STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of April 20, 2004 (this "Agreement") by
and among International Paper Company, a New York corporation ("IP"), and Box
USA Holdings, Inc., a Maryland corporation ("BUSA"), Xxxxxx and Xxxxx Xxxxxx
(the "Mehiels"), Xxxxx X. Xxxxx ("Stone"), Box USA Holdings, L.L.C., a Delaware
limited liability company ("BUSA Holdings LLC"), Washington & Congress Capital
Partners, L.P. (f.k.a. Triumph Partners III, L.P.), a Delaware limited
partnership ("W&C Partners"), and Triumph III Investors, L.P., a Delaware
limited partnership ("W&C Investors" and, together with W&C Partners, "W&C"),
Xxxxx X. Xxxxx and Xxxxx Xxxxx, not individually but in their capacities as
trustees of the Xxxxx and Xxxxx Xxxxx Family Foundation (the "Foundation"),
Xxxxx X. Xxxxx, not individually but in his capacity as the trustee of the Box
USA Trust dated as of July 17, 2000 (the "BUSA Trust") (the Mehiels, Stone, BUSA
Holdings LLC, W&C, the Foundation and the BUSA Trust are collectively referred
to herein as the "Controlling Sellers" and, individually, each a "Controlling
Seller") and Xxxxx X. Xxxxx, in his capacity as Controlling Sellers'
Representative (as defined herein). Capitalized terms used herein but not
defined upon their first usage are defined in Section 9.1.
RECITALS
WHEREAS, the boards of directors of IP and BUSA have approved, and deem it
advisable and in the best interests of their respective stockholders to
consummate, the stock purchase transaction provided for herein, on the terms and
subject to the conditions hereof, in which IP shall purchase all of the
outstanding BUSA Shares (as defined herein) from the respective holders thereof;
and
WHEREAS, IP, BUSA and the Controlling Sellers desire to make certain
representations, warranties and agreements in connection with the transactions
contemplated hereby and also to prescribe various conditions to the consummation
of such transactions.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I.
PURCHASE AND SALE OF STOCK
Section 1.1. Purchase and Sale. Subject to the provisions of this
Agreement, at the Closing (as hereinafter defined), the Controlling Sellers
shall sell, convey, assign, transfer and deliver to IP, and IP will purchase,
acquire and accept from the Controlling Sellers, the BUSA Shares, in
consideration for which IP shall pay and deliver for the account of each of the
Controlling Sellers (as directed in writing by the Controlling Sellers'
Representative) the consideration set forth in this Article I (the "Stock
Purchase").
Section 1.2. Closing. Subject to satisfaction or waiver of the closing
conditions set forth in Article VII, the closing of the Stock Purchase (the
"Closing") will take place on July 1, 2004 (the "Closing Date"), unless another
earlier or later date is agreed to in writing by the parties hereto. The Closing
shall be held at the offices of Xxxxxxxxxxxx Xxxx & Xxxxxxxxx LLP,
8000 Sears Tower, 000 X. Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, unless another
place is agreed to in writing by the parties hereto.
Section 1.3. Effects of the Stock Purchase. After the Closing, BUSA shall
be a wholly owned subsidiary of IP.
Section 1.4. [Reserved]
Section 1.5. Officers and Directors. The officers of BUSA immediately prior
to the Closing, other than those officers of BUSA listed on Schedule 1.5 who
shall each tender a letter of resignation to BUSA effective as of the Closing,
shall be the officers of BUSA until the earlier of their resignation or removal
or otherwise ceasing to be an officer or until their respective successors are
duly appointed. Effective immediately after the Closing, IP shall appoint new
directors of BUSA and the BUSA Subsidiaries, and the incumbent directors of BUSA
and the BUSA Subsidiaries shall tender letters of resignation as directors of
BUSA and the BUSA Subsidiaries effective as of the Closing. The directors
appointed by IP shall be the directors of BUSA and the BUSA Subsidiaries until
the earlier of their resignation or removal or otherwise ceasing to be a
director or until their respective successors are duly elected and qualified.
Section 1.6. Stock Purchase Consideration. At the Closing, IP shall pay for
the BUSA Shares as follows:
(a) [Reserved]
(b) BUSA Preferred Stock. Upon receipt of the certificates representing all
of such shares of preferred stock accompanied by stock powers transferring
ownership and title to such shares of preferred stock to IP, at the Closing IP
shall wire immediately available funds to the holders of all shares of Series A
Redeemable Preferred Stock of BUSA (the "Series A Preferred Stock") and Series B
Preferred Stock of BUSA (the "Series B Preferred Stock", and, together with the
Series A Preferred Stock, the "BUSA Preferred Stock") in an amount equal to the
Redeemable Liquidation Preference Amount and the Junior Preferred Liquidation
Preference Amount (as such terms are defined in the Third Articles of Amendment
and Restatement of the Articles of Incorporation of BUSA (the "BUSA Articles")),
as applicable, with respect to all of such shares of BUSA Preferred Stock. IP
hereby waives its rights as a holder of the Series A Preferred Stock and the
Series B Preferred Stock to redemption of such stock in connection with the
Closing of the Transactions contemplated hereby pursuant to Sections 5(a)(iii)
and (iv) and 6(a)(iii) of the BUSA Articles.
(c) BUSA Common Stock. At the Closing IP shall pay and deliver for the
account of the holders of BUSA Common Stock issued and outstanding immediately
prior to the Closing, in exchange for such shares (x) an amount per share of
BUSA Common Stock, without interest, equal to:
(i) $405 million, as it may be adjusted pursuant to Section 1.11 (as
so adjusted, the "Estimated Adjusted Valuation Amount"), minus
(A) the $15 million principal amount of the Note (as defined in
Section 1.10),
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(B) the amount payable by IP pursuant to Section 1.17 hereof,
(C) all amounts payable by IP for the BUSA Preferred Stock
pursuant to Section 1.6(b),
(D) the $170 million principal amount of the 12% Senior Notes
due 2006 of BUSA (the "BUSA Senior Notes") (excluding all
accrued and unpaid interest thereon as of the Closing Date,
all Retirement Costs and any "make-whole premium," call
premium or premium to be paid upon a "change of control"),
(E) the outstanding principal amount payable (except for amounts
payable with respect to any undrawn and outstanding letters
of credit) by BUSA under the Credit Agreement (as defined in
Section 1.16) as of the Closing Date (excluding all accrued
and unpaid interest thereon as of the Closing Date and all
Retirement Costs),
(F) the outstanding principal amount payable by BUSA under the
Mortgages as of the Closing Date (excluding all accrued and
unpaid interest thereon as of the Closing Date and all
Retirement Costs),
(G) the aggregate amount of Capital Leases set forth on BUSA's
balance sheet as of the Closing Date in accordance with
generally accepted accounting principles,
(H) $350,000, which shall be paid by BUSA to Washington &
Congress Managers, LLC by wire transfer of immediately
available funds to an account designated by W&C Partners at
least three business days prior to the Closing Date (the
"W&C Fee"),
(I) $61,500, which shall be paid by BUSA by check at the Closing
to certain directors of BUSA as directed in writing by the
Controlling Seller's Representative at least three business
days prior to the Closing Date,
(J) $298,500, which shall be paid by IP (less applicable
withholding Taxes) pursuant to Section 1.8 hereof by check
at the Closing to such employees of BUSA and in such amounts
as are set forth on Schedule 1.8 attached hereto,
(K) up to a maximum of $2,301,500, which shall be paid by BUSA
(less applicable withholding Taxes) by check at the Closing
to certain employees of BUSA as directed in writing by the
Controlling Sellers' Representative at least three business
days prior to the Closing Date; provided, however, that any
amounts payable to Xxxxxxx Xxxxxx pursuant to this
subsection shall be
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paid by BUSA at the Closing by wire transfer of immediately
available funds to an account designated in writing by the
Controlling Seller's Representative at least three business
days prior to the Closing Date,
(L) an amount designated in writing by the Controlling Seller's
Representative at least three business days prior to the
Closing Date for the payment of the legal fees and expenses
of Xxxxxxxxxxxx Xxxx & Xxxxxxxxx LLP, counsel to BUSA
("Seller's Counsel"), which amount shall be paid by BUSA by
wire transfer of immediately available funds to an account
designated by Seller's Counsel, and
(M) the outstanding principal amount payable by BUSA or the BUSA
Subsidiaries under the Equipment Loan as of the Closing Date
(excluding all accrued and unpaid interest thereon and all
Retirement Costs), divided by
(ii) the number of shares of BUSA Common Stock outstanding on the
Closing Date,
plus (y) a Proportionate Share of the Note (collectively, the "Purchase
Consideration").
Schedule 1.6 attached hereto contains a summary of the various components
of the Estimated Adjusted Valuation Amount to be paid by IP at the Closing
pursuant to this Article I, assuming that (i) the Closing occurs on June 30,
2004, and (ii) the Estimated Pre-Closing Net Working Capital (as defined herein)
is equal to $46.6 million. Two (2) business days before the Closing, the
Controlling Sellers' Representative shall provide to IP a flow of funds
memorandum certifying the amounts to be paid pursuant to this Section 1.6(c).
Section 1.7. Exchange of Certificates for Purchase Consideration.
(a) At the Closing, upon receipt by IP of certificates evidencing the
shares of BUSA Common Stock (the "BUSA Common Certificates") accompanied by
stock powers transferring ownership and title to such BUSA Common Stock to IP,
IP shall wire immediately available funds to such accounts as are directed in
writing by the Controlling Sellers' Representative at least three business days
prior to Closing the cash amount payable to each holder of BUSA Common Stock
pursuant to Section 1.6(c)(x) less, to the extent permitted in Section 1.7(b)
below, any applicable withholding Tax. In addition, each such holder shall be
entitled to such holder's Proportionate Share of the Note in accordance with
Section 1.10 hereof.
(b) Withholding. BUSA shall use commercially reasonable efforts to cause
each of the holders of BUSA Shares to complete and deliver Form W-9, or a valid
substitute form, to IP on or prior to the Closing Date. In the event, and only
in such event, that a holder of BUSA Shares fails to satisfy the requirement set
forth in the previous sentence, IP may deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to such holder of
BUSA Shares such amount, if any, as IP is required to deduct and withhold with
respect to the making of such payment under the backup withholding provisions of
Section 3406 of the Code
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or the foreign withholding provisions of Sections 1441 and 1442 of the Code, and
the rules and regulations promulgated thereunder. To the extent that such amount
is so withheld by IP and paid to governmental tax authorities in accordance with
the previous sentence, such withheld amount shall be treated for all purposes of
this Agreement as having been paid to such holder of the BUSA Shares in respect
of which such deduction and withholding was made by IP. The consideration
payable hereunder shall not be reduced by any other withholding, reductions or
assessments relating to Taxes.
(c) Lost BUSA Share Certificates. If any certificate representing any BUSA
Shares shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such certificate to be lost,
stolen or destroyed and, if required by IP the posting of such Person of a bond
or an indemnity in such reasonable form and amount as IP may direct, as
indemnity against any claim that may be made against it with respect to such
certificate, IP will pay in exchange for such lost, stolen or destroyed
certificate the Purchase Consideration in respect of the BUSA Shares represented
by such certificates as contemplated by this Article I.
Section 1.8. BUSA Stock Options. Upon the payment by IP of the Retention
Payments to the Key Employees at the time of the Closing pursuant to Section
1.20 hereof, all options to acquire BUSA Common Stock granted to the Key
Employees will automatically terminate on the Closing Date without any further
action on the part of BUSA or the Key Employees in accordance with the terms of
the Retention Agreements. With respect to the employees of BUSA other than the
Key Employees, at the Closing BUSA shall use commercially reasonable efforts to
deliver to IP letter agreements in form and substance reasonably acceptable to
IP (collectively, the "Option Letters") executed by each holder of options to
acquire BUSA Common Stock (other than the Key Employees), pursuant to which all
options to acquire BUSA Common Stock ("BUSA Stock Options") held by each such
holder shall automatically terminate on the Closing Date without any further
action on the part of BUSA or such holder upon the payment by BUSA to such
holder of the amount set forth opposite such holder's name on Schedule 1.8
attached hereto, subject to any applicable withholding Taxes. Upon delivery by
BUSA to IP of the Option Letters, BUSA will pay to such holders of the amount
set forth opposite such holders' names on Schedule 1.8 attached hereto, subject
to any applicable withholding Taxes.
Section 1.9. Certain Adjustments. If, between the date of this Agreement
and the Closing, the outstanding BUSA Shares shall have been increased,
decreased, changed into or exchanged for a different number of shares or
different class of stock, in each case, by reason of any reclassification,
recapitalization, stock split, split-up, combination or exchange of shares or a
stock dividend or dividend payable in any other securities shall be declared
with a record date within such period, or any similar event shall have occurred
(other than exercises of BUSA Stock Options), the applicable Purchase
Consideration shall be appropriately adjusted to provide to the holders of BUSA
Shares the same economic effect as contemplated by this Agreement prior to such
event.
Section 1.10. Note. At the Closing, IP shall execute and deliver to the
Controlling Sellers a contingent Note in substantially the form attached hereto
as Schedule 1.10 with an aggregate initial principal amount of $15 million,
which note shall bear interest at the rate of six percent (6%) per annum (the
"Note"). To the extent, and only to the extent, that the then
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pending unsatisfied indemnification claims of the IP Indemnities pursuant to
Article VI hereof do not in the aggregate exceed the remaining amounts payable
under the Note, 20% of the original principal amount of the Note, together with
accrued interest thereon, shall be paid by IP to the Controlling Sellers on each
of the first three semi-annual anniversaries of the Closing Date, with the
balance of the Note, together with accrued interest thereon, to be paid by IP to
the Controlling Sellers on the date that is two years after the Closing Date,
all in accordance with the terms of the Note. Notwithstanding the foregoing, if
(i) IP is unable in good faith to reasonably estimate the amount of a Loss
payable in connection with a claim for indemnification under Article VI hereof
and (ii) it is reasonably likely that the amount of such Loss (together with all
then outstanding indemnification claims of the IP Indemnitees pursuant to
Article VI hereof) would exceed the remaining amounts payable under the Note (an
"Unquantifiable Claim") then, subject to the limitation set forth in the
following sentence, the remaining amounts payable on the Note shall not be paid
until such time as is provided in the Note. The Controlling Sellers'
Representative shall have the right to dispute in good faith IP's determination
as to the amount to be withheld from the Note pending resolution of a claim of
the IP Indemnities for indemnification under Article VI hereof, and all such
disputes relating to the same shall be resolved in accordance with the
procedures set forth in Section 6.7 hereof. IP shall have the right, but not the
obligation, to prepay the Note at any time prior to maturity without premium or
penalty.
Section 1.11. Estimated Pre-Closing Net Working Capital. No later than two
business days prior to the Closing Date, the Controlling Sellers' Representative
shall deliver to IP a certificate setting forth the BUSA's good faith estimate
(the "Estimated Pre-Closing Net Working Capital") of BUSA's Net Working Capital
as of the end of the calendar month immediately preceding the Closing Date;
provided, however, that the amount of inventory to be included in the Estimated
Pre-Closing Net Working Capital shall be determined in accordance with the
penultimate sentence of Section 1.12 hereof. To the extent that the Estimated
Pre-Closing Net Working Capital of BUSA (i) is less than $46.6 million (the
"Target Net Working Capital"), then the dollar amount referred to in Section
1.6(c)(i) shall be reduced by the difference between $46.6 million and the
Estimated Pre-Closing Net Working Capital, or (ii) exceeds $46.6 million, then
the dollar amount referred to in Section 1.6(c)(i) shall be increased by the
difference between the Estimated Pre-Closing Net Working Capital and $46.6
million.
Section 1.12. Preparation of Final Statement. An unaudited Statement of
BUSA's Net Working Capital (the "Final Statement") as of the close of business
on the Closing Date shall be prepared in the following manner:
(a) Within 60 days after the Closing Date, IP shall deliver to the
Controlling Sellers' Representative the Final Statement, fairly presenting
BUSA's Net Working Capital as of the Closing Date. The Final Statement shall be
accompanied by a report setting forth (i) BUSA's Net Working Capital, as
reflected in the Final Statement, and (ii) the amount of any adjustment to the
Estimated Adjusted Valuation Amount, and how and by whom such adjustment should
be effected pursuant to Section 1.13 and the basis therefor.
(b) Following the delivery of the Final Statement, IP shall give the
Controlling Sellers' Representative and any independent auditors and authorized
representatives of the Controlling Sellers' Representative full access at all
reasonable times to the properties, books,
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records and personnel of the Business relating to periods prior to the Closing
Date for purposes of preparing, reviewing and resolving any disputes concerning
the Final Statement. If the Controlling Sellers' Representative agrees with the
Final Statement, the Controlling Sellers' Representative shall notify IP in
writing. If the Controlling Sellers' Representative disputes the Final
Statement, the Controlling Sellers' Representative shall give IP notice of the
dispute within 30 days after the Final Statement has been delivered to the
Controlling Sellers' Representative, with such notice setting forth in
reasonable detail the basis for such dispute. If the Controlling Sellers'
Representative fails to notify IP of any such dispute within such 30-day period,
the Final Statement shall be deemed to be accepted. In the event that the
Controlling Sellers' Representative shall so notify IP of any dispute, IP and
the Controlling Sellers' Representative shall cooperate in good faith to resolve
such dispute within thirty (30) days.
(c) If IP and the Controlling Sellers' Representative are unable to resolve
any such dispute within 30 days of the Controlling Sellers' Representative's
delivery of such notice (the "Resolution Period"), then all amounts remaining in
dispute shall be submitted promptly thereafter to PriceWaterhouseCoopers LLP
(the "Independent Accounting Firm"). Each party agrees to execute, if requested
by the Independent Accounting Firm, a reasonable engagement letter. All fees and
expenses relating to the work, if any, to be performed by the Independent
Accounting Firm shall be paid by IP, and IP shall be entitled to offset 50% of
such fees and expenses against amounts otherwise due and payable under the Note
in accordance with the terms thereof. The Independent Accounting Firm shall act
as an arbitrator to determine, based solely on presentations by the Controlling
Sellers' Representative and IP, and not by independent review, only those items
or issues still in dispute and shall be limited to those adjustments, if any,
which need be made for the Final Statement to comply with the standards set
forth in the preceding subsection (a). The Independent Accounting Firm's
determination shall be requested to be made within 30 days of their selection,
shall be set forth in writing, and shall be final, binding and conclusive. The
Final Statement, as modified by resolution of any disputes by IP and the
Controlling Sellers' Representative or by the Independent Accounting Firm, shall
be the "Final Statement."
(d) The term "BUSA's Net Working Capital" shall mean the amount of the
current assets of BUSA and its consolidated BUSA Subsidiaries minus the amount
of the current liabilities of BUSA and its consolidated BUSA Subsidiaries,
determined in accordance with the applicable guidelines set forth in the BUSA
Accounting Manual, as adjusted as contemplated below in this Section 1.12.
For purposes of calculating BUSA's Net Working Capital, the current assets
of BUSA and its consolidated BUSA Subsidiaries shall be
(i) increased by the sum of
(a) any cash paid by BUSA or any of its consolidated BUSA Subsidiaries
in connection with the purchase of operating assets that do not constitute
current assets ("Fixed Operating Assets") after December 31, 2003 and on or
prior to the Closing Date, all of which purchases through March 31, 2004,
including the dollar amount thereof, are set forth on Schedule 1.12(d) and
which Schedule shall be updated as of the Closing Date; provided, that in
no case shall the aggregate payments made pursuant to this clause
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1.12(d)(i)(a) exceed the sum of (A) $547,120 (which is the amount of Fixed
Operating Assets purchased after December 31, 2003 through March 31, 2004),
(B) the amount of capital expenditures set forth on Schedule 1.12(d) under
the column "Estd. $ Bal. To Complete," (C) an amount not to exceed $100,000
per month between the date hereof and the Closing Date and prorated for any
partial month and (D) the amount of Fixed Operating Assets purchased from
the date hereof through the Closing Date with the approval of IP (which
approval shall not be unreasonably withheld),
(b) any cash payable to BUSA or any of the consolidated BUSA
Subsidiaries in connection with the pending sale of any non-operating
assets with respect to which BUSA or any of the consolidated BUSA
Subsidiaries has entered into a contract to sell but which has not closed
as of the Closing Date (a "Pending Sale"), all of which Pending Sales,
including the dollar amount thereof through the date hereof, are set forth
on Schedule 1.12(d), and which Schedule shall be updated as of the Closing
Date; provided, that all of such sales are made in arm's length
transactions and in no case shall the aggregate amounts payable to BUSA
pursuant to this clause 1.12(d)(i)(b) in connection with such sales exceed
$1.5 million; provided, further, however, that the amounts set forth in
this subsection (b) shall be excluded from the calculation of BUSA's Net
Working Capital set forth in the Final Statement if the Pending Sale has
not closed on or prior to the date that the Final Statement is finally
determined pursuant to this Section 1.12,
(c) the amount of (i) all Retention Payments made by BUSA pursuant to
Section 1.20 hereof, (ii) all payments made by BUSA or any of the
consolidated BUSA Subsidiaries to the Key Employees pursuant to the terms
of the Key Employee Severance Agreements, and (iii) all severance payments
made by BUSA and the BUSA Subsidiaries to their employees (other than the
Key Employees) pursuant to Section 8.5 hereof, to the extent such payments
have been made, in each case, on or prior to the Closing Date, and
(d) the aggregate amounts paid by BUSA on the Closing Date pursuant to
Sections 1.6(c)(i)(H), (I), (J), (K) and (L) (collectively, the amounts
paid or payable pursuant to Sections 1.6(c)(i)(H), (I), (J), (K) and (L) on
or prior to the Closing Date are referred to herein as the "BUSA
Expenses"),
and (ii) decreased by any cash received by BUSA or any of the consolidated BUSA
Subsidiaries in connection with the sale of Fixed Operating Assets after
December 31, 2003 and on or prior to the Closing Date, all of which sales
through the date hereof, including the dollar amount thereof, are set forth on
Schedule 1.12(d), and which Schedule shall be updated as of the Closing Date;
provided, that all of such sales are made in arm's length transactions and in no
case shall the aggregate amount of such sales pursuant to this clause
1.12(d)(ii) exceed $100,000.
The Parties acknowledge and agree that (A) any cash received by BUSA or any
of the consolidated BUSA Subsidiaries on or prior to the Closing Date in
connection with the sale of certain non-operating assets (all of which
non-operating assets are set forth on Schedule 1.12(d) hereto) and (B) any cash,
cash equivalents or other assets contained in the Cash Collateral Account, the
Asset Sale Account, the Event of Loss Account or the General Cash Collateral
Account (as such terms are defined in the Indenture) as of the Closing Date,
shall be included in
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the current assets of BUSA and the consolidated BUSA Subsidiaries for purposes
of the Final Statement.
For purposes of calculating BUSA's Net Working Capital, the following
amounts shall be excluded from the current liabilities of BUSA and its
consolidated BUSA Subsidiaries: (i) the current portion of the long-term
Indebtedness of BUSA or any of its consolidated BUSA Subsidiaries (other than
accrued and unpaid interest thereon to the extent contemplated by the following
paragraph), (ii) any liabilities of BUSA or any of its consolidated BUSA
Subsidiaries which result from, or are accelerated as a result of, the
consummation of the transactions contemplated hereby (including without
limitation (w) unamortized debt fees, (x) the Retention Payments, (y) all
amounts payable to the Key Employees pursuant to the Key Employee Severance
Agreements and all amounts payable to employees pursuant to Section 8.5(b), and
(z) any "make-whole premium" or premium to be paid upon a call or "change of
control" in connection with the BUSA Senior Notes) and (iii) the BUSA Expenses.
For purposes of calculating BUSA's Net Working Capital, (i) all accrued and
unpaid interest as of the Closing Date under the Senior Notes, the Credit
Agreement, the Mortgages and the Equipment Loan shall be included as current
liabilities of BUSA and its consolidated BUSA Subsidiaries, and (ii) a physical
count of the inventory of BUSA and the BUSA Subsidiaries shall be conducted by
BUSA and representatives of IP on the weekend immediately preceding the Closing
Date in accordance with the applicable guidelines set forth in the BUSA
Accounting Manual, and the results of such inventory count (after taking into
account any changes in the amount of inventory between the date of such physical
inventory count and the Closing Date as documented in the books and records of
BUSA and the BUSA Subsidiaries on the Closing Date) shall be utilized for
purposes of the Final Statement and an estimate thereof shall be utilized for
purposes of the Estimated Pre-Closing Net Working Capital; provided, that any
disputes relating to the inventory shall be shall be resolved as set forth in
this Section 1.12. A computation of the Net Working Capital as of March 31, 2004
is attached hereto on Schedule 1.12.
Section 1.13. Post-Closing Net Working Capital Adjustment.
