Exhibit 2.1
EXECUTION VERSION
AGREEMENT OF PURCHASE AND SALE
by and among
INTERNATIONAL PAPER COMPANY,
CMP INVESTMENTS LP
and
CMP HOLDINGS LLC
Dated as of June 4, 2006
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
Section 1.1 Definitions...................................................................1
Section 1.2 Interpretation...............................................................14
ARTICLE II SALE AND PURCHASE OF ASSETS
Section 2.1 Sale of Transferred Equity Interests.........................................15
Section 2.2 Transfer of Assets; Retained Assets..........................................15
Section 2.3 Assumption of Liabilities; Excluded Liabilities..............................18
Section 2.4 The Purchase Price...........................................................20
Section 2.5 Purchase Price Adjustment....................................................20
Section 2.6 Inventory....................................................................24
Section 2.7 Consigned Inventory..........................................................24
Section 2.8 Allocation of Consideration..................................................25
Section 2.9 Post-Purchase Price Adjustment Working Capital Allocations...................25
Section 2.10 Proceeds from Right of First Refusal; ARCo Qualifying Facility Status........26
Section 2.11 Sale of Designated Interest to Xxxxxxx Lumber................................27
ARTICLE III CLOSING
Section 3.1 Closing......................................................................28
Section 3.2 Deliveries by Seller.........................................................28
Section 3.3 Deliveries by the Acquirors..................................................29
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER
Section 4.1 Organization.................................................................29
Section 4.2 Authorization................................................................30
Section 4.3 Title to Personal Property; Transferred Equity Interests.....................30
Section 4.4 Consents and Approvals; No Violations; Governmental Filings..................31
Section 4.5 Financial Statements.........................................................31
Section 4.6 No Undisclosed Liabilities.....................................................
Section 4.7 Absence of Certain Changes...................................................33
Section 4.8 Litigation...................................................................33
Section 4.9 Compliance with Applicable Law; Permits......................................33
Section 4.10 Taxes........................................................................34
Section 4.11 Employee Benefit Plans.......................................................35
Section 4.12 Intellectual Property........................................................37
Section 4.13 Labor Relations..............................................................38
Section 4.14 Environmental Matters........................................................38
Section 4.15 Real Property................................................................39
Section 4.16 Material Contracts...........................................................40
Section 4.17 Entire Business; Sufficiency of Assets.......................................42
Section 4.18 Brokers and Finders..........................................................42
Section 4.19 Distributors, Customers and Suppliers........................................42
Section 4.20 No Other Representations and Warranties......................................43
Section 4.21 Potential Conflicts of Interest..............................................43
Section 4.22 FERC Regulations.............................................................43
Section 4.23 Product Liability and Warranty Claims........................................43
Section 4.24 Insurance....................................................................43
Section 4.25 Investment Representations...................................................44
Section 4.26 Qualifications for Certain Wastewater Permit Transfers.......................44
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE ACQUIRORS
Section 5.1 Organization.................................................................45
Section 5.2 Authorization................................................................45
Section 5.3 Consents and Approvals; No Violations; Governmental Filings..................45
Section 5.4 Capitalization...............................................................46
Section 5.5 Availability of Funds........................................................46
Section 5.6 Litigation...................................................................46
Section 5.7 Brokers or Finders...........................................................47
Section 5.8 Investment Representations...................................................47
Section 5.9 Solvency.....................................................................47
Section 5.10 FERC Regulations.............................................................47
Section 5.11 No Implied Representations...................................................48
Section 5.12 Private Offering.............................................................48
Section 5.13 Qualifications for Certain Wastewater Permit Transfers.......................48
ARTICLE VI COVENANTS
Section 6.1 Conduct of the Business......................................................49
Section 6.2 Access to Information........................................................51
Section 6.3 Reasonable Best Efforts......................................................53
Section 6.4 Antitrust Consents and Approvals.............................................53
Section 6.5 Further Assurances...........................................................54
Section 6.6 Communications with Customers and Suppliers..................................56
Section 6.7 Publicity....................................................................56
Section 6.8 Employees and Employee Benefits..............................................56
Section 6.9 Tax Matters..................................................................61
Section 6.10 No Solicitation and No Hire of Employees.....................................66
Section 6.11 Non-Competition Agreement....................................................67
Section 6.12 Sartell Sublease.............................................................68
Section 6.13 Other Intellectual Property and Transaction..................................69
Section 6.14 Connectivity.................................................................69
Section 6.15 Buyer's Financing Activities.................................................70
Section 6.16 Certain Transactions.........................................................72
Section 6.17 Solvency Opinion.............................................................73
Section 6.18 Access to Records; Confidentiality...........................................73
Section 6.19 Intercompany Accounts........................................................74
Section 6.20 Post-Closing Litigation......................................................74
Section 6.21 Bulk Sales Law...............................................................74
Section 6.22 Disclosure Supplement........................................................75
Section 6.23 Release of Indemnity Obligations.............................................75
Section 6.24 Release of Liens.............................................................75
Section 6.25 Insurance Matters and Contractual Indemnities................................75
Section 6.26 Title Insurance and Surveys..................................................76
Section 6.27 Transition Services; Further Action..........................................77
Section 6.28 CRC Facility.................................................................78
Section 6.29 Transferred Subsidiaries.....................................................78
Section 6.30 Confidentiality by Seller....................................................79
Section 6.31 Release of Letters of Credit.................................................79
Section 6.32 Transfer of Certain Wastewater Permits.......................................79
Section 6.33 Office Relocation............................................................79
Section 6.34 Migration of Data and Systems................................................80
Section 6.35 Third Party Arrangements.....................................................80
Section 6.36 Transition Services Arrangement..............................................80
ARTICLE VII CONDITIONS
Section 7.1 Conditions to Each Party's Obligations.........................................
Section 7.2 Conditions to Obligations of the Acquirors...................................81
Section 7.3 Conditions to Obligations of Seller..........................................82
ARTICLE VIII TERMINATION
Section 8.1 Termination..................................................................82
Section 8.2 Effect of Termination........................................................83
ARTICLE IX SURVIVAL; INDEMNIFICATION
Section 9.1 Survival of Representations..................................................83
Section 9.2 Seller's Agreement to Indemnify..............................................83
Section 9.3 The Acquirors' Agreement to Indemnify........................................86
Section 9.4 Third Party Indemnification..................................................88
Section 9.5 Environmental Liability......................................................89
Section 9.6 Additional Procedures for Remedial Actions on the Real Property..............92
Section 9.7 Exclusive Remedy for Environmental Matters; Indemnification by Buyer.........93
Section 9.8 Xxxxx Dam Indemnity..........................................................94
Section 9.9 Androscoggin Wastewater Indemnity............................................94
Section 9.10 BELLC Indemnity..............................................................96
Section 9.11 Indemnification Following Transfer...........................................96
ARTICLE X MISCELLANEOUS
Section 10.1 Remedies.....................................................................96
Section 10.2 Notices......................................................................97
Section 10.3 Extensions, Waivers and Amendments...........................................98
Section 10.4 Headings.....................................................................98
Section 10.5 Counterparts.................................................................98
Section 10.6 Entire Agreement.............................................................98
Section 10.7 Governing Law................................................................98
Section 10.8 Waiver of Jury Trial.........................................................98
Section 10.9 Assignment...................................................................99
Section 10.10 Fees and Expenses............................................................99
Section 10.11 Binding Nature; Third-Party Beneficiaries....................................99
Section 10.12 Severability.................................................................99
Section 10.13 No Right of Setoff...........................................................99
Section 10.14 Specific Performance........................................................100
Section 10.15 Construction................................................................100
Schedules
Schedule I Business
Schedule II Accounting Methodologies
Schedule III Certain Acquired Assets
Schedule IV Certain Retained Assets
Schedule V Certain Assumed Liabilities
Schedule VI Certain Excluded Liabilities
Schedule VII Consideration Allocation
Schedule VIII Permitted Encumbrance Exceptions
Schedule IX Seller Transition and Migration Tasks
Schedule X Buyer Transition and Migration Tasks
List of Exhibits
Exhibit A Xxxx of Sale
Exhibit B Real Property Warranty Deeds
Exhibit C Assignment of Easements, Rights of Way, Licenses and Permits
Exhibit D Assignments of Lease
Exhibit E Environmental Reliance Letters
Exhibit F Assignment of Contracts, Contract Rights and Permits
Exhibit G Instrument of Assumption
List of Annexes
Annex A Amended and Restated Limited Partnership Agreement
Annex B Xxxxxx Pulp Supply Agreement
Annex C Intellectual Property Agreement
Annex D Intellectual Property Assignments
Annex E Joint Purchasing Agreement
Annex F Litigation Support Agreement
Annex G Amendment to Pine Bluff Agreement
Annex H Quinnesec Wood Supply Agreement
Annex I Sartell Sublease
Annex J Tax Exempt Bond Agreement
Annex K Transition Services Agreement
INDEX OF DEFINED TERMS
Term Page
---- ----
AAA......................................................................................................1
Accounting Methodologies.................................................................................1
Acquired Assets.........................................................................................15
Acquirors................................................................................................1
Additional Administrative Employees.....................................................................56
Additional Financial Data...............................................................................71
Adjustment..............................................................................................62
Adjustment Statement....................................................................................21
AELLC Energy Assets......................................................................................2
Affected Employees......................................................................................56
Affiliate................................................................................................2
Agreement................................................................................................1
Amended and Restated Limited Partnership Agreement.......................................................2
Ancillary Agreements.....................................................................................2
Androscoggin Cap Ex Costs...............................................................................95
Androscoggin Fines......................................................................................95
Androscoggin O&M Costs..................................................................................95
Androscoggin Wastewater Permits..........................................................................2
Applicable Laws.........................................................................................33
ARCo....................................................................................................26
ARCo QF Recertification.................................................................................26
ARCo ROFR...............................................................................................26
ARCo Shares.............................................................................................26
ARCo Transmission Lease.................................................................................26
Assets...................................................................................................2
Assumed Contracts.......................................................................................16
Assumed Indebtedness....................................................................................21
Assumed Liabilities.....................................................................................18
Base Cash Purchase Price................................................................................20
Basket Amount...........................................................................................84
Benchmark................................................................................................2
Broker..................................................................................................76
Bucksport Wastewater Permit..............................................................................3
Business.................................................................................................1
Business Day.............................................................................................3
Business Offices........................................................................................79
Buyer....................................................................................................1
Buyer Claim.............................................................................................84
Buyer Damages...........................................................................................84
Buyer Indemnified Party.................................................................................84
Buyer Plans.............................................................................................58
Buyer Savings Plan......................................................................................58
Cap.....................................................................................................84
Cash Purchase Price.....................................................................................23
Certain Accrued Liabilities..............................................................................3
Claim...................................................................................................88
Closing.................................................................................................28
Closing Date............................................................................................28
Closing Inventory Report................................................................................24
Code.....................................................................................................3
Commitment Letters......................................................................................46
Competition Laws........................................................................................53
Competitive Business....................................................................................67
Competitive Products....................................................................................67
Confidentiality Agreement................................................................................3
Consideration...........................................................................................20
Consigned Inventory......................................................................................3
Consigned Price..........................................................................................3
Consignment Report......................................................................................24
Contract Indemnities....................................................................................75
Contractor..............................................................................................76
Contracts................................................................................................3
Control..................................................................................................3
CRC Assets..............................................................................................78
CRC Facility............................................................................................78
Current Assets...........................................................................................3
Current Liabilities......................................................................................3
Designated Interest.....................................................................................27
Employees...............................................................................................35
Environmental Laws.......................................................................................4
Environmental Permit.....................................................................................4
Equipment................................................................................................4
Equity Consideration....................................................................................20
Equity Intellectual Property.............................................................................4
Equity Interest..........................................................................................4
ERISA....................................................................................................4
Estimated Assumed Indebtedness..........................................................................21
Estimated Cash Purchase Price...........................................................................20
Estimated Inventory Amount..............................................................................21
Estimated Net Working Capital Amount....................................................................21
Excess Amount............................................................................................4
Exchange Act.............................................................................................5
Excluded Intellectual Property...........................................................................5
Excluded Liabilities....................................................................................19
Excluded Litigation Matters.............................................................................20
Existing Androscoggin Wastewater Permit.................................................................95
FERC.....................................................................................................5
FERC Licenses............................................................................................5
FERC Orders..............................................................................................5
Final Assumed Indebtedness..............................................................................23
Final Assumed Indebtedness Amount.......................................................................23
Final Consignment Items.................................................................................23
Final Determination......................................................................................5
Final Inventory Amount..................................................................................23
Final Net Working Capital Adjustment Amount.............................................................23
Final Net Working Capital Amount........................................................................23
Financial Statements....................................................................................32
Financing...............................................................................................46
GAAP.....................................................................................................5
Governmental Entity......................................................................................5
Governmental Filings....................................................................................31
Hazardous Substances.....................................................................................5
Headquarters Business Employees.........................................................................56
Xxxxxx Pulp Supply Agreement.............................................................................6
HSP.....................................................................................................58
HSR Act..................................................................................................6
Inactive Employee.......................................................................................57
Income Tax Return........................................................................................6
Income Taxes.............................................................................................6
Indebtedness.............................................................................................6
Indemnity Period........................................................................................83
Insurance Company.......................................................................................76
Insurance Policies.......................................................................................6
Intellectual Property....................................................................................6
Intellectual Property Agreement..........................................................................7
Intellectual Property Assignments........................................................................7
Interim Financial Statements............................................................................32
Inventories..............................................................................................7
Inventory................................................................................................7
Inventory Benchmark......................................................................................7
Joint Purchasing Agreement...............................................................................7
Knowledge of Seller......................................................................................7
Knowledge of the Acquirors...............................................................................7
Leased Real Property.....................................................................................7
Letters of Credit.......................................................................................79
Lien.....................................................................................................7
Litigation..............................................................................................33
Litigation Support Agreement.............................................................................8
Master Sublease.........................................................................................68
Material Adverse Effect..................................................................................8
Material Contracts......................................................................................42
Mill Sites..............................................................................................77
Xxxxx....................................................................................................8
Minimum Claim Amount....................................................................................84
Net Working Capital......................................................................................8
Non-Represented Employee................................................................................57
Occurrence Based Insurance Policies......................................................................8
OCIP....................................................................................................76
Offering Materials......................................................................................70
Offerings...............................................................................................70
One Time Costs..........................................................................................80
Owned Real Property......................................................................................8
Parent...................................................................................................1
Payables.................................................................................................8
Permits..................................................................................................8
Permitted Encumbrances...................................................................................9
Permitted Liens..........................................................................................9
Person...................................................................................................9
Physical Inventory Count................................................................................24
Pine Bluff Agreement.....................................................................................9
Pine Bluff Mill..........................................................................................9
Plans...................................................................................................35
Plant Closure Provisions................................................................................36
PM1......................................................................................................9
Post-Closing Tax Period.................................................................................10
Pre-Closing Period......................................................................................10
Pre-Closing Tax Period..................................................................................10
Preliminary Assumed Indebtedness........................................................................21
Preliminary Consignment Items...........................................................................21
Preliminary Inventory Amount............................................................................21
Preliminary Net Working Capital Amount..................................................................21
Prepaids................................................................................................10
Product.................................................................................................10
Profits Interest........................................................................................10
Quinnesec Wastewater Permit.............................................................................10
Quinnesec Wood Supply Agreement.........................................................................10
Real Property...........................................................................................10
Real Property Leases....................................................................................39
Receivables.............................................................................................10
Registered Intellectual Property........................................................................10
Regulation S-X..........................................................................................32
Regulation S-X Financial Statements.....................................................................71
Release.................................................................................................10
Released Parties........................................................................................79
Relocated Business Offices..............................................................................80
Remediation Standard....................................................................................11
Replacement Androscoggin Wastewater Permits.............................................................95
Represented Employee....................................................................................57
Restricted Cash.........................................................................................11
Retained Assets.........................................................................................17
Retained Motor Vehicles.................................................................................11
Xxxxxxx Forest Management Agreement.....................................................................27
Xxxxxxx Purchase Right..................................................................................27
Sartell Real Property...................................................................................11
Sartell Sublease........................................................................................11
Sartell Wastewater Permit...............................................................................11
Schedule of Consigned Inventory.........................................................................11
Secured Systems Connectivity............................................................................69
Securities Act..........................................................................................11
Seller...................................................................................................1
Seller Claim............................................................................................86
Seller Damages..........................................................................................86
Seller Disclosure Letter................................................................................29
Seller Indemnified Party................................................................................86
Seller Participants.....................................................................................11
Seller Retirement Plan..................................................................................59
Seller Savings Plan.....................................................................................58
SESP....................................................................................................59
Settlement Accountant...................................................................................11
Shut Down Date..........................................................................................78
Software................................................................................................12
Solvency Certificate....................................................................................73
Solvency Opinion........................................................................................73
Solvent.................................................................................................12
SSP.....................................................................................................58
Straddle Period.........................................................................................12
Stub Period Combined Financial Statements...............................................................70
Subsequent Financial Statements.........................................................................70
Subsidiary..............................................................................................12
Surveys.................................................................................................77
Tax.....................................................................................................12
Tax Benefit.............................................................................................12
Tax Claim...............................................................................................13
Tax Dispute Resolution Mechanism........................................................................66
Tax Exempt Bond Agreement...............................................................................13
Tax Indemnified Party...................................................................................13
Tax Indemnifying Party..................................................................................13
Tax Return..............................................................................................13
Tax Sharing Agreements..................................................................................66
Taxes...................................................................................................12
Third Party Intellectual Property.......................................................................13
Title Commitments.......................................................................................76
Title Company...........................................................................................76
Title Insurance.........................................................................................77
Total Cost..............................................................................................13
Transfer Taxes..........................................................................................13
Transferred Business....................................................................................96
Transferred Entities....................................................................................13
Transferred Equity Interests............................................................................15
Transferred Intellectual Property.......................................................................13
Transferred Motor Vehicles..............................................................................13
Transferred Subsidiaries................................................................................14
Transition Services Agreement...........................................................................14
Unit....................................................................................................14
Units...................................................................................................14
WARN Act................................................................................................14
Warranty Inventory......................................................................................25
Wastewater Permits......................................................................................14
AGREEMENT OF PURCHASE AND SALE
This AGREEMENT OF PURCHASE AND SALE (this "Agreement") is made
and entered into and effective as of June 4, 2006, by and among International
Paper Company, a corporation organized under the laws of the State of New York
("Seller"), CMP Investments LP, a limited partnership organized under the laws
of the State of Delaware ("Parent") and CMP Holdings LLC, a limited liability
company organized under the laws of the State of Delaware and an indirect,
wholly-owned subsidiary of Parent ("Buyer" and, together with Parent, the
"Acquirors").
RECITALS
WHEREAS, Seller is engaged in the manufacture and sale of
coated paper and conducts related activities, as more fully described on
Schedule I hereto, (the "Business");
WHEREAS, Buyer desires to purchase from Seller and Seller
desires to sell to Buyer (i) certain assets of Seller used in the Business and
located in the U.S., as described herein, (ii) certain obligations and
liabilities related to the Business to the extent set forth herein, and (iii)
all of the issued and outstanding equity interests owned by Seller in certain
entities related to the Business as described herein; and
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements contained herein, other good and
valuable consideration the adequacy and receipt of which are hereby
acknowledged, and intending to be legally bound hereby, Seller, Parent and Buyer
hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the
following terms shall have the following meanings:
"AAA" shall mean the American Arbitration Association.
"Abbottsfield Deliverables" shall mean the "Deliverables," as
such term is used in the Abbottsfield SOW.
"Abbottsfield SOW" shall mean Statement of Work #1 for
Bucksport Mill Technical Training Program, between Seller and Abbottsfield
Industrial Training, Inc., dated February 10, 2006, and issued pursuant to the
Professional Services Agreement between the same parties, dated May 13, 2002.
"Accounting Methodologies" shall mean those accounting
methodologies set forth on Schedule II.
"AELLC Energy Assets" shall mean the #1 (westernmost) gas
turbine and generator, the #2 (middle) gas turbine and generator and the #3
(easternmost) gas turbine and generator and all related boilers, transformer and
related assets of Androscoggin Energy LLC that have been transferred to Seller
in the settlement of In re: Androscoggin Energy LLC pursuant to the order (i)
confirming Debtor's Second Amended Plan of Reorganization Dated January 9, 2006
and (ii) authorizing and directing certain actions in connection therewith,
dated February 15, 2006 (U.S. Bankruptcy Court, District of Maine).
"Affiliate" shall mean, with respect to any Person, any Person
which, directly or indirectly, controls, is controlled by, or is under common
control with, such Person.
"Amended and Restated Limited Partnership Agreement" shall
mean the limited partnership agreement of Parent, in the form attached hereto as
Annex A.
"Ancillary Agreements" shall mean (i) the Transition Services
Agreement, (ii) the Tax Exempt Bond Agreement, (iii) the Litigation Support
Agreement, (iv) the Quinnesec Wood Supply Agreement, (v) the Sartell Sublease,
(vi) the Intellectual Property Agreement, (vii) the Intellectual Property
Assignments, (viii) the Joint Purchasing Agreement, (ix) the Xxxxxx Pulp Supply
Agreement and (x) the Amended and Restated Limited Partnership Agreement.
"Androscoggin Wastewater Permits" shall mean the Maine MEPDES
permit issued on September 21, 2005, the Maine DEP Xxxxx-Xxx-Livermore Water
Quality Certification issued as of May 5, 1998 and the Planning Board of the
Town of Xxx Permit No. 5 as issued October 9, 2001.
"Assets" shall mean, collectively, the Acquired Assets and
Transferred Equity Interests.
"Benchmark" shall mean $156,500,000 (one hundred fifty six
million five hundred thousand dollars).
"Brightstar Technology" shall mean all Intellectual Property
rights of Seller and its Subsidiaries in that certain technology owned by Seller
and its Subsidiaries, relating to the brightening of pulp and paper, that is
claimed or described in (i) U.S. Patent Application Ser. No. 11/358,543 filed by
Seller with the U.S. Patent and Trademark Office on February 21, 2006, (ii) U.S.
Patent Application filed by Seller with the U.S. Patent and Trademark Office on
June 2, 2006 Docket Number: TEC-037148, Title: Improved Process for
Manufacturing Pulp, Paper and Paperboard Products or (iii) U.S. Patent
Application filed by Seller with the U.S. Patent and Trademark Office on June 2,
2006, a continuation-in-part of Ser. No. 11/358,543, Docket Number
TEC-031116-I1, Title: Pulp and Paper Having Increased Brightness Fixation of
Optical Brightening Agents Onto Papermaking Fiber, and in any patent issuing
from any of the foregoing patent applications, or in any patent issuing from any
divisional, reissue, continuation or foreign counterpart application claiming
priority from any of the foregoing patent applications, and any other technology
which is equivalent to the foregoing technology and claimed in any patents
issuing from any of the foregoing patent applications within the meaning of the
United States Law of the Doctrine of Equivalents.
"Bucksport Wastewater Permit" shall mean the Maine MEPDES
permit issued November 2, 2004.
"Business Day" shall mean any day that is not a Saturday,
Sunday or other day on which banks are required or authorized by law to be
closed in the City of New York.
"Certain Accrued Liabilities" shall mean (i) payroll and
related accruals with respect to Affected Employees, (ii) accrued liabilities
for rebate obligations with respect to products sold by the Business and (iii)
accrued liabilities for freight obligations, in each case, which exclusively
relate to the Business, other than any of the foregoing arising in connection
with or relating to the Retained Assets or Excluded Liabilities.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Confidentiality Agreement" shall mean the Confidentiality
Agreement, dated November 2, 2005, between Apollo Management VI, L.P. and
Seller.
"Consigned Inventory" shall mean finished goods Inventory
(including Z orders) having a dollar value equal to the Excess Amount, which
finished goods Inventory shall be retained by Seller subject to the provisions
of Section 2.7. The dollar value of the Consigned Inventory shall equal the
aggregate amount of the dollar value of all Products contained in such Consigned
Inventory, determined by multiplying the total number of tons of each such
Product by the Total Cost for such Product.
"Consigned Price" with respect to any item of Consigned
Inventory, shall mean the actual variable cost for such Inventory, determined in
the ordinary course of business, consistent with past practice.
"Contracts" shall mean all agreements, legally binding
commitments or undertakings, contracts, leases (including leases and subleases
relating to the Real Property), indentures, collective bargaining agreements and
licenses (including licenses and sublicenses of Intellectual Property), written
and oral.
"Control" as applied to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management of that Person, whether through ownership of voting securities or
otherwise.
"Current Assets" shall mean, without duplication, the sum of
the following items: (i) Restricted Cash, (ii) Receivables, net of reserves for
cash discounts, suspended accounts and any allowance for doubtful accounts,
(iii) Inventories, net of reserves and subject to Section 2.5(e), (iv) Prepaids
and (v) other current assets of the Business, in each case, determined in
accordance with GAAP, applied on a basis consistent with the Financial
Statements and the Accounting Methodologies, and excluding any Retained Assets.
"Current Liabilities" shall mean, without duplication, the sum
of the following items: (i) Payables, (ii) Certain Accrued Liabilities and (iii)
other current liabilities of the Business, in each case, determined in
accordance with GAAP, applied on a basis consistent with the Financial
Statements and the Accounting Methodologies and excluding any Excluded
Liabilities.
"Environmental Laws" shall mean all United States civil and
criminal federal, state and local laws, rules, regulations, orders, ordinances
and common law, applicable, in effect, and in existence as of the Closing Date
where the Business currently is conducted any of which govern or relate to
pollution, protection of the environment, natural resources, safety and health
Releases or threatened Releases of Hazardous Substances, solid or hazardous
waste, as any of these terms are or may be defined in such statutes, laws,
rules, regulations, orders, ordinances, and common law or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, Release,
transport or handling of Hazardous Substances and all laws and regulations with
regard to record keeping, notification, disclosure and reporting requirements
respecting Hazardous Substances.
"Environmental Permit" shall mean any permit, approval,
identification number, license or other authorization required under any
applicable Environmental Law.
"Equipment" shall mean the Transferred Motor Vehicles and all
equipment and tangible personal property (including unregistered motor vehicles
other than the Retained Motor Vehicles) that is (i) located on the Real Property
and (ii) located at a location other than the Real Property and is (A) used or
held for use exclusively in the Business by Seller or its Subsidiaries (whether
as owner, lessor, lessee or otherwise) or (B) owned by Seller or its
Subsidiaries and provided to the Affected Employees for their exclusive use, in
each case, including machinery, tools, furniture, computer hardware, service
parts and supplies, other than any of the foregoing that constitute Inventories
or Retained Assets.
"Equity Intellectual Property" shall mean the Intellectual
Property owned by the Transferred Subsidiaries, including, without limitation,
the Intellectual Property listed in Section 4.12(a)(i) of the Seller Disclosure
Letter.
"Equity Interest" shall mean any share capital, capital stock,
partnership or limited liability company interest or other equity or voting
interest or any security or evidence of indebtedness convertible into or
exchangeable for any share capital, capital stock, partnership or limited
liability company interest or other equity interest, or any right, warrant or
option to acquire any of the foregoing.
"Equity Value" shall mean the dollar value of the Equity
Consideration, which shall be equal to ten percent (10%) of the aggregate equity
capitalization (including, for these purposes, the dollar value of such Equity
Consideration) of Parent as of the Closing Date.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"Excess Amount" shall mean (x) the dollar value of all
Inventory on hand as of the Closing Date, minus (y) the Inventory Benchmark
applicable for the time period in which the Closing Date occurs; provided,
however, that the Excess Amount shall never be less than zero. The dollar value
of the Inventory shall equal the aggregate amount of the dollar value of all
Products contained in such Inventory, prepared in accordance with GAAP, on a
basis consistent with the Financial Statements and the Accounting Methodologies.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Excluded Intellectual Property" shall mean (i) all
Intellectual Property of Seller and its Affiliates that is used or held for use
in the Business, other than the Equity Intellectual Property and the Transferred
Intellectual Property, including Intellectual Property listed in Section 6.13(b)
of the Seller Disclosure Letter, (ii) all Intellectual Property of Seller and
its Affiliates that is not used or held for use in the Business and (iii) the
Brightstar Technology.
"FERC" shall mean the United States Federal Energy Regulatory
Commission.
"FERC Licenses" shall mean the following licenses issued to
Seller by FERC under Part I of the Federal Power Act (i) International Paper
Company, Project No. 8315 (Minnesota), 96 FERC P. 62,178 (2001), as amended;
(ii) International Paper Company, Project No. 8277 (Maine), 101 FERC P. 62,096
(2002), as amended; and (iii) International Paper Company, Project No. 2375
(Maine), 84 FERC P. 62,235 (1998) and 110 FERC P. 62,345 (2005), as amended.
"FERC Orders" shall mean the orders issued by the FERC
approving the transfers of the FERC Licenses from Seller to Buyer.
"Final Determination" shall mean, with respect to any Tax
matters, (i) any final determination of liability in respect of a Tax that,
under Applicable Law, is not subject to further appeal, review or modification
through proceedings or otherwise (including the expiration of a statute of
limitations or a period for the filing of claims for refunds, amended returns or
appeals from adverse determinations), including a "determination" as defined in
Section 1313(a) of the Code or execution of an Internal Revenue Service Form
870AD or (ii) the payment of Tax by Buyer, Seller or any of their Affiliates,
whichever is responsible for payment of such Tax under Applicable Law, with
respect to any item disallowed or adjusted by a Taxing Authority, provided that
such responsible party determines that no action should be taken to recoup such
payment and the other party consents, which consent shall not be unreasonably
withheld.
"GAAP" shall mean United States generally accepted accounting
principles as in effect on the date hereof.
"Governmental Entity" shall mean any federal, state,
provincial, county, municipal or local government in the United States, or any
political subdivision of any of the foregoing, or any non-U.S. entity of a type
similar to the foregoing, or any entity, authority, agency, ministry,
commission, tribunal, arbitral body, court or other similar body exercising
executive, legislative, judicial, regulatory or administrative authority or
functions of or pertaining to government, including any authority or
quasi-governmental entity established to perform any of these functions.
"Hazardous Substances" shall mean any chemicals, materials or
substances defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "hazardous constituents," "restricted
hazardous materials," "extremely hazardous substances," "toxic substances,"
"contaminants," "pollutants," "toxic pollutants," or words of similar meaning
and regulatory effect under any applicable Environmental Law, including,
asbestos, lead paint, toxic mold, radon and polychlorinated biphenyls.
"Xxxxxx Pulp Supply Agreement" shall mean the pulp supply
agreement, to be executed and delivered on the Closing Date, between Buyer and
Seller, pursuant to which Buyer will purchase air-dry softwood NBSK pulp from
Seller, in the form attached hereto as Annex B.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder.
"Income Taxes" shall mean all Taxes based upon, measured by,
or calculated with respect to (i) gross or net income or gross or net receipts
of profits (including, but not limited to, any capital gains, minimum taxes and
any Taxes on items of tax preference, but not including sales, use, goods and
services, real or personal property transfer or other similar Taxes), (ii)
multiple bases (including, but not limited to, corporate franchise, doing
business or occupation Taxes) if one or more of the bases upon which such Tax
may be based upon, measured by, or calculated with respect to, is described in
(i) above, or (iii) withholding taxes measured by, or calculated with respect
to, any payments or distributions (other than wages).
"Income Tax Return" shall mean any Tax Return relating to
Income Taxes.
"Indebtedness" of any Person shall mean (i) all liabilities
and obligations of such Person for borrowed money or evidenced by notes, bonds
or similar instruments, (ii) obligations in respect of the deferred purchase
price of property or services (other than any amount that would constitute
Current Assets) to the extent that such amount would be accrued as a liability
on a balance sheet prepared in accordance with GAAP, (iii) obligations in
respect of capitalized leases, (iv) obligations in respect of letters of credit,
acceptances or similar obligations, (v) obligations under interest rate cap
agreements, interest rate swap agreements, foreign currency exchange contracts
or other hedging contracts, (vi) any accrued or unpaid interest or breakage fees
related to any of the foregoing, and (vii) any guarantee of the obligations of
another Person with respect to any of the foregoing.
"Insurance Policies" shall mean the insurance policies,
binders and bonds, maintained by Seller that cover losses of, and to the extent
related to, the Business.
"Intellectual Property" shall mean all intellectual property
including but not limited to: (i) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
provisionals, reissuances, continuations, continuations-in-part, divisions,
revisions, extensions, and reexaminations thereof, (ii) all trademarks, service
marks, trade dress, logos, brand names, trade names, domain names and corporate
names, all goodwill associated therewith, and all applications, registrations,
and renewals in connection therewith, (iii) all copyrightable works, all
copyrights, and all website content, and all applications, registrations, and
renewals in connection therewith, (iv) all mask works and protectible designs,
and all applications, registrations, and renewals in connection therewith, (v)
all trade secrets and confidential business information (including research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
research records, records of inventions, test information, customer and supplier
lists, customer data, pricing and cost information, and business and marketing
plans and proposals) and (vi) all Software, and all electronic data, databases,
and data collections.
"Intellectual Property Agreement" shall mean an agreement, and
all schedules and exhibits attached thereto, between Seller and Buyer licensing
to Buyer, as of the Closing, certain Excluded Intellectual Property,
substantially in the form attached hereto as Annex C.
"Intellectual Property Assignments" shall mean the
Intellectual Property Assignment (including the Trademark Assignment, Patent
Assignment and Copyright Assignment attached as exhibits thereto) attached
hereto as Annex D.
"Inventories" or "Inventory" shall mean all inventory,
work-in-process, finished goods, raw materials (including wood), replacement
parts and other supplies classified as either short or long-term located at the
Xxxxx or at a location other than the Xxxxx and used or held for use exclusively
in, or manufactured by, the Business by Seller, other than any of the foregoing
to the extent constituting Retained Assets.
"Inventory Benchmark" shall have the meaning set forth in
Schedule II under the heading "Inventories".
"Joint Purchasing Agreement" shall mean a joint purchasing
agreement, to be executed and delivered on the Closing Date, between Buyer and
Seller, providing for the joint purchase of certain goods, services and
commodities, in the form attached as Annex E.
"Knowledge of the Acquirors" shall mean the actual knowledge,
after reasonable inquiry, of the following persons: Xxxxx Xxxxxxxx, Xxxxxx Xxxxx
and Xxxxx Xxxxxx.
"Knowledge of Seller" shall mean the actual knowledge, after
reasonable inquiry, of the following persons: XX Xxxxxxx, Xxxx Xxxxxxx, Xxxxxx
X. Xxxxx, Xxxxxxx Xxxxxxxx, Xxxx Xxxx, Xxxx X. Xxxxx and, for the purposes of
Section 4.10 only, Xxxxxxx Xxxxxxxxx, for the purposes of Section 4.14 only,
Xxxxxx Xxxxxxx, and for the purposes of Section 4.11 only, Xxxxxx Xxxxxx.
"Leased Real Property" shall mean the real property leased or
subleased by Seller or any Subsidiary listed on Section 4.15(b)(i) of the Seller
Disclosure Letter, and any other real property leased or subleased by Seller or
any Subsidiary that is used or held for use exclusively in the Business,
together with (to the extent so leased or subleased) all buildings and other
structures, facilities or improvements currently located thereon, all fixtures
thereto, and all easements, licenses, rights and other appurtenances relating to
the foregoing, other than any of the foregoing that constitute Retained Assets.
