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Sample Business ContractsHome: Sample Business Contracts:
ASSET PURCHASE AGREEMENT
BY AND AMONG
CROWN PAPER CO., CROWN VANTAGE NEW HAMPSHIRE ELECTRIC, INC.
AND BERLIN MILLS RAILWAY, INC., AS SELLER
AND
AMERICAN TISSUE HOLDINGS INC. AND
PULP & PAPER OF AMERICA LLC, AS BUYER
Dated as of March 24, 1999
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
1.1 Definitions.............................................................1
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 Purchase and Sale of Assets.............................................5
2.2 Excluded Assets.........................................................7
2.3 Assumed Liabilities.....................................................8
2.4 Purchase Price.........................................................10
ARTICLE III
RELATED AGREEMENTS
3.1 Related Agreements.....................................................10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
4.1 Organization, Qualification............................................11
4.2 Authority Relative to this Agreement...................................12
4.3 Consents and Approvals.................................................12
4.4 Non-Contravention......................................................13
4.5 Environmental Matters..................................................13
4.6 Licenses and Permits...................................................14
4.7 Compliance with Laws...................................................14
4.8 Financial Statements...................................................15
4.9 Litigation.............................................................15
4.10 Absence of Changes.....................................................16
4.11 Title to Purchased Assets..............................................18
4.12 Real Property..........................................................18
4.13 Leases.................................................................20
4.14 Inventory..............................................................20
4.15 Intellectual Property and Software.....................................20
4.16 Material Contracts.....................................................23
4.17 Maintenance of the Equipment...........................................23
4.18 Sufficiency of Purchased Assets........................................24
4.19 Labor Matters..........................................................24
4.20 Employee Benefit Plans.................................................24
4.21 Taxes..................................................................25
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4.22 Insurance..............................................................25
4.23 Undisclosed Liabilities................................................26
4.24 Powers of Attorney.....................................................26
4.25 Product Warranty.......................................................26
4.26 Product Liability......................................................26
4.27 Finders................................................................26
4.28 Related Party Transactions.............................................26
4.29 Year 2000 Compliance...................................................27
4.30 Books and Records......................................................27
4.31 Shares of ARCO.........................................................27
4.32 Disclosure.............................................................27
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
5.1 Organization, Qualification............................................28
5.2 Authority Relative to this Agreement...................................28
5.3 Consents and Approvals.................................................29
5.4 Non-Contravention......................................................29
5.5 Litigation.............................................................29
5.6 Finders................................................................30
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Conduct of Business of the Facility....................................30
6.2 Notification...........................................................30
6.3 Forbearances by Seller.................................................31
6.4 Insurance, Landfill, Financial Security................................32
6.5 Negotiations with Others...............................................32
6.6 Investigation of Businesses and Properties.............................32
6.7 Confidentiality........................................................32
6.8 Taxes and Recording Fees...............................................33
6.9 Proration of Lease Payments, Utility Charges and Other Payments........33
6.10 Allocation of Purchase Price...........................................33
6.11 Collection of Accounts Receivable......................................33
6.12 Bulk Sales Laws........................................................34
6.13 Materials Received After Closing.......................................34
6.14 Retention of Books and Records.........................................34
6.15 HSR Filings............................................................34
6.16 Expenses...............................................................34
6.17 Public Announcements...................................................34
6.18 Subsequent Events......................................................35
6.19 Efforts to Consummate..................................................35
6.20 Further Assurances.....................................................36
6.21 Inventory Adjustment...................................................36
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6.22 Real Property Information..............................................37
6.23 Certain Incomplete Deliveries..........................................38
6.24 Pulp Mill Shutdown Costs...............................................38
ARTICLE VII
COVENANTS
7.1 Transition.............................................................39
7.2 Covenant Not To Compete................................................39
7.3 Permit Application.....................................................40
7.4 Tax Clearance..........................................................40
ARTICLE VIII
EMPLOYEES AND EMPLOYEE MATTERS
8.1 Transferred Employees..................................................41
8.2 Employee Benefit Plans.................................................41
8.3 Worker's Compensation..................................................42
8.4 Severance and Vacation Pay.............................................42
8.5 Other Liabilities Relating to Employees................................43
8.6 Administration.........................................................43
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF BUYER
9.1 Representations and Warranties.........................................43
9.2 Performance of this Agreement..........................................44
9.3 Corporate Authorization................................................44
9.4 Consents and Approvals.................................................44
9.5 Injunction, Litigation.................................................44
9.6 Legislation............................................................44
9.7 Title Insurance, Estoppel Certificates.................................44
9.8 Receipt of Licenses and Permits and Environmental Permits..............45
9.9 Related Agreements, Documents and Instruments..........................45
9.10 No Change..............................................................45
9.11 Payment of Transfer Taxes..............................................45
9.12 Bulk Sales Compliance..................................................45
9.13 Results of Environmental Audit.........................................45
9.14 Opinion of Counsel for Seller..........................................46
9.15 No Material Adverse Change.............................................46
9.16 HSR Act................................................................46
9.17 Termination of Liens...................................................46
9.18 Closing of Sale of Senior Notes........................................46
9.19 Cluster Compliance.....................................................47
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ARTICLE X
CONDITIONS TO OBLIGATIONS OF SELLER
10.1 Representations and Warranties.........................................47
10.2 Performance of this Agreement..........................................47
10.3 Limited Liability Company Authorization................................47
10.4 Consents and Approvals.................................................47
10.5 Injunction, Litigation.................................................47
10.6 Legislation............................................................48
10.7 Opinion of Counsel for Buyer...........................................48
10.8 HSR Act................................................................48
ARTICLE XI
CLOSING
11.1 Time and Place of Closing..............................................48
11.2 Deliveries by Seller...................................................48
11.3 Deliveries by Buyer....................................................49
11.4 Deliveries by Seller and Buyer.........................................50
ARTICLE XII
INDEMNIFICATION
12.1 Indemnification by Seller..............................................50
12.2 Indemnification by Buyer...............................................52
12.3 Third Party Claims.....................................................53
12.4 Limitations on Indemnification.........................................54
12.5 Survival, Investigation................................................54
12.6 Exclusive Remedy. .....................................................54
ARTICLE XIII
TERMINATION, AMENDMENT AND WAIVER
13.1 Termination............................................................55
13.2 Effect of Termination..................................................55
13.3 Amendment..............................................................56
13.4 Extension, Waiver......................................................56
13.5 Termination of ATH's Obligations. ....................................56
ARTICLE XIV
GENERAL PROVISIONS
14.1 Option to Purchase Shares of Electric..................................56
14.2 Notices................................................................56
14.3 Interpretation.........................................................57
14.4 Counterparts...........................................................57
14.5 Waiver.................................................................57
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14.6 Modification...........................................................58
14.7 Severability...........................................................58
14.8 Stricken Words or Phrases..............................................58
14.9 Number and Gender......................................................58
14.10 Miscellaneous..........................................................58
14.11 Specific Performance...................................................58
14.12 Governing Law..........................................................58
List of Schedules:
1.1 Persons With "Knowledge"
2.1(i) Real Property
2.1(ii) Equipment
2.1(iv) Environmental Permits
2.1(v) Licenses and Permits
2.1(vi) Intellectual Property
2.1(vii) Utility Agreements
2.1(ix) Prepaid Expenses and Deferred Charges
2.1(x) Assets of Electric and Railway
2.1(xii) Facility Software
2.1(xiii) Shared Software
2.2(iii) Non Assignable Environmental Permits and Licenses and Permits
2.2(vi) Excluded Assets
2.3(a)(i) Industrial Revenue Bonds
4.1(b) Real Property and Assets of Electric
4.1(c) Real Property and Assets of Railway
4.3 Seller Consents and Approvals
4.3 Consents and Approvals of Electric
4.3 Consents and Approvals of Railway
4.5 Environmental Permits
4.6 Licenses and Permits
4.7 Compliance with Laws
4.8 Financial Statements
4.9 Litigation
4.10 Absence of Changes
4.11 Title to Purchased Assets
4.12(c) Real Property Compliance with Laws
4.12(d) Defects Affecting Real Property
4.12(h) Leases, Subleases, Licenses, Covenants, Easements, Concessions
or Other Agreements Affecting Real Property
4.12(i) Underground Storage Tanks
4.13 Leases
4.14 Inventory
4.15(c) Title to Intellectual Property
4.15(e) Shared Software Programs
4.16 Material Contracts
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4.18 Sufficiency of Purchased Assets
4.19 (a) Collective Bargaining Agreements, Employment Contracts and
Consulting Agreements to be Assumed by Buyer
4.19(b) Notices Regarding Labor Matters
4.19(d) Employee Claims
4.20 Employee Benefit Plans
4.21(b) Return Audits
4.22 Insurance
4.25 Seller's Standard Terms and Conditions of Sale
4.28 Related Party Transactions
4.29 Exceptions to Year 2000 Compliance
5.3 Buyer Consents and Approvals
5.5 Litigation Threatened against Buyer
6.6 Scope of Phase II Environmental Audit
7.2(iii) Employees That Seller Will Not Employ
7.2(a) Manufacturing of Target Grades at Berlin-Gorham and other
Crown Mills
8.2 Employee Benefit Plans to be established by Buyer
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of March 24,
1999, is made by and among CROWN PAPER CO., a Virginia corporation ("Crown"),
CROWN VANTAGE NEW HAMPSHIRE ELECTRIC, INC., a New Hampshire corporation and a
wholly-owned subsidiary of Crown ("Electric"), BERLIN MILLS RAILWAY, INC., a New
Hampshire corporation and a wholly-owned subsidiary of Crown ("Railway," and
together with Crown and Electric, collectively, "Seller"), and AMERICAN TISSUE
HOLDINGS INC., a Delaware corporation ("ATH") and PULP & PAPER OF AMERICA LLC, a
New York limited liability company ("PPA" and together with ATH, "Buyer").
RECITALS
Seller desires to sell to Buyer substantially all of the assets of its
integrated pulp and paper mills located in Berlin and Gorham, New Hampshire and
related hydroelectric generating facilities and landfill (collectively, the
"Facility"), and Buyer desires to purchase from Seller such assets, with the
exception of certain excluded assets, upon the terms and conditions and for the
consideration hereinafter set forth, which consideration consists of cash and
the assumption of certain liabilities.
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties and agreements herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. The following terms, as used herein, have the following
meanings:
"Arbitrator" has the meaning set forth in Section 6.21(a).
"ARCO" has the meaning set forth in Section 2.1(x).
"Assumed Liabilities" has the meaning set forth in Section 2.3.
"ATC" has the meaning set forth in Section 6.7.
"ATH" has the meaning set forth in the introductory paragraph of this Agreement.
"Basket" has the meaning set forth in Section 12.1(i).
"Brokerage Agreement" has the meaning set forth in Section 3.1(i).
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"Business" has the meaning set forth in Section 2.1(iii).
"Buyer Indemnified Parties" has the meaning set forth in Section 12.1.
"Buyer" has the meaning set forth in the introductory paragraph of this
Agreement.
"Closing" has the meaning set forth in Section 11.1.
"Closing Date" has the meaning set forth in Section 11.1.
"Closing Inventory Statement" has the meaning set forth in Section 6.21(a)(i).
"Cluster Rule" has the meaning set forth in Section 9.19.
"Compete" has the meaning set forth in Section 7.2.