(a) On the tenth (10th) business day following the completion of the Final
Statement in accordance with Section 1.12 hereof, the amount calculated as
contemplated by this subsection shall be paid as follows: If BUSA's Net Working
Capital as set forth in the Final Statement is greater than the Estimated
Pre-Closing Net Working Capital, such excess (the "Net Working Capital Surplus")
shall be distributed to the Controlling Sellers in cash on a Proportionate
Basis, together with interest on the aggregate amount of the Net Working Capital
Surplus, accrued from the Closing Date to the date of such payment at a rate of
six percent (6%) per annum. If BUSA's Net Working Capital as set forth in the
Final Statement is less than the Estimated Pre-Closing Net Working Capital, IP
shall offset such shortfall (a "Net Working Capital Shortfall"), against the
first installment of the Note in accordance with the terms thereof, and no
interest shall accrue under the Note with respect to that portion of the Note
with a principal amount equal to the Net Working Capital Shortfall from the
Closing Date to the date of the final determination of the Final Statement in
accordance with the terms thereof; provided, that if the Net Working Capital
Shortfall exceeds $1,000,000, then the amount of such Net Working Capital
Shortfall shall not be offset against the first installment of the Note, but
such amount, together with interest accrued on the amount of the Net Working
Capital Shortfall from
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the Closing Date to the date of the final determination of the Final Statement
at the rate of six percent (6%) per annum, shall be paid by each of the
Controlling Sellers, on a Proportionate Basis, to IP on the tenth (10th)
business day following the completion of the Final Statement in accordance with
Section 1.12 hereof, such payment obligation of the Controlling Sellers to be
several, and not joint, among the Controlling Sellers.
(b) Any adjustments pursuant to Section 1.13(a) shall be treated as an
adjustment to the Purchase Consideration contemplated by this Agreement.
Section 1.14. Settlement of Affiliate Indebtedness. Prior to the Closing,
BUSA shall cause the Controlling Sellers (other than W&C) and their Affiliates
(other than BUSA and its Affiliates) to cancel, settle or otherwise repay such
Indebtedness owing to BUSA or its Affiliates as shall be directed by IP in
writing. Prior to the Closing, BUSA will cancel, settle or otherwise repay such
Indebtedness of BUSA owed to such Controlling Sellers or their Affiliates (other
than BUSA and its Affiliates) as shall be directed by IP in writing. IP shall
provide to the Controlling Sellers Representative notice of such Indebtedness to
be cancelled, settled or repaid not later than fifteen (15) business days prior
to the Closing.
Section 1.15. BUSA Senior Notes. In accordance with the terms and
requirements of that certain Indenture dated May 30, 1996, as amended (the
"Indenture"), between BUSA and Xxxxx Fargo Bank, Minnesota, as successor in
interest to Norwest Bank Minnesota, National Association, in its capacity as
trustee (the "Trustee"), after the Closing IP shall cause BUSA to (i) commence a
Change of Control Offer (as defined in the Indenture) with respect to the Senior
Notes and complete such Change of Control Offer, and (ii) include in the notice
to holders of the Change of Control Offer a notice of redemption of the Senior
Notes and redeem any Senior Notes which may remain outstanding upon the
completion of the Change of Control Offer and, in each case, IP shall pay all
Retirement Costs in connection therewith. Upon the execution of this Agreement,
IP and BUSA shall jointly contact the Trustee in order to confirm the
obligations of BUSA under the Indenture in connection with the provisions of
this Section 1.15.
Section 1.16. BUSA Credit Agreement.
(a) At least 21 days prior to the Closing Date, IP shall provide the
Controlling Sellers' Representative with written notice of whether it intends to
(i) repay at the Closing (the "Credit Agreement Repayment Option") all amounts
owed by BUSA pursuant to the terms of that certain Amended and Restated
Financing and Security Agreement, dated July 17, 2000, as amended from time to
time among Bank of America, N.A., as agent ("BofA") and the Borrowers (as
defined therein) (the "Credit Agreement") or (ii) permit such Indebtedness to
remain in place after the Closing, to be paid by BUSA from and after the Closing
Date in accordance with its terms (the "Credit Agreement Assumption Option").
(b) In the event IP elects the Credit Agreement Repayment Option, IP shall
at the Closing repay the entire amount owed under the Credit Agreement,
including all principal, interest, premiums and other Retirement Costs payable
with respect to the repayment, repurchase, defeasance, satisfaction and
discharge or redemption of all indebtedness under the Credit Agreement. In such
event, IP shall be responsible for providing cash collateral, a back-up letter
of credit or some other credit arrangement in each case acceptable as substitute
collateral to
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BofA with respect to all undrawn and outstanding letters of credit as of the
Closing Date, which letters of credit are set forth on Schedule 1.16 attached
hereto.
(c) In the event that IP elects the Credit Agreement Assumption Option, IP
and BUSA shall use commercially reasonable efforts to amend or modify, or obtain
waivers or consents with respect to, the Credit Agreement to avoid or cure any
defaults that may occur thereunder as a result of the consummation of the
transactions contemplated hereby or that may otherwise be required to consummate
the Credit Agreement Assumption Option, and IP shall promptly pay all Retirement
Costs incurred in connection therewith.
Section 1.17. Purchase of Capital Assets. At the Closing, IP shall pay an
amount equal to $15 million less the sum of the amounts set forth in Sections
1.6(c)(i)(J) and (K) hereof (prior to giving effect to the deduction for
applicable withholding taxes as provided for therein) by wire transfer of
immediately available funds to BUSA Holdings LLC, and in exchange therefor and
as resolution of the proper allocation of the acquisition consideration, (i)
BUSA Holdings LLC shall, and shall cause BUSA Investment LP to, assign their
respective names to IP pursuant to an Assignment in substantially the form
attached hereto as Schedule 1.17 (the "Assignment") and (ii) each of BUSA
Holdings LLC, BUSA Investment LP, the Xxxxx-Xxxxxx Limited Partnership and each
of their respective owners of equity interests shall execute a release of
certain claims against BUSA in substantially the form attached hereto as
Schedule 1.17 (collectively, the "Equityholder Releases"). As soon as
practicable after the Closing, BUSA Holdings LLC shall, and shall cause BUSA
Investment LP to, change their names so as to not include the name "Box USA" or
any derivation thereof.
Section 1.18. W&C Notes; Preferred Interests. At the Closing and upon
receipt from IP of payment by wire transfer of immediately available funds of an
amount equal to the Redeemable Liquidation Preference Amount of the Series A
Preferred Stock in accordance with Section 1.6(b) hereof, the Controlling
Sellers' Representative shall cause the BUSA Trust to use the proceeds thereof
to repay the W&C Notes in full, together with accrued interest thereon, and W&C
shall release of all of its Liens in the Collateral (as such terms are defined
in the Security Agreement and the Pledge Agreement). At the Closing, BUSA
Holdings LLC shall utilize all proceeds it receives pursuant to Section 1.6(b)
hereof with respect to the Series B Preferred Stock held by it to redeem all of
the outstanding Preferred Interests (as defined in the BUSA Holdings Operating
Agreement) held by Xxxxxx Xxxxxx at their Liquidation Preference Amount (as
defined in the BUSA Holdings Operating Agreement).
Section 1.19. Mortgages and Capital Leases.
(a) At least 21 days prior to the Closing Date, IP shall provide the
Controlling Sellers' Representative with written notice of whether it intends to
(i) if permitted pursuant to the terms of the applicable Mortgage, repay at the
Closing all amounts owed by BUSA or any of the BUSA Subsidiaries pursuant to the
terms of one or more of the Mortgages (the "Mortgage Repayment Option"), (ii)
permit the Indebtedness under one or more of the Mortgages to remain in place
after the Closing Date, to be paid by BUSA or a BUSA Subsidiary, as applicable,
from and after the Closing Date in accordance with their terms (the "Mortgage
Assumption Option") or (iii) a combination of the Mortgage Repayment Option and
the Mortgage Assumption Option.
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(b) In the event that IP elects the Mortgage Repayment Option with respect
to one or more of the Mortgages, IP shall at the Closing repay all amounts owed
with respect to such Mortgages, including all principal, interest, premiums and
other Retirement Costs payable with respect thereto.
(c) In the event that IP elects the Mortgage Assumption Option with respect
to one or more of the Mortgages, IP and BUSA shall use commercially reasonable
efforts to amend or modify, or obtain waivers or consents with respect to, such
Mortgages to avoid or cure any defaults that may occur thereunder as a result of
the consummation of the transactions contemplated hereby or that may otherwise
be required to consummate the Mortgage Assumption Option with respect to such
Mortgages, and IP shall pay all Retirement Costs incurred in connection
therewith.
(d) At least 21 days prior to the Closing Date, IP shall provide the
Controlling Sellers' Representative with written notice of whether it intends to
(i) if permitted pursuant to the terms of the applicable Capital Lease, repay at
the Closing all amounts owed by BUSA or any of the BUSA Subsidiaries pursuant to
the terms of one or more of the Capital Leases (the "Capital Lease Repayment
Option"), (ii) permit the Indebtedness under one or more of the Capital Leases
to remain in place after the Closing Date, to be paid by BUSA or a BUSA
Subsidiary, as applicable, from and after the Closing Date in accordance with
their terms (the "Capital Lease Assumption Option") or (iii) a combination of
the Capital Lease Repayment Option and the Capital Lease Assumption Option.
(e) In the event that IP elects the Capital Lease Repayment Option with
respect to one or more of the Capital Leases, IP shall at the Closing repay all
amounts owed with respect to such Capital Leases, including all principal,
interest, premiums and other Retirement Costs payable with respect thereto.
(f) In the event that IP elects the Capital Lease Assumption Option with
respect to one or more of the Capital Leases, IP and BUSA shall use commercially
reasonable efforts to amend or modify, or obtain waivers or consents with
respect to, such Capital Leases to avoid or cure any defaults that may occur
thereunder as a result of the consummation of the transactions contemplated
hereby or that may otherwise be required to consummate the Capital Lease
Assumption Option with respect to such Capital Leases, and IP shall pay all
Retirement Costs in connection therewith.
Section 1.20. Retention Payments. At the Closing, BUSA shall make the
Retention Payments to the Key Employees by wire transfer of immediately
available funds in accordance with the terms of the Retention Agreements, less
applicable withholding for Taxes. The Controlling Sellers' Representative shall
provide IP with wire transfer instructions for the Key Employees at least three
business days prior to the Closing Date.
Section 1.21. Equipment Loan.
(a) At least 21 days prior to the Closing Date, IP shall provide the
Controlling Sellers' Representative with written notice of whether it intends to
(i) if permitted pursuant to the terms of the Equipment Loan, repay at the
Closing all amounts owed by BUSA or any of the
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BUSA Subsidiaries pursuant to the terms of the Equipment Loan (the "Equipment
Loan Repayment Option"), or (ii) permit the Indebtedness under the Equipment
Loan to remain in place after the Closing Date, to be paid by BUSA or a BUSA
Subsidiary, as applicable, from and after the Closing Date in accordance with
its terms (the "Equipment Loan Assumption Option").
(b) In the event that IP elects the Equipment Loan Repayment Option, IP
shall at the Closing repay all amounts owed with respect to such Equipment Loan,
including all principal, interest, premiums and other Retirement Costs payable
with respect thereto.
(c) In the event that IP elects the Equipment Loan Assumption Option, IP
and BUSA shall use commercially reasonable efforts to amend or modify, or obtain
waivers or consents with respect to, the Equipment Loan to avoid or cure any
defaults that may occur thereunder as a result of the consummation of the
transactions contemplated hereby or that may otherwise be required to consummate
the Equipment Loan Assumption Option, and IP shall pay all Retirement Costs
incurred in connection therewith.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF IP
As a material inducement to the Controlling Sellers and BUSA to enter into
this Agreement and complete the Transactions, IP hereby represents and warrants
to each of the Controlling Sellers that:
Section 2.1. Organization. IP is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York. IP has
the requisite corporate power and authority and all licenses, permits and
authorizations necessary to enter into, deliver and carry out its obligations
pursuant to the Transaction Documents to which it is a party.
Section 2.2. Authorization; Binding Effect; No Breach. The execution,
delivery and performance by IP of each Transaction Document to which it is a
party, and the consummation of the Transactions contemplated thereby, have been
duly authorized and approved by its Board of Directors and no further approval
of an action by IP or its Boards of Directors or stockholders is necessary to
consummate the Transactions. Each Transaction Document to which IP is a party
constitutes a valid and binding obligation of such party which is enforceable
against it in accordance with its terms, except as such enforceability may be
limited by (a) applicable insolvency, bankruptcy, reorganization, moratorium or
other similar laws affecting creditors' rights generally and (b) applicable
equitable principles (whether considered in a proceeding at law or in equity).
The execution, delivery and performance by IP of the Transaction Documents to
which it is a party do not and will not (i) conflict with or result in a breach
of the terms, conditions or provisions of, (ii) constitute a default under,
(iii) result in a violation of, or (iv) except as required by the terms of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), require any authorization, consent, approval, exemption or other action
by or declaration or notice to any Government Entity pursuant to, the charter or
bylaws of
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IP or any material agreement, instrument, or other document, or any material
Legal Requirement, to which IP is subject.
Section 2.3. Brokerage. There is no claim for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement (the "Transactions") based on any arrangement or
agreement which is binding upon IP.
Section 2.4. Knowledge. IP has no knowledge of any inaccuracy in or breach
of any representation, warranty, covenant or agreement of any of BUSA or any of
the Controlling Sellers set forth in this Agreement or any closing certificate
delivered by BUSA or any of the Controlling Sellers pursuant to the terms
hereof. The foregoing representation shall not apply to any documents which BUSA
has not delivered to IP as of the date hereof pursuant to Sections 3.9, 3.15,
3.17(b) and 3.17(c)(ii) hereof. As used in this Section 2.4, "knowledge" with
respect to IP shall mean the actual knowledge of H. Xxxxx Xxxxxxxx, X. Xxxx
Xxxx, Xxxxx Xxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxx Xxxxxx or Xxxxxxx Xxxxxxxx.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF BUSA
As a material inducement to IP to enter into this Agreement and complete
the Transactions, BUSA hereby represents and warrants to IP that:
Section 3.1. Organization and Power; the Shares; Corporate Documents.
(a) BUSA. BUSA is a corporation duly organized, validly existing and in
good standing under the laws of the State of Maryland. BUSA duly qualified to do
business in each jurisdiction in which its ownership of property or conduct of
business requires it to so qualify, except where the failure to so qualify could
not reasonably be expected to materially and adversely affect BUSA and the BUSA
Subsidiaries taken as a whole. Schedule 3.1(a) lists every jurisdiction where
BUSA is duly qualified to do business. BUSA has the requisite corporate power
and authority, and all licenses, permits and authorizations necessary to enter
into, deliver and carry out its obligations pursuant to the Transaction
Documents to which it is a party, and to own and operate its properties, and to
carry on the Business, except for those licenses, permits and authorizations,
the absence of which could not reasonably be expected to materially and
adversely affect BUSA and the BUSA Subsidiaries taken as a whole.
(b) The BUSA Shares. The authorized capital stock of BUSA consists solely
of:
(i) 10,526,316 shares of Class A Voting Common Stock (the "Class A
Common"), of which 94 shares are issued and outstanding;
(ii) 7,963,731 shares of Class B Non-Voting Common Stock (the "Class B
Common"), of which 7,437,415 shares are issued and outstanding;
(iii) 1,562,491 shares of Class C Non-Voting Common Stock (the "Class
C Common"), of which 1,562,491 shares are issued and outstanding;
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(iv) 1,000,000 shares of Class D Non-Voting Common Stock (the "Class D
Common"), of which 1,000,000 shares are issued and outstanding;
(v) 1,000,000 shares of Series A Preferred Stock, of which 1,000,000
shares are issued and outstanding; and
(vi) 1,800 shares of Series B Preferred Stock, of which 1,740 shares
are issued and outstanding.
The shares of Class A Common, Class B Common, Class C Common, and the Class D
Common are collectively referred to herein as the "BUSA Common Stock", and the
BUSA Common Stock and the BUSA Preferred Stock are collectively referred to
herein as the "BUSA Shares".
The outstanding BUSA Shares are duly authorized, validly issued, fully paid
and nonassessable. Schedule 3.1(b) sets forth a true and correct list of each of
the record holders of BUSA Shares and the number of BUSA Shares owned of record
by each of them.
Except for the BUSA Stock Options or as noted on Schedule 3.1(b), there are
no outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights or other contracts or commitments
that could require BUSA to issue, sell or otherwise cause to become outstanding
any of its capital stock or equity interests, and except as set forth on
Schedule 3.1(b) attached hereto, there are no outstanding or authorized stock
appreciation, phantom stock, profit participation or similar rights with respect
to the capital stock of BUSA. Except as set forth on Schedule 3.1(b) attached
hereto, BUSA has not entered into any agreement, and is not bound by any
obligation of any kind whatsoever, to transfer or dispose of the Business (or
any substantial portion thereof) to any Person other than IP pursuant to this
Agreement. Except as set forth on Schedule 3.1(b) attached hereto, BUSA has not
entered into any agreement to, nor is bound by any obligation of any kind
whatsoever to, issue any capital stock of BUSA to any Person.
Other than the BUSA Shares, the BUSA Stock Options, the BUSA Senior Notes
and the notes issued in connection with the Credit Agreement, the Mortgages and
the Equipment Loan, no other equity, debt or other securities of BUSA have been
issued and are outstanding.
(c) Corporate Documents. Schedule 3.1(c) lists the directors and officers
of BUSA and includes correct and complete copies of the articles of
incorporation and bylaws of BUSA, including all amendments thereto. The minute
books and stock transfer ledgers of BUSA made available to IP contain a true and
complete record of all action taken at all meetings and by all written consents
in lieu of meeting of the stockholders, the board of directors and the
committees of the board of directors and all transfers in the capital stock of
BUSA.
Section 3.2. Authorization; Binding Effect; No Breach. The execution,
delivery and performance by BUSA of each Transaction Document to which it is a
party, and the consummation of the Transactions contemplated thereby, have been
duly authorized and approved by its Board of Directors, and no further approval
of or action by BUSA's Board of Directors or stockholders is required to
consummate the Transactions. Each Transaction Document to which BUSA is a party
constitutes a valid and binding obligation of BUSA, which is enforceable against
BUSA in accordance with its terms, except as such enforceability may be
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limited by (a) applicable insolvency, bankruptcy, reorganization, moratorium or
other similar laws affecting creditors' rights generally and (b) applicable
equitable principles (whether considered in a proceeding at law or in equity).
Except as set forth on Schedule 3.2, the execution, delivery and performance of
each Transaction Document to which BUSA is a party do not and will not (i)
conflict with or result in a breach of the terms, conditions or provisions of,
(ii) constitute a default under, (iii) result in the creation of any Lien other
than a Permitted Lien upon any Assets (as defined herein) under, (iv) result in
a violation of, or (v) except as required by the terms of the HSR Act, require
any authorization, consent, approval, exemption or other action by or
declaration or notice to any Government Entity pursuant to, the charter or
bylaws of BUSA or any material agreement, instrument or other document, or any
material Legal Requirement, to which BUSA or any of the Assets is subject.
Section 3.3. Subsidiaries; Investments.
(a) Each of the BUSA Subsidiaries is a corporation validly existing and in
good standing under the laws of its jurisdiction of incorporation identified on
Schedule 3.3, and has full corporate power and authority to conduct its business
as and to the extent now conducted and to own, use and lease its assets and
properties. Each of the BUSA Subsidiaries is duly qualified, licensed or
admitted to do business and is in good standing in those jurisdictions specified
on Schedule 3.3, which are the only jurisdictions in which the ownership, use or
leasing of BUSA or such Subsidiary's assets and properties, or the conduct or
nature of its business, makes such qualification, licensing or admission
necessary, except for those jurisdictions in which the adverse effects of all
such failures by any of the BUSA Subsidiaries to be qualified, licensed or
admitted and in good standing could not, individually or in the aggregate,
reasonably be expected to materially and adversely affect BUSA and the BUSA
Subsidiaries taken as a whole. Schedule 3.3 lists for each BUSA Subsidiary the
amount of its authorized capital stock, the amount of its outstanding capital
stock and the record owners of such outstanding capital stock. Except as
disclosed on Schedule 3.3, all of the outstanding shares of capital stock of
each BUSA Subsidiary owned by BUSA have been duly authorized and validly issued,
are fully paid and nonassessable, and are owned, beneficially and of record, by
BUSA free and clear of all Liens (other than Permitted Liens). Except as
disclosed on Schedule 3.3, there are no outstanding options to purchase any
equity interests in any BUSA Subsidiary. BUSA has made available to IP true and
complete copies of the certificate or articles of incorporation and by-laws (or
other comparable corporate charter documents) of each of the BUSA Subsidiaries
as in effect on the date hereof.
(b) Except as identified on Schedule 3.3, BUSA does not own or hold any
capital stock or any other security, interest or Investment in any other Person
(or any rights to acquire any of the foregoing) other than investments which
constitute cash or cash equivalents.
Section 3.4. Financial Statements and Related Matters.
(a) Financial Statements. Schedule 3.4 contains: (i) the audited
consolidated balance sheets of the BUSA as of December 31, 2001, December 31,
2002 and December 31, 2003 and the audited related consolidated statements of
income and cash flows for the respective 12-month periods then ended (the
"Audited Financial Statements"), and (ii) the unaudited consolidated balance
sheet of BUSA as of March 31, 2004 (the "Latest Balance Sheet") and the related
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unaudited consolidated statement of income for the three-month period then ended
(collectively, the "Financial Statements"). Each of the Financial Statements
(including in all cases the notes thereto, if any) presents fairly in all
material respects the financial condition of BUSA as of the dates of such
statements and the results of operation for such periods, is accurate and
complete in all material respects, is consistent with the Books and Records in
all material respects (which, in turn, are accurate and complete in all material
respects) and has been prepared in accordance with GAAP applied on a consistent
basis in accordance with historical BUSA practices throughout the periods
covered thereby.
(b) Receivables. Except as set forth on Schedule 3.4(b) attached hereto,
the accounts receivable of BUSA shown on the Latest Balance Sheet were, as of
the date thereof (the "Latest Balance Sheet Date"), valid receivables, arising
in bona fide transactions in the ordinary course of business of BUSA, and were
current (as determined in accordance with the BUSA Accounting Manual) and, to
the Knowledge of BUSA, collectible, subject to no valid counterclaims or
setoffs, in accordance with their terms at the aggregate amount recorded on the
Latest Balance Sheet, net of the amount of allowances for doubtful accounts set
forth on the Latest Balance Sheet.
(c) Inventory. The inventory of BUSA shown on the Latest Balance Sheet, net
of the reserves applicable to such inventory set forth on the Latest Balance
Sheet, consisted of a quantity and quality which was usable and salable in the
ordinary course of business on the Latest Balance Sheet Date, and the items of
such inventory were not defective, slow-moving, obsolete or damaged, except as
set forth on Schedule 3.4(c).
(d) Controls and Procedures. Except as set forth on Schedule 3.4(d), to
BUSA's Knowledge, BUSA has in place effective controls and procedures designed
to ensure that financial and accounting information with respect to the Business
is recorded, processed, summarized and reported on a timely basis. Except as set
forth on Schedule 3.4(d), to BUSA's Knowledge, such controls and procedures
include, without limitation, controls and procedures designed to ensure that
such information is accumulated and communicated to BUSA management, including
its Chief Executive Officer and Chief Financial Officer, in a timely manner.
Except as set forth on Schedule 3.4(d), to BUSA's Knowledge, BUSA's internal
controls over financial reporting are designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with GAAP and except as
set forth on Schedule 3.4(d), to BUSA's Knowledge include policies and
procedures that:
(i) pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions
of BUSA's assets in all material respects;
(ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in
accordance with GAAP, and that receipts and expenditures are
being made only in accordance with authorizations of BUSA
management and directors; and
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(iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of
BUSA's assets that could have a material adverse effect on its
financial statements.
BUSA management has disclosed to IP any change in BUSA's internal control over
financial reporting that occurred since BUSA's last audit that has materially
affected, or is reasonably likely to materially affect, BUSA's internal control
over financing reporting. BUSA has further disclosed to IP, in writing:
(i) all material deficiencies and weaknesses in the design or
operation of internal controls over financial reporting of which
it has Knowledge; and
(ii) any fraud, whether or not material, of which it has Knowledge
that involves BUSA management or other employees who have a
significant role in BUSA's internal controls over financial
reporting occurring or discovered since July 17, 2000.
Section 3.5. Absence of Undisclosed Liabilities. Except as set forth on
Schedule 3.5 hereto, as of the Latest Balance Sheet Date, BUSA did not have any
liability (whether accrued, absolute, contingent, unliquidated or otherwise,
whether or not known to BUSA, whether due or to become due, and regardless of
when asserted) that should be reflected on a balance sheet prepared in
accordance with GAAP, other than (i) the liabilities set forth on or disclosed
in the Latest Balance Sheet, (ii) obligations to perform the executory portions
of contracts to which BUSA or any of the BUSA Subsidiaries is a party, (iii)
liabilities incurred in connection with the consummation of the transactions
contemplated hereby and (iv) liabilities and obligations expressly disclosed
(i.e., by making reference on Schedule 3.5 to such other Schedules) in the other
Schedules to this Agreement or not required to be disclosed on the Schedules to
this Agreement pursuant to the representations or warranties relating to such
Schedules. Except as set forth on Schedule 3.5 hereto, since the Latest Balance
Sheet Date, BUSA has not incurred any liability (whether accrued, absolute,
contingent, unliquidated or otherwise, whether or not known to BUSA, whether due
or to become due, and regardless of when asserted) that should be reflected on a
balance sheet prepared in accordance with GAAP, other than (a) current
liabilities which have arisen after the Latest Balance Sheet Date in the
ordinary course of business and consistent with BUSA's past practice as set
forth on or disclosed in the certificate of the Controlling Sellers'
Representative setting forth the Estimated Pre-Closing Net Working Capital (none
of which is a material liability resulting from breach of contract, breach of
warranty, tort, infringement, violation of law, claim or lawsuit), (b) other
liabilities and obligations expressly disclosed (i.e., by making reference on
Schedule 3.5 to such other Schedules) in the other Schedules to this Agreement
or not required to be disclosed on such Schedules pursuant to the
representations or warranties relating to such Schedules, (c) obligations to
perform the executory portions of contracts to which BUSA or any of the BUSA
Subsidiaries is a party and (d) liabilities incurred in connection with the
consummation of the transactions contemplated hereby.