"Lien" shall mean any mortgage, pledge, lien (statutory or
otherwise and including, without limitation, environmental, ERISA and tax
liens), security interest, easement, right of way, limitation, encroachment,
covenant, claim, restriction, right, option, conditional sale or other title
retention agreement, charge or encumbrance of any kind or nature (except for any
restrictions arising under any applicable securities laws).
"Litigation Support Agreement" shall mean a litigation support
agreement, to be executed and delivered on the Closing Date, between Buyer and
Seller, governing the Excluded Litigation Matters, in the form attached hereto
as Annex F.
"Material Adverse Effect" shall mean a material adverse effect
on (a) the business, assets, results of operations or financial condition of the
Business and the Acquired Assets, taken as a whole, or (b) the ability of Seller
to consummate the transactions contemplated hereby, in each case, other than any
effect resulting from, relating to or arising out of: (i) the announcement of
the execution of this Agreement and the transactions contemplated hereby,
including by reason of the identity of the Acquirors or communication by the
Acquirors of their plans or intentions regarding operation of the Business, (ii)
any actions taken by Seller for which consent was obtained from the Buyer in
accordance with Section 6.1, (iii) any change in law, rule or regulation or GAAP
or interpretations thereof applicable to the Business, Seller or the Acquirors,
to the extent the Business is not disproportionately affected, (iv) changes or
events affecting the financial, banking, currency or capital markets in general
(whether in the United States or any other country or in any international
market), (v) changes or events affecting the industry and markets in which the
Business generally operates, to the extent the Business is not
disproportionately affected or (v) changes or events exclusively affecting or
relating to Retained Assets or Excluded Liabilities.
"Xxxxx" shall mean the xxxxx relating to the Business in
Androscoggin, Maine; Bucksport, Maine; Quinnesec, Michigan and Sartell,
Minnesota.
"Net Working Capital" shall equal: (i) the amount of Current
Assets as of 11:59 p.m. on the date immediately prior to the Closing Date minus
(ii) the amount of Current Liabilities as of 11:59 p.m. on the date immediately
prior to the Closing Date.
"Occurrence Based Insurance Policies" shall mean all Insurance
Policies that are occurrence based, other than those policies, binders or bonds
provided or issued by Seller's captive insurance company.
"Owned Real Property" shall mean the real property owned by
Seller or any Subsidiary, including the real property on which the Xxxxx are
situated, that is listed in Section 4.15(a) of the Seller Disclosure Letter and
any other real property owned by Seller or any Subsidiary that is used
exclusively in the Business, in each case together with all buildings and other
structures, facilities or improvements currently or hereafter located thereon,
all fixtures thereto, and all easements, licenses, rights and other
appurtenances relating to the foregoing, but excluding the facilities and
improvements that constitute Retained Assets.
"Payables" shall mean any and all accounts payable, notes or
other amounts payable relating to the purchase of goods or services by or on
behalf of the Business, other than any of the foregoing arising in connection
with or relating to amounts due to Seller and its Affiliates, Retained Assets or
Excluded Liabilities.
"Permits" shall mean permits, licenses, variances, exemptions,
orders, approvals, authorizations, certificates, franchises, qualifications,
registrations, consents, notices and rights.
"Permitted Encumbrances" shall mean with respect to each
parcel of Real Property: (i) zoning, planning and building codes and other
applicable laws regulating the use, development and occupancy of the Real
Property and permits, consents and rules under such laws; (ii) encumbrances,
easements, rights-of-way, covenants, conditions, restrictions and other matters
affecting title to such Real Property which do not materially detract from the
value of such Real Property or materially restrict (or otherwise materially
interfere with) the use of such Real Property, in each case, based on the
current use of such property and, in each case, which does not secure any
obligation to make payment; (iii) except as set forth on Schedule VIII, matters
shown on the title insurance or commitments listed in Section 4.15 of the Seller
Disclosure Letter, (iv) matters of record or registered encumbrances affecting
title to any Real Property or other encumbrances, easements, rights-of-way,
covenants, conditions, restrictions and other matters affecting title to such
Real Property reflected in the Real Property surveys made available to the
Acquirors or their representatives prior to the date hereof or set forth in
Section 4.15 of the Seller Disclosure Letter, in each case, which do not
materially detract from the value of such Real Property or materially restrict
(or otherwise materially interfere with) the use of such Real Property, in each
case, based on the current use of such property, or which do not secure any
obligation to make payment; (v) leases and subleases of Real Property set forth
in Section 4.15 of the Seller Disclosure Letter; (vi) statutory encumbrances of
landlords for amounts not yet due and payable; (vii) all easements, encumbrances
or other matters which are necessary for utilities and other similar services on
the Real Property; and (viii) Permitted Liens.
"Permitted Liens" shall mean: (i) Liens identified in the
Seller Disclosure Letter, (ii) Liens for Taxes and other governmental levies not
yet due and payable or, if due, being contested in good faith by appropriate
proceedings, (iii) mechanics', workmen's, repairmen's, warehousemen's, carriers'
or other Liens, including all statutory Liens, arising or incurred in the
ordinary course of business consistent with past practice that do not materially
interfere with or materially affect the use or value of the respective
underlying asset to which such Liens relate as used on the date hereof and (iv)
conditional sales contracts and equipment leases with third parties entered into
in the ordinary course of business consistent with past practice.
"Person" shall mean any individual, corporation, general
partnership, limited partnership, limited liability partnership, limited
liability company, joint stock company, unincorporated organization or
association, trust, joint venture or other organization or entity (including,
without limitation, any Governmental Entity) as well as any syndicate or group
that would be deemed to be a person under Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended.
"Pine Bluff Agreement" shall mean the Contract for Sale and
Purchase of Coated Paper, dated as of April 1, 2006, executed by Seller on
behalf of the Business and Seller's Beverage Packaging Division, as will be
amended by an amendment in the form attached hereto as Annex G.
"Pine Bluff Mill" shall mean the mill owned by Seller located
in Pine Bluff, Arkansas.
"PM1" shall mean the coated papers machine located at the Pine
Bluff Mill.
"Post-Closing Tax Period" shall mean any Tax period that
begins after the Closing Date and the portion of any Straddle Period that begins
after the Closing Date.
"Pre-Closing Period" shall mean the period from the date of
this Agreement through the Closing Date.
"Pre-Closing Tax Period" shall mean any Tax period that ends
on or before the Closing Date and the portion of any Straddle Period that ends
on the Closing Date.
"Prepaids" shall mean all prepaid items and expenses, deferred
charges, advance payments, deposits, rights of offset, credits, claims for
refunds, and similar items that exclusively relate to the Business, other than
any of the foregoing to the extent constituting or related to Retained Assets or
to the extent arising in connection with or relating to the Excluded
Liabilities, Taxes or Insurance Policies.
"Product" shall mean coated groundwood paper, coated freesheet
C2S paper and uncoated groundwood supercalendered paper.
"Profits Interest" shall mean the profits interest to be
issued by Parent to Seller at Closing in accordance with this Agreement and the
Amended and Restated Limited Partnership Agreement comprised of the Seller's
right to distributions under Section 4.1(b)(ii) and (c)(ii) of the Amended and
Restated Limited Partnership Agreement.
"Quinnesec Wastewater Permit" shall mean the Michigan
Department of Environmental Quality NPDES permit issued May 17, 2004.
"Quinnesec Wood Supply Agreement" shall mean the pulpwood
supply and related agreements, to be executed and delivered on the Closing Date,
between CMP Quinnesec LLC, on the one hand, and Seller or Resource Management
Service LLC as assignee of Seller, on the other hand, pursuant to which CMP
Quinnesec LLC will purchase wood fiber from Seller or Resource Management
Service LLC, substantially in the form attached hereto as Annex H.
"Real Property" shall mean the Owned Real Property and the
Leased Real Property.
"Receivables" shall mean any and all accounts receivable,
notes and other amounts receivable, exclusively relating to sales and other
transactions of the Business other than any of the foregoing to the extent
constituting Retained Assets.
"Registered Intellectual Property" shall mean (i) patents and
patent applications, (ii) registered trademarks, service marks, trade dress, and
domain names, and applications for registrations thereof and (iii) registered
copyrights, designs, and mask works, and applications for registrations thereof.
"Release" shall mean any spill, emission, discharge, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching, release,
presence or migration of Hazardous Substances on, above, under, onto, in or into
the environment above regulatory standards or into or out of any property.
"Remediation Standard" shall mean a numerical standard
(whether resulting from an enacted statute, promulgated regulation, guidance or
policy document issued by a regulatory agency, or developed on a case-by-case
basis through a risk assessment or other methodology authorized pursuant to an
applicable Environmental Law and acceptable to the applicable governmental
authority) that defines the concentrations of Hazardous Substances that may be
permitted to remain in any environmental media after a remediation of a release
of Hazardous Substances.
"Restricted Cash" shall mean cash of the Business that is
restricted in its use and may be used only to fund (i) the ongoing energy
operations of the Bucksport energy asset investment or (ii) the ongoing
operations of the landfill located in Quinnesec, Michigan, each as more
particularly described in items 2 and 3, respectively, under "Cash" on Schedule
II.
"Retained Motor Vehicles" shall mean the registered motor
vehicles related to the Business other than the Transferred Motor Vehicles.
"Sartell Real Property" shall mean all of the real property
currently leased by the Seller pursuant to the Master Sublease, together with
all buildings and other structures, facilities or improvements currently or
hereafter located thereon, all fixtures thereto, and all easements, licenses,
rights of Seller and other appurtenances relating to the foregoing, but
excluding any facilities and improvements that constitute Retained Assets.
"Sartell Sublease" shall mean a sublease for the Sartell Real
Property, substantially in the form attached hereto as Annex I.
"Sartell Wastewater Permit" shall mean the Minnesota Pollution
Control Agency NPDES permit first issued November 1, 1997.
"Schedule of Consigned Inventory" shall mean a schedule that
identifies each item of Consigned Inventory by roll or other applicable unit and
includes, for each such roll or unit, the corresponding weight in tons, Total
Cost and Consigned Price, such that the aggregate Total Cost of the Inventory
identified on such schedule equals the dollar value of the Consigned Inventory
(as defined in the definition of Consigned Inventory).
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Seller Participants" shall mean, collectively, Seller and the
Transferred Subsidiaries.
"Settlement Accountant" shall be KPMG LLP unless such firm
declines, in which case shall mean an internationally recognized independent
accounting firm jointly selected by the parties that is not the independent
auditor for either Buyer or Seller or their Affiliates, or, if Buyer and Seller
are unable to jointly select such an accounting firm within 30 days after
delivery of written notice of a disagreement, a senior partner in an
internationally recognized accounting firm selected by the AAA based on the
request of Buyer or Seller to make such selection.
"Software" shall mean computer programs, applications,
interfaces, operating systems, middleware, firmware or embedded software
programs or applications, including source code, object code, including related
documentation, development tools, test suites, files, processes, scripts,
routines used to process data, web sites (including related computer code and
content), improvements, modifications, enhancements, versions and releases
relating thereto, and all documentation related to any of the foregoing,
irrespective of the media on which it is recorded.
"Solvent" with regard to any Person, means that (i) the sum of
the assets of such Person, both at a fair valuation and at present fair salable
value, exceeds its liabilities, including contingent, subordinated, unmatured,
unliquidated, and disputed liabilities; (ii) such Person has sufficient capital
with which to conduct its business; and (iii) such Person has not incurred
debts, and does not intend to incur debts, beyond its ability to pay such debts
as they mature. For purposes of this definition, "debt" means any liability on a
claim, and "claim" means (i) a right to payment, whether or not such right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or unsecured or (ii)
a right to an equitable remedy for breach of performance if such breach gives
rise to a payment, whether or not such right to an equitable remedy is reduced
to judgment, fixed, contingent, matured, unmatured, disputed, undisputed,
secured, or unsecured. With respect to any such contingent liabilities, such
liabilities shall be computed at the amount which, in light of all the facts and
circumstances existing at the time, represents the amount which can reasonably
be expected to become an actual or matured liability.
"Straddle Period" shall mean any taxable year or period
beginning on or before and ending after the Closing Date.
"Subsidiary" of any Person means, on any date, any Person (i)
the accounts of which would be consolidated with and into those of the
applicable Person in such Person's consolidated financial statements if such
financial statements were prepared in accordance with GAAP as of such date or
(ii) of which securities or other ownership interests representing more than
fifty (50) percent of the equity or more than fifty (50) percent of the ordinary
voting power or, in the case of a partnership, more than fifty (50) percent of
the general partnership interests or more than fifty (50) percent of the profits
or losses of which are, as of such date, owned, controlled or held by the
applicable Person or one or more subsidiaries of such Person.
"Tax" or "Taxes" shall mean (i) all taxes, levies, charges,
imposts, assessments or fees including, without limitation, income, corporation,
gross receipts, transfer, excise, property, sales, use, value-added, goods and
services, license, payroll, employment, occupancy, commercial rent, withholding,
social security and franchise or other governmental taxes or charges, imposed by
the United States or any state, county, local or foreign government, and such
term shall include any interest, penalties or additional tax attributable
thereto and (ii) any liability for amounts described in clause (i) as a result
of (w) the application of Treasury Regulations Section 1.1502-6 (or any similar
provision of foreign, state, or local law), (x) transferee liability, (y) by law
or (z) by contract.
"Tax Benefit" shall mean the amount of any refund, credit or
reduction in otherwise required Tax payments, including any interest payable
thereon.
"Tax Claim" shall mean a claim for Taxes, including without
limitation, notice of a pending or threatened audit made by any taxing authority
in writing.
"Tax Exempt Bond Agreement" shall mean an agreement between
Buyer and Seller relating to the Industrial Development Bonds to be retained by
Seller, substantially in the form attached hereto as Annex I.
"Tax Indemnified Party" shall mean a party seeking
indemnification under Section 6.9.
"Tax Indemnifying Party" shall mean a party from whom
indemnification has been sought under Section 6.9.
"Tax Return" shall mean any report, return (including any
information return) or statement required to be supplied to a taxing authority
in connection with Taxes including, without limitation, any amendments thereto.
"Third Party Intellectual Property" shall mean all
Intellectual Property of any third Person used in the conduct of the Business.
"Total Cost" shall mean, with respect to any Product, the
total actual manufacturing cost for such Product, including fixed and variable
manufacturing costs, determined in the ordinary course of business, consistent
with past practice.
"Transfer Taxes" shall mean all real property, transfer,
personal property, sales and use, value added, stamp taxes, documentary taxes
and similar Taxes (including any Taxes imposed by way of withholding) and notary
fees arising as a result of the transactions contemplated by this Agreement.
"Transferred Entities" shall mean (i) Androscoggin Reservoir
Company, a Maine corporation, and (ii) Gulf Island Pond Oxygenation Project, a
Maine general partnership, in each of which Seller directly holds an equity
interest that is less than a 100% interest.
"Transferred Intellectual Property" shall mean (i) the
Intellectual Property that is owned by Seller or any of its Affiliates that is
used or held for use exclusively in the Business or related exclusively to the
Acquired Assets, including, without limitation, the Intellectual Property listed
in Section 4.12(a)(ii) of the Seller Disclosure Letter, but not including the
Excluded Intellectual Property and (ii) the Intellectual Property that is owned
by Seller or any of its Affiliates and that, except for the fact that such
Intellectual Property is also used in connection with PM1, also would be used or
held for use exclusively in the Business or related exclusively to the Acquired
Assets.
"Transferred Motor Vehicles" shall mean the registered motor
vehicles set forth on Section 1.1 of the Seller Disclosure Letter or such other
registered motor vehicles used or held for use exclusively in the Business.
"Transferred Subsidiaries" shall mean (i) Nextier Solutions
Corporation, a California corporation, and (ii) Bucksport Leasing Company, a
Delaware corporation, in each of which Seller directly or indirectly holds 100%
of the outstanding equity interest.
"Transition Services Agreement" shall mean a transition
services agreement, to be executed and delivered on the Closing Date, between
Seller and Buyer for the provision of transition services after Closing, in the
form attached hereto as Annex J.
"Unit" or "Units" shall mean a unit or units of partnership
interest in Parent having the rights set forth in the Amended and Restated
Limited Partnership Agreement.
"WARN Act" shall mean the Worker Adjustment Retirement and
Notification Act of 1988, as amended.
"Wastewater Permits" shall mean the Bucksport Wastewater
Permit, the Androscoggin Wastewater Permits, the Sartell Wastewater Permit and
the Quinnesec Wastewater Permit.
Section 1.2 Interpretation.
(a) As used in this Agreement, all references to the Seller
Participants, or any of them, shall refer to the Seller Participants solely in
connection with the conduct of the Business.
(b) For the purposes hereof, (i) words in the singular shall
be held to include the plural and vice versa, and words of one gender shall be
held to include the other genders as the context requires, (ii) the words
"hereof," "herein," and "herewith" and words of similar import shall, unless
otherwise stated, be construed to refer to this Agreement as a whole (including
the Disclosure Letters, the Schedules hereto and the Exhibits hereto) and not to
any particular provision of this Agreement, and article, section, paragraph,
exhibit and schedule references are to the articles, sections, paragraphs, and
exhibits and schedules of this Agreement unless otherwise specified, (iii) the
words "including" and words of similar import when used in this Agreement shall
mean "including, without limitation" unless otherwise specified, (iv) the word
"or" shall not be exclusive, (v) Buyer, Parent and the Acquirors, on the one
hand, and Seller, on the other hand, will be referred to herein individually as
a "party" and collectively as "parties" (except where the context otherwise
requires) and (vi) the phrase "transactions contemplated by this Agreement" or
"transactions contemplated herein" shall include the transactions contemplated
by the Exhibits and Schedules to this Agreement.
(c) Any reference to any federal, state, local or non-U.S.
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context otherwise requires.
(d) With regard to the preparation of the Adjustment Statement
and the calculation of the Preliminary Net Working Capital Amount and the Final
Net Working Capital Amount in the event of any inconsistency between any
interpretation or application of GAAP and the Accounting Methodologies, the
Accounting Methodologies shall control.
(e) For the purposes of Section 4.15(a), the Sartell Real
Property shall be considered part of Owned Real Property.
ARTICLE II
SALE AND PURCHASE OF ASSETS
Section 2.1 Sale of Transferred Equity Interests. Upon the
terms and subject to Section 2.9 and the satisfaction or, if permissible,
waiver, of the conditions of this Agreement, at the Closing, Seller shall sell,
convey, assign, transfer and deliver to Buyer and Buyer shall purchase, acquire
and accept from Seller, all of the shares of capital stock or other equity
interests of the Transferred Subsidiaries and the equity interests of the
Transferred Entities held by Seller or its Subsidiaries (collectively, the
"Transferred Equity Interests") free and clear of any and all Liens.
Section 2.2 Transfer of Assets; Retained Assets.
(a) Upon the terms and subject to the satisfaction or, if
permissible, waiver, of the conditions of this Agreement, at the Closing, Seller
shall sell, convey, assign, transfer and deliver to Acquirors and Acquirors
shall purchase, acquire and accept from Seller, all of the right, title and
interest of Seller and its Subsidiaries (whether held directly or indirectly by
any Subsidiary of Seller) in and to the rights, properties and assets, tangible
and intangible, of Seller or its Subsidiaries that are used or held for use
exclusively in the Business or are exclusively related to the assets listed in
sub-clauses (i) - (xix) below, and, without limitation, the rights, properties
and assets set forth in sub-clauses (i) through (xix) below (each and all such
rights, properties and assets being herein referred to collectively as the
"Acquired Assets"):
(i) the Owned Real Property;
(ii) the Leased Real Property;
(iii) Restricted Cash and any Cash transferred to
Buyer pursuant to Section 2.10 and Section 2.11;
(iv) the Inventories, other than the Consigned
Inventory;
(v) the Equipment;
(vi) the Receivables;
(vii) the Prepaids;
(viii) other current assets contained in Current
Assets;
(ix) all Transferred Intellectual Property, all
copies and tangible embodiments of the Transferred Intellectual
Property (in whatever form or medium), all rights in or licenses to or
from a third Person in any of the Transferred Intellectual Property,
and all past, present or future claims or causes of actions arising out
of or related to any infringements, dilutions or misappropriations of
any of the Transferred Intellectual Property;
(x) all books of account, general, financial and,
subject to Applicable Law, personnel records for the Affected
Employees, other than as provided in Section 2.2(b)(v); provided,
however, that provision of Tax books and records shall be governed
exclusively by Section 6.9(a)(iii);
(xi) invoices, shipping records, supplier lists,
correspondence and other documents, books, records and files and any
rights thereto owned by Seller that exclusively relate to the Business,
other than (x) organizational documents, minute and stock record books
and the corporate seals of Seller (but including such books and records
for the Transferred Subsidiaries), and (y) such items that relate to
Retained Assets or Excluded Liabilities;
(xii) original sales and promotional literature,
customer lists, customer files and other materials relating to sales,
marketing, advertising or promotions exclusively relating to the
Business and, as to such materials not exclusively relating to the
Business, copies of the foregoing to the extent relating to the
Business;
(xiii) Contracts exclusively relating to the
Business, including all Contracts (A) for the purchase or use of goods
and services exclusively for the benefit of the Business including all
open purchase and sales orders; (B) constituting bids and offers for
goods and services used in the ordinary course of business consistent
with past practice of the Business that exclusively relate to the
Business; (C) for the procurement, development, manufacture or sale of
Inventories; (D) constituting collective bargaining agreements assumed
by Buyer pursuant to Section 6.8; (E) with individual Affected
Employees assumed by Buyer pursuant to Section 6.8; (F) relating to the
ownership of the Transferred Equity Interests by Seller listed on
Section 4.16(a)(v) of the Seller Disclosure Letter; (G) containing
non-disclosure, confidentiality and non-competition agreements; (H)
leases and subleases of personal and real property, (I) relating to
Third Party Intellectual Property and (J) all open purchase and sales
orders, for the sale of goods and services produced or provided by the
Business, in each case, other than any Contracts that constitute
Retained Assets or Excluded Liabilities, and (K) each of the Contracts
listed on Section 4.16 of the Seller Disclosure Letter (collectively,
the "Assumed Contracts");
(xiv) Contracts that relate to the Business and also
relate to other businesses of Seller, but only for the portion of such
Contracts that relate exclusively to the Business as set forth on
Exhibit C to the Joint Purchasing Agreement, as such exhibit is amended
from time to time in accordance with Section 6.1 of this Agreement
(such portions that exclusively relate to the Business are collectively
referred to as the "Partially Assumed Contracts");
(xv) to the extent legally transferable, all Permits
issued by any Governmental Entity used or held for use exclusively in
the Business by Seller and all applications therefor;
(xvi) all rights, properties and assets listed on
Schedule III;
(xvii) all causes of action, judgments, claims,
rights, reimbursements and demands, of whatever nature (including
rights under and pursuant to all warranties, representations and
guarantees made by suppliers of products, materials or Equipment, or
components thereof, including rights arising from the performance or
breach by third parties of their obligations under the Assumed
Contracts, other than those specified in Sections 2.2(b)(vi), (vii) and
(viii);
(xviii) all of Seller's right, title and interest to
the real and personal property (including transformers, generators,
water wheels, switch gear and wiring, easements, structures and dams)
described in the FERC Licenses; and
(xix) the AELLC Energy Assets.
(b) Notwithstanding anything to the contrary contained herein,
the term "Acquired Assets" (i) except as set forth in clauses (i) - (xix) of
Section 2.2(a), shall not include any rights, properties and assets of Seller
which are not used or held for use exclusively in the Business and (ii) shall
specifically exclude the following (each and all such rights, properties and
assets being herein referred to as the "Retained Assets"):
(i) all cash and cash equivalent items, including but
not limited to such items held by or for the account of Seller, whether
or not arising from the conduct of the Business, including, without
limitation, all bank accounts, demand accounts, certificates of
deposit, time deposits, marketable securities, negotiable instruments
and the proceeds of accounts receivable paid prior to the Closing Date,
other than Restricted Cash;
(ii) all intercompany accounts receivable and notes
for those accounts receivable and notes where the obligor is Seller or
any of its Affiliates;
(iii) the Contracts set forth on Schedule IV;
(iv) all Excluded Intellectual Property (subject to
the rights and licenses granted to Buyer under the Intellectual
Property Agreement);
(v) (A) any books and records which Seller is
required by Applicable Law to retain, (B) all files and records
relating to the Excluded Litigation Matters and (C) all books and all
records relating to individual personnel records;
(vi) all causes of action, judgments, claims,
reimbursements and demands, of whatever nature (including rights under
and pursuant to all warranties, representations and guarantees made by
suppliers of products, materials or Equipment, or components thereof),
in favor of Seller to the extent related to Retained Asset or the
Excluded Liabilities or listed on Schedule IV;
(vii) all Tax credits and refunds of the Business
other than Tax credits and refunds (A) of the Transferred Subsidiaries,
which shall be governed by Section 6.9, and (B) with respect to the
Transferred Entities;
(viii) Insurance Policies;
(ix) all Plan assets;
(x) the Retained Motor Vehicles;
(xi) the Pine Bluff Mill (excluding any rights and
assets provided to the Business pursuant to the Pine Bluff Agreement);
(xii) the Consigned Inventory; and
(xiii) such other rights, properties and assets set
forth on Schedule IV hereto.
(c) Seller shall convey an undivided interest in each of the
Acquired Assets, having an aggregate fair market value equal to the Equity
Value, to Parent in exchange for the consideration described in Section 2.4(b)
and (c). Seller shall convey the remaining portion of the Acquired Assets to
Buyer in exchange for assumption by Buyer of the Assumed Liabilities and the
consideration described in Section 2.4(a). Parent intends to transfer the
portion of the Acquired Assets acquired by it to its corporate subsidiaries as a
capital contribution, and to cause such subsidiaries to transfer such assets to
Buyer as a capital contribution (who may, in turn, transfer such assets to one
or more subsidiaries). To facilitate these transfers, if and as requested by
Parent, in lieu of transferring an undivided interest in the Acquired Assets to
Parent, Seller shall convey such assets directly to Buyer (or to one or more
subsidiaries of Buyer).
Section 2.3 Assumption of Liabilities; Excluded Liabilities.
(a) Upon the terms and subject to the satisfaction or, if
permissible, waiver, of the conditions of this Agreement, at the Closing, Buyer
shall assume and, effective as of the Closing, hereby agrees to pay, perform and
discharge when due and shall be liable with respect to, all of the following
liabilities and obligations, whether known or unknown, and, except as
specifically set forth below, whether arising before, on or after the Closing
Date, of Seller, in each case, to the extent exclusively related to the Business
(collectively, the "Assumed Liabilities"):
(i) all Payables;
(ii) all Current Liabilities, including all Certain
Accrued Liabilities;
(iii) all liabilities and obligations arising out of,
resulting from or relating to the Assumed Contracts;
(iv) all liabilities and obligations arising out of,
resulting from or relating to the Partially Assumed Contracts;
(v) all liabilities and obligations arising out of,
resulting from or relating to the matters described in Schedule V;
(vi) all liabilities and obligations arising out of
product warranties, product returns or rebates and other claims with
respect to products produced or sold, and services provided by the
Business in the ordinary course of business consistent with past
practice, other than any Excluded Liabilities;
(vii) to the extent provided in Section 6.8 hereof to
be assumed by Buyer, obligations of Seller or its Affiliates with
respect to Affected Employees;
(viii) all liabilities under Environmental Law as to
the Owned Real Property and the Leased Real Property other than
Excluded Liabilities;
(ix) all deferred revenue obligations, including all
obligations to fulfill orders relating to products of the Business,
other than with respect to Excluded Liabilities; and
(x) the Assumed Indebtedness.
(b) Notwithstanding anything in this Agreement to the
contrary, Buyer shall not assume or be deemed to have assumed, and shall have no
liability or obligation with respect thereto, any liability or obligation that
is not an Assumed Liability, including the following liabilities and obligations
of Seller or its Subsidiaries (collectively, the "Excluded Liabilities"):
(i) all intercompany accounts payable and notes
relating to the Business existing as of the Closing Date, where the
obligee is Seller or any Subsidiary of Seller which will remain a
Subsidiary of Seller after the consummation of the transactions
contemplated by this Agreement;
(ii) except as provided in Section 6.8, all
obligations and liabilities of Seller or its Subsidiaries with respect
to their respective employees (including the Affected Employees with
respect to the period prior to such Affected Employee's commencement of
employment with Buyer) and former employees including, but not limited
to, those arising from or relating to their employment with Seller or
its Subsidiaries (including any expenses, liabilities or costs relating
to any claims), or the termination thereof including medical, other
health benefits, life insurance plans, pension plans, retiree benefits,
workers compensation claims and obligations and liabilities with
respect to any Plan;
(iii) all liabilities and obligations, whether known
or unknown, arising out of, resulting from or relating to the Retained
Assets (other than the Consigned Inventory);
(iv) all liabilities and obligations relating to
property formerly owned, operated or otherwise used by Seller relating
to the Business, including any property to which the Business (or any
predecessor) shipped Hazardous Substances for treatment, storage,
disposal or handling prior to the Closing (but excluding liability to
the extent of any such shipments to such locations that occur after the
Closing);
(v) all liabilities and obligations arising out of,
resulting from or relating to the matters described in Schedule VI (
the "Excluded Litigation Matters");
(vi) any Taxes imposed with respect to the Acquired
Assets for Pre-Closing Tax Periods or imposed on Seller (or any member
of any affiliated group of corporations, within the meaning of Section
1504 of the Code of which Seller is or has been a member) other than
Taxes of the Transferred Entities and the Transferred Subsidiaries
which shall be governed by Section 6.9; and
(vii) any claims brought by third parties with
respect to bodily or personal injury or property damage or arising out
of, resulting from or relating to the operation of the Business prior
to the Closing.
Section 2.4 The Purchase Price. Subject to Section 2.9 and
Section 2.10, upon the terms and the satisfaction or, if permissible, waiver, of
the conditions of this Agreement, in consideration of the aforesaid sale,
conveyance, assignment, transfer and delivery to Acquirors of the Assets and the
agreements of Seller set forth in this Agreement, at the Closing, Buyer shall
assume and undertake to pay, perform and discharge the Assumed Liabilities and
the Acquirors shall deliver, or cause to be delivered, to Seller (or its
designee) for:
(a) from Buyer, an amount in cash equal to $1.4 billion less
the Equity Value (the "Base Cash Purchase Price"), as adjusted pursuant to
Section 2.5(b) by the Estimated Net Working Capital Amount and the Estimated
Assumed Indebtedness and less any applicable withholding tax (the "Estimated
Cash Purchase Price"); the Estimated Cash Purchase Price is subject to
adjustment following the Closing pursuant to Section 2.5 and, as so adjusted, is
the Cash Purchase Price, as set forth in Section 2.5(j);
(b) from Parent, such number of Units representing 10% of the
outstanding Units of Parent on a fully diluted basis on the Closing Date and the
other rights and obligations set forth in the Amended and Restated Limited
Partnership Agreement (collectively, the "Equity Consideration"); and
(c) From Parent, the Profits Interest (together with the Cash
Purchase Price and the Equity Consideration, the "Consideration").
Section 2.5 Purchase Price Adjustment.
(a) At least three (3) Business Days prior to the Closing
Date, Seller shall prepare and deliver to Buyer its good faith estimate of (i)
the Net Working Capital as of the Closing Date (the "Estimated Net Working
Capital Amount"), (ii) the Inventories as of the Closing Date (the "Estimated
Inventory Amount"), (iii) the Indebtedness of the Business to be assumed by
Buyer (the "Assumed Indebtedness") as of the Closing Date (the "Estimated
Assumed Indebtedness") and (iv) the Excess Amount and the Schedule of Consigned
Inventory and the components of each such item prepared in accordance with GAAP,
on a basis consistent with the Financial Statements and the Accounting
Methodologies and, in the case of the Estimated Net Working Capital Amount and
Estimated Inventory Amount, subject to Section 2.5(e). Seller's calculation of
the Estimated Net Working Capital Amount and Estimated Assumed Indebtedness
shall be used in determining the Estimated Cash Purchase Price for purposes of
Section 2.4.
(b) The Base Cash Purchase Price shall be (i) (x) increased,
if the Estimated Net Working Capital Amount exceeds the Benchmark, by an amount
equal to such excess, or (y) decreased, if the Benchmark exceeds the Estimated
Net Working Capital Amount, by an amount equal to such excess and (ii) decreased
by any amount of the Estimated Assumed Indebtedness (to the extent not included
in the calculation of the Estimated Net Working Capital Amount).
(c) Within sixty (60) days after the Closing Date, Buyer shall
prepare and deliver to Seller a statement (the "Adjustment Statement") which
sets forth in reasonable detail the calculation of (i) the Net Working Capital
as of the Closing Date (the "Preliminary Net Working Capital Amount"), (ii) the
Inventories of the Business as of the Closing Date (the "Preliminary Inventory
Amount"), (iii) the Assumed Indebtedness as of the Closing Date (the
"Preliminary Assumed Indebtedness"), and (iv) the Excess Amount and a Schedule
of Consigned Inventory as of the Closing Date (the "Preliminary Consignment
Items"), in each case, from the books and records of the Business. The
Adjustment Statement shall be prepared in accordance with GAAP, on a basis
consistent with the Financial Statements, and the Accounting Methodologies and,
in the case of the Preliminary Net Working Capital Amount and the Preliminary
Inventory Amount, subject to Section 2.5(e). Seller agrees to cooperate with
Buyer in connection with the preparation of the Adjustment Statement and related
information, and shall provide to Buyer such books, records and information as
may be reasonably requested by Buyer from time to time in connection with its
preparation of the Adjustment Statement.
(d) The amount of Inventory as of the Closing Date set forth
in the Adjustment Statement shall be based on the Inventory set forth in the
Closing Inventory Report to the extent such items of Inventory are covered by
the Physical Inventory Count, together with changes in Inventory from the date
of the Physical Inventory Count referred to in Section 2.6 below in relation to
the Closing Date and net of any required inventory reserves (with such reserves
being calculated on the same bases as the Adjustment Statement).
(e) The amount of Inventories used in the calculation of the
Current Assets, Estimated Net Working Capital, Preliminary Net Working Capital,
Final Net Working Capital, Estimated Inventory Amount, Preliminary Inventory
Amount and the Final Inventory Amount shall not exceed the Inventory Benchmark
applicable for the time period in which the Closing Date occurs.
(f) If Seller disagrees with the determination of the
Preliminary Net Working Capital Amount, Preliminary Inventory Amount, the
Preliminary Assumed Indebtedness or the Preliminary Consignment Items, Seller
shall notify Buyer in writing of such disagreement within the thirty (30)
Business Day period immediately following the delivery of the Adjustment
Statement, which notice shall describe the specific nature of any such
disagreement and provide reasonable supporting documentation for such
disagreement. During the thirty (30) Business Day period of its review, Seller
shall have reasonable access to any documents, schedules or work papers used in
the preparation of the Adjustment Statement. Seller agrees that any failure by
it to notify Buyer in writing of any such disagreement prior to end of the
thirty (30) Business Day period immediately following the delivery of the
Adjustment Statement shall be deemed to be an acceptance by Seller of the
Adjustment Statement and shall constitute a complete waiver of any right of
Seller to dispute such Adjustment Statement and Buyer's calculation of the
Preliminary Net Working Capital Amount, Preliminary Inventory Amount, the
Preliminary Assumed Indebtedness and the Preliminary Consignment Items for
purposes of this Agreement.
