None of the actions, suits, proceedings,
hearings, and investigations set forth in Section 3(s)
of the Disclosure Schedule could result in any adverse
change in the business, financial condition, operations,
results of operations, or future prospects of the Seller.
To the Knowledge of Seller, Seller has no reason to believe
that any such action, suit, proceeding, hearing, or
investigation may be brought or threatened against the Seller.
(t) Product Warranty. Except as set forth on the Disclosure
Schedule hereto, each product manufactured, sold, leased,
or delivered by the Seller has been in conformity with all
applicable contractual commitments and all express and
implied warranties, and the Seller has no Liability
(and to the Knowledge of Seller there is no Basis for any
present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against
any of them giving rise to any Liability) for replacement
or repair thereof or other damages in connection therewith.
No product manufactured, sold, leased, or delivered by the
2.1-22
Seller is subject to any guaranty, warranty, or other
indemnity beyond the applicable standard terms and conditions
of sale or lease. Section 3(t) of the Disclosure Schedule
includes copies of the standard terms and conditions of sale
or lease for the Seller (containing applicable guaranty,
warranty, and indemnity provisions).
(u) Product Liability. Except as set forth on the Disclosure
Schedule hereto, the Seller has no Liability (and to the
Knowledge of Seller there is no Basis for any present or
future action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand against any of them giving
rise to any Liability) arising out of any injury to
individuals or property as a result of the ownership,
possession, or use of any product manufactured, sold, leased,
or delivered by the Seller.
(v) Employees. Except as set forth on the Disclosure Schedule
hereto, to the Knowledge of Seller (without reasonable
investigation), no executive, key employee, or group of
employees has any plans to terminate employment with the
Seller. The Seller is not a party to or bound by any
collective bargaining agreement, nor are there any pending
strikes, grievances, claims of unfair labor practices, or
other collective bargaining disputes. The Seller has not
committed any unfair labor practice. To the Knowledge of
Seller (without reasonable investigation), no organizational
effort is presently being made or threatened by or on behalf
of any labor union with respect to employees of any of the
Seller.
(w) Employee Benefits.
(i) Section 3(w) of the Disclosure Schedule lists each
Employee Benefit Plan that the Seller maintains or to
which the Seller contributes or may be obligated to
contribute, with respect to Walkisoft Employees. No
Employee Pension Benefit Plan that Seller and any
current or former domestic member of the Controlled
Group of Corporations which includes the Seller, as
contemplated by ' 414 of the Code, has incurred any
liability under Title IV of ERISA that would result
in any liability for, or loss to, Buyer.
(A) The requirements of Part 6 of Subtitle B of
Title I of ERISA and of Code ss. 4980B have
been substantially met with respect to each
such Employee Benefit Plan which is a
,,group health plan" within the meaning of
Code Section 5000.
(B) All premiums or other payments for all
periods ending on or before the Effective
Date have been paid with respect to each
such Employee Benefit Plan which is an
Employee Welfare Benefit Plan.
(C) The existing Employee Benefit Plan which is
intended to be maintained under Code Section
401(k) and in which Walkisoft USA, Inc. is a
2.1-23
participating employer with respect to the
Walkisoft Employees has received a favorable
determination letter from the Internal
Revenue Service covering all legislation for
which the applicable remedial amendment
period has not expired, and nothing has
occurred or failed to occur to the Knowledge
of Seller which would impair the
tax-qualified status of such plan.
(D) The Seller has delivered to the Buyer
correct and complete copies of the plan
documents and summary plan descriptions, the
most recent determination letter received
from the Internal Revenue Service, the most
recent Form 5500 Annual Report, and all
related trust agreements, insurance
contracts, and other funding agreements
which implement each such Employee Benefit
Plan.
(ii) None of the Seller and the other members of the
Controlled Group of Corporations that includes the
Seller contributes to, ever has contributed to, or
ever has been required to contribute to any
Multiemployer Plan with respect to the Walkisoft
Employees or has or may have any Liability (including
withdrawal Liability) under any Multiemployer Plan.
(iii) The Seller does not maintain or contribute to any
Employee Welfare Benefit Plan providing medical,
health, or life insurance or other welfare-type
benefits for current or future retired or terminated
employees, their spouses, or their dependents (other
than in accordance with Code ' 4980B).
(x) Guaranties. The Seller is not a guarantor or otherwise liable
for any Liability or obligation (including indebtedness) that
would survive the Closing of any other Person.
(y) Environmental, Health, and Safety Matters. With respect to
the Acquired Assets;
(i) The Seller, and its respective Affiliates have
complied and are in compliance with all
Environmental, Health, and Safety Requirements.
(ii) Without limiting the generality of the foregoing, the
Seller and its respective Affiliates have obtained
and complied with, and are in compliance with, all
permits, licenses and other authorizations that are
required pursuant to Environmental, Health, and
Safety Requirements for the occupation of its
Facilities and the operation of its business; a list
of all such permits, licenses and other
authorizations is set forth on the Disclosure
Schedule 3(z).
(iii) Neither the Seller, nor its Affiliates has received
any written notice, report or other information
(including employee or third-party complaints or
threats) regarding any violation of Environmental,
Health, and Safety Requirements, or any liabilities
or potential liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise), including any
investigatory, remedial or corrective obligations,
relating to any of them or its Facilities arising
under Environmental, Health, and Safety Requirements.
2.1-24
(iv) To the Knowledge of Seller, none of the following
exists at any property or facility owned or operated
by the Seller: (1) underground storage tanks, (2)
asbestos-containing material in any form or
condition, (3) materials or equipment containing
polychlorinated biphenyls, or (4) landfills, surface
impoundments, or disposal areas.
(v) Neither the Seller, nor its Affiliates has treated,
stored, disposed of, arranged for or permitted the
disposal of, transported, handled, or released any
Hazardous Materials , or owned or operated any
property or facility in a manner that has given or
would give rise to liabilities, including any
liability for response costs, corrective action
costs, personal injury, property damage, natural
resources damages or attorney fees, pursuant to
CERCLA, the Solid Waste Disposal Act, as amended
("SWDA") or any other Environmental, Health, and
Safety Requirements as they exist as of the Effective
Date.
(vi) Neither the Seller nor any of its Affiliates has,
either expressly or by operation of law, assumed or
undertaken any liability, including without
limitation any obligation for corrective or remedial
action, of any other Person relating to
Environmental, Health, and Safety Requirements.
(vii) To the Knowledge of Seller, no facts, events or
conditions relating to the past or present
Facilities, properties or operations of the Seller
or any of its respective predecessors will prevent,
hinder or limit continued compliance with
Environmental, Health, and Safety Requirements,
give rise to any investigatory, remedial or
corrective obligations pursuant to Environmental,
Health, and Safety Requirements, or give rise
to any other liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise) pursuant to
Environmental, Health, and Safety Requirements,
including without limitation any relating to onsite
or offsite releases or threatened releases of
hazardous materials, substances or wastes,
personal injury, property damage or natural
resources damage.
(z) Year 2000 Problem. With regard to the possibility that
computer programs and systems may not properly process dates
subsequent to December 31, 1999 (the "Y2K Problem"), Seller
represents and warrants that it has audited all of its
computer systems (including, but not limited to, systems which
operate the machinery and equipment at the Mt. Xxxxx plant
operated by Walkisoft USA) and that to its Knowledge, such
systems are free from the Y2K Problem insofar as it may affect
the operations of the Walkisoft Business.
(aa) Certain Business Relationships With the Seller. None of the
stockholders of the Seller or their Affiliates owns any
asset, tangible or intangible, which is used in the business
of the Seller.