Section 3.6. Assets. Except as identified on Schedule 3.6:
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(a) The assets of BUSA and the BUSA Subsidiaries shown on the Latest
Balance Sheet or acquired by BUSA or the BUSA Subsidiaries since the Latest
Balance Sheet Date (each, an "Asset" and collectively, the "Assets") constitute
all of the assets and rights which are owned by BUSA with respect to the
Business as currently conducted;
(b) Except as set forth on Schedule 3.6(b), BUSA and the BUSA Subsidiaries
have good and marketable title to, or a valid leasehold interest in, or a valid
license for, all properties and assets shown on the Latest Balance Sheet or
acquired by BUSA since the Latest Balance Sheet Date, in each case free and
clear of all Liens, other than Permitted Liens, and other than (i) properties
and assets disposed of in the ordinary course of business and consistent with
past practice since the Latest Balance Sheet Date (which disposals, other than
sales of inventory and those non-operating assets specified on Schedule 1.12(d)
attached hereto, do not exceed $100,000 in the aggregate), (ii) the sale or
other disposition of those non-operating assets set forth on Schedule 1.12(d)
attached hereto and (iii) Liens disclosed on the Latest Balance Sheet (including
any notes thereto);
(c) Except as set forth on Schedule 3.6(c) attached hereto, BUSA's and the
BUSA Subsidiaries' material equipment and other material tangible assets are in
good operating condition (subject to normal wear and tear); and
(d) The Assets include all of BUSA's right, title and interest in any
studies commissioned by, and any bids and proposals obtained by, BUSA in
connection with its proposed recycled linerboard project.
Section 3.7. Absence of Certain Developments. Except as identified on
Schedule 3.7, since the Latest Balance Sheet Date, there has been no Material
Adverse Effect. Without limiting the generality of the preceding sentence,
except as expressly contemplated by this Agreement or as identified on Schedule
3.7, since the Latest Balance Sheet Date, neither BUSA nor (to the extent
applicable) any of the BUSA Subsidiaries has:
(a) engaged in any activity outside the ordinary course of business which
has resulted in any material (i) acceleration or delay of the collection of its
accounts receivable, (ii) delay in the payment in its accounts payable or (iii)
increase in its purchases of raw materials, in each case as compared with its
custom and practice in the conduct of the Business immediately prior to the
Latest Balance Sheet Date;
(b) discharged or satisfied any Lien other than Permitted Liens or paid any
obligation or liability, other than current liabilities paid in the ordinary
course of business and consistent with past practice;
(c) mortgaged or pledged any Asset (or any asset of any BUSA Subsidiary) or
subjected any Asset (or any asset of any BUSA Subsidiary) to any Lien other than
Permitted Liens;
(d) sold, assigned, conveyed, transferred, canceled or waived any property,
tangible asset, Proprietary Right or other intangible asset or right other than
in the ordinary course of business and consistent with past practice;
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(e) disclosed any material confidential information to any Person other
than IP and IP's and BUSA's and the Controlling Sellers' respective
representatives, agents, attorneys, accountants and present and proposed
financing sources;
(f) waived any material right other than in the ordinary course of business
and consistent with past practice;
(g) made commitments for capital expenditures which, in the aggregate,
would exceed $50,000;
(h) made any loan or advance to, or guarantee for the benefit of, or any
Investment in, any other Person (other than advances to employees in the
ordinary course of business in a manner consistent with past practice);
(i) other than (1) the accrual and payment of bonuses for 2003 and the
accrual of bonuses for 2004, (2) as required by any applicable collective
bargaining agreement set forth on Schedule 3.9 or (3) as contemplated by
Sections 1.6(c)(i)(J) and (K), Section 1.20 and Section 8.5, granted any bonus
or any increase in wages, salary or other compensation to any employee (other
than any increase in wages or salaries not exceeding 2% granted in the ordinary
course of business and consistent with past practice granted to any non-officer
employee who is not Affiliated with BUSA other than by reason of such Person's
employment by BUSA);
(j) made any charitable contributions, exceeding $5,000 for any single
contribution and $10,000 in the aggregate;
(k) suffered damages, destruction or casualty losses to any Asset or the
assets of any BUSA Subsidiary (i) which are not covered by insurance (excluding
any deductible) and (ii) which exceed $100,000 individually or $500,000 in the
aggregate;
(l) received notice from any material supplier of BUSA or of any BUSA
Subsidiary to the effect that such supplier will stop, or materially decrease
the rate of, supplying materials, products or services to BUSA or such BUSA
Subsidiary or received notice from any material customer of BUSA or of any BUSA
Subsidiary to the effect that such customer will stop, or materially decrease
the rate of, buying materials, products or services from BUSA or such BUSA
Subsidiary;
(m) entered into any transaction other than in the ordinary course of
business and consistent with past practice, or entered into any other material
transaction, whether or not in the ordinary course of business, which could
reasonably be expected to materially adversely affect BUSA and the BUSA
Subsidiaries taken as a whole; or
(n) agreed to do any act described in any of clauses 3.7(a) through (m).
Section 3.8. Tax Matters. Except as identified on Schedule 3.8:
(a) BUSA and the BUSA Subsidiaries have filed all Tax Returns and other
reports which it or they were required to file and each such return or other
report was correct and complete in all respects, and BUSA and the BUSA
Subsidiaries have paid all Taxes due and
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owing by it or them (whether or not shown on any Tax Return or other report) and
have withheld and paid over all Taxes which it or they are obligated to withhold
from amounts paid or owing to any employee, independent contractor, stockholder,
partner, creditor or other third party;
(b) no Tax audits are pending or being conducted with respect to BUSA or
any BUSA Subsidiary;
(c) there are no Liens, other than Permitted Liens, on any of the Assets or
the assets of any BUSA Subsidiary that arose in connection with any failure (or
alleged failure) to pay any Tax;
(d) no information related to Tax matters has been requested by any Taxing
authority and neither BUSA nor any BUSA Subsidiary received notice indicating an
intent to open an audit or other review from any Taxing authority;
(e) there are no unresolved disputes or claims concerning the Tax liability
of BUSA or any BUSA Subsidiary;
(f) no written claim has been made within the applicable statute of
limitations by any jurisdiction in which BUSA or any BUSA Subsidiary does not
file Tax Returns to the effect that BUSA or such Subsidiary is or may be subject
to any Tax imposed by that jurisdiction;
(g) BUSA is not a party to any agreement that could obligate it to make any
payments that would not be deductible pursuant to Section 280G of the Code,
except those that may arise in relation to this Agreement;
(h) BUSA has not made an election pursuant to Code Section 341(f);
(i) Neither BUSA nor any BUSA Subsidiary has waived any statute of
limitations in respect of Taxes or agreed to an extension of time with respect
to any Tax assessment or deficiency;
(j) Neither BUSA nor any BUSA Subsidiary is a party to any Tax sharing or
allocation agreement, and BUSA has no liability for the Taxes of any person
under Section 1.1502-6 of the Treasury Regulations (or any similar provision of
state, local or foreign law), as a transferee or successor, by contract, or
otherwise; and
(k) Since January 1, 2000, none of BUSA nor any BUSA Subsidiary has
participated in, and to BUSA's Knowledge, none of BUSA's or any BUSA
Subsidiary's predecessors or acquired entities has participated in a "listed
transaction," or a transaction that is the same as or substantially similar to a
"listed transaction," as defined by Treas. Reg. Section 1.6011-4(b)(2), and all
required disclosures of such transactions have been made on the applicable Tax
Return(s).
Section 3.9. Contracts and Commitments.
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(a) Contracts. Other than this Agreement, the transactions contemplated
hereby or as identified on Schedule 3.9, neither BUSA nor any BUSA Subsidiary is
a party to any written or oral:
(i) pension, profit sharing, stock option, employee stock purchase or
other plan or arrangement providing for deferred or other
compensation to employees or any other employee benefit, welfare
or stock plan or arrangement which is not identified on Schedule
3.15, or any contract with any labor union, or any severance
agreement or other agreement or arrangement pursuant to which
BUSA or any BUSA Subsidiary is or may become required to make any
payment to any director, officer or employee as a result of the
consummation of the Transactions;
(ii) contract for the employment or engagement as an independent
contractor of any Person on a full-time, part-time, consulting or
other basis which provides for payments in excess of $100,000 per
annum and is not terminable by BUSA within 12 months after the
date hereof, and the aggregate amount payable with respect to all
of such contracts not required to be identified under this clause
3.9(a)(ii) because they provide for payments of less than
$100,000 per annum or are terminable by BUSA within 12 months
after the date hereof do not exceed $250,000 per annum;
(iii) contract pursuant to which BUSA or such BUSA Subsidiary has
advanced or loaned funds, or agreed to advance or loan funds, to
any other Person;
(iv) contract or indenture relating to any Indebtedness or the
mortgaging, pledging or otherwise placing a Lien (other than a
Permitted Lien) on any of the Assets or any assets of an BUSA
Subsidiary;
(v) contract pursuant to which BUSA or such BUSA Subsidiary is the
lessee of, or holds or operates, any real or personal property
owned by any other Person, and which provides for payments in
excess of $100,000 per annum and is not terminable by BUSA within
12 months after the date hereof, and the aggregate amount payable
with respect to all of such contracts not required to be
identified under this clause 3.9(a)(v) because they provide for
payments of less than $100,000 per annum or are terminable by
BUSA within 12 months after the date hereof do not exceed
$250,000 per annum;
(vi) contract pursuant to which BUSA or such BUSA Subsidiary is the
lessor of, or permits any third party to hold or operate, any
real or personal property owned by BUSA or such BUSA Subsidiary
or of which BUSA or such BUSA Subsidiary is a lessee, and which
provides for payments in excess of $100,000 per annum and is not
terminable by BUSA within 12 months after the date hereof, and
the aggregate amount payable with
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respect to all of such contracts not required to be identified
under this clause 3.9(a)(vi) because they provide for payments of
less than $100,000 per annum or are terminable by BUSA within 12
months after the date hereof do not exceed $250,000 per annum;
(vii) assignment, license, indemnification or other contract with
respect to any material intangible property (including any
Proprietary Right) which is not identified on Schedule 3.10;
(viii) contract prohibiting BUSA or such BUSA Subsidiary from freely
engaging in any business anywhere in the world;
(ix) independent sales representative or distributorship agreement
with respect to the Business;
(x) contract pursuant to which BUSA or any BUSA Subsidiary is
required to (x) purchase all of their requirements of any
product, service, raw material, energy, fuel or other item from
any Person, or (y) pay for any product, service, raw material,
energy, fuel or other item regardless of whether or such BUSA
Subsidiary avails itself of such product, service, raw material,
energy, fuel or other item;
(xi) each supply or purchase contract for raw materials involving
consideration in excess of $100,000 per annum; or
(xii) any other contract (other than Purchase and Sales Contracts (as
defined below)) which is material to BUSA or the BUSA
Subsidiaries or involves a consideration in excess of $100,000
per annum and is not terminable by BUSA within 12 months after
the date hereof.
(b) Enforceability. Each item identified on Schedule 3.9 or otherwise
referred to in Section 3.9(a) (the "Contracts") is valid, binding and
enforceable against BUSA (or as applicable, the relevant BUSA Subsidiary) and,
to BUSA's Knowledge, the other parties thereto, in accordance with its terms,
except as such enforceability may be limited by (i) applicable insolvency,
bankruptcy, reorganization, moratorium or other similar laws affecting
creditors' rights generally and (ii) applicable equitable principles (whether
considered in a proceeding at law or in equity).
(c) Compliance. Except as otherwise set forth on Schedule 3.9(c), BUSA and
the BUSA Subsidiaries performed all material obligations required to be
performed by it or them under each Contract, and neither BUSA nor any BUSA
Subsidiary is in default under or in breach in any material respect of (nor is
it in receipt of any claim of default or breach under) any such obligation.
Except as otherwise set forth on Schedule 3.9(c), no event has occurred which
with the passage of time or the giving of notice (or both) would result in a
default, breach or event of noncompliance in any material respect under any
obligation of BUSA or any BUSA Subsidiary pursuant to any Contract. Except as
otherwise set forth on Schedule 3.9(c), BUSA and each BUSA Subsidiary has no
present expectation or intention of not fully performing any
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obligation of BUSA or such BUSA Subsidiary pursuant to any Contract, and BUSA
has no Knowledge of any breach or anticipated breach by any other party to any
Contract.
(d) Leases. With respect to each Contract which is a lease of personal
property, BUSA, or, as applicable, a BUSA Subsidiary holds a valid and existing
leasehold interest under such lease for the term set forth with respect to such
lease identified on Schedule 3.9.
(e) Purchase and Sales Contracts. All contracts (including without
limitation purchase and sales orders) for the purchase or sale by BUSA or any of
the BUSA Subsidiaries of raw materials, inventory or other goods or services
(collectively, the "Purchase and Sales Contracts") have been entered into by
such Persons in arm's-length transactions in the ordinary course of business
consistent with past practice and are not materially in excess of the quantities
used in the ordinary course of business.
(f) Affiliate Transactions. Except as identified on Schedule 3.9(f), no
officer, director, stockholder or Affiliate of BUSA or a BUSA Subsidiary (and no
individual related by blood or marriage to any such Person, and no entity that
is an Affiliate of such Person) is a party to any agreement, contract,
commitment or transaction with BUSA or any BUSA Subsidiary or has any material
interest in any material property used by BUSA or any BUSA Subsidiary; provided,
however, that no representations are being made herein with respect to W&C, its
Affiliates or any directors appointed by W&C.
(g) Copies. Except as otherwise set forth on Schedule 3.9(g), true, correct
and complete copies of each written Contract that is set forth on Schedule 3.9
attached hereto as of the date hereof have been made available to IP prior to
the date hereof. Each written Contract that is not set forth on Schedule 3.9 as
of the date hereof or that has not otherwise been made available to IP prior to
the date hereof shall be provided to IP within ten (10) business days after the
date hereof.
Section 3.10. Proprietary Rights.
(a) Schedule 3.10 contains a complete and accurate list of (i) all patented
or registered Proprietary Rights owned by BUSA or any BUSA Subsidiary, (ii) all
pending patent applications and applications for registrations of other
Proprietary Rights filed by or on behalf of BUSA or any BUSA Subsidiary, (iii)
all trade names, trade marks, corporate names and unregistered trade names and
service marks owned by BUSA or any BUSA Subsidiary, (iv) domain names and
internet websites, and (v) all registered copyrights and computer software
(other than "off-the-shelf" software applications ) which are owned or licensed
by BUSA or any BUSA Subsidiary. Schedule 3.10 also contains a complete and
accurate list of all licenses and other rights granted by BUSA or any BUSA
Subsidiary to any third party, and all licenses and other rights granted by any
third party to BUSA or any BUSA Subsidiary, with respect to any Proprietary
Rights (other than "off-the-shelf" software applications). The Proprietary
Rights listed on Schedule 3.10 comprise all material intellectual property
rights which are owned or licensed by BUSA and the BUSA Subsidiaries in the
operation of the Business.
(b) Ownership; Claims. Except as identified on Schedule 3.10, BUSA or a
BUSA Subsidiary owns and possesses all right, title and interest in and to (or
has the right to use
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pursuant to a valid and enforceable license) all Proprietary Rights necessary
for the operation of BUSA's and the BUSA Subsidiaries' businesses as presently
conducted, and BUSA or the BUSA Subsidiaries have taken all necessary actions to
maintain and protect the registered Proprietary Rights which it owns and uses.
Except as identified on Schedule 3.10:
(i) BUSA and the BUSA Subsidiaries own all right, title, and interest
in and to all of the Proprietary Rights that they purport to own
as described on such Schedule (in each case free and clear of all
Liens, other than Permitted Liens);
(ii) there have been no written claims made against BUSA or any BUSA
Subsidiary since January 1, 2000 asserting the invalidity, misuse
or unenforceability of any of such Proprietary Rights, and to the
Knowledge of BUSA, there are no grounds for any such claim;
(iii) neither BUSA nor any BUSA Subsidiary has received any written
notice since January 1, 2000 of (nor does it have Knowledge of
any facts which indicate a reasonable likelihood of) any
infringement or misappropriation by, or conflict with, any Person
with respect to the Proprietary Rights (including any written
demand or request that BUSA or any BUSA Subsidiary license rights
from any Person);
(iv) to the Knowledge of BUSA, the conduct of the Business has not
infringed or misappropriated, and does not infringe or
misappropriate, any proprietary right of any other Person, nor,
to the Knowledge of BUSA, would IP's conduct of the Business as
presently conducted infringe or misappropriate any proprietary
right of any other Person;
(v) to the Knowledge of BUSA, the Proprietary Rights owned by BUSA or
the BUSA Subsidiaries have not been infringed or misappropriated
by any other Person; and
(vi) the consummation of the Transactions will have no material
adverse effect on any Proprietary Right owned or licensed by BUSA
or the BUSA Subsidiaries.
Section 3.11. Certain Litigation. Except as identified on Schedule 3.11,
there is no action, suit, proceeding, order, investigation or claim pending (or,
to the Knowledge of BUSA, threatened) against BUSA or any BUSA Subsidiary (or
pending or threatened against any officer or director of BUSA or any BUSA
Subsidiary in his or her capacity as such), at law or in equity, or before or by
any Government Entity, including (i) with respect to the Transactions, or (ii)
concerning the design, manufacture, rendering or sale by BUSA or any BUSA
Subsidiary of any product or service or otherwise concerning the conduct of the
Business, and, to the Knowledge of BUSA, there is no basis for any of the
foregoing.
Section 3.12. Brokerage. Except for the W&C Fee, there is no claim for
brokerage commissions, finders' fees or similar compensation in connection with
the Transactions based on
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any arrangement or agreement which may be binding upon BUSA or any BUSA
Subsidiary or to which BUSA or any BUSA Subsidiary or any of the Assets may be
subject.
Section 3.13. Insurance. Schedule 3.13 contains a list of each insurance
policy currently maintained by BUSA and each BUSA Subsidiary with respect to its
properties, assets or business, and each such policy is in full force and
effect. Neither BUSA nor any BUSA Subsidiary is in default in any material
respect of any obligation pursuant to any such insurance policy. True, correct
and complete copies of all of such insurance policies, as currently in effect,
have been made available to IP.
Section 3.14. Employees.
(a) Continued Employment. Except as set forth on Schedule 3.14, to the
Knowledge of BUSA, no executive or key employee of BUSA or any BUSA Subsidiary
or any group of employees of BUSA or any BUSA Subsidiary has any plans to
terminate employment with BUSA or such BUSA Subsidiary.
(b) Compliance and Restrictions. Except as set forth on Schedule 3.14, BUSA
and each BUSA Subsidiary has complied in all material respects with all laws
relating to the employment of labor, including provisions of such laws relating
to wages, hours, equal opportunity, collective bargaining and the payment of
social security and other taxes, and BUSA and each BUSA Subsidiary has no
material labor relations problem (including any union organization activities
with respect to employees not currently subject to a collective bargaining
agreement, threatened or actual strikes or work stoppages or material
grievances). Except as set forth in Schedule 3.14, none of BUSA or any BUSA
Subsidiary, nor, to the Knowledge of BUSA, any employees of BUSA or any BUSA
Subsidiary are subject to any noncompete, nondisclosure, confidentiality,
employment, consulting or similar agreement relating to, affecting, or in
conflict with the Business activities as presently conducted.
(c) Labor Relations. Except for those employees presently members of a
collective bargaining unit covered by a collective bargaining agreement set
forth on Schedule 3.9 and except as otherwise set forth on Schedule 3.14, no
employee of BUSA or any BUSA Subsidiary is presently a member of a collective
bargaining unit and, to the Knowledge of the BUSA, there are no threatened or
contemplated attempts to organize for collective bargaining purposes any of the
employees of BUSA or any BUSA Subsidiary that are not currently so organized.
Since January 1, 2000 and except as set forth on Schedule 3.14, there has been
no work stoppage, strike or other concerted action by employees of BUSA or any
BUSA Subsidiary which materially adversely affected the Business or condition of
BUSA or any BUSA Subsidiary.
Section 3.15. ERISA. Except as otherwise identified on Schedule 3.15:
(a) with respect to all current employees (including those on lay-off,
disability or leave of absence), former employees, and retired employees of BUSA
or any BUSA Subsidiary (the "Employees"), neither BUSA nor any BUSA Subsidiary
maintains or contributes to any (i) employee welfare benefit plans (as defined
in Section 3(1) of ERISA) ("Employee Welfare Plans"), or (ii) any plan, policy
or arrangement which provides nonqualified deferred compensation, bonus or
retirement benefits, severance or "change of control" (whether or not as
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set forth in Code Section 280G) benefits, or life, disability, accident,
vacation, tuition reimbursement or other material fringe benefits ("Other
Plans");
(b) BUSA and the BUSA Subsidiaries do not maintain, contribute to, or
participate in any defined benefit plan or defined contribution plan which are
employee pension benefit plans (as defined in Section 3(2) of ERISA) ("Employee
Pension Plans");
(c) BUSA and the BUSA Subsidiaries do not contribute to or participate in
any multiemployer plan (as defined in Section 3(37) of ERISA) (a "Multiemployer
Plan");
(d) BUSA and the BUSA Subsidiaries do not maintain or have any obligation
to contribute to or provide any post-retirement health, accident or life
insurance benefits to any Employee, other than limited medical benefits required
to be provided under Code Section 4980B or Sections 601-608 of ERISA ("COBRA");
(e) other than instances of noncompliance that have not had or could not
reasonably be expected to have a material adverse effect on BUSA and the BUSA
Subsidiaries, taken as a whole, all Plans (other than any Multiemployer Plan)
(and all related trusts and insurance contracts) have been maintained in
substantial compliance in form and in operation with the applicable requirements
of ERISA, the Code, and any other applicable statute, order, rule or regulation;
(f) other than instances of noncompliance that have not had or could not
reasonably be expected to have a material adverse effect on BUSA and the BUSA
Subsidiaries, taken as a whole, all required reports and descriptions (including
all Form 5500 Annual Reports, Summary Annual Reports, PBGC-1s and Summary Plan
Descriptions) with respect to all Plans (other than any Multiemployer Plan) have
been properly filed with the appropriate Government Entity or distributed to
participants, and BUSA and the BUSA Subsidiaries have complied with the
requirements of Code Section 4980B;
(g) with respect to each Plan, all required contributions, premiums or
payments which are due from BUSA or the BUSA Subsidiaries on or before the
Closing Date have been paid to such Plan, and all amounts which have accrued on
or prior to the Closing Date but which are payable thereafter have been provided
for on the Financial Statement of BUSA as of the Closing Date;
(h) other than premiums due in the ordinary course, since January 1, 2000
BUSA and the BUSA Subsidiaries have not incurred any liability to the Pension
Benefit Guaranty Corporation (the "PBGC") with respect to any Multiemployer Plan
or otherwise with respect to any employee pension benefit plan currently or
previously maintained by members of the controlled group of companies (as
defined in Sections 414(b) and (c) of the Code) that includes BUSA and the BUSA
Subsidiaries (the "Controlled Group") that has not been satisfied in full, and
no condition exists that presents a material risk to BUSA or any member of the
Controlled Group of incurring such a liability (other than liability for
premiums due the PBGC) which could reasonably be expected to have any material
adverse effect on IP, BUSA or the BUSA Subsidiaries, taken as a whole, after the
Closing;
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(i) to the Knowledge of BUSA, BUSA and the BUSA Subsidiaries have not
communicated to present or former employees of BUSA or any BUSA Subsidiary or
formally adopted or authorized any additional Plan or any change (except as
necessary to comply with changes in applicable law) in or termination of any
existing Plan. BUSA and the BUSA Subsidiaries have not made any commitment to
create any additional Plan or to terminate or modify or change in any material
respect any existing Plan. Each Plan covers only current or former employees of
BUSA and their beneficiaries or dependents;
(j) BUSA has provided IP with a complete and correct list of all Plans
which are sponsored or maintained by BUSA or the BUSA Subsidiaries and has made
available to IP complete and correct copies of each Plan, or written summaries
of any unwritten Plan, any collective bargaining agreement covering employees of
BUSA or the BUSA Subsidiaries, any employee handbook applicable to employees of
BUSA or the BUSA Subsidiaries, and, with respect to each Plan, the current
summary plan description, related trust agreements, insurance contracts and
other material service contracts, the latest Internal Revenue Service ("IRS")
determination letter, the latest annual financial statements, the last three
years annual reports on IRS Form 5500 (including all required schedules and
accountant's opinions), the last three years' actuarial reports, and the last
three years' PBGC-1s;
(k) with respect to any "defined benefit plan," within the meaning of
Section 3(35) of ERISA, maintained or contributed to by BUSA or the BUSA
Subsidiaries (other than any Multiemployer Plan): (i) no such plan has incurred
an "accumulated funding deficiency" (within the meaning of Section 412 of the
Code), whether or not waived; (ii) all contributions required to have been made
to any such plan under Section 412 of the Code or Section 302 of ERISA have been
made when due; (iii) no notice of intent to terminate any such plan has been
filed with the PBGC or distributed to participants and no amendment terminating
any such plan has been adopted; (iv) no proceedings to terminate any such plan
have been instituted by the PBGC and no event or condition has occurred which
might constitute grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any such plan, (v) no amendment has
been adopted which has or could reasonably be expected to subject the plan to
the requirements of Section 401(a)(29) of the Code; (vi) no "reportable event"
within the meaning of ERISA Section 4043 of ERISA (for which the 30-day notice
requirement has not been waived by the PBGC) has occurred within the last six
years; (vii) no lien has arisen under ERISA or the Code on the assets of BUSA
and (viii) neither BUSA nor any of its ERISA Affiliates has incurred any
liability under Title IV of ERISA (contingent or otherwise) other than for PBGC
premiums not yet due. With respect to any Multiemployer Plan contributed to by
BUSA or the BUSA Subsidiaries, BUSA or the BUSA Subsidiaries have no Knowledge
of any of the items set forth in this Section 3.15(k) as they pertain to any
Multiemployer Plan;
(l) each Plan which is intended to be qualified under Section 401(a) of the
Code has been determined by the IRS to be so qualified, and each trust forming a
part thereof is exempt from tax pursuant to Section 501(a) of the Code. BUSA has
furnished, or will make available upon request, to IP copies of the most recent
IRS determination letters with respect to each such Plan; and
(m) other than claims for benefits arising in the ordinary course of the
administration and operation of the Plans, no claims, investigations or
arbitrations are pending by or with
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respect to any current or former employees of BUSA or any BUSA Subsidiary
against any Plan or against BUSA, any trust or arrangement created under or as
part of any Plan, or any trustee, fiduciary, custodian, administrator or other
person or entity holding or controlling assets of any Plan.