(g) Buyer and Seller agree to negotiate to resolve any such
disagreement regarding the determination of the Preliminary Net Working Capital
Amount, Preliminary Inventory Amount, the Preliminary Assumed Indebtedness or
the Preliminary Consignment Items, and any resolution of such disagreement
agreed to in writing by Buyer and Seller shall be final and binding upon the
parties and their successors and assigns. If Buyer and Seller are unable to
resolve such disagreement identified by Seller pursuant to Section 2.5(f) within
the thirty (30) Business Day period after delivery to Buyer of written notice of
such disagreement by Seller, then the disputed matters shall be referred for
final determination to the Settlement Accountant.
(h) Each of Buyer and Seller shall provide a written
submission of their positions on each item in dispute within fifteen (15) days
of the appointment of the Settlement Accountant, with a copy to the other party.
The Settlement Accountant shall consider only those items and amounts as to
which Buyer and Seller have disagreed within the time periods and on the terms
specified above and shall resolve the matter in accordance with the terms and
provisions of this Agreement, including Section 2.5(e). The Settlement
Accountant shall consider only the written submissions provided by Buyer and
Seller pursuant to this paragraph (f) and shall not conduct any independent
investigation or review. The Settlement Accountant is expressly limited to the
selection of either Seller's or Buyer's position on a disputed item or a
position in between the positions of Seller or Buyer based upon written
submissions of Buyer and Seller and it shall thus select as a resolution for
each disputed matter the position of either Buyer or Seller or a position in
between the positions of Seller or Buyer, and the Settlement Accountant may not
impose an alternative resolution outside those bounds. The Settlement Accountant
shall deliver to Buyer and Seller, as promptly as practicable and in any event
within forty-five (45) days after its appointment, a written report setting
forth the resolution of each disputed matter and its determination of the
Preliminary Net Working Capital Amount, Preliminary Inventory Amount, the
Preliminary Assumed Indebtedness and/or the Preliminary Consignment Items
determined in accordance with the terms of this Agreement. Such report shall be
final, non-appealable and binding upon the parties to the fullest extent
permitted by Applicable Law and may be enforced in any court having competent
jurisdiction. The forty-five (45) day period for delivering the written report
may be extended by the mutual written consent of the parties or for good cause
shown by the Settlement Accountant at its sole discretion. The fees, expenses
and costs of the Settlement Accountant shall be borne one-half by Buyer and
one-half by Seller.
(i) (i) (a) If no dispute notice has been timely delivered by
Seller pursuant to Section 2.5(f), the Preliminary Net Working Capital Amount,
as originally submitted by Buyer, or (b) if a dispute notice has been timely
delivered by Seller pursuant to Section 2.5(f), the Preliminary Net Working
Capital Amount, as determined pursuant to the resolution of such dispute in
accordance with Section 2.5(g) or (h), shall be the "Final Net Working Capital
Amount", (ii) (a) if no dispute notice has been timely delivered by Seller
pursuant to Section 2.5(f), the Preliminary Inventory Amount, as originally
submitted by Buyer, or (b) if a dispute notice has been timely delivered by
Seller pursuant to Section 2.5(f), the Preliminary Inventory Amount, as
determined pursuant to the resolution of such dispute in accordance with Section
2.5(g) or (h), shall be the "Final Inventory Amount", (iii) (a) if no dispute
notice has been timely delivered by Seller pursuant to Section 2.5(f), the
Preliminary Assumed Indebtedness, as originally submitted by Buyer, or (b) if a
dispute notice has been timely delivered by Seller pursuant to Section 2.5(f),
the Preliminary Assumed Indebtedness, as determined pursuant to the resolution
of such dispute in accordance with Section 2.5(g) or (h), shall be the "Final
Assumed Indebtedness", and (iv) (a) if no dispute notice has been timely
delivered by Seller pursuant to Section 2.5(f), the Preliminary Consignment
Items, as originally submitted by Buyer, or (b) if a dispute notice has been
timely delivered by Seller pursuant to Section 2.5(f), the Preliminary
Consignment Items, as determined pursuant to resolution of such dispute in
accordance with Section 2.5(g) or (h), shall be the "Final Consignment Items".
(j) The "Final Net Working Capital Adjustment Amount" shall be
the amount equal to (i) the Final Net Working Capital Amount minus (ii) the
Estimated Net Working Capital Amount (it being understood that the Final
Adjustment Amount may be either a positive or negative number).
(k) The "Final Assumed Indebtedness Amount" shall be the
amount equal to (i) the Final Assumed Indebtedness minus (ii) the Estimated
Assumed Indebtedness (it being understood that the Final Assumed Indebtedness
Amount may be either a positive or negative number).
(l) The "Cash Purchase Price" shall be equal to (i) the
Estimated Cash Purchase Price plus (ii) the Final Net Working Capital Adjustment
Amount (it being understood that the Final Adjustment Amount may be either a
positive or negative number) minus (iii) the Final Assumed Indebtedness Amount
(to the extent not included in the calculation of the Final Net Working Capital
Adjustment Amount; it being understood that the Final Assumed Indebtedness
Amount may be either a positive or negative number).
(m) If the Cash Purchase Price exceeds the Estimated Cash
Purchase Price, Buyer shall pay the amount of such excess to Seller. If the
Estimated Cash Purchase Price exceeds the Cash Purchase Price, Seller shall pay
the amount of such excess to Buyer. Buyer or Seller, as the case may be, shall,
within five (5) Business Days after the determination of the Cash Purchase Price
pursuant to this Section 2.5, make payment to the other by wire transfer in
immediately available funds of the amount payable by Buyer or Seller, as the
case may be, in respect of the difference between the Cash Purchase Price and
Estimated Cash Purchase Price, together with interest thereon from the Closing
Date to the date of payment, at a floating rate equal to the U.S. dollar prime
rate per annum, as quoted by The Wall Street Journal from time to time during
such period. Such interest shall be calculated based on a year of 365 days and
the number of days elapsed since the Closing Date.
Section 2.6 Inventory. During the period commencing ten (10)
days prior to and ending ten (10) days following the Closing Date, Seller and
Buyer shall conduct a physical count of the Inventory (the "Physical Inventory
Count") as set forth in this Section 2.6. The Inventory to be included in the
Physical Inventory Count shall consist of finished goods, work in progress and
raw materials (excluding wood and stores) at (i) the warehouses of the Business
that contain the five (5) largest quantities of such Inventory and (ii) each of
the Xxxxx, as set forth in greater detail in the Accounting Methodologies under
heading of "Inventories." The results of the Physical Inventory Count shall be
set forth in an inventory report, which shall set forth the aggregate value of
such Inventories as of the Closing Date, including appropriate roll-forward and
roll-back adjustments to physical counts made during such period (the "Closing
Inventory Report"). The Physical Inventory Count shall be conducted by Seller or
representatives of Seller prior to the Closing, and any remaining physical
counts shall be conducted by Buyer or representatives of Buyer after the
Closing, and, at the option of each, shall be observed by and calculated in
consultation with one or more of the other's representatives. The Physical
Inventory Count and valuation of the Inventory shall be conducted on a basis
consistent with the Financial Statements and the Accounting Methodologies.
Section 2.7 Consigned Inventory. From and after the Closing
Date, Buyer and Seller covenant and agree as set forth below:
(a) In the event that any Consigned Inventory exists as of the
Closing Date, Seller shall retain title to such Consigned Inventory following
the Closing until sold or transferred to Buyer pursuant to the terms of this
Section 2.7. The Consigned Inventory shall be consistent with the Final
Consignment Items.
(b) Unless and until any Consignment Inventory is sold
pursuant to this Section 2.7 or transferred by Buyer to a third party in
connection with a sale of Inventory or to a third party service provider for the
provision of services to Buyer, Consigned Inventory shall remain in the
possession and control of Buyer and Buyer shall maintain and insure the
Consigned Inventory in the ordinary course of business consistent with the
manner in which Buyer maintains and insures its own Inventory. In the event of
any loss of or damages to the Consigned Inventory, all insurance proceeds
payable in respect of such Consigned Inventory shall be paid to Seller, net of
any applicable deductibles.
(c) Each Schedule of Consigned Inventory shall set forth a
list of each item of Consigned Inventory identified by (i) roll or other
applicable unit and (ii) as to each such roll or unit, the weight in tons, the
Total Cost and the Consigned Price. Buyer shall track sales of such Consigned
Inventory and shall produce a monthly report (the "Consignment Report") setting
forth each roll or unit that was sold during such month and the applicable
Consigned Price.
(d) In the event that Buyer sells any Consigned Inventory,
then within ten (10) Business Days following the end of each month in which
sales of Consigned Inventory occurred, Buyer shall remit to Seller in cash an
aggregate dollar amount equal to the sum of the Consigned Prices of all rolls or
units of Consigned Inventory sold by Buyer in such month. Such remittance shall
be accompanied by a Consignment Report for such month.
(e) In the event Buyer must deliver additional Consigned
Inventory or Inventory that is not Consigned Inventory to any customer to
replace previously sold Consigned Inventory that is subject to warranty claims
(such previously sold Consigned Inventory, "Warranty Inventory"), then Seller
shall not be entitled to any payment with respect to such Warranty Inventory.
Appropriate adjustment shall be made in respect of any amounts previously
remitted by Buyer to Seller in respect of such Warranty Inventory. In the event
that Buyer delivers to a customer additional Consigned Inventory to replace
Warranty Inventory, such additional Consigned Inventory shall be deemed sold for
purposes of this Section 2.7.
(f) Seller and its representatives and advisors shall have the
right to audit the Consignment Report and related remittance provided pursuant
to clauses (b) and (c) above and, upon reasonable notice during normal business
hours, to conduct a physical inventory of the Consigned Inventory, provided
Buyer shall only be required to provide access for one such physical inventory
during any six-month period.
(g) If, after the eighteen (18) month anniversary of the
Closing Date, any Consigned Inventory remains in Buyer's possession, title to
such remaining Consigned Inventory shall be transferred to Buyer, at no cost to
Buyer, and Buyer shall have no further obligations pursuant to this Section 2.7,
other than to remit any amounts due to Seller for sales or transfers of
Consigned Inventory that occur prior to the eighteen (18) month anniversary of
the Closing Date.
Section 2.8 Allocation of Consideration.
(a) Seller and Buyer agree to allocate the Consideration and
the Assumed Liabilities in the manner set forth in Schedule VII hereto
consistent with Section 1060 of the Code. Within 15 days of determination of the
difference between the Base Cash Purchase Price and the Cash Purchase Price
pursuant to Section 2.5 hereof, Buyer shall prepare a revised Consideration
allocation to provide for the allocation of the difference between the Base Cash
Purchase Price and the Cash Purchase Price in a manner that is consistent with
the Consideration allocation set forth in Schedule VII and shall deliver such
revised allocation to Seller for its review and comment.
(b) Neither Seller, Buyer nor any of their respective
Affiliates shall file any Tax Return or other document relating to Taxes or
otherwise take any position or agree to take any position relating to Taxes
which is inconsistent with the allocation (including any revision under this
Section 2.8) determined pursuant to this Section 2.8 unless required to do so
pursuant to a Final Determination.
Section 2.9 Post-Purchase Price Adjustment Working Capital
Allocations. If, within eighteen (18) months following the determination of the
Final Net Working Capital Amount, (a) Buyer receives or becomes aware that it is
in possession of a payment or other asset that constituted a Current Asset as of
the Closing Date but was not reflected on the statement of Net Working Capital
used to determine the Final Net Working Capital Amount, then Buyer shall
promptly remit such asset to Seller or (b) Buyer becomes aware that it is liable
for an obligation that constituted a Current Liability as of the Closing Date
but was not reflected on the statement of Net Working Capital used to determine
the Final Net Working Capital Amount, then, upon reasonable demonstration of the
foregoing by Buyer, such liability shall be assumed by Seller. If the parties
are unable to reach an agreement as to whether the disputed asset or liability
constituted a Current Asset or Current Liability to be remitted or assumed in
accordance with the foregoing clauses (a) and (b), the parties shall submit the
dispute to the Settlement Accountant for resolution in accordance, mutatis
mutandis, with the provisions set forth in Section 2.5(f).
Section 2.10 Proceeds from Right of First Refusal; ARCo
Qualifying Facility Status
(a) In the event that Androscoggin Reservoir Company ("ARCo")
or a stockholder of ARCo other than Seller exercises its right of first refusal
pursuant to Article VII of the bylaws of ARCo ("ARCo ROFR") to purchase Seller's
equity interest in ARCo (the "ARCo Shares"), then (a) the Transferred Equity
Interests shall be deemed to exclude the ARCo Shares for all purposes of this
Agreement and (b) the proceeds paid to Seller in connection with the exercise of
such right of first refusal and sale of the ARCo Shares shall be transferred to
Buyer at Closing. The price of the ARCo Shares offered to a transferee pursuant
to the foregoing right of first refusal shall be mutually agreed upon by Buyer
and Seller.
(b) In the event the ARCo ROFR is not exercised then:
(i) Seller shall use its reasonable best efforts to
cause ARCo to file pursuant to FERC's regulations at 18 CFR Part 292
prior to Closing a self recertification for qualifying facility status
of the hydroelectric generating facility owned by ARCo ("ARCo QF
Recertification") to clarify that the certain transmission line lease
entered into between ARCo and Central Maine Power Company on March 11,
2004 ("ARCo Transmission Lease"), is a part of the qualifying facility
owned by ARCo. Seller shall keep Buyer informed of the status of the
ARCo QF Recertification application in accordance with Section 6.3.
(ii) If the ARCo QF Recertification shall not have
been filed as of the Closing Date, or if the ARCo QF Recertification is
filed but does not clarify to the reasonable satisfaction of Buyer that
the ARCo Transmission Lease is a part of the ARCo qualifying facility,
the ARCo Shares shall not be transferred to Buyer and the parties agree
that until such time as the ARCo QF Recertification is filed, the QF
Recertification clarifies to the reasonable satisfaction of Buyer that
the ARCo Transmission Lease is a part of the ARCo qualifying Facility
and the ARCo Shares are transferred to Buyer as set forth in clause
(iii) below, Buyer shall reimburse Seller for documented expenses
arising from Seller's ownership of the ARCo Shares and Seller shall
deliver to Buyer any dividends or other proceeds or benefits arising
from its ownership of the ARCo Shares.
(iii) If the Closing shall have occurred and the ARCo
QF Recertification shall not yet have been filed or if the ARCo
Recertification filed does not clarify to the reasonable satisfaction
of Buyer that the ARCo Transmission Lease is a part of the ARCo
qualifying facility, then (x) Seller shall continue to use its
reasonable best efforts to cause ARCo to obtain the ARCo QF
Recertification; and (y) upon filing of the ARCo QF Recertification
Seller, and subject to Buyer's reasonable satisfaction that the ARCo QF
Recertification clarifies that the ARCo Transmission Lease is a part of
the ARCo qualifying facility, Seller shall transfer to Buyer the ARCo
shares free and clear of all Liens and Encumbrances.
Section 2.11 Sale of Designated Interest to Xxxxxxx Lumber
(a) If the Xxxxxxx Purchase Right (as defined below) is
consummated prior to the Closing Date, Seller shall transfer to Buyer on the
Closing Date any consideration paid to Seller or any of its Subsidiaries in
connection with the exercise by Xxxxxxx Lumber, Inc. of its right, under Section
8 of the Forest Management Agreement, dated June 25, 1996 by and between
Champion International Corporation and Xxxxxxx Lumber, Inc. (the "Xxxxxxx Forest
Management Agreement"), to purchase Seller's Designated Interest to harvest wood
set forth in the Quitclaim Deed with Covenant dated June 25, 1996, by and
between Diamond Occidental Forest and Xxxxxxx Lumber (the "Designated Interest")
(the "Xxxxxxx Purchase Right").
(b) During the period after the date hereof and through the
Closing Date, Seller shall keep Buyer informed of, and provide Buyer with all
reasonable documentation related to, the sale of the Designated Interest
pursuant to the Xxxxxxx Purchase Right and shall not agree to any definitive
arrangement related to such disposition, including the purchase price, without
the prior written consent of Buyer (not to be unreasonably withheld or delayed).
(c) If the Xxxxxxx Purchase Right is not consummated prior to
the Closing Date, Buyer shall assume all rights and obligations under the
Xxxxxxx Xxxxxxx Management Agreement and the Designated Interest, shall control
the disposition of the Designated Interest pursuant to the Robins Purchase Right
and shall receive all proceeds from such disposition.
ARTICLE III
CLOSING
Section 3.1 Closing. Upon the terms and subject to the
satisfaction or, if permissible, waiver, of the conditions of this Agreement,
the consummation of the transactions contemplated by this Agreement (the
"Closing") shall take place on the fifth (5th) Business Day following the
satisfaction or, if permissible, waiver of the conditions set forth in Article
VII hereof (other than conditions which by their nature can be satisfied only at
the Closing), at 10:00 a.m. New York City time, at the offices of Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP, Xxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at
such other time and place as shall be agreed upon by the parties hereto. The
date on which the Closing occurs is herein referred to as the "Closing Date."
The Closing will be deemed to have occurred as of 12:01 a.m. local time on the
Closing Date.
Section 3.2 Deliveries by Seller. At the Closing, Seller shall
deliver or cause to be delivered to Buyer (unless previously delivered), the
following items:
(a) Subject to Section 2.9, a certificate or certificates
representing the Transferred Equity Interests (or other appropriate certificates
evidencing transfer of ownership), accompanied by stock or similar powers duly
endorsed in blank by Seller or accompanied by instruments of transfer duly
executed by Seller;
(b) One or more duly executed Bills of Sale, substantially in
the form of Exhibit A hereto;
(c) One or more Special Warranty Deeds for the Owned Real
Property in recordable form for the applicable jurisdiction, conveying fee
simple title, subject only to Permitted Encumbrances, to all Owned Real Property
to Buyer or its designee, substantially in the form of Exhibit B hereto and an
Assignment of Easements, Rights of Way, Licenses and Permits substantially in
the form of Exhibit C hereto;
(d) Assignments of Lease substantially in the form attached as
Exhibit D with respect to the Leased Real Property;
(e) An affidavit as may reasonably be requested by the Title
Company (as hereinafter defined) to remove or insure over the standard
exceptions for parties in possession, survey and mechanics liens from Buyer's
title policy;
(f) The officer's certificate referred to in Section 7.2(d);
(g) A duly executed counterpart of each of the Ancillary
Agreements;
(h) An affidavit stating, under penalty or perjury, that the
indicated number is Seller's United States taxpayer identification number and
that Seller is not a foreign person, pursuant to Section 1445(b)(2) of the Code;
(i) Reliance letters in substantially the form of Exhibit E
hereto providing that Buyer may rely on Phase I environmental reports originally
prepared for Seller;
(j) Subject to Section 2.10, assignment of Contracts, Contract
Rights and Permits, substantially in the form attached hereto as Exhibit F,
respectively, pursuant to Section 6.27(b); and
(k) All other documents, instruments and writings required or
reasonably requested to be delivered by the Acquirors at or prior to the Closing
pursuant to this Agreement or otherwise required in connection herewith.
Section 3.3 Deliveries by the Acquirors. At the Closing, the
Acquirors, as applicable, shall deliver or cause to be delivered to Seller
(unless previously delivered), the following items:
(a) The Estimated Cash Purchase Price by wire transfer of same
day funds to an account or accounts and in such amounts as designated by Seller
in writing at least two Business Days prior to the Closing Date;
(b) The Equity Consideration;
(c) The Profits Interest;
(d) A duly executed Instrument of Assumption, substantially in
the form of Exhibit G hereto;
(e) The officer's certificate referred to in Section 7.3(c);
(f) A true and complete copy of the Solvency Opinion or
Solvency Certificate, in accordance with Section 6.17;
(g) A duly executed counterpart of each of the Ancillary
Agreements; and
(h) All other documents, instruments and writings required or
reasonably requested to be delivered by Seller at or prior to the Closing
pursuant to this Agreement or otherwise required in connection herewith.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as disclosed in a separate disclosure letter, a copy of
which is being delivered by Seller to the Acquirors with this Agreement (the
"Seller Disclosure Letter"), Seller hereby represents and warrants to the
Acquirors as follows:
Section 4.1 Organization. Each Seller Participant is a
corporation duly organized, validly existing and in good standing under the laws
of its State of incorporation and each of the Seller Participants has all
requisite corporate power and corporate authority to own, lease and operate its
properties and assets used in the Business and to carry on the Business as it is
now being conducted. The Seller Participants are duly qualified or licensed to
do business in each jurisdiction in which the property owned, leased or operated
by the Seller Participants in the conduct of the Business makes such
qualification necessary, except in any such jurisdictions where the failure to
be duly qualified or licensed would not have or be reasonably likely to have,
either individually or in the aggregate, a Material Adverse Effect.
Section 4.2 Authorization. Seller has the corporate power and
corporate authority to execute and deliver this Agreement and the Ancillary
Agreements and consummate or cause to be consummated the transactions
contemplated hereby or thereby. The execution and delivery of this Agreement and
the Ancillary Agreements and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by the Board of
Directors of Seller and no other corporate proceeding on the part of Seller is
necessary to authorize the execution, delivery and performance of this Agreement
and the Ancillary Agreements or the consummation of the transactions
contemplated hereby or thereby. This Agreement has been, and the Ancillary
Agreements will be, duly executed and delivered by Seller and, assuming the
valid execution and delivery by all counterparties thereto, will constitute a
valid and binding agreement of Seller enforceable against Seller in accordance
with its terms, except to the extent that enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization and other laws affecting the
enforcement of creditors' rights generally and by general principles of equity.
Section 4.3 Title to Personal Property; Transferred Equity
Interests.
(a) Subject to the receipt of any consents or approvals
contemplated by Section 4.4, Seller has good and valid title to all tangible
personal property included in the Acquired Assets, free and clear of all Liens
except for Permitted Liens.
(b) Except as set forth in Section 4.3(b) of the Seller
Disclosure Letter, Seller owns of record and beneficially all of the Transferred
Equity Interests, free and clear of all Liens. The Transferred Equity Interests
of the Transferred Subsidiaries are duly authorized, validly issued, fully paid
and nonassessable and constitute all of the outstanding capital stock of the
Transferred Subsidiaries. Except as set forth in Section 4.3(b) of the Seller
Disclosure Letter, there are no warrants, options, agreements, calls, conversion
rights, exchange rights, preemptive rights or other rights or commitments or
understandings which call for the repurchase or redemption, or issuance, sale,
pledge or other disposition of any shares of capital stock of the Transferred
Subsidiaries or any securities convertible into or other rights to acquire, any
shares of capital stock of the Transferred Subsidiaries. Except as set forth in
Section 4.3(b) of the Seller Disclosure Letter, none of the shares of capital
stock of the Transferred Entities owned by Seller is subject to any voting
trust, transfer restrictions or other similar arrangements that relates to the
voting or control of such capital stock. Upon consummation of the transactions
contemplated by this Agreement Seller will deliver to Buyer all the issued and
outstanding capital stock of each Transferred Subsidiary free and clear of all
Liens, other than any Liens arising as a result of action by Buyer.
(c) Section 4.3(c) of the Seller Disclosure Letter sets forth
the jurisdiction, date of incorporation, authorized capital stock and capital
stock issued and outstanding for each Transferred Subsidiary.
(d) Except as set forth in Section 4.3(d) of the Seller
Disclosure Letter, none of the Transferred Subsidiaries has any Subsidiaries or
holds any equity, partnership, joint venture or similar ownership interest, of
record or beneficially, or has any right or obligation, contingent or otherwise,
to purchase any similar ownership interest.
Section 4.4 Consents and Approvals; No Violations;
Governmental Filings.
(a) Except as set forth in Section 4.4(a) of the Seller
Disclosure Letter, neither the execution, delivery or performance by Seller of
this Agreement or the Ancillary Agreements nor the consummation by the Seller of
the transactions contemplated hereby or thereby will (i) conflict with or result
in any breach or violation of any provision of the certificate of incorporation
or by-laws of any Seller Participant; (ii) violate, conflict with or result in a
default (or any event which, with notice or lapse of time or both, would
constitute a default) under, or result in any termination, cancellation or
acceleration, give rise to any such right of termination, cancellation or
acceleration under, or require any consent under, any bond, note, mortgage or
indenture, contract, agreement, lease, sublease, license, permit, franchise or
other instrument to which any Seller Participant is a party; (iii) violate any
order, injunction, decree, statute, rule or regulation applicable to Seller or
any of the assets or properties of the Business, or (iv) result in the creation
or imposition of any Lien upon any of the assets or properties of the Business,
excluding from the foregoing clauses (ii), (iii) and (iv), such violations,
conflicts, defaults, rights or Liens that would not have or be reasonably likely
to have, either individually or in the aggregate, a Material Adverse Effect or
that become applicable as a result of the business or activities (other than the
Business) in which the Acquirors engage or propose to be engaged or as a result
of any acts or omissions by, or the status of or any facts pertaining to, the
Acquirors.
(b) Except as set forth in Section 4.4(b) of the Seller
Disclosure Letter, no filings or registrations with, notifications to, or
authorizations, consents or approvals of, a Governmental Entity (collectively,
"Governmental Filings") are required to be obtained or made by any Seller
Participant in connection with the execution, delivery or performance by Seller
of this Agreement or the Ancillary Agreements or the consummation by Seller of
the transactions contemplated hereby, except (i) Governmental Filings under the
HSR Act or any other Competition Law, (ii) compliance with and filings under the
Exchange Act, and the rules and regulations promulgated thereunder, (iii)
Governmental Filings with FERC under the Federal Power Act, (iv) Governmental
Filings that become applicable as a result of the business or activities (other
than the Business) in which the Acquirors engage or propose to be engaged or as
a result of any acts or omissions by, or the status of or any facts pertaining
to, the Acquirors, and (e) such other Governmental Filings, the failure of which
to be obtained or made would not have or be reasonably likely to have, either
individually or in the aggregate, a Material Adverse Effect.
Section 4.5 Financial Statements.
(a) Prior to the date hereof, Seller has made available to the
Acquirors or their representatives (i) the audited combined balance sheet of the
Coated and Supercalendered Papers Division of Seller as of December 31, 2005 and
2004 and the audited combined statements of income and cash flows of such
division for each of the three years ended December 31, 2003, December 31, 2004
and December 31, 2005, together with the related notes thereto, accompanied by
the reports thereon of Seller's accountants (collectively, the "Financial
Statements") and (ii) the unaudited combined balance sheet of the Coated and
Supercalendered Papers Division of Seller as of March 31, 2006 and the related
statements of income and cash flows of such division for the three-month period
ended March 31, 2006, in each case, as set forth in Section 4.5(a) of the Seller
Disclosure Letter (collectively the "Interim Financial Statements").
(b) The Financial Statements were prepared from the books of
account and other financial records of Seller and its Subsidiaries in accordance
with GAAP, consistently applied throughout the periods indicated, are in
compliance with Regulation S-X of the Securities Act of 1933, as amended
("Regulation S-X"), and fairly present, in all material respects, the combined
financial position, results of operations and cash flows of the Business as of
the dates thereof and for the periods covered thereby, in each case, except as
disclosed in the Financial Statements (or the notes thereto) or in Section
4.5(b) of the Seller Disclosure Letter.
(c) The Interim Financial Statements were prepared from the
books of account and other financial records of Seller and its Subsidiaries in
accordance with GAAP, consistently applied with the Financial Statements, and
fairly present, in all material respects, the combined financial position,
results of operations and cash flows of the Business as of the date thereof for
the period covered thereby, subject to normal and recurring year-end adjustments
in a manner consistent with past practice, except as disclosed in the Interim
Financial Statements or in Section 4.5(c)(i) of the Seller Disclosure Letter and
except for the absence of footnote disclosure.
(d) Section 4.5(d) of the Seller Disclosure Letter sets forth
an aged receivables report, as of the date set forth therein, showing
Receivables that have been outstanding for thirty (30) days or more, prepared in
the ordinary course consistent with past practice, showing the periods for which
such Receivables have been outstanding. Receivables reflected on the Financial
Statements arose from bona fide transactions with unaffiliated third parties,
net of applicable reserves for doubtful accounts. Except as set forth in Section
4.5(d) of the Seller Disclosure Letter, no Person has any Lien (other than
Permitted Liens) on the Receivables.
Section 4.6 No Undisclosed Liabilities. Except as reflected or
reserved against in the Financial Statements (or the notes thereto) or in
Section 4.6 of the Seller Disclosure Letter, the Business did not have, as of
December 31, 2005, any liabilities or obligations (whether direct, indirect,
accrued or contingent) that would be required to be reflected or reserved
against in a balance sheet of the Business prepared in accordance with GAAP
consistently applied. Except (i) for liabilities and obligations incurred in the
ordinary course of business consistent with past practice since December 31,
2005, (ii) as reflected or reserved against in the Financial Statements (or
notes thereto) or (iii) as set forth in Section 4.6 of the Seller Disclosure
Letter, since December 31, 2005 through the date hereof, the Business has not
incurred any liabilities or obligations (whether direct, indirect, accrued or
contingent) that would be required to be reflected or reserved against in a
balance sheet of the Business prepared in accordance with GAAP consistently
applied.
Section 4.7 Absence of Certain Changes. Except as set forth in
Section 4.7 of the Seller Disclosure Letter, since December 31, 2005, the Seller
Participants have conducted the Business in the ordinary course of business
consistent with past practice in all material respects and, as of the date
hereof, there has not been any development or change which has had or would be
reasonably likely to have, either individually or in the aggregate, a Material
Adverse Effect. Since December 31, 2005 until the date hereof, except as set
forth in Section 4.7 of the Seller Disclosure Letter, none of the Seller
Participants has taken any action, in connection with the Business, which, if
taken on or after the date hereof, would have required the prior written consent
of Buyer pursuant to Section 6.1(i)-(xx).
Section 4.8 Litigation. Except as set forth in Section 4.8 of
the Seller Disclosure Letter (and except with respect to Tax matters, which are
governed by Section 4.10, employee benefit matters, which are governed by
Section 4.11, Intellectual Property matters, which are governed by Section 4.12,
labor matters, which are governed by Section 4.13, and environmental matters,
which are governed by Section 4.14), as of the date hereof, there is no (i)
claim, action, suit, judicial or administrative proceeding or arbitration
("Litigation") pending, or, to Knowledge of Seller, threatened, against Seller
or the Transferred Subsidiaries, in each case, relating to the Business, as of
the date hereof, by or before any Governmental Entity, or (ii) any order,
judgment, writ, injunction or decree of any Governmental Entity against any of
Seller or the Transferred Subsidiaries, in each case, relating to the Business,
other than such claims, actions, suits, inquiries, proceedings, arbitrations or
investigations or orders, judgments, writs, injunctions or decrees that would
not have or be reasonably likely to have, either individually or in the
aggregate, a Material Adverse Effect. None of the matters set forth in Section
4.8 of the Seller Disclosure Letter has had or would be reasonably likely to
have, either individually or in the aggregate, a Material Adverse Effect or
would affect the legality, validity or enforceability of this Agreement or the
transactions contemplated hereby.
Section 4.9 Compliance with Applicable Law; Permits.
(a) Except as set forth in Section 4.9(a) of the Seller
Disclosure Letter, with respect to the Business, the Seller Participants are in
compliance with all laws, orders, ordinances, rules, and regulations, whether
civil or criminal, of any federal, state, local or foreign governmental
authority applicable to the Business ("Applicable Laws") (other than Tax laws,
ordinances, rules and regulations, which are governed by Section 4.10, laws
relating to employee benefit plans, which are governed by Section 4.11, labor
and employment laws, which are governed by Section 4.13, and Environmental Laws,
which are governed by Section 4.14), except for such violations, if any, that,
either individually or in the aggregate, do not have or would not be reasonably
likely to have a Material Adverse Effect.
(b) With respect to the Business, the Seller Participants hold
(or other parties hold for their benefit) all material Permits necessary for the
lawful conduct of the Business (other than Environmental Permits, which are
governed by Section 4.14), except for such Permits the failure of which to hold
would not have or be reasonably likely to have, either individually or in the
aggregate, a Material Adverse Effect. Except as set forth in Section 4.9(b) of
the Seller Disclosure Letter, (i) to the Knowledge of Seller, all such Permits
are in full force and effect as of the date hereof and the Seller Participants
are in compliance with the terms of such Permits, except for such failure to be
in full force and effect and such instances of noncompliance that did not have
or would not be reasonably likely to have, either individually or in the
aggregate, a Material Adverse Effect and (ii) Seller has not received written
notice of any threatened revocation of or material modification to such Permits.
(c) With respect to the Business, neither Seller, nor any of
its respective directors, officers or employees, has been alleged to violate or
has violated any Competition Laws, except as set forth in Section 4.9(c) of the
Seller Disclosure Letter and except for such violations, if any, that, either
individually or in the aggregate, do not have or would not be reasonably likely
to have a Material Adverse Effect.
Section 4.10 Taxes. Except as set forth in Section 4.10 of the
Seller Disclosure Letter:
(a) For all periods through and including the Closing Date,
each of the Transferred Subsidiaries and, to the Knowledge of Seller, each of
the Transferred Entities, have timely filed or caused to be filed with the
appropriate taxing authorities all Income Tax Returns and other material Tax
Returns due prior to the Closing Date and required to be filed by it and such
Tax Returns are true, correct and complete in all material respects. For all
periods through and including the Closing Date, Seller has timely filed or
caused to be timely filed with the appropriate taxing authorities all Income Tax
Returns and other material Tax Returns due prior to the Closing Date and
required to be filed by it with respect to the Business and such Tax Returns are
true, correct and complete in all material respects.
(b) The Transferred Subsidiaries and, to the Knowledge of
Seller, the Transferred Entities, have timely paid or caused to be timely paid
all material Taxes due and payable and have made adequate provision for the
payment of material Taxes not yet due and payable for all periods through and
including the Closing Date. Seller has timely paid or caused to be timely paid
all material Taxes in respect of the Business due and payable and has made
adequate provision for the payment of material Taxes not yet due and payable for
all periods through and including the Closing Date.
(c) The Transferred Subsidiaries and, to the Knowledge of
Seller, the Transferred Entities, have withheld and paid all material Taxes
required to be withheld with respect to amounts owing to any employee, creditor,
independent contractor or other third party. Seller has withheld and paid all
material Taxes related to the Business and required to be withheld with respect
to amounts owing to any employee, creditor, independent contractor or other
third party.
(d) None of the assets of the Business is subject to any Liens
(other than Permitted Liens) as a result of a failure to pay any Tax.
(e) None of the assets of the Business is "tax-exempt use
property" within the meaning of Section 168(h) of the Code. Other than the
property referenced in the Tax Exempt Bond Agreement, none of the assets of the
Business are required to be treated as tax-exempt bond financed property within
the meaning of Section 168 of the Code. As of December 31, 2005, Seller's
adjusted tax basis in the tax-exempt bond financed property of the Business
referenced in the Tax Exempt Bond Agreement did not exceed $1 million.