"Crown" has the meaning set forth in the introductory paragraph of this
Agreement.
"Electric" has the meaning set forth in the introductory paragraph of this
Agreement.
"Employee" has the meaning set forth in Section 8.1.
"Encumbrances" has the meaning set forth in Section 4.11.
"Environmental Laws" has the meaning set forth in Section 4.7.
"Environmental Liabilities" has the meaning set forth in Section 2.3(a)(iii).
"Environmental Permits" has the meaning set forth in Section 2.1(iii).
"Equipment" has the meaning set forth in Section 2.1(ii).
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"Excluded Assets" has the meaning set forth in Section 2.2.
"Expert" has the meaning set forth in Section 9.13(a).
"Facility" has the meaning set forth in the Recitals.
"Facility Software" has the meaning set forth in Section 2.1(xii).
"Final Closing Inventory Statement" has the meaning set forth in Section
6.21(a)(ii).
"Financial Statements" has the meaning set forth in Section 4.8.
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"Governmental Authority" has the meaning set forth in Section 4.5.
"Handling Hazardous Substances" has the meaning set forth in Section 4.5.
"Hazardous Emissions" has the meaning set forth in Section 4.5.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
"Indemnified Party" has the meaning set forth in Section 12.3.
"Indemnifying Party" has the meaning set forth in Section 12.3.
"Intellectual Property" has the meaning set forth in Section 2.1(vi).
"Inventory" has the meaning set forth in Section 2.1(iii).
"Law" has the meaning set forth in Section 2.3(a).
"Leases" has the meaning set forth in Section 4.13.
"Legal Action" has the meaning set forth in Section 12.3.
"Liabilities" has the meaning set forth in Section 2.3(a).
"Licenses and Permits" has the meaning set forth in Section 2.1(v).
"Material Contracts" has the meaning set forth in Section 4.16.
"Minimum" has the meaning set forth in Section 12.1(i).
"Ordinary Course of Business" has the meaning set forth in Section 2.1(ix).
"Pension Plans" has the meaning set forth in Section 4.20.
"Permitted Exceptions" has the meaning set forth in Section 6.19.
"Publishing Grades" has the meaning set forth in the Strategic Alliance
Agreement.
"Purchase Price" has the meaning set forth in Section 2.4.
"Purchased Assets" has the meaning set forth in Section 2.1.
"Purchased Hardware and Software" has the meaning set forth in Section 4.29.
"Railway" has the meaning set forth in the introductory paragraph of this
Agreement.
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"Real Property" has the meaning set forth in Section 2.1(i).
"Related Agreements" has the meaning set forth in Section 3.1.
"Related Party" has the meaning set forth in Section 4.28.
"Returns" has the meaning set forth in Section 4.21(b).
"Schedule," together with the numeric designation thereof (e.g., "Schedule
4.3"), means the specifically enumerated Schedule. Except to the extent
otherwise expressly provided herein, each Schedule has been separately delivered
and agreed to as of the date of this Agreement.
"Seller Documents" has the meaning set forth in Section 4.2(a).
"Seller Indemnified Parties" has the meaning set forth in Section 12.2.
"Shared Software" has the meaning set forth in Section 2.1(xiii).
"SEC" means the Securities and Exchange Commission.
"Strategic Alliance Agreement" has the meaning set forth in Section 3.1(i).
"Survival Date" has the meaning set forth in Section 12.5.
"Sustaining Grades" has the meaning set forth in the Brokerage Agreement.
"Taxes" has the meaning set forth in Section 4.21(b).
"Target Grades" has the meaning set forth in the Brokerage Agreement.
"Target Value" has the meaning set forth in Section 6.21.
"To the knowledge of Buyer" means the actual present knowledge of those officers
and employees of Buyer, after due inquiry, listed in Schedule 1.1.
"To the knowledge of Seller" means the actual present knowledge of those
officers and employees of Seller, after due inquiry, listed in Schedule 1.1.
"Transferred Employees" has the meaning set forth in Section 8.1.
"Utility Agreements" has the meaning set forth in Section 2.1(vii).
"WARN Act" means the Worker Adjustment and Retraining Notification Act, as
amended.
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"Welfare Plans" has the meaning set forth in Section 4.20.
"Work" has the meaning set forth in Section 6.24.
"Y2K Remediation Project" has the meaning set forth in Section 4.29.
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 Purchase and Sale of Assets. At the Closing, Seller will sell, assign,
transfer, grant, convey and deliver to Buyer and/or one or more of its
designees, and Buyer and/or one or more of its designees shall purchase, acquire
and take delivery, or cause one or more of its designees to purchase, acquire
and take delivery, from Seller, for the consideration hereinafter set forth in
Sections 2.3(a) and 2.4, of the following listed assets, properties and rights
of Seller (the "Purchased Assets"):
(i) the real property listed in Schedule 2.1(i) which, together with
the structures, fixtures and other improvements thereon and the
appurtenances thereto and all rights and privileges pertaining thereto, is
hereinafter referred to as the "Real Property";
(ii) the machinery, equipment (including, without limitation,
electronic data processing equipment and peripheral equipment), hydro
electric facilities and transmission system, furniture, vehicles, tools,
supplies, hardware, spare parts and other tangible personal property (other
than the tangible personal property described in other clauses of this
Section 2.1) listed in Schedule 2.1(ii), (hereinafter referred to
collectively as the "Equipment");
(iii) all raw materials, work-in-process, pulp and finished goods
inventories, stores and supplies, wherever located, which are owned by
Seller and are used in the business of the Facility (the "Business") (which
inventories, stores and supplies are hereinafter referred to collectively
as the "Inventory");
(iv) the Environmental Permits and applications held by Seller which
are assignable and relate exclusively to the Purchased Assets and/or the
Business listed in Schedule 2.1(iv), and used herein, "Environmental
Permits" means federal, state and local governmental licenses, permits, and
other authorizations and approvals, whether foreign or domestic, which
relate to the environment or to public health and safety or worker health
and safety as they may be affected by the environment;
(v) the Licenses and Permits and applications held by Seller which are
assignable and relate exclusively to the Purchased Assets and/or the
Business listed in Schedule 2.1(v); as used herein, "Licenses and Permits"
means federal, state
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and local governmental licenses, permits, approvals and authorizations,
whether foreign or domestic, other than "Environmental Permits";
(vi) the Intellectual Property owned or licensed by Seller or which
Seller has the right to use, which is used in or relates to the Business
listed in Schedule 2.1(vi); as used herein, "Intellectual Property" means
(A) all rights and interests of Seller in trade names, trademarks, and
service marks (including trademark and service mark registrations and
applications for registration) related to the Business (but excluding those
relating to Sustaining Grades, Target Grades and Publishing Grades), and
(B) the following other intellectual property rights and interests used in
or related to the Business: patents, patent rights, copyrights, whether
domestic or foreign (as well as applications, registrations, licenses,
franchises and certificates for any of the foregoing), inventions, trade
secrets, proprietary information, goodwill, know-how, shop rights,
technology, drawings, blueprints, specifications, proprietary processes and
all other industrial and intellectual property rights that are used in or
relate to the Business, provided that Seller shall retain a perpetual,
royalty-free, non-exclusive license to use all of the Intellectual Property
rights and interests described in this Section 2.1(vi)(B).
(vii) all rights and interests of Seller in, to and under all Material
Contracts and Leases and all rights and interests of Seller in, to and
under all other contracts and commitments which relate exclusively to the
Purchased Assets or the Business, including, but not limited to, cutting
and timber rights and contracts; and all rights to contracts and agreements
for the provision of gas, water, steam, electricity, telecommunications
services and other utilities (if any) supplied to the Real Property listed
in Schedule 2.1(vii) ("Utility Agreements");
(viii) all books and records (or true and complete copies thereof)
pertaining to the Business, the Purchased Assets and operations of the
Facility, wherever located, including, without limitation, computerized
records, databases and any associated software and documentation as to
assets, liabilities, revenues, expenditures of, and financial transactions,
as to taxes, shipping, supplier lists, Environmental Protection Agency
manifests, etc. used or maintained in the Facility or in connection with
the Business, or otherwise pertaining to the Purchased Assets or the
Business, including, without limitation, operations logs, equipment repair
and maintenance logs, environmental data, books and records relating to or
containing production data, manufacturing and quality control information,
sales or marketing information, customer invoices, customer lists, vendor
and supplier lists and information, and personnel records of those
employees of the Facility who will become Transferred Employees;
(ix) except as otherwise expressly set forth herein, all general
intangibles and other intangible personal property of whatever kind or
character relating to the Business, whether evidenced in writing or not,
including, but not limited to, those categories of prepaid expenses and
deferred charges created in the ordinary course of business consistent with
past custom and practice (including with
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respect to quantity and frequency) ("Ordinary Course of Business"),
databases, proprietary assays, claims, refunds and causes of action
(whether fixed or contingent) of the business listed in Schedule 2.1(ix);
(x) all of the shares of the capital stock of Androscoggin Reservoir
Company ("ARCO") owned by Seller beneficially and/or of record;
(xi) all technical materials and guidelines relating to the Business,
and all brochures, sales literature, promotional material and other
marketing and selling materials relating to pulp and toweling;
(xii) to the extent assignable, transferable or licensable, all rights
and interests of Seller in and to the computer software programs and
databases (and documentation related thereto) that are used exclusively at
the Facility but are not used by Seller in its operations in locations
other than the Facility, as listed in Schedule 2.1(xii) (the "Facility
Software");
(xiii) non-exclusive rights and licenses to use the computer software
programs and databases (and documentation related thereto) that are used at
the Facility and are also used by Seller in its operations in locations
other than the Facility as listed in Schedule 2.1(xiii) (the "Shared
Software"), to the extent that such rights can be granted or licensed;
(xiv) all causes of action, software and equipment warranties and
legal claims relating to the Purchased Assets; and
(xv) except as otherwise expressly provided in this Agreement, all
other assets and rights of every kind and nature, real or personal,
tangible or intangible, other than the Excluded Assets under Section 2.2
hereof, that are owned or claimed by Seller and that are necessary to, or
used by Seller primarily in connection with the Purchased Assets or the
Business, whether or not such Purchased Assets are reflected on the
Financial Statements, or acquired thereafter by Seller.
2.2 Excluded Assets. The following assets relating to the Facility (the
"Excluded Assets") are not included in the Purchased Assets:
(i) all cash and cash equivalents, including cash on hand, in bank
accounts and in the escrow account relating to the Industrial Revenue
Bonds, certificates of deposit, commercial paper and securities (other than
shares of the capital stock of ARCO to be delivered to Buyer or its
designees pursuant to Section 2.1) belonging to Seller, except petty cash
funds located at the offices of the Facility on the date of the Closing;
(ii) all accounts receivable and notes receivable related to the
Business on the date of the Closing;
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(iii) all Environmental Permits and Licenses and Permits held by
Seller which by operation of law are not assignable which are listed in
Schedule 2.2(iii);
(iv) all prepaid expenses and deferred charges relating to the
Facility and belonging to Seller, other than those listed in Schedule
2.1(ix);
(v) all refunds or rebates paid or payable by vendors or suppliers
relating to purchases for the Facility otherwise properly allocable to
periods prior to the Closing; and
(vi) all other assets listed in Schedule 2.2(vi).