2.1-25
(bb) Investment. The Seller (i) understands that the Buyer Note
has not been, and will not be, registered under the
Securities Act, or under any state securities laws, and is
being offered and sold in reliance upon federal and state
exemptions for transactions not involving any public
offering, (ii) is acquiring the Buyer Note solely for its own
account for investment purposes, and not with a view to the
distribution thereof, (iii) is a sophisticated investor
with knowledge and experience in business and financial
matters, (iv) has received certain information concerning
the Buyer and has had the opportunity to obtain additional
information as desired in order to evaluate the merits
and the risks inherent in holding the Buyer Note and, (v) is
able to bear the economic risk and lack of liquidity
inherent in holding the Buyer Note.
(cc) Sales Companies. Walkisoft France S.A.R.L. is duly organized,
validly existing and in good standing under the laws
of France, and all of the outstanding capital stock is
owned by UPM Industries S.A., an Affiliate of UPM.
Walkisoft Iberica S.A. is duly organized, validly existing
and in good standing under the laws of Spain, and all of
the outstanding capital stock is owned by Walkisoft Finland,
an Affiliate of UPM. Walkisoft Italia S.r.l. is duly
organized, validly existing and in good standing under the
laws of Italy, and all of the outstanding capital stock
is owned by Walkisoft Finland, an Affiliate of UPM.
Walkisoft (U.K.) Limited is duly organized, validly existing
and in good standing under the laws of United Kingdom,
and all of the outstanding capital stock is owned by
UPM-Kymmene UK, Plc., an Affiliate of UPM. As of the
Effective Date, Seller and UPM shall cause 100% of the
outstanding capital stock of the Sales Companies to be
transferred to BKI International Inc., free and clear of any
liens or encumbrances, and there shall exist no warrants,
options or other commitment with respect to the issuance
of any additional capital stock for any of such Sales
Companies. Each of the Sales Companies has been operated in
full compliance with all applicable laws and regulations.
As of the Effective Date, the Sales Companies shall have
no Liabilities whatsoever except for trade payables
incurred in the Ordinary Course of Business which shall not
exceed the current assets of the respective Sales Companies
and the Liabilities listed on Exhibit C and specifically
assumed by Buyer hereunder. Seller and UPM shall cause all
other Liabilities relating to the Sales Companies to be
discharged at their sole cost and expense. At Closing, UPM
shall cause the delivery of resignations of officers and
directors as requested by Buyer.
3. Representations and Warranties of the Buyer. The Buyer represents and
warrants to the Seller that the statements contained in this Section 4
are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 4), except as set forth in the Disclosure
Schedule. The Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this
Section 4.
(a) Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation except that
2.1-26
Buckeye Mt. Xxxxx is a limited liability company duly
organized, validly existing and in good standing under the
laws of the State of Delaware.
(b) Authorization of Transaction. The Buyer has full power and
authority (including full corporate power and authority) to
execute and deliver this Agreement and the other Agreements to
be signed by Buyer and to perform its obligations hereunder or
thereunder. Without limiting the foregoing, the board of
directors of Buyer has duly authorized the execution, delivery
and performance of this Agreement by Buyer. This Agreement
constitutes, and upon the execution thereof, the Other
Agreements to be signed by Buyer will constitute, the valid
and legally binding obligation of the Buyer, enforceable in
accordance with their respective terms and conditions.
(c) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the
transactions contemplated hereby (including the assignments
and assumptions referred to in Section 2 above), will
(i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or
other restriction of any government, governmental agency, or
court to which the Buyer is subject or any provision of
its charter or bylaws or (ii) conflict with, result in a
breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument,
or other arrangement to which the Buyer is a party or by
which it is bound or to which any of its assets is subject.
The Buyer does not need to give any notice to, make any
filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for
the Parties to consummate the transactions contemplated by
this Agreement (including the assignments and assumptions
referred to in Section 2 above).
(d) Brokers' Fees. The Buyer has no Liability or obligation to pay
any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for
which the Seller could become liable or obligated.
4. Pre-Closing Covenants. The Parties agree as follows with respect to the
period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use its commercially
reasonable efforts to take all action and to do all things
necessary, proper, or advisable in order to consummate and
make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the Closing
conditions set forth in Section 6 below).
(b) Notices and Consents. The Seller will give any notices to
third parties, and the Seller will obtain any third party
consents as set forth on Exhibit O. If the other party to the
contract to be assigned refuses its consent to the assignment
of the contract to the Buyer and the failure
2.1-27
to obtain such required consent is waived by Buyer, the
respective contract shall be assigned as between Seller and
Buyer, with the effect that Buyer, to the extent that this is
legally permissible and practicable, shall perform the
contract and accept performance of the contract by the other
contractual party on behalf of Seller but for the account of
Buyer. If as a result of the sale and transfer of the Acquired
Assets and/or the Seller's inability to perform its
obligations under an assigned contract the other contractual
party terminates the contract with the Seller for failure to
obtain required consent and/or asserts a claim for breach of
contract, Seller shall indemnify Buyer from and against all
claims of such contractual party, and from all interest,
penalties and costs in connection therewith.
(c) Operation of Business. The Seller will not engage in any
practice, take any action, or enter into any transaction
outside the Ordinary Course of Business. Without limiting the
generality of the foregoing, the Seller will not (i) execute
any agreement that will survive Closing with another Seller or
Affiliate unless Buyer consents, (ii) negotiate any agreements
creating obligations after Closing in excess of U.S.$10,000
other than sales agreements and agreements for the purchase of
raw materials executed in the Ordinary Course of Business for
a period not to exceed December 31, 1999, unless Buyer
consents, or (iii) otherwise engage in any practice, take any
action, or enter into any transaction of the sort described in
Section 3(h) above.
(d) Preservation of Business. The Seller will use commercially
reasonable efforts to keep its business and properties
substantially intact, including its present operations,
physical Facilities, working conditions, and relationships
with lessors, licensors, suppliers, customers, and employees.
(e) Full Access. Subject to anticompetitive laws, the Seller will
permit representatives of the Buyer to have full access at all
reasonable times, and in a manner so as not to interfere with
the normal business operations of the Seller, to all premises,
properties, personnel, books, records (including Tax records),
contracts, and documents of or pertaining to each Seller.
(f) Title Insurance. The Buyer will obtain the following title
insurance commitments, policies, and riders in preparation for
the Closing:
(i) with respect to each parcel of real estate in North
Carolina that the Seller owns, an ALTA Owner's Policy
of Title Insurance Form B-1987 (or equivalent
policy reasonably acceptable to the Buyer if the
real property is located in a state in which an
ALTA Owner's Policy of Title Insurance Form B-1987
is not available) issued by a title insurer
reasonably satisfactory to the Buyer in such
amount as the Buyer reasonably may determine to be
the fair market value of such real property
(including all improvements located thereon),
insuring title to such real property to be in the
Buyer as of the Closing (subject only to the title
exceptions described above in Section 3(l)(i) and
in Section 3(l)(i) of the Disclosure Schedule).
2.1-28
Each title insurance policy delivered under Section 5(f)(i) above shall
(A) insure title to the real property and all recorded easements
benefitting such real property, (B) contain an "extended coverage
endorsement" insuring over the general exceptions contained customarily
in such policies, (c) contain an ALTA Zoning Endorsement 3.1 (or
comparable equivalent), (D) contain an endorsement insuring that the
real property described in the title insurance policy is the same real
estate as shown on the Survey delivered with respect to such property,
(E) contain an endorsement insuring that each street adjacent to the
real property is a public street and that there is direct and
unencumbered pedestrian and vehicular access to such street from the
real property, (F) if the real property consists, of more than one
record parcel, contain a "contiguity" endorsement insuring that all of
the record parcels are contiguous to one another, and (G) contain a
"non-imputation" endorsement to the effect that title defects known to
the officers, directors, and stockholders of the owner prior to the
Closing shall not be deemed "facts known to the insured" for purposes
of the policy.