(f) There are no outstanding agreements or waivers extending
the statute of limitations for any period with respect to any material Tax to
which the Transferred Subsidiaries, or to the Knowledge of Seller, the
Transferred Entities may be subject. No audits, examinations or administrative
or judicial proceedings with respect to material Taxes of the Transferred
Subsidiaries, or to the Knowledge of Seller, the Transferred Entities, are
ongoing, pending or proposed in writing by any taxing authority. No audits,
examinations or administrative or judicial proceedings with respect to material
Taxes of Seller that relate to the Business are ongoing, pending or proposed in
writing by any taxing authority. All material deficiencies asserted or
assessments made as a result of any examinations of any of the Transferred
Subsidiaries or, to the Knowledge of Seller, the Transferred Entities, have been
fully paid or are being contested in good faith and an adequate reserve therefor
has been established and is fully reflected in the Financial Statements.
(g) Except as entered into in the ordinary course of business
consistent with past practice, no Transferred Subsidiary is a party to any tax
sharing agreement or tax indemnification agreement and all such agreements of
the Transferred Subsidiaries shall terminate as of the Closing.
(h) Seller has included in its Tax Returns items of income and
deductions provided to IP with respect to Gulf Island Pond Oxygenation Project
on Forms K-1.
(i) None of the Transferred Subsidiaries or, to the Knowledge
of Seller, the Transferred Entities, has received written notice from any taxing
authority in a jurisdiction in which such entity does not file a Tax Return
stating that such entity is or may be subject to taxation by that jurisdiction;
and
(j) None of the Transferred Subsidiaries or, to the Knowledge
of Seller, the Transferred Entities, will be required to include any material
item of income in, or exclude any material item of deduction from, any taxable
income for any taxable period (or portion thereof) ending after the Closing Date
as a result of any (a) change in method of accounting for a taxable period (or
portion thereof) ending on or prior to the Closing Date, (b) disposition made on
or prior to the Closing Date, (c) prepaid amount received on or prior to the
Closing Date or (d) intercompany transaction or excess loss account described in
Treasury Regulations Under Code Section 1502 (or any similar provision of
foreign, state, or local law).
Section 4.11 Employee Benefit Plans.
(a) Section 4.11(a) of the Seller Disclosure Letter lists all
material benefit and compensation plans and contracts, including, but not
limited to, "employee benefit plans" within the meaning of Section 3(3) of
ERISA, and deferred compensation, stock option, stock purchase, stock
appreciation rights, stock-based incentive bonus, severance, employment, change
in control, vacation or fringe benefit programs, policies, agreements,
arrangements or plans maintained or contributed to by Seller for the benefit of
any employee or former employees of the Business (the "Employees")
(collectively, the "Plans"). True and complete copies of all material Plans,
including, but not limited to, any trust instruments and insurance contracts
forming a part of any Plans, and all amendments thereto have been provided or
made available to the Acquirors or their representatives.
(b) Each of the Plans has been administered in accordance with
its terms and in substantial compliance with Applicable Law (including, where
applicable, ERISA and the Code), except where the failure to so administer such
Plan would not have or be reasonably likely to have, either individually or in
the aggregate, a Material Adverse Effect.
(c) Each of the Plans intended to be "qualified" within the
meaning of Section 401(a) of the Code has been determined by the Internal
Revenue Service to be so qualified, and Seller knows of no fact or set of
circumstances that has adversely affected, or is reasonably likely to affect
adversely, the qualification of such Plan prior to the Closing.
(d) Except as set forth in Section 4.11(d) of the Seller
Disclosure Letter, no Plan provides medical, surgical, hospitalization, death or
similar benefits (whether or not insured) for employees or former employees of
the Business for periods extending beyond their termination of service (by
retirement or otherwise), other than (i) coverage mandated by applicable law,
(ii) death benefits under any "pension plan," as that term is defined in Section
3(2) of ERISA or (iii) benefits the full cost of which is borne by the current
or former employee (or his beneficiary).
(e) Except as set forth in Section 4.11(e) of the Seller
Disclosure Letter, there are no pending or, to the Knowledge of Seller,
threatened claims (other than routine claims for benefits) by, on behalf of or
against any of the Plans or any trusts related thereto, except where the failure
to so administer such Plan would not have or be reasonably likely to have,
either individually or in the aggregate, a Material Adverse Effect.
(f) No liability has been incurred by or is expected to be
incurred by any Seller Participant or any entity which is considered one
employer with any Seller Participant under Section 4001 of ERISA or Section 414
of the Code that could subject Buyer or any of its Affiliates to liability under
Title IV of ERISA, Section 302 of ERISA, Sections 412 or 4971 of the Code or
COBRA. Except as set forth in Section 4.11(f) of the Seller Disclosure Letter,
no Employee is party to any individual Contract for the employment of the
Employee or the provision of severance, retention or change of control benefits.
No Seller Participant nor any Affiliate thereof is required to contribute to, or
has been required to contribute to, any "multiemployer plan" (as defined in
Section 3(37) or 4001(a)(3) of ERISA) with respect to Employees. No Plan is
maintained outside of the United States or covers any Employee outside of the
United States. For the avoidance of doubt, except as otherwise specifically set
forth in Section 6.8, neither the Buyer nor any of its Affiliates shall have any
obligation or liability with respect to any Plan, and Seller shall be solely
responsible for and shall retain all liabilities with respect to the Plans
(including without limitation all obligations and liabilities with respect to
the Seller's Business Performance Incentive Plan (2006) and all severance,
retention, stock option, restricted stock or other equity compensation plans,
programs or arrangements).
(g) All hourly-paid Affected Employees (whether Represented
Employees or Non-Represented Employees) whose principal place of business is the
Androscoggin Mill, the Bucksport Mill or the Sartell Mill are covered by the
plant closure provisions set forth in Benefit Schedule A-1 or Benefit Schedule
B-35 to the Seller Retirement Plan (the "Plant Closure Provisions"), and the
transactions contemplated by this Agreement will constitute a plant closure for
purposes of the Plant Closure Provisions.
Section 4.12 Intellectual Property.
(a) Section 4.12(a)(i) of the Seller Disclosure Letter sets
forth all Registered Intellectual Property included in the Equity Intellectual
Property and Section 4.12(a)(ii) of the Seller Disclosure Letter sets forth all
Registered Intellectual Property included in the Transferred Intellectual
Property, and includes for each listed item (A) as applicable, the jurisdiction,
serial/application number, patent or registration number, filing date, and
issuance or registration date, and (B) as applicable, the owner of record or
applicant. Except as disclosed in Section 4.12(a)(iii) of the Seller Disclosure
Letter, with respect to each item of Registered Intellectual Property that is
required to be identified in Sections 4.12(a)(i) and (ii) of the Seller
Disclosure Letter: (x) the applicable Seller Participant is the sole owner and
possesses all right, title, and interest in and to such item in the listed
country or jurisdiction, free and clear of all Liens (other than Permitted
Liens) and (y) the Seller Participants have not granted to any Person any
license, option or other rights in or to such item; and no Seller Participant
has received written notice of any pending or threatened action, suit,
proceeding, hearing, investigation, charge, complaint, claim or demand that
challenges the legality, validity, enforceability, registration, ownership or
use of such item in the listed country or jurisdiction, except for office
actions issued in the ordinary course by the U.S. Patent and Trademark Office or
any similar office in any foreign jurisdiction.
(b) Except as set forth in Section 4.12(b)(i) of the Seller
Disclosure Letter, the Seller Participants have such ownership of, or other
rights by a valid and enforceable license or other agreement to use, all
Intellectual Property that is necessary for or actually used in the conduct of
the Business as currently conducted in all material respects. Except as set
forth in Section 4.12(b)(ii) of the Seller Disclosure Letter, the execution and
performance of this Agreement and the Ancillary Agreements, and the consummation
of the transactions contemplated hereby and thereby, will not result in the loss
or impairment of, or give rise to any right of any third Person to terminate,
the right of Buyer to own or use the Transferred Intellectual Property, the
Equity Intellectual Property, or the Third Party Intellectual Property (other
than off-the-shelf Software licenses and Software used by Seller on behalf of
the Business in performing its obligations under the Transition Services
Agreement) nor require the consent of any Governmental Entity or any third
Person in respect of any such Intellectual Property, except as would not, either
individually or in the aggregate, have or be reasonably likely to have a
Material Adverse Effect. Except as set forth in Section 4.12(b)(iii) of the
Seller Disclosure Letter, there are no actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands or litigation pending or,
to the Knowledge of Seller, threatened in writing by any person against any
Seller Participant alleging that any of the Transferred Entities, Transferred
Subsidiaries or the conduct of the Business infringes, misappropriates, dilutes
or otherwise violates the Intellectual Property rights of any other Person.
Except as set forth in Section 4.12(b)(iv) of the Seller Disclosure Letter, to
the Knowledge of Seller, no Person is infringing, misappropriating, diluting or
otherwise violating any of the Transferred Intellectual Property, Equity
Intellectual Property or the Excluded Intellectual Property that is to be
licensed to Buyer in accordance with Section 6.13(b).
(c) The Seller is taking or has taken all material actions
that it reasonably believes are necessary to maintain and protect each item of
Transferred Intellectual Property or Equity Intellectual Property consistent
with the actions that Seller takes with respect to similar Intellectual Property
used or held for use in its retained business.
Section 4.13 Labor Relations. Seller has previously delivered
to the Acquirors or their representatives copies of all collective bargaining
agreements or union contracts relating to the Business to which the Seller is a
party, which are listed in Section 4.13(a) of the Seller Disclosure Letter.
Except as set forth in Section 4.13(b) of the Seller Disclosure Letter, (i)
there is no material labor strike, dispute, slowdown, stoppage or lockout
ongoing, or to the Knowledge of Seller threatened, against or affecting
employees of the Business; (ii) there is no unfair labor practice charge or
complaint against Seller relating to the Business pending for which written
notice has been provided or, to the Knowledge of Seller, threatened before the
National Labor Relations Board or any similar Governmental Entity; (iii) to the
Knowledge of Seller, Seller has not received written notice of the intent of any
Governmental Entity responsible for the enforcement of labor or employment laws
to conduct an investigation with respect to or relating to the Business and no
such investigation is in progress; (iv) the Seller Participants are in material
compliance with all Applicable Laws respecting employment and employment
practices, terms and conditions of employment, wages and hours, occupational
health and safety, equal employment opportunity, and affirmative action; (v) no
material grievances or arbitration proceedings arising out of or under the
collective bargaining agreements listed in Section 4.13(a) of the Seller
Disclosure Letter are pending against Seller; and (vi) no Litigation by or on
behalf of Employees is pending, or to the Knowledge of Seller, threatened in
writing against Seller, the Transferred Subsidiaries or the Transferred Entities
other than, with respect to clauses (ii), (iv) and (v) above, such matters that
would not have or be reasonably likely to have, either individually or in the
aggregate, a Material Adverse Effect.
Section 4.14 Environmental Matters. Except as set forth in
Section 4.14 of the Seller Disclosure Letter:
(a) The Seller Participants are in material compliance with
all Environmental Laws applicable to it in the conduct of the Business, except
for any non-compliance that would not have or be reasonably likely to have,
either individually or in the aggregate, a Material Adverse Effect. Seller
possesses all material Environmental Permits required under applicable
Environmental Laws for the conduct of the Business, and is in compliance in all
material respects with the terms and conditions thereof. Section 4.14(a)(i) of
the Seller Disclosure Letter sets forth a complete list of such Environmental
Permits.
(b) To the Knowledge of Seller, there have been no material
Releases (except for releases in accordance with valid Environmental Permits) of
any Hazardous Substances at any of the properties of Seller to be transferred
pursuant to this Agreement which have resulted or may result in liability under
Environmental Law.
(c) Within the last two (2) years, no Seller Participant has
received written notice of, and is not, to the Knowledge of Seller, the subject
of, any threatened actions, causes of action, claims, investigations, demands or
notices by any person alleging liability under or noncompliance with any
Environmental Law relating to the Real Property or the Business, other than any
of the foregoing that would not have or be reasonably likely to have, either
individually or in the aggregate, a Material Adverse Effect.
(d) Seller has made available to the Acquirors or their
representatives either in the electronic data room compiled by Seller in
connection with the transaction contemplated by this Agreement, at the Xxxxx or
by delivery to the Acquirors or the Acquirors' advisors, all environmental
reports, studies and audits to the extent related to the Business that are in
its possession.
(e) Except as set forth in Section 4.14(e) of the Seller
Disclosure Letter, Seller is not obligated to provide financial assurance in
consideration of the Business under Environmental Law.
(f) Section 4.14(f) of the Seller Disclosure Letter contains a
complete list of all requirements of Environmental Law for which the deadline
(including interim deadlines) for achieving compliance is after the Closing Date
and with which the Business is not yet compliant.
Section 4.15 Real Property.
(a) Section 4.15 (a)(i) of the Seller Disclosure Letter sets
forth a list of all Owned Real Property. Except as set forth in Section
4.15(a)(ii) of the Seller Disclosure Letter and subject in all cases to
Permitted Encumbrances: (i) the Seller holds or will hold on the Closing Date
(but with respect to the Sartell Real Property, at the time of its transfer to
Buyer pursuant to Section 6.12) fee simple title, subject only to Permitted
Encumbrances, to the Owned Real Property, free and clear of all encumbrances and
(ii) there are no easements, licenses, occupancy agreements, options, rights,
concessions, or other operating rights or similar rights of use, written or
oral, to which any Seller Participant is a party, granting to any Person the
right to purchase, use or occupy any of the Owned Real Property; (iii) Seller
Participants have not received notice of any special assessments relating to any
Owned Real Property or any portion thereof, and to the Knowledge of Seller,
there is no pending or threatened special assessment; and (iv) other than
published notice not actually received, to the Knowledge of Seller, there are no
pending or contemplated rezoning or special designation proceedings affecting
the Owned Real Property.
(b) Section 4.15(b)(i) of the Seller Disclosure Letter sets
forth a list of all leases relating to the Leased Real Property. True and
correct copies of the leases, and all amendments thereto (the "Real Property
Leases") relating to the Leased Real Property have been made available to the
Acquirors or their representatives prior to the date hereof. The Seller is not
in default in any material respect under any Real Property Lease and, to the
Knowledge of Seller, no lessor is in default in any material respect under any
Real Property Lease. Seller holds valid leasehold title to all of the Leased
Real Property, in each case, in accordance with the provisions of the applicable
lease or sublease for such Leased Real Property and free of all encumbrances
(other than encumbrances affecting the underlying fee estate and Permitted
Encumbrances). No Seller Participant has received notice of any special
assessment relating to any Leased Real Property or any portion thereof, and to
the Knowledge or Seller, there are no pending or threatened special assessments.
All of the Real Property Leases are valid, binding, enforceable and in full
force and effect and grant in all material respects the leasehold estates or
rights of occupancy or use they purport to grant, and such Real Property Leases
will not cease to be valid, binding, enforceable and in full force and effect on
terms identical to those currently in effect as a result of the consummation of
the transactions contemplated by this Agreement. The consummation of the
transactions contemplated by this Agreement will not constitute a breach or
default under such Real Property Leases or otherwise give any landlord a right
to terminate any Real Property Lease. Except as set forth in Section 4.15(b)(ii)
of the Seller Disclosure Letter, there are no written agreements to which any
Seller Participant grants to any other Person a right to purchase, use, or
occupy any of the Leased Property.
(c) Except as set forth in Section 4.15(c) of the Seller
Disclosure Letter, all material improvements and fixtures located on the Real
Property are in working condition and in ordinary repair (normal wear and tear
excepted and taking into account the age of the underlying asset).
(d) The Real Property constitute all the real property used,
held or intended to be used in, and all such real property necessary in, the
conduct of the Business, including without limitation, ingress and egress to
each of the Real Properties. Except as set forth in Section 4.4(a) of the Seller
Disclosure Letter, all rights of the Seller in each item of Real Property are
transferable to the Buyer without the consent of any third party or governmental
agency on terms and conditions substantially similar to those applicable to the
Seller Participants immediately prior to the Closing with respect to each item
of Real Property and as contemplated by this Agreement.
(e) Except as set forth in Section 4.15(e) of the Seller
Disclosure Letter, to the Knowledge of Seller, the Seller Participants are in
compliance with all material covenants, easements, and permits (other than
Environmental Permits) affecting the Owned Real Property, except to the extent
non-compliance would have or be reasonably likely to have, either individually
or in the aggregate, a Material Adverse Effect.
(f) Section 4.15(a) and 4.15(b)(i) of the Seller Disclosure
Letter together form a complete list of all Real Property used in the Business.
Section 4.16 Material Contracts.
(a) Set forth in Section 4.16(a) of the Seller Disclosure
Letter is a list of all Contracts, and any amendments thereto, in the categories
listed below to which a Seller Participant is a party exclusively in connection
with the Business and in effect as of the date hereof, other than Contracts that
constitute Retained Assets or Excluded Liabilities:
(i) collective bargaining agreement;
(ii) employment or consulting agreement providing for
annual payments in excess of $100,000;
(iii) indenture, mortgage, note, installment
obligation, agreement or other instrument, in each case relating to the
borrowing of money (other than intercompany accounts), or the guaranty
of any obligation for the borrowing of money, except for any such
agreement (x) with an aggregate outstanding principal amount not
exceeding $350,000 and (y) relating to Excluded Liabilities;
(iv) partnership, joint venture or other similar
agreement or arrangement requiring the commitment of capital in excess
of $350,000;
(v) agreement pertaining to any of the Transferred
Equity Interests;
(vi) agreement granting any Person a license under or
otherwise permitting the use by such Person of material Intellectual
Property owned by another Person (other than off-the-shelf Software
licenses and licenses for Software that are commercially available to
the public generally, with an annual license fee of $75,000 or less);
(vii) agency, sales representation, brokerage,
distribution or other similar agreement providing for annual payments
by the Business in excess of $350,000;
(viii) supplier contract or other agreement for the
purchase of supplies or raw materials other than in the ordinary course
of business consistent with past practice providing for annual payments
in excess of $350,000;
(ix) customer contract or other agreement for the
sale of goods or services other than in the ordinary course of business
consistent with past practice providing for annual payments in excess
of $350,000;
(x) agreement regarding the development or purchase
of energy for any of the Xxxxx providing for annual payments in excess
of $350,000, other than routine arrangements with utility companies;
(xi) agreement regarding shipping, transportation or
storage of products of the Business providing for annual payments by
the Business in excess of $350,000;
(xii) lease of personal property requiring annual
payments by the Business in excess of $350,000;
(xiii) agreement or commitment for capital
expenditures or the acquisition or construction of fixed assets,
requiring payments by the Business in excess of $2,000,000 for the
fiscal year ended December 31, 2006 or any fiscal year thereafter;
(xiv) agreement containing covenants not to compete
or solicit or otherwise limiting in any material respect the right of
the Business to engage in any material line of business or in any
geographic area;
(xv) agreement for the sale of Assets in excess of
$350,000, other than sales of Inventory or other sales of Assets in the
ordinary course of business consistent with past practice;
(xvi) agreement containing any material
indemnification obligation by a Seller Participant entered into other
than in the ordinary course of business consistent with past practice;
and
(xvii) agreement (except as otherwise set forth in
(i) through (xvii) above or on the Seller Disclosure Letter), entered
into other than in the ordinary course of business consistent with past
practice and providing for annual payments by the Business in excess of
$350,000.
The Contracts described in clauses (i) through (xvii) above
are collectively referred to as the "Material Contracts."
(b) There are no agreements with Affected Employees containing
severance payments, change of control payments, stay bonus, or any other right
to additional compensation or change in duties or job description triggered by
this Agreement or the transactions contemplated hereby, for which the liability
will be borne by Buyer.
(c) Except as set forth in Section 4.16(c) of the Seller
Disclosure Letter, each Material Contract is a valid, binding and enforceable
obligation of the relevant Seller Participant and enforceable against such
Seller Participant in accordance with its terms, except as limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights in general and subject to general
principles of equity. No Seller Participant is in default under any of the
Material Contracts, except for such defaults that would not have or be
reasonably likely to have, either individually or in the aggregate, a Material
Adverse Effect.
Section 4.17 Entire Business; Sufficiency of Assets. The sale
of the Assets to Buyer pursuant to this Agreement will convey to Buyer at the
Closing Date all of the assets and properties that, together with all rights
granted or conveyed under the Ancillary Agreements, are necessary for the
operation of the Business and the Acquired Assets as conducted as of the date
hereof, except for (i) the Retained Assets set forth in Section 2.2(b)(i)-(iii)
and Section 2.2(b)(v)-(xiii) and (ii) those assets and properties set forth in
Section 4.17(a) of the Seller Disclosure Letter.
Section 4.18 Brokers and Finders. No broker, investment
banker, financial advisor or other person, is entitled to any broker's,
finder's, financial advisor's or other similar fee, expenses or commission in
connection with this Agreement or the transactions contemplated hereby, except
for Credit Suisse Securities (USA) LLC and Lazard Freres & Co. LLC which fees
will be paid by Seller.
Section 4.19 Distributors, Customers and Suppliers. Section
4.19 of the Seller Disclosure Letter sets forth a list of each of the top ten
(10) customers, distributors and suppliers of the Business, on the basis of
revenues generated or expenditures made, as applicable, during the twelve months
ended December 31, 2005. From December 31, 2005 to the date hereof, none of the
customers, distributors or suppliers listed has provided written notice to
cancel or terminate its agreement with the Business, other than in accordance
with such agreement's terms, or, to the Knowledge of Seller, has threatened in
writing to cancel, terminate or materially and adversely modify its agreement
with the Business, other than in accordance with such agreement's terms.
Section 4.20 No Other Representations and Warranties. None of
Seller, any of its Affiliates nor any of their respective officers, employees,
agents or representatives makes any express or implied representation or
warranty on behalf of Seller or in relation to the Business, other than as
expressly set forth in this Article IV. All other representations and
warranties, express or implied, are disclaimed by Seller.
Section 4.21 Potential Conflicts of Interest. Except as set
forth on Section 4.21 of the Seller Disclosure Letter:
(a) none of Seller nor any of its Subsidiaries (other than the
Transferred Subsidiaries) nor, to the Knowledge of Seller, any executive officer
of Seller or of the Business owns, directly or indirectly, any interest in
(excepting not more than five percent (5%) stock holdings held solely for
investment purposes in securities of any Person that is listed on any national
securities exchange or regularly traded in the over-the-counter market) or is an
owner, sole proprietor, stockholder, partner, director, officer, employee,
consultant or agent of any Person which is a lessor, lessee, customer, licensee,
or supplier of the Business (other than pursuant to arrangements on terms that
would be obtained on an arms' length basis and other than Contracts entered into
by the Seller for the benefit of the Business and the Seller's other
businesses); or
(b) to the Knowledge of the Seller, none of the executive
officers of Seller or of the Business owns, directly or indirectly, in whole or
in part, any tangible property, patent, trademark, service xxxx, trade name,
copyright, franchise, invention, permit or license which is used and necessary
for the operation of the Business.
Section 4.22 FERC Regulations. Seller is not a "public
utility" and, without giving effect to the interest Seller owns in Androscoggin
Reservoir Power Company, Seller is not (a) a "holding company," or (b) a
"holding company" in a "holding company system" that includes a "transmitting
utility" or an "electric utility," as each of the foregoing terms is defined in
the Federal Power Act, as amended, or the regulations of the FERC promulgated
thereunder.
Section 4.23 Product Liability and Warranty Claims. Except as
set forth on Section 4.23 of the Seller Disclosure Letter, to the Knowledge of
Seller, as of the date hereof, there is no (i) product liability claim or (ii)
claim for breach of warranty, or failure to meet product or service
specifications, in each case for damages in excess of $300,000, with respect to
products produced or sold and services provided by the Business (other than
claims that are Excluded Liabilities in accordance with Section 2.3(b)(vii)).
Section 4.24 Insurance. Section 4.24 of the Seller Disclosure
Letter sets forth a list of all the Insurance Policies (including Occurrence
Based Insurance Policies), together with the name of the insurer, policy number,
type of coverage, limits, date of issue and applicable business unit deductible.
All of the Insurance Policies are in full force and effect as of the date hereof
and the Seller is not in material default thereunder and, since January 1, 2005,
there has been no denial or reservation of rights in respect of any claim.
Section 4.25 Investment Representations.
(a) Seller is acquiring the Profits Interest to be acquired by
it hereunder for its own account, solely for the purpose of investment and not
with a view to, or for sale in connection with, any distribution thereof in
violation of the federal securities laws or any applicable foreign or state
securities law.
(b) Seller is an "accredited investor" as defined in Rule
501(a) promulgated under the Securities Act.
(c) Seller understands that the acquisition of the Profits
Interest to be acquired by it pursuant to the terms of this Agreement involves
substantial risk. Seller has experience as an investor in securities and
acknowledges that it can bear the economic risk of its investment and has such
knowledge and experience in financial or business matters that Seller is capable
of evaluating the merits and risks of its investment in the Profits Interest to
be acquired by it pursuant to the transactions contemplated hereby.
(d) Seller understands that the Profits Interest to be
acquired by it hereunder have not been registered under the Securities Act on
the basis that the sale provided for in this Agreement is exempt from the
registration provisions thereof. Seller acknowledges that such securities may
not be transferred or sold except pursuant to the registration and other
provisions of applicable securities laws or pursuant to an applicable exemption
therefrom.
(e) Seller acknowledges that the offer and sale of the Profits
Interest to be acquired by it in the transactions contemplated hereby has not
been accomplished by the publication of any advertisement.
(f) Seller acknowledges that the offer, purchase and sale of
Profits Interest to be issued to Seller was made in the State of New York.
Section 4.26 Qualifications for Certain Wastewater Permit
Transfers. Except as previously disclosed to Acquirors, to the Knowledge of
Seller, there is no reason (related to any fact or circumstance concerning the
Seller or its Affiliates) that would cause the Seller to believe that any
governmental authority would not to permit the transfer of any of the Wastewater
Permits to the Acquirors in order to satisfy the condition contained in Section
7.2(h).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE ACQUIRORS
Each of the Acquirors hereby represents and warrants to Seller
as follows:
Section 5.1 Organization. Buyer is a limited liability company
duly organized, validly existing and in good standing under the laws of its
state of formation. Parent is a limited partnership duly formed, validly
existing and in good standing under the laws of its state of formation. Each of
the Acquirors has heretofore delivered to Seller complete and correct copies of
its organizational documents, as currently in effect.
Section 5.2 Authorization. Each of the Acquirors has full
power and authority to execute and deliver this Agreement and consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the Ancillary Agreements and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by the
governing body of each of the Acquirors and no other proceeding on the part of
either of the Acquirors is necessary to authorize the execution, delivery and
performance of this Agreement or the Ancillary Agreements or the consummation of
the transactions contemplated hereby or thereby. This Agreement has been, and
the Ancillary Agreements will be, duly executed and delivered by each of the
Acquirors, as applicable, and, assuming the valid execution and delivery by all
counterparties thereto, will constitute, a valid and binding agreement of each
of the Acquirors, as applicable, enforceable against both of the Acquirors in
accordance with its terms, except to the extent that enforceability may be
limited by bankruptcy, moratorium, reorganization and other laws affecting the
enforcement of creditors' rights generally and by general principals of equity.
Section 5.3 Consents and Approvals; No Violations;
Governmental Filings.
(a) Neither the execution, delivery or performance of this
Agreement and the Ancillary Agreements nor the consummation by either of the
Acquirors, as applicable, of the transactions contemplated hereby or thereby,
including the issuance of the Profits Interest, will (i) conflict with or result
in any breach or violation of any provision of the organizational documents of
either of the Acquirors, (ii) violate, conflict with or result in a default (or
any event which, with notice or lapse of time or both, would constitute a
default) under, or result in any termination, cancellation or acceleration, or
give rise to any such right of termination, cancellation or acceleration under,
any of the terms, conditions or provisions of any note, mortgage, other evidence
of indebtedness, guarantee, license, agreement, lease or other instrument or
obligation to which either of the Acquirors is a party or by which either of the
Acquirors or any of their assets is subject or by which any of them may be
bound, (iii) violate any order, injunction, decree, statute, rule or regulation
applicable to either of the Acquirors or (iv) result in the creation or
imposition of any Lien upon any properties, assets or business of either of the
Acquirors, excluding from the foregoing clauses (ii), (iii) and (iv), such
conflicts, defaults, rights, security interests, Liens or violations that would
not adversely affect the ability of, or timing for, either of the Acquirors, as
applicable, to consummate the transactions contemplated by this Agreement or the
Ancillary Agreements.
(b) No Governmental Filings are required to be obtained or
made by either of the Acquirors or their Affiliates in connection with the
execution, delivery or performance by either of the Acquirors, as applicable, of
this Agreement or the Ancillary Agreements or the consummation by either of the
Acquirors, as applicable, of the transactions contemplated hereby or thereby,
except (i) Governmental Filings under the HSR Act or any other Competition Law,
(ii) Governmental Filings that become applicable as a result of the business or
activities (including the Business) in which Seller engages or as a result of
any acts or omissions by, or the status of or any facts pertaining to, Seller,
(iii) Governmental Filings with FERC under the Federal Power Act and (iv) such
other Governmental Filings, the failure of which to be obtained or made would
not adversely affect the ability of, or timing for, either of the Acquirors, as
applicable, to consummate the transactions contemplated by this Agreement or the
Ancillary Agreements.
Section 5.4 Capitalization.
(a) As of the date hereof, the authorized Equity Interests of
Parent consist of $1,000 of capital, all of which represent General Partner
interests. Except as contemplated by this Agreement and the Ancillary
Agreements, there are no outstanding Equity Interests, agreements or other
commitments pursuant to which Parent is or may become obligated to issue any
Equity Interests. All of the outstanding Equity Interests of Parent have been
duly authorized and validly issued. The Profits Interest and the Units to be
issued to Seller pursuant to this Agreement and under the terms of the Amended
and Restated Limited Partnership Agreement will be duly authorized and validly
issued. Other than as set forth above, Parent has no other Equity Interests
authorized, reserved for issuance, issued or outstanding and there are no voting
trusts or other agreements or understandings to which Parent is bound with
respect to the Equity Interests of Parent.
(b) At Closing, Seller will hold Units representing ten
percent of the Equity Interests of Parent, and the Apollo Partners (as such term
is defined in the Amended and Restated Limited Partnership Agreement) will hold
ninety percent of the Equity Interests of Parent, in each case, on a fully
diluted basis.
Section 5.5 Availability of Funds. Buyer has or will have
available, at or prior to Closing, sufficient cash pursuant to the commitment
letters referred to in the next sentence in immediately available funds to pay
the Cash Purchase Price and all costs, fees and expenses necessary to consummate
the transactions contemplated by this Agreement and the Ancillary Agreements.
Buyer has received the executed commitment letters attached to Section 5.5 of
the Buyer Disclosure Letter (the "Commitment Letters") with respect to the debt
and equity financing arrangements for the transactions contemplated by this
Agreement and the Ancillary Agreements (the "Financing"). As of the date of this
Agreement, each of the Commitment Letters is in full force and effect and has
not been amended or rescinded. The aggregate proceeds of the Financing provided
for in the Commitment Letters, together with cash available to Buyer, will be
sufficient to pay the Cash Purchase Price and satisfy the other obligations of
Buyer and its Affiliates necessary to consummate the transactions contemplated
by this Agreement and the Ancillary Agreements.
Section 5.6 Litigation. As of the date hereof, there is no (i)
claim, action, suit, inquiry, judicial or administrative proceeding, arbitration
or investigation pending, or, to Knowledge of the Acquirors, threatened, against
either of the Acquirors or any of their Affiliates by or before any Governmental
Entity or (ii) any order, judgment, writ, injunction or decree of any
Governmental Entity against either of the Acquirors or their Affiliates, or any
of its properties, assets or business operations, in each case, which has
resulted or which could be reasonably likely to result in a prohibition against,
or a material delay in completing, all or any part of the transactions
contemplated by this Agreement or the Ancillary Agreements.
Section 5.7 Brokers or Finders. No broker, investment banker,
financial advisor or other person, is entitled to any broker's, finder's,
financial advisor's or other similar fee, expenses or commission in connection
with this Agreement or the transactions contemplated hereby, except for any such
fee, expense or commission for which the Acquirors will be responsible.
Section 5.8 Investment Representations.
(a) Buyer is acquiring the Transferred Equity Interests to be
acquired by it hereunder for its own account, solely for the purpose of
investment and not with a view to, or for sale in connection with, any
distribution thereof in violation of the federal securities laws or any
applicable foreign or state securities law.
(b) Each of the Acquirors is an "accredited investor" as
defined in Rule 501(a) promulgated under the Securities Act.
(c) Each of the Acquirors understands that the acquisition of
the Transferred Equity Interests to be acquired by Buyer pursuant to the terms
of this Agreement involves substantial risk. The Acquirors and their officers
have experience as an investor in securities and equity interests of companies
such as the ones being transferred pursuant to this Agreement and acknowledges
that it can bear the economic risk of its investment and has such knowledge and
experience in financial or business matters that each of the Acquirors is
capable of evaluating the merits and risks of its investment in the Transferred
Equity Interests to be acquired by it pursuant to the transactions contemplated
hereby.
(d) Each of the Acquirors understands that the Transferred
Equity Interests to be acquired by Buyer hereunder have not been registered
under the Securities Act on the basis that the sale provided for in this
Agreement is exempt from the registration provisions thereof. Each of the
Acquirors acknowledges that such securities may not be transferred or sold
except pursuant to the registration and other provisions of applicable
securities laws or pursuant to an applicable exemption therefrom.
(e) Each of the Acquirors acknowledges that the offer and sale
of the Transferred Equity Interests to be acquired by it in the transactions
contemplated hereby has not been accomplished by the publication of any
advertisement.
Section 5.9 Solvency. As of the Closing, assuming satisfaction
or, if permissible, waiver of the conditions of this Agreement, and after giving
effect to the transactions contemplated by this Agreement, including the
Financing and the payment of the Consideration, and payment of all related fees
and expenses, each of the Acquirors will be Solvent.
Section 5.10 FERC Regulations. Neither Acquiror is (a) a
"public utility," or (b)(i) a "holding company," or (ii) a "holding company" in
a "holding company system" that includes a "transmitting utility" or an
"electric utility," as each of the foregoing terms is defined in the Federal
Power Act, as amended, or the regulations of the FERC promulgated thereunder.
Section 5.11 No Implied Representations. Notwithstanding
anything contained in Article IV or any other provision of this Agreement or the
Seller Disclosure Letter, each of the Acquirors acknowledges and agrees that
neither Seller nor any of its Affiliates is making any representation or
warranty whatsoever, express or implied, beyond those expressly given in Article
IV of this Agreement, including no implied warranty of merchantability or
suitability as to the properties or assets of the Business, and it is understood
that, except as otherwise provided in Article IV, each of the Acquirors
acknowledges that the Business is being sold "as is" and "where is." In
addition, each of the Acquirors acknowledges and agrees that any cost estimates,
projections, forecasts and predictions contained or referred to in any materials
that have been provided to either Acquiror are not and shall not be deemed to be
representations or warranties of Seller or its Affiliates.