2.3 Assumed Liabilities. (a) Except to the extent set forth in paragraph
(b) below, at the Closing, PPA will assume the following specifically listed
actions, suits, proceedings, hearings, investigations, charges, complaints,
claims, demands, assessments, injunctions, judgments, orders, decrees, rulings,
damages, dues, penalties, fines, costs, debts, liabilities, obligations, taxes,
liens, losses, expenses and fees, including reasonable attorneys' fees, whether
accrued or fixed, absolute or contingent, material or immaterial, or determined
or determinable ("Liabilities"), arising under any federal, state, local or
foreign, statute, law, ordinance, regulation or rule of law (collectively, the
"Law") or otherwise, of Seller which relate to the Purchased Assets and/or the
Business and are not paid or discharged at or before the Closing, and PPA shall
not assume, incur, guarantee or otherwise be obligated with respect to any
Liabilities whatsoever of Seller other than as so stated:
(i) all obligations of Seller relating to the Purchased Assets or the
Business arising from the Material Contracts, Leases and other contracts
and commitments described in Section 2.1(vii), to the extent such
obligations, by their stated terms, are to be performed in the Ordinary
Course of Business subsequent to the Closing, other than Liabilities
arising from breaches thereof or Liabilities accruing thereunder on or
prior to the Closing;
(ii) certain Liabilities of Seller relating to employees and employee
benefits to the extent set forth in Article VIII; and
(iii) except as set forth in Section 9.13, all liabilities and
obligations arising from Hazardous Emissions and Handling Hazardous
Substances at the Facility (whether based in contract, tort, implied or
express warranty, criminal or civil statute or otherwise), under any law,
regulation, policy or guideline, including but not limited to, obligations
to clean up, remedy or otherwise to restore to a former condition, by
itself or jointly with others, any contaminated surface water, ground
water, soil or any natural resources associated therewith, regardless of
whether such liabilities or obligations arose before or after the Closing
(such liabilities and obligations referred to herein as "Environmental
Liabilities").
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The Liabilities hereinabove listed, and to be assumed by PPA, are hereinafter
referred to collectively as the "Assumed Liabilities."
(b) Notwithstanding the provisions of paragraph (a) above, Seller is
retaining, and Buyer is not assuming, and shall not be deemed to have assumed,
any Liabilities of Seller of any kind or nature whatsoever, except those
expressly provided for in Section 2.3(a) above. Without limiting the generality
of the foregoing, except as otherwise set forth in this Agreement and subject to
Section 2.3(a) above, Buyer is not assuming any Liabilities and shall not have
any obligation for or with respect to:
(i) any Liabilities for federal, state and local taxes or assessments,
and related penalties and interest, incurred or suffered by Seller or its
affiliates in the conduct of, or relating to, the Business prior to the
Closing or incurred by Seller with respect to any of the transactions
contemplated hereby including, without limitation, all income, payroll,
value added, sales, use, ad valorem, transfer, franchise, withholding,
property excise taxes, timber tax, worker's compensation tax, governmental
fees or other like assessments or charges of any kind;
(ii) any Liabilities, whether civil or criminal in nature, arising out
of any actual or alleged violation by Seller which occurred, or which are
alleged to have occurred, prior to the Closing, or by any previous owner of
any of the Purchased Assets, of any federal, state or local law, rule,
regulation, judicial or administrative order, judgment or decree, or
governmental permit, license, approval or authorization, with the exception
of Environmental Liabilities;
(iii) any Liabilities of Seller or its affiliates arising from a
breach by Seller or its affiliates prior to the Closing of any contract or
agreement, including, without limitation, Material Contracts and Leases;
(iv) any Liabilities arising under any contract or agreement,
including, without limitation, Material Contracts and Leases, if the rights
of Seller or its affiliates are, for any reason, not transferred to, or the
benefits thereunder are not otherwise made available to, Buyer at the
Closing;
(v) except to the extent expressly otherwise provided in Article VIII
hereof, any Liability in respect of (A) any worker's compensation or
long-term disability for former or present employees of Seller or its
affiliates, whether or not such employees are Transferred Employees, if the
claim arose prior to Closing; (B) any obligation of Seller or its
affiliates to indemnify any person, including, without limitation, by
reason of the fact that such person is or was an officer, director or
employee or agent of Seller or its affiliates; (C) any pension costs for
former or present employees of Seller or its affiliates, whether or not
such employees are Transferred Employees, relating to the period of
employment prior to the Closing, (D) any post-retirement medical benefits
due to former or present employees of Seller, or (E) any severance or
separation pay or allowances for former or present employees of Seller or
its affiliates who are not Transferred Employees.
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(vi) any Liabilities of Seller or its affiliates under unsatisfied
purchase obligations other than the Assumed Liabilities;
(vii) any obligation of Seller or its affiliates under any employment
or consulting agreements or arrangements;
(viii) any Liabilities of Seller or any of its affiliates for any
refunds,
rebates, discounts or other such sums, whether falling due before or after
the Closing;
(ix) any Liabilities of Seller or any of its affiliates, including,
without limitation, inter-company interest payable and accounts payable;
(x) any Liabilities of Seller or its affiliates for legal, accounting
and other professional services rendered to Seller or its affiliates;
(xi) any Liabilities of Seller or its affiliates arising out of any
action, suit, investigation or proceeding to the extent based upon an event
occurring or a claim arising (i) prior to the Closing or (ii) after the
Closing in the case of claims in respect of products or services sold or
provided by Seller prior to the Closing and attributable to acts performed
or omitted by Seller or its affiliates prior to the Closing;
(xii) any other Liabilities of Seller or its affiliates relating to
the Purchased Assets and/or the Business that are incurred prior to the
Closing, including, without limitation, any accounts payable or other
current Liabilities of Seller or its affiliates and any other liabilities
of Seller or its affiliates incurred in connection with its efforts to
consummate the transactions contemplated hereby; and
(xiii) any Liabilities of Seller arising out of indebtedness for
borrowed money, including, without limitation, loans and credit lines of
Seller.
2.4 Purchase Price. The purchase price for the Purchased Assets (the
"Purchase Price"), shall be Forty-Five Million Dollars ($45,000,000), payable in
cash at the Closing by electronic funds transferred to a deposit account with
the financial institution specified by Seller in writing to Buyer no less than
twenty-four (24) hours prior to the Closing. The Purchase Price shall be subject
to the adjustment as set forth in Section 6.21.
ARTICLE III
RELATED AGREEMENTS
3.1 Related Agreements. In connection with the sale and purchase of the
Purchased Assets, the agreements listed in Sections 3.1(i) and 3.1(ii) below
between Crown and PPA will be executed simultaneous with this Agreement and will
become effective as
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of the Closing Date, and Crown and PPA will use reasonable best efforts to enter
into the agreements listed in Section 3.1(iii) below on the Closing Date:
(i) A paper brokerage agreement regarding "Target Grades" and
"Sustaining Grades" of papers produced at the Facility (the "Brokerage
Agreement") and a strategic alliance agreement regarding "Publishing
Grades" of paper produced at the Facility (the "Strategic Alliance
Agreement").
(ii) A pulp purchase agreement regarding pulp produced at the
Facility; and
(iii) Transitional services agreements, pursuant to which each of
Seller and Buyer (and its designees) will provide the other(s) with certain
transitional services relating to the operation and management of the
Business and the corporate operations of Seller following the Closing, such
services to be provided at cost, without profit.
The foregoing agreements are hereinafter referred to collectively as the
"Related Agreements."
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer the following:
4.1 Organization, Qualification. (a) Crown is a corporation duly organized,
validly existing and in good standing under the laws of the State of Virginia
and has all requisite corporate power and authority to own all of its properties
and assets, including, without limitation, the Purchased Assets and to carry on
the Business as it is presently being conducted. Seller is duly qualified and in
good standing to do business in New Hampshire and in each other jurisdiction in
which the conduct of the ownership or leasing of its assets or the Business
makes such qualification necessary, except in those jurisdictions where the
failure to be duly qualified and in good standing would not have a material
adverse effect on the Purchased Assets or the Business.
(b) Electric is a corporation duly organized, validly existing and in good
standing under the laws of the State of New Hampshire and a wholly-owned
subsidiary of Crown, and has all requisite corporate power and authority to own,
and does own, all of its properties and assets, including, without limitation,
the assets listed in Schedule 4.1(b), and to carry on its business as it is
presently being conducted. Electric is duly qualified and in good standing to do
business in each other jurisdiction in which the ownership or leasing of its
assets or the conduct of its business makes such qualification necessary, except
in those jurisdictions where the failure to be duly qualified and in good
standing would not have a material adverse effect on the Purchased Assets or its
business.
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(c) Railway is a corporation duly organized, validly existing and in good
standing under the laws of the State of New Hampshire and a wholly-owned
subsidiary of Crown, has all requisite corporate power and authority to own, and
does own, all of its properties and assets, including, without limitation, the
assets listed in Schedule 4.1(c), and to carry on its business as it is
presently being conducted. Railway is duly qualified and in good standing to do
business in each other jurisdiction in which the ownership or leasing of its
assets or the conduct of its business makes such qualification necessary, except
in those jurisdictions where the failure to be duly qualified and in good
standing would not have a material adverse effect on the Purchased Assets or its
business.
4.2 Authority Relative to this Agreement. (a) Seller has all requisite
corporate power and authority under its respective articles of incorporation and
by-laws, each as amended to date, and applicable laws to execute and deliver
this Agreement, the Related Agreements and each other agreement, instrument or
document to be executed and delivered by it hereunder to which it is a party
(collectively, the "Seller Documents") and to consummate the transactions
contemplated hereby and thereby and to perform its obligations hereunder and
thereunder. The execution, delivery and performance by each Seller of the Seller
Documents, and the consummation by it of the transactions contemplated hereby
and thereby, have been duly authorized by the Board of Directors of each Seller
and no other corporate proceedings on the part of each Seller are necessary with
respect thereto. Assuming that Buyer has duly authorized the execution and
delivery of the Seller Documents, this Agreement constitutes, and each of the
other Seller Documents, when executed and delivered by Seller, will constitute,
valid and binding obligations of Seller, enforceable in accordance with their
respective terms, except as the same may be limited by (i) any applicable
bankruptcy, insolvency, reorganization, moratorium or similar law affecting
creditors' rights generally or (ii) general principles of equity, whether
considered in a proceeding in equity or law. Other than with respect to
Electric, Railway and ARCO, Crown does not own of record or beneficially, or
have any right or obligation to acquire, directly or indirectly, (i) any shares
of capital stock, or securities convertible into, or exercisable or exchangeable
for, shares of capital stock, of any other corporation, any equity participating
interests in any joint venture, partnership or other non-corporate business
enterprise, relating in either case to the Purchased Assets or the Business.
(b) Neither Electric nor Railway owns of record or beneficially, or has any
right or obligation to acquire, directly or indirectly, (i) any shares of
capital stock, or securities convertible into, or exercisable or exchangeable
for, shares of capital stock, of any other corporation, or (ii) any equity or
participating interests in any joint venture, partnership or other non-corporate
business enterprise, relating in either case to the Purchased Assets or the
Business.