Section 3.16. Real Estate.
(a) Owned Properties. Schedule 3.16(a) identifies all real property that
BUSA or any BUSA Subsidiary owns (the "Owned Real Property"). Except as
otherwise identified on Schedule 3.16(a), with respect to each parcel of Owned
Real Property:
(i) BUSA or the BUSA Subsidiary identified on Schedule 3.16(a) has
good and marketable fee simple title to each such parcel of Owned
Real Property free and clear of any Lien, except for Permitted
Real Estate Liens;
(ii) there are no pending or, to the Knowledge of BUSA, threatened
condemnation proceedings, lawsuits, or administrative actions
relating to the Owned Real Property or to the Knowledge of BUSA
other material matters affecting adversely the current use,
occupancy, or value of the Owned Real Property;
(iii) no material Owned Real Property serves any adjoining property
for any purpose inconsistent with the use of the Owned Real
Property, and no material Owned Real Property is located within
any flood hazard area (as defined by the Federal Emergency
Management Agency);
(iv) there are no leases, subleases, licenses, concessions, or other
agreements, written or oral, granting to any Person the right of
use or occupancy of any portion of the Owned Real Property;
(v) there are no outstanding contracts, options or rights of first
refusal to purchase any of the Owned Real Property (other than
the right of IP pursuant to this Agreement), or any portion
thereof or interest therein;
(vi) no Person (other than BUSA or a BUSA Subsidiary) is in possession
of any Owned Real Property;
(vii) the current use of the Owned Real Property and the operation of
the Business thereon does not violate any instrument of record or
agreement affecting the Owned Real Property or any applicable
Legal Requirements except for such violations which, individually
and in the aggregate, could not reasonably be expected to have a
Material Adverse Effect;
(viii) all material buildings, structures and other improvements
located on the Owned Real Property, including all material
components thereof, are in good condition (subject to normal wear
and tear); and
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(ix) each Owned Real Property has vehicular and pedestrian access to
public streets; all material buildings, structures and other
improvements located on Owned Real Property are entirely within
the property's boundaries and, to the Knowledge of BUSA, no other
buildings, structures or improvements encroach on any of the
Owned Real Property; and
(x) all material certificates of occupancy, permits, licenses,
approvals and other authorizations required in connection with
the operation of the Business on the Owned Real Property required
to have been issued to enable the Owned Real Property to be
lawfully occupied and used for all of the purposes for which it
is currently occupied and used in connection with the operation
of the Business have been lawfully issued and are, as of the
date, hereof, in full force and effect.
(b) Leased Property. Schedule 3.16(b) identifies all real property leased
or subleased to BUSA and the BUSA Subsidiaries (the "Leased Real Property") and
not owned by BUSA or the BUSA Subsidiaries. Prior to the date hereof, BUSA has
made available to IP true, correct and complete copies of the leases and
subleases listed on Schedule 3.16(b) as currently in effect (collectively, the
"Leases"). With respect to the Leased Real Property and each of the Leases, and
unless otherwise noted on Schedule 3.16(b):
(i) such Lease is legal, valid, binding, enforceable against BUSA,
and in full force and effect;
(ii) such Lease is fully assignable to IP without the need for any
consents or authorizations and will continue to be legal, valid,
binding, enforceable against BUSA, and in full force and effect
on identical terms following the consummation of the
Transactions;
(iii) none of BUSA or the respective BUSA Subsidiary or, to the
Knowledge of BUSA, the other party to such Lease is in material
breach or default, and no event has occurred which, with notice
or lapse of time, would constitute a material breach or default
by BUSA or any BUSA Subsidiary or permit termination,
modification, or acceleration of such Lease;
(iv) no party to such Lease has repudiated in writing any provision
thereof;
(v) there are no disputes of which BUSA or any BUSA Subsidiary has
received written notice, and, to the Knowledge of BUSA, there are
no oral agreements or forbearance programs in effect as to such
Lease;
(vi) in the case of each Lease which is a sublease, the
representations and warranties set forth in clauses 3.16(b) (i)
through (v) are true and correct with respect to the underlying
lease;
(vii) neither BUSA nor any BUSA Subsidiary has assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest
in the leasehold or subleasehold created pursuant to such Lease;
and
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(viii) none of the Leases has been modified in any respect, except to
the extent that such modifications are in writing and have been
made available to IP prior to the date hereof;
(ix) all buildings, improvements and other structures located upon the
Leased Real Property have received all material approvals of
Governmental Entities, including licenses and permits, required
in connection with the operation of the Business thereon and have
been operated and maintained in all material respects in
accordance with applicable Legal Requirements and the terms and
conditions of the Leases; and
(x) all material buildings, structures and other improvements located
upon the Leased Real Property, including all material components
thereof, are in good operating condition (subject to normal wear
and tear).
Section 3.17. Compliance with Law.
(a) Generally. Except as identified on Schedule 3.17(a), BUSA and the BUSA
Subsidiaries are in compliance with applicable Legal Requirements in all
material respects, and neither BUSA nor any BUSA Subsidiary has received notice
alleging any violation of Legal Requirements since January 1, 2000 that has not
been resolved as of the date hereof.
(b) Required Permits. Other than the matters set forth on Schedule 3.3,
BUSA and the BUSA Subsidiaries are in compliance in all material respects with
all permits, licenses and other authorizations required for the occupation of
its and their facilities, the consummation of the Transactions and the operation
of the Business. Except as otherwise set forth on Schedule 3.17(b), the items
identified on Schedule 3.17(b) constitute all of the material permits, filings,
notices, licenses, consents, authorizations, accreditation, waivers, approvals
and the like of, to or with any Government Entity which are required for the
consummation of any of the Transactions or the conduct of the Business (as it is
presently conducted) thereafter. Notwithstanding the foregoing, the disclosure
of any item on Schedule 3.17(b) shall not cure any breach of the first sentence
of this Section 3.17(b).
(c) Environmental and Safety Matters. Without limiting the generality of
Sections 3.17(a) and (b), and except as set forth on Schedule 3.17(c):
(i) BUSA and the BUSA Subsidiaries are in compliance in all material
respects with all Environmental and Safety Requirements.
(ii) Without limiting the generality of the foregoing, BUSA and the
BUSA Subsidiaries are in substantial compliance with all permits,
licenses and other authorizations required pursuant to
Environmental and Safety Requirements ("Environmental Permits")
for the occupation of its facilities and the operation of the
Business. All pending permit applications, permits, licenses and
other authorizations are identified on Schedule 3.17(c).
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(iii) Neither BUSA nor any BUSA Subsidiary has received from any
Governmental Entity or third party any written notice, report or
other document which alleges that BUSA or any BUSA Subsidiary is
responsible for any liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise) or investigatory, remedial
or corrective obligations, relating to it or its facilities and
arising under Environmental and Safety Requirements, which has
not been resolved as of the date hereof.
(iv) Except as identified on Schedule 3.17(c) and except such as would
not constitute a violation of applicable Environmental and Safety
Requirements, none of the following exists at any property or
facility currently owned or operated by BUSA or any BUSA
Subsidiary, nor has BUSA or any BUSA Subsidiary retained any
Known liability with respect to any of the following at any
property or facility formerly owned or operated by BUSA or any
BUSA Subsidiary:
a. underground storage tanks or surface impoundments;
b. asbestos-containing material in any form or condition; or
c. materials or equipment containing polychlorinated
biphenyls.
(v) Neither BUSA nor any BUSA Subsidiary has treated, stored,
disposed of, arranged for or permitted the disposal of,
transported, handled, or Released any Hazardous Substance, or
owned or operated any facility or property, so as to give rise to
liabilities for response costs, natural resource damages or
attorneys' fees pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), or similar state or local laws.
(vi) BUSA shall comply with any requirements applicable to BUSA or any
BUSA Subsidiary pursuant to any so-called "transaction-triggered"
or "responsible property transfer" Environmental and Safety
Requirements.
(vii) Neither BUSA nor any BUSA Subsidiary has, either expressly or by
operation of law, assumed or undertaken any Known liability,
including any obligation for corrective or remedial action, of
any other Person relating to any Environmental and Safety
Requirements.
(viii) No Environmental Lien has attached to any property currently
owned by BUSA or any BUSA Subsidiary, and, to BUSA's Knowledge,
no Environmental Lien has attached to any property previously
owned by BUSA or any BUSA Subsidiary during the period of time
that the property was owned by BUSA or any BUSA Subsidiary, which
Environmental Lien remains in full force and effect.
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(d) There are no claims, suits, or actions pending or to BUSA's Knowledge
threatened, by any government agency, authority or jurisdiction, or its agents,
assignees, or contractors, for escheat of any unclaimed or abandoned property or
liability, which is subject to escheat relating to BUSA or the BUSA
Subsidiaries, including but not limited to the following: outstanding health and
dental checks; outstanding pension checks; undelivered shares of stock and
dividends; undelivered bonds/long-term debt principal and interest; accounts
receivable credits; customer overpayments; customer duplicate payments;
unidentified remittances; unrefunded overcharges; uninvoiced receipts; refunds
due; voiding of outstanding liabilities; reversals of credit balances or
outstanding liabilities to profit and loss; or reversals of credit balances or
outstanding liabilities against original charges, and, to BUSA's Knowledge there
is no basis for any such claims, suits or actions.
Section 3.18. Product Liability. Except to the extent reserved for in
BUSA's financial statements or as identified on Schedule 3.18, there are no
claims pending or, to BUSA's Knowledge, threatened against BUSA that allege that
products manufactured, serviced, distributed, sold or delivered by BUSA and the
BUSA Subsidiaries have been manufactured, serviced, distributed, sold and/or
delivered in violation of applicable contractual commitments or express or
implied warranties. Except to the extent reserved for in BUSA's Financial
Statements or as identified on Schedule 3.18, no material liability of BUSA and
the BUSA Subsidiaries exists for replacement or other damages in connection with
any such product. Since July 17, 2000, none of BUSA, the BUSA Subsidiaries or
their predecessor companies has manufactured, distributed or sold any products
containing asbestos; and, to the Knowledge of BUSA, none of BUSA, the BUSA
Subsidiaries or their predecessor companies has ever manufactured, distributed
or sold any products containing asbestos.
Section 3.19. Powers of Attorney. There are no outstanding powers of
attorney executed on behalf of BUSA, except as disclosed on Schedule 3.19.
Section 3.20. Bank Accounts. Schedule 3.20 identifies the names and
locations of all banks, depositories and other financial institutions in which
BUSA or any of the BUSA Subsidiaries, has an account and the names of all
persons authorized to draw on such accounts.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE CONTROLLING SELLERS
As a material inducement to IP to enter into this Agreement and complete
the Transactions, each Controlling Seller hereby, severally and not jointly,
represents and warrants to IP that:
Section 4.1. Ownership of Stock. Except as set forth on Schedule 4.1
hereto, such Controlling Seller is the sole record owner of the number of BUSA
Shares set forth opposite such Controlling Seller's name on Schedule 4.1 hereto,
which ownership is free and clear of all Liens. Such BUSA Shares represent all
of the issued and outstanding capital stock of BUSA owned by such Controlling
Seller. Upon consummation of the Transactions, IP will obtain title to and
ownership of such BUSA Shares, free and clear of all Liens other than Liens
permitted by IP, if any.
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Section 4.2. Restrictions on Stock.
(a) Agreements Relating to Stock. Except as set forth on Schedule 4.2
hereto, such Controlling Seller is not a party to any agreement creating rights
with respect to such Seller's BUSA Shares in any Person and such Controlling
Seller has the full power and legal right to sell, assign, transfer and deliver
such Controlling Seller's BUSA Shares to IP.
(b) No Warrants, Options, Etc. Except as set forth on Schedule 4.2 hereto,
and except for this Agreement and the Transactions contemplated hereby, there
are no existing warrants, options, stock purchase agreements, redemption
agreements, restrictions of any nature, calls or rights to subscribe of any
character relating to the BUSA Shares owned by such Controlling Seller.
Section 4.3. Authority.
(a) Corporate Action; Capacity. If such Controlling Seller is not a natural
person, the execution and delivery to IP of this Agreement and each other
Transaction Document to which such Person is a party and the performance of such
Controlling Seller's obligations hereunder and thereunder have been duly
authorized by such Controlling Seller and its governing body. If such
Controlling Seller is a natural person, such Controlling Seller has the capacity
and authority to execute and deliver to IP this Agreement and each other
Transaction Document to which such Person is a party and to perform such
Controlling Seller's obligations hereunder and thereunder.
(b) Execution and Delivery. This Agreement and each other Transaction
Document to which such Controlling Seller is a party has been duly and validly
executed and delivered to IP by such Controlling Seller and constitutes a valid
and binding obligation of such Controlling Seller, enforceable against such
Controlling Seller in accordance with its terms, except as such enforceability
may be limited by (a) applicable insolvency, bankruptcy, reorganization,
moratorium, or other similar laws affecting creditors' rights generally and (b)
applicable equitable principles (whether considered in a proceeding of law or in
equity).
(c) No Violation. Except for violations which will be cured prior to the
Closing or Liens which will be released concurrent with the Closing and except
as set forth on Schedule 4.3 hereto, the execution, delivery and performance of
this Agreement and each other Transaction Document to which such Controlling
Seller is a party by such Person does not and will not: (i) constitute a breach,
or a violation of, or a default under, any organizing or governing document, if
any, of such Controlling Seller, or of any material law, rule or regulation,
agreement, indenture, deed of trust, mortgage, loan agreement or other agreement
or instrument to which such Controlling Seller is a party or by which such
Controlling Seller or any of such Controlling Seller's BUSA Shares are bound;
(ii) constitute a violation of any order, judgment or decree to which such
Controlling Seller or any of such Controlling Seller's BUSA Shares are bound; or
(iii) result in the creation of any Lien upon such Controlling Seller's BUSA
Shares.
Section 4.4. Affiliate Transactions.
Except as identified on Schedule 4.4, such Controlling Seller is not, and
no director of BUSA appointed by such Controlling Seller is, and no individual
related by blood or marriage to any of the foregoing Persons or any entity that
is an Affiliate of any of the foregoing Persons is, a
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party to any agreement, contract, commitment or transaction with BUSA or any
BUSA Subsidiary or has any material interest in any material property used by
BUSA or any BUSA Subsidiary; provided, however, that no representations are
being made herein with respect to Affiliates of W&C.
Section 4.5. Brokerage.
Except for the W&C Fee, there is no claim for brokerage commissions,
finders' fees or similar compensation in connection with the Transactions based
on any arrangement or agreement which may be binding upon such Controlling
Seller with respect to such Controlling Seller's BUSA Shares.
ARTICLE V.
COVENANTS OF THE PARTIES
Section 5.1. Covenants of BUSA.
(a) Between the date hereof and the Closing Date, unless IP agrees
otherwise in writing, or as otherwise expressly contemplated or permitted
hereby, BUSA will not, and BUSA will cause the BUSA Subsidiaries not to, take
any action with respect to the Business other than in the ordinary course, on an
arm's-length basis and in accordance with all applicable Legal Requirements in
all material respects and past custom and practice. Without limiting the
generality of the preceding sentence and except as otherwise expressly
contemplated or permitted hereby or except as set forth on Schedule 5.1 attached
hereto, BUSA covenants that between the date hereof and the Closing Date, BUSA
and the BUSA Subsidiaries will not, directly or indirectly:
(i) except for those Assets described on Schedule 5.1 attached hereto
and except for the pledge or encumbrance of Assets pursuant to
the Credit Agreement, sell, pledge, dispose of or encumber any
BUSA Shares or one or more operating Assets, other than sales of
inventory in the ordinary course of business and consistent with
past practice (it being acknowledged and agreed that BUSA and the
BUSA Subsidiaries shall be entitled to sell any of the
non-operating assets set forth on Schedule 1.12(d) hereto);
(ii) engage in any activity which would materially accelerate the
collection of its accounts or notes receivable, delay the payment
of its accounts payable, or reduce or otherwise restrict the
amount of inventory (including raw material, packaging,
work-in-process, or finished goods) on hand, in each case, other
than in the ordinary course of the conduct of business and
consistent with past practice;
(iii) acquire (by merger, exchange, consolidation, acquisition of
stock or assets or otherwise) any corporation, partnership, joint
venture or other business organization or division or material
assets thereof;
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(iv) except pursuant to the Credit Agreement, incur any Indebtedness
or issue any debt securities;
(v) except for (a) salary increases not to exceed 2% in the ordinary
course of business consistent with past practices, (b) the
payment of accrued bonuses in the ordinary course of business
consistent with past practices, (c) payments made pursuant to
existing commitments, and (d) the payment of the BUSA Expenses
and the amounts set forth in Sections 1.20 and 8.5 hereof, grant
any bonuses, salary increases, severance or termination pay;
(vi) change the number of BUSA Shares or issue or grant any option,
warrant, call, commitment, subscription, right to purchase or
agreement of any character relating to the authorized or issued
capital stock of BUSA or any BUSA Subsidiary or any securities
convertible into shares of such stock, or split, combine or
reclassify any shares of its capital stock, or redeem or
otherwise acquire any shares of such capital stock, or declare,
set aside or pay any dividend, or other distribution (whether in
cash, stock or property or any combination thereof) in respect of
its capital stock (other than as contemplated pursuant to
Sections 1.6(b) and 1.8 hereof);
(vii) make any material changes in its Tax elections or accounting
methods or practices, other than changes required by GAAP, and
neither BUSA nor any BUSA Subsidiary will participate in any
"listed transaction," or a transaction that is the same as or
substantially similar to a "listed transaction," as defined by
Treas. Reg. Section 1.6011-4(b)(2).;
(viii) take any action designed to render any representation or
warranty made by the BUSA in this Agreement untrue at (or at any
time prior to) the Closing;
(ix) adopt or amend any employee benefit or welfare plan;
(x) change any provision of BUSA's or any BUSA Subsidiary's articles
of incorporation or bylaws or any similar governing documents; or
(xi) enter into or modify, or propose to enter into or modify, any
agreement, arrangement or understanding with respect to any of
the matters referred to in clauses (i) through (x) above.
(b) Between the date hereof and the Closing Date, BUSA shall use
commercially reasonable efforts to cause the insurance policies identified on
Schedule 3.13 not to be canceled or terminated, and not to permit any of the
coverage pursuant to any such policy to lapse, unless at the time of such
termination, cancellation or lapse there is in full force and effect a
replacement policy which provides coverage in an amount which is not less than
the amount of the coverage pursuant to the canceled, terminated or lapsed
policy;
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(c) Between the date hereof and the Closing Date, BUSA will, and will cause
each of the BUSA Subsidiaries to:
(i) use its commercially reasonable efforts to (A) preserve intact
the organization and goodwill of the Business, (B) keep available
the services of its officers and employees as a group, and (C)
maintain satisfactory relationships with its material financing
sources, suppliers and customers and other Persons having
material business relationships with it;
(ii) upon reasonable request and subject to applicable law, confer
with representatives of IP regarding the Business;
(iii) upon reasonable request, and subject to applicable law and
BUSA's reasonable discretion as to the appropriate timing,
arrange meetings with such customers of, and suppliers to, BUSA
and the BUSA Subsidiaries as IP shall reasonably designate in
order that IP may confer with such customers and suppliers
regarding the Business and the nature of the transactions
contemplated by this Agreement;
(iv) maintain the facilities and Assets of BUSA and the BUSA
Subsidiaries in the ordinary course of business consistent with
past practice; and
(v) notify IP of (A) any material adverse change in the normal course
of the Business or in the condition of the Assets or the
operation of the Business and (B) any governmental or third party
complaint, investigation or hearing (or communication indicating
that such a complaint, investigation or hearing is or may be
contemplated) if such change, complaint, investigation or hearing
could reasonably be expected to be material, individually or in
the aggregate, to the financial condition, operating results,
assets, customer or supplier relations, employee relations or
business prospects of the Business.
(d) Between the date hereof and the Closing Date, BUSA promptly will notify
IP if it discovers that any representation or warranty by the Controlling
Sellers or BUSA set forth in this Agreement was untrue in any material respect
when made or subsequently has become untrue in any material respect.
Section 5.2. Access. Subject to the Confidentiality Agreement, BUSA shall
permit IP and its representatives access to each of BUSA's and the BUSA
Subsidiaries' respective properties, and shall make available to IP and its
representatives all books, papers and records relating to BUSA's and the BUSA
Subsidiaries' respective assets, stock ownership, properties, operations,
obligations and liabilities, including, but not limited to, all books of account
(including the general ledger), tax records, minute books of directors' and
stockholders' meetings, organizational documents, bylaws, material contracts and
agreements, filings with any regulatory authority, independent auditors' work
papers (subject to the receipt by such auditors
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of a standard access representation letter), litigation files, plans affecting
employees, and any other business activities or prospects in which IP and its
representatives may have a reasonable interest. IP's access rights hereunder
shall include the right to take samples of soil and water conditions on, at or
under BUSA's and the BUSA Subsidiaries' respective properties, provided that IP
provides prior notice to BUSA, including a reasonable sampling plan, and proof
of adequate insurance by all persons entering upon the properties, which amount
of insurance shall be reasonably calculated to cover loss and damage to property
and injury to and death of all persons arising from the performance of the
sampling activities; and further provided that IP shall restore the property to
its original condition prior to such sampling. Notwithstanding the foregoing,
BUSA shall not be required to provide access to or to disclose information where
such access or disclosure would violate or prejudice the rights of any customer
or would contravene any agreement, law, rule, regulation, order or judgment.
BUSA will use its commercially reasonably efforts to obtain waivers of any such
restriction and in any event make appropriate substitute disclosure arrangements
under circumstances in which the restrictions of the preceding sentence apply.
Section 5.3. Exclusivity. BUSA will not and will cause the BUSA
Subsidiaries and their respective Affiliates, representatives and agents not to
(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 except as expressly contemplated hereby any substantial portion
of the assets, of BUSA or the BUSA Subsidiaries (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. BUSA agrees to notify
IP immediately if any Person makes any proposal, offer, inquiry, or contact with
respect to any of the foregoing.
Section 5.4. IP Covenants. From the date of this Agreement until the
Closing, IP promptly will notify BUSA and the Controlling Sellers'
Representative if any representation or warranty of IP set forth in this
Agreement was untrue in any material respect when made or subsequently has
become untrue in any material respect.
Section 5.5. HSR Act Covenants.
(a) Provided IP pays for any filing fee, BUSA will (i) promptly take all
actions necessary to make the filings required of BUSA under the HSR Act, (ii)
comply at the earliest practicable date with any request for information
received by BUSA from the Federal Trade Commission or the Department of Justice
pursuant to the HSR Act or as requested by any state or foreign competition or
antitrust authority, and (iii) cooperate with IP in connection with IP's filing
under the HSR Act and in connection with resolving any investigation or other
inquiry concerning the Transactions commenced by either the Federal Trade
Commission or the Department of Justice or any state or foreign competition or
antitrust authority.
(b) IP will (i) take promptly all actions necessary to make the filings
required of IP under the HSR Act, (ii) comply at the earliest practicable date
with any request for additional information received by IP from the Federal
Trade Commission or the Department of Justice pursuant to the HSR Act or as
requested by any state or foreign competition or antitrust
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authority, and (iii) cooperate with the Controlling Sellers and BUSA in
connection with their respective filing under the HSR Act and as required by any
state or foreign competition or antitrust authority and in connection with
resolving any investigation or other inquiry concerning the Transactions
commenced by either the Federal Trade Commission or the Department of Justice or
any such any state or foreign competition or antitrust authority.