Section 5.12 Private Offering. No form of general solicitation
or general advertising was used by Parent or its representatives in connection
with the offer or sale of the Profits Interest. Subject in part to the truth and
accuracy of each of Parent's representations and warranties set forth in Article
V hereof, no registration of the Profits Interest pursuant to the Securities Act
or any state securities or "blue sky" laws will be required by the offer, sale
or issuance of the Profits Interest. Parent agrees that neither it, nor anyone
acting on its behalf, shall offer to sell the Profits Interest or any other
securities of Parent so as to require the registration of the Profits Interest
pursuant to the provisions of the Securities Act or any state securities or
"blue sky" laws, unless such Profit Interests or other securities are so
registered.
Section 5.13 Qualifications for Certain Wastewater Permit
Transfers. To the Knowledge of the Acquirors, there is no reason (related to any
fact or circumstance concerning any of the Acquirors or their Affiliates) that
would cause the Acquirors to believe that any governmental authority would not
permit the transfer of any of the Wastewater Permits to the Acquirors in order
to satisfy the condition contained in Section 7.2(h).
ARTICLE VI
COVENANTS
Section 6.1 Conduct of the Business.
During the period from the date hereof until the Closing,
except as (a) otherwise provided in this Agreement, (b) set forth in Section
6.1(a) of the Seller Disclosure Letter, (c) required by applicable law or (d)
consented to in writing by Buyer, (which consent shall not be unreasonably
withheld or delayed) Seller (1) shall, and shall cause each of the other Seller
Participants to (except to the extent that Seller does not have the authority to
cause any Transferred Entity to do so), (x) operate the Business in the ordinary
course consistent with past practice in all material respects (for purposes of
this clause (x), operating the Business in the ordinary course consistent with
past practice with respect to sales and marketing activities shall mean
operating in a manner that, in the judgment of the operating management of the
Business, is in the best interests of the Business, as if it were a stand-alone
business), (y) maintain the Acquired Assets in the ordinary course consistent
with past practice in all material respects and will make the budgeted capital
expenditures set forth in Section 6.1(a)(1) of the Seller Disclosure Letter
within the time periods and in the amounts indicated thereon and (z) use
reasonable best efforts, generally consistent with existing practices, to keep
available the services of employees and preserve relationships with key
customers and suppliers in order to preserve, in all material respects, the
goodwill and ongoing operations of the Business at the Closing, and (2) shall
not, and shall cause the other Seller Participants not to (in each case only
with respect to or for the account of the Business and provided that the
following restrictions shall not apply to the Transferred Entities to the extent
that such entities may take such actions without the consent of Seller):
(i) sell, lease, transfer or dispose of any of the
Assets, except sales of Inventory in the ordinary course of business
consistent with past practice;
(ii) purchase (by merger, exchange, consolidation,
acquisition of stock or assets or otherwise) any Person or an amount of
properties or assets in excess of $10,000,000, except purchases of
Inventory in the ordinary course of business consistent with past
practice;
(iii) permit or allow any Asset to be subjected to
any Lien, other than Permitted Liens, Permitted Encumbrances and Liens
that will be released at or prior to the Closing;
(iv) except in the ordinary course of business
consistent with past practice, enter into, materially modify, extend or
terminate any Material Contract;
(v) except in the ordinary course of business
consistent with past practice, enter into, materially modify, extend or
terminate any Partially Assumed Contract requiring annual payments by
the Business in excess of $350,000;
(vi) except in the ordinary course of business
consistent with past practice, enter into, materially modify, extend or
terminate any lease for real property requiring annual payments in
excess of $350,000;
(vii) abandon, sell, license, transfer, convey,
assign, fail to maintain or otherwise dispose of any item of the
Transferred Intellectual Property, Equity Intellectual Property or the
Excluded Intellectual Property that is to be licensed to Buyer in
accordance with Section 6.13(b); provided that licensing of the
Excluded Intellectual Property is permitted to the extent that such
licensing would not preclude or impair the licensing of the Excluded
Intellectual Property to Buyer as contemplated by this Agreement; and,
provided further, that Seller shall be permitted to execute a perpetual
non-exclusive, royalty-free license between the Business and Seller's
beverage packaging business with respect to the Transferred
Intellectual Property that is used on PM1, and the terms of such
licenses shall be agreed between Buyer and Seller;
(viii) increase in any material manner the
compensation of any of the officers or other key employees of the
Business, except for such increases as are granted in the ordinary
course of business consistent with past practice (which shall include
normal periodic performance reviews and related compensation and
benefit increases) or in accordance with the terms of any collective
bargaining agreement or employment contract as currently in effect, or
enter into any agreement with Affected Employees containing severance
payments, change of control payments, stay bonus, or any other right to
additional compensation or change in duties or job description
triggered by this Agreement or the transactions contemplated hereby,
other than such agreements, the liability for which will be borne by
Seller, provided that Seller shall be permitted to enter into
confidentiality agreements with Affected Employees with respect to such
employees' access to co-mingled or sensitive data following Closing
pursuant to the Transition Services Agreement, the terms of which
agreements shall be no less protective than those in Sections 14 and 15
of the Transition Services Agreement;
(ix) adopt, grant, extend, materially increase the
rate of compensation under or materially modify any bonus, insurance,
pension or other employee benefit plan, payment or arrangement made to,
for or with any such officers or employees of the Business, except
increases required by any applicable law, rule or regulation or by the
terms of any collective bargaining agreement or employment contract as
currently in effect;
(x) make any change in any of its present accounting
methods and practices, except as required by law or changes in GAAP;
(xi) with respect to any Transferred Subsidiary,
incur long-term indebtedness in an aggregate amount in excess of
$2,500,000;
(xii) with respect to any Transferred Subsidiary,
make any loans, advances (other than advances in the ordinary course of
business consistent with past practice) or capital contributions to, or
investments in, any other Person in an aggregate amount in excess of
$2,500,000 (other than intercompany transactions with Seller or any
other Subsidiary of Seller in the ordinary course of business
consistent with past practice);
(xiii) with respect to any Transferred Subsidiary or
Transferred Entity, settle any material Tax liability or make any new,
or change any existing, material Tax election;
(xiv) (A) with respect to any Transferred Subsidiary,
issue, deliver or sell, or authorize the issuance, delivery or sale of,
any shares of any class of its capital stock, any securities
convertible into or exercisable or exchangeable for any such shares, or
other securities, or any rights, warrants or options to acquire same
and (B) with respect to any Transferred Entity, sell, or authorize the
sale of, any shares of any class of its capital stock or other equity
interests owned by Seller or any securities convertible into or
exercisable or exchangeable for any such shares or interests;
(xv) engage in any transactions with any Affiliate of
Seller in connection with the Business, except for any such
transactions in the ordinary course of business consistent with past
practice;
(xvi) settle any legal proceeding where the terms or
impact of such settlement has or would reasonably be likely to have a
Material Adverse Effect on the Business or would impose any material
non-monetary obligation on the Business after Closing;
(xvii) engage in any activity with the purpose or
intent of (A) accelerating the collection of accounts receivable or (B)
delaying the payment of the accounts payable;
(xviii) enter into commitments for new capital
expenditures that would require payment following the Closing in excess
of $5,000,000 in the aggregate, to the extent not otherwise
contemplated by Section 6.1(a)(1) of the Seller Disclosure Letter;
(xix) amend the organizational documents of any
Transferred Subsidiary; or
(xx) enter into any agreement to do any of the
foregoing.
Section 6.2 Access to Information.
(a) Between the date of this Agreement and the Closing Date,
Seller shall, and shall cause the Transferred Subsidiaries to, subject to
applicable law, and subject to any applicable restrictions as to confidentiality
(as to which Buyer does not provide indemnification, or the waiver of which
Seller shall not have obtained after using reasonable best efforts): (i) give
Buyer and its authorized representatives reasonable access to books, records,
offices and other facilities and properties and personnel of the Business as
Buyer may reasonably request; (ii) permit Buyer and its authorized
representatives to make such inspections thereof as Buyer may reasonably request
(except that Buyer and its representatives shall specifically be prohibited from
conducting any environmental testing at any property of the Business); (iii)
furnish Buyer and its authorized representatives with such financial and
operating data and other information with respect to the Business as Buyer may
from time to time reasonably request, including such data and benefits
information as is reasonably necessary for Buyer to comply with the provisions
of Section 6.8; and (iv) provide such information and support to Buyer and its
insurance company or broker as is reasonable and customarily required by
insurance companies to conduct analysis and investigation for the purpose of
underwriting insurance policies and binders substantially similar to the
Insurance Policies; provided, however, that any such access shall be provided
after reasonable notice during normal business hours under the supervision of
Seller's personnel and in such a manner as to not interfere unreasonably with
the operations of the Business or the other businesses of Seller or its
Affiliates; and provided, further, that neither Seller nor any of its Affiliates
shall be required to furnish or make available (A) such books, records or data
to the extent that they are subject to a legal privilege that, in the good faith
judgment of Seller, may be lost or impaired by virtue of such disclosure or (B)
any of its Income Tax Returns (including any combined or consolidated Income Tax
Return or any combined or consolidated Tax Returns that include any income or
other Tax items from assets or activities that are not exclusively related to
the Business). In an effort to prevent any interference or disruption caused by
such access, Seller may reasonably limit the number of individuals and the
frequency of visits to its facilities. Buyer shall coordinate all such access
with a Seller employee who will be identified to Buyer promptly after the
execution of this Agreement, and shall not directly or indirectly contact any
other employee of Seller or its Affiliates without the prior approval of the
designated employee. Prior to the Closing Date, Seller shall provide to Buyer
accurate and complete information necessary for Buyer to make actuarial
calculations and otherwise assess its liabilities under Section 6.8 of this
Agreement.
(b) Subject to applicable law and, subject to any applicable
restrictions as to confidentiality (as to which Buyer does not provide
indemnification, or the waiver of which Seller shall not have obtained after
using reasonable best efforts), any books and records relating to the Business
(which shall include the insurance information described in clause (iv) of
Section 6.2(a)) that are not delivered to Buyer hereunder shall be preserved by
Seller for a period no less than seven (7) years after the Closing Date
(including any legal holds placed on books and records relating to litigated
matters), and will be made available (for review and copying) to Buyer and its
authorized representatives following the Closing at Buyer's expense upon
reasonable notice during normal business hours, and in a manner as to not
unreasonably interfere with the Seller's business to the extent reasonably
required by Buyer, except (A) to the extent that such books and records are
subject to a legal privilege that, upon advice of Seller's counsel and after
taking all reasonable measures to preserve privilege, may be lost or impaired by
virtue of such disclosure or (B) for any of its Tax Returns. During such period,
Seller shall permit, to the extent permitted by law and upon request of Buyer,
Buyer and any of its agents, representatives, advisors or consultants reasonable
access to Employees of Seller related to the Business for information related to
periods up to and including the Closing. In an effort to prevent any
interference or disruption caused by such access, Seller may reasonably limit
the number of individuals and the frequency of visits to its facilities;
provided that Buyer must reasonably be able to accomplish its purposes within a
reasonable amount of time.
Section 6.3 Reasonable Best Efforts.
(a) Upon the terms and subject to the conditions of this
Agreement, each of the parties hereto shall use its reasonable best efforts to
take, or cause to be taken, all appropriate actions, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement and the Ancillary Agreements as promptly as practicable
including, without limitation, (i) the preparation and filing of all forms,
registrations and notices required to be filed to consummate the transactions
contemplated by this Agreement and the Ancillary Agreements and the taking of
such actions as are necessary to obtain any requisite approvals, consents,
orders, exemptions or waivers by any third party or Governmental Entity,
including, without limiting the generality of the foregoing, the preparation and
filing of the applications under the Federal Power Act and the regulations of
FERC thereunder jointly seeking FERC approval of the transfer of each of the
FERC Licenses from Seller to Buyer and (ii) using their reasonable best efforts
to cause the satisfaction of all conditions to Closing. Each party shall
promptly consult with the other with respect to, provide any necessary
information with respect to, and provide copies of all filings made by such
party with any Governmental Entity or any other information supplied by such
party to a Governmental Entity in connection with this Agreement and the
Ancillary Agreements and the transactions contemplated hereby and thereby.
(b) Each party hereto shall promptly inform the other of any
communication from any Governmental Entity regarding any of the transactions
contemplated by this Agreement and the Ancillary Agreements. If any party or
Affiliate thereof receives a request for additional information or documentary
material from any such Governmental Entity with respect to the transactions
contemplated by this Agreement, then such party shall use its reasonable best
efforts to make, or cause to be made, as soon as practicable and after
consultation with the other party, an appropriate response in compliance with
such request.
Section 6.4 Antitrust Consents and Approvals.
(a) Without limiting the generality of the undertakings
pursuant to Section 6.3, each of Seller and the Acquirors shall use their
reasonable best efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary under the applicable U.S. and foreign
antitrust or competition laws and regulations ("Competition Laws") to consummate
and make effective the transactions contemplated by this Agreement and the
Ancillary Agreements, including, without limitation, furnishing all information
required by applicable law in connection with approvals of or filings with any
Governmental Entities, including filing, or causing to be filed, as promptly as
practicable, any required notification and report forms (x) under the HSR Act
with the Federal Trade Commission and the Antitrust Division of the United
States Department of Justice or (y) under other applicable non-U.S. laws with
the applicable non-U.S. Governmental Antitrust Entities.
(b) If any objections are asserted with respect to the
transactions contemplated by this Agreement or the Ancillary Agreements under
any Competition Law or if any suit or proceeding is instituted or threatened by
any Governmental Entity or any private party challenging any of the transactions
contemplated by this Agreement or the Ancillary Agreements as violative of any
Competition Law, each of Seller, Parent and Buyer shall use its reasonable best
efforts to promptly resolve such objections; provided, however, that
notwithstanding anything to the contrary in this Agreement, none of Seller or
any of its Affiliates shall have any obligation to hold separate or divest any
property or assets of Seller or any of its Affiliates, or to defend against any
lawsuit, action or proceeding, judicial or administrative, challenging this
Agreement or any Ancillary Agreement or the transactions contemplated hereby or
thereby. In furtherance of the foregoing, the Acquirors shall, and shall cause
their Affiliates to, take all action, including agreeing to hold separate or to
divest any of the businesses or properties or assets of the Acquirors or any of
their Affiliates (including any Acquired Assets and the Transferred Equity
Interests) and to terminate any existing relationships and contractual rights
and obligations, as may be required (i) by the applicable Governmental Entity in
order to resolve such objections as such Governmental Entity may have to such
transactions under any Competition Law or (ii) by any domestic or foreign court
or other tribunal, in any action or proceeding brought by a private party or
Governmental Entity challenging such transactions as violative of any
Competition Law, in order to avoid the entry of, or to effect the dissolution,
vacating, lifting, altering or reversal of, any order that has the effect of
restricting, preventing or prohibiting the consummation of the transactions
contemplated by this Agreement or the Ancillary Agreements. In addition, the
Acquirors shall, and shall cause their Affiliates to, vigorously defend any
action or proceeding brought by a private party or Governmental Entity
challenging the transactions contemplated hereby or by the Ancillary Agreements
as violative of any Competition Law, in order to avoid the entry of, or to
effect the dissolution, vacating, lifting, altering or reversal of, any order
that has the effect of restricting, preventing or prohibiting the consummation
of the transactions contemplated by this Agreement or the Ancillary Agreements
(including by pursuing any available appeal process).
Section 6.5 Further Assurances.
(a) Subject to Sections 6.5(b) and 6.5(c), on and after the
Closing Date, each of Seller, Buyer and Parent shall cooperate and use their
respective reasonable best efforts to take or cause to be taken all appropriate
actions and do, or cause to be done, all things necessary or appropriate to
consummate and make effective the transactions contemplated hereby, including
the execution of any additional documents or instruments of any kind, the
obtaining of consents which may be reasonably necessary or appropriate to carry
out any of the provisions hereof (including the third party consents pursuant to
the Contracts set forth on Section 4.4 of the Seller Disclosure Letter) and the
taking of all such other actions as such party may reasonably be requested to
take by the other party hereto from time to time, consistent with the terms of
this Agreement and the Ancillary Agreements, in order to effectuate the
provisions and purposes of this Agreement and the Ancillary Agreements and the
transactions contemplated hereby and thereby.
(b) Notwithstanding anything to the contrary contained herein,
nothing in this Agreement shall be deemed to require the conveyance, assignment
or transfer of any Asset that by its terms or by operation of applicable law
cannot be conveyed, assigned, transferred or assumed. To the extent a party
hereto has been unable to obtain any governmental or any third party consents or
approvals required under applicable law for the transfer of any Asset and to the
extent not otherwise prohibited by the terms of any Assumed Contract or
Partially Assumed Contract, Seller and its Affiliates shall continue to be bound
by the terms of such applicable Assumed Contract or Partially Assumed Contract,
as the case may be, and Buyer shall pay, perform and discharge fully all of the
obligations of Seller and its Affiliates thereunder (but as to any Partially
Assumed Contract, only to the extent provided in the Partial Contract
Assignment) from and after the Closing to the extent that the corresponding
benefit is received. Seller shall, without consideration therefor, pay, assign
and remit to Buyer promptly all monies, rights and other consideration received
in respect of such performance. To the extent permitted by law, Seller and its
Affiliates shall exercise or exploit their rights in respect of such Assets only
as reasonably directed by Buyer and at Buyer's expense. Each party hereto shall
continue to use reasonable best efforts to obtain at the earliest practicable
date all unobtained consents or approvals required to be obtained by it in
connection with the transfer of the Assets or performance of any Ancillary
Agreement; provided, that, except as set forth in Section 6.13, neither Seller,
Buyer nor any of their Affiliates shall be required to pay any consideration,
other than a de minimis amount, in connection with such consents or approvals
unless Buyer agrees to pay such amounts. If and when any such consents or
approvals shall be obtained, then Seller and its Affiliates shall promptly (i)
assign their rights and obligations thereunder to Buyer without payment of
consideration and Buyer shall, without the payment of any consideration
therefor, assume such rights and obligations or (ii) perform under the Ancillary
Agreement, as applicable. Each party shall execute such good and sufficient
instruments as may be necessary to evidence such assignment and assumption.
(c) Notwithstanding anything to the contrary contained herein,
Seller and Buyer shall cooperate with each other and use reasonable best efforts
to obtain any consents from vendors that are necessary in order to provide the
services contemplated by the Transition Services Agreement. In the event that
Seller is unable to obtain any such consent, the parties will work together to
agree upon a commercially reasonable alternative arrangement. Any costs and
expenses incurred by Seller (i) in connection with obtaining and implementing
such consents and (ii) in connection with the implementation of any such
commercially reasonable alternative arrangement shall be borne 50% by Buyer and
50% by Seller, provided that Buyer shall continue to be responsible for paying
the ongoing fees, if any, that are specified in the Transition Services
Agreement for the associated services. Except as set forth in this Section
6.5(c), all costs and expenses associated with services provided pursuant to the
Transition Services Agreement shall be borne by the parties in accordance with
the provisions of the Transition Services Agreement.
(d) Notwithstanding anything to the contrary contained herein,
nothing in this Agreement shall be deemed to require the conveyance, assignment
or transfer of any Asset that would result in the loss of the attorney-client or
work product privilege by Seller with respect to any Retained Asset or Excluded
Liability. To the extent that any such privileged Assets are inadvertently
transferred to Buyer, Buyer and Seller hereby agree that such transfer will not
result in the loss of Seller's privilege, and each party shall take all
reasonable actions necessary to prevent the loss of Seller's privilege.
(e) Should Seller, in its reasonable discretion, determine
after the Closing that books, records or other materials constituting Acquired
Assets are still in the possession of Seller or any of its Affiliates, Seller
shall or shall cause such Affiliates to promptly deliver them to Buyer at no
cost to Buyer. Should Seller or Buyer, in its reasonable discretion, determine
after the Closing that books, records or other documents constituting Excluded
Assets were delivered to Buyer, Buyer shall promptly return them to Seller at no
cost to Seller.
Section 6.6 Communications with Customers and Suppliers. Prior
to the Closing, the Acquirors shall not, and shall cause their Affiliates and
representatives not to, contact, or engage in any discussions or otherwise
communicate with, any of the Business' customers, suppliers and others with whom
it has material commercial dealings without obtaining the prior written consent
of Seller (which will not be unreasonably withheld but, if given, may be
conditioned on Seller having the right to participate in any meetings or
discussion with any such customers, suppliers or others).
Section 6.7 Publicity. Neither Seller nor the Acquirors shall
issue any press release or otherwise make any public announcement with respect
to this Agreement and the transactions contemplated hereby without the prior
consent of the other (which consent shall not be unreasonably withheld or
delayed), except as may be required by applicable law or stock exchange
regulation. Notwithstanding anything in this Section 6.7 to the contrary, Seller
and the Acquirors shall, to the extent practicable, consult with each other
before issuing, and provide the other the opportunity to review and comment
upon, any such press release or other public statements with respect to this
Agreement and the transactions contemplated hereby, whether or not required by
law or stock exchange requirements.
Section 6.8 Employees and Employee Benefits.
(a) Employment. Prior to the Closing, Buyer shall offer, or
cause a Subsidiary of Buyer to offer, employment to each person who is a full
time or part time employee of the Seller employed in the Business immediately
prior to the Closing who is listed in Section 6.8(a)(i) of the Seller Disclosure
Letter, including, without limitation, those certain employees of the Seller
whose principal place of business is Memphis, Tennessee, whose primary function
is to support the Business and who are listed on Section 6.8(a)(i) of the Seller
Disclosure Letter in the categories marked "Business Staff Group" or "HR" and
identified as being located in the Memphis office (the "Headquarters Business
Employees") and those certain other employees of the Seller who provide services
in support of the Business, who are listed in the categories marked "Business
Staff Group," "Fiber Procurement/Woodyards," "IT Employees," and
"Communications" of Section 6.8(a)(i) of the Seller Disclosure Letter and are
not identified as being located in the Memphis office (the "Additional
Administrative Employees"). Section 6.8(a)(i) of the Seller Disclosure Letter
lists the date of hire, position, base compensation, bonus opportunity, hourly
or salaried status of each such employee, and whether such employee is a
Represented Employee or a Non-Represented Employee (as defined below) which
shall be updated as of the Closing Date. Section 6.8(a)(ii) of the Seller
Disclosure Letter separately identifies the number of Inactive Employees (as set
forth below) by location and position and shall set forth the general reason for
the individual's inactive status (including, without limitation, short term
disability, an approved leave of absence or layoff) and the expected dates of
return to work (where available). Those employees who accept such offer shall be
referred to herein as "Affected Employees". Each such offer to any employee
listed in Section 6.8(a)(i) of the Seller Disclosure Letter whose terms and
conditions of employment are not governed by a collective bargaining agreement
shall (i) be on terms and conditions substantially comparable in the aggregate
(including with respect to position, duties, responsibilities, compensation and
incentives) to those provided to such employee immediately prior to the Closing;
(ii) other than with respect to the Headquarters Business Employees, provide for
such employee to continue working at the same work location at which such
employee customarily provided services prior to the Closing, except that an
Additional Administrative Employee may be required to work at a new work
location, provided that any increase in the distance from such employee's
residence to the new work location over the distance from such employee's
residence to the employee's pre-Closing work location is less than fifty (50)
miles; and (iii) provide a base rate of pay or salary not less than the rate in
effect for such Affected Employee immediately prior to the Closing Date. Each
such employee whose terms and conditions of employment are not governed by a
collective bargaining agreement who accepts such offer shall be referred to
herein as a "Non-Represented Employee". Notwithstanding the foregoing, any offer
of employment to an Affected Employee who is on short-term disability leave or
any approved leave of absence (each an "Inactive Employee") shall be conditioned
on such Inactive Employee being ready and able to return to work within six
months following the Closing Date.
(b) Substantially Comparable Benefits; Non-Represented
Employees. With respect to any Non-Represented Employee, for a period of one
year following Closing, Buyer shall provide, or cause to be provided, (i)
employee benefits (other than equity compensation) to each Non-Represented
Employee that are substantially comparable in the aggregate to those benefits
provided to or maintained for such Non-Represented Employee prior to the Closing
(other than benefits under a defined benefit plan) and (ii) a defined benefit
plan that is comparable to the defined benefit plan provided to or maintained
for such Non-Represented Employee prior to the Closing or, if Buyer does not
provide such a comparable defined benefit plan, Buyer must replace such defined
benefit plan with a defined contribution plan or include a defined contribution
plan feature in a plan provided under (i) above that requires an annual Buyer
contribution of at least 2.75% of the aggregate base pay of all such
Non-Represented Employees. If the Buyer chooses to satisfy its obligations under
Section 6.8(b)(ii) with a comparable defined benefit plan, a defined
contribution plan or defined contribution plan feature, such plan or such
feature, as the case may be, shall not be taken into account in determining
whether Buyer has satisfied its obligations under Section 6.8(b)(i).
Notwithstanding the foregoing provisions of this Section 6.8, the Buyer's
obligation to provide substantially comparable benefits in the aggregate
pursuant to Section 6.8(b)(i) shall take into account any decrease to
Non-Represented Employee benefits announced by the Seller or its Affiliates on
or prior to the Closing.
(c) Assumption of Collective Bargaining Agreements;
Represented Employees. With respect to any Affected Employee whose terms and
conditions of employment are governed by any of the collective bargaining
agreements listed on Section 6.8(c) of the Seller Disclosure Letter (each a
"Represented Employee"), Buyer agrees to assume the collective bargaining
agreements listed on Section 6.8(c) of the Seller Disclosure Letter as of the
Closing and to continue all terms and conditions of employment under such
collective bargaining agreements through the expiration, modification or
termination of such agreements in conformity with applicable law. For purposes
of this Section 6.8(c) only, the United Steelworkers of America will have
third-party beneficiary rights with respect to the obligations and covenants of
Buyer under this Section 6.8(c) with respect to such collective bargaining
agreements to which the United Steelworkers of America is a party. Except as set
forth in the immediately preceding sentence, no employee or collective
bargaining representative thereof shall have any third party beneficiary rights
with respect to this Agreement.
(d) Service Credit, Deductibles, and Preexisting Conditions.
Buyer agrees that, for purposes of all employee benefit plans (including, but
not limited to, all "employee benefit plans" within the meaning of Section 3(3)
of ERISA, and all policies, arrangements and employee fringe benefit programs,
including vacation policies) of Buyer and its Subsidiaries (such plans,
programs, policies and arrangements, the "Buyer Plans") in which Affected
Employees may participate following the Closing, full credit will be given to
the Affected Employees for service previously credited with Seller prior to the
Closing; provided, however, that such crediting of service shall not result in a
duplication of benefits; and provided, further, that such crediting of service
need not be given for benefit accrual purposes under any Buyer Plan that is a
"defined benefit plan" (as defined in Section 3(35) of ERISA). The Buyer shall
use reasonable best efforts to provide that Affected Employees shall also be
given full credit for any deductible or co-payment amounts paid in respect of
the plan year in which the Closing occurs, to the extent that, following the
Closing, they participate in any corresponding Buyer Plan for which deductibles
or co-payments are required. Buyer shall also cause each Buyer Plan to waive any
pre-existing condition exclusion or restriction, any waiting period limitation,
or any evidence of insurability requirements for the Affected Employees to the
extent such exclusions, restrictions, limitations or requirements had been
waived or satisfied under the terms of any corresponding Seller Plan immediately
prior to the Closing.
(e) Savings Plan. As soon as practicable following the Closing
Date:
(i) Buyer shall provide Seller with such documents
and other information as Seller shall reasonably request to assure
itself that the savings plan that Buyer will establish prior to (or as
soon as reasonably practicable following) Closing (the "Buyer Savings
Plan") provides for the receipt of eligible rollover distributions (as
such term is defined under Section 402 of the Code) from the Affected
Employees;
(ii) Buyer shall provide Seller with such documents
and other information as Seller shall reasonably request to assure
itself that the Buyer Savings Plan and the trust established in
connection therewith are qualified and tax-exempt under Sections 401(a)
and 501(a) of the Code; and
(iii) Seller shall provide Buyer with such documents
as Buyer shall reasonably request to assure itself that the accounts of
the Affected Employees under the International Paper Salaried Savings
Plan (the "SSP") and the International Paper Hourly Savings Plan (the
"HSP") (each, a "Seller Savings Plan"), if distributed to such Affected
Employees, would be eligible rollover distributions.
Seller shall 100% vest or cause to be 100% vested, as of the Closing Date, the
accounts under the SSP and HSP for each Affected Employee. Each Affected
Employee who is a participant in a Seller Savings Plan shall be given the
opportunity to "roll over" such account balance by way of an eligible rollover
distribution to the Buyer Savings Plan, subject to and in accordance with the
provisions of such Plan and applicable law. Notwithstanding anything in this
Agreement to the contrary, each Affected Employee who is eligible to participate
in a Seller Savings Plan will become eligible to participate in the Buyer
Savings Plan as soon as reasonably practicable after the Closing Date.
(f) Retirement Plan. Neither Buyer nor any of its Affiliates
shall become sponsoring employers of the Retirement plan of International Paper
Company (the "Seller Retirement Plan"). Affected Employees who are participants
in the Seller Retirement Plan shall be entitled to the payment of benefits under
the Seller Retirement Plan solely in accordance with its terms.
(g) Subsequent Terminations or Lay-offs; Severance Pay. In the
event that any Non-Represented Employee who participates in Seller's Salaried
Employee Severance Plan (the "SESP") immediately prior to the Closing is
discharged by Buyer or any Subsidiary of Buyer within twelve (12) months after
the Closing Date (other than for "cause" or because of such Non-Represented
Employee's voluntary termination or retirement), then Buyer shall treat such
Non-Represented Employee, and shall be responsible for severance and six (6)
months medical and dental continuation coverage at no cost to such
Non-Represented Employee (but not outplacement services and the continued
Employee Assistance Program), in accordance with provisions of the SESP and the
SESP Benefits Exhibit, as referenced in Section 6.8(g) of the Seller Disclosure
Letter. Buyer will maintain such severance and benefits for at least twelve (12)
months after the Closing Date. Buyer shall be responsible and assume all
liability for all notices or payments due to any Affected Employee, and all
notices, payments or assessments due to any Government Entity, pursuant to any
applicable federal, state or local law, common law, statute, rule or regulation
with respect to the employment, discharge or layoff of employees by the Business
after the Closing, including but not limited to the WARN Act, and any rules or
regulations as have been issued in connection with the foregoing. For a period
of ninety (90) days following the Closing, Buyer shall not cause or permit any
Affected Employee to suffer an "employment loss" (as defined under the WARN Act)
if such employment loss would trigger the requirements of, or any liability
under, the WARN Act when aggregated with any "employment losses" experienced by
employees of the Business on or prior to the Closing. On or prior to the
Closing, Seller shall provide Buyer with a written list of all employees of the
Business by facility and operating unit who have experienced an "employment
loss" in the ninety (90) days on or prior to the Closing.
(h) Vacation. As of the Closing, Buyer will assume all
obligations of Seller to Affected Employees for any accrued vacation entitlement
and vacation pay entitlement. Subject to applicable law, Seller will have no
obligation to make any payment to Affected Employees after the Closing with
respect to any such accrued vacation entitlement and vacation pay entitlement.
Buyer will give the Affected Employees full credit for their respective service
with Seller prior to the Closing Date for purposes of entitlement and accrual of
vacation and vacation pay from and after the Closing Date (to the extent Buyer
gives credit to its similarly situated employees for such purposes).
(i) Pre-Closing Claims. Except as otherwise provided in this
Section 6.8(i) with respect to sickness and disability claims, Seller shall
remain responsible for all claims under the applicable Plans for health,
accident, injury, sickness, and disability benefits that are deemed incurred
prior to the Closing Date by Affected Employees. For all purposes under such
Plans, such employees shall be considered to have terminated employment with
Seller as of the Closing Date. For purposes of this Agreement: (i) a claim for
health benefits (including, without limitation, claims for medical, prescription
drug and dental expenses) shall be deemed to have been incurred on the date on
which the related medical service or material was rendered to or received by the
Affected Employee claiming any such benefits, (ii) a claim for injury, sickness
or disability benefits based on an injury or illness occurring on or prior to
the Closing Date shall be deemed to have been incurred prior to the Closing Date
if, but only if, a claim relating to any such injury is made within two (2)
years after the Closing Date, and (iii) in the case of any claim for benefits
other than health benefits and sickness and disability benefits (e.g., life
insurance benefits), a claim will be deemed to have been incurred upon the
occurrence of the event giving rise thereto. As of the Closing, any Affected
Employee who is receiving benefits under Seller's short-term disability program
shall be deemed to be an employee of Seller until such time as such employee is
no longer eligible for Seller's short-term disability program. If at such time
such Affected Employee will be returning to work, such employee shall be
employed by Buyer in accordance with the terms of Sections 6.8(a) or 6.8(c)
hereof, as applicable. If at such time such employee will be eligible for
long-term disability benefits or disability retirement, such employee shall
receive such benefits under Seller's long-term disability program or pension
plan.
(j) Disabled Employees. Seller shall remain responsible for
(i) all benefits payable to employees of the Business who, as of the close of
business on the day immediately preceding the Closing Date, were determined to
be totally and permanently disabled in accordance with the applicable provisions
of Seller's health, accident, sickness, salary continuation, or short-term or
long-term disability benefits plans or programs, and (ii) all workers
compensation claims based on injuries occurring on or prior to the Closing Date;
provided, however, that a workers compensation claim relating to any such injury
is made within two (2) years after the Closing Date.
(k) Retiree Life and Health. Seller shall provide retiree life
insurance and health benefits as required under the provisions of any applicable
Plan to any Affected Employee who was eligible for such benefits (i.e., who met
the applicable age and service requirements but has not yet retired) as of the
close of business on the day immediately preceding the Closing Date. For the
avoidance of doubt, nothing in this Agreement shall obligate Buyer to provide
retiree medical insurance, retiree life insurance or other retiree welfare
benefits to any Non-Represented Employee.
(l) No Right of Employment. Nothing contained herein, express
or implied, is intended to confer upon any Affected Employee any right to
continued employment for any period by reason of this Agreement. Nothing
contained herein is intended to confer upon any Affected Employee any particular
term or condition of employment other than with respect to the particular
employee benefit plans or severance plans, policies or arrangements expressly
referred to in this Agreement.
Section 6.9 Tax Matters.
(a) Return Filings, Refunds and Credits.
(i) Seller shall prepare, or cause to be prepared,
and file, or cause to be filed, on a timely basis, all Tax Returns with
respect to the Business (including any Tax Returns of the Transferred
Entities or the Transferred Subsidiaries for which Seller currently has
filing responsibility) for taxable periods ending on or prior to the
Closing Date, and pay or cause to be paid the amounts shown as due and
payable on such Tax Returns.
(ii) Buyer shall prepare, or cause to be prepared,
file, or cause to be filed, on a timely basis, all other Tax Returns
with respect to the Business and pay or cause to be paid the amounts
shown as due and payable on such Tax Returns. Except as otherwise
required by Applicable Law, the computation of Taxes and the reporting
of items for a Straddle 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. Before filing any Tax Return with respect
to any Straddle Period, Buyer shall provide Seller with a copy of such
Tax Return at least ten (10) days prior to the earlier of (x) the last
date for timely filing such Tax Return (giving effect to any valid
extensions thereof) and (y) the date of actual filing of such Tax
Return, accompanied by a statement calculating in reasonable detail
Seller's indemnification obligation pursuant to Section 6.9(c)(i).