4.3 Consents and Approvals. Except as set forth in Schedule 4.3, there is
no requirement applicable to Seller to make any notification, registration,
qualification or filing with any Governmental Authority or any other third party
as a condition to the lawful consummation by Seller of the transactions
contemplated by the Seller Documents. No order, writ, injunction or decree has
been issued, or is threatened to be issued, by any Governmental Authority
governing or pertaining to the Purchased Assets, or the conduct of
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the Business, which would adversely affect the consummation of the transactions
contemplated by the Seller Documents or the value of the Business or the
Purchased Assets. Except as set forth in Schedule 4.3, there is no requirement
that any party to any Material Contract, Lease, Licenses and Permits, agreement
for the use of Intellectual Property, or loan agreement, to which Seller is a
party or by which it or the Purchased Assets are subject or bound, consent to
the execution by Seller of any of the Seller Documents or the consummation of
the transactions contemplated by the Seller Documents.
4.4 Non-Contravention. Assuming that the consents and approvals set forth
in Schedule 4.3 are obtained, the execution and delivery by each Seller of this
Agreement does not, and the execution and delivery by each Seller of the other
Seller Documents at the Closing and consummation of the transactions
contemplated hereby and thereby will not, (i) violate or result in a breach of
any provision of the respective articles of incorporation or bylaws of each
Seller, each as amended to date, (ii) result in a breach of, or constitute (with
due notice or lapse of time, or both) a default (or give rise to any right of
termination, cancellation or acceleration or otherwise be in conflict with or
result in a loss of contractual benefits) under the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, agreement, lease or
other instrument or obligation to which any Seller is a party or by which any
Seller or any of the Purchased Assets may be bound, (iii) violate any order,
writ, injunction, decree, statute, rule, regulation, ordinance, code or other
legal requirement applicable to each Seller, any of the Purchased Assets, or the
Business (excluding from the foregoing clauses (ii) and (iii) such defaults and
violations which would not have a material adverse effect on the Purchased
Assets or the Business), (iv) result in any Encumbrance upon any of the
Purchased Assets or the Facility, or (v) interfere with or otherwise adversely
affect the ability of Buyer and/or any of its designees acquiring the Purchased
Assets to carry on the Business after the Closing Date on substantially the same
basis as it is now conducted by Seller.
4.5 Environmental Matters. Except as set forth in Schedule 4.5, Seller has
obtained all material Environmental Permits required for the lawful operation of
the Purchased Assets and conduct of the Business as it is presently being
conducted, including, without limitation, those relating to (i) emissions,
discharges or threatened discharges of pollutants, contaminants, hazardous or
toxic substances or petroleum or any other waste, substance, material, chemical
or constituent subject to regulation under any Environmental Law ("Hazardous
Materials") into the air, surface water, ground water or the ocean, or on or
into the land ("Hazardous Emissions") and (ii) the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials ("Handling Hazardous Substances"). Schedule 2.1(iv) contains
a complete and correct list of all such material Environmental Permits and
applications, all of which are in full force and effect and all of which are
assignable without conditions, unless otherwise indicated therein. To the
knowledge of Seller, and except as identified in Schedule 4.5, Seller is in
substantial compliance with all of the terms and conditions set forth in such
Environmental Permits and are also in substantial compliance with all of the
terms and conditions contained in or required of Seller by any law, regulation,
policy, guideline, order, judgment or decree of any agency, instrumentality,
department, commission, court, tribunal or board of any government, whether
foreign or domestic, national, federal, state, provincial or local (each,
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a "Governmental Authority"), applicable to or having jurisdiction over the
Facility, the Purchased Assets, or the Business which relate to the environment,
including, without limitation, ambient air, surface water, groundwater, land and
subsurface strata, and natural resources such as wetlands flora and fauna, or to
public health and safety or worker health and safety as they may be affected by
the environment including, without limitation, the Resource Conservation and
Recovery Act of 1976, as amended, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (CERCLA) (42 USCA 9601, et. seq.), as
amended, the Superfund Amendments and Reauthorization Act of 1986 (SARA) (Act of
October 17, 1986, Pub. L. No. 99-499 (100 Stat. 1613)), the Federal Clean Water
Act, the Federal Clean Air Act, the Toxic Substances Control Act, the Pulp and
Paper Cluster Rule (63 FR 18504-18751) (hereinafter referred to, collectively,
as "Environmental Laws"). To the knowledge of Seller (but with respect to
Section 9.13 without regard to Seller's knowledge), and except as identified in
Schedule 4.5, there exist no facts, events or conditions which (x) interfere
with, prevent, or, with the passage of time, could interfere with or prevent
continued substantial compliance by Seller with any of its Environmental Permits
or any of the aforementioned laws, regulations, policies, guidelines, orders,
judgments or decrees, (y) may give rise to any liability on the part of Seller
(whether based in contract, tort, implied or express warranty, criminal or civil
statute or otherwise) under any law, regulation, policy or guideline relating to
the Hazardous Emissions or Handling Hazardous Substances or (z) obligate any of
Seller or, with the passage of time, could cause it to be obligated to clean up,
remedy or otherwise restore to a former condition, by itself or jointly with
others, any contaminated surface water, ground water, soil or any natural
resources associated therewith. Seller has delivered to Buyer true and correct
copies of all environmental site assessments commissioned or performed by or on
behalf of Seller relating to the Purchased Assets or the Business, as listed in
Schedule 4.5.
4.6 Licenses and Permits. Except as set forth in Schedule 4.6, Seller has
obtained all material Licenses and Permits required for the lawful operation of
the Purchased Assets and conduct of the Business as it is presently being
conducted. Schedule 2.1(v) contains a complete and correct list of all such
material Licenses and Permits and applications, all of which are in full force
and effect and, to the knowledge of Seller, are unimpaired by any act or
omission of Seller, its officers, directors, employees or agents, and all of
which are assignable without conditions unless otherwise indicated on Schedule
4.6. No complaint or notice of a violation of any such License or Permit has
been received by Seller or, to the knowledge of Seller, recorded or published,
and no proceeding is pending or, to the knowledge of Seller, threatened, to
revoke, cancel, rescind, modify, or refuse to renew or limit any of the Licenses
and Permits. Seller has no reason to believe that the Licenses or Permits in
effect on the date hereof will not be renewed.
4.7 Compliance with Laws. Except as set forth in Schedule 4.7 or identified
in Schedule 4.5, and in addition to the representations and warranties contained
in Section 4.5 relating to Environmental Permits, those contained in Section 4.6
relating to Licenses and Permits and those contained in Section 4.12 relating to
Real Property, Crown has, and on or after August 25, 1995 Electric and Railway
have, operated the Purchased Assets and the Business in substantial compliance
with all applicable laws, rules, regulations, codes, plans,
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policies, guidelines, injunctions, orders, rulings, judgments or decrees of any
Governmental Authority, applicable to the Purchased Assets or the Business,
including, without limitation, (i) the Occupational Safety and Health Act of
1970, as amended, (ii) Environmental Laws, and (iii) those related to antitrust
and trade matters, civil rights, zoning and building codes, public health and
safety, worker health and safety and labor and nondiscrimination, the failure to
comply with which could reasonably be expected to materially and adversely
affect the earnings, assets, financial condition or operations of the Business
or the Purchased Assets. Seller is not subject to any governmental or private
litigation or proceedings involving a demand for damages or other liability
under Environmental Laws and, to the knowledge of Seller, none are threatened or
anticipated. Furthermore, except as is disclosed in Schedule 4.5 or Schedule
4.7, Seller has not received any citation, notice of fine, penalty or
unsatisfied abatement obligation, notice or orders or other written or oral
communication alleging any presently unresolved non-compliance with any of the
aforementioned laws, regulations, policies, guidelines, orders, judgments or
decrees or which may require cleanup or other remedial work, and no action,
suit, proceeding, hearing, investigation, charge, complaint, demand, or notice
has been filed or commenced against Seller alleging any failure so to comply
and, to the knowledge of Seller, none are threatened or anticipated. Crown has,
and on or after August 25, 1995, Electric and Railway have, timely filed all
material reports required to be filed by them under applicable Environmental
Laws. To the knowledge of Seller, Crown has not, and on or after August 25,
1995, neither Electric nor Railway has, stored or used any pollutants,
contaminants or hazardous or toxic wastes, substances or materials in violation
of any aspect of any Environmental Law under which the Facility is subject.
Crown has not, and on or after August 25, 1995, neither Electric nor Railway
has, buried, dumped, disposed, spilled or released any Hazardous Materials on,
beneath or about the Facility in violation of Environmental Laws that have not
yet been resolved with the applicable Governmental Authority and, except as
disclosed in Schedule 4.5, no releases of Hazardous Materials have occurred at,
on, under or from the Real Property in a manner which would reasonably be
expected to require response or other corrective action under any applicable
Environmental Law.
4.8 Financial Statements. Seller has previously furnished Buyer with true
and complete copies of the following unaudited financial statements for the
Business (collectively the "Financial Statements"): a balance sheet as of
December 27, 1998 and statements of income and cash flow for the fiscal year
ended on such date. The Financial Statements present fairly the financial
position of the Business as of such date and the results of operations and cash
flows for such period and have been prepared in accordance with accounting
principles utilized by Seller for its internal operating and management purposes
applied on a consistent basis.
4.9 Litigation. Except as set forth in Schedule 4.9, there are no material
actions, suits, claims, investigations or proceedings (legal, administrative or
arbitrative) pending or, to the knowledge of Seller, threatened against Seller,
or relating to the Purchased Assets or the Business, whether at law or in equity
and whether civil or criminal in nature, before any Governmental Authority or
arbitral panel, nor are there any judgments, decrees or orders of any such
Governmental Authority or arbitral panel outstanding against Seller which have,
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or, if adversely determined, could reasonably be expected to have a material
adverse effect on the Purchased Assets or the earnings, assets, financial
condition or operations of the Business, or which seek to prevent, restrict or
delay consummation of the transactions contemplated hereby or fulfillment of any
of the conditions of any of the Seller Documents nor does Seller know of any
reasonable grounds for any such claim, action, suit, proceeding or
investigation.