(g) Surveys. With respect to each parcel of real property in
North Carolina that the Seller owns and as to which a
title insurance policy is to be procured pursuant to
Section 5(f) above, the Buyer will procure in preparation for
the Closing a current survey of the real property
certified to the Buyer, prepared by a licensed surveyor and
conforming to current ALTA Minimum Detail Requirements for
Land Title Surveys (or comparable equivalent), disclosing
the location of all improvements, easements, party walls,
sidewalks, roadways, utility lines, and other matters
shown customarily on such surveys, and showing access
affirmatively to public streets and roads (the "Survey"). The
Survey shall not disclose any survey defect or encroachment
from or onto the real property which has not been cured
or insured over prior to the Closing.
(h) Notice of Developments. Each Party will give prompt written
notice to the other Party of any material adverse development
causing a breach of any of its own representations and
warranties in Section 3 and Section 4 above. No disclosure by
any Party pursuant to this Section 5(h), however, shall be
deemed to amend or supplement the Disclosure Schedule or to
prevent or cure any misrepresentation, breach of warranty, or
breach of covenant.
(i) Exclusivity. The Seller will not (i) solicit, initiate, or
encourage the submission of any proposal or offer from any
Person relating to the acquisition of any capital stock or
other voting securities, or any portion of the assets, of the
Seller (including any acquisition structured as a merger,
consolidation, or share exchange) or (ii) participate in any
discussions or negotiations regarding, furnish any information
with respect to, assist or participate in, or facilitate in
any other manner any effort or attempt by any Person to do or
seek any of the foregoing. The Seller will notify the Buyer
immediately if any Person makes any proposal, offer, inquiry,
or contact with respect to any of the foregoing.
2.1-29
5. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The obligation of the
Buyer to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the
following conditions:
(i) the representations and warranties set forth in
Section 3 above shall be true and correct in all
material respects at and as of the Closing Date;
(ii) the relevant parties shall have entered into the
Other Agreements, including the German Purchase
Agreement, and the same shall be in full force and
effect;
(iii) the Seller shall have performed and complied with all
of its covenants hereunder and under the Other
Agreements in all material respects through the
Closing Date;
(iv) the Seller shall have procured all of the third party
consents specified in Section 5(b) above, and all of
the permits necessary for Buyer to own and operate
the Acquired Assets in the manner operated prior to
the Closing Date, and all licenses and approvals
necessary for Buyer to own and operate the Acquired
Assets shall have been obtained;
(v) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or
administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated
by this Agreement, (B) cause any of the transactions
contemplated by this Agreement to be rescinded
following consummation, or (c) affect adversely the
right of the Buyer to own the Acquired Assets or to
operate the former businesses of the Seller;
(vi) the Seller shall have delivered to the Buyer a
certificate to the effect that each of the conditions
specified above in Section 6(a)(i)-(v) is satisfied
in all respects;
(vii) the approval or waiver of preemptive rights necessary
for the transfer of the real property described in
the German Purchase Agreement, the discharge of all
land charges encumbering such real estate and the
registration of a priority notice with no
registrations having prior ranking not assumed by the
Buyer shall have been obtained for such real
property; and
(viii) all actions to be taken by the Seller in connection
with consummation of the transactions contemplated
hereby and all certificates, opinions, instruments,
and other documents required to effect the
transactions contemplated hereby will be satisfactory
in form and substance to the Buyer.
2.1-30
The Buyer may waive any condition specified in this Section 6(a) if it
executes a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Seller. The obligation of the
Seller to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the
following conditions:
(i) the representations and warranties set forth in
Section 4 above shall be true and correct in all
material respects at and as of the Closing Date;
(ii) the relevant parties shall have entered into the
Other Agreements, including the German Purchase
Agreement, and the same shall be in full force and
effect;
(iii) the Buyer shall have performed and complied with all
of its covenants hereunder and under the Other
Agreements in all material respects through the
Closing;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or
administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated
by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be
rescinded following consummation (and no such
injunction, judgment, order, decree, ruling, or
charge shall be in effect);
(v) the Buyer shall have delivered to the Seller a
certificate to the effect that each of the conditions
specified above in Section 6(b)(i)-(iv) is satisfied
in all respects;
(vi) the Buyer shall have delivered to the Seller the
Initial Payment adjusted in accordance with the
provisions of this Agreement, the Buyer Note and the
Pledge and Security Agreement;
(vii) the Seller shall have received from counsel to the
Buyer an opinion in form and substance as set forth
in Exhibit I attached hereto, addressed to the
Seller, and dated as of the Closing Date;
(viii) all actions to be taken by the Buyer in connection
with consummation of the transactions contemplated
hereby and all certificates, opinions, instruments,
and other documents required to effect the
transactions contemplated hereby will be satisfactory
in form and substance to the Seller.
The Seller may waive any condition specified in this Section 6(b) if it
executes a writing so stating at or prior to the Closing.
2.1-31
6. Termination.
(a) Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
(i) the Buyer and the Seller may terminate this Agreement
by mutual written consent at any time prior to the
Closing;
(ii) the Buyer may terminate this Agreement by giving
written notice to the Seller at any time prior to the
Closing (A) in the event the Seller has breached any
material representation, warranty, or covenant
contained in this Agreement in any material respect,
the Buyer has notified the Seller of the breach, and
the breach has continued without cure for a period of
30 days after the notice of breach or (B) if the
Closing shall not have occurred on or before December
31, 1999.
(iii) the Seller may terminate this Agreement by giving
written notice to the Buyer at any time prior to the
Closing (A) in the event the Buyer has breached any
material representation, warranty, or covenant
contained in this Agreement in any material respect,
the Seller has notified the Buyer of the breach, and
the breach has continued without cure for a period of
30 days after the notice of breach or (B) if the
Closing shall not have occurred on or before December
31, 1999.
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to Section 7(a) above, all rights and obligations of
the Parties hereunder shall terminate without any Liability of
any Party to any other Party (except for any Liability of any
Party then in breach).
7. Post-Closing Covenants.
(a) License of Walkisoft Name. Seller hereby grants to Buyer
the exclusive royalty-free right to use the trade name
"Walkisoft" for a period of five (5) years from the Effective
Date in all areas in which the Seller has used the trade
name or otherwise has rights in the trade name. Seller
hereby expressly releases Buyer, its agents,
employees, licensees and assigns from and against any and
all claims which Seller has or may have with respect to
use of the trade name "Walkisoft." From Effective Date and
thereafter for a period of five (5) years, Seller shall
not use or license to use or transfer to Persons other than
Buyer the "Walkisoft" trade name and thereafter it will
not use, license to use or transfer the "Walkisoft"
trade name in or to any similar business to that of Buyer.
Seller warrants that it has the full right and authority
to grant to Buyer the license to use the trade name
"Walkisoft."
(b) Noncompetition by Seller. Except as specified in Section 8(c)
below, for a period of five (5) years from and after the
Effective Date, neither any Seller nor any Affiliate of Seller
shall engage in, directly or indirectly, the airlaid nonwoven
business or any other business conducted
2.1-32
by Seller as of the Effective Date (the "Restricted Business")
anywhere in the world (each of Parties hereto acknowledging
that the business as conducted by Seller is an expanding
global business with current worldwide sales); provided,
however, that no owner of less than 1% of the outstanding
stock of any publicly-traded corporation shall be deemed to
engage solely by reason thereof in the Restricted Business.