Notwithstanding anything in this Agreement to the contrary, if Buyer
fails to provide Seller with either a copy of such Tax Return or such
statement within the time frame described above, Seller's
indemnification obligation under Section 6.9(c)(i) shall be reduced to
the extent of any liability incurred as a result of the failure of
Buyer to timely provide Seller a copy of such Tax Return or such
statement. If for any reason Seller does not agree with Buyer's
calculation of its indemnification obligation, Seller shall notify
Buyer of its disagreement within five (5) days of receiving a copy of
the Tax Return and Buyer's calculation, and such dispute shall be
resolved pursuant to the Tax Dispute Resolution Mechanism. If Seller
agrees with Buyer's calculation of its indemnification obligation,
Seller shall pay to Buyer the amount of Seller's indemnification
obligation at least one business day prior to the last date for timely
filing such Tax Return (including any valid extensions thereof).
(iii) Seller and Buyer 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. Buyer and
Seller recognize that Seller and its affiliates will need access, from
time to time, after the Closing Date, to certain accounting and Tax
records and information relating to the Business to the extent such
records and information pertain to events occurring prior to the
Closing Date; therefore, Buyer agrees that (A) from and after the
Closing Date, Buyer shall, or shall cause the Transferred Subsidiaries
and their successors to (1) retain and maintain such records until the
earlier of (x) the expiration of the statute of limitations for the Tax
periods to which the Tax Returns and other documents relate to or (y)
such time as the other party agrees in writing that such retention and
maintenance is no longer necessary and (2) allow Seller and its agents
and representatives (and agents and representatives of any of its
affiliates), at Seller's expense and during regular business hours, to
inspect, review and make copies of such records as Seller may
reasonably deem necessary or appropriate from time to time.
(iv) Any refunds or credits of Taxes of the Business
received by Buyer or the Transferred Subsidiaries plus any interest
received with respect thereto from the applicable taxing authority for
any Pre-Closing Tax Period (including, without limitation, refunds or
credits arising by reason of amended Tax Returns filed after the
Closing Date) shall be for the account of Seller other than (a) any
refunds or credits that were included in the calculation of the Final
Net Working Capital Amount, (b) any refund or credit of property tax
which is directly attributable to a capital expenditure or similar
action of Buyer, the Transferred Subsidiaries, the Transferred Entities
or any Affiliate taken after the Closing and (c) any refund or credit
that arises as a result of a carryback of a loss or other Tax benefit
from a Post-Closing Tax Period, which shall be for the account of
Buyer, provided, however, that Buyer shall indemnify Seller for any
loss or reduction in any credit or other Tax attribute for any
Pre-Closing Tax Period as a result of the carryback of such loss or
other Tax benefit. All other refunds or credits of Taxes of the
Business plus any interest received with respect thereto from the
applicable taxing authority shall be for the account of Buyer. If one
party receives a refund or credit to which the other party is entitled
pursuant to this Section 6.9(a)(iv), it shall pay to the other party
within 10 days of receipt thereof. To the extent a refund or credit
relates to a Tax that is prorated pursuant to Section 6.9(b), such
refund or credit shall be prorated using the principles set forth in
Section 6.9(b).
(v) If an audit adjustment, amended Tax Return or
amended assessment (an "Adjustment") after the date hereof shall both
increase a Tax liability which is allocated to Seller under this
Section 6.9 (or reduce losses or credits otherwise available to Seller)
for a period ending on or before the Closing Date (treating such date
as the end of a short taxable year for this purpose) and decrease a Tax
liability of (or increase losses or credits otherwise available to)
Buyer or any of the Transferred Subsidiaries for a period ending after
the Closing Date (treating such date as the end of a short taxable year
for this purpose), then Buyer shall promptly pay to Seller an amount
equal to the present value amount of such refund, reduction, credit or
adjustment, which present value amount shall be determined by using a
discount rate equal to the mid-term applicable federal rate in effect
on the date on which the Adjustment is made. Similarly, if an
Adjustment shall both decrease a Tax liability which is allocated to
Seller under this Section 6.9 (or increase losses or credits of Seller)
for a period ending on or before the Closing Date and increase the Tax
liability of Buyer, the Company or any of the Transferred Subsidiaries
(or reduce losses or credits otherwise available to any such
corporation after taking into account this Agreement) for a period
ending after the Closing Date (treating such date as the end of a short
taxable year for this purpose), then Seller shall promptly pay to Buyer
an amount equal to the present value amount of such refund, reduction,
credit or adjustment, which present value amount shall be determined by
using a discount rate equal to the mid-term applicable federal rate in
effect on the date on which the Adjustment is made. This Section
6.9(a)(vi) shall be effective with respect to increases and decreases
in Tax liability as long as permitted under applicable law.
(vi) At Seller's request and expense, Buyer shall, or
shall cause the Transferred Subsidiaries to file for and obtain any
refunds or credits to which Seller is entitled under this Section
6.9(a)(vi). In connection therewith Buyer will, or will cause the
Transferred Subsidiaries to forward to Seller any such refund within
ten (10) days after the refund is received (or reimburse Seller for any
such credit within ten (10) days after the relevant Tax Return is filed
in which the credit is actually applied against the Transferred
Subsidiaries, any of their affiliates or any of their successors'
liability for Taxes.
(b) Proration. Buyer and Seller agree that personal property,
real estate, occupancy, intangibles, and any other similar ad valorem Taxes,
assessments and other charges, if any, on or with respect to the ownership, use
or business and operation of the Acquired Assets will be prorated as of the
Closing Date, with Seller liable to the extent such items relate to any time
period through and including the Closing Date, and Buyer liable to the extent
such items relate to periods subsequent to the Closing Date. Such apportionments
shall be made as of the Closing Date and in the case of real property, personal
property, intangibles and other similar ad valorem Taxes, shall be based upon
the fiscal year for which the same are assessed and shall be apportioned in
accordance with the principles of Section 164(d) of the Code. In connection with
such proration, in the event that actual amounts are not available at the
Closing Date, the proration shall be based upon the actual amount of such Taxes
or fees for the preceding year (or appropriate period) for which such actual
Taxes or fees are available and such Taxes or fees shall be reprorated upon
request of either Seller or Buyer made within sixty (60) days of the date that
the actual amounts become available. Seller shall not be responsible for any
increased assessments for Post-Closing Tax Periods resulting from the
transactions contemplated hereby. Seller and Buyer agree to furnish each other
with such documents and other records as may be reasonably requested in order to
confirm all adjustment and proration calculations made pursuant to this Section
6.9(b).
(c) Tax Indemnification.
(i) Notwithstanding anything in this Agreement to the
contrary, Seller shall indemnify Buyer and hold it harmless from and
against (A) any liability for Taxes (other than Buyer's share of
Transfer Taxes pursuant to Section 6.9(c)(iv)) with respect to the
Acquired Assets, Taxes of the Transferred Subsidiaries and any Taxes of
Seller imposed with respect to the Transferred Entities, in each case
for all Pre-Closing Tax Periods, (B) all Tax liability resulting by
reason of the several liability of the Transferred Subsidiaries
pursuant to Treasury Regulations Section 1.1502-6 or any similar
provision of foreign state or local law or by reason of the Transferred
Subsidiaries ever having been a member of any consolidated, combined or
unitary group on or prior to the Closing Date, (C) all Taxes payable as
a result of a breach of any representation or warranty contained in
Section 4.10 and (D) any liability for its share of Transfer Taxes
pursuant to Section 6.9(c)(iv).
(ii) The Acquirors shall indemnify Seller and hold it
harmless from and against (A) any liability for Taxes with respect to
the Acquired Assets, the Transferred Entities and the Transferred
Subsidiaries for all Post-Closing Tax Periods, (B) any liability for
its share of Transfer Taxes pursuant to Section 6.9(c)(iv) and (C) any
liability for Taxes directly attributable to a breach by Buyer of its
obligations under the Agreement.
(iii) In the case of a Straddle Period, Buyer and
Seller shall, 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 the Business 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 ad valorem
taxes shall be allocated in accordance with the principles of Section
164(d) of the Code.
(iv) The parties hereto agree that, notwithstanding
any provision to the contrary herein or in the Ancillary Agreements,
Seller shall bear all Transfer Taxes up to $5,000,000 in the aggregate
and all Transfer Taxes in excess of $5,000,000 shall be borne 50% by
Buyer and 50% by Seller. Notwithstanding the foregoing, if and to the
extent that the Transfer Taxes actually incurred exceed the Transfer
Taxes that would have been incurred if the Assets were sold to Buyer
entirely for cash, Seller shall bear the amount of such excess Transfer
Taxes. Seller shall prepare and timely file all Tax Returns relating to
such Taxes except for such returns that are legally required to be
filed by Buyer, in which case Buyer will prepare and file such returns.
(v) Notwithstanding anything in this Agreement to the
contrary, Seller shall have no liability under this Agreement in
respect of Taxes of the Business which are attributable to any action
of the Transferred Subsidiaries and Transferred Entities, the Acquirors
or any of their respective affiliates with respect to any Straddle
Period that occurs after the Closing.
(vi) The parties hereto agree that any payments made
pursuant to the indemnification provisions in this Section 6.9 or in
Article IX are intended to be deemed to be an adjustment to the Cash
Purchase Price and shall take no position to the contrary for any Tax
purpose; provided however, that to the extent that any taxing authority
successfully characterizes, in a Final Determination, that any
indemnification payments shall be deemed to be income to the party
receiving such payments, then the party making such payments shall pay
an additional amount to the party receiving such payments to cover
appropriate Taxes thereon, and provided, further, that Seller in no
event be liable to indemnify or reimburse for any adjustment to the
basis of any asset as a result of an adjustment to the Cash Purchase
Price under this Section 6.9.
(d) Procedures Relating to Tax Indemnification.
(i) If a Tax Claim is made, which, if successful,
could result in an indemnity payment pursuant to this Section 6.9, the
Tax Indemnified Party shall notify the Tax Indemnifying Party in
writing of the Tax Claim within twenty (20) Business Days of receipt of
such Tax Claim. If notice of a Tax Claim is not given to the Tax
Indemnifying Party within such twenty (20) Business Days 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 is prejudiced as a result thereof.
(ii) With respect to any Tax Claim which could result
in an indemnity payment to Buyer pursuant to Section 6.9(c)(i), Seller
shall control all proceedings taken in connection with such Tax Claim
(including, without limitation, selection of counsel) and, without
limiting the foregoing, may in its sole discretion and at its sole
expense pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with any taxing authority with
respect thereto; provided that Seller shall not settle any Tax Claim
without Buyer's prior written consent, not to be unreasonably withheld,
and Buyer shall have the right, at its sole expense, to participate in
any appeals, proceedings, hearings or conferences with any taxing
authority. In no case shall the Transferred Subsidiaries, Buyer or any
of their respective affiliates or successors, settle or otherwise
compromise any Tax Claim referred to in the preceding sentence without
Seller's prior written consent, not to be unreasonably withheld. Buyer,
the Transferred Subsidiaries and their respective affiliates and
successors shall cooperate with Seller at Seller's expense in
contesting such Tax Claim, which cooperation shall include, without
limitation, the retention and (upon Seller's request) the provision to
Seller of records and information which are relevant to such Tax Claim
and making employees available during normal business hours to provide
additional information or explanation of any material provided
hereunder or to testify at proceedings relating to such Tax Claim.
Notwithstanding anything in this Section 6.9(d)(ii) to the contrary,
with respect to any Tax Claim relating to a United States federal
income consolidated Tax Return of the affiliated group of corporations
that includes the Transferred Subsidiaries and Seller, Seller shall
have the sole right to control and settle all appeals, proceedings,
hearings and conferences with the Internal Revenue Service with respect
thereto and may, in its sole discretion, either pay the Tax Claim and
xxx for a refund where applicable law permits such refund suits or
contest such Tax Claim in any permissible manner.
(e) Tax Dispute Resolution Mechanism. Wherever in this Section
6.9 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 the Settlement Accountant for resolution, which
resolution shall be final, conclusive and binding on the parties.
Notwithstanding anything in this Agreement to the contrary, the fees and
expenses of the Settlement Accountant in resolving a dispute shall be paid by
Buyer and Seller in proportion to each party's respective liability for Taxes as
determined by the Settlement Accountant. The award of the Settlement Accountant
shall be rendered as expeditiously as possible, and if practicable, no later
than sixty (60) days after the submission of the tax dispute to the Settlement
Accountant, unless the parties agree to extend such time period or the
Settlement Accountant, at his sole discretion, extends such time period for good
cause shown. The determination of the Settlement Accountant shall be final and
binding on the parties and may be entered and enforced in any court having
jurisdiction.
(f) Elections. Except as otherwise specifically provided in
this Agreement, Buyer shall not, and shall cause the Transferred 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 Seller or any of its
affiliates in any taxable period or cause Seller to have an indemnification
obligation pursuant to Section 6.9(c)(i).
(g) Exclusivity. This Section 6.9 shall be the sole provision
governing the retention of records of the Transferred Subsidiaries and the
procedures for all indemnification claims, in each case with respect to Taxes.
(h) Tax Sharing Agreements. Other than pursuant to this
Agreement, any and all existing agreements relating to the allocation and
sharing of Taxes (the "Tax Sharing Agreements") between the Business and Seller
or any of its affiliates shall be terminated as of the Closing Date. After the
Closing Date, none of the Transferred Subsidiaries, Seller or any of its
Affiliates shall have any further rights or obligations under any such Tax
Sharing Agreements.
(i) Sales and Use Tax. Buyer shall deliver to Seller any
documentation that is reasonably requested by Seller, that Buyer is legally able
to deliver and that is necessary to qualify the transactions contemplated by
this Agreement for an exemption from sales and use tax.
Section 6.10 No Solicitation and No Hire of Employees. None of
Seller or any of its Subsidiaries shall at any time prior to eighteen (18)
months from the Closing Date, directly or indirectly, solicit the employment or
services of, or hire in any capacity (whether as an employee, consultant,
independent contractor or otherwise), any employee of the Business as of the
date hereof without Buyer's prior written consent, which consent shall not be
unreasonably withheld or delayed. None of Buyer or any of its Affiliates shall
at any time prior to one year from the Closing Date, directly or indirectly,
solicit the employment or services of, or hire in any capacity (whether as an
employee, consultant, independent contractor or otherwise), any employee of
Seller (other than Affected Employees) or its Subsidiaries without Seller's
prior written consent. For purposes of this Section 6.10, the term "solicit the
employment or services" shall not be deemed to include generalized searches for
employees through media advertisements of general circulation, employment firms,
open job fairs or otherwise provided that such searches are not focused or
targeted on Affected Employees or employees of Seller or its Subsidiaries, as
the case may be. For the avoidance of doubt, the first sentence of this Section
6.10 shall restrict only the hiring and solicitation activities of Seller and
the Subsidiaries owned by it and nothing in this Agreement shall restrict such
activities of any Person or any of its Affiliates who engages in a transaction
resulting in the acquisition of a majority of the outstanding shares or all or
substantially all of the assets of Seller.
Section 6.11 Non-Competition Agreement. During the period
beginning on the Closing Date and ending on the third anniversary thereof,
neither Seller nor any of its Subsidiaries shall directly or indirectly engage
in the manufacture and sale of coated groundwood paper, coated freesheet C2S
paper rolls or uncoated groundwood supercalendered paper (collectively, the
"Competitive Products"), in each case, for sale to customers in North America in
the catalog, magazine, or commercial print markets or inserts for the catalog,
magazine, retail, commercial print, or newspaper markets (collectively, a
"Competitive Business"); provided, however, that nothing in this Section 6.11
shall:
(i) prohibit or prevent Seller or any of its
Subsidiaries from acquiring as an investment in the ordinary course of
business (including investments by any trust of any of its employee
benefit plans) any securities required to be registered under the
Securities Exchange Act of 1934, as amended, of any Person engaged in a
Competitive Business to the extent that such acquisitions do not result
in Seller or any of its Subsidiaries owning in the aggregate 10% or
more of any class of such securities;
(ii) prohibit or prevent another Person (or its
successor) or business from directly or indirectly engaging in a
Competitive Business from and after the time at which Seller or any of
its Subsidiaries acquires (through merger, stock purchase or
acquisition of assets or otherwise) ownership of or any interest in
such Person or business, provided that (A) the annual revenues of such
Person or business from the Competitive Business are not more than 20%
of its total annual revenues (based on the most recent full fiscal year
revenues of such Person or business), or (B) if its annual revenues
from the Competitive Business are more than 20% of such Person's or
business' total annual revenues (based upon its most recent full fiscal
year revenues), Seller shall or shall cause its relevant Subsidiary to
dispose of such Competitive Business within twelve (12) months of its
acquisition by Seller or such Subsidiary;
(iii) prohibit or prevent Seller or any of its
Subsidiaries from engaging and continuing to engage directly or
indirectly in (A) the design, manufacture, marketing, sale and
distribution in any market of Competitive Products at the Pine Bluff
Mill or the conduct of a Competitive Business at the Pine Bluff Mill,
in each case, so long as such Competitive Products are manufactured
using the paper machine currently existing at the Pine Bluff Mill
(including any subsequent upgrades thereto), (B) any marketing, sale,
procuring, sourcing, design, private labeling, converting, or
distribution of Competitive Products in any market by Seller's global
distribution business, including its xpedx and Xxxxxxx Xxxxxx business
groups; (C) any manufacture, marketing and sale in any market of (1)
all Coated Freesheet Coated One Side products; (2) Specialty Coated
Freesheet products whether C2S or C1S sold in rolls or sheets, limited
to the following applications: all label applications whether glue
applied, or pressure sensitive, such as wet strength, metallizing and
pizza label; all specialty coating base, release base and liner
applications; all food grade packaging applications; all envelope, bag
and kraft specialty applications; all packaging applications such as
pharmaceutical, cosmetic and tobacco packaging; book jacket; off
quality production for gift wrap; litholam; imaging papers (coated
cut-size); decor overlays and surface papers; photographic papers; and
security, electrical, medical, tape backing, flame retardant, tobacco
onsert coupon and fragrance papers applications, and (D) any activities
that are incidental to or derived from such business or activities
described in clauses (A) through (C) (other than a Competitive Business
not included in clauses (A) through (C); or
(iv) be deemed to apply to any business of a Person
(or its Affiliates) that acquires control of Seller or any of its
Subsidiaries or that merges with or acquires all or substantially all
of the assets of Seller or any of its Subsidiaries.
For the avoidance of doubt, this Section 6.11 shall restrict only the business
activities of Seller and the Subsidiaries owned by it and nothing in this
Agreement shall restrict such activities of (x) any Person or any of its
Affiliates that acquires any Subsidiary or business from Seller or its
Affiliates, including its Beverage Packaging Division and Inpacel, Brazil
operations, or (y) any such Subsidiary or business following such acquisition.
Section 6.12 Sartell Sublease. Seller has exercised its option
to purchase the Land and the Improvements pursuant to paragraph 14(a) of the
Sublease Agreement, dated as of August 1, 1983, between Sartell Leasing Joint
Venture and St. Regis Corporation (the "Master Sublease"), and shall purchase
such Land and Improvements in accordance with the terms set forth therein and in
accordance with the terms of the Sartell Sublease. Seller shall comply with the
provisions of paragraph 15 of the Master Sublease and the terms of the Sartell
Sublease to effect the purchase of the Land and Improvements and to cause the
conveyance of such Land and Improvements to be made to Buyer or one of its
Affiliates as promptly as practicable. All costs and expenses incurred in
connection with the exercise of the option by Seller, including the purchase
price and any Transfer Taxes, shall be paid by Seller, provided the Transfer
Taxes relating to the transfer of fee title to the Sartell Real Property from
Master Lessor to Buyer shall be paid 50% by Buyer and 50% by Seller, subject to
the provisions of Section 6.9(c)(iv). Seller and Buyer agree to cooperate to
minimize any such Transfer Tax. Pursuant to the Master Sublease, Seller shall
use its reasonable best efforts to deliver to Buyer a certificate from the
Master Sublessor indicating the date through which rent payments made pursuant
to the Master Sublease are current. As used in this Section 6.12, the terms
"Land," "Improvements," "Master Lease," and "Master Lessor" shall have the
respective meanings ascribed to them in the Sartell Sublease.
Section 6.13 Other Intellectual Property and Transaction.
(a) License to Use Seller's Name. Buyer and its Affiliates
shall have the right to resell any and all of the Inventories included in the
Acquired Assets or conveyed with the Transferred Subsidiaries. As soon as
practicable but not later than three (3) months after the Closing, Buyer shall,
and shall cause its Affiliates to, institute a procedure whereby a stamp or
other indelible identifying xxxx is affixed to products sold by the Business in
order to distinguish such products from products sold by the Business prior to
the Closing. Seller hereby grants to Buyer and its Affiliates a limited,
non-exclusive, royalty-free license to use Seller's name on forms, marketing
materials and signage included in the Acquired Assets or conveyed with the
Transferred Subsidiaries only to the extent that the use thereof cannot be
commercially reasonably avoided in the conduct of the Business following the
Closing; provided, that Buyer shall in any event cease all such uses not more
than nine (9) months following the Closing. During the term of the license as
described herein, Buyer shall ensure that all Inventories sold in connection
with Seller's name are of a quality at least as high as the quality of such
goods immediately prior to the Closing.
(b) At Closing, Seller and Buyer shall enter into the
Intellectual Property Agreement, pursuant to which Seller shall license to Buyer
all Intellectual Property owned by Seller and its Subsidiaries and used or held
for use in the Business (other than the Equity Intellectual Property,
Transferred Intellectual Property, the Brightstar Technology, trademarks, domain
names and certain other Intellectual Property identified in a Schedule C
thereto), including the Intellectual Property set forth in Section 6.13(b) of
the Seller Disclosure Letter, on the terms and conditions set forth therein.
(c) Upon completion of the Abbottsfield Deliverables, at
Seller's request, and pursuant to an agreement to be entered into by the
parties, Buyer shall (i) deliver a complete copy of the Abbottsfield
Deliverables to Seller and (ii) grant to Seller a non-exclusive, royalty-free,
perpetual, sublicensable right and license to use, publish, display, reproduce,
copy, create derivative works of enhance and otherwise exploit the Abbottsfield
Deliverables. In consideration thereof, Seller shall pay to Buyer $356,000. For
the avoidance of doubt, if Seller does not request such copy and license,
neither party shall have any obligation whatsoever pursuant to this Section
6.13(c). Any license in and to the Abbottsfield Deliverables shall be on an
as-is basis, and Buyer shall make no warranties whatsoever with respect to the
Abbottsfield Deliverables including, without limitation, any warranties of
merchantability for a particular purpose or non-infringement of third party
rights. In addition, Buyer shall have no obligation to provide Seller with
support, maintenance, revisions, updates, upgrades, bug fixes or any other
assistance of any kind in connection with the Abbottsfield Deliverables. In
addition, any license in and to the Abbottsfield Deliverables may include other
customary terms and conditions for a license of its type, provided that such
terms and conditions shall not limit the scope of the license set forth herein.
Section 6.14 Connectivity. In order to enable Seller to
provide services pursuant to the Transition Service Agreement, Seller and Buyer
shall cooperate between the date hereof and Closing to design, develop and
implement as of Closing certain system security and connectivity software,
hardware, policies and processes ("Secured Systems Connectivity"). Seller and
Buyer each shall bear responsibility for establishing Secured Systems
Connectivity. Except as otherwise set forth in the Transition Services
Agreement, each party shall bear all of its own costs and expenses associated
with such design, development and implementation.
Section 6.15 Buyer's Financing Activities.
(a) Financial Information
(i) Upon request of Buyer, Seller shall, and shall
cause each of its Subsidiaries to, use reasonable best efforts to
cooperate with and assist, and shall request its independent
accountants to cooperate with and assist, Buyer in preparing such
information packages and offering materials as the parties to the
Commitment Letters may reasonably request (collectively, the "Offering
Materials") for use in connection with the offering and/or syndication
of debt securities, loan participation and other matters contemplated
by the commitment letters (the "Offerings"), including, without
limitation, making senior management of the Seller or the Business who
will be Affected Employees available (at mutually agreeable times) to
participate in meetings with prospective investors and participating in
"road shows" in connection with any Offerings and providing such other
information and assistance as the parties to such Commitment Letters
may reasonably request in connection therewith. Buyer shall reimburse
Seller for all documented reasonable out-of-pocket fees and expenses
(including accountants' fees) incurred by Seller in complying with this
Section 6.15(a)(i) promptly upon request therefor.
(ii) As soon as practicable, but in any event no
later than twenty (20) days after each calendar month-end following the
date hereof that occurs prior to the Closing Date, Seller will deliver
to Buyer a copy of the internal operating balance sheet and internal
profit and loss statement of the Business (as such internal reports are
currently generated in the Business and delivered to management,
including projections and forecasts) (the "Subsequent Financial
Statements").
(iii) Seller shall furnish, for each quarterly period
completed at least forty-five (45) days prior to the Closing Date, the
following financial statements for the Business, on a combined basis,
each in a form meeting the requirements of Regulation S-X as follows
(collectively referred to herein as the "Stub Period Combined Financial
Statements") as soon as reasonably practicable, but in no event later
than forty-five (45) days following the close of such quarter: the
unaudited combined balance sheets of the Business as of the end of such
quarter together with the related unaudited combined statement of
operations and combined statement of cash flows for the quarterly
period then ended, and together with comparable financial statements
for the corresponding period of the preceding year. For each of the
financial statements for a quarterly period completed following the
Closing Date through and including the quarterly period ended September
30, 2006, Seller shall furnish, in a form meeting the requirements of
Regulation S-X, comparable financial statements for the Business for
the corresponding period of the preceding year.
(iv) In addition, as soon as reasonably practicable
upon reasonable request, Seller shall use its reasonable best efforts
to provide to Buyer such other financial data as may be reasonably
requested by Buyer, including reasonably requested financial data on a
combined basis for the Business in connection with the debt financing
contemplated by the Financing Commitments, and unaudited selected
financial information for the Business for 2001 and 2002, to be
included in any offering memorandum, prospectus, or registration
statement required to be delivered or filed in connection therewith
(collectively, the "Additional Financial Data").
(v) The Financial Statements, the Stub Period Combine
Financial Statements and the financial data in this Section 6.15 (other
than the Subsequent Financial Statements) are collectively known as the
"Regulation S-X Financial Statements." Seller will prepare, or cause
the Regulation S-X Financial Statements to be prepared, in accordance
with GAAP and on a basis consistent with the requirements of Regulation
S-X for Buyer's or its Subsidiaries' offering memorandum, prospectus,
registration statement and any amendments thereto in connection with
the debt financing contemplated by the Financing Commitments and any
updated filings. Seller shall furnish to Buyer any information or
documents requested by Buyer, which is in Seller's possession or to
which Seller has access, constituting, or necessary for the completion
of, the Regulation S-X Financial Statements or any updated filings or
amendments thereto, and Seller agrees to execute any reasonably
necessary management representation letters to permit Buyer or its
Subsidiaries' independent accountants to issue unqualified reports with
respect to the Regulation S-X Financial Statements to be included in
the offering memorandum, prospectus, registration statement any updated
filings or amendments thereto. Seller shall furnish to Buyer any
available drafts of the Regulation S-X Financial Statements as they
become available and shall consider in good faith any reasonable
suggestions Buyer may have regarding the Regulation S-X Financial
Statements. Seller shall also cooperate with Buyer and its accountants
in the preparation of the pro forma financial statements for the
acquisition and Financing required under Regulation S-X as well as in
the determination of EBITDA adjustments.
(vi) Seller shall use its reasonable best efforts to
obtain prior to the Closing, the consent of Deloitte & Touche LLP to
permit the use of the Regulation S-X Financial Statements in connection
with offerings of securities by Buyer and/or one or more of its
Subsidiaries as contemplated by the Financing Commitments. In addition,
Seller shall use its reasonable best efforts to cause Deloitte & Touche
LLP to provide a comfort letter in accordance with SAS 72 for any such
offering.
(b) Except as provided herein, Buyer acknowledges and agrees
that Seller and its Affiliates have no responsibility for any financing that
Buyer may raise in connection with the transactions contemplated hereby,
including with respect to any Offering Materials prepared by or on behalf of or
utilized by Buyer or its Affiliates, or Buyer's financing sources, in connection
with Buyer's financing activities in connection with the transactions
contemplated hereby, regardless of whether such Offering Materials include any
information provided by Seller or any of its Affiliates (including the
Business). Any Offering Materials in connection with any debt offering or other
such Buyer financing shall include a conspicuous disclaimer to the effect that
neither Seller nor any of its Affiliates nor any employees thereof have any
responsibility for the content of such document and disclaim all responsibility
therefore and shall further include a disclaimer with respect to Seller and its
Affiliates in any oral disclosure with respect to such financing.
(c) Buyer shall use its reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to (i) maintain in effect the Financing and the
Commitment Letters, (ii) enter into definitive financing agreements with respect
to the Financing, so that such agreements are in effect as promptly as
practicable but in any event no later than the Closing Date and (iii) consummate
the Financing at or prior to Closing (including, if necessary, closing under the
bridge commitments included in the Financing). Buyer shall provide to Seller
copies of all documents relating to the Financing and shall keep Seller
reasonably informed of material developments in respect of the financing process
relating thereto. Prior to the Closing, Buyer shall not agree to, or permit, any
amendment or modification of, or waiver under, the Commitment Letters or other
documentation relating to the Financing that adds any conditions to the
Financing or otherwise materially adversely affects the likelihood of the
consummation of the Financing at or prior to Closing without the prior written
consent of Seller. In the period between the date hereof and the Closing Date,
upon request of Buyer, Seller shall, and shall use reasonable best efforts to
cause its Affiliates and representatives to, reasonably cooperate with Buyer in
connection with the Financing. Buyer shall promptly, upon request by Seller,
reimburse Seller for all documented out-of-pocket expenses incurred by Seller or
its Affiliates or representatives in connection with such cooperation.
(d) If, notwithstanding the use of reasonable best efforts by
Buyer to satisfy its obligations under Section 6.15(c), any of the Financing or
the Commitment Letters (or any definitive financing agreement relating thereto)
expire or are terminated prior to the Closing, in whole or in part, for any
reason, Buyer shall (i) promptly notify Seller of such expiration or termination
and the reasons therefor and (ii) use its reasonable best efforts promptly to
arrange for alternative financing (which shall not contain any conditions in
addition to those contained in such expired or terminated commitments or
agreements) to replace the financing contemplated by such expired or terminated
commitments or agreements in an amount sufficient to consummate the transactions
contemplated by this Agreement and the Ancillary Agreements; provided that such
reasonable effort shall in no event require Buyer to secure such substitute
financing on terms that are either (i) less favorable with respect to economic
terms (taking into account flex terms and bridge loans contained in the
Financing) or (ii) less favorable in the aggregate with respect to non-economic
terms, in each case as compared to the Financing.
Section 6.16 Certain Transactions.
(a) The Acquirors shall not, and shall not permit any of their
Affiliates, a majority of whose voting stock is owned or voted by, or a majority
of whose board of directors or analogous governing body is elected or appointed
by, in either case, directly or indirectly, funds managed by the Acquirors or
their Affiliates, to, acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of or equity in, or
by any other manner, any business or any corporation, partnership, association
or other business organization or division thereof, or otherwise acquire or
agree to acquire any assets if the entering into of a definitive agreement
relating to or the consummation of such acquisition, merger or consolidation
would reasonably be expected to (i) impose any material delay in the obtaining
of, or significantly increase the risk of not obtaining, any authorizations,
consents, orders, declarations or approvals of any Governmental Entity necessary
to consummate the transactions contemplated by this Agreement or the Ancillary
Agreements or the expiration or termination of any applicable waiting period,
(ii) significantly increase the risk of any Governmental Entity entering an
order prohibiting the consummation of the transactions contemplated by this
Agreement or the Ancillary Agreements, (iii) significantly increase the risk of
not being able to remove any such order on appeal or otherwise or (iv)
materially delay or prevent the consummation of the transactions contemplated by
this Agreement or the Ancillary Agreements.
(b) Prior to Closing, Buyer shall not, and shall not permit
any of its Affiliates to negotiate the disposition of, agree to divest or
otherwise dispose of, or cause the divestiture or disposition of, any of the
assets of or equity in, or by any other manner, the Business, except as set
forth in Section 6.4 hereof.
Section 6.17 Solvency Opinion. In the event that, in
connection with the Financing, either or both of the Acquirors is required to
provide to their lenders an opinion of a third party appraisal firm that,
following consummation of the transactions contemplated hereby, such Acquiror(s)
and its Subsidiaries will be Solvent and that such transactions do not otherwise
"impair the capital of the corporation" within the meaning of Section 160(a) of
the Delaware General Corporation Law (the "Solvency Opinion"), it or they shall
deliver to Seller such Solvency Opinion, dated as of the Closing Date and
addressed to Seller. In the event that either or both of the Acquirors is not
required to provide such a Solvency Opinion to their lenders in connection with
the Financing, such Acquiror(s) shall deliver to Seller a certificate of an
authorized officer of such Acquiror, dated as of the Closing Date, certifying
that, following consummation of transactions contemplated hereby, such Acquiror
will be Solvent and that such transactions do not otherwise "impair the capital
of the corporation" within the meaning of Section 160(a) of the Delaware General
Corporation Law (the "Solvency Certificate").
Section 6.18 Access to Records; Confidentiality.
(a) Buyer shall preserve for a period of no less than seven
(7) years after the Closing Date and make available (for review and copying) to
Seller and its authorized representatives following the Closing upon reasonable
notice during normal business hours the records transferred by Seller and, with
respect to records that may be relevant to any actual Tax audits or proceedings,
such additional period as is reasonably required by Seller; provided, however,
that Buyer shall notify Seller prior to destroying any such record during such
period and, provided, further, that Buyer shall maintain in the CHAMP system any
records transferred by Seller as part of such system, and Buyer shall run
reports with respect to such records upon Seller's reasonable request,
consistent with past practice. In the event that, during such seven (7) year
period, Buyer intends to cease use of the CHAMP system for its own purposes or
transfer the CHAMP system to a third party (other than in a sale of the Business
in which the transferee assumes all obligations of Buyer relating to the CHAMP
system and the applicable records), Buyer shall so notify Seller and, upon
Seller's request, shall (i) provide to Seller a copy of the then-current source
code for the CHAMP software; and (ii) grant to Seller a perpetual,
non-exclusive, royalty-free, fully-paid, irrevocable license to use and make
derivative works of such software. Buyer shall permit, to the extent permitted
by law, Seller, and any of its agents, representatives, advisors and
consultants, to have reasonable access to the employees of the Business for
information relating to periods up to and including the Closing which is
reasonably requested by Seller, subject to the same types of conditions and
limitations as set forth in Section 6.2(a).
(b) Any information regarding the Business or Assets
heretofore or hereafter obtained from Seller or its Affiliates by the Acquirors
or their Affiliates or representatives shall be subject to the terms of the
Confidentiality Agreement and such information shall be held in confidence by
the Acquirors and their Affiliates and representatives in accordance with the
terms of the Confidentiality Agreement. The terms of the Confidentiality
Agreement are hereby incorporated by reference and shall continue in full force
and effect until the Closing, at which time such Confidentiality Agreement shall
terminate. If this Agreement is, for any reason, terminated prior to the
Closing, the Confidentiality Agreement shall continue in full force and effect
as provided in Section 8.2 hereof in accordance with its terms.