4.10 Absence of Changes. Except as set forth in Schedule 4.10, since
December 27, 1998, there has not been any material adverse change in the
financial condition, operations or results of operations of the Business or the
Purchased Assets, including, without limitation:
(i) there has not been any change, or development involving a
prospective change, including, without limitation, any damage, destruction
or loss (whether or not covered by insurance), but excluding economic,
political, or other conditions affecting the paper and pulp industry
generally, which affects or, to the knowledge of Seller, can reasonably be
expected to affect, materially and adversely, the Purchased Assets or the
earnings, assets, financial condition or operations of the Business;
(ii) any obligation or liability not in the Ordinary Course of
Business involving more than Two Hundred Thousand Dollars ($200,000)
(whether matured, absolute, accrued, contingent, or otherwise) incurred by
Seller with respect to the Business or the Purchased Assets and neither
Seller nor any third party has imposed any Encumbrance upon the Purchased
Assets;
(iii) there has not been any increase in the compensation of the
employees of the Business, including, without limitation, any increase
pursuant to any bonus, pension, profit sharing or other plan or commitment,
(other than normal increases consistent with past practices and those
required by law or collective bargaining agreements);
(iv) there has not been any amendment to any employment agreement,
consulting agreement, or collective bargaining agreement to which any
employee of the Business is a party, and Seller has not entered into any
such agreement;
(v) Seller has not entered into any sale, transfer, lease, mortgage,
license or assignment of, or granted or imposed or permitted any
Encumbrance upon, any of the assets of the Business, including, without
limitation, the Purchased Assets, other than in the Ordinary Course of
Business;
(vi) Seller has not entered into any agreements, contracts, leases, or
licenses (or series of related agreements, contracts, leases and licenses),
other than in the Ordinary Course of Business, with respect to the Business
or with respect to the Purchased Assets which, individually or in the
aggregate, would be material to the Business or which agreements,
contracts, leases or licenses entered into the Ordinary
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Course of Business could be reasonably expected if performed in accordance
with their terms, to have a material adverse effect on the earnings,
assets, financial condition or operations of the Business;
(vii) no party (including Seller) has accelerated, terminated,
modified, or cancelled, or threatened to accelerate, terminate, modify or
cancel, any agreement, contract, lease, or license (or series of related
agreements, contracts, leases and licenses) to which Seller is a party or
by which it is bound which in the aggregate would have a material affect on
the Purchased Assets or the Business;
(viii) Seller has not made any capital investment in, any loan to, or
any acquisition of the securities or assets of, any other person (or series
of related capital investments, loans, and acquisitions) outside the
Ordinary Course of Business with respect to the Purchased Assets or the
Business;
(ix) Seller has not issued any note, bond, or other debt security or
created, incurred, assumed, or guaranteed any indebtedness for borrowed
money or capitalized lease obligation either involving more than Five
Hundred Thousand Dollars ($500,000) singly or One Million Dollars
($1,000,000) in the aggregate with respect to the Purchased Assets or the
Facility;
(x) Seller has not delayed or postponed the payment of accounts
payable and other liabilities outside the Ordinary Course of Business with
respect to the Purchased Assets or the Business;
(xi) Seller has not cancelled, compromised, waived, or released any
right or claim (or series of related rights and claims) either involving
more than Two Hundred and Fifty Thousand Dollars ($250,000) or outside the
Ordinary Course of Business with respect to the Business or the Purchased
Assets;
(xii) Seller has not granted any license or sublicense of or
transferred any rights under or with respect to any Intellectual Property
with respect to the Purchased Assets or the Business;
(xiii) Seller has not experienced any damage, destruction, or loss
(whether or not covered by insurance) to the property relating to the
Business or to the Purchased Assets, in excess of Fifty Thousand Dollars
($50,000) per occurrence and One Hundred and Fifty Thousand Dollars
($150,000) in the aggregate;
(xiv) there has not been any other material occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary
Course of Business involving the Business or the Purchased Assets;
(xv) there has not been any material deterioration of relations
between the Facility and its suppliers, customers, or labor unions; and
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(xvi) Seller has not entered into any agreement or commitment to take
any action described in this Section 4.10.
Since December 27, 1998, the Business has been conducted only in the Ordinary
Course of Business and in a manner consistent with past practices.
4.11 Title to Purchased Assets. Seller is the sole lawful owner of, and has
good and valid record and marketable title collectively to, the Purchased
Assets, such as, with respect to the Real Property, would be insurable on a
standard ALTA form policy of title insurance at standard premium rates, and
immediately prior to Closing, Seller will have the full right to sell, convey,
transfer, assign and deliver all of its right, title and interest in the
Purchased Assets owned by it or in which it has an interest and will have such
power without any restrictions of any kind whatsoever. Except for easements,
restrictions and other encumbrances described in Schedule 4.11 or Schedule
4.12(h) and the Assumed Liabilities, all of the Purchased Assets are entirely
free and clear of any security interests, liens, claims, charges, options,
mortgages, debts, leases (and subleases), conditional sales agreements, title
retention agreements, easements, rights-of-way, licenses, covenants, tenancies,
encumbrances of any kind, defects as to title or restrictions on the use and
enjoyment thereof or against the transfer or assignment thereof (collectively,
"Encumbrances"), and there are no filings in any registry of deeds in any
jurisdiction or under the Uniform Commercial Code or similar statute in any
jurisdiction showing Seller as mortgagor or debtor which create or perfect or
which purport to create or perfect any Encumbrance in or on any of the Purchased
Assets. Except as set forth in Schedule 4.11 or Schedule 4.12(h), all leases of
personal property of Seller to be assigned to the Buyer (or its designees)
hereunder are valid and binding in accordance with their respective terms, and
there is not, under any of such leases, any existing default or any condition,
event or act, which with notice or lapse of time, or both, would constitute a
material default or an event of default. Copies of all title insurance policies
and other evidence of title obtained by Seller with respect to the Real Property
have been, or will, in accordance with Section 6.22, be, delivered to Buyer by
Seller. Seller will deliver to Buyer, in accordance with Section 6.22, all
surveys of land and plans, including, without limitation, site plans and
"as-built" plans with respect to the Real Property which are available to Seller
after due inquiry.
4.12 Real Property.
(a) Schedule 2.1(i) includes a complete and accurate legal description of
the Real Property. The Real Property comprises all real properties owned or
leased by Seller which are used by Seller in, or are otherwise necessary for,
the conduct of the Business.
(b) There are no pending or, to Seller's knowledge, contemplated
condemnation or eminent domain proceedings that might reasonably be expected to
affect the Real Property. There are no planned or commenced public improvements
which, to the knowledge of Seller, may result in special assessments or
otherwise affect the Real Property and to the knowledge of Seller there is no
proposed increase in taxes, real estate or otherwise, relating to the Real
Property except as set forth in the Settlement Agreement
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with the City of Berlin, which is referenced in Schedule 4.9 and has been
delivered to Buyer.
(c) Except as set forth in Schedule 4.12(c), the Real Property complies in
all material respects with all regulations, codes, ordinances, and statutes and
other legal requirements of all applicable Governmental Authorities, including,
without limitation, all zoning, building, health, Environmental Laws, sanitary,
and occupational safety and health regulations, laws, and ordinances.
(d) Except as set forth in Schedule 4.12(d), there are no material
structural defects affecting the Real Property (including, without limitation,
the hydroelectric facilities and landfill), all mechanical systems, including,
without limitation, sewer, septic, water, steam, electrical, plumbing, heating,
air conditioning and environmental improvement systems, are adequate in quantity
and quality for normal operations, and the roofs of the buildings located on the
Real Property are free from material defects. Except as set forth in Schedule
4.12(d), Seller has not received any unresolved complaint or notice of violation
from the Federal Occupational Safety and Health Administration, the Federal
Environmental Protection Agency, the New Hampshire Department of Environmental
Services, or any other Governmental Authority relating to the Real Property.
(e) The Real Property has direct and unobstructed access to adequate
electric, gas, water, sewer, steam, and telephone lines, all of which are
adequate for the uses to which such property is currently used by Seller, all of
which services are adequate in accordance with all applicable laws, ordinances,
rules and regulations and are sufficient for the operation and conduct of the
business of the Facility.
(f) The Real Property has full and free vehicular access to and from
adjacent public highways and roads and Seller has no knowledge of any fact or
condition which would result in the termination of such access.
(g) Except as set forth in Schedule 4.11, to the knowledge of Seller, there
are no encroachments on or nuisances affecting adjacent owners' lands by any
portion of any of the improvements located on the Real Property and/or any of
the business conducted at the Facility and there are no encroachments by any of
the improvements located on adjacent owners' lands on any portion of the Real
Property giving rise to any rights or interests of any other person which would
in any way impair the use of the Real Property for Buyer's intended use thereof.
(h) Except as set forth in Schedule 4.12(h), there are no leases,
subleases, licenses, covenants, options, easements, concessions, or other
agreements, written or oral, recorded or unrecorded, granting to any party or
parties the right of use or occupancy of any portion of the Real Property.
(i) Except as set forth in Schedule 4.12(i), to the knowledge of Seller,
none of the Real Property contains any underground storage tanks.
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(j) Except as set forth in Schedule 4.11, none of the Real Property
(whether owned or leased) used in the active conduct of the Business, or any
real property which is the subject of any timber rights or similar agreements,
is subject to any land use change tax under NHRSA 79-A.
4.13 Leases. For Seller's fiscal year ended December 27, 1998, the
aggregate amount of annual rental expense under leases, oral or written, for
real and personal property ("Leases"), was not greater than $1,200,000. Schedule
4.13 sets forth a complete and accurate list of the Leases. Except as set forth
on Schedule 4.13, Seller has not entered into any material lease of real or
personal property, oral or written, with respect to the Business since December
27, 1998. Except as set forth in Schedule 4.13, neither Seller nor any other
party thereto has breached any such Lease and, no event has occurred which, with
the giving of notice or the passage of time, or both, will cause a default
under, or permit the termination, modification or acceleration of any such Lease
by any party thereto. Complete and accurate copies of all of the Leases have
been delivered to Buyer.
4.14 Inventory. The Inventory, in the aggregate, (i) is fit for the purpose
for which it was procured and manufactured and is usable or saleable in the
Ordinary Course of Business, (ii) is sufficient but not excessive in kind or
amount for the conduct of the Business as it is presently being conducted, and
(iii) is carried on the books of Seller at an amount which reflects valuations
not in excess of the lower of cost or market determined in accordance with
generally accepted accounting principles applied on a consistent basis. Schedule
4.14 sets forth a list of locations of Inventory not located on the Real
Property or on real estate subject to a Lease.
4.15 Intellectual Property and Software. (a) Seller owns or has valid
rights to use pursuant to license, agreement or permission each item of
Intellectual Property necessary or desirable for the conduct of the Business as
presently conducted, as listed in Schedule 2.1(vi) without conflict with the
right of others. Each item of Intellectual Property set forth in Schedule
2.1(vi) will be owned or available for use by Buyer on identical terms
immediately subsequent to the Closing Date. Seller has taken all necessary and
desirable action to maintain and protect each item of Intellectual Property that
it owns or uses.
(b) Seller has not interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of third
parties with respect to the Business and none of the directors and officers (and
employees with responsibility for Intellectual Property matters) of Seller has
ever received any charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation (including any claim
that Seller must license or refrain from using any Intellectual Property rights
of any third party) that remains unresolved. No third party has interfered with,
infringed upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of the Business in any manner that remains
unresolved.
(c) Schedule 2.1(vi) identifies each trademark, copyright and patent
registration which is held by Seller with respect to any of the Intellectual
Property,
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identifies each pending patent application or application for registration which
Seller has made with respect to any of the Intellectual Property, and identifies
each license, agreement, or other permission which Seller has granted to any
third party with respect to any of the Intellectual Property (together with any
exceptions). Seller has delivered to the Buyer correct and complete copies of
all such registrations, applications, licenses, agreements, and permissions (as
amended to date) and has made available to the Buyer correct and complete copies
of all other written documentation evidencing ownership and prosecution (if
applicable) of each such item. Schedule 2.1(vi) also identifies each trade name
or unregistered trademark or service mark used by Seller in the conduct of the
Business, except those used in connection with the Publishing Grades. With
respect to each item of Intellectual Property:
(i) Seller possesses all right, title, and interest in and to the
item, free and clear of any Encumbrance, license, or other restriction,
except as set forth in Schedule 4.15(c);
(ii) the item is not subject to any outstanding injunction, judgment,
order, decree, ruling, or charge;
(iii) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or is threatened which challenges
the legality, validity, enforceability, use, or ownership of the item; and
(iv) Seller has never agreed to indemnify any person for or against
any interference, infringement, misappropriation, violation or other
conflict with respect to the item.