Notwithstanding anything to the contrary in this Agreement, (x) neither IP
nor any of its subsidiaries shall be required to (i) divest any of their
respective businesses, product lines or assets, or (ii) take or agree to take
any other action or agree to any limitation that could be reasonably expected to
adversely affect IP or its subsidiaries, (y) neither BUSA nor the BUSA
Subsidiaries shall be required to (i) divest any of their respective businesses,
product lines or assets, or (ii) to take or agree to take any other action or
agree to any limitation that could be reasonably expected to adversely affect
BUSA or the BUSA Subsidiaries, and (z) IP shall not be required to waive any of
the conditions to the consummation of the Transactions set forth in Section 7.1
hereof, in each case in connection with the satisfaction of any requirements of,
or in order to receive any approval of, the Federal Trade Commission, the
Department of Justice or any state or foreign competition or antitrust
authority.
Section 5.6. BUSA Senior Notes. Subject to IP providing the funding as
contemplated in Section 1.15 hereof, BUSA shall prior to Closing take all
actions reasonably requested by IP in connection with the Change of Control
Offer and notice of redemption with respect to the BUSA Senior Notes.
Section 5.7. Additional Covenants. Each Party will use commercially
reasonable efforts to:
(a) take or cause to be taken all actions, and do or cause to be done all
things, which are necessary, proper or advisable to cause any other Party's
conditions set forth in Sections 7.1 and 7.2 to be fully satisfied, and
(b) consummate, close and make effective as promptly as practicable the
Transactions, including commercially reasonable efforts to obtain the consents
referenced in Article VII.
Section 5.8. Controlling Sellers' Representative.
(a) Each of the Controlling Sellers hereby appoints and elects the
Controlling Sellers' Representative (as defined in Section 9.1 hereof) to act
without compensation as the attorney-in-fact, agent and representative of the
Controlling Sellers, subject to the limitations set forth in this Section
5.8(a), for purposes of making any election or taking any action whatsoever on
their behalf or in their name with respect to this Agreement or any of the
Transaction Documents, including to (i) deliver to IP at the Closing the
certificates for the BUSA Shares; (ii) execute and deliver to IP at the Closing
all certificates and documents to be delivered to IP by the Controlling Sellers
pursuant to this Agreement and the Transaction Documents, (iii) incur expenses
on behalf of the Controlling Sellers in connection with this Agreement, the
Transaction Documents and the transactions contemplated hereby and thereby as
the Controlling Sellers' Representative may deem appropriate; and (iv) take such
action on behalf of the Controlling Sellers as the
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Controlling Sellers' Representative may deem appropriate in respect of: (1)
waiving any inaccuracies in the representations or warranties of IP contained in
this Agreement or the Transaction Documents; (2) amending or waiving any
provision of this Agreement or the Transaction Documents (provided, however,
that no such amendment or waiver shall (A) modify this Section 5.8 or the
Consent and Waiver dated on or about the date hereof among BUSA, the Controlling
Sellers and the other parties thereto, or (B) reduce the amount of the Purchase
Consideration or change the allocation of the Purchase Consideration among the
holders of BUSA Shares, other than as a result of the Net Working Capital
adjustment contemplated by Section 1.13 hereof, the Controlling Seller's
Indemnity (as defined below) or any offsets against the Note provided for in
this Agreement); (3) delivering the Schedules to this Agreement; (4) taking such
other action as the Controlling Sellers are authorized to take under this
Agreement or the Transaction Documents; (5) receiving all documents or
certificates and making all determinations, on behalf of the Controlling
Sellers, required under this Agreement or the Transaction Documents; (6)
resolving any dispute with IP over any aspect of this Agreement or the
Transaction Documents, including the Net Working Capital adjustment contemplated
in Article I hereof and claims by the IP Indemnitees for indemnification
hereunder; (7) all such other matters as the Controlling Sellers' Representative
may deem necessary or appropriate to consummate the transactions contemplated by
this Agreement or the Transaction Documents; (8) taking all such action as may
be necessary after the Closing Date to carry out any of the transactions
contemplated by this Agreement or the Transaction Documents; and (9) entering
into any agreement to effectuate any of the foregoing which shall have the
effect of binding such Controlling Seller as if such Controlling Seller had
personally entered into such agreement.
(b) A decision, act, consent, or instruction of the Controlling Sellers'
Representative made in accordance with this Section 5.8 shall constitute a
decision of all the Controlling Sellers and shall be final, binding, and
conclusive upon each such Controlling Seller, and IP may rely upon any such
decision, act, consent, or instruction of the Controlling Sellers'
Representative as being the decision, act, consent, or instruction of each
Controlling Seller without inquiry, investigation or other obligation of IP.
(c) The Controlling Sellers' Representative shall not be liable to any
Controlling Seller for the performance of any act or the failure to act under or
in connection with this Agreement or any of the Transaction Documents, so long
as he acted or failed to act in good faith in what he reasonably believed to be
the scope of his authority and for a purpose that he reasonably believed to be
in the best interests of the Controlling Sellers taken as a whole. In performing
his obligations hereunder in accordance with the authority set forth above, the
Controlling Sellers' Representative shall take such actions in a manner that he
reasonably believes in good faith treats the Controlling Sellers equitably.
(d) Each Controlling Seller agrees, severally and not jointly, to indemnify
the Controlling Sellers' Representative and hold him harmless on a Proportionate
Basis against any loss, damage, liability, demand, claim, action, cause of
action, cost, deficiency, penalty, fine or other expense incurred in good faith
on the part of the Controlling Sellers' Representative and arising out of or in
connection with the performance of the Controlling Sellers' Representative's
duties hereunder or under the Transaction Documents, including the reasonable
fees and expenses of any legal counsel, accountants, consultants, or other
experts retained by the Controlling Sellers' Representative and all amounts paid
or incurred in connection with any
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action, demand, proceeding, investigation or claim by any of the IP Indemnitees
or a third party (including any Governmental Entity) relating thereto (the
"Controlling Seller's Indemnity").
Section 5.9. Supplemental Schedules. Prior to Closing, BUSA shall be
entitled to supplement or amend the Schedules delivered in connection herewith
with respect to any matter which, if existing, occurring or known at the date of
this Agreement, would have been required to be set forth or described in any
such Schedule or which is necessary to correct any information in any such
Schedule which has been rendered inaccurate thereby, and whether or not such
matter is material (a "Supplemental Schedule"). No Supplemental Schedule shall
have any effect for the purpose of determining satisfaction of the conditions
set forth in Section 7.1(a) hereof. To the extent such Supplemental Schedules
are received by IP within ten (10) business days after the date hereof, in the
event that any such Supplemental Schedule would result in an indemnifiable Loss
or Recoverable Amount if not disclosed prior to the date hereof, and if the
aggregate amount of indemnifiable Losses and Recoverable Amounts relating to all
such Supplemental Schedules is less than $250,000, then, notwithstanding
anything in this Agreement to the contrary, such amounts shall not be
indemnified under Article VI hereof and shall not be counted toward the
Threshold Amount. To the extent such Supplemental Schedules are received by IP
within ten (10) business days after the date hereof, in the event that any such
Supplemental Schedule would result in an indemnifiable Loss or Recoverable
Amount if not disclosed prior to the date hereof, and if the aggregate amount of
indemnifiable Losses and Recoverable Amounts relating to all such Supplemental
Schedules is equal to or more than $250,000, then such amounts shall be counted
toward the Threshold Amount from the first dollar, and, if such Losses and
Recoverable Amounts exceed the Threshold Amount, then such Losses and
Recoverable Amounts shall be indemnified under Article VI hereof, subject to the
provisions thereof. To the extent that Supplemental Schedules are received by IP
after the date that is ten (10) business days after the date hereof, and any
such Supplemental Schedule would result in an indemnifiable Loss or Recoverable
Amount if not disclosed prior to the date hereof, then all Losses and
Recoverable Amounts relating to such Supplemental Schedules received by IP after
the end of such ten (10) business day period shall be counted toward the
Threshold Amount, and, if such Losses and Recoverable Amounts exceed the
Threshold Amount, then such Losses and Recoverable Amounts shall be indemnified
under Article VI hereof, subject to the provisions thereof.
Section 5.10. State Qualifications. Prior to the Closing, BUSA shall take
commercially reasonable efforts to cause the BUSA Subsidiaries to become
qualified and in good standing in each of the jurisdictions listed opposite its
name on Schedule 3.3.
ARTICLE VI.
SURVIVAL AND INDEMNIFICATION
Section 6.1. Survival of Representations and Warranties.
(a) Survival Term. The representations and warranties set forth in (x)
Section 3.6(c) hereof or in any closing certificate relating to such section
delivered in connection with the transactions contemplated hereby shall survive
the Closing for a period of thirty (30) days, and (y) Sections 3.16(a)(viii) and
3.16(b)(x) hereof or in any closing certificate relating to such sections
delivered in connection with the transactions contemplated hereby shall survive
the
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Closing for a period of sixty (60) days. Except as set forth in the immediately
preceding sentence, the representations and warranties contained herein or made
in writing by any Party in connection herewith shall survive for a period of two
(2) years following the Closing Date; provided, however, that the
representations and warranties set forth in the first sentence of Section 2.2,
Section 3.1(b) and the first sentence of Section 3.2 shall survive the Closing
indefinitely (the "Survival Term").
(b) Special Rule for Fraud. Notwithstanding anything in this Section 6.1 to
the contrary, in the event of a breach of a representation or warranty arising
out of fraud committed by either IP or a Controlling Seller, the representation
or warranty of IP or such Controlling Seller, as applicable, that has been
breached will survive the execution and delivery of this Agreement and the
consummation of the Transactions contemplated hereby (regardless of any
investigation made by any Party or on its behalf) and will continue in full
force and effect for perpetuity.
(c) No Waiver. Except as otherwise provided herein, neither a Party's
participation in the consummation of any transaction pursuant to any Transaction
Document nor any waiver of any condition to such participation (including any
condition that a representation or warranty of any other Party be true and
correct) will constitute a waiver by such participating Party of any
representation or warranty of any Party or otherwise affect the survival of any
such representation or warranty.
Section 6.2. Indemnification Obligations of the Controlling Sellers.
Subject to the limitations set forth in this Article VI, each Controlling
Seller, severally and not jointly, will indemnify IP and its Affiliates,
officers, directors, employees, agents, representatives and permitted successors
and assigns (collectively, the "IP Indemnitees") and hold each IP Indemnitee
harmless on a Proportionate Basis against any Loss with respect to BUSA or any
BUSA Subsidiary which any IP Indemnitee suffers, sustains or becomes subject to
as a result of, in connection with, relating to or by virtue of, the following,
without duplication:
(i) subject to the survival provisions of Section 6.1, any
misrepresentation or breach of any representation or warranty
(other than breaches of representations and warranties arising
out of fraud committed by such Controlling Seller) (a) by BUSA
set forth in this Agreement or any Schedule or closing
certificate furnished to IP pursuant to any Transaction Document
or (b) by such Controlling Seller set forth in Article IV hereof;
provided, that the Controlling Sellers will not have any
liability under this Section 6.2(i) unless and until the
aggregate of all Losses under this Section 6.2(i) (together with
any (x) Recoverable Amounts pursuant to Section 6.8 hereof, and
(y) any Losses indemnifiable pursuant to Section 6.9 hereof)
exceeds $1,000,000 (the "Threshold Amount"), in which event the
IP Indemnities shall be entitled, subject to the other
limitations set forth in this Article VI, to recover only the
aggregate amount of Losses and Recoverable Amounts in excess of
the Threshold Amount; or
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(ii) breach of any representation or warranty (a) by BUSA set forth in
this Agreement or any Schedule or closing certificate furnished
to IP pursuant to any Transaction Document, or (b) by such
Controlling Seller set forth in Article IV hereof, in each case
arising out of fraud committed by Xxxxxxx Xxxxxx or by such
Controlling Seller (either in such Person's capacity as a
Controlling Seller or in such Person's capacity as an officer or
director of BUSA); or
(iii) any nonfulfillment or breach of any covenant or agreement of
BUSA or any Controlling Seller set forth in any Transaction
Document; or
(iv) any liability in connection with the consummation of the
transactions contemplated hereby to any prospective buyer with
whom BUSA or any of its agents have had discussions regarding the
disposition of BUSA.
Section 6.3. Indemnification Obligations of IP. IP will indemnify the
Controlling Sellers and their Affiliates (other than BUSA and the BUSA
Subsidiaries), officers, directors, employees, agents, representatives and
permitted successors and assigns (collectively, the "Seller Indemnitees") and
hold each of them harmless against any Loss which a Seller Indemnitee suffers,
sustains or becomes subject to as a result of, in connection with, relating to
or by virtue of, without duplication:
(a) subject to the survival provisions of Section 6.1, any
misrepresentation or breach of any representation or warranty (other than
breaches of representations and warranties arising out of fraud) by IP set forth
in this Agreement or any Schedule or closing certificate delivered to the
Controlling Sellers by IP pursuant to any Transaction Document;
(b) breach of any representation or warranty arising out of fraud by IP set
forth in this Agreement or any Schedule or closing certificate delivered to the
Controlling Sellers by IP pursuant to any Transaction Document; or
(c) any nonfulfillment or breach of any covenant or agreement of IP set
forth in any Transaction Document.
Section 6.4. Indemnification Procedures.
(a) Notice of Claim. Any Person making a claim for indemnification pursuant
to this Article VI (an "Indemnified Party") must give the Party or Parties from
whom indemnification is sought (an "Indemnifying Party") written notice of such
claim (an "Indemnification Claim Notice") promptly after the Indemnified Party
receives any written notice of any action, lawsuit, proceeding, investigation or
other claim (a "Proceeding") against or involving the Indemnified Party by a
Government Entity or other third party, or otherwise discovers the liability,
obligation or facts giving rise to such claim for indemnification; provided,
that the failure to notify or delay in notifying an Indemnifying Party will not
relieve the Indemnifying Party of its obligations pursuant to this Article VI,
except to the extent that such failure actually xxxxx the Indemnifying Party.
Such notice must contain a description of the claim and the nature and amount of
such Loss (to the extent that the nature and amount of such Loss is known or
reasonably ascertainable at such time). In the event that an Indemnification
Claim Notice is delivered to the Controlling
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Sellers' Representative within the Survival Period with respect to a claim for
indemnification pursuant to this Article VI, (i) if such Indemnification Claim
Notice indicates the reasonably ascertainable amount of such Loss, then an
amount equal to the amount of such Loss (including the entire unpaid principal
amount of the Note and any interest accrued but unpaid thereon at such time in
the event that the amount of such Loss exceeds the unpaid principal amount of
the Note and any interest accrued but unpaid thereon at such time) shall not be
paid on the Note in accordance with the terms thereof until the final resolution
of such claim under this Article VI, and (ii) if such Indemnification Claim
Notice relates to an Unquantifiable Claim, then the amount to be withheld from
the Note pending resolution of such claim shall be determined in accordance with
Section 1.10 hereof.
(b) Control of Defense; Conditions. With respect to the defense of any
Proceeding against or involving an Indemnified Party in which a Government
Entity or other third party in question seeks the recovery of a sum of money for
which indemnification is provided in Section 6.2 or 6.3, at its option an
Indemnifying Party may appoint as lead counsel of such defense any legal counsel
selected by the Indemnifying Party.
(c) Control of Defense; Related Matters. Notwithstanding Section 6.4(b):
(i) the Indemnified Party will be entitled to participate in the
defense of such claim and to employ counsel of its choice for
such purpose at its own expense; provided, that the Indemnifying
Party will bear the reasonable fees and expenses of such separate
counsel incurred prior to the date upon which the Indemnifying
Party assumes control of such defense;
(ii) the Indemnifying Party will not be entitled to assume control of
the defense of such claim, and will pay the reasonable fees and
expenses of legal counsel retained by the Indemnified Party
(which counsel shall be reasonably acceptable to the Indemnified
Party), if
(A) after giving effect to the limitations on the
indemnification set forth in Article VI hereof, the
Indemnified Party is reasonably expected to bear a majority
of the Losses relating to such claim after giving effect to
any indemnification from the Indemnifying Party hereunder;
(B) the Indemnifying Party elects within 15 days in writing not
to assume the defense of the claim pursuant to Section
6.4(b) hereof,
(C) a conflict of interest exists or could reasonably be
expected to arise which, under applicable principles of
legal ethics, could reasonably be expected to prohibit a
single legal counsel from representing both the Indemnified
Party and the Indemnifying Party in such Proceeding, or
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(D) a court of competent jurisdiction rules that the
Indemnifying Party has failed or is failing to prosecute or
defend vigorously such claim;
provided, in each case that the Indemnified Party shall be
prohibited from compromising or settling the claim without the
prior written consent of the Indemnifying Party, which consent
shall not be unreasonably withheld or delayed.
(d) Cooperation. In the event that the Indemnifying Party assumes the
defense of such claim, the Indemnified Party will cooperate with and make
available to the Indemnifying Party such assistance, personnel, witnesses and
materials as the Indemnifying Party may reasonably request. Regardless of which
party defends such claim, the other party shall have the right at its expense to
participate in the defense assisted by counsel of its own choosing.
(e) Settlements. Without the prior written consent of the Indemnified Party
(which shall not be unreasonably withheld or delayed), the Indemnifying Party
shall not enter into any settlement of any such claim for which the Indemnified
Party has assumed the defense pursuant to Section 6.4(b) hereof if pursuant to
or as a result of such settlement, such settlement would result in any liability
on the part of the Indemnified Party for which the Indemnified Party is not
entitled to indemnification hereunder. If a firm offer is made to settle such
claim, which offer the Indemnifying Party is permitted to settle under this
Section 6.4(e), and the Indemnifying Party desires to accept and agree to such
offer, the Indemnifying Party shall give written notice to the Indemnified Party
to that effect. If the Indemnified Party objects to such firm offer within ten
days after its receipt of such notice, the Indemnified Party may continue to
contest or defend such claim and, in such event, the maximum liability of the
Indemnifying Party as to such claim shall not exceed such amount of such
settlement offer payable by the Indemnifying Party hereunder, plus other Losses
paid or incurred by the Indemnified Party up to the point such notice had been
delivered. If the Indemnified Party has assumed control of the defense of a
claim pursuant to this Section 6.4 for which indemnification is provided in
Section 6.2 or 6.3, the Indemnified Party shall provide the Indemnifying Party
with written notice of any firm offer to settle such claim. If a firm offer is
made to settle such claim and the Indemnifying Party desires to accept and agree
to such offer, the Indemnifying Party shall give written notice to the
Indemnified Party to that effect. If the Indemnified Party objects to such firm
offer within ten days after its receipt of such notice, the Indemnified Party
may continue to contest or defend such claim and, in such event, the maximum
liability of the Indemnifying Party as to such claim shall not exceed the such
amount of such settlement offer payable by the Indemnifying Party hereunder,
plus other Losses paid or incurred by the Indemnified Party up to the point such
notice had been delivered.
Section 6.5. Treatment of Indemnification Payments. Amounts paid to or on
behalf of IP or the Controlling Sellers as indemnification hereunder shall be
treated as adjustments to the consideration paid by IP pursuant to the
Transactions.
Section 6.6. [Reserved]
Section 6.7. Arbitration Procedure.
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(a) The Parties agree that the arbitration procedure set forth below shall
be the sole and exclusive method for resolving and remedying claims for money
damages arising out of the provisions of Article VI (the "Disputes"); provided,
however, that nothing in this Section 6.7 shall prohibit a Party from (i)
instituting litigation to enforce any Final Determination (as defined below) or
(ii) from joining another Party in a litigation initiated by a Person which is
not a Party. The Parties hereby agree and acknowledge that, except as otherwise
provided in this Section 6.7 or in the Commercial Arbitration Rules of the
American Arbitration Association as in effect from time to time, the arbitration
procedures and any Final Determination hereunder shall be governed by, and shall
be enforced in accordance with the Commercial Arbitration Rules of the American
Arbitration Association.
(b) In the event that any Party asserts that there exists a Dispute, such
Party shall deliver a written notice to the other Party specifying the nature of
the asserted Dispute and requesting a meeting to attempt to resolve the same. If
no such resolution is reached within 30 days after the delivery of such notice,
either Party (the "Disputing Party") may commence arbitration hereunder by
delivering to the other Party a notice of arbitration (a "Notice of
Arbitration"). Such Notice of Arbitration shall specify (i) the matters as to
which arbitration is sought, (ii) the nature of any Dispute, (iii) the claims of
the Disputing Party, (iv) the amount and nature of any damages, if any, sought
to be recovered as a result of any alleged claim and (v) any other matters
required by the Commercial Arbitration Rules of the American Arbitration
Association as in effect from time to time to be included therein, if any.
(c) IP and the Controlling Sellers' Representative each shall select one
non-neutral arbitrator expert in the subject matter of the Dispute (the
arbitrators so selected shall be referred to herein as the "IP's Arbitrator" and
the "Controlling Sellers' Arbitrator," respectively). In the event that either
IP or the Controlling Sellers' Representative fails to select an arbitrator as
set forth herein within 20 days from the delivery of a Notice of Arbitration,
then the matter shall be resolved by the arbitrator selected by the other. The
Controlling Sellers' Arbitrator and IP's Arbitrator shall select a third
independent, neutral arbitrator expert in the subject matter of the dispute, and
the three arbitrators so selected shall resolve the matter according to the
procedures set forth in this Section 6.7. If the Controlling Sellers' Arbitrator
and IP's Arbitrator are unable to agree on a third arbitrator within 20 days
after their selection, the Controlling Sellers' Arbitrator and IP's Arbitrator
shall each prepare a list of three independent arbitrators. The Controlling
Sellers' Arbitrator and IP's Arbitrator shall each have the opportunity to
designate as objectionable and eliminate one arbitrator from the other
arbitrator's list within seven (7) days after submission thereof, and the third
arbitrator shall then be selected by lot from the arbitrators remaining on the
lists submitted by the Controlling Sellers' Arbitrator and IP's Arbitrator.
(d) The arbitrator(s) selected pursuant to Section 6.7(c) above will
allocate the costs and expenses of arbitration (and legal fees and expenses
associated therewith) to each Party in proportion to the contested amount not
awarded to each Party relative to the total contested amount.
(e) The arbitration shall be conducted in Chicago, Illinois under the
Commercial Arbitration Rules of the American Arbitration Association as in
effect from time to time, except as modified by the agreement of all of the
parties to this Agreement. The arbitrator(s) shall so conduct the arbitration
that a final result, determination, finding, judgment and/or award (the
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"Final Determination") is made or rendered as soon as practicable. The Final
Determination must be agreed upon and signed by the sole arbitrator or by at
least two of the three arbitrators (as the case may be). The Final Determination
shall be final and binding on all parties and there shall be no appeal from or
reexamination of the Final Determination, except for fraud, perjury or
misconduct by an arbitrator prejudicing the rights of any Party and to correct
manifest clerical errors. If the Final Determination provides that any of the IP
Indemnitees is entitled to recovery, then it shall have the right as of the date
of the Final Determination to offset such recovery against amounts payable under
the Note in accordance with the terms and conditions thereof.
(f) IP and the Controlling Sellers may enforce any Final Determination in
any state or federal court located in the State of Illinois. For the purpose of
any action or proceeding instituted with respect to any Final Determination,
each Party hereto hereby irrevocably submits to the jurisdiction of such courts,
irrevocably consents to the service of process by registered mail or personal
service and hereby irrevocably waives, to the fullest extent permitted by law,
any objection which it may have or hereafter have as to personal jurisdiction,
the laying of the venue of any such action or proceeding brought in any such
court and any claim that any such action or proceeding brought in any court has
been brought in an inconvenient forum.
Section 6.8. Certain Tax Matters.
(a) Tax Indemnification.
(i) Subject to the limitations set forth in this Article VI, the
Controlling Sellers will, severally and not jointly, indemnify IP
and save and hold it harmless on a Proportionate Basis from and
against any liability for Taxes (other than Conveyance Taxes, as
defined below) of BUSA and the BUSA Subsidiaries for all taxable
periods ending on or before the Closing Date and the portion of
any Straddle Period (as defined below) ending on the Closing Date
(a "Pre-Closing Tax Period"). For the purpose of such
indemnification, IP's liability for Taxes shall be determined
after the proper application in accordance with the Code of any
and all net operating losses, capital losses, or other
carryforwards or carrybacks of deductions or credits of BUSA and
the BUSA Subsidiaries arising in a Pre-Closing Tax Period, and
the Controlling Sellers shall have no liability pursuant to this
Section 6.8 for any reduction in net operating losses or other
carryforwards from Pre-Closing Tax Periods to periods after the
Closing Date. Further, the Controlling Sellers shall not
indemnify or hold harmless IP from or against any liability for
Taxes until (1) the total of the Controlling Sellers'
indemnification obligations pursuant to this Section 6.8(a)(i)
without regard to this clause exceeds any amounts reserved for
Taxes on the Final Statement (the amount of such excess being
referred to as the "Recoverable Amount") and (2) such Recoverable
Amounts, together with any Losses under Section 6.2(i) hereof and
any Losses under Section 6.9 hereof, exceed the Threshold Amount,
in which event IP shall be entitled, subject to the other
limitations set forth in this Article VI, to recover only the
aggregate amount of Losses and Recoverable Amounts in excess of
the
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Threshold Amount. The measure of such indemnification shall take
account of any credit, relief, set-off, deduction, right to
repayment or other benefit which shall become available to IP,
BUSA or any BUSA Subsidiary as a result of any such liability for
Taxes, the discharge of it or any payment by BUSA under this
Section 6.8(a)(i) and of any other relief from Taxes available as
a result of any event or circumstances prior to Closing but not
taken into account in the Final Statement.