(c) From and after the Closing, the Acquirors shall, and shall
cause each of their Affiliates and the Business to, keep confidential and not
use for any purpose all nonpublic information regarding Seller or its Affiliates
(other than the Transferred Subsidiaries and the Business) of which the
Acquirors, their Subsidiaries, the Business or the Affected Employees may be
aware.
Section 6.19 Intercompany Accounts. As of 11:59 PM on the day
prior to the Closing, Seller shall, and shall cause all Seller Participants to,
settle intercompany accounts payable and accounts receivable, except to the
extent arising under or in connection with the Assumed Contracts. Seller shall
determine the method by which such intercompany accounts are eliminated
including, but not limited to, by means of setoff, settlement or capital
contribution.
Section 6.20 Post-Closing Litigation. Other than with respect
to the matters set forth in Schedule VII, in the event and for so long as Buyer
actively is contesting or defending against any action, investigation, charge,
claim, or demand by a third party (other than Seller or its Affiliates) in
connection with (i) any transaction contemplated under this Agreement or (ii)
any practice, occurrence, event, incident, action or failure to act involving
the Business prior to the Closing Date upon the request of Buyer, Seller will
reasonably cooperate with Buyer and its counsel in the contest or defense, make
available its personnel, and provide such testimony and access to its books and
records as shall be reasonably necessary in connection with the contest or
defense, all at the sole cost and expense of Buyer (unless Buyer is entitled to
indemnification therefor under Article IX).
Section 6.21 Bulk Sales Law. Buyer hereby waives compliance by
Seller, in connection with the transactions contemplated hereby, with the
provisions of any applicable bulk sales law; provided that, Seller shall
indemnify Buyer for any Losses arising from such non-compliance under Article
IX.
Section 6.22 Disclosure Supplement. Each party shall have the
right from time to time prior to the Closing to supplement or amend its
Disclosure Letter with respect to any matter hereafter arising that, if existing
or known at the date of this Agreement, would have been required to be set forth
or described in such Disclosure Letter. Any such supplemental or amended
disclosure shall not be deemed to have cured any breach of any representation or
warranty made in this Agreement for purposes of Article IX, and will not be
deemed to have cured any such breach made in this Agreement nor to have been
disclosed as of the date of this Agreement for purposes of determining whether
or not the conditions set forth in Article VII hereof have been satisfied.
Section 6.23 Release of Indemnity Obligations. The Seller
covenants and agrees, on or prior the Closing, to execute and deliver to each of
the Transferred Subsidiaries, for the benefit of each Transferred Subsidiary, a
general release and discharge, in form and substance satisfactory to Buyer,
releasing and discharging the each of the Transferred Subsidiaries from any and
all obligations to indemnify the Seller or otherwise hold it harmless pursuant
to any agreement or other arrangement entered into prior to the Closing.
Section 6.24 Release of Liens. Seller shall release or cause
to be released all Liens on any of the Acquired Assets other than Permitted
Liens and Permitted Encumbrances.
Section 6.25 Insurance Matters and Contractual Indemnities.
(a) Seller shall assist Buyer with claims under Occurrence
Based Insurance Policies and for recovery of damages for breaches of
representations, warranties or covenants contained in contracts related to the
Business that have not been assigned to Buyer (the "Contract Indemnities") with
respect to claims arising out of pre-Closing events or occurrences in the
Business, and shall reasonably cooperate with Buyer and take commercially
reasonable actions as may be necessary to assist Buyer in submitting claims for
occurrences or damages in the Business, but only occurrences or damages arising
out of the portion of operations of the Business to which such policies or
Contractual Indemnities apply; provided that Buyer shall be responsible for any
deductibles, co-payments and assessments on retrospectively rated policies
relating to such claims and provided, further, that Seller shall not be required
to maintain any such policies or coverage relating to the Business beyond the
current respective terms of such policies. Seller will pay such Occurrence Based
Insurance Policy or Contractual Indemnities proceeds to Buyer net of deduction
and reasonable expense of recovery.
(b) As necessary to enable Buyer to exercise its rights under
subsection (a), Seller shall (i) assign to Buyer applicable rights in respect of
its Occurrence Based Insurance Policies as permitted under Applicable Law, (ii)
provide timely written notice of claims (following receipt of notice from Buyer)
(iii) provide information in its possession regarding any such claim under
applicable insurance policy or contract or reasonably requested by the
applicable insurer or required under the applicable contract and (iv) provide
any and all further assistance in connection with prosecution of claims. Buyer
shall provide Seller prompt written notice of any claims that it desires to
submit pursuant to clause (a) above and shall provide to Seller all information
as may be required by the applicable insurance policy or contract or reasonably
requested by the applicable insurer or required under the applicable contract in
connection with such claim.
(c) Following the Closing, Seller agrees to use its reasonable
best efforts to maintain coverage, and to make premium payments for Worker's
Compensation and Commercial General Liability coverage, under the Owner
Contractor Insurance Program that is currently in place to insure SW&B
Construction ("Contractor") performing construction work on the new Xxxxxxxx
Project at the Bucksport Mill ("OCIP") As of the date hereof, OCIP is insured
and claims are administered by Zurich North America (the "Insurance Company")
and the coverage and safety management is coordinated by HRH of Atlanta
("Broker"). Provided that the Insurance Company continues to provide coverage
under OCIP following Closing, Seller agrees to make premium payments for the
duration of such construction, but in no event shall Seller make any premium
payments after December 31, 2006. Buyer shall reimburse Seller at a rate of
6.48% of the final payroll of the Contractor (including all payroll classes
working under the contract) for the period starting on the Closing through the
end of such coverage, plus any out-of-pocket expenses incurred by Seller
pursuant to this Section 6.25(c). In consideration for providing this coverage,
Buyer shall:
(i) ensure that Contractor continues to report
payroll and other exposure information to Broker or other designated
party as required under the OCIP guidelines that Contractor has agreed
to under the OCIP program;
(ii) ensure that Contractor reports any and all
claims or circumstances which might lead to a claim under this OCIP
program as soon as possible, but no later than the earlier of thirty
(30) days after the project is completed or January 31, 2007;
(iii) not change the scope, size or design which has
any impact on the risk insured, including
(iv) maintain safety standards equal to or above the
standards currently in place at the Bucksport Mill relating to
construction; and
(v) to allow reasonable access to appropriate
employees of Seller, Insurance Company and Broker for the purposes of
safety audits, bookkeeping audits, or other activities to monitor and
maintain the OCIP program.
Seller acknowledges that failure to meet these requirements
may result in the immediate cancellation of the OCIP program by the Insurance
Company.
Section 6.26 Title Insurance and Surveys.
(a) Title Insurance. Seller has obtained from First American
Title Insurance Company ("Title Company") and has made or will make available to
Buyer commitments (the "Title Commitments") to insure title to each of the Owned
Real Property. The commitments, any policies of title insurance, and other title
costs or charges, including search and exam fees, shall be at Buyer's expense.
At Closing, Title Company will insure good and marketable title to the Owned
Real Property and any Leased Property requested by Buyer, subject only to the
Permitted Encumbrances, and without exception for (i) survey matters (except as
shown on the survey furnished pursuant to subsection (b) below), (ii) mechanics'
or materialmen's liens, or (iii) "parties in possession," for an amount equal to
the amount allocated to the Owned Real Property and any Leased Property
requested by Buyer, under an ALTA Owner's Policy Form B-1970 (or the equivalent
thereof) (the "Title Insurance"). The Title Commitment shall include extended
coverage and all customary owners and lender's endorsements. On the Closing
Date, the Seller shall have delivered the Title Insurance to the Buyer.
(b) Survey. Seller, at Buyer's cost, shall procure and cause
to be delivered to Buyer on or prior to the Closing Date for each Owned Real
Property and any Leased Property reasonably requested by Buyer on which any of
the Xxxxx is located (collectively, the "Mill Sites"), a survey (collectively,
the "Surveys"). Such Surveys shall be certified to Buyer, Buyer's lender and the
Title Company, and shall (i) meet minimum standard detail requirements for
ALTA/ACSM Land Title Surveys for the land at each Mill Site where an actual Mill
is located and the remainder of the such Mill Site, and (ii) for the remainder
of the property at each Mill Site and for any property that does not constitute
a Mill Site, shall be sufficient and satisfactory to Title Company so as to
enable Title Company to issue coverage over all general survey exceptions and to
issue all endorsements requested by Buyer and Buyer's lender. Such Surveys shall
show no matters which materially adversely affect the use or value of the Owned
Real Property or such Leased Property and shall show (i) no encroachments that
materially impair the value or use of the Owned Real Property or Leased Property
requested by Buyer, (ii) that the improvements (including without limitation all
buildings and loading docks and the parking lots appurtenant thereto) are
entirely located (except for de minimus encroachments) on the Owned Real
Property or Leased Property requested by Buyer and (iii) that the Owned Real
Property or Leased Property has access to an adjacent road (which may be over an
easement running with the Owned Real Property). Notwithstanding the foregoing,
Seller has delivered to Buyer certain surveys pertaining to the Owned Real
Property. On the Closing Date, the Seller shall have delivered the Surveys to
the Buyer.
(c) Seller shall deliver, to the extent in its possession on
the Closing Date, to Buyer upon Closing (or, if such documents come into
Seller's possession within six (6) months following Closing, upon receipt
thereof), all original warranties, guarantees and certificates of occupancy,
licenses and permits affecting the Owned Real Property, its use or any part
thereof, together with an Assignment of Contracts, Contract Rights and Permits
and an Assignment of Additional Contracts and Contract Rights to Buyer of those
specified by Buyer.
Section 6.27 Transition Services; Further Action.
(a) Following the Closing, Seller shall provide, or cause to
be provided, to the Business certain services that are currently provided by
Seller and its Affiliates to the Business, including access to certain Retained
Assets that are currently used on a non-exclusive basis in the conduct of the
Business, subject to and on the terms set forth in the Transition Services
Agreement and other Ancillary Agreements to be entered into by the Seller and
the Buyer as of the Closing.
(b) If, following the Closing, the parties determine that any
property or asset used exclusively in the Business was not transferred to Buyer
or its designee pursuant to this Agreement or the Ancillary Agreements (assuming
that such property or asset is not a Retained Asset set forth in Section
2.2(b)(i)-(xii)), then Seller shall, without further consideration, promptly
transfer or cause the transfer of such asset or property to the Buyer or its
designee.
(c) If, within five (5) months following the Closing, the
parties determine that any Critical Non-Exclusive Asset was not provided to
Buyer or its designee pursuant to the Ancillary Agreements, then Seller shall
provide to Buyer, at cost, (subject to appropriate transitional arrangements not
to exceed one year following Closing) the right to use such Critical
Non-Exclusive Asset on terms substantially similar to how such Critical
Non-Exclusive Asset was used in the Business prior to Closing; provided,
however, that the foregoing shall not apply to (A) the properties and assets set
forth in Section 6.27(c) of the Seller Disclosure Letter, (B) the properties and
assets used to provide services under the Ancillary Agreements and (C)
properties and assets the provision of which would result in (x) a breach of
contract (in which case, Seller will use commercially reasonable efforts to
obtain a waiver or consent, if appropriate, the costs of which shall be borne by
the parties in accordance with Section 6.5(c)), (y) a violation of law or (z) a
waiver of the attorney-client privilege, attorney work product doctrine or any
other privilege or immunity.
As used herein, a "Critical Non-Exclusive Asset" means any
property or asset that is not subject to paragraph (b) above, but (i) is owned
by Seller (or to which Seller otherwise has rights), (ii) was used by the
Business on a non-exclusive basis prior to the date hereof and is necessary for
the operation of the Business as conducted as of the date hereof and (iii) is
not readily available from a third party at a comparable cost.
Section 6.28 CRC Facility. In the event that, following the
Closing, Seller, in its sole discretion, determines to shut down its research
and development facility located in Tuxedo Park, New York (the "CRC Facility"),
Seller shall notify Buyer of such proposed shut down at least 90 days prior to
the date on which the CRC Facility will be shut down (the "Shut Down Date").
Buyer shall have the right, within 60 days following the Shut Down Date, to
remove, at its sole cost and expense, the assets set forth in Section 6.28 of
the Seller Disclosure Letter (the "CRC Assets"). If Buyer elects to remove the
CRC Assets, it shall provide notice to Seller no later than 60 days prior to the
Shut Down Date. Buyer's removal shall be undertaken in a careful and workmanlike
manner and the premises shall be left broom clean after such removal. Buyer will
indemnify and hold Seller harmless against any (a) damage to the remaining
assets at the CRC Facility, (b) unsafe or unreliable condition caused as a
result of the removal of the CRC Assets, (c) any personal injury claims arising
from the removal of the CRC Assets or (d) any mechanics or materialmen or other
claims that are caused by or result from Buyer or its contractors undertaking
removal of the CRC Assets. For the avoidance of doubt, a sale of the CRC
Facility will not be considered a shut-down of such facility.
Section 6.29 Transferred Subsidiaries.
Prior to the Closing, Seller shall convert Bucksport Leasing
Company into a Delaware limited liability company in accordance with Section 266
of the Delaware General Corporation Law; provided, however, that Buyer shall
bear the filing fees and legal expenses incurred by Seller associated with such
conversions. Seller shall not make an election pursuant to Treasury Regulation
Section 301.7701-3 with respect to Bucksport Leasing Company to be classified as
an association taxable as a corporation for U.S. federal Income Tax purposes.
Section 6.30 Confidentiality by Seller.
From and after the date of this Agreement, unless required by
Applicable Law and except as contemplated by this Agreement, each Seller
Participant shall, and shall cause each of their respective Affiliates,
including, prior to Closing, the Business, to keep confidential all proprietary
or nonpublic information regarding the Business.
Section 6.31 Release of Letters of Credit.
Prior to the Closing, the Acquirors shall use their reasonable
best efforts to, effective on the Closing Date, either (a) arrange for
substitute letters of credit to replace the existing letters of credit of Seller
or its Affiliates (collectively, the "Released Parties") posted in favor of the
Business set forth in Section 6.31 of the Seller Disclosure Letter
(collectively, "Letters of Credit") or (b) assume all obligations under each
such Letters of Credit, obtaining from the creditor or other counter-party a
full release of the Released Parties. Following the Closing, the Acquirors shall
continue to use their reasonable best efforts to terminate, or cause Buyer or
one of its Affiliates to be substituted in all respects for the Released Parties
in respect of, all obligations of the Released Parties under any such Letters of
Credit. The Acquirors shall, to the extent the beneficiary or counter-party
under any Letter of Credit refuses to accept such a substitute letter of credit,
(i) obtain a letter of credit on behalf of Parent or Buyer and (ii) indemnify
and hold harmless the Released Parties for any Losses arising from payments
under such Letters of Credit which relate to events or circumstances arising
after the Closing. To the extent that any Released Party has performance
obligations under any such Letter of Credit, the Acquirors shall use its
reasonable best efforts to (i) perform such obligations on behalf of such
Released Party or (ii) otherwise take such action as reasonably requested by
Seller so as to put such Released Party in the same position as if the
Acquirors, and not such Released Party, had performed or was performing such
obligations.
Section 6.32 Transfer of Certain Wastewater Permits. Subject
to compliance by Seller with its obligations under this Section 6.32, the
Acquirors shall file with the appropriate Governmental Entity prior to the tenth
Business Day after the date of this Agreement a complete application for
transfer of each of the Wastewater Permits meeting all of the requirements of
Applicable Law for such request to transfer and shall use its reasonable best
efforts to promptly thereafter obtain from such Governmental Entity an
acknowledgement that such application is complete. Seller shall cooperate and
assist Buyer in preparing these filings, including by promptly filing any
documentation necessary to be filed by Seller in connection with the transfer of
such Wastewater Permits.
Section 6.33 Office Relocation. Seller will separate the
Affected Employees and Acquired Assets located at Seller's Memphis, Tennessee
facilities and Seller's Loveland, Ohio facilities (the "Business Offices") and
will relocate such offices to another Seller location (the "Relocated Business
Offices") such that, at Closing or within one (1) month after Closing, Buyer
shall be able conduct the Business from the Relocated Business Offices in
substantially the same manner as the Business was conducted prior to Closing. If
such separation and relocation shall not have occurred as of the Closing, such
Affected Employees and Acquired Assets will remain in the Business Offices and
such offices will be leased or subleased (as applicable) to the Buyer on
substantially the same terms as the Business Offices were provided to prior to
Closing until such time as such separation and relocation have occurred.
Section 6.34 Migration of Data and Systems. Seller will use
commercially reasonable efforts to separate and segregate the data and systems
that support the Business as necessary to perform the transition services as
contemplated by the Transition Services Agreement on or prior to the Closing. If
Seller, after using such commercially reasonable efforts, is unable to
accomplish the separation and segregation described above on or prior to the
Closing, Seller will complete such separation and segregation as soon as
reasonably practicable thereafter; provided that such segregation and separation
shall be completed no later three (3) months after the Closing Date.
Section 6.35 Third Party Arrangements. Prior to or at Closing,
Buyer will execute the following agreements to the extent necessary for the
Seller's provision of transition services to Buyer under the Transition Services
Agreement: (1) necessary license agreements with CINCOM, H&W Software and GT
Software; (2) services agreements with EDS and ADP; and (3) a transitional
services agreement with SAP.
Section 6.36 Transition Services Arrangement. Each of Seller
and Buyer shall keep reasonably detailed records of the following one-time costs
incurred by it: (i) Seller's one-time costs set forth in the schedules to the
Transition Services Agreement; and (ii) Buyer's one-time costs incurred in
connection with preparations to receive the services under the Transition
Services Agreement, including without limitation the activities contemplated by
Section 6.35 hereof (collectively, the "One Time Costs"). Seller shall bear all
One-Time Costs until such time as the One-Time Costs of both parties in the
aggregate reaches Four Million Dollars ($4,000,000), after which each party
shall bear its own One-Time Costs.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligations. The
respective obligation of each party to effect the transactions contemplated by
this Agreement shall be subject to the satisfaction or waiver at or prior to the
Closing of the following conditions:
(a) any waiting period (and any extension thereto) applicable
to the consummation of the transactions contemplated by this Agreement under the
HSR Act or any other Competition Law shall have expired or been terminated;
(b) no provision of any applicable law or regulation and no
judgment, injunction (preliminary or permanent), order or decree that prohibits,
makes illegal or enjoins the consummation of the transactions contemplated by
this Agreement shall be in effect (each party taking any and all steps required
by Section 6.3 and Section 6.4 of this Agreement); and
(c) the FERC Orders shall have been obtained.
Section 7.2 Conditions to Obligations of the Acquirors. The
obligation of the Acquirors to effect the transactions contemplated by this
Agreement shall further be subject to the satisfaction at or prior to the
Closing of the following conditions, which are for the benefit of the Acquirors
only and may be waived only by both of the Acquirors at or prior to the Closing
in their sole discretion:
(a) all representations and warranties of Seller in this
Agreement (without taking into account any materiality or Material Adverse
Effect qualification therein) shall be true and correct as of the Closing Date
with the same effect as though such representations and warranties had been made
as of the Closing Date (except for representations and warranties that speak as
of a specific date or time, which shall be true and correct only as of such date
or time), except (x) for changes specifically contemplated or permitted by this
Agreement, and (y) where such failure to be so true and correct, either
individually or in the aggregate, would not have or be reasonably likely to have
a Material Adverse Effect as of the Closing Date;
(b) Seller shall have in all material respects performed and
complied with all of its covenants, undertakings and agreements required by this
Agreement to be performed or complied with by it at or prior to the Closing;
(c) there shall not have occurred after the date hereof any
event or circumstance, which individually or in the aggregate has or is
reasonably likely to have a Material Adverse Effect;
(d) Seller shall have delivered to the Acquirors a certificate
as to the satisfaction of the conditions set forth in Sections 7.2(a) and (b),
dated as of the Closing and executed by an officer of Seller;
(e) Seller shall have delivered or caused to be delivered to
the Acquirors each of the items specified in Sections 3.2(a), (b), (c), (d), (f)
and (g);
(f) Buyer shall have obtained debt financing from the lenders
referred to in the Commitment Letters on the terms contemplated by the terms
sheets attached to the Commitment Letters;
(g) Seller shall have obtained the written consents, in form
and substance reasonably satisfactory to Buyer, set forth in Section 7.2(g) of
the Seller Disclosure Letter;
(h) orders or written notice shall have been issued approving
transfer to Buyer of the Wastewater Permits; and
(i) Seller shall be prepared and able to provide services to
the Acquirors pursuant to the Transition Services Agreement in all material
respects.
Section 7.3 Conditions to Obligations of Seller. The
obligation of Seller to effect the transactions contemplated by this Agreement
shall be further subject to the satisfaction at or prior to the Closing of the
following conditions, which are for the benefit of Seller only and may be waived
only by Seller at or prior to the Closing in its sole discretion:
(a) all representations and warranties of the Acquirors in
this Agreement (without taking into account any materiality qualification
therein) shall be true and correct as of the Closing Date with the same effect
as though such representations and warranties had been made as of the Closing
Date (except for representations and warranties that speak as of a specific date
or time, which shall be true and correct only as of such date or time), except
(x) for changes specifically contemplated or permitted by this Agreement and (y)
where such failure to be so true and correct, individually or in the aggregate,
would not have a material adverse effect on either of the Acquiror's ability to
consummate the transactions contemplated hereby as of the Closing Date;
(b) the Acquirors shall have in all material respects
performed and complied with all of their respective covenants, undertakings and
agreements required by this Agreement to be performed or complied with by them
at or prior to the Closing;
(c) each of the Acquirors shall have delivered to Seller a
certificate as to the satisfaction of the conditions set forth in Sections
7.3(a) and (b), dated as of the Closing and executed by an officer of each of
the Acquirors; and
(d) the Acquirors shall have delivered or caused to be
delivered to Seller each of the items specified in Section 3.3(a), (b), (c),
(d), (e), (f) and (g).
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated at
any time prior to the Closing by:
(a) mutual written consent of Seller, Buyer and Parent;
(b) either Seller or the Acquirors, upon written notice to the
other, if the Closing shall not have occurred on or prior to the six-month
anniversary of the date of this Agreement; provided, however, that if (i) the
Closing has not occurred by such date by reason of nonsatisfaction of any of the
conditions set forth in Section 7.1(a), (c) and 7.2(h) and (ii) all other
conditions set forth in Article VII have heretofore been satisfied or waived or
are then capable of being satisfied, then such date shall automatically be
extended to the date that is the eight-month anniversary of this Agreement;
provided, further, that the right to terminate this Agreement under this Section
8.1(b) shall not be available to any party whose failure to fulfill in any
material respect any obligation under this Agreement has caused or resulted in
the failure of the Closing to occur on or before such date, whether or not such
date has been so extended; or
(c) either Seller or the Acquirors, upon written notice to the
other, if any court of competent jurisdiction or other competent Governmental
Entity shall have issued a statute, rule, regulation, order, decree or
injunction or taken any other action permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement and such
statute, rule, regulation, order, decree or injunction or other action shall
have become final and non-appealable, unless the failure to consummate the
Closing because of such action by a Governmental Entity shall be due to the
failure of the party seeking to terminate this Agreement to have fulfilled any
of its obligations under Section 6.3 or Section 6.4.
Section 8.2 Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 8.1 hereof, (i) this Agreement
(except for Section 6.18, this Section 8.2 and Article X) shall forthwith become
void and have no effect, without any liability on the part of any party hereto
or its Affiliates and (ii) all filings, applications and other submissions made
pursuant to this Agreement, to the extent practicable, shall be withdrawn from
the agency or other Person to which they were made or appropriately amended to
reflect the termination of the transactions contemplated hereby; provided,
however, that nothing contained in this Section 8.2 shall relieve any party from
liability for any intentional or willful breach of this Agreement.
ARTICLE IX
SURVIVAL; INDEMNIFICATION
Section 9.1 Survival of Representations. All representations
and warranties contained herein shall survive for a period of eighteen (18)
months following the Closing Date, except for representations and warranties
contained in (i) Section 4.1 (Organization), Section 4.2 (Authorization),
Section 4.3 (Title to Personal Property; Transferred Equity Interests), Section
5.1 (Organization), and Section 5.2 (Authority), which shall survive
indefinitely, (ii) Section 4.9(c) which shall survive for a period of five years
following the Closing Date, (iii) Section 4.10 (Taxes), which shall survive
until 30 days following the expiration of the applicable statute of limitations
(including any applicable extensions) and (iv) Section 4.14 (Environmental
Matters), which shall survive for the period set forth in Section 9.5 (such
period set forth in clauses (i), (ii), (iii) or (iv) or such eighteen (18) month
period, as applicable, the "Indemnity Period"). If a written notice of claim for
indemnification is made during the Indemnity Period, such claim shall survive
until its resolution. Notwithstanding the foregoing, no representation or
warranty shall survive any termination of this Agreement pursuant to Article
VIII. The parties intend to shorten the statute of limitations and agree that no
claims or causes of action may be brought against Seller, Buyer or any of their
respective directors, officers, employees, Affiliates, controlling persons,
agents or representatives based upon, directly or indirectly, any of the
representations and warranties contained in this Agreement after the Indemnity
Period or, except as provided in Section 8.2, any termination of this Agreement.
This Section 9.1 shall not limit any covenant or agreement of the parties.
Section 9.2 Seller's Agreement to Indemnify.
(a) Subject to the terms of this Article IX, from and after
the Closing, Seller shall indemnify and hold harmless Buyer, Parent and each of
their respective Affiliates (other than Seller), directors, officers and
successors (to the extent set forth in Section 10.9) (each, a "Buyer Indemnified
Party") from and against all out of pocket liabilities, claims, assessments,
losses, judgments, settlements, fines, penalties, damages, costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses)
(collectively, the "Buyer Damages") incurred by a Buyer Indemnified Party as a
result of or arising out of (i) the Excluded Liabilities or the Retained Assets
(other then Consigned Inventory), (ii) a breach of any representation or
warranty contained in Article IV of this Agreement, in each case, when made, and
it being understood that such representations and warranties shall be
interpreted without giving effect to any limitations or qualifications as to
"materiality" (including the word "material") or Material Adverse Effect set
forth therein (other than Section 4.10 and Section 4.14 which shall be governed
by Section 6.9 and Sections 9.5, 9.8 and 9.9 respectively) or (iii) a breach in
any material respect of any agreement or covenant of Seller in this Agreement
(other than agreements and covenants relating to Taxes and environmental
matters, which shall be governed by Section 6.9 and Sections 9.5, 9.8 and 9.9
respectively). Buyer agrees that, except as contemplated by the immediately
preceding sentence, from and after the Closing, the indemnification provided in
this Section 9.2 is the exclusive remedy for a breach by Seller of any
representation, warranty, agreement or covenant contained in this Agreement.
(b) Seller's obligations to indemnify Buyer Indemnified
Parties pursuant to Sections 9.2(a) and 9.5 hereof are subject to the following
limitations (other than as specifically set forth in Section 9.5):
(i) No indemnification shall be made by Seller with
respect to any claim for breach of any representation or warranty
pursuant to Sections 9.2(a)(ii) or 9.5 ("Buyer Claim") unless (a) the
aggregate amount of Buyer Damages incurred by a Buyer Indemnified Party
with respect to such Buyer Claim exceeds $100,000 (the "Minimum Claim
Amount") and (b) the amount of (1) aggregate Buyer Damages, under all
Buyer Claims, and (2) payments made by Buyer pursuant to Section 9.9(b)
exceeds an amount equal to $20,000,000 (twenty million dollars) (the
"Basket Amount") and, in such event, indemnification shall be made by
Seller only for the amount by which such Buyer Damages exceed, in the
aggregate, the Basket Amount;
(ii) In no event shall Seller's aggregate obligation
to indemnify the Buyer Indemnified Parties with respect to any claim
for breach of representation or warranty pursuant to Section
9.2(a)(ii), together with any indemnification pursuant to Sections 9.5,
exceed an amount equal to twenty percent (20%) of the Cash Purchase
Price (the "Cap");
(iii) In calculating amounts payable to a Buyer
Indemnified Party, the amount of any indemnified Buyer Damages shall be
determined without duplication of any other Buyer Damages for which a
Buyer Claim has been made or could be made under any other
representation, warranty, covenant, or agreement included herein;
(iv) The amount of any Buyer Damages with respect to
any claim for breach of representation or warranty pursuant to Section
9.2(a)(ii) shall be reduced by any amount (A) that is reserved for sums
held in reserve in respect of the indemnifiable event on the balance
sheet of the Business as of December 31, 2005 or reflected in the
statement of Net Working Capital used to determine the Final Net
Working Capital Amount or (B) actually received by a Buyer Indemnified
Party with respect thereto under any third party insurance coverage or
from any other party alleged to be responsible therefor. If a Buyer
Indemnified Party makes a claim for indemnification under Sections
9.2(a)(ii) or 9.5, the Buyer Indemnified Party shall use its reasonable
best efforts to collect any amounts available under such insurance
coverage and from such other party alleged to have responsibility. If a
Buyer Indemnified Party receives an amount under insurance coverage or
from such other party with respect to Buyer Damages at any time
subsequent to any indemnification provided by Seller pursuant to
Sections 9.2(a)(ii) or 9.5, then such Buyer Indemnified Party shall
promptly reimburse Seller for any payment made or expense incurred by
Seller in connection with providing such indemnification up to such
amount received by the Buyer Indemnified Party, but net of any expenses
incurred by the Buyer Indemnified Party in collecting such amount. To
the extent Seller makes any indemnification payment pursuant to
Sections 9.2(a)(ii) or 9.5 in respect of Buyer Damages for which a
Buyer Indemnified Party has a right to recover against a third party
(including an insurance company), Seller shall be subrogated to the
right of the Buyer Indemnified Party to seek and obtain recovery from
such third party; provided, however, that if Seller shall be prohibited
from such subrogation, the Buyer Indemnified Party shall seek recovery
from such third party on Seller's behalf and pay any such recovery to
Seller net of expenses;
(v) Seller shall be obligated to indemnify, subject
to the terms and conditions of this Article IX, a Buyer Indemnified
Party for breach of representation or warranty only for those Buyer
Claims as to which the Buyer Indemnified Party has given Seller written
notice prior to the end of the Indemnity Period;
(vi) Any written notice delivered by a Buyer
Indemnified Party to Seller seeking indemnification pursuant to this
Agreement with respect to Buyer Damages shall set forth, with as much
specificity as is reasonably practicable, the basis of the Buyer Claim,
the sections of this Agreement which form the basis for the Claim,
copies of material written materials relating to such Claim and, to the
extent reasonably practicable, a reasonable estimate of the amount of
the Buyer Damages that have been or may be sustained by the Buyer
Indemnified Party;
(vii) Any indemnity amounts payable by Seller to or
on behalf of the Buyer Indemnified Parties pursuant to this Agreement
(including, without limitation, any indemnity payment made under this
Article IX) shall be reduced by any Tax Benefit arising from the claim,
loss or damage actually received in cash in the current year for which
the indemnity is being paid; and
(viii) Notwithstanding any other provision of this
Agreement, in no event shall Buyer be entitled to indemnification
pursuant to this Agreement to the extent of the Buyer Damages
attributable to Buyer's own gross negligence or willful misconduct.
Section 9.3 The Acquirors' Agreement to Indemnify.
(a) Subject to the terms of this Article IX, from and after
the Closing, each of the Acquirors, severally and not jointly, shall indemnify
and hold harmless Seller, its Affiliates and each of their respective directors,
officers and successors (to the extent set forth in Section 10.9) (each, a
"Seller Indemnified Party") from and against all out of pocket liabilities,
claims, assessments, losses, judgments, settlements, fines, penalties, damages,
costs and expenses (including, without limitation, reasonable attorneys' fees
and expenses) (collectively, the "Seller Damages") incurred by a Seller
Indemnified Party as a result of or arising out of (i) the Assumed Liabilities,
the Acquired Assets and the Consigned Inventory, (ii) a breach of any
representation or warranty contained in Article V of this Agreement, in each
case when made, and it being understood that such representations and warranties
shall be interpreted without giving effect to any limitations or qualifications
as to "materiality" (including the word "material") or Material Adverse Effect
set forth therein, (iii) a breach of any agreement or covenant in any material
respect of an Acquiror contained herein including any covenant concerning
Affected Employees set forth in Section 6.8 (other than agreements and covenants
relating to Taxes, which shall be governed exclusively by Section 6.9) or (iv)
the use, operation or ownership of the Business or any of the Acquired Assets
(excluding the Excluded Liabilities and Retained Assets (other than the
Consigned Inventory)) after the Closing. Seller agrees that, except as
contemplated by the immediately preceding sentence, from and after the Closing,
the indemnification provided in this Section 9.3 is the exclusive remedy for a
breach by an Acquiror of any representation, warranty, agreement or covenant
contained in this Agreement. Notwithstanding the foregoing, Buyer shall not,
with respect to the preceding clauses (i) and (iv), indemnify the Seller
Indemnified Parties for Seller Damages related to the Consigned Inventory not
incurred as a result of or arising out of third-party claims.
(b) The Acquirors' obligations to indemnify Seller Indemnified
Parties pursuant to Section 9.3(a) are subject to the following limitations:
(i) No indemnification shall be made by either of the
Acquirors with respect to any claim for breach of representation or
warranty pursuant to Section 9.3(a)(ii) ("Seller Claim") unless (a) the
aggregate amount of Seller Damages incurred by a Seller Indemnified
Party with respect to such Seller Claim exceeds the Minimum Claim
Amount and (b) the aggregate amount of Seller Damages, under all Seller
Claims, exceeds the Basket Amount and, in such event, indemnification
shall be made by the Acquirors only for the amount by which such Seller
Damages exceed, in the aggregate, the Basket Amount;
(ii) In no event shall the Acquirors' aggregate
obligation to indemnify the Seller Indemnified Parties with respect to
any claim for breach of representation or warranty pursuant to Section
9.3(a)(ii) exceed an amount equal to the Cap;
(iii) In calculating amounts payable to a Seller
Indemnified Party, the amount of any indemnified Seller Damages shall
be determined without duplication of any other Seller Damages for which
a Seller Claim has been made or could be made under any other
representation, warranty, covenant, or agreement included herein;
(iv) The amount of any Seller Damages shall be
reduced by any amount that was actually received by a Seller
Indemnified Party with respect thereto under any third party insurance
coverage or from any other party alleged to be responsible therefor. If
a Seller Indemnified Party makes a claim for indemnification under
Section 9.3, the Seller Indemnified Party shall use its reasonable best
efforts to collect any amounts available under such insurance coverage
and from such other party alleged to have responsibility. If the Seller
Indemnified Party receives an amount under insurance coverage or from
such other party with respect to the Seller Damages at any time
subsequent to any indemnification provided by an Acquiror pursuant to
Section 9.3, then Seller shall promptly reimburse such Acquiror for any
payment made or expense incurred by such Acquiror in connection with
providing such indemnification up to such amount received by a Seller
Indemnified Party, but net of any expenses incurred by the Seller
Indemnified Party in collecting such amount. To the extent an Acquiror
makes any indemnification payment pursuant to Section 9.3 in respect of
the Seller Indemnified Party Damages for which a Seller Indemnified
Party has a right to recover against a third party (including an
insurance company, such Acquiror shall be subrogated to the right of
the Seller Indemnified Party to seek and obtain recovery from such
third party; provided, however, that if such Acquiror shall be
prohibited from such subrogation, the Seller Indemnified Party shall
seek recovery from such third party on such Acquiror's behalf and pay
any such recovery to such Acquiror, net of expenses;
(v) The Acquirors shall be obligated to indemnify,
subject to the terms and conditions of this Article IX, a Seller
Indemnified Party for breach of any representation or warranty only for
those Seller Claims as to which a Seller Indemnified Party has given
either of the Acquirors written notice prior to the end of the
Indemnity Period;
(vi) Any written notice delivered by a Seller
Indemnified Party to either of the Acquirors seeking indemnification
pursuant to this Agreement with respect to Seller Damages shall set
forth, with as much specificity as is reasonably practicable, the basis
of the Seller Claim, the sections of this Agreement which form the
basis for the Seller Claim, copies of material written materials
relating to such Seller Claim and, to the extent reasonably
practicable, a reasonable estimate of the amount of the Seller Damages
that have been or may be sustained by the Seller Indemnified Party;
(vii) Any indemnity amounts payable by Buyer to or on
behalf of Seller pursuant to this Agreement (including, without
limitation, any indemnity payment made under this Article IX) shall be
reduced by any Tax Benefit arising from the claim, loss or damage
actually received in cash in the current year or a previous year for
which the indemnity is being paid; and
(viii) Notwithstanding any other provision of this
Agreement, in no event shall Seller be entitled to indemnification
pursuant to this Agreement to the extent of the Seller Damages
attributable to Seller's own gross negligence or willful misconduct.