(d) Schedule 2.1(vi) identifies each item of Intellectual Property that any
third party owns and that Seller uses in the conduct of the Business pursuant to
license, sublicense, agreement, or permission. Seller has delivered to the Buyer
correct and complete copies of all such licenses, sublicense, agreements and
permissions (as amended to date). With respect to each such item of Intellectual
Property:
(i) the license, sublicense, agreement, or permission covering the
item is legal, valid, binding, enforceable, and in full force and effect;
(ii) the license, sublicense, agreement, or permission will continue
to be legal, valid, binding, enforceable, and in full force and effect on
identical terms following the consummation of the transactions contemplated
hereby;
(iii) no party to the license, sublicense, agreement, or permission is
in breach or default, and no event has occurred which with notice or lapse
of time or both, would constitute a breach or default or an event of
default, or permit termination, modification, or acceleration thereunder;
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(iv) no party to the license, sublicense, agreement, or permission has
repudiated any provision thereof;
(v) with respect to each sublicense, the representations and
warranties set forth in subsections (i) through (iv) above are true and
correct with respect to the underlying license;
(vi) the underlying item of Intellectual Property is not subject to
any outstanding injunction, judgment, order, decree, ruling, or charge;
(vii) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or is threatened which challenges
the legality, validity, or enforceability of the underlying item of
Intellectual Property; and
(viii) Seller has not granted any sublicense or similar right with
respect to the license, sublicense, agreement or permission.
(e) (i) Schedule 2.1(xii) identifies all of the Facility Software and
Schedule 2.1(xiii) identifies all of the Shared Software (other than
off-the-shelf, non-customized programs and databases that are generally
commercially available), and except as set forth in Schedule 4.15(e), Seller
owns outright or holds valid licenses to all copies of the Facility Software and
the Shared Software. To the knowledge of Seller, none of the Facility Software
or Shared Software, and no use by Seller thereof infringes upon or violates any
patent, copyright, trade secret or other proprietary right of any other person,
and no claim with respect to any such infringement or violation is threatened.
Seller has taken all steps reasonably necessary to protect its right, title and
interest in and to the Facility Software and the Shared Software owned by it,
including, without limitation, the use of written agreements containing
appropriate confidentiality provisions with all third parties having access to
the source code relating thereto.
(ii) Except for off-the-shelf, non-customized programs and databases that
are generally commercially available, Seller possesses or has access to
documentation, including, without limitation, source codes for all Facility
Software and Shared Software owned or used by it sufficient to continue to
operate the Business. Upon consummation of the transactions contemplated by this
Agreement, the Buyer will own all the Facility Software and will have a valid
non-exclusive transferable perpetual and fully-paid up right and license to use
all of the Shared Software owned by Seller immediately prior to the Closing,
free and clear of all claims, liens, encumbrances, obligations and liabilities
and, with respect to all agreements for the lease or license of Facility
Software or Shared Software which require consents or other actions as a result
of the consummation of the transactions contemplated by this Agreement in order
for the Buyer to use and operate the same after the Closing Date, Seller will
have obtained such consents or taken such other actions so required. Seller has
fully paid up all licenses with respect to every third party software program
utilized by each in the conduct of the Business.
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(f) The conduct of the Business following the Closing will not interfere
with, infringe upon, misappropriate, or otherwise come into conflict with, any
Intellectual Property or Facility Software or Shared Software rights of third
parties as a result of the continued operation of its business as presently
conducted.
4.16 Material Contracts. Schedule 4.16 sets forth a complete and correct
list of each contract, agreement or commitment, other than Leases, of Seller:
(i) upon which any substantial part of the Business is dependent or
which, if breached, could reasonably be expected to affect, materially and
adversely, the Purchased Assets or the earnings, assets, financial
condition or operations of the Business;
(ii) which provides for aggregate future payments by the Business of
more than One Hundred Thousand Dollars ($100,000), except for purchase
orders or sales orders arising in the Ordinary Course of Business, in which
case they are listed only if any party thereto is obligated to make future
payments pursuant thereto aggregating more than Two Hundred Thousand
Dollars ($200,000);
(iii) which relates to the Purchased Assets and extends more than one
year from the date hereof and is not cancelable by either party on 30 days'
notice;
(iv) which provides for the sale, lease or transfer of any interest
in, after the date hereof and other than in the Ordinary Course of
Business, of any of the Purchased Assets; or
(v) which contains covenants pursuant to which any person has agreed
not to compete with any business conducted by or at the Facility or not
disclose to others information concerning the Purchased Assets or the
Business.
Each of the foregoing is referred to in this Agreement as a "Material Contract."
Except as set forth in Schedule 4.16, all of the Material Contracts are in full
force and effect, no Material Contract has been breached and, to the knowledge
of Seller, no event has occurred which, with or without the giving of notice or
the passage of time or both, would constitute a default by any party thereto.
Complete and correct copies of all the Material Contracts have been delivered to
Buyer.
4.17 Maintenance of the Equipment. The Equipment comprises all of the
equipment owned by Seller at the Facility and used or necessary for the conduct
of the Business as currently conducted. The Equipment is adequate in quantity
and quality to operate and conduct the Business in the ordinary course and in
substantial compliance with all applicable laws, rules and regulations. Without
limiting the foregoing, the Equipment has been maintained and operated in
substantial compliance with the rules and regulations of the Federal
Occupational Safety and Health Administration, the Federal Environmental
Protection Agency and all other federal, state, county, or local agencies or
departments having jurisdiction thereover.
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4.18 Sufficiency of Purchased Assets. With the exception of the Excluded
Assets and other exceptions set forth in Schedule 4.18, the Purchased Assets
include all properties and rights of Seller used in the operation of the
Purchased Assets and the conduct of the Business as it is presently being
conducted.
4.19 Labor Matters. (a) Schedule 4.19(a) sets forth a complete and correct
list of each labor or collective bargaining agreement, employment contract and
independent contractor agreements to be assumed by Buyer covering Employees and
independent contractors of the Business.
(b) Except as set forth in Schedule 4.19(b), Seller has not received notice
of any allegation of unfair labor practices, or of the institution or, to the
knowledge of Seller, threatened institution of any grievance or arbitration
proceedings or of any material violation of agreements, statutes and
governmental regulations relating to employment practices at the Facility that
remain unresolved or that have resulted in a grievance arbitration decision or a
written settlement agreement during the period of five years preceding the
execution of this Agreement. Except as set forth in Schedule 4.19(b), with
respect to the Business, Seller has substantially complied with all applicable
laws and regulations relating to the employment of labor, including, but not
limited to, those related to wages, hours, discrimination, ERISA, and the
payment of Social Security or similar taxes or unemployment or withholding
taxes, and Seller is not liable for any material penalties for failure to comply
with any of the foregoing. Except as set forth in Schedule 4.19(b), Seller has
not committed any unresolved violation of the federal Fair Labor Standards Act
or any other law dealing with such matters at the Facility.
(c) Since January 1, 1998, neither Crown nor Electric has experienced at
the Facility any strike, labor dispute, work stoppage, slow-down or lockout, or
any other event adversely affecting employee relations and there are no such
actions pending or threatened.
(d) Except as set forth in Schedule 4.19(b) or (d), there are no
unresolved, existing, or to Seller's knowledge, potential, claims by any one or
more of Seller's employees or former employees under any applicable occupational
health or safety, equal employment opportunity, or discrimination statutes or
laws relating to employment at the Facility and there have been no claims that
have resulted in a grievance arbitration decision or a written settlement
agreement with respect to the foregoing during the period of five years
preceding the execution of this Agreement.
4.20 Employee Benefit Plans. Schedule 4.20 lists all of the employee
benefit plans and programs, including, without limitation, all retirement,
savings and other pension plans ("Pension Plans"), all health, severance,
insurance, disability and other employee welfare plans ("Welfare Plans") and all
stock option, incentive, vacation and other similar plans that are maintained by
Seller with respect to employees of the Facility or to which Seller has
contributed or is now contributing on behalf of the employees of the Facility,
true and complete copies of which have been delivered to Buyer. Seller has not
ever maintained or made any contribution to, and is not a party to, any
multi-employer plan as defined in Section 3(37) of ERISA regarding the Facility.
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4.21 Taxes. (a) Except as listed in Schedule 4.9, all real property and
personal property taxes, penalties and interest and related charges currently
due with respect to the Purchased Assets and the conduct of the Business have
been paid by Seller, Electric and Railway. All water and sewage and other
municipal charges and assessments, and any interest and/or penalties thereon,
which are currently due with respect to the Facility or any of the Equipment
(whether or not constituting a lien upon any of the Real Property or other
Purchased Assets) have been paid. Except for the real estate transfer tax, the
sale of the Purchased Assets by Seller, Electric and Railway and purchase of the
Purchased Assets by Buyer, pursuant to this Agreement or any of the Related
Agreements will not result in the imposition of any personal property sales tax
or other similar tax upon the transfer of any of the Purchased Assets, by any
federal, state or local taxing authority.
(b) Except as set forth in Schedule 4.9, to the knowledge of Seller, with
respect to the Business and the Purchased Assets: (i) Seller has timely filed,
or caused to be timely filed, all returns, declarations, reports, estimates,
information returns and statements ("Returns") required to be filed with or
supplied to any taxing authority in connection with all taxes, charges, fees,
levies, duties, tariffs, or other assessments, including, without limitation,
income, gross receipts, excise, real and personal property, sales, transfer,
timber, interest and dividends, business profits, use, change in use, ad
valorem, gains, workers compensation, license, payroll and franchise taxes,
imposed by any Governmental Authority, any interest, penalties or additions to
tax attributable to any of the foregoing (collectively, "Taxes"), required to be
filed by Seller, all of which Returns were substantially correct as filed and
correctly reflect the facts regarding the income, business, assets, operations,
activities and status of Seller, as well as any Taxes required to be paid or
collected by Seller and the Returns comply in all respects with all applicable
legal requirements; (ii) except as set forth in Schedule 4.21(b), Seller's
Returns have not been audited by any Governmental Authority, nor is any such
audit scheduled or pending; (iii) there are no outstanding, waivers or
extensions of time relating to the filing of any Return; (iv) any deficiency
assessments, penalties and interest with respect to Seller's Returns have been
paid by Seller; (v) there are no outstanding waivers or comparable consents to
the application of the statute of limitations with respect to any Taxes or
Returns; and (vi) except as set forth in Schedule 4.21(b), there are no tax
sharing or similar agreements with respect to any Taxes paid or payable by
Seller.
(c) With regard to the Facility and the Purchased Assets, except as set
forth in Schedule 4.9, Seller has timely paid and through the Closing Date will
have timely paid, all Taxes due and payable on or before such date.
4.22 Insurance. Schedule 4.22 sets forth the insurance coverage (and
deductibles relating thereto) currently maintained by Seller relating to the
Purchased Assets and the Business. All premiums with respect thereto have been
paid, and Seller has not received any unresolved notice of cancellation or
threatened cancellation of insurance covering any of the Purchased Assets or the
Business. All such policies are in full force and effect and provide insurance,
including, without limitation, liability insurance, in such amounts and against
such risks and liability claims as is customary for companies engaged in similar
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businesses to that of Seller, to protect the employees, properties, assets of
the Purchased Assets and the Business.