(ii) IP will indemnify the Seller Indemnitees and save and hold them
harmless from and against (A) any liability for Taxes of BUSA and
the BUSA Subsidiaries for any taxable period ending after the
Closing Date (except with respect to a Straddle Period, in which
case IP's indemnity will cover only that portion of any Taxes
other than Conveyance Taxes that do not relate to a Pre-Closing
Tax Period) and (B) any liability for greater than one-half of
Conveyance Taxes.
(iii) In the case of any taxable period that includes but does not end
on the Closing Date (a "Straddle Period"), IP and BUSA will, to
the extent permitted by applicable law, elect with the relevant
taxing authority to treat such taxable period for all purposes as
a short taxable period ending as of the close of the Closing
Date. In any case where applicable law does not permit such an
election to be made, Taxes of BUSA and the BUSA Subsidiaries for
the Straddle Period shall be allocated to the Pre-Closing Tax
Period using an interim closing-of-the-books method assuming that
such taxable period ended at the close of the Closing Date,
except that (A) exemptions, allowances or deductions that are
calculated on an annual basis (such as the deduction for
depreciation) shall be apportioned on a per-diem basis and (B)
real property, personal property, intangibles and other similar
taxes relating to assets located in the United States shall be
allocated in accordance with the principles of Section 164(d) of
the Code.
(iv) Notwithstanding anything in this Agreement to the contrary,
Seller Indemnitees shall have no liability under this Agreement
in respect of Taxes of BUSA and the BUSA Subsidiaries which are
attributable to any action of IP or any of its Affiliates
(including, without limitation, BUSA and the BUSA Subsidiaries)
that occurs after the Closing (whether on the Closing Date or
otherwise).
(v) To the extent that an indemnification obligation pursuant to this
Section 6.8 may overlap with any other indemnification obligation
pursuant to this Article VI, the provisions of this Section 6.8
shall govern such indemnification obligation and the party
entitled to such indemnification shall be limited to
indemnification under this Section 6.8.
(b) Procedures Relating to Tax Indemnification.
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(i) If a claim for Taxes, including, without limitation, notice of a
pending or threatened audit, shall be made by any taxing
authority in writing (a "Tax Claim"), which, if successful, could
result in an indemnity payment pursuant to this Section 6.8,
without regard to the Threshold Amount or any amounts reserved
for Taxes on the Final Statement, as contemplated by Section
6.8(a)(i), the indemnitee seeking indemnification (the "Tax
Indemnified Party") shall notify the indemnifying party (and, if
the Controlling Sellers, the Controlling Sellers' Representative)
(the "Tax Indemnifying Party") in writing of the Tax Claim within
thirty (30) days of receipt of such Tax Claim. If notice of a Tax
Claim is not given to the Tax Indemnifying Party within such
thirty-day period or in detail sufficient to apprise the Tax
Indemnifying Party of the nature of the Tax Claim, the Tax
Indemnifying Party shall not be liable to the Tax Indemnified
Party to the extent that the Tax Indemnifying Party's position
could be prejudiced as a result thereof.
(ii) With respect to any Tax Claim relating to a Pre-Closing Tax
Period that is not a Straddle Period which could result in an
indemnity payment to IP pursuant to Section 6.8(a)(i), without
regard to the Threshold Amount or any amounts reserved for Taxes
on the Final Statement, as contemplated by Section 6.8(a)(i), the
Controlling Sellers' Representative shall control all proceedings
taken in connection with such Tax Claim (including, without
limitation, selection of counsel) and, without limiting the
foregoing, may in his sole discretion and at his sole expense
pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with any taxing authority with respect
thereto, and may, in his sole discretion, either cause IP to pay
the Tax Claim (which amount may be offset by IP against the Note
in accordance with the terms and conditions thereof) and xxx for
a refund where applicable law permits such refund suits or
contest such Tax Claim in any permissible manner; provided,
however, that IP shall have a right to participate in such
proceedings to the extent that the resolution of any such Tax
Claim might reasonably be expected to have a material effect on
Taxes following the Closing. In no case shall IP, any of its
Affiliates or any successor to either of them, settle or
otherwise compromise any Tax Claim referred to in the preceding
sentence without the Controlling Sellers' Representative's prior
written consent. IP, BUSA and the BUSA Subsidiaries, their
Affiliates and any successors thereto shall cooperate with the
Controlling Sellers' Representative in contesting such Tax Claim,
which cooperation shall include, without limitation, the
retention and (upon the Controlling Sellers' Representative's
request) the provision to the Controlling Sellers' Representative
of records and information which are relevant to such Tax Claim
and making employees available to provide additional information
or explanation of any material provided hereunder or to testify
at proceedings relating to such Tax Claim. In the case of any Tax
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Claim that relates to Taxes of BUSA or any BUSA Subsidiary for a
Straddle Period, the Controlling Sellers' Representative and IP
shall jointly control the proceedings relating to such Tax Claim.
(c) Tax Dispute Resolution Mechanism. Wherever in this Section 6.8 it is
provided that a dispute shall be resolved pursuant to the "Tax Dispute
Resolution Mechanism," such dispute shall be resolved as follows: The parties
shall submit the dispute to an Independent Accounting Firm for resolution, which
resolution shall be final, conclusive and binding on the parties. All fees and
expenses relating to the work, if any, to be performed by the Independent
Accounting Firm shall be paid by IP, and IP shall be entitled to offset 50% of
such fees and expenses against amounts otherwise due and payable under the Note
in accordance with the terms thereof.
(d) Survival of Tax Provisions. Any claim to be made pursuant to this
Section 6.8 must be made prior to the second anniversary of the Closing Date.
(e) Return Filings, Refunds and Credits.
(i) IP shall prepare, or cause to be prepared, and file, or cause to
be filed, on a timely basis, all Tax Returns with respect to BUSA
and the BUSA Subsidiaries with a due date, including valid
extensions thereof, after the Closing Date. The computation of
Taxes and the reporting of items for any Pre-Closing Period shall
be in a manner consistent with the manner in which such Taxes
were computed and such items were reported in preceding taxable
periods ("Past Practice"). Before filing any Tax Return with
respect, in whole or in part, to any Pre-Closing Period, IP shall
provide the Controlling Sellers' Representative with a copy of
such Tax Return at least twenty days prior to the last date for
timely filing such Tax Return (giving effect to any valid
extensions thereof), accompanied by a statement calculating in
reasonable detail the Controlling Sellers' indemnification
obligation pursuant to Section 6.8(a)(i). If for any reason the
Controlling Sellers' Representative does not agree with IP's
calculation of its indemnification obligation, the Controlling
Sellers' Representative shall notify IP of its disagreement
within ten days of receiving a copy of the Tax Return and IP's
calculation, and such dispute shall be resolved pursuant to the
Tax Dispute Resolution Mechanism. If the Controlling Sellers'
Representative agrees with IP's calculation of their
indemnification obligation, IP shall have a right of offset
against the Note pursuant to the terms thereof in the amount of
the Controlling Sellers' indemnification obligation effective at
least one business day prior to the last date for timely filing
such Tax Return (including any valid extensions thereof). Except
as herein provided, neither IP nor any of BUSA and the BUSA
Subsidiaries shall file any Tax Return with respect to BUSA and
the BUSA Subsidiaries for any Pre-Closing Tax Period without the
prior written consent of the Controlling Sellers' Representative.
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(ii) BUSA, the Controlling Sellers' Representative and the BUSA
Subsidiaries and IP shall reasonably cooperate, and shall cause
their respective Affiliates, officers, employees, agents,
auditors and representatives reasonably to cooperate, in
preparing and filing all Tax Returns (including claims for
refund), including maintaining and making available to each other
all records necessary in connection with Taxes and in resolving
all disputes and audits with respect to all taxable periods
relating to Taxes. IP and the Controlling Sellers' Representative
recognize that the Controlling Sellers' Representative, the
Controlling Sellers and their respective Affiliates will need
access, from time to time, after the Closing Date, to certain
accounting and tax records and information held by BUSA and the
BUSA Subsidiaries to the extent such records and information
pertain to events occurring prior to the Closing Date; therefore,
IP agrees that (A) from and after the Closing Date, IP shall, and
shall cause BUSA and the BUSA Subsidiaries, their Affiliates and
their successors to, (1) retain and maintain such records until
such time as the Controlling Sellers' Representative agrees that
such retention and maintenance is no longer necessary and (2)
allow the Controlling Sellers' Representative and his agents and
representatives (and agents and representatives of the
Controlling Sellers and their respective Affiliates), to inspect,
review and make copies of such records as the Controlling
Sellers' Representative may deem necessary or appropriate from
time to time.
(iii) Any refunds or credits of Taxes of BUSA and the BUSA
Subsidiaries plus any interest received with respect thereto from
the applicable taxing authority for any taxable period ending on
or before the Closing Date (including, without limitation,
refunds or credits arising by reason of amended Tax Returns filed
after the Closing Date) shall be paid by IP to the Controlling
Sellers on a Proportionate Basis within 10 days after IP, BUSA or
such BUSA Subsidiary receives such refund or after the relevant
Tax Return is filed in which the credit is applied against IP's,
BUSA's, such BUSA Subsidiaries', any of their Affiliates' or any
of their successors' liability for Taxes; provided, however, that
such refund or credit payable to the Controlling Sellers may be
reduced to the extent of actual tax payments to be made by IP,
BUSA or such BUSA Subsidiary in respect of such refund or credit.
Any refunds or credits of Taxes of BUSA and the BUSA Subsidiaries
plus any interest received with respect thereto from the
applicable taxing authority for any taxable period beginning
after the Closing Date shall be for the account of IP. Any
refunds or credits of Taxes of BUSA and the BUSA Subsidiaries for
any Straddle Period shall be apportioned between the Controlling
Sellers (on a Proportionate Basis) and IP in the same manner as
the liability for such Taxes is apportioned pursuant to Section
6.8(a)(iii).
(iv) At the Controlling Sellers' Representative's request (and for the
account of the Controlling Sellers, who shall be severally and
not jointly
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responsible on a Proportionate Basis for out-of-pocket costs), IP
shall cause BUSA and the BUSA Subsidiaries and any of their
successors to file for and obtain any refunds or credits with
respect to Income Taxes to which, consistent with Past Practice,
BUSA and the BUSA Subsidiaries are entitled under applicable law
for a Pre-Closing Tax Period. In connection therewith, (A) (i)
for a refund or credit relating to a Pre-Closing Tax Period that
is not a Straddle Period, IP shall permit the Controlling
Sellers' Representative (at the Controlling Sellers'
Representative's expense) to control the prosecution of any such
refund claim and, where reasonable and appropriate, IP shall
cause BUSA or the relevant BUSA Subsidiary and any of its
successors to authorize by appropriate powers of attorney such
persons as the Controlling Sellers' Representative shall
designate to represent BUSA or such subsidiary or any of its
successors with respect to such refund claim and (ii) for a
refund or credit relating to a Straddle Period, the Controlling
Sellers' Representative (at his expense) shall have the right to
participate in (but not control) the prosecution of any such
refund claim; and (B) IP shall cause BUSA or the relevant BUSA
Subsidiary or any of its successors to pay any such refund to the
Controlling Sellers on a Proportionate Basis within 10 days after
the refund is received (or pay to the Controlling Sellers on a
Proportionate Basis the amount of any such credit within 10 days
after the relevant Tax Return is filed in which the credit is
actually applied against BUSA's or an BUSA Subsidiary's, any of
its Affiliates' or any of its successors' liability for Taxes),
whichever is earlier.
(f) Elections. Except as otherwise specifically provided in this Agreement,
IP shall not, and shall cause BUSA and the BUSA Subsidiaries not to, make, amend
or revoke any election with respect to Taxes, if such action would adversely
affect the tax liability or refund of the Controlling Sellers or any of their
Affiliates in any taxable period or cause BUSA to have an indemnification
obligation pursuant to Section 6.8(a)(i). From the date of this Agreement until
Closing, BUSA shall make no material elections affecting Taxes unless agreed to
in writing by IP.
(g) Exclusivity. Subject to Section 6.10 hereof, this Section 6.8 shall be
the sole provision governing the retention of records of BUSA and the BUSA
Subsidiaries and the procedures for all indemnification claims, in each case
with respect to Taxes.
Section 6.9. Procedures and Rights Relating to Environmental
Indemnification.
(a) Indemnification. From and after the Closing and subject to the
limitations set forth elsewhere in this Article VI, the Controlling Sellers
shall, severally and not jointly, indemnify, defend and hold harmless IP, any
Subsidiary or Affiliate thereof, their directors, officers, employees and
agents, on a Proportionate Basis, from and against all Losses, asserted against,
resulting to, imposed upon or incurred by IP, whether before or after the
Closing by reason of or resulting from Remedial Action or violation of
applicable Environmental and Safety Requirements arising from (i) the Release or
threatened Release by BUSA, a BUSA Subsidiary or their respective agents or
employees on or prior to the Closing Date of Hazardous Substances
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into the environment (including ambient air, indoor air, surface water, ground
water, land surface or sub-surface strata) at, on, under or migrating from any
Owned Real Property or Leased Real Property; and (ii) the Release or threatened
Release of Hazardous Substances into the environment (including ambient air,
indoor air, surface water, ground water, land surface or sub-surface strata) at,
on, under or migrating from any Owned Real Property or Leased Real Property
resulting from the use by BUSA or a BUSA Subsidiary of pipes, tanks or other
equipment constituting part of the Business that leaked before and/or were
leaking as of the Closing Date, provided, however, that the Controlling Sellers
shall only be responsible for the Release or threatened Release on or prior to
the Closing Date due to pipes, tanks or other equipment to the extent that they
leaked on or prior to the Closing Date; (iii) the presence of Hazardous
Substances as of the Closing Date in the environment (including ambient air,
indoor air, surface water, ground water, land surface or sub-surface strata) at,
on, or under any Owned Real Property or Leased Real Property resulting from the
migration to the Owned Real Property or Leased Real Property of Hazardous
Substances Released by third parties (the "Responsible Party") on or prior to
the Closing Date to the extent the Responsible Party fails to take action to
address the Release after IP uses commercially reasonable efforts to cause the
Responsible Party to do so; and (iv) violations by BUSA or any BUSA Subsidiary
of any applicable Environmental and Safety Requirements (including Environmental
Permits) prior to or at the time of the Closing Date. IP shall have the right to
withhold amounts under the Note with respect to Section 6.9(a)(iii) provided
that (x) IP shall promptly deliver a written demand to the Responsible Party
requesting the Responsible Party to address or acknowledge responsibility for
the Release with a copy to the Controlling Sellers, and (y) IP shall continue to
use commercially reasonable efforts to cause the Responsible Party to compensate
for Losses associated with such Release. Notwithstanding the foregoing, the
Controlling Sellers will not have any liability under this Section 6.9 unless
and until the aggregate amount of all Losses under this Section 6.9 (together
with any Losses under Section 6.2(i) hereof and any Recoverable Amounts under
Section 6.8 hereof) exceed the Threshold Amount, in which IP shall be entitled,
subject to the other limitations set forth in this Article VI, to recover only
the aggregate amount of Losses and Recoverable Amounts in excess of the
Threshold Amount.
(b) Written Notice. Indemnification shall be available under this Section
6.9 only with respect to those specific claims for which IP has provided written
notice to the Controlling Sellers' Representative during the Survival Term.
(c) Control.
(i) IP shall have the right to control the management of an
investigation or remediation of Hazardous Substances at any Owned
Real Property or Leased Real Property that is subject to
indemnification pursuant to Section 6.9(a) of this Agreement
("Covered Remediation"), and, subject to the limitations set
forth in this Article VI, offset the reasonable costs thereof
against amounts otherwise due and payable under the Note in
accordance with the terms thereof.
(ii) In undertaking an investigation and remediation pursuant to this
Section, IP shall retain a qualified independent environmental
consultant, which consultant shall be subject to the Controlling
Sellers' Representative's
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approval (such approval not to be unreasonably withheld). IP
shall undertake such investigation and remediation in a
commercially reasonable fashion in accordance with applicable
Environmental and Safety Requirements for facilities of the type
being remediated such that the Remedial Action complies with only
the minimum requirements of applicable Environmental and Safety
Requirements and shall not cause, through its own inaction, any
undue delay in obtaining written notice from the appropriate
regulatory body that no further investigation or remediation is
necessary with respect to the matter that is the subject of the
indemnification claim, or, if no regulatory body is involved in
such matter, a good faith determination from its environmental
consultant that no further investigation or remediation is
required to bring the property that is the subject of the
Remedial Action into conformance with the minimum requirements of
applicable Environmental and Safety Requirements for facilities
of the type being remediated. IP shall comply with its
obligations under this Section 6.9 in a commercially reasonable
and effective manner to achieve compliance with the minimum
requirements of the Environmental and Safety Requirements for
facilities of the type being remediated as contemplated hereby.
IP shall promptly provide copies to Controlling Sellers'
Representative of all notices, correspondence, draft reports,
submissions, work plans, and final reports and shall give
Controlling Sellers' Representative a reasonable period of time
(at Controlling Sellers' Representative's own expense) to approve
of any submissions IP intends to deliver or submit to the
appropriate regulatory body prior to said submission, which
approval shall not be unreasonably withheld; provided, however,
that so long as Controlling Sellers' Representative has had a
reasonable time to review and approve a submission, upon the
advice of counsel that such submission is necessary or advisable,
and upon reasonable notice to Controlling Sellers'
Representative, IP may make such submission to the appropriate
regulatory body without the prior approval of Controlling
Sellers' Representative. The Controlling Sellers' Representative
may, at the Controlling Sellers' cost, hire its own consultants,
attorneys or other professionals to monitor the investigation or
remediation, including any field work undertaken by IP, and IP
shall provide Controlling Sellers' Representative with the
results of all such field work and the opportunity to conduct
field work or sampling by an environmental consultant reasonably
acceptable to IP. Notwithstanding the above, Controlling Sellers'
Representative shall not take any actions that shall unreasonably
interfere with IP's performance of the investigation, remediation
and/or containment.
(iii) Notwithstanding anything in this Article VI to the contrary, IP
shall not be entitled to recovery for Losses relating to,
resulting from or in connection with: (a) a material change after
the Closing in any of the uses of the Owned Real Property or
Leased Real Property; (b) a material change in, alteration of or
addition to the building, structures, fixtures or
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equipment located on the Owned Real Property or Leased Real
Property after the Closing; (c) the cost of removal or treatment
of any substance that can be managed in place in a commercially
reasonable fashion while complying with the minimum requirements
of applicable Environmental and Safety Requirements for
facilities of the type being remediated; or (d) any change in
Environmental and Safety Requirements occurring after the Closing
Date.
(d) Other. The Controlling Sellers' obligation to indemnify, defend and
hold harmless IP for the matters addressed in this Section 6.9 shall be without
regard to whether BUSA was in breach of any representation or warranty hereunder
and shall be limited to those matters as to which IP provides the Controlling
Sellers' Representative with written notice (such notice to be in conformance
with other relevant provisions of this Agreement and to contain, to the extent
available, reasonable details of the matter for which indemnification is sought)
of said claim. The procedures provided in Section 6.9 hereof shall be the
exclusive procedures for any Claim (other than third party environmental claims
for which indemnification procedures are governed by the provisions of Section
6.4) relating to environmental matters or Losses under Environmental and Safety
Requirements, including, without limitation, any claim asserting a breach of
representation or warranty of this Agreement and any claim pursuant to any
Environmental and Safety Requirements. "Remedial Action" means any action, taken
to satisfy applicable Environmental and Safety Requirements, to investigate,
evaluate, assess, test, monitor, cleanup, remedy, remediate, remove, respond to,
treat, neutralize, contain, isolate or otherwise deal with Hazardous Substances.
Section 6.10. Indemnifications, Limitations and Restrictions.
Notwithstanding anything in this Agreement to the contrary (including without
limitation Sections 6.2, 6.8 and 6.9 hereof):
(a) Exclusive Remedy. Except (i) to the extent provided in Section 1.13
hereof in the event the Net Working Capital Shortfall exceeds $1,000,000, (ii)
with respect to a Controlling Seller in the event of fraud committed by such
Controlling Seller, or (iii) with respect to a Controlling Seller in the event
of breach by such Controlling Seller of its representations set forth in
Sections 4.1, 4.2, 4.3(a) and (b) and 4.5 hereof (collectively the "Note
Exceptions"), the sole and exclusive recourse and remedy for any of the IP
Indemnitees with respect to any breach of any representation, warranty, covenant
or agreement by BUSA or any of the Controlling Sellers in this Agreement, any
Transaction Document or any closing certificate delivered pursuant to the terms
hereof shall be to seek recourse against the Note in accordance with the terms
and conditions thereof. Without limiting the generality of the foregoing and
except for the Note Exceptions, (i) the obligations of a Controlling Seller to
indemnify the IP Indemnitees under Article VI hereof shall be satisfied solely
and exclusively from any amounts remaining unpaid under the Note (including
interest accrued thereon) in accordance with the terms thereof and (ii) in no
event shall the liability of any Controlling Seller to the IP Indemnitees under
this Agreement and the other Transaction Documents exceed such Controlling
Seller's Proportionate Share of any amounts remaining unpaid under the Note
(including interest accrued thereon) as identified on Schedule 6.10 hereto.
Moreover, other than with respect to fraud committed by such Controlling Seller,
in no event shall the liability of any Controlling Seller to the IP Indemnitees
(including without limitation the Note Exceptions) under this Agreement and the
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other Transaction Documents exceed the Purchase Consideration to be received by
such Controlling Seller pursuant to the terms hereof.
(b) Amount of Losses. The amount of any Loss or Recoverable Amount payable
hereunder shall be reduced by (i) any insurance proceeds which the Indemnified
Party actually collects with respect to the event or occurrence giving rise to
such Losses or Recoverable Amounts, as applicable, and (ii) any amounts which
the Indemnified Party actually collects from third parties in connection with
Losses or Recoverable Amounts, as applicable, for which indemnification is
sought under this Article VI, but, in each case, net of any out-of-pocket costs
and expenses paid to third parties (including, without limitation, reasonable
costs and expenses of outside legal counsel) incurred in connection with the
collection of such amounts. The Indemnified Party shall use commercially
reasonable efforts to pursue insurance claims or third party claims that may
reduce or eliminate Losses and Recoverable Amounts, as applicable. If the
Indemnified Party both collects proceeds from any insurance company or third
party and receives a payment from the Indemnifying Party hereunder (or, with
respect to an IP Indemnitee, offsets amounts owed against the Note), and the sum
of such proceeds, net of out-of-pocket collection costs and expenses, and
payment or offset, as applicable, is in excess of the Losses or Recoverable
Amounts, as applicable, with respect to the matter that is the subject of the
indemnity, then the Indemnified Party shall promptly refund to the Indemnifying
Party the amount of such excess; provided that to the extent that the Note has
not yet matured at such time, the offset amount of the Note with respect to such
excess shall not be repaid to the indemnifying Controlling Sellers but shall
remain payable in accordance with the terms of the Note.
(c) Mitigation. Each Indemnified Party shall be required to use
commercially reasonable efforts to mitigate Losses and Recoverable Amounts, as
applicable, and shall reasonably consult with the Indemnifying Party with a view
toward mitigating Losses and Recoverable Amounts, as applicable, in conjunction
with all claims for which a party seeks indemnification under this Article VI.
(d) Subrogation. After any indemnification payment is made to any
Indemnified Party pursuant to this Article VI (whether by offset or otherwise),
the Indemnifying Party shall, to the extent of such payment, be subrogated to
all rights (if any) of the Indemnified Party against any third party in
connection with the Losses or Recoverable Amounts, as applicable, to which such
payment relates. Without limiting the generality of the preceding sentence, any
Indemnified Party receiving an indemnification payment pursuant to the preceding
sentence (whether by offset or otherwise) shall execute, upon the written
request of the Indemnifying Party, any instrument reasonably necessary to
evidence such subrogation rights.
(e) Final Statement. In no event shall the IP Indemnities be entitled to
recover any Losses or Recoverable Amounts with respect to any matter to the
extent included in the calculation of BUSA's Net Working Capital set forth on
the Final Statement.
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ARTICLE VII.
CONDITIONS TO THE CLOSING
Section 7.1. Conditions of IP's Obligation. IP's obligation to effect the
Transactions at the Closing is subject to the satisfaction as of the Closing of
the following conditions precedent:
(a) Representations and Warranties. The representations and warranties set
forth in Article III of this Agreement (x) that are qualified by materiality or
Material Adverse Effect shall be true and correct as of the Closing Date (except
to the extent such representations and warranties speak as of an earlier date)
as though made on and as of the Closing Date, and (y) that are not qualified by
materiality or Material Adverse Effect shall be true and correct in all material
respects as of the Closing Date (except to the extent such representations speak
as of an earlier date) as though made on and as of the Closing Date, except in
each case to the extent of any change solely caused by the transactions
expressly contemplated hereby.
(b) Covenants. BUSA will have performed and observed in all material
respects each covenant or other obligation, as applicable, required to be
performed or observed by it pursuant to the Transaction Documents prior to the
Closing.
(c) Compliance with Applicable Laws. The consummation of the transactions
contemplated hereby will not be prohibited by any Legal Requirement or subject
IP, BUSA, the BUSA Subsidiaries or any of their Affiliates, the Business or any
of the Assets to any material penalty or liability arising under any Legal
Requirement or imposed by any Government Entity that is not otherwise disclosed
herein or in any Schedule hereto.