Section 9.4 Third Party Indemnification. The obligations of
any indemnifying party to indemnify any indemnified party under this Article IX
with respect to Buyer Damages or Seller Damages, as the case may be, resulting
from the assertion of a Buyer Claim or of a claim under Section 9.10,
respectively, by third parties (including Governmental Entities) (a "Claim"),
shall be subject to the following terms and conditions:
(a) Any party against whom any Claim is asserted shall give
the party required to provide indemnity hereunder written notice of any such
Claim promptly after learning of such Claim (with such notice satisfying the
requirements of Section 9.2(b)(vi) or 9.3(b)(vi), as the case may be), and the
indemnifying party may at its option undertake the defense thereof by
representatives of its own choosing and shall provide written notice of any such
undertaking to the indemnified party. Failure to give prompt written notice of a
Claim hereunder shall not affect the indemnifying party's obligations under this
Article IX, except to the extent that the indemnifying party is actually
prejudiced by such failure to give prompt written notice. The indemnified party
shall, and shall cause its employees and representatives to, cooperate with the
indemnifying party in connection with the settlement or defense of such Claim
and shall provide the indemnifying party with all available information and
documents concerning such Claim. The indemnifying party shall provide the
indemnified party with copies of all non-privileged communications and other
information in respect of the Claim. If the indemnifying party, within thirty
(30) days after written notice of any such Claim, fails to assume the defense of
such Claim, or, after assuming defense, negligently fails to defend and fails to
call after reasonable written notice of the same, the indemnified party against
whom such claim has been made shall (upon further written notice to the
indemnifying party) have the right to undertake the defense, compromise or
settlement of such claim on behalf of and for the account and risk, and at the
expense, of the indemnifying party, subject to the right of the indemnifying
party to assume the defense of such Claim at any time prior to settlement,
compromise or final determination thereof upon written notice to the indemnified
party.
(b) Anything in this Section 9.4 to the contrary
notwithstanding, (i) the indemnified party shall not settle a claim for which it
is indemnified without the prior written consent of the indemnifying party,
which consent shall not be unreasonably withheld, conditioned or delayed and
(ii) the indemnifying party shall not enter into any settlement or compromise of
any action, suit or proceeding, or consent to the entry of any judgment for
relief other than monetary damages to be borne by the indemnifying party,
without the prior written consent of the indemnified party, which consent shall
not be unreasonably withheld, conditioned or delayed.
Section 9.5 Environmental Liability.
(a) If the Closing occurs, subject to the provisions of
Section 9.2(b) (except that the Minimum Claim Amount and Basket Amount in
Section 9.2(b)(i) shall not apply in connection with clauses (ii), (iii) and (v)
below and the Cap in Section 9.2(b)(ii) shall not apply to clause (v) below),
Section 9.4 and Section 9.6, Seller shall indemnify, defend and hold harmless
the Buyer Indemnified Parties from and against any Buyer Damages incurred or
suffered by Buyer (i) as a result of or arising out of a breach of any
representation or warranty set forth in Section 4.14, it being understood that
such representations and warranties shall be interpreted without giving effect
to any limitations or qualifications as to materiality (including the word
"material") or Material Adverse Effect, (ii) as a consequence of Hazardous
Substances that are present or released on or before the Closing at, on, under,
about or migrating from any of the Real Property subject to special limitations
provided in Section 9.5(c); (iii) in connection with claims or proceedings by
third parties in respect of personal injury or property damage as a result of
Hazardous Substances that were present or released, on or before the Closing,
at, on, under, about or migrating from, any of the Real Property; subject to
special limitations set forth in Section 9.5(c); (iv) in connection with
violations by Seller (in respect of the Business) of any applicable
Environmental Law (including any Permits issued pursuant to such applicable
Environmental Law) prior to the Closing and (v) as a result of or arising out of
the breach of any agreement or covenant in this Agreement relating to
environmental matters, other than with respect to Section 9.8 or Section 9.9.
(b) Limitations as to Dams and Landfills Indemnity. Anything
in this Agreement notwithstanding, the indemnification provided by Seller in
Section 9.5(a) hereof shall not include (i) the cost of operation, opening,
closure, or maintenance of any landfills at, or associated with the operation
of, any of the Real Property and which landfills are disclosed in Section 4.14
of the Seller Disclosure Letter, or compliance with the requirements imposed by
or agreed to with any Governmental Entity as of the Closing Date at any such
landfill, except to the extent that Buyer can demonstrate that such costs, as
well as any increase in such costs subsequent to the Closing Date, result from
(A) a Release of Hazardous Substances from or at such landfill prior to the
Closing Date and (B) a requirement imposed by Environmental Law, a Governmental
Entity (pursuant to Environmental Law), or agreement with any Governmental
Entity or third person (entered pursuant to the requirements of Section 9.4
hereof and pursuant to Environmental Law), other than any such requirement or
agreement existing as of the Closing Date, and which is otherwise eligible for
the indemnification provided in Section 9.5(a) hereof; and (ii) the cost of
operation, opening, closure, or maintenance of dams and all appurtenant
structures such as fish ladders, at, or associated with the operation of, any of
the Real Property, other than as set forth in Section 9.8, and which dams and
appurtenant structures disclosed in Section 4.14 of the Seller Disclosure
Letter, including compliance with any conditions of any Permits applicable
thereto (regardless of whether issued, expired, or renewed before or after the
Closing Date), except to the extent that such costs or an increase in such costs
subsequent to the Closing Date, result from (A) a Release of Hazardous
Substances in connection with such dam prior to the Closing Date and (B)
provided that such indemnification shall include any violation of Environmental
Law arising from the existence or operation of such dams and structures to the
extent provided in Section 9.5(a)(iv) hereof.
(c) Survival. Seller's obligation to indemnify, defend and
hold harmless Buyer for the matters addressed in Section 9.5(a) shall be limited
to those matters as to which Buyer provides Seller with written notice (such
notice to be in conformance with Section 9.2(b)(iv)) within two (2) years after
the Closing, provided that, such two-year period shall not expire until four
years after the Closing for any matter as to which Buyer can demonstrate the
presence of a release of Hazardous Substances for which Seller is providing an
indemnification to Buyer in this Agreement occurred before the Closing and the
concentration of any such Hazardous Substance resulting from the presence of or
a release in any environmental medium first exceeded a Remediation Standard
subsequent to the Closing Date but before the fourth anniversary of the Closing
Date, provided that Seller's obligation to indemnify the Buyer in such instances
shall be limited to the extent of Seller's pre-Closing contribution to the
contamination which is the subject of remediation.
(d) General Limitations. With respect to claims to defend,
indemnify and hold harmless Buyer pursuant to Section 9.5(a):
(i) Seller shall only be required to defend,
indemnify and hold harmless Buyer to the extent that: (A) the
investigation, containment, remediation or liability for damages as to
Hazardous Substances is pursuant to an Environmental Law that is in
effect as of and is enforceable as of the Closing; (B) the Remediation
Standards, if any, that must be met in order to satisfy the
requirements of Environmental Law: (1) are no more stringent than the
Remediation Standards that were in effect (if any) as of the Closing
Date under the applicable Environmental Law that is the source of the
obligation to conduct a remediation, or, where no such Remediation
Standards had been promulgated and were enforceable as of the Closing
Date, Remediation Standards that were applied by a Governmental Entity,
within one (1) year prior to the Closing Date, on a case-by-case basis,
to properties that are most similar to the property that is subject to
a remediation in the same jurisdiction and (2) are those Remediation
Standards that would be the least stringent Remediation Standards
acceptable to a Governmental Entity, taking into account that the
normal operating condition at the affected facility shall be maintained
at all times, that would be applicable given the use of the property as
of the Closing Date; and (C) investigation, containment and/or
remediation is conducted using the most cost effective methods, taking
into account that the normal operating condition at the affected
facility shall be maintained at all times, for investigation,
remediation and/or containment consistent with applicable Environmental
Law. To the extent that the Buyer Damages incurred in connection with
an investigation, containment or remediation are in excess of the Buyer
Damages that would be incurred for an investigation, containment or
remediation meeting the conditions set forth in this subsection, Seller
shall have no obligation to indemnify Buyer for such excess Buyer
Damages. If Seller is undertaking investigative or remedial action,
Seller shall use its reasonable best efforts to minimize, to the extent
practicable, interference with Buyer's business operations.
(ii) If the costs of an investigation, containment or
remediation at any of the Real Property that is subject to an indemnity
by Seller hereunder are increased due to an act or omission (after the
Closing) by a Person other than Seller, a Subsidiary of Seller, or an
agent, representative or contractor of Seller, Seller shall not be
responsible for any such increase in costs incurred. Seller shall not
be responsible for any increased costs or increased Buyer Damages under
this subsection to the extent they arise by reason of (A) the voluntary
closure of operations at the Owned Real Property or (B) a material
change in use of any of said property from the use of said property as
of the Closing.
(e) Limitation as to Remediation Projects. Anything in this
Agreement notwithstanding, the indemnification provided by Seller in Section
9.5(a) hereof shall be subject to the following conditions: (i) To the extent
necessary to achieve the purposes set forth in Sections 9.5 and 9.6 hereof,
Buyer shall not unreasonably withhold consent to a deed restriction or other
institutional controls required by and acceptable to a Governmental Entity under
Environmental Law on the relevant facility that is subject to such
indemnification, provided that such deed restriction or other institutional
controls shall not restrict or limit the industrial activities which were being
performed at such facility as of the Closing Date.
(ii) Buyer agrees that it shall and shall cause any
of the Subsidiaries to, in good faith, seek to enter, when necessary,
into an agreement with the Governmental Entity having jurisdiction over
the investigation or remedial action, or other action, which is the
subject of this Section 9.5 or of Section 9.6 to allow the Seller to
use the most commercially reasonable method and least stringent
Remediation Standard acceptable to a Governmental Entity and affected
parties in connection with such investigation or remediation under such
circumstances and use.
(iii) Seller and Buyer agree that the issuance of a
"no further action" letter or the equivalent indicia of completion
issued by any Governmental Entity having jurisdiction over remediation
shall constitute completion of Seller's obligations under this Section
9.5 or Section 9.6 which is subject to approval by a Governmental
Entity, regardless of any language in such document allowing the matter
to be reopened for non-material conditions.
(iv) Buyer shall not, and shall not cause any other
Person to, provide or disclose to any Person or Governmental Entity,
any information in any form including reports, analyses, sampling
results or data, relating to any of the conditions which this Section
9.5 or Section 9.6 requires Seller to investigate or remediate, except
to the extent that such disclosure is required by Environmental Laws or
by a Governmental Entity, or in connection with a sale of the Business
(subject to appropriate confidentiality obligations).
(f) Indemnity as to Oversight Costs. Notwithstanding anything
to the contrary herein, with respect to claims arising pursuant to Section 9.5,
the parties shall not be obligated to indemnify for the costs and expenses
associated with oversight of performance of defense and indemnity obligations,
including, but not limited to, the costs and expenses of overseeing legal
counsel, consultants, or employees, and the parties shall not be obligated to
indemnify each other for any costs or expenses for management and employee time
costs.
(g) Indemnity for Breach of Environmental Representation or
Covenant. If Buyer may seek indemnification for a claim pursuant to Section
9.5(a) and either Section 9.8 or Section 9.9, then the provisions of Section 9.8
or Section 9.9, as the case may be, shall govern. For the avoidance of doubt,
Buyer's right to indemnity under Section 9.5(a) shall be without duplication for
claims that Buyer may make under more than one clause of Section 9.5(a) and
Buyer's right to indemnification under either Section 9.8 or Section 9.9 shall
be without duplication for claims that Buyer may make under Section 9.5.
(h) Indemnity Procedures to Apply. Except as otherwise noted,
Claims brought pursuant to this Section 9.5 that constitute "Claims" as defined
in Section 9.4 shall be subject to the procedures for indemnification set forth
in Section 9.4 if such claims are third party claims. Claims that involve or
also involve the investigation, containment and/or remediation of Hazardous
Substances at the Real Property shall also be subject to the procedures of
Section 9.6.
Section 9.6 Additional Procedures for Remedial Actions on the
Real Property.
(a) Seller shall have the right to control the management of
an investigation, containment or remediation of Hazardous Substances at the Real
Property that is subject to indemnification pursuant to this Agreement. Buyer
hereby grants Seller reasonable continued access to the Real Property consistent
with such right to control the management of an investigation, containment or
remediation provided Seller's entry onto the Buyer's property shall be at
reasonable times, and on reasonable advance notice and Seller shall use its
reasonable best efforts so that such entry is without unreasonable interference
to Buyer's business operations. Seller must notify Buyer, within sixty (60) days
of receipt of notice of Buyer's claim for indemnification for such matter, that
(i) it intends to undertake said responsibility or (ii) more information is
needed from Buyer before Seller can reasonably determine that Buyer's claim is
subject to indemnification pursuant to this Agreement. Buyer shall promptly
respond to such requests for information (to the extent such information is
reasonably available to Buyer) and, within thirty (30) days of receipt of such
information, Seller shall notify Buyer as to whether it shall undertake the
investigation, containment and/or remediation. Prior to a determination by
Seller that it will undertake investigation, containment and/or remediation
pursuant to this Section, Buyer shall take only those actions necessary to
comply with applicable Environmental Laws, the requirements of Governmental
Authorities or address conditions that pose a substantial imminent endangerment
to health, safety or the environment.
(b) In undertaking an investigation, containment and/or
remediation pursuant to this Section 9.6, Seller shall retain a qualified
independent environmental consultant, which consultant shall be subject to
Buyer's approval (such approval not to be unreasonably withheld, conditioned or
delayed). Seller shall undertake such investigation, containment and/or
remediation in a prompt and expeditious fashion in accordance with applicable
Environmental Laws and shall not cause, through its own inaction, any undue
delay in obtaining written approvals from appropriate regulatory bodies as to
investigation, containment or remediation 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 independent
environmental consultant that no further investigation, containment or
remediation is required to bring the property that is the subject of the
remedial action into conformance with applicable Environmental Laws. Seller
shall comply with all Applicable Laws, including all applicable Environmental
Laws, with respect to its performance pursuant to this Section 9.6. In the event
that Seller undertakes the performance of an investigation, containment and/or
remediation pursuant to this Section 9.6, Seller shall have primary
responsibility to interact and negotiate with any Governmental Authorities
having jurisdiction over such investigation, containment and/or remediation.
Seller shall promptly provide copies to Buyer of all notices, correspondence,
draft reports, submissions, work plans, and final reports and shall give Buyer a
reasonable opportunity (at Buyer's own expense) to comment on any submissions
Seller intends to deliver or submit to the appropriate regulatory body prior to
said submission. Buyer may, at its own expense, hire its own consultants,
attorneys or other professionals to monitor the investigation, containment
and/or remediation, including any field work undertaken by Seller, and Seller
shall provide Buyer with copies of the results of all such field work.
Notwithstanding the above, Buyer shall not take any actions that shall
unreasonably interfere with Seller's performance of the investigation,
remediation and/or containment. Seller shall undertake any such work required
hereby in a manner designed to minimize any disruption, to the extent reasonably
possible, with the conduct of operations at the applicable property. Buyer shall
allow Seller reasonable access to conduct any of the work contemplated herein
and shall fully cooperate with Seller in the performance of the investigation,
remediation or containment, including, but not limited to, providing Seller with
reasonable access to employees and documents as Seller reasonably deems
necessary.
(c) If Seller declines to undertake the performance of an
investigation, containment and/or remediation hereunder or wrongfully fails to
perform and fails to cure the same after reasonable notice, Buyer shall be
entitled to control the investigation, containment and/or remediation. Buyer
shall promptly provide copies to Seller of all notices, correspondence, draft
reports, submissions, work plans, and final reports and shall give Seller a
reasonable opportunity (at Seller's own expense) to comment on any submissions
Buyer intends to deliver or submit to the appropriate regulatory body prior to
said submission. Seller may, at its own expense, hire its own consultants,
attorneys or other professionals to monitor the investigation containment and/or
remediation, including any field work undertaken by Buyer, and Buyer shall
provide Seller with copies of the results of all such field work.
Notwithstanding the above, Seller shall not take any actions that shall
unreasonably interfere with Buyer's performance of the investigation,
containment and/or remediation. Seller's decision to allow Buyer to undertake
investigation and remediation hereunder shall not limit or affect Seller's
obligation to indemnify Buyer for said investigation, containment and/or
remediation as otherwise provided in this Agreement.
Section 9.7 Exclusive Remedy for Environmental Matters;
Indemnification by Buyer. Notwithstanding anything to the contrary in this
Agreement, Buyer hereby agrees that its sole and exclusive remedy against
Seller, with respect to any and all matters arising under or related to
Environmental Law or Hazardous Substances and with respect to the Business and
the Owned Real Property, shall be the indemnification rights set forth in
Section 9.5, Section 9.8 and Section 9.9. Except with respect to the remedy
referred to in the preceding sentence, Buyer hereby waives, to the fullest
extent permitted under applicable law, and forever release Seller (with respect
to the Business) and the Owned Real Property, from, and indemnify and hold
harmless the Seller Indemnities against, any and all Claims or Seller Damages
arising under Environmental Laws or relating to Hazardous Substances or the
environment.
Section 9.8 Xxxxx Dam Indemnity.
(a) If the Closing occurs, then subject to the procedures set
forth in clause (b) below, Seller shall indemnity, defend and hold harmless the
Buyer Indemnified Parties from and against any Buyer Damages, including
investigation and remediation costs, incurred by Buyer in excess of $2 million
prior to the later of (i) two (2) years from the Closing Date (it being the
present intention of the parties that an investigation shall be completed in the
fall of 2006 and remediation shall be completed in 2007) or (ii) such later date
as may reasonably be required in consideration of river conditions relevant to
such investigation and remediation, reasonable agreement of the parties on final
remedy as provided in clause (b) below, and necessary approvals from
Governmental Entities and third parties, in connection with restoration or
replacement of the Xxxxx Dam for the purpose of abating subsidence occurring at,
and repairing deterioration causing such subsidence of the Xxxxx Dam, but only
to the extent such damage or deterioration to the Xxxxx Dam is not caused by
Buyer (other than the operation of the Xxxxx Dam in the ordinary course of
business).
(b) For purposes of this section, indemnified costs shall be
limited to the lowest reasonable cost applicable to accomplish restoration or
replacement, taking into account: (i) the normal operating conditions at the
affected facilities and (ii) applicable law. Seller shall have the right to
control all investigation and remediation actions, including communication with
affected parties and Governmental Entities having jurisdiction over such
actions, provided that Seller shall take all reasonable measures, to the extent
practical, to prevent disruption of normal business operations at the affected
facilities. Buyer also shall provide Seller reasonable access to the Real
Property and affected facilities to conduct any of the work contemplated herein
and shall fully cooperate with Seller in the performance of such work. Seller
shall promptly provide copies to Buyer of all notices, correspondence, draft and
final reports, draft and final designs, pleadings, submissions, and work plans,
and shall give Buyer reasonable opportunity (at Buyer's sole expense) to provide
advance comment on any material designs as well as any administrative or
judicial submissions (including communications to Governmental Entities or third
parties), and Seller shall give reasonable consideration to the same. Any final
restoration or replacement plan shall be subject to approval of Buyer, such
approval not to be unreasonably withheld or delayed. Buyer may, at its own
expense, hire its own consultants, attorney or other professionals to monitor
the investigation and remediation without unreasonable interference or delay to
Seller's performance of the investigation and remediation. If Seller negligently
fails to perform the investigation or remediation as provided in clause (a) and
fails to cure after reasonable written notice of the same, Buyer shall have the
right to undertake the investigation and remediation.
Section 9.9 Androscoggin Wastewater Indemnity.
(a) If the Closing occurs, and if the terms and conditions of
the Androscoggin Wastewater Permits in existence as of the date hereof (the
"Existing Androscoggin Wastewater Permit") are made more stringent in
resolution of the challenges and allegations made in the proceedings listed on
Section 9.9 of the Seller Disclosure Letter, including amendments to such
permit, or replacement of such permit with a new permit, including pursuant to
any judicial, administrative, or consented to resolution of such proceedings
(such amended permit or new permit, as applicable, the "Replacement
Androscoggin Wastewater Permits"), Seller shall, subject to the limitations set
forth in Section 9.9(b) and (c) below, indemnify, defend and hold harmless the
Buyer Indemnified Parties for: (i) any capital expenditures required to be
incurred by a Buyer Indemnified Party for the purpose of complying with the
terms and conditions of the Replacement Androscoggin Wastewater Permit
("Androscoggin Cap Ex Costs"), (ii) any operational and maintenance costs
required to be incurred by Buyer for the purpose of complying with the terms
and conditions of the Replacement Androscoggin Wastewater Permits
("Androscoggin O&M Costs") and (iii) fines, penalties and third-party damages
arising from civil and administrative challenges to and claims in respect of
the Existing Androscoggin Wastewater Permits, in each case, including all out
of pocket liabilities, losses, costs and expenses (including reasonable
attorney's fees) ("Androscoggin Fines"); provided, however, that Seller's
indemnification obligations pursuant to this Section 9.9(a) shall terminate on
the earlier of (A) the expiration of the Replacement Androscoggin Wastewater
Permit (or the expiration of the Existing Androscoggin Wastewater Permit, if
such Existing Androscoggin Wastewater Permit is amended to resolve the
challenges and allegations described in this Section 9.9(a) or the challenges
and allegations are resolved in favor of Buyer) or (B) the tenth (10th)
anniversary of the Closing Date.
(b) Notwithstanding the provisions of Section 9.9(a), Seller
shall indemnify the Buyer Indemnified Parties for 50% of Androscoggin Cap Ex and
Androscoggin O&M Costs incurred by a Buyer Indemnified Party, and Buyer shall be
responsible for the other 50% of such Androscoggin Cap Ex and Androscoggin O&M
Costs. Such amounts paid by Buyer shall be included as part of Buyer Damages
sustained by Buyer in satisfaction of the Basket Amount, and such amounts as are
paid by Seller shall be included in the calculation of Buyer Damages paid by
Seller in satisfaction of the Cap. Seller shall not be liable for Androscoggin
Cap Ex and Androscoggin O&M Costs (together with other payments made pursuant to
Section 9.2) in excess of the Cap. Seller shall indemnify the Buyer Indemnified
Parties for 100% any Androscoggin Fines.
(c) For purposes of this section, indemnified compliance costs
shall be limited to the lowest reasonable cost acceptable to Governmental
Entities and consistent with maintenance of normal operating conditions at the
affected facilities. Buyer shall have the right to control the defense of the
Androscoggin Wastewater Indemnity matters, including communication with any
Governmental Entities having jurisdiction over such matters and any parties to
the judicial proceedings. Buyer shall provide Seller with copies of all notices,
correspondence, submissions, reports and pleadings and shall give Seller
reasonable opportunity (at Seller's own expense) to comment on any material
administrative and judicial submissions. Buyer shall afford Seller the
opportunity, on reasonable advance notice, to participate in all administrative
and judicial conferences and settlement discussion. Seller may, at is own
expense, hire its own consultants, attorneys or other advisors to assist in
review of such documents or to participate in such proceedings as provided for
herein. Buyer shall also afford Seller the opportunity, on reasonable advance
notice, to comment on any proposed judicial and administrative settlement and
provide its consent to the same, such consent not to be unreasonably withheld.
Section 9.10 BELLC Indemnity. If the Closing occurs, Seller
shall indemnify, defend and hold harmless the Buyer Indemnified Parties from and
against Buyer Damages arising from any claims related to or arising from the
allegations set forth in item 1(iii) of Schedule V, provided that with respect
to any Buyer Damages arising under the Amended and Restated Co-Owners Ownership,
Operating & Mutual Sales Agreement, between Seller (as successor by merger to
Champion International Corporation) and BELLC, dated as of July 27, 1999, as
amended on July 27, 1999, Seller's obligation to indemnify Buyer therefore shall
be limited to those Buyer Damages arising under the terms of such agreement in
effect as of the Closing Date.
Section 9.11 Indemnification Following Transfer. In the event
Buyer shall sell, transfer or dispose of all or a portion of the Business
("Transferred Business") to another Person, Buyer shall, with respect to the
Transferred Business, continue to be entitled to make indemnity claims against
Seller, for Buyer Damages incurred with respect to the Transferred Business,
subject to and in accordance with this Article IX or Article VI, as if such
Transferred Business continued to be owned by Buyer to the extent related to
indemnification claims brought by such Person against Buyer.
ARTICLE X
MISCELLANEOUS
Section 10.1 Remedies. NOTWITHSTANDING ANY OTHER PROVISION OF
THIS AGREEMENT, INCLUDING ARTICLE IX, IN NO EVENT SHALL THE ACQUIRORS OR SELLER
BE LIABLE FOR, OR BEAR ANY OBLIGATION IN RESPECT OF, ANY PUNITIVE, INCIDENTAL,
INDIRECT, SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES OF ANY KIND OR CHARACTER
OR ANY DAMAGES RELATING TO, OR ARISING OUT OF, LOST PROFITS, OR LIMITATIONS OR
RESTRICTIONS ON BUSINESS PRACTICES, EXCEPT (I) TO THE EXTENT THAT IN CONNECTION
WITH ANY INDEMNIFICATION CLAIM UNDER ARTICLE IX SUCH DAMAGES ARE AWARDED TO A
THIRD PARTY (NOT THE ACQUIRORS OR SELLER OR THEIR RESPECTIVE AFFILIATES), (II)
THIS SENTENCE SHALL NOT PRECLUDE THE ACQUIRORS FROM MAKING A CLAIM, IN THE EVENT
OF A BREACH OF THE REPRESENTATIONS OF SELLER CONTAINED SECTION 4.5 OF THIS
AGREEMENT, FOR THE RECOVERY OF DAMAGES CAUSED BY SUCH BREACH ON THE BASIS OF ANY
CLAIMED LOSS IN THE VALUE OF THE BUSINESS AS OF THE CLOSING DATE AS COMPARED TO
THE PURCHASE PRICE, EVEN IF SUCH DAMAGES WERE DETERMINED TO BE INCIDENTAL,
INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OR DAMAGES RELATING TO, OR ARISING
OUT OF LOST PROFITS AND (III) THE FOREGOING CLAUSE (II) DOES NOT CONSTITUTE AN
ACKNOWLEDGMENT OR AGREEMENT BY SELLER THAT SUCH DAMAGES ARE APPROPRIATE IN ANY
PARTICULAR CASE AND SHALL NOT PRECLUDE THE SELLER FROM DISPUTING ANY SUCH CLAIM
FOR DAMAGES.
Section 10.2 Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
transmission) and shall be given (i) by personal delivery to the appropriate
address as set forth below (or at such other address for the party as shall have
been previously specified in writing to the other party), (ii) by reliable
overnight courier service (with confirmation) to the appropriate address as set
forth below (or at such other address for the party as shall have been
previously specified in writing to the other party), or (iii) by facsimile
transmission (with confirmation) to the appropriate facsimile number set forth
below (or at such other facsimile number for the party as shall have been
previously specified in writing to the other party) with follow-up copy by
reliable overnight courier service the next Business Day:
(a) if to the Acquirors, to:
CMP Investments LP
CMP Holdings LLC
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxx
Facsimile: (000) 000-0000
and
(b) if to Seller, to:
International Paper Company
0000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Meager & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxx, Esq.
Xxxxxxxx Xxxxx, Esq.
Facsimile: (000) 000-0000
All such notices, requests and other communications shall be
deemed received on the date of receipt by the recipient thereof if received
prior to 5 p.m. (New York City time) and such day is a Business Day in the place
of receipt. Otherwise, any such notice, request or communication shall be deemed
not to have been received until the next succeeding Business Day.
Section 10.3 Extensions, Waivers and Amendments. At any time
prior to the Closing, each of the parties hereto may (i) extend the time for the
performance of any of the obligations or acts of the other party hereto, (ii)
waive any inaccuracies in the representations and warranties of the other party
contained herein or in any document delivered pursuant hereto, (iii) waive
compliance with any of the agreements of the other party contained herein or
(iv) waive any condition to its obligations hereunder. Any agreement on the part
of a party hereto to any such extension or waiver shall be valid only if set
forth in a written instrument signed on behalf of such party. No failure or
delay in exercising any right, power or privilege hereunder will operate as a
waiver thereof, nor will any single or partial exercise thereof preclude any
other or further exercise of any right, power or privilege hereunder. This
Agreement may not be modified or amended except by an instrument or instruments
in writing signed by an authorized officer of each party.
Section 10.4 Headings. The table of contents and the article,
section, paragraph and other headings contained in this Agreement are inserted
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 10.5 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original, but
all of which together shall constitute one and the same agreement.
Section 10.6 Entire Agreement. This Agreement, the Ancillary
Agreements, the Disclosure Letters, the Exhibits hereto, the Schedules hereto,
and the Confidentiality Agreement constitute the entire agreement between the
parties hereto with respect to the subject matter hereof, and supersede and
cancel all prior agreements, negotiations, correspondence, undertakings,
understandings and communications of the parties, oral and written, with respect
to the subject matter hereof.
Section 10.7 Governing Law. THIS AGREEMENT, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OR CHOICE OF LAWS OR ANY OTHER LAW THAT WOULD MAKE
THE LAWS OF ANY OTHER JURISDICTION OTHER THAN THE STATE OF NEW YORK APPLICABLE
HERETO.
Section 10.8 Waiver of Jury Trial. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION,
CLAIM, SUIT, LITIGATION OR OTHER PROCEEDING BETWEEN THE PARTIES HERETO IN ANY
NEW YORK COURT.
Section 10.9 Assignment. This Agreement may not be assigned by
any party hereto without the prior written consent of the other party.
Notwithstanding the foregoing, (i) Acquirors may assign this Agreement and the
Ancillary Agreements (other than, in the case of Buyer, the Transition Services
Agreement), in whole or in part, to any of their Affiliates but in no event
shall such assignment release the Acquirors from their obligations hereunder,
(ii) Buyer may assign the Transition Services Agreement to an Affiliate in
connection with the assignment of this Agreement to such Affiliate pursuant to
clause (i) above, (iii) any party may assign this Agreement and the Ancillary
Agreements (other than the Transition Services Agreement) to an entity which has
succeeded to all or substantially all of the assets of such party, so long as
such party assumes the assigning party's obligations in writing, and (iv) Buyer
may collaterally assign its rights under this Agreement and the Ancillary
Agreements (including the Transition Services Agreement) to any Person providing
financing related to the transactions contemplated hereby, but in no event shall
such assignment release the Buyer from its obligations hereunder.
Section 10.10 Fees and Expenses. Whether or not the
transactions contemplated by this Agreement are consummated, each party shall
bear its own fees and expenses incurred in connection with the transactions
contemplated by this Agreement, except Seller shall bear all Transfer Taxes up
to $5,000,000 in the aggregate and all Transfer Taxes in excess of $5,000,000
shall be borne 50% by Buyer and 50% by Seller. Buyer and Seller shall cooperate
to provide all certifications necessary to minimize any such Transfer Taxes.
Section 10.11 Binding Nature; Third-Party Beneficiaries. This
Agreement shall be binding upon and inure solely to the benefit of the parties
hereto and their respective successors (whether by operation of law or
otherwise) and permitted assigns. Except specifically as set forth in Section
6.8(c) and Article IX, nothing in this Agreement, express or implied, is
intended to or shall confer upon any other Person or Persons (including, without
limitation, any employee or collective bargaining representatives thereof) any
rights, benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
Section 10.12 Severability. This Agreement shall be deemed
severable; the invalidity or unenforceability of any term or provision of this
Agreement shall not affect the validity or enforceability of this Agreement or
of any other term hereof, which shall remain in full force and effect, for so
long as the economic or legal substance of the transactions contemplated by this
Agreement is not affected in any manner materially adverse to any party. The
parties hereby acknowledge and agree that the covenants set forth in Section
6.10 and Section 6.11 are reasonable in scope and in all other respects. If it
is ever held that any restriction hereunder is too broad to permit enforcement
of such restriction to its fullest extent, each party agrees that such
restriction may be enforced to the maximum extent permitted by law, and each
party hereby consents and agrees that such scope may be judicially modified
accordingly in any proceeding brought to enforce such restriction.
Section 10.13 No Right of Setoff. Neither party hereto nor any
Affiliate thereof may deduct from, set off, holdback or otherwise reduce in any
manner whatsoever any amount owed to it hereunder or pursuant to any Ancillary
Agreement against any amounts owed hereunder or pursuant to any Ancillary
Agreement by such Persons to the other party hereto or any of such other party's
Affiliates.
Section 10.14 Specific Performance. The parties hereto agree
that irreparable damage would occur in the event that any provision of this
Agreement was not performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or equity.
Section 10.15 Construction.
(a) Information disclosed in any section of the Seller
Disclosure Letter or the Buyer Disclosure Letter shall be deemed to be disclosed
with respect to such other sections of this Agreement or the Seller Disclosure
Letter to which such disclosure would reasonably pertain in light of the form
and substance of the disclosure made.
(b) The parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provisions
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
INTERNATIONAL PAPER COMPANY
By: /s/ X. Xxxx Xxxx
--------------------------------
Name: X. Xxxx Xxxx
Title: Senior Vice President
CMP HOLDINGS LLC
By: /s/ Xxxxx Xxxxxxxx
--------------------------------
Name: Xxxxx Xxxxxxxx
Title: President
CMP INVESTMENTS LP
By: CMP INVESTMENTS MANAGEMENT LLC
Its General Partner
By: /s/ Xxxxx Xxxxxxxx
--------------------------------
Name: Xxxxx Xxxxxxxx
Title: President