Notwithstanding the foregoing, Seller or an Affiliate of
Seller shall be permitted to acquire another business which
has an airlaid nonwoven division or subsidiary comprising not
more than 3% of the gross sales for such acquired business for
its last full fiscal year. In such event, Seller or its
applicable Affiliate shall use its best efforts to dispose of
the airlaid nonwoven division or subsidiary of the acquired
business as soon as commercially practicable to do so and as
part of such process, shall give Buckeye Technologies or its
Affiliates a right of first negotiation to acquire the airlaid
nonwoven division or subsidiary to be sold. To the extent
Buyer is unwilling to acquire such airlaid non-woven division
or subsidiary at such price and on such terms as offered by
Seller in writing to Buyer, then Seller may not sell such
business at a lower price or on more favorable terms than
offered to Buyer for at least one year following the date of
written offer from Seller to Buyer. If Seller or its Affiliate
is unable to sell such airlaid nonwoven division or subsidiary
after using commercially reasonable efforts or determines that
it is commercially impracticable to sell such airlaid nonwoven
division or subsidiary based on its integration with the
remaining acquired business, then in such event, Seller
covenants that neither Seller nor its Affiliates shall seek to
expand or otherwise invest in expansion of the airlaid
nonwoven division or subsidiary within the five-year period
following the Effective Date. If the final judgment of a court
of competent jurisdiction declares that any term or provision
of this Section 8(b) is invalid or unenforceable, the Parties
agree that the court making the determination of invalidity or
unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific
words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention
of the invalid or unenforceable term or provision, and this
Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment may be
appealed.
(c) Walkisoft Finland Oy. Buyer agrees that Seller may continue
the operation of the Walkisoft plant in Kotka, Finland for up
to six (6) months after the Effective Date. By the end of the
six (6) month period, Seller must either (i) sell the
equipment at the Kotka plant to third parties who are not in
competition with Buyer or (ii) elect to continue operating the
equipment to produce products which are not in competition
with Buyer. In either event, Seller agrees to seek Buyer's
prior written approval regarding whether the sale of the
equipment or the continued production at the Kotka Plant would
be in competition with Buyer, and Buyer's decision shall be
determinative of the issue as long as it is not unreasonably
given or withheld.
2.1-33
(d) Buyer Note. The Buyer Note will be imprinted with a legend
substantially in the following form:
THE PAYMENT OF PRINCIPAL AND INTEREST ON THIS NOTE IS SUBJECT TO
CERTAIN RECOUPMENT AND SET-OFF PROVISIONS SET FORTH IN THE ASSET
PURCHASE AGREEMENT DATED AS OF OCTOBER 1, 1999 (THE "AGREEMENT")
BETWEEN THE ISSUER OF THIS NOTE AND THE PERSON TO WHOM THIS NOTE
ORIGINALLY WAS ISSUED, AMONG OTHERS. THIS NOTE WAS ORIGINALLY ISSUED ON
OCTOBER 1, 1999, AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED. THE TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN
RESTRICTIONS SET FORTH IN THE AGREEMENT. THE ISSUER OF THIS NOTE WILL
FURNISH A COPY OF THESE PROVISIONS TO THE HOLDER HEREOF WITHOUT CHARGE
UPON WRITTEN REQUEST.
If Seller desires to transfer Buyer Note to an Affiliate, Seller first
must furnish the Buyer with (a) a written opinion satisfactory to the
Buyer in form and substance from counsel satisfactory to the Buyer to
the effect that the holder may transfer the Buyer Note as desired
without registration under the Securities Act and (b) a written
undertaking executed by the desired transferee satisfactory to the
Buyer in form and substance agreeing to be bound by the offset and
recoupment provisions and the restrictions on transfer contained
herein.
(e) Accounts Receivable. If Buyer is unable after reasonable
efforts to collect the accounts receivable comprising Acquired
Assets within sixty (60) days after the stated date for
payment, Seller shall purchase such accounts receivable at the
U.S. value assigned to such accounts as of the Effective Date.
(f) Further Assurances. From time to time after the Closing Date,
each party, at the request of the other and without
further consideration, agrees to execute and deliver or to
cause to be executed and delivered at its expense (a)
such other instruments of transfer as reasonably may be
requested by Buyer to more effectively transfer to Buyer the
right, title and interest in or to the Acquired Assets
contemplated by this Agreement (including assignments of
Intellectual Property and procurement of third-party
consents where required) or (b) such other instruments of
assumption by Buyer for Assumed Liabilities as contemplated
by this Agreement and (c) to take or cause to be taken
such further or other action as may reasonably be necessary
or appropriate in order to effectuate the transactions
contemplated by this Agreement.
(g) Sales Rebates or Discounts. Seller shall remain liable for or
receive benefit from, as the case may be, its pro rata share
of any sales or purchase discounts or rebates which are
payable after Closing for the period up to the Effective Date.
(h) Product Warranty. As a service to Seller, Buyer agrees to use
its reasonable efforts to rectify and/or remedy on Seller's
behalf and at Seller's expense any items manufactured by
Seller prior to the Effective Date which are claimed to be
covered by a warranty of Seller. Upon receipt of reasonable
documentation from Buyer, Seller shall promptly reimburse
Buyer for all costs reasonably
2.1-34
expended in rectifying or remedying the claim. To the extent
such costs are anticipated to be in excess of U.S. $10,000 for
a particular warranty claim, Buyer shall notify Seller in
advance of remedying the warranty claim to advise Seller of
the claim and the anticipated expenses associated therewith.
Buyer shall remedy or replace the item with the consent of
Seller, which shall not be unreasonably withheld, provided
that upon Seller's failure to object within five (5) business
days following receipt of Buyer's notice to Seller of the
claim, Buyer may proceed to rectify or remedy the claim at
Seller's expense. The Parties acknowledge that Designated
Accruals contains a reserve for warranty claims which shall be
charged against prior to reimbursement by Seller. The Parties
further acknowledge that Buyer is providing this warranty
service as an accommodation to Seller and such agreement shall
not constitute an assumption by Buyer of any Liability that
does not constitute an Assumed Liability under this Agreement.
(i) Access to Records. Each of the Parties after the Closing Date
shall permit the other full access at reasonable times, and in
a manner so as not to interfere with normal business
operations, to all books, records (including tax records),
contracts and documents pertaining to the operation of
Seller's business prior to the Effective Date.
(j) Payment to Xxx-Web. Within five (5) banking days after the
Closing Date, UPM and Buckeye Technologies each agree to pay
or cause to be paid U.S. $1,400,000 to Xxx-Web, for a total of
U.S. $2,800,000 as required by Section 7.1 of the Buckeye
License agreement dated July 13, 1999, between UPM, Buckeye
Technologies, Xxx-Web and Scanweb. Further, if the Closing
Date shall not have occurred before January 1, 2000, UPM and
Buckeye each agree to pay or cause to be paid U.S. $100,000 to
Xxx-Web within five (5) days thereafter, for a total of U.S.
$200,000 as required by Section 7.1 of said Buckeye License
Agreement.
(k) UPM-Raflatac, Inc. Property. UPM shall cause its Affiliate,
UPM-Raflatac, Inc., to sell and Buyer shall purchase all of
the approximately 46 acres of real property contiguous or in
close proximity to Seller's Facilities at a price of $650,000
payable in cash at closing which shall be held within thirty
(30) days following the Closing Date. The same provisions and
obligations of the Parties regarding title, title insurance,
survey and expense sharing regarding the Facilities shall
similarly apply to the sale hereunder.
8. Indemnification
(a) Survival; Right to Indemnification Not Affected by Knowledge.
All of the representations, warranties, covenants and
obligations in this Agreement and the various Disclosure
Schedules referred to herein, the supplements to such
Disclosure Schedules, and any other certificate or document
delivered pursuant to this Agreement and the German
Purchase Agreement shall survive the Closing and continue in
full force and effect forever thereafter (subject to
any applicable statutes of limitations). The right to
indemnification, payment of the amount of Adverse
Consequences or other remedy based on such representations,
2.1-35
warranties, covenants, and obligations will not be affected by
any investigation conducted with respect to, or any Knowledge
acquired (or capable of being acquired) at any time, whether
before or after the execution and delivery of this Agreement
or the Closing Date, with respect to the accuracy or
inaccuracy of or compliance with, any such representation,
warranty, covenant, or obligation. The waiver of any condition
based on the accuracy of any representation or warranty, or on
the performance of or compliance with any covenant or
obligation, will not affect the right to indemnification,
payment of the amount of Adverse Consequences or other remedy
based on such representations, warranties, covenants, and
obligations.