(d) Proceedings. No action, suit or proceeding will be pending or
threatened before any Government Entity the result of which could reasonably be
expected to prevent or prohibit the consummation of the Transactions, cause any
Transaction to be rescinded following consummation, or adversely affect IP's
right to acquire BUSA Shares or conduct the Business or BUSA's performance of
its obligations pursuant to the Transaction Documents, and no judgment, order,
decree, stipulation, injunction or charge having any such effect will exist.
(e) Consents. All filings, notices, licenses, consents, authorizations,
accreditation, waivers, approvals and the like of, to or with any Government
Entity or any other Person (i) that are required to be obtained by BUSA for the
consummation of the Transactions or the ownership of BUSA Shares or the conduct
of the Business thereafter and (ii) which are set forth on Schedule 7.1(e) (the
"Material Consents") will have been duly made or obtained and all waiting
periods applicable to the Transactions under applicable antitrust or trade
regulation laws and regulations, including, without limitation, under the HSR
Act, shall have expired or been terminated. IP and the Controlling Sellers
Representative shall mutually agree to Schedule 7.1(e) not later than ten (10)
business days after the date hereof.
(f) Environmental Matters. IP shall be satisfied in its reasonable judgment
that IP shall be able to operate all of the facilities of BUSA and the BUSA
Subsidiaries at their respective outputs consistent with historical practice
over the twelve moth period ending on the
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date hereof in accordance with all applicable Environmental and Safety
Requirements and Environmental Permits in all material respects.
(g) Opinion of Counsel. IP will have received from Xxxxxxxxxxxx Xxxx &
Xxxxxxxxx LLP, legal counsel for BUSA, an opinion addressed to IP. Such opinion
will be dated the Closing Date and will be in form reasonably satisfactory to
the Parties.
(h) Non-Competition Agreements. Xxxxx Xxxxx and Xxxxxxx Xxxxxx will each
have executed and delivered to IP a Non-Competition Agreement substantially in
the form attached as Schedule 7.1(h) (the "Non-Competition Agreements"). The
Non-Competition Agreements dated as of July 17, 2000 between BUSA and each of
Xxxxx Xxxxx and Xxxxxxx Xxxxxx shall have been terminated as of the Closing
Date.
(i) Undisclosed Materially Adverse Developments. Between the date hereof
and the Closing Date, (x) IP shall not have discovered (including, without
limitation, as a result of any supplemental disclosure by BUSA pursuant to
Section 5.9 hereof) one or more matters relating to BUSA or the BUSA
Subsidiaries that (a) are individually or in the aggregate materially adverse to
BUSA and the BUSA Subsidiaries taken as a whole and (b) were not disclosed to IP
or its representatives on or prior to the date hereof, and (y) IP shall not have
discovered (including, without limitation, as a result of any supplemental
disclosure by BUSA) one or more matters relating to Groveton with respect to
compliance with applicable Environmental and Safety Requirements or
Environmental Permits, that (a) are individually or in the aggregate materially
adverse to Groveton taken as a whole and (b) were not disclosed to IP or its
representatives on or prior to the date hereof.
(j) Director Resignations. BUSA will cause (i) each director of BUSA and
the BUSA Subsidiaries, and (ii) each officer of BUSA and the BUSA Subsidiaries
set forth on Schedule 1.5, to tender his or her written resignation to take
effect as of the Closing Date (collectively, the "Resignations") for delivery to
IP at the Closing.
(k) Senior Notes. IP shall be satisfied in its reasonable discretion that
no Default or Event of Default (each as defined in the Indenture) shall occur or
have occurred as a result of the consummation of the transactions contemplated
hereby and by the Transaction Documents, including, without limitation, the
provisions of Section 1.15 hereof.
(l) Supply Agreements. IP shall be satisfied in its reasonable discretion
that BUSA and the BUSA Subsidiaries have in place agreements satisfactory in all
material respects, including, without limitation, with respect to the ability of
BUSA to terminate such agreements at its option, relating to the supply of
linerboard and corrugating medium to the Business after the Closing.
(m) Internal Accounting Controls and Procedures. IP shall be satisfied in
its reasonable discretion that BUSA and the BUSA Subsidiaries have in place
internal accounting controls and procedures which are effective in all material
respects.
(n) Seller Closing Documents. BUSA or the Controlling Sellers, as
applicable, will have delivered to IP the following documents:
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(i) certificates representing BUSA Shares duly endorsed in blank or
accompanied by duly executed stock powers endorsed in blank, with
requisite stock transfer tax stamps, if any, attached;
(ii) the Assignment duly executed by BUSA Holdings LLC and BUSA
Investment LP and the Equityholder Releases duly executed by the
parties thereto;
(iii) an Officer's Certificate of BUSA, dated the Closing Date,
stating that the conditions specified in Sections 7.1(a) through
7.1(f), inclusive, have been fully satisfied;
(iv) a copy of the resolutions duly adopted by BUSA's board of
directors, authorizing BUSA's execution, delivery and performance
of the Transaction Documents to which BUSA is a party and the
consummation of the Transactions, as in effect as of the Closing,
certified by an officer of BUSA;
(v) a certificate (dated not less than five business days prior to
the Closing) of the Secretary of State of each state listed on
Schedule 3.1 as to the good standing of BUSA and the BUSA
Subsidiaries, respectively, in such states;
(vi) copies of the Material Consents;
(vii) the Resignations;
(viii) the Option Letters;
(ix) payoff letters, in form and substance reasonably acceptable to
IP, from the lenders under the Credit Agreement, the Mortgages,
the Capital Leases and/or the Equipment Loan, as applicable, but
only to the extent that IP elects to repay the Indebtedness
relating to the same pursuant to Article I hereof;
(x) agreements reasonably satisfactory in form and substance to IP
relating to (A) the amendment, at IP's election, of that certain
Sales Contract (the "FMG Agreement") dated as of January 1, 1995,
as amended, between BUSA and Fibre Marketing Group, LLC ("FMG")
to clarify (i) that the terms of such contract will apply after
the Closing only to those facilities of BUSA and the BUSA
Subsidiaries existing immediately prior to the Closing Date and
(ii) the volume requirements of such agreement relating to BUSA
and the BUSA Subsidiaries agreement to sell materials to FMG, and
to release BUSA and the BUSA Subsidiaries from any claims FMG may
have under the FMG Agreement for breaches of the FMG Agreement
prior to the Closing Date, (B) the termination of the
Non-Competition Agreement, dated July 17, 2000, among BUSA,
MannKraft Corporation ("MannKraft") and Xxxxxx Xxxxxx, and (C)
the
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Mehiel Property containing substantially the terms set forth on
Schedule 7.1(n) attached hereto;
(xi) certificates of non-foreign status in accordance with Section
1445 of the Code and the regulations promulgated thereunder
executed by each of the Controlling Sellers; and
(xii) such other documents relating to the transactions contemplated
hereby as IP reasonably requests.
All corporate and other proceedings or actions taken or required to be
taken by BUSA in connection with the transactions contemplated hereby, and all
documents incident thereto, must be reasonably satisfactory in form and
substance to IP. Any condition set forth in this Section 7.1 may be waived only
in a writing executed by IP.
Section 7.2. Conditions of BUSA's and the Controlling Sellers' Obligations.
BUSA's and the Controlling Sellers' obligations to consummate the Transactions
at the Closing is subject to the satisfaction as of the Closing of the following
conditions precedent:
(a) Representations and Warranties. The representations and warranties set
forth in Article II of this Agreement (x) that are qualified by materiality or
Material Adverse Effect shall be true and correct as of the Closing Date (except
to the extent such representations and warranties speak as of an earlier date)
as though made on and as of the Closing Date, and (y) that are not qualified by
materiality or Material Adverse Effect shall be true and correct in all material
respects as of the Closing Date (except to the extent such representations speak
as of an earlier date) as though made on and as of the Closing Date, except in
each case to the extent of any change solely caused by the transactions
expressly contemplated hereby.
(b) Covenants. IP will have performed in all material respects each
covenant or other obligation required to be performed by it pursuant to the
Transaction Documents prior to the Closing.
(c) Compliance with Applicable Laws. The consummation of the transactions
contemplated hereby will not be prohibited by any Legal Requirement or subject
the Controlling Sellers to any material penalty or liability arising under any
Legal Requirement or imposed by any Government Entity that is not otherwise
disclosed herein or in any Schedule hereto.
(d) Consents. All material filings, notices, licenses, consents,
authorizations, accreditation, waivers, approvals and the like of, to or with
any Government Entity or any other Person that are required for the consummation
of the Transactions will have been duly made or obtained, and all waiting
periods applicable to the Transactions under applicable antitrust or trade
regulation laws and regulations, including, without limitation, under the HSR
Act, shall have expired or been terminated.
(e) Proceedings. No action, suit or proceeding will be pending or
threatened before any Government Entity the result of which could reasonably be
expected to prevent or prohibit the consummation of any transaction pursuant to
the Transaction Documents, cause any such transaction to be rescinded following
such consummation or adversely affect IP's performance of
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its obligations pursuant to the Transaction Documents, and no judgment, order,
decree, stipulation, injunction or charge having any such effect will exist.
(f) BUSA will have received from in-house counsel for IP an opinion
addressed to the Controlling Sellers. Such opinion will be dated the Closing
Date and will be in a form reasonably satisfactory to the Parties.
(g) Senior Notes. BUSA shall be satisfied in its reasonable discretion that
no Default or Event of Default (each as defined in the Indenture) shall occur or
have occurred as a result of the consummation of the transactions contemplated
hereby and by the Transaction Documents, including, without limitation, the
provisions of Section 1.15 hereof.
(h) IP Closing Documents. IP will have delivered to BUSA, as appropriate,
the following documents:
(i) an Officer's Certificate of IP, dated the Closing Date, stating
that the conditions specified in Sections 7.2(a) through 7.2(e),
inclusive, have been fully satisfied;
(ii) the Note and the Assignment;
(iii) a copy of the resolutions duly adopted by the Board of Directors
of IP authorizing the execution, delivery and performance by IP
of the Transaction Documents to which it is a party and the
consummation of the Transactions, as in effect as of the Closing,
certified by officers of IP; and
(iv) such other documents relating to the transactions hereby to be
consummated at the Closing as BUSA reasonably requests.
All corporate and other proceedings or actions taken or required to be
taken by IP in connection with the transactions contemplated hereby, and all
documents incident thereto, must be reasonably satisfactory in form and
substance to BUSA and its legal counsel. Any condition set forth in this Section
7.2 may be waived only in a writing executed by the Controlling Sellers'
Representative.
ARTICLE VIII.
OTHER COVENANTS
Section 8.1. Transaction Expenses. IP will be responsible for all costs and
expenses incurred by IP in connection with the negotiation, preparation and
entry into the Transaction Documents and the consummation of the Transactions,
including the filing fee under the HSR Act, title, survey, environmental and
other due diligence fees and expenses. IP and BUSA will each pay one-half of all
transfer, sales, use and other Taxes (other than the Income Taxes of the
Controlling Sellers) imposed by reason of the transactions contemplated by this
Agreement, stamp and recording taxes, fees and expenses, settlement fees, and
other miscellaneous fees or costs associated therewith (collectively, the
"Conveyance Taxes"). BUSA will pay all costs and
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expenses incurred by BUSA in connection with the negotiation, preparation and
entry into the Transaction Documents and the consummation of the Transactions.
Section 8.2. Further Assurances. From and after the Closing, the
Controlling Sellers will, and will cause their Affiliates to, execute all
documents and take any other action which it is reasonably requested to execute
or take to further effectuate the transactions contemplated hereby.
Section 8.3. Announcements. Prior to Closing, IP will not make any public
announcement of or regarding the transactions contemplated by this Agreement
without the prior approval of the Controlling Sellers' Representative as to the
timing and content of such announcement (which approval the Controlling Sellers'
Representative may not unreasonably withhold or delay), except to the extent
required by or advisable under applicable law or stock exchange regulation. To
the extent a foregoing public announcement is required by or advisable under
applicable law or stock exchange regulation, IP shall, to the extent
practicable, provide the Controlling Sellers' Representative with reasonable
advance notice of, and an opportunity to comment on, such public announcement
prior to its release. Prior to Closing, BUSA will not make any public
announcement of or regarding the transactions contemplated by this Agreement
without the prior approval of IP as to the timing and content of such
announcement (which approval IP may not unreasonably withhold or delay), except
to the extent required by or advisable under applicable law. To the extent a
foregoing public announcement is required by applicable law, BUSA shall, to the
extent practicable, provide IP with reasonable advance notice of, and an
opportunity to comment on, such public announcement prior to its release.
Section 8.4. Financial Statements. BUSA shall deliver to IP as soon as
available but in any event within 15 business days after the end of each monthly
accounting period of BUSA, ending after the date hereof but before the Closing,
unaudited statements of income and cash flows of BUSA for such respective
monthly period and for the period from the beginning of the respective current
fiscal year to the end of such month, and an unaudited balance sheet of BUSA as
of the end of such monthly period, setting forth in each case comparisons to the
corresponding period in the respective preceding fiscal year (collectively, the
"Pre-Closing Monthly Financial Statements"). Each Pre-Closing Monthly Financial
Statement shall be prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby, present fairly the financial
condition of BUSA as of such dates and the results of operations of BUSA for
such periods in all material respects, and shall be consistent with the Books
and Records in all material respects (which Books and Records shall be correct
and complete in all material respects), subject to normal year-end adjustments
and the lack of footnotes and other presentation items.
Section 8.5. Employee Covenants/Severance.
(a) IP agrees that after the Closing Date it will, at its discretion,
either maintain any or all of the Employee Welfare Plans, Employee Pension Plans
and Other Plans in effect at the Closing Date for all current employees
(including those on leave of absence) of BUSA or any BUSA Subsidiary (the
"Acquired Employees") or extend participation to Acquired Employees under any
plan, program or arrangement of IP relating to employee benefits ("IP Benefit
Program"); provided that Acquired Employees shall suffer no gap in medical,
dental or other
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health insurance coverage provided under any IP Benefit Program. IP agrees that
(i) each Acquired Employee's service with BUSA or any BUSA Subsidiary shall be
recognized for eligibility purposes under any IP Benefit Program; (ii) each
Acquired Employee (other than those Acquired Employees who are covered by a
collective bargaining agreement) shall be immediately eligible for any IP
Benefit Program for which similarly situated IP employees are eligible, other
than any plan, program or arrangement that duplicates or provides substantially
similar benefits to any benefit received by such Acquired Employee provided by
Employee Welfare Plans, Employee Pension Plans and Other Plans maintained by
BUSA after the Closing Date; and (iii) for purposes of each IP Benefit Program
providing medical, dental, pharmaceutical and/or vision benefits to any Acquired
Employee, IP shall cause all pre-existing condition exclusions and
actively-at-work requirements of such IP Benefit Program (to the extent such
requirement was satisfied under the comparable BUSA or BUSA Subsidiary Employee
Welfare Plans or Other Plans) to be waived for such Acquired Employee and his or
her covered dependents (as determined in accordance with IP's benefit plans),
and IP shall cause any eligible expenses incurred by such Acquired Employee and
his or her covered dependents during the portion of the plan year ending on the
date such Acquired Employee's participation in the corresponding IP Benefit
Program begins to be taken into account under such IP Benefit Program for
purposes of satisfying all deductible, coinsurance and maximum out-of-pocket
requirements applicable to such Acquired Employee and his or her covered
dependents for the applicable plan year as if such amounts had been paid in
accordance with such IP Benefit Program. Notwithstanding any of the foregoing,
this Agreement does not preclude IP from modifying or terminating any IP Benefit
Program after the Closing Date in such a manner as it shall determine. Subject
to the terms of any collective bargaining agreements to which BUSA or any of the
BUSA Subsidiaries are parties, this Section shall not require Acquired Employees
to be given credit for past service credit with BUSA for the purposes of benefit
accruals or vesting, other than vacation, including, without limitation, any
benefit plan, pension or retirement benefit plan that may be provided by IP.
Vacation of the Acquired Employees shall accrue after the Closing Date according
to such policies and procedures as IP shall establish, giving credit in an
amount equivalent to past service with BUSA for purposes of determining length
of service. Nothing in this Section 8.5 or elsewhere in this Agreement shall be
construed to create a right in any employee to employment with IP, BUSA, or any
other Subsidiary of IP or BUSA and the employment of each Acquired Employee
shall be "at will" employment.
(b) The Parties hereby acknowledge and agree that the payments set forth on
Schedule 8.5 to be made to the Key Employees pursuant to the Key Employee
Severance Agreement shall remain obligations of BUSA from and after the Closing
Date and shall be paid by BUSA in accordance with the terms of such agreements.
In the event that BUSA terminates, or IP causes BUSA to terminate, for any
reason for which severance payments would be paid pursuant to a BUSA or BUSA
Subsidiary severance plan in place at the date of the signing of this agreement,
any of the Acquired Employees who are not covered by a collective bargaining
agreement and are exempt or non-exempt salaried employees, other than the Key
Employees, during the period commencing on the Closing Date through the first
anniversary of the Closing Date, then BUSA shall pay each such employee an
amount (less applicable withholding for Taxes) equal to the greater of (i) two
weeks of such employee's annual salary (as in effect immediately prior to the
Closing Date) per year of such employee's service with BUSA or any BUSA
Subsidiary up to the date of such termination and prorated for any partial year
of service or (ii) twelve weeks of such employee's annual salary (as in effect
immediately prior to the
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Closing Date). Any amounts which an Acquired Employee is entitled to receive
pursuant to this Section 8.5(b) will be offset by the amounts, if any, the
Acquired Employee actually receives pursuant to BUSA's or any BUSA Subsidiary's
severance pay policy or other applicable severance plan. Notwithstanding the
foregoing, no severance payment to any Acquired Employee (other than payments
pursuant to the Key Employee Severance Agreements) shall be required pursuant to
this Section 8.5(b) in the event of any sale to any third party of any BUSA or
BUSA Subsidiary operation, business or location if such Acquired Employee would
not be entitled to severance under IP's applicable severance policy.
Section 8.6. Covenants of the Controlling Sellers.
(a) Except as set forth on Schedule 8.6 attached hereto, the Controlling
Sellers each agree (i) not to take any action or fail to take any action that
could be reasonably expected to result in a breach of the representations and
warranties of such Controlling Seller set forth in Article IV hereof, and (ii)
subject to satisfaction of the conditions set forth in Section 7.2 hereof, to
deliver to IP the certificates representing the BUSA Shares owned by such
Controlling Seller to IP at the Closing accompanied by stock powers transferring
ownership and title to such BUSA Shares to IP.
(b) During the period from the date hereof to the Closing Date and except
as set forth on Schedule 8.6 attached hereto, the Controlling Sellers shall not,
directly or indirectly: (A) except pursuant to the terms of this Agreement,
offer for sale, sell, transfer, tender, pledge, encumber, assign or otherwise
dispose of, or enter into any contract, option or other arrangement or
understanding with respect to or consent to the offer for sale, sale, transfer,
tender, pledge, encumbrance, assignment or other disposition of, any or all of
the BUSA Shares held by such Controlling Seller; (B) grant any proxies or powers
of attorney, deposit any of the BUSA Shares into a voting trust or enter into a
voting agreement with respect to any of the BUSA Shares; (C) take any action
that would have the effect of impairing the ability of the Controlling Seller to
perform its obligations under this Agreement or preventing or delaying the
consummation of any of the Transactions contemplated hereby.
(c) The Controlling Sellers shall cooperate fully with BUSA and IP in
connection with their respective efforts to fulfill the conditions to the
Transactions set forth in Article VII hereof.
(d) Each Controlling Seller shall not, in its capacity as a BUSA
stockholder, respond to any inquiries or the making of any proposal by any
person or entity (other than IP or any affiliate of IP) concerning any business
combination, merger, exchange offer, sale of assets, sale of shares of capital
stock or debt securities or similar transactions involving BUSA or any BUSA
Subsidiary, division or operating principal business unit of BUSA. Each
Controlling Seller will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to the foregoing.
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ARTICLE IX.
DEFINITIONS
Section 9.1. Definitions. For purposes hereof, the following terms, when
used herein with initial capital letters, shall have the respective meanings set
forth herein.
"accumulated funding deficiency" has the meaning set forth in Section
3.15(k).
"Acquired Employees" has the meaning set forth in Section 8.5(a).
"Affiliate" of any Person means any other Person controlling, controlled by
or under common control with such first Person; it being acknowledged and agreed
that Groveton is not an Affiliate of any Person for purposes of this Agreement.
"Agreement" means this Stock Purchase Agreement, including all Schedules
hereto, as it may be amended from time to time in accordance with its terms.
"Asset(s)" has the meaning set forth in Section 3.6(a).
"Assignment" has the meaning set forth in Section 1.17.
"Audited Financial Statements" has the meaning set forth in Section 3.4(a).
"BofA" has the meaning set forth in Section 1.16(a).
"Books and Records" means all lists, records and other information
pertaining to accounts, personnel and referral sources of BUSA, all lists and
records pertaining to suppliers and customers of BUSA, and all other books,
ledgers, files and business records of every kind relating or pertaining to the
Business, in each case whether evidenced in writing, electronically (including
by computer) or otherwise.
"BUSA" has the meaning set forth in the preface of this Agreement.
"BUSA Accounting Manual" shall mean that certain Box USA Accounting Policy
and Procedures Manual attached hereto on Schedule 1.12.
"BUSA Articles" has the meaning set forth in Section 1.6(b).
"BUSA Common Certificates" has the meaning set forth in Section 1.7(a).
"BUSA Common Stock" has the meaning set forth in Section 3.1(b).
"BUSA Expenses" has the meaning set forth in Section 1.12(d)(i)(d).
"BUSA Holdings LLC" has the meaning set forth in the preface of this
Agreement.
"BUSA Holdings Operating Agreement" shall mean that certain Limited
Liability Company Agreement of BUSA Holdings LLC dated as of July 17, 2000, as
amended.
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"BUSA Investment LP" means the Box USA Investment Limited Partnership, an
Illinois limited partnership.
"BUSA's Net Working Capital" has the meaning set forth in Section 1.12(d).
"BUSA Preferred Stock" has the meaning set forth in Section 1.6(b).
"BUSA Senior Notes" has the meaning set forth in Section 1.6(c)(i)(D).
"BUSA Shares" has the meaning set forth in Section 3.1(b).
"BUSA Subsidiary" means any corporation or other legal entity (including
without limitation partnerships or limited liability companies) more than 50% of
the outstanding voting securities or similar rights of which are directly or
indirectly owned by BUSA; it being acknowledged and agreed that Groveton is not
a BUSA Subsidiary for purposes of this Agreement.
"BUSA Stock Options" has the meaning set forth in Section 1.8.
"BUSA Trust" has the meaning set forth in the preface of this Agreement.
"Business" means the business of BUSA and the BUSA Subsidiaries (taken as a
whole) as currently conducted.
"Capital Lease Assumption Option" has the meaning set forth in Section
1.19(d).
"Capital Lease Repayment Option" has the meaning set forth in Section
1.19(d).
"Capital Leases" shall mean those capital leases set forth on Schedule
3.9(a)(iv).
"CERCLA" has the meaning set forth in Section 3.17(c)(v).
"Class A Common" has the meaning set forth in Section 3.1(b)(i).
"Class B Common" has the meaning set forth in Section 3.1(b)(ii).
"Class C Common" has the meaning set forth in Section 3.1(b)(iii).
"Class D Common" has the meaning set forth in Section 3.1(b)(iv).
"Closing" has the meaning set forth in Section 1.2.
"Closing Date" has the meaning set forth in Section 1.2.
"COBRA" has the meaning set forth in Section 3.15(d).
"Code" means the United States Internal Revenue Code of 1986, as amended.
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"Confidentiality Agreement" shall mean that certain Confidentiality
Agreement between BUSA and IP dated as of December 18, 2003.
"Contracts" has the meaning set forth in Section 3.9(b).
"Controlled Group" has the meaning set forth in Section 3.15(h).
"Controlling Seller" has the meaning set forth in the preface of this
Agreement.
"Controlling Seller's Indemnity" has the meaning set forth in Section
5.8(d).
"Controlling Sellers" has the meaning set forth in the preface of this
Agreement.
"Controlling Sellers' Arbitrator" has the meaning set forth in Section
6.7(c).
"Controlling Sellers' Representative" shall mean Xxxxx Xxxxx, or in the
event of Xxxxx Xxxxx'x death, disability or failure or refusal to so act, the
Controlling Sellers' Representative shall mean Xxxxxx Xxxxxx and thereafter in
the event of Xxxxxx Xxxxxx'x death, disability or failure or refusal to act as
Controlling Sellers' Representative, the Controlling Sellers' Representative
shall be Xxxxxxx Xxxxxx, and thereafter in the event of Xxxxxxx Xxxxxx'x death,
disability or failure or refusal to act as Controlling Sellers' Representative,
the Controlling Sellers' Representative shall be such Person as is designated at
any time after the date hereof by the last acting Controlling Sellers'
Representative.
"Conveyance Taxes" has the meaning set forth in Section 8.1.
"Covered Remediation" has the meaning set forth in Section 6.9(c)(i).
"Credit Agreement" has the meaning set forth in Section 1.16(a).
"Credit Agreement Assumption Option" has the meaning set forth in Section
1.16(a).
"Credit Agreement Repayment Option" has the meaning set forth in Section
1.16(a).
"Disputes" has the meaning set forth in Section 6.7(a).
"Disputing Party" has the meaning set forth in Section 6.7(b).
"Employee Pension Plans" has the meaning set forth in Section 3.15(b).
"Employee Welfare Plans" has the meaning set forth in Section 3.15(a).