4.23 Undisclosed Liabilities. Except as disclosed in this Agreement and
except for the Assumed Liabilities, at the Closing there will be no Liabilities
of Seller which could create an Encumbrance on, or result in a lien on, the
Purchased Assets or the Business (whether absolute, accrued, contingent or
otherwise, and whether due or to become due).
4.24 Powers of Attorney. There are no outstanding powers of attorney
executed with respect to the Business or the Purchased Assets.
4.25 Product Warranty. Each product manufactured, sold, or delivered by
Seller in the conduct of the Business has been manufactured, sold or delivered
in substantial conformity with all applicable contractual commitments and all
express and implied warranties, and Seller has no Liability (and there is no
basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against the Purchased Assets
or the Facility giving rise to any Liability) for replacement thereof or other
damages in connection therewith, except for product defects in the Ordinary
Course of Business. No product manufactured, sold, or delivered by Seller in the
conduct of the Business is subject to any guaranty, warranty, or other indemnity
beyond the applicable standard terms and conditions of sale. Schedule 4.25
includes copies of the standard terms and conditions of sale for products
manufactured, sold or delivered by Seller at the Facility (containing applicable
guaranty, warranty, and indemnity provisions).
4.26 Product Liability. To the knowledge of Seller, the Business has no
substantial Liability (and there is no basis for any present or future action,
suit, proceeding, hearing, investigation, charge, complaint, claim, or demand
against Seller giving rise to any Liability) arising out of any injury to
individuals or property as a result of the ownership, possession, or use of any
product manufactured, sold, or delivered by Seller relating to the Facility or
the Purchased Assets.
4.27 Finders. No broker, finder or investment banker is entitled to any fee
or commission from Seller for services rendered on behalf of Seller in
connection with the transactions contemplated by this Agreement, and Seller
shall be solely responsible for, and shall indemnify Buyer from and against, any
Liability with respect to any and all commissions, fees, and other charges
arising out of any claimed retention by Seller of a broker or finder in
connection with the transactions contemplated hereby except to the extent said
party was engaged by or dealt with Buyer.
4.28 Related Party Transactions. Except as set forth in Schedule 4.28, as
to the Business and the Purchased Assets, there are no existing arrangements or
proposed transactions between or among Seller, its parent or any of its
subsidiaries and (i) any officer or director of Seller, its parent or any of its
subsidiaries or any member of the immediate family of any of the foregoing
persons (such officers, directors and family members being hereinafter
individually referred to as a "Related Party"), (ii) any business (corporate or
otherwise) which a Related Party owns, directly or indirectly, or in which a
Related Party
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has an ownership interest, or (iii) between any Related Party and any business
(corporate or otherwise) with which Seller or its subsidiaries regularly does
business.
4.29 Year 2000 Compliance. Seller has put in place and is presently
implementing a project of remediation (the "Y2K Remediation Project") of its
computer hardware as listed in Schedule 2.1(ii), the Facility Software and the
Shared Software (collectively, "Purchased Hardware and Software") in order to
ascertain whether the same is free from the "millennium bug" and, in that
regard, will record, store, process and present calendar dates falling on or
after January, 1, 2000, in the same manner, and with the same functionality, as
calendar dates are recorded, stored, processed and presented on or before
December 31, 1999, with the objective that no functionality will be lost with
respect to the introduction of records containing dates falling on or after
January 1, 2000, and, if any of such Purchased Hardware and Software is so
affected, to remediate the same, with the objective that the Purchased Hardware
and Software will on and after January 1, 2000, be interoperable with other
software used by Buyer which may deliver records to the Purchased Hardware and
Software, receive records from the Purchased Hardware and Software, or interact
with the Purchased Hardware and Software in the course of processing data as set
forth in Schedule 4.29. Seller will diligently continue the Y2K Remediation
Project according to its current plans from the date of execution of this
Agreement through the Closing, and will cooperate with Buyer so that Buyer can
continue to carry out the Y2K Remediation Project after the Closing. Seller
currently estimates that the total cost to complete the Y2K Remediation Project
as presently planned will not exceed $1.25 million.
4.30 Books and Records. The books and records of Seller are complete and
correct in all material respects, have been maintained in accordance with good
business practices, and accurately reflect the basis for the financial
condition, operating results and cash flows set forth in the Financial
Statements, as described in Section 4.8.
4.31 Shares of ARCO. Seller is the sole record and beneficial owner of two
thousand five hundred (2,500) shares of the capital stock of ARCO representing
approximately 25% of the total issued and outstanding shares of the capital
stock of ARCO, free and clear of any restrictions on transfer, Taxes, security
interests, Encumbrances, options, warrants, purchase rights, contracts,
commitments, equities, claims, and demands. Seller is not a party to any option,
warrant, purchase right, or other contract or commitment that could require
Seller to sell, transfer, or otherwise dispose of any capital stock of ARCO
(other than this Agreement). Seller is not a party to any voting trust, proxy,
or other agreement or understanding with respect to the voting of any capital
stock of ARCO. Buyer shall have the right, under that certain Androscoggin River
Headwater Benefits Agreement dated June 1, 1983, to select a member of the
Engineering Committee of ARCO.
4.32 Disclosure. None of the information furnished by Seller to Buyer in
connection with the representations and warranties contained in this Article IV
or the transactions contemplated by this Agreement or the Related Agreements
contains any untrue statement of a fact or omits to state any fact necessary in
order to make the statements and
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information contained therein not misleading which would have a material adverse
effect on the Purchased Assets or the Business.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller the following:
5.1 Organization, Qualification. (a) ATH is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite power and authority to own all of its properties and
assets and to carry on its business as it is presently being conducted.
(b) PPA is a limited liability company duly organized, validly existing and
in good standing under the laws of the State of New York and has the requisite
power and authority to own all of its properties and assets and to carry on its
business as it is presently being conducted.
5.2 Authority Relative to this Agreement. (a) ATH has all requisite
corporate power and authority under its Certificate of Incorporation and
by-laws, each as amended to date, and applicable laws to execute and deliver
this Agreement and to perform its obligations hereunder. The execution and
delivery by ATH of this Agreement, and the performance by it of its obligations
hereunder have been duly authorized by the Board of Directors of ATH and no
other corporate proceedings on the part of ATH are necessary with respect
thereto. Assuming that Seller has duly authorized the execution and delivery of
the Seller Documents, this Agreement constitutes the valid and binding
obligations of ATH, enforceable in accordance with its terms, except as
enforceability may be limited by (i) any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditor's rights generally
or (ii) general principles of equity, whether considered in a proceeding in
equity or law.
(b) PPA has all requisite power and authority under its Articles of
Organization and Operating Agreement and applicable laws to execute and deliver
this Agreement and the Related Agreements and to consummate the transactions
contemplated hereby and thereby and to perform its obligations hereunder and
thereunder. The execution and delivery by PPA of this Agreement and the Related
Agreements, and the consummation by it of the transactions contemplated hereby
and thereby, have been duly authorized by the Managers of PPA and no other
limited liability company proceedings on the part of PPA are necessary with
respect thereto. Assuming that Seller has duly authorized the execution and
delivery of the Seller Documents, this Agreement constitutes, and the Related
Agreements, when executed and delivered by PPA will constitute, valid and
binding obligations of PPA, enforceable in accordance with their terms, except
as the same may be limited by (i) any applicable bankruptcy, insolvency,
reorganization, moratorium or similar
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law affecting creditor's rights generally or (ii) general principles of equity,
whether considered in a proceeding in equity or law.
5.3 Consents and Approvals. Except as set forth in Schedule 5.3, there is
no requirement applicable to Buyer to make any registration, qualification or
filing with any Governmental Authority or any third party as a condition to the
lawful consummation of the transactions contemplated by this Agreement by Buyer.
No order, writ, injunction or decree has been issued, or is threatened to be
issued, by any Governmental Authority which would adversely affect the
consummation of the transactions contemplated by this Agreement. Except as set
forth in Schedule 5.3, there is no requirement that any party to an agreement to
which Buyer is a party or by which it is bound consent to the consummation of
the transactions contemplated by this Agreement.
5.4 Non-Contravention. (a) Assuming that the consents and approvals set
forth in Schedule 5.3 are obtained, the execution and delivery by Buyer of this
Agreement does not, and the consummation of the transactions contemplated hereby
and thereby will not, (i) violate or result in a breach of any provision of the
Certificate of Incorporation or by-laws of ATH, or (ii) result in a breach of,
or constitute (with due notice or lapse of time, or both) a default (or give
rise to any right of termination, cancellation or acceleration or otherwise be
in conflict with or result in a loss of contractual benefits) under the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
agreement, lease or other instrument or obligation to which Buyer is a party or
by which ATH, or the business conducted by ATH, may be bound, excluding from the
foregoing clauses (i) and (ii), such defaults and violations as would not have a
material adverse effect on the business or properties of ATH.
(b) Assuming that the consents and approvals set forth in Schedule 5.3 are
obtained, the execution and delivery by PPA of this Agreement and the Related
Agreements does not, and the consummation of the transactions contemplated
hereby and thereby will not, (i) violate or result in a breach of any provision
of the Articles of Organization or Operating Agreement of PPA, or (ii) result in
a breach of, or constitute (with due notice or lapse of time, or both) a default
(or give rise to any right of termination, cancellation or acceleration or
otherwise be in conflict with or result in a loss of contractual benefits) under
the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, agreement, lease or other instrument or obligation to which PPA is a
party or by which PPA, or the business conducted by PPA, may be bound, excluding
from the foregoing clauses (i) and (ii) such defaults and violations which would
not have a material adverse effect on the business or properties of PPA.
5.5 Litigation. Except as set forth in Schedule 5.5, there are no material
actions, suits, claims, investigations or proceedings (legal, administrative or
arbitrative) pending or, to the knowledge of Buyer, threatened against Buyer,
whether at law or in equity and whether civil or criminal in nature, before any
Governmental Authority, nor are there any judgments, decrees or orders of any
such Governmental Authority outstanding against Buyer which seek to prevent,
restrict or delay consummation of the transactions contemplated hereby or
fulfillment of any of the conditions of this Agreement or the
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Related Agreements, nor does Buyer know of any reasonable grounds for any such
claim, action, suit, proceeding or investigation.
5.6 Finders. No broker, finder or investment banker is entitled to any fee
or commission from Buyer for services rendered on behalf of Buyer in connection
with the transactions contemplated by this Agreement, and Buyer shall be solely
responsible for, and shall indemnify Seller from and against any liability in
respect of any and all commissions, fees, and other charges arising out of any
claimed retention by Buyer of a broker or finder in connection with the
transactions contemplated hereby except to the extent said party was engaged by
or dealt with Seller.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Conduct of Business of the Facility. From the date hereof and until the
Closing, Seller will (i) conduct the Business only in the usual and ordinary
course; (ii) maintain in their present condition, except for reasonable wear and
tear, all of the Purchased Assets; (iii) use its best efforts to preserve its
relationships with licensors, suppliers, dealers, customers, Employees, labor
unions, and others having business relationships with the Facility, provided
that Seller shall continue to implement planned reductions in staffing at the
Facility previously disclosed to Buyer so long as such reductions have no
material adverse effect, individually, or in the aggregate, on the Business;
(iv) use its best efforts to assign all Licenses and Permits and obtain all
necessary consents, waivers and approvals; and (v) not change the character of
the Business in any material manner. Seller's management will meet, upon
request, with Buyer on a regular and frequent basis to discuss the general
status of the ongoing operations of the Facility and any material problems
relating to the conduct of its business.