(b) Indemnification Provisions for Benefit of the Buyer.
(1) Each of Seller, jointly and severally, will indemnify and hold
harmless the Buyer and Buckeye Technologies (the indemnified
persons are sometimes hereinafter referred to collectively as
the "Indemnified Persons" and the indemnifying parties are
sometimes hereinafter referred to collectively as the
"Indemnifying Party") for, and will pay to the Indemnified
Persons the amount of, any Adverse Consequence arising,
directly or indirectly, from or in connection with:
(i) any breach of any representation or warranty made by
the Seller in this Agreement, including the
Disclosure Schedule (but without giving effect to any
supplement to the Disclosure Schedule made subsequent
to the signing hereof), or any other certificate or
document delivered by the Sellers pursuant to this
Agreement;
(ii) any breach by the Seller of any covenant or
obligation of such Seller in this Agreement;
(iii) any product shipped or manufactured by, or any
services provided by, the Seller prior to the
Effective Date;
(iv) any Liability for infringement of any Lemelson patent
relating to the use of the Acquired Assets before the
Effective Date and with respect to Buckeye Mt. Xxxxx
only, after the Effective Date;
(v) any Liability of UPM, Seller, or any predecessor of
Seller or any of their respective Affiliates or
otherwise arising out of or relating to the ownership
and operation of the Walkisoft Business prior to the
Effective Date which is not an Assumed Liability; or
(vi) any Liability of one or more of the Sales Companies
arising out of or relating to the operation of their
respective businesses prior to the Effective Date
except for trade payables incurred in the Ordinary
Course of Business and any Liabilities specifically
assumed by Buyer and listed on Schedule C attached
hereto.
2.1-36
The remedies provided in this Section 9(b)(1) will be the exclusive
remedy that may be available to the Indemnified Persons relating to the
matters covered herein except as set forth in Section 11(o) and except
that (i) indemnification relating to Liability of Seller for unpaid
Taxes pertaining to any period of time prior to the Effective Date
shall be governed exclusively by Section 9(b)(2) below and (ii)
indemnification for the Environmental, Health and Safety Liabilities,
Hazardous Materials, and Hazardous Activities pertaining to a time
period prior to the Effective Date shall be governed exclusively by
Section 9(b)(3) below.
(2) Each Seller, jointly and severally, agrees to indemnify the
Indemnified Persons from and against the entirety of any
Adverse Consequences the Indemnified Persons may suffer
resulting from, arising out of, relating to, in the nature of,
or caused by any Liability of the Seller for unpaid Taxes
relating to any period in time prior to the Effective Date.
(3) Each Seller, jointly and severally, will indemnify and hold
harmless the Indemnified Persons for, and will pay to the
Indemnified Persons the amount of, any Adverse Consequences
(including costs of cleanup, containment, or other
remediation) arising, directly or indirectly, from or in
connection with:
(i) any Environmental, Health, and Safety Liabilities
arising out of or relating to: (A) the ownership,
operation, or condition at any time on or prior to
the Effective Date of the Facilities or any other
properties and assets (whether real, personal, or
mixed and whether tangible or intangible) in which
the Seller has or had an interest, (B) any Hazardous
Materials or other contaminants that were present
on the Facilities or such other properties and
assets at any time on or prior to the Effective
Date; (C) any Hazardous Materials or other
contaminants, wherever located, that were generated,
transported, stored, treated, released, or otherwise
handled by the Seller or by any other Person for
whose conduct they are or may be held responsible at
any time on or prior to the Effective Date, or (D)
any Hazardous Activities that were conducted by the
Seller or by any other Person for whose conduct they
are or may be held responsible; or
(ii) any bodily injury (including illness, disability,
and death, and regardless of when any such bodily
injury occurred, was incurred, or manifested
itself), personal injury, property damage
(including trespass, nuisance, wrongful eviction,
and deprivation of the use of real property), or
other damage of or to any Person, including any
employee or former employee of the Seller or any
other Person for whose conduct they are or may be
held responsible, in any way arising from any
Hazardous Activity conducted with respect to
the Facilities or the operation of the business by
Seller prior to the Effective Date, or from
Hazardous Material that was (A) present on or before
the Effective Date on or at the Facilities (or
present on any other property, if such Hazardous
Material emanated from any of the Facilities and was
present on any of the Facilities on or prior to the
Effective Date) or (B) released by the Seller or
any other Person for whose conduct they are or may
be held responsible, at any time on or prior to the
Effective Date.
2.1-37
(iii) If any investigation, removal or remedial action is
required by Environmental, Health and Safety
Requirements ("Required Action") and the Seller is
Liable to the Buyer for the Environmental, Health
and Safety Liabilities giving rise to the Required
Action under the terms of Section 9(b)(3) above,
Seller shall be entitled to undertake said Required
Action so long as (a) Seller provides reasonable
notice to Buyer before commencing such Required
Action (b) Seller performs such Required Action in
accordance with the Environmental, Health and Safety
Requirements; (c) Seller performs the Required
Action, in accordance with any requirements of any
governmental agency having jurisdiction over the
administration and enforcement of the Environmental,
Health and Safety Requirements, (d) Seller performs
the Required Action in a manner so as not to
interfere, to the extent reasonably practicable,
with the Buyer's operation of business, and
(e) Seller undertakes the Required Action and uses
commercially reasonable efforts to complete the
Required Action in a timely and expeditious manner.
If the Seller fails to meet the foregoing conditions,
the Buyer shall be entitled to perform the Required
Action at Seller's expense. If the Buyer and Seller
dispute either the extent to which there is a
Required Action or Seller's Liability with respect
to the Required Action or whether the Seller has
failed to meet any of the conditions set forth above
which would entitle Buyer to perform the Required
Action, the Parties agree to submit such issue to
arbitration pursuant to Section 11(a) hereof. In the
event that Seller performs the Required Action,
Seller shall keep Buyer reasonably informed of the
progress of such Required Action and shall provide
copies to Buyer of the results of any Required
Action, all correspondence from or to any
governmental entity pertaining to the Required
Action, and all reports and other documentation
pertaining to such Required Action. Buyer shall
provide access to the property at reasonable times
to allow Seller to perform any Required Action.
(c) Indemnification Provisions for Benefit of the Seller. In
the event the Buyer breaches any of its representations,
warranties, and covenants contained herein, then the
Buyer agrees to indemnify the Seller from and against the
entirety of any Adverse Consequences the Sellers may
suffer through and after the date of the claim for
indemnification (including any Adverse Consequences the
Seller may suffer after the end of any applicable survival
period) resulting from, arising out of, relating to, in
the nature of, or caused by the breach. Further, Buyer
agrees to hold harmless and indemnify Seller from and against
any Adverse Consequences arising out of the operation
of the business by Buyer following the Effective Date or
the failure by Buyer to discharge or perform any Assumed
Liabilities or the breach by Buyer of the Worker Adjustment
Retraining Notification Act or any other plant closure
law applicable to Walkisoft USA.
2.1-38
(d) Time Limitations. If the Closing occurs, the Seller will have
no Liability (for indemnification or otherwise) with
respect to any representation or warranty, except as set
forth below, unless on or before the second (2nd)
anniversary of the Effective Date, the Buyer notifies the
Sellers of a claim specifying the factual basis of that
claim in reasonable detail to the extent then known by the
Buyer. With respect to environmental matters covered
under Section 3(y) or indemnification for environmental
matters covered under Section 9(b)(3), the time limitations
set forth above shall be extended to the fifth (5th)
anniversary of the Effective Date except that no time
limitation shall apply to any breach of representation or
warranty with respect to environmental matters covered
under Section 3(y), or indemnification for environmental
matters covered under Section 9(b)(3) of which any Seller
had Knowledge at any time prior to the Effective Date. With
respect to Tax matters covered under Section 3(k) and
title matters covered under Section 3(e), the time limitation
set forth above shall be extended to the expiration of
the applicable statute of limitations for such tax or title
matter. If the Closing occurs, the Buyer will have no
Liability (for indemnification or otherwise) with respect to
any representation or warranty, unless on or before the
second (2nd) anniversary of the Effective Date, the Seller
notifies the Buyer of a claim specifying the factual
basis of that claim in reasonable detail to the extent then
known by the Seller.