"Employees" has the meaning set forth in Section 3.15(a).
"Environmental and Safety Requirements" means all federal, state and local
statutes, regulations and ordinances, all judicial and administrative orders and
all applicable common law, in each case concerning public health and safety,
worker health and safety and pollution or protection of the environment
(including all those relating to the presence, use, production, generation,
handling, transport, treatment, storage, disposal, distribution, labeling,
testing,
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processing, discharge, Release, threatened Release, control, or cleanup of any
Hazardous Substance) and in each case effective on the date hereof and with a
compliance date on or before the date hereof.
"Environmental Lien" means any Lien, whether recorded or unrecorded, in
favor of any Government Entity relating to any liability arising under any
Environmental and Safety Requirement.
"Environmental Permits" has the meaning set forth in Section 3.17(c)(ii).
"Equipment Loan" shall mean that certain equipment loan set forth on
Schedule 3.9(a)(iv).
"Equipment Loan Assumption Option" has the meaning set forth in Section
1.21(a).
"Equipment Loan Repayment Option" has the meaning set forth in Section
1.21(a).
"Equityholder Releases" has the meaning set forth in Section 1.17.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Estimated Adjusted Valuation Amount" has the meaning set forth in Section
1.6(c)(i).
"Estimated Pre-Closing Net Working Capital" has the meaning set forth in
Section 1.11.
"Final Determination" has the meaning set forth in Section 6.7(e).
"Final Statement" has the meaning set forth in Section 1.12.
"Financial Statements" has the meaning set forth in Section 3.4(a).
"Fixed Operating Assets" has the meaning set forth in Section
1.12(d)(i)(a).
"FMG" has the meaning set forth in Section 7.1(n)(x).
"FMG Agreement" has the meaning set forth in Section 7.1(n)(x).
"Foundation" has the meaning set forth in the preface of this Agreement.
"GAAP" means, at a given time, United States generally accepted accounting
principles, consistently applied.
"Government Entity" means the United States of America or any other nation,
any state or other political subdivision thereof, or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
government.
"Groveton" means Groveton Paper Board Inc., a minority owned subsidiary of
BUSA.
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"Hazardous Substance" means any hazardous, toxic, radioactive or chemical
materials, mixtures, substances or wastes; and (whether or not included in the
foregoing), any pesticides, pollutants, contaminants, petroleum products or
by-products, asbestos, polychlorinated biphenyls (or PCBs) or radiation.
"HSR Act" has the meaning set forth in Section 2.2.
"Income Taxes" means Taxes imposed under the United States Internal Revenue
Code of 1986, as amended, and any state, county, local or foreign Taxes imposed
upon net income, including any interest or penalties or additions to any such
taxes.
"Indebtedness" of any Person means, without duplication: (a) indebtedness
for borrowed money or for the deferred purchase price of property or services in
respect of which such Person is liable, contingently or otherwise, as obligor,
guarantor or otherwise (other than trade payables and other current liabilities
incurred in the ordinary course of business) and any commitment by which such
Person assures a creditor against loss, including contingent reimbursement
obligations with respect to letters of credit; (b) indebtedness guaranteed in
any manner by such Person, including a guarantee in the form of an agreement to
repurchase or reimburse; (c) obligations under capitalized leases in respect of
which such Person is liable, contingently or otherwise, as obligor, guarantor or
otherwise, or in respect of which obligations such Person assures a creditor
against loss; and (d) any unsatisfied Known obligation of such Person for
"withdrawal liability" to a "multiemployer plan," as such terms are defined
under ERISA.
"Indemnification Claim Notice" has the meaning set forth in Section 6.4(a).
"Indemnified Party" has the meaning set forth in Section 6.4(a).
"Indemnifying Party" has the meaning set forth in Section 6.4(a).
"Indenture" has the meaning set forth in Section 1.15.
"Independent Accounting Firm" has the meaning set forth in Section 1.12(c).
"Investment" means, with respect to any Person, any direct or indirect
purchase or other acquisition by such Person of any notes, stock, securities or
other ownership or beneficial interest (including partnership interests and
joint venture interests) of any other Person, and any capital contribution by
such Person to any other Person.
"IP" has the meaning set forth in the preface of this Agreement.
"IP Benefit Program" has the meaning set forth in Section 8.5(a).
"IP Indemnitees" has the meaning set forth in Section 6.2.
"IP's Arbitrator" has the meaning set forth in Section 6.7(c).
"IRS" has the meaning set forth in Section 3.15(j).
"Key Employees" means Xxxxxxx Xxxxxx, Xxxxx Xxxxxx and Xxxxx XxXxxxx.
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"Key Employee Severance Agreements" means those certain Severance
Agreements between BUSA and each of the Key Employees dated as of March 29,
2004.
"Knowledge" means, with respect to BUSA and the BUSA Subsidiaries, the
actual knowledge of Xxxxx Xxxxx and Xxxxxxx Xxxxxx after reasonable inquiry of
Xxxxxxx Xxxxxx.
"Latest Balance Sheet" has the meaning set forth in Section 3.4(a).
"Latest Balance Sheet Date" has the meaning set forth in Section 3.4(b).
"Leased Real Property" has the meaning set forth in Section 3.16(b).
"Leases" has the meaning set forth in Section 3.16(b).
"Legal Requirement" means any requirement arising under any action, law,
treaty, rule or regulation, determination or direction of an arbitrator or
Government Entity, including any Environmental and Safety Requirement.
"Lien" means any mortgage, pledge, security interest, encumbrance,
easement, restriction, charge, or other lien.
"Loss" means, with respect to any Person, any loss, damage, liability,
demand, claim, obligation, action, cause of action, suit (including citizen
suits), assessment, cost, damage, deficiency, penalty, fine or other loss or
expense, whether or not arising out of a third party claim, including all
interest, penalties, reasonable attorneys' fees and expenses and all amounts
paid or incurred in connection with any action, demand, proceeding,
investigation or claim by any third party (including any Government Entity)
against or affecting such Person and the investigation, defense or settlement of
any of the foregoing. Notwithstanding the foregoing, in no case shall Losses
include any incidental, consequential, indirect or special losses or damages
(including, without limitation, lost profits, lost revenues and loss of
business), whether foreseeable or not, whether occasioned by any failure to
perform or the breach of any representation, warranty, covenant or other
obligation under this Agreement, any Transaction Document or any closing
certificate delivered pursuant to the terms hereof for any cause whatsoever.
"MannKraft" has the meaning set forth in Section 7.1.
"Material Adverse Effect" means, with respect to BUSA, any change, event or
effect that is materially adverse to the Business, Assets, condition (financial
or otherwise), liabilities, results of operations or capitalization of BUSA and
the BUSA Subsidiaries taken as a whole, other than any change, event or effect
to the extent arising from or relating primarily to (i) the United States or the
global economy or securities markets in general, (ii) actions taken pursuant to
the obligations of the parties expressly set forth in this Agreement, or (iii)
the industry in which BUSA and the BUSA Subsidiaries operate generally (and
which are not specific to the Business and which do not affect the Business
disproportionately as compared to other companies which compete with the
Business).
"Material Consents" shall have the meaning set forth in Section 7.1(e).
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"Mehiels" has the meaning set forth in the preface of this Agreement.
"Mehiel Property" means the leased property listed as item numbers 3, 11,
20 and 23 on Schedule 3.16(b).
"Mortgage Assumption Option" has the meaning set forth in Section 1.19(a).
"Mortgage Repayment Option" has the meaning set forth in Section 1.19(a).
"Mortgages" shall mean those Mortgages set forth on Schedule 3.9(a)(iv).
"Multiemployer Plan" has the meaning set forth in Section 3.15(c).
"Net Working Capital Shortfall" has the meaning set forth in Section
1.13(a).
"Net Working Capital Surplus" has the meaning set forth in Section 1.13(a).
"Non-Competition Agreements" has the meaning set forth in Section 7.1(h).
"Note" has the meaning set forth in Section 1.10.
"Note Exceptions" has the meaning set forth in Section 6.10(a).
"Notice of Arbitration" has the meaning set forth in Section 6.7(b).
"notices" has the meaning set forth in Section 10.6.
"Officer's Certificate" of any Person means a certificate signed by such
Person's president or chief financial officer (or an individual having
comparable responsibilities with respect to such Person) stating that the
individual signing such certificate has made or has caused to be made such
investigations as are necessary in order to permit such individual to verify the
accuracy of the information set forth in such certificate.
"Option Letters" has the meaning set forth in Section 1.8.
"Other Plans" has the meaning set forth in Section 3.15(a).
"Owned Real Property" has the meaning set forth in Section 3.16(a).
"Parties" means IP, BUSA, the Controlling Sellers and the Controlling
Sellers' Representative.
"Past Practice" has the meaning set forth in Section 6.8(e)(i).
"PBGC" has the meaning set forth in Section 3.15(h).
"Pending Sale" has the meaning set forth in Section 1.12(d)(i)(b).
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"Permitted Lien" means, as to Real Estate, Permitted Real Estate Liens,
and, as to other Assets, (i) any Lien for Taxes not yet due or delinquent or
being contested in good faith by appropriate proceedings for which adequate
reserves have been established in accordance with GAAP, (ii) any statutory Lien
arising in the ordinary course of business by operation of Law with respect to a
liability that is not yet due or delinquent, (iii) any immaterial imperfection
of title or similar Lien which individually or in the aggregate with other such
Liens could not reasonably be expected to materially adversely affect the
Business and (iv) all Liens arising under the Indenture, the Credit Agreement,
the Mortgages, the Capital Leases, the Equipment Loan and any related collateral
documents.
"Permitted Real Estate Lien" means (A) real estate taxes, assessments,
governmental levies, fees or charges or statutory liens for current taxes or
other governmental charges with respect to the Owned Real Property not yet due
and payable or the amount or validity of which is being contested in good faith
by appropriate proceedings, and with respect to which all reserves in accordance
with the GAAP have been established; (B) mechanics', carriers', workers',
repairers' and similar statutory liens arising or incurred in the ordinary
course of business for amounts which are not delinquent and which would not,
individually or in the aggregate, be materially adverse to the Business; (C)
zoning, entitlement, building codes and other land use regulations imposed by
governmental agencies having jurisdiction over the Owned Real Property which are
not violated by the current use and occupancy of the Owned Real Property; and
(D) covenants, conditions, restrictions, easements and other similar matters of
record affecting title to the Owned Real Property and other title exceptions
disclosed by any title insurance policy for any such Owned Real Property, which,
in each case do not or would not materially impair the use or value of the Owned
Real Property for the purposes for which it is used in connection with the
Business; and (E) all Liens arising under the Mortgages, the Indenture, the
Credit Agreement and any related collateral documents.
"Person" means an individual, a partnership, a corporation, an association,
a limited liability company, a limited partnership, a joint stock company, a
trust, a joint venture, an unincorporated organization and a governmental entity
or any department, agency or political subdivision thereof.
"Plans" means all Employee Pension Plans, Employee Welfare Plans, Other
Plans and Multiemployer Plans to which BUSA contributes or is a party.
"Pledge Agreement" means that certain Pledge Agreement dated as of July 17,
2000 among BUSA Holdings LLC, the BUSA Trust and W&C.
"Pre-Closing Monthly Financial Statements" has the meaning set forth in
Section 8.4.
"Pre-Closing Tax Period" has the meaning set forth in Section 6.8(a)(i).
"Proceeding" has the meaning set forth in Section 6.4(a).
"Proportionate Basis" or "Proportionate Share," with respect to a
Controlling Seller, shall mean the percentage set forth opposite such
Controlling Seller's name on Schedule 6.10 attached hereto.
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"Proprietary Rights" means all of the following: (a) all inventions
(whether or not patentable or 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) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, 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 (including software), 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, pricing and cost
information, and business and marketing plans and proposals); (f) all computer
software (including data and related documentation); (g) all other proprietary
rights; and (h) all copies and tangible embodiments thereof (in whatever form or
medium).
"provision" has the meaning set forth in Section 10.1(g).
"Purchase and Sales Contracts" has the meaning set forth in Section 3.9(e).
"Purchase Consideration" has the meaning set forth in Section 1.6(c).
"Recoverable Amount" has the meaning set forth in Section 6.8(a)(i).
"Release" has the meaning set forth in Section 101 of CERCLA (42 U.S.C.
'SS' 9601 (22)), in effect as of the Closing Date.
"reportable event" has the meaning set forth in Section 3.15(k).
"Remedial Action" has the meaning set forth in Section 6.9(d).
"Resignations" has the meaning set forth in Section 7.1(j).
"Resolution Period" has the meaning set forth in Section 1.12(c).
"Responsible Party" has the meaning set forth in Section 6.9(a).
"Retention Agreements" means those certain Box USA Holdings, Inc. Retention
Agreements dated as of March 29, 2004 between BUSA and each of the Key
Employees.
"Retention Payment" shall have the meaning ascribed to such term in the
Retention Agreements.
"Retirement Costs" means all costs, premiums and other fees and expenses
(other than the principal amount of BUSA's Indebtedness and accrued and unpaid
interest thereon as of the Closing Date) of BUSA, IP or any third party that may
be incurred in connection with (i) the repayment, retirement, redemption,
defeasance or discharge by IP of BUSA's Indebtedness (including without
limitation any collateral required by lender(s) in connection with outstanding
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and undrawn letters of credit) pursuant to Article I hereof or (ii) BUSA
continuing to perform its obligations with respect to such Indebtedness from and
after the Closing Date as contemplated by Article I hereof (including without
limitation any costs, fees, or other expenses that may be incurred to amend or
modify, or obtain waivers or consents with respect to, the operative documents
relating to such Indebtedness (a) to avoid or cure any defaults that may occur
as a result of the transactions contemplated hereby or (b) that may otherwise be
required to maintain such Indebtedness in full force and effect from and after
the Closing Date.
"right" has the meaning set forth in Section 10.2.
"Schedules" shall mean the disclosure schedules to this Agreement.
"Security Agreement" shall mean that certain Security Agreement dated as of
July 17, 2000 among BUSA Holdings LLC, the BUSA Trust and W&C.
"Seller's Counsel" has the meaning set forth in Section 1.6(c)(i)(L).
"Seller Indemnitees" has the meaning set forth in Section 6.3.
"Series A Preferred Stock" has the meaning set forth in Section 1.6(b).
"Series B Preferred Stock" has the meaning set forth in Section 1.6(b).
"Stock Purchase" has the meaning set forth in Section 1.1.
"Stone" has the meaning set forth in the preface of this Agreement.
"Straddle Period" has the meaning set forth in Section 6.8(a)(iii).
"Supplemental Schedule" has the meaning set forth in Section 5.9.
"Survival Term" shall have the meaning set forth in Section 6.1(a).
"Target Net Working Capital" has the meaning set forth in Section 1.11.
"Tax Claim" has the meaning set forth in Section 6.8(b)(i).
"Tax Indemnified Party" has the meaning set forth in Section 6.8(b)(i).
"Tax Indemnifying Party" has the meaning set forth in Section 6.8(b)(i).
"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 any amendment thereof.
"Taxes" means any federal, state, county, local or foreign taxes, charges,
fees, levies, other assessments or withholding taxes or charges imposed by any
governmental entity and includes any interest and penalties (civil or criminal)
on or additions to any such taxes.
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"Threshold Amount" has the meaning set forth in Section 6.2(i).
"Transaction Documents" means this Agreement, and all other agreements,
instruments, certificates and other closing documents entered into or delivered
by any Party in connection with the Transactions pursuant to the terms of this
Agreement.
"Transactions" has the meaning set forth in Section 2.3.
"Treasury Regulations" means the United States Treasury Regulations
promulgated pursuant to the Code.
"Trustee" has the meaning set forth in Section 1.15.
"Unquantifiable Claim" has the meaning set forth in Section 1.10.
"W&C" has the meaning set forth in the preface of this Agreement.
"W&C Fee" has the meaning set forth in Section 1.6(c)(i)(H).
"W&C Investors" has the meaning set forth in the preface of this Agreement.
"W&C Notes" shall mean those certain Senior Secured Notes dated as of July
17, 2000 issued by the BUSA Trust in favor of W&C Partners and Triumph Investors
with principal amounts of $24,700,000 and $300,000, respectively.
"W&C Partners" has the meaning set forth in the preface of this Agreement.
Section 9.2. Other Definitional Provisions.
(a) Accounting Terms. Accounting terms which are not defined herein have
the meanings given to them under GAAP and, if not defined thereby, the meanings
given to them in the BUSA Accounting Manual. To the extent that the definition
of an accounting term set forth in this Agreement is inconsistent with the
meaning of such term under GAAP, the definition in this Agreement will control.
(b) "Hereof," etc. The terms "hereof," "herein" and "hereunder" and terms
of similar import are references to this Agreement as a whole and not to any
particular provision of this Agreement. Section, clause and Schedule references
contained in this Agreement are references to Sections, clauses and Schedules in
or to this Agreement, unless otherwise specified.
(c) "Successor Laws." Any reference to any particular Code section or any
other law or regulation will be interpreted to include any revision of or
successor to that section regardless of how it is numbered or classified.
ARTICLE X.
OTHER AGREEMENTS
Section 10.1. Termination. This Agreement may be terminated prior to
Closing:
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(a) at any time by mutual agreement of IP and BUSA;
(b) by IP, at any time when any of the Controlling Sellers are in breach of
any of their material covenants pursuant to this Agreement, or if any
representation or warranty of any of the Controlling Sellers herein is false or
misleading in any material respect; provided that such condition is not the
result of any breach of any covenant, representation or warranty of IP set forth
in any Transaction Document; and provided further that such breach shall not
have been cured within ten (10) business days following receipt by the breaching
party and the Controlling Seller's Representative of notice of such breach;
(c) by either IP or BUSA, if a Governmental Entity shall have issued an
order, decree or ruling or taken any other action, in each case permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement, and such order, decree, ruling or other action shall have become
final and nonappealable;
(d) by IP, at any time when BUSA is in breach of any of its covenants
pursuant to this Agreement or if any representation or warranty of BUSA is false
or misleading in any material respect; provided that such condition is not the
result of any breach of any covenant, representation or warranty of IP set forth
in any Transaction Document; and provided further that such breach shall not
have been cured within ten (10) business days following receipt by the breaching
party of notice of such breach;
(e) by BUSA, at any time when IP is in breach of any of its covenants
pursuant to this Agreement or if any representation or warranty of IP is false
or misleading in any material respect; provided that such condition is not the
result of any breach of any covenant, representation or warranty of BUSA set
forth in any Transaction Document; and provided further that such breach shall
not have been cured within ten business days following receipt by the breaching
party of notice of such breach; or
(f) by IP or BUSA, at any time after August 31, 2004, if the Closing has
not then occurred; provided, however, that the right to terminate this Agreement
shall not be available to any party whose breach of this Agreement has been the
cause of, or has resulted in, the failure of the Closing to occur on or before
such date.
(g) Any termination of this Agreement pursuant to any of clauses (b)
through (f) will be effected by written notice from the terminating Party to the
non-terminating Party. Any termination of this Agreement pursuant to clause (b),
(d), (e) or (f) will not terminate any liability of any Party for any breach or
default of any representation, warranty, covenant, agreement, provision or term
(each, a "provision") in any Transaction Document which exists at the time of
such termination.
Section 10.2. Rights and Remedies. No course of dealing between the Parties
or failure or delay in exercising any right, remedy, power or privilege (each, a
"right") pursuant to this Agreement will operate as a waiver of any rights of
any Party, nor will any single or partial exercise of any right under this
Agreement preclude any other or further exercise of such right or the exercise
of any other right. In the event of fraud committed by IP or, with respect to a
Controlling Seller, fraud committed by such Controlling Seller, as applicable,
the rights provided
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pursuant to this Agreement are cumulative and not exhaustive of any other rights
which may be provided by law. For purposes of determining whether fraud has been
committed by BUSA Holdings LLC under this Agreement or any of the other
Transaction Documents, fraud committed by Xxxxx Xxxxx or Xxxxxxx Xxxxxx (either
in such Person's capacity as an officer or manager of BUSA Holdings LLC or in
such Person's capacity as an officer or director of BUSA) shall be deemed to
have been committed by BUSA Holdings LLC.
Section 10.3. Waivers, Amendments to be in Writing. No waiver, amendment,
modification or supplement of this Agreement will be binding upon a Party unless
such waiver, amendment, modification or supplement is set forth in writing and
is executed by such Party.
Section 10.4. Successors and Assigns. Except as otherwise expressly
provided in this Agreement, all covenants and agreements set forth in this
Agreement by or on behalf of the Parties will bind and inure to the benefit of
the respective permitted successors and assigns of the Parties, except that
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned (i) by BUSA without IP's prior written consent or (ii) by IP
without the prior written consent of the Controlling Sellers' Representative.
Section 10.5. Governing Law. This Agreement will be governed by and
construed in accordance with the domestic laws of the State of New York, without
giving effect to any choice of law or conflict rule of any jurisdiction that
would cause the laws of any other jurisdiction to be applied. In furtherance of
the foregoing, the internal law of the State of New York will control the
interpretation and construction of this Agreement, even if under any choice of
law or conflict of law analysis, the substantive law of some other jurisdiction
would ordinarily apply.
Section 10.6. Notices. All demands, notices, communications and reports
("notices") provided for in this Agreement will be in writing and will be either
personally delivered, mailed by registered mail, return receipt requested, or
sent by reputable overnight courier service (delivery charges prepaid) to any
Party at the address specified below, or at such address, to the attention of
such other Person, and with such other copy, as the recipient party has
specified by prior written notice to the sending Party pursuant to the
provisions of this Section 10.6.
If to the Controlling Sellers' Representative or BUSA (prior to
Closing):
Xx. Xxxxx X. Xxxxx
0000 Xxxxxxxx Xxxx
Xxxxxxx, XX 00000-0000
Telecopy: 000-000-0000
with a copy, which will not constitute notice, to:
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx LLP Xxxxxx X. Xxxxxxxx, Esq.
8000 Sears Tower c/x Xxxxx Group
000 X. Xxxxxx Xxxxx and 000 Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000 Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxx
Xxxxx Xxxxx
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If to IP or BUSA (after the Closing):
International Paper Company
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: General Counsel
Any such notice will be deemed to have been given when delivered
personally, upon receipt if sent by registered mail, return receipt requested,
or on the business day after deposit with a reputable overnight courier service,
as the case may be.
Section 10.7. Severability. If any provision of this Agreement is held to
be invalid for any reason whatsoever, then such provision will be deemed
severable from the remaining provisions of this Agreement and will in no way
affect the validity or enforceability of any other provision of this Agreement.
Section 10.8. Schedules. The Schedules constitute a part of this Agreement
and are incorporated into this Agreement for all purposes.
Section 10.9. Counterparts. The Parties may execute this Agreement in
separate counterparts (no one of which need contain the signatures of all
Parties), each of which will be an original and all of which together will
constitute one and the same instrument.
Section 10.10. Third-Party Beneficiaries. Except as otherwise expressly
provided in this Agreement, no Person which is not a Party will have any right
or obligation pursuant to this Agreement. Notwithstanding the foregoing, the
Parties hereby acknowledge and agree that the Controlling Sellers'
Representative (acting on behalf of the Acquired Employees) is an intended
third-party beneficiary under Section 8.5(b) of this Agreement and entitled to
enforce against IP all of the rights of the Acquired Employees thereunder.
Section 10.11. Headings. The headings used in this Agreement are for the
purpose of reference only and will not affect the meaning or interpretation of
any provision of this Agreement.
Section 10.12. Integration. Except as otherwise provided in this Agreement,
this Agreement, the Confidentiality Agreement and the Transactions Documents set
forth the entire understanding of the Parties relating to the subject matter
hereof, and all prior understandings, whether written or oral, are superseded by
this Agreement, the Confidentiality Agreement and the other Transaction
Documents executed pursuant to the terms hereof.
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first written above.
INTERNATIONAL PAPER COMPANY,
a New York Corporation
By:
------------------------------------
Name:
Title:
BOX USA HOLDINGS, INC.,
a Maryland Corporation
By:
------------------------------------
Name: Xxxxx X. Xxxxx
Title: Chairman and Chief Executive
Officer
----------------------------------------
Xxxxxx Xxxxxx
----------------------------------------
Xxxxx Xxxxxx
----------------------------------------
Xxxxx X. Xxxxx
BOX USA HOLDINGS, L.L.C.,
a Delaware limited liability company
By:
------------------------------------
Name: Xxxxx X. Xxxxx
Title: Chairman
XXXXX AND XXXXX XXXXX FAMILY FOUNDATION
By:
------------------------------------
Xxxxx X. Xxxxx, Trustee
By:
------------------------------------
Xxxxx Xxxxx, Trustee
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BOX USA TRUST DATED AS OF JULY 17, 2000
By:
------------------------------------
Xxxxx X. Xxxxx, Trustee
----------------------------------------
Xxxxx X. Xxxxx, in his capacity as
Controlling Sellers' Representative
WASHINGTON & CONGRESS CAPITAL PARTNERS,
L.P., a Delaware limited partnership
By: WASHINGTON & CONGRESS
ADVISORS, LLC, its General Partner
By:
------------------------------------
Name: Xxxxxxxxx X. Xxxxxxx XX
Title: Chief Executive Officer
TRIUMPH III INVESTORS, L.P.
a Delaware limited partnership
By: TRIUMPH III INVESTORS, INC.,
its General Partner
By:
------------------------------------
Name: Xxxxxxxxx XxXxxxxx III
Title:
Stock Purchase Agreement
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