(e) Limitation on Amount C Seller. The Seller shall have no
Liability for indemnification for indirect or consequential
losses and damages with respect to matters described in
9(b)(1)(i) unless such matter involves a breach of
Section 3(e) or involves gross negligence or wilful
misconduct by Seller, UPM or any of their respective
Affiliates and the term Adverse Consequences shall be
interpreted accordingly. Further, the Seller shall have no
Liability for indemnification for any individual claim
pursuant to Section 9(b)(1)(i) if the Adverse Consequence
for such individual claim is less than U.S. $25,000. Seller
shall have no Liability for indemnification with respect to
the matters described in Section 9(b)(1)(i) and which exceed
the foregoing $25,000 de minimus limitation, until the
total of all Adverse Consequences with respect to such claims
under this Agreement and similar claims for breaches of
representations and warranties under the German Purchase
Agreement exceed U.S. $300,000 in the aggregate, at which
time, the Seller shall be liable to the Indemnified Persons
for the entire amount of such Adverse Consequences
(subject, however, to the $25,000 de minimus limitation)
in excess of U.S. $300,000. However, the foregoing
$300,000 limitation will not apply to any breach of the
Seller's representations and warranties of which any Seller
or UPM had Knowledge at any time prior to the Effective Date.
The maximum aggregate total amount of indemnification that Seller shall
be Liable under this Agreement with respect to the matters described in
Sections 9(b)(1)(i) and 9(b)(3) and similar matters under the German
Purchase Agreement shall in all events be limited to U.S. $20,000,000
except with respect to fraud or any intentional breach by any Seller,
UPM or any of their respective Affiliates of any representation,
warranty, covenant or obligation, and the Seller will be jointly and
severally liable for all Adverse Consequences suffered by the Buyer
2.1-39
with respect to such fraud or intentional breach. The maximum aggregate
total amount of indemnification that Seller shall be Liable under this
Agreement with respect to all matters described in Section 9(b) and
similar matters under the German Purchase Agreement shall in all events
be limited to U.S. $105,000,000.
(f) Limitation on Amount -- Buyer. Buyer shall have no liability
for indemnification for any individual claim pursuant
to Section 9(c) if the Adverse Consequences for such
claim is less than U.S. $25,000. The Buyer will have no
Liability (for indemnification or otherwise) with respect to
the matters described in Section 9(c) and which exceed
the $25,000 de minimus limitation until the total of all
Adverse Consequences with respect to such claims under this
Agreement and similar claims under the German Purchase
Agreement exceed U.S. $300,000, at which time, the Buyer
shall be liable to the Indemnified Persons for the entire
amount of such Adverse Consequences (subject, however, to
the $25,000 de minimus limitation) in excess of U.S. $300,000.
However, this Section (9)(f) will not apply to any breach
of any of the Buyer's representations and warranties of
which the Buyer had Knowledge at any time prior to Closing
Date. The maximum aggregate total amount of indemnification
that Buyer shall be Liable under Section 9(c) of this
Agreement for breaches of representations and warranties and
under the German Purchase Agreement for similar matters shall
in all events be limited to U.S. $20,000,000 except with
respect to fraud or any intentional breach by any Buyer of
any representation, warranty, covenant or obligation,
and the Buyer will be jointly and severally liable for all
Adverse Consequences suffered by Seller with respect to such
fraud or intentional breach.
(g) Recoupment Under the Buyer Note. Upon notice to Seller
specifying in reasonable detail the basis for such
set-off, the Seller shall have thirty (30) days to agree or
disagree with Buyer's claim for set-off. The Buyer may
set-off any amount to which Seller agrees that Buyer is
entitled under this Section 9 against amounts otherwise
payable under the Buyer Note or the obligations owing to
Seller on account of the German Purchase Agreement. The
exercise of such right of set-off by the Buyer will not
constitute an event of default under the Buyer Note or the
German Purchase Agreement. As to any amount that Seller
disputes as being entitled to set-off by providing notice to
Buyer of such disputed amount within said thirty (30) day
period, Buyer shall pay such disputed amount to a mutually
agreed upon escrow agent to hold until the dispute is
resolved by mutual agreement of the Parties or pursuant to
the arbitration provisions of Section 11(a). Any interest
earned in escrow shall be paid to the Party receiving the
principal from escrow, or such part attributable thereto.
(h) Procedure for Indemnification--Third Party Claims
(1) Promptly after receipt by an Indemnified Person under
this Section 9 of notice of the commencement of any
proceeding against it, such Indemnified Person will,
if a claim is to be made against an Indemnifying
2.1-40
Party under this Section 9, give notice to the
Indemnifying Party of the commencement of such claim,
but the failure to notify the Indemnifying Party will
not relieve the Indemnifying Party of any liability
that it may have to any Indemnified Person, except to
the extent that the Indemnifying Party demonstrates
that the defense of such action is prejudiced by the
Indemnified Person's failure to give such notice.
(2) If any proceeding referred to in Section 9(f)(1) is
brought against an Indemnified Person and it gives
notice to the Indemnifying Party of the commencement
of such proceeding, the Indemnifying Party will,
unless the claim involves Taxes, be entitled to
participate in such proceeding and, to the extent
that it wishes (unless (i) the Indemnifying Party is
also a party to such proceeding and the Indemnified
Person determines in good faith that joint
representation would be inappropriate, or (ii) the
Indemnifying Party fails to provide reasonable
assurance to the Indemnified Person of its financial
capacity to defend such proceeding and provide
indemnification with respect to such proceeding), to
assume the defense of such proceeding with counsel
satisfactory to the Indemnified Person and, after
notice from the Indemnifying Party to the Indemnified
Person of its election to assume the defense of such
proceeding, the Indemnifying Party will not, as long
as it diligently conducts such defense, be liable to
the Indemnified Person under this Section 9 for any
fees of other counsel or any other expenses with
respect to the defense of such proceeding, in each
case subsequently incurred by the Indemnified Person
in connection with the defense of such proceeding,
other than reasonable costs of investigation. If the
Indemnifying Party assumes the defense of a
proceeding, (i) it will be conclusively established
for purposes of this Agreement that the claims made
in that proceeding are within the scope of and
subject to indemnification; (ii) no compromise or
settlement of such claims may be effected by the
Indemnifying Party without the Indemnified Person's
consent unless (A) there is no finding or admission
of any violation of the law or any violation of the
rights of any Person and no effect on any other
claims that may be made against the Indemnified
Person, and (B) the sole relief provided is monetary
damages that are paid in full by the Indemnifying
Party; and (iii) the Indemnified Person will have no
liability with respect to any compromise or
settlement of such claims effected without its
consent. If notice is given to an Indemnifying Party
of the commencement of any proceeding and the
Indemnifying Party does not, within ten days after
the Indemnified Person's notice is given, give notice
to the Indemnified Person of its election to assume
the defense of such proceeding, the Indemnifying
Party will be bound by any determination made in such
proceeding or any compromise or settlement effected
by the Indemnified Person.
2.1-41
(3) Notwithstanding the foregoing, if an Indemnified
Person determines in good faith that there is a
reasonable probability that a proceeding may
adversely affect it or its Affiliates other than as a
result of monetary damages for which it would be
entitled to indemnification under this Agreement, the
Indemnified Person may, by notice to the Indemnifying
Party, assume the exclusive right to defend,
compromise, or settle such proceeding, but the
Indemnifying Party will not be bound by any
determination of a proceeding so defended or any
compromise or settlement effected without its consent
(which may not be unreasonably withheld).
(i) Procedure for Indemnification--Other Claims. A claim for
indemnification for any matter not involving a third-party
claim may be asserted by notice to the party from whom
indemnification is sought.
(j) Coordination with German Purchase Agreement. The Parties agree
that they shall not cause any actions to be taken under this
Agreement or the German Purchase Agreement which would cause
the aggregate limitation provisions of Section 9(e) to be
exceeded.
(k) Overlapping Indemnification Obligations. To the extent Buyer
shall have any claim for indemnification involving both a
matter described in 9(b)(1)(i) and any other provision of
9(b), the portion of such claim involving 9(b) other than
9(b)(1)(i) shall not be subject to the limitations contained
in 9(d) or 9(e) unless specifically provided therein.
(l) Release. Buyer agrees that as of the fifth anniversary of the
Effective Date, Buyer waives, releases, acquits, and
forever discharges Seller, its officers, directors, partners,
employees or agents, of and from any and all claims, actions,
causes of action, demands, rights, damages, costs, expenses
or compensation whatsoever, direct or indirect, known or
unknown, foreseen or unforeseen, which Buyer may have on or
after that date relating to or arising out of any
Environmental, Health, and Safety Requirements. This Release
shall not be effective until the date five years after the
Effective Date and shall not apply to claims for which Buyer
has given Seller notice pursuant to Section 9(d) hereof
prior to that date or to any claim for breach of
representation or warranty with respect to environmental
matters covered under Section 3(y) or indemnification for
environmental matters covered under Section 9(b)(3) of which
any Seller had Knowledge at any time prior to the
Effective Date.
9. Offer of Employment.
(a) North Carolina Personnel. Buyer shall offer employment as of
the Effective Date to all of the Seller's personnel at
the Walkisoft plant in Mt. Xxxxx, North Carolina USA
(collectively, "Walkisoft Employees"). The offer of
employment shall be on terms comparable to the terms under
which such Walkisoft Employees are currently employed by
Seller subject, however, to Buyer's right to make some
organizational changes where Buyer deems appropriate. Except
as otherwise agreed in writing, the costs and expenses of
such Walkisoft Employees as of the Effective Date shall not
constitute Assumed Liabilities and shall remain the
2.1-42
obligation of and be paid by Seller, including all costs
associated with compensation, benefits, reimbursements,
pensions and severance payments. Further, any such Walkisoft
Employee who does not accept Buyer's offer of employment shall
remain an employee of Seller, which shall have sole
responsibility for all costs related to employment, including
severance and termination payments.
(b) Accrued Employee Liabilities. In the event Buyer agrees in
writing to assume any accrued Liabilities relating to the
Walkisoft Employees described in Section 10(a), Buyer's
auditors will determine in accordance with GAAP, labor law,
and employment rules, regulations and contracts the amount of
such accrued Liabilities and such Liability shall become an
Assumed Liability and shall be included as Designated Accruals
when computing Net Working Capital.
(c) Finnish Employees. Buyer shall offer employment to the five
(5) persons in the research and development group at the
Walkisoft plant in Kotka, Finland and the nine (9) persons in
the engineering group in Valkeakoski, Finland on terms
comparable to the terms under which such persons are currently
employed by Seller subject, however, to Buyer's right to make
some organizational changes where Buyer deems appropriate. For
each such person that accepts employment, the Designated
Accruals shall be increased by the amounts set forth on
Exhibit H up to an aggregate amount of $450,000. Buckeye
Finland will employ such persons.
(d) COBRA Liability. Seller shall remain responsible under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended (COBRA), by reason of any qualifying event which
occurs on or prior to the Effective Date with respect to
employees of Seller and its Affiliates, or beneficiaries or
dependents thereof.
(e) Without limiting the generality of Section 10(a), Buyer shall
establish, effective as of the Effective Date, for the
benefit of the Walkisoft Employees employed by Buyer as of
such date ("New Buyer Plan") a retirement plan with a
cash or deferred feature which is intended to be qualified
under Sections 401 (a) and 401 (k) of the Internal Revenue
Code. Effective as of the Effective Date, or as soon
thereafter as is administratively practicable, Seller and
Buyer shall take all actions necessary to cause the account
balances of the Walkisoft Employees employed by Buyer as of
the Effective Date to be transferred from the Walkisoft USA,
Inc. Savings Plan to the New Buyer Plan, provided that prior
to such transfer, Buyer provides Seller with evidence
acceptable to Seller that the New Buyer Plan is or will be
amended to be "qualified" for purposes of Section 401 (a)
of the Code and that its related trust is or will be amended
to be tax exempt under Code Section 501 (a). As soon as
practicable after the Closing, but in any event within the
applicable remedial amendment period set forth in Treas.
Xxx.xx. 1.401 (b). Buyer shall submit to the Internal Revenue
Service an accurate and complete application for a
determination as to the qualified status of the new Buyer
Plan and shall make any amendments to the New Buyer Plan as
the Internal Revenue Service may require as a condition to
issuing a favorable determination letter.
2.1-43
(f) Buyer will recognize the service of each Walkisoft Employee
with Walkisoft USA and/or UPM for purposes of eligibility and
vesting under the New Buyer Plan and any welfare benefit plan
for which Buyer assumes insured coverage from Seller.
(g) Seller shall be responsible for all claims for welfare
benefits which are incurred prior to the Effective Date by
any Walkisoft Employee (or the eligible dependent of any
Employee) that are payable under the terms and conditions
of any Employee Welfare Benefit Plan. Buyer shall be
responsible for all claims for welfare benefits which are
incurred from and after the Effective Date by any
Walkisoft Employee (or any eligible dependent of any such
Employee) that are payable under the terms and conditions of
any employee welfare benefit plan maintained by the Buyer for
Walkisoft Employees employed by Buyer. For purpose of this
Section, a claim for welfare benefits shall be deemed to be
incurred, when the death or disability occurs, or other
expense giving rise to the claim is incurred. The Buyer shall
assume Principal Health Care of the Carolinas group contract
#303137; Principal Life Insurance Co. (dental) account
#N98977-1, Shenandock Life (Life, AD&D, STD, LTD) policy
#003008021-00001 (the "transferred contracts"). Any such
transferred contracts shall recognize copayments and
deductibles paid by such Employee or dependent under such
assumed coverages prior to the Effective Date and shall not
exclude any preexisting conditions of any such Employee or
dependent that were not excluded under the assumed
coverages immediately prior to the Effective Date.
10. Miscellaneous.
(a) Arbitration. Any controversy or claim arising out of or
relating to this Agreement, the German Purchase Agreement
or their breach, not satisfied through negotiation, shall
be settled by binding arbitration in accordance with the
arbitration rules of the International Chamber of Commerce
by an arbitration tribunal consisting of one arbitrator.
The place of arbitration shall be in Cologne, Germany,
except that if the matter relates only to a dispute under
this Agreement and does not involve the German Purchase
Agreement, the arbitration shall be held in Wilmington,
Delaware. Judgment upon the award rendered by the arbitrator
may be entered in any court having jurisdiction. As soon as
reasonably practical after submission of a demand for binding
arbitration, Buyer and Seller shall select one arbitrator,
agreeable to all parties. This arbitrator will be selected
from lists prepared by the International Chamber of
Commerce. From the list the Parties will rank the
arbitrators which are acceptable. The highest ranking
acceptable candidate will be selected. If no arbitrators
from the list composed by the International Chamber of
Commerce are acceptable to either of the Parties, the
International Chamber of Commerce will compile a second
list. If the Parties are unable to agree from a second
list, the arbitrator will be selected by the International
Chamber of Commerce. The results of the arbitrator's finding
will be binding on the Parties. As part of any award, the
arbitrator may include an award of attorneys fees to the
prevailing party. English shall be the language used for
any arbitration.
2.1-44
(b) Press Releases and Public Announcements. No Party shall issue
any press release or make any public announcement relating to
the subject matter of this Agreement prior to the Closing
without the prior written approval of the other Party;
provided, however, that any Party may make any public
disclosure it believes in good faith is required by applicable
law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party
will use its best efforts to advise the other Party prior to
making the disclosure).
(c) No Third-Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties
and their respective successors and permitted assigns.
(d) Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement between
the Parties and supersedes any prior understandings,
agreements, or representations by or between the Parties,
written or oral, to the extent they related in any way to the
subject matter hereof.
(e) Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein
and their respective successors and permitted assigns. No
Party may assign either this Agreement or any of its rights,
interests, or obligations hereunder without the prior written
approval of the other Party; provided, however, that the
Buyer may, with the prior written consent of Seller, not to
be unreasonably withheld, (i) assign any or all of its
rights and interests hereunder to one or more of its
Affiliates and (ii) designate one or more of its Affiliates
to perform its obligations hereunder (in any or all of which
cases the Buyer nonetheless shall remain responsible for the
performance of all of its obligations hereunder). The
parties acknowledge that BKI Holding shall acquire all
Intellectual Property relating to the Acquired Assets,
Buckeye Mt. Xxxxx shall acquire all Acquired Assets and
assume all Assumed Liabilities relating to the Walkisoft USA
operations and the machinery and equipment comprising the
Walkisoft production line in Aarhus, Denmark, BKI
International shall acquire all of the capital stock of the
Sales Companies, and Buckeye Finland shall acquire and
assume the Cooperation Agreement dated February 4, 1998
between Walkisoft Finland Oy and Havix Corporation.
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but
all of which together will constitute one and the same
instrument.
(g) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice,
request, demand, claim, or other communication hereunder shall
2.1-45
be deemed duly given if (and then two business days after) it
is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended
recipient as set forth below:
If to the Seller: Xxxx Xxxxx-Xxxxxx, Company Secretary
UPM-Kymmene, Group Head Office
Xxxxxxxxxxxxxx 0
XXX-00000Xxxxxxxx, Xxxxxxx
Tel x000 000 00 000
Fax x000 000 00 000
If to the Buyer: Xxxxx X. Xxxxxxxx, Xx. Vice President
Buckeye Technologies Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Telephone No. 000-000-0000
Fax No. 000-000-0000
Copy to: Xxx X. Xxxxx, Xx.
Baker, Donelson, Bearman & Xxxxxxxx, P.C.
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Telephone No. 000-000-0000
Fax No. 000-000-0000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of
Delaware, USA without giving effect to any choice or conflict
of law provision or rule (whether of the State of Delaware,
USA or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the
State of Delaware, USA.
(j) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing
and signed by the Buyer and the Seller. The Seller may consent
to any such amendment at any time prior to the Closing with
the prior authorization of its board of directors. No waiver
by any Party of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not,
shall be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder
or affect in any way any rights arising by virtue of any prior
or subsequent such occurrence.
(k) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the
2.1-46
remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(l) Expenses. Each of the Buyer, the Seller, and UPM will bear its
own costs and expenses (including legal fees and expenses)
incurred in connection with this Agreement and the
transactions contemplated hereby. Further, Seller shall pay
all costs and expenses necessary to transfer and record the
Intellectual Property assignments to Buyer which shall be
coordinated by Buyer, and for transfer taxes for the North
Carolina real property conveyance. Buyer shall pay for title
insurance and survey costs for the North Carolina real
property conveyance. Any other transfer taxes shall be
administered and paid by Buyer and reimbursed one-half by
Seller.
(m) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue
of the authorship of any of the provisions of this
Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the
context requires otherwise. The word "including" shall
mean including without limitation. Nothing in the
Disclosure Schedule shall be deemed adequate to disclose an
exception to a representation or warranty made herein
unless the Disclosure Schedule identifies the exception
with particularity and describes the relevant facts in
detail. Without limiting the generality of the foregoing,
the mere listing (or inclusion of a copy) of a document
or other item shall not be deemed adequate to disclose an
exception to a representation or warranty made herein
(unless the representation or warranty has to do with the
existence of the document or other item itself). The
Parties intend that each representation, warranty,
and covenant contained herein shall have independent
significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect,
the fact that there exists another representation,
warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity)
which the Party has not breached shall not detract from or
mitigate the fact that the Party is in breach of the first
representation, warranty, or covenant.
(n) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein
by reference and made a part hereof.
(o) Specific Performance. Each of the Parties acknowledges and
agrees that the other Party would be damaged irreparably
in the event any of the provisions of this Agreement are not
performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the Parties
agrees that the other Party shall be entitled to an
injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any
2.1-47
state thereof having jurisdiction over the Parties and the
matter, in addition to any other remedy to which it may be
entitled, at law or in equity. Notwithstanding the foregoing,
Seller shall not be subject to specific performance for any
breach of representation or warranty under this Agreement
which shall be governed exclusively by the indemnification
provisions of Section 9 except to the extent such breach
involves Section 3(e), fraud or gross negligence by Seller.
(p) Bulk Transfer Laws. The Buyer acknowledges that the Seller
will not comply with the provisions of any bulk transfer laws
of any jurisdiction in connection with the transactions
contemplated by this Agreement.
(q) Passing of Title. Legal title with respect to the Acquired
Assets to be transferred hereunder shall pass on the Closing
Date by delivery of the instruments and receipt of the
consideration therefor. Equitable title and risk of loss shall
pass on the Effective Date. Income, liabilities and expenses
occurring or incurred from the operations of Seller as of the
Effective Date shall be for the account of Buyer.
(r) Joinder and Guaranty. UPM joins in this Agreement for the
purpose of: (i) confirming and guaranteeing the
representations and warranties of Seller contained in this
Agreement; (ii) confirming and guaranteeing the
performance and ratification of the indemnity obligations of
Seller contained in this Agreement; (iii) confirming
and guaranteeing the performance by Seller of post-closing
covenants (collectively the "Guaranteed Obligations");
and (iv) joining in this Agreement for the specific
obligations attributable to UPM hereunder. In the event that
the Seller does not fully, faithfully and promptly perform
each and every covenant, agreement, warranty, obligation
and undertaking required to be kept, met, observed and
performed under and pursuant to the terms of the Guaranteed
Obligations, UPM will, immediately and without delay,
correct and cure such default; and if, as the direct or
indirect result of such default, Buyer suffers or sustains
any loss, cost, damage or expense, then and in any such
event, UPM shall reimburse Buyer, promptly upon demand, for
the entire amount of such loss, cost, damage or expense,
subject to any applicable limitations contained in Section 9
above. Buyer shall be entitled to enforce payment and
performance of the Guaranteed Obligations directly against
UPM in accordance with the terms of Section 11 (a) of
this Agreement, without first exhausting any right or
remedy which Buyer may have against Seller. Buyer shall be
under no obligation, at any time, to resort first to, make
demand on, file a claim against, or exhaust its remedies
against the Seller.
2.1-48
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
BUCKEYE TECHNOLOGIES INC.
By:
Title:
BKI HOLDING CORPORATION
By:
Title:
BUCKEYE MT. XXXXX LLC
By:
Title:
BUCKEYE FINLAND OY
By:
Title:
BKI INTERNATIONAL INC.
By:
Title:
WALKISOFT FINLAND OY
By:
Title:
WALKISOFT USA, INC.
By:
Title:
2.1-49
WALKISOFT DENMARK A/S
By:
Title:
UPM-KYMMENE CORPORATION
By:
Title:
By:
Title:
2.1-50