6.2 Notification. Seller shall notify Buyer in writing promptly after
receipt by Seller of any notice of (i) the institution of, or any threat to
institute, any litigation, suit or proceedings before any Governmental Authority
which could have a material effect on the Purchased Assets, the consummation of
the transactions contemplated by the Seller Documents or the Business; (ii) the
entry or imposition of any judgment or lien against any of the Purchased Assets;
(iii) any notice of, or threat of, taking of all or any part of the Real
Property under powers of condemnation or eminent domain; (iv) any notice of
increase or proposed increase in real property tax rates, or tax assessments,
relating to any portion of the Purchased Assets; (v) any notice from any
Governmental Authority or professional environmental engineering firm retained
by Seller of non-compliance with any law (including, without limitation, the
Environmental Laws) relating to the Purchased Assets or the Business; (vi) any
notice from any insurance company or underwriting agency relating to
non-compliance with insurance requirements or standards in respect of any of the
Purchased Assets or the Business; (vii) any notice of breach or default
hereunder or under any mortgage, agreement, or governmental or judicial decree
or order or applicable law, rule or regulation, by which the Business is bound
or affected and which would have an
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effect upon the value or use of the Purchased Assets, or the consummation of the
transactions contemplated by this Agreement; and (viii) any fact, condition or
event which is, or with the lapse of time or giving of notice, or both, would
become a material breach or default or event of default hereunder or which would
render any representation or warranty of Seller hereunder incomplete or
inaccurate and Seller shall take all reasonable action as is necessary to
forthwith remedy such condition, cure such breach or default or event of default
and/or to render any representation, warranty or covenant complete and accurate.
No notification under this Section 6.2 shall be deemed to cure any breach or
default or event of default or render any representation or warranty incomplete
or inaccurate.
6.3 Forbearances by Seller. Except as contemplated by this Agreement, with
regard to the Purchased Assets and the Business, Seller will not, from the date
hereof until the Closing, without the written consent of Buyer, such consent not
to be unreasonably withheld:
(i) incur any material Liability (fixed or contingent), except normal
trade or business obligations incurred in the Ordinary Course of Business
and consistent with past practice and except in connection with this
Agreement and the Related Agreements;
(ii) mortgage, pledge or subject to any Encumbrance, any of the
Purchased Assets;
(iii) sell, transfer, lease or otherwise dispose of any of the
Purchased Assets, except for a fair consideration in the Ordinary Course of
Business and consistent with past practice;
(iv) waive or release any rights of material value or surrender, or
cause to be revoked or otherwise terminate any Licenses and Permits or
other approval, authorization or consent from any court, administrative
agency or other Governmental Authority relating to the Business;
(v) transfer or grant any licenses, patents, inventions, trademarks,
trade names, service marks, copyrights or know-how;
(vi) make or grant any wage, salary or benefit increase or bonus
payment or enter into or amend the terms of any employment contract, or
consulting agreement, or enter into any incentive compensation, profit
sharing, savings deferred compensation, retirement pension or other benefit
plan or arrangement or grant any severance benefits; or pay or agree to pay
any pension or retirement allowance not required by an existing plan or
agreement;
(vii) make any commitments for capital expenditures (including capital
leases) related to the Business, other than in the Ordinary Course of
Business and in the aggregate amount not exceeding Fifty Thousand Dollars
($50,000);
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(viii) enter into any contract (other than purchases under open
purchase orders made in the Ordinary Course of Business) which will
require, in the aggregate, an expenditure of more than Two Hundred and
Fifty Thousand Dollars ($250,000) by the Facility;
(ix) alter in any way the manner in which it has regularly and
customarily maintained the books of account and records of the Facility; or
(x) enter into any contract, transaction or agreement to do any of the
things described in clauses (i) through (ix) above.
6.4 Insurance, Landfill, Financial Security. Seller agrees to use its best
efforts to (i) assist Buyer in placing appropriate insurance coverage for
ownership of the Purchased Assets and operation of the Business and (ii) reduce
the financial security required by the New Hampshire Department of Environmental
Services for operation and closure of the landfill facility included in the
Purchased Assets.
6.5 Negotiations with Others. Seller will not (and Seller will not cause or
permit any of its directors, officers, employees, agents, or representatives to)
(i) solicit, initiate, or encourage the submission of any proposal or offer from
any person relating to the acquisition of the Purchased Assets or (ii)
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any person to do or seek, initiate or
encourage any of the foregoing. Seller will notify the Buyer immediately if any
person makes any proposal, offer, inquiry or contact with respect to the
foregoing.
6.6 Investigation of Businesses and Properties. From and after the date
hereof until the Closing, Seller will afford Buyer and its attorneys,
accountants, financial advisors and other representatives access at all
reasonable times to its officers, employees, properties, contracts, books,
records and documents of Seller relating to the Purchased Assets and the
Business, and a full opportunity to make such investigation as Buyer shall
desire to make with respect to the Purchased Assets and the Business, including,
without limitation, discussion of any such matters with Seller's officers and
other employees, agents, representatives, creditors and vendors. Notwithstanding
the foregoing, Buyer shall have the opportunity to make an analysis of materials
and conduct certain environmental auditing procedures, the scope of which is set
forth in Schedule 6.6. In addition, Seller will furnish Buyer with such
financial, operating and additional data as Buyer may reasonably request
concerning the operations, properties and personnel of the Business.
6.7 Confidentiality. Seller and Buyer agree to be bound by the terms of the
Confidentiality and Non-Disclosure Agreement by and between Seller and American
Tissue Corporation ("ATC") dated August 1, 1998, except to the extent that any
information otherwise deemed to be confidential is required to be disclosed to
investors in connection with the Company's proposed offering of senior notes
referred to in Section 9.18. The Confidentiality and Non-Disclosure Agreement
shall survive (i) the execution of this Agreement notwithstanding any merger
clause contained herein and (ii) the Closing.
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6.8 Taxes and Recording Fees. (i) All property taxes included in Taxes and
special assessments payable in respect of any of the Real Property, Equipment,
and Inventory transferred in connection with the transactions contemplated
hereby shall be prorated between the parties on the basis of actual days elapsed
between the commencement of the current fiscal tax year and, up to and including
the Closing Date, based on a 365-day year.
(ii) The New Hampshire real estate transfer taxes incurred in connection
with this Agreement and the transactions contemplated hereby will be borne
equally by Buyer and Seller at the time of Closing. Buyer and Seller will file
all necessary tax returns and other documents required to be filed with respect
to all such taxes and filing fees. Buyer will cooperate with Seller to the
extent necessary to enable it to make such filings and join in the execution and
delivery of the New Hampshire Department of Revenue Administration Declaration
of Consideration and Real Estate Questionnaire. Each party will bear its
respective filing and recording fees.
6.9 Proration of Lease Payments, Utility Charges and Other Payments. All
rent accrued on any of the Leases and any utility or similar charge of the
Facility relating to the period prior to the Closing Date will be the liability
of Seller. Any installment of rent due on any of the Leases and any utility or
similar charge payable with respect to the period in which the Closing occurs
shall be prorated between the parties hereto on the basis of the actual number
of days applicable to pre-Closing and post-Closing occupancy or use.
6.10 Allocation of Purchase Price. The parties shall use reasonable efforts
to agree to the allocation of the Purchase Price among the various assets that
constitute the Purchased Assets, and upon such agreement, the parties shall
execute IRS form 8594 in connection therewith. Each of the parties shall respect
such agreed upon allocation for all tax purposes and shall file all returns and
other documents with all taxing authorities on a basis consistent therewith.
6.11 Collection of Accounts Receivable. Following the Closing, Buyer will
afford Seller reasonable access during normal business hours to such of the
records transferred to it as shall be necessary to allow Seller to collect any
accounts receivable arising prior to the Closing. If a debtor on any such
account receivable who is also a debtor to Buyer for debts incurred at or after
the Closing shall make any remittance on amounts due in respect of the business
of the Facility, whether the debt was incurred prior to or subsequent to the
Closing, such remittance shall be deemed to be on account of the earliest
invoice unless the debtor specifically designates to the contrary, in which case
the payment shall be applied in accordance with such designation; provided,
however, that PPA and its employees and agents shall not personally solicit
account debtors to designate payments in a manner that is to the financial
disadvantage of Seller. After the Closing, and in accordance with the foregoing
sentence, Seller will promptly transfer and deliver (properly endorsed, if
necessary) to PPA any checks or other payments (including the cash equivalents
of credits due from vendors, suppliers or shippers) which it receives on account
of goods sold or shipped by PPA and Buyer shall promptly transfer and deliver
(properly endorsed, if necessary) to Seller any checks or other payments
(including the cash
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equivalents of credits due from vendors, suppliers or shippers) which it
receives on account of goods sold or shipped by Seller.
6.12 Bulk Sales Laws. Notwithstanding the provisions of Article XII, Seller
will indemnify and hold harmless Buyer from any and all claims made by creditors
of Seller relating to provisions of the "bulk sales laws" of any state or other
jurisdiction which may be applicable to the transactions contemplated hereby and
from all costs (including reasonable attorneys' fees) incurred in the defense of
any claims made under such laws.
6.13 Materials Received After Closing. Following the Closing, Buyer may
open all mail, telegrams and other communications and packages it receives which
are addressed to Seller and deal with the contents thereof in its discretion to
the extent that the contents thereof relate to the Purchased Assets, the
Business or the Assumed Liabilities. Buyer agrees to deliver to Seller and to
treat confidentially all other such material it receives which are addressed to
Seller and does not relate to the Purchased Assets, the Assumed Liabilities or
the Business.
6.14 Retention of Books and Records. For a period of seven years after the
Closing, the parties shall retain their books or records relating to the
Purchased Assets and the Assumed Liabilities. After such seven-year period, any
party shall provide not less than forty-five (45) nor more than ninety (90)
days' prior written notice to the other parties of any proposed destruction or
disposition of any such books and records. If the recipient of such notice
desires to obtain any of the documents to be destroyed or disposed of, it may do
so by notifying the sender of such notice, in writing, at any time prior to the
scheduled date for such destruction or disposal. The notice must specify the
documents which the requesting party wishes to obtain. The parties shall then
promptly arrange for the delivery of such documents. All out-of-pocket costs
associated with the delivery of the requested documents shall be paid by the
requesting party.
6.15 HSR Filings. Seller and Buyer will each file, or cause to be filed
within fifteen (15) days of the date hereof, with the United States Federal
Trade Commission and the Antitrust Division of the United States Department of
Justice, pursuant to the HSR Act, all requisite documents and notifications in
connection with the transactions contemplated by this Agreement.
6.16 Expenses. Except as otherwise provided in this Agreement, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby, including, without limitation, attorneys', accountants' and
outside advisers' fees and disbursements, will be paid by the party incurring
such costs and expenses. Buyer shall pay the HSR filing fee.
6.17 Public Announcements. The parties will consult with one another before
issuing any press releases or otherwise making any public statements with
respect to this Agreement and the Related Agreements and the transactions
contemplated hereby and thereby and will not issue any such press release or
make any such public statement
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without the written consent of the other party unless such action is required by
law or by the SEC.
6.18 Subsequent Events. If any event shall occur prior to the Closing
which, had it occurred prior to the execution of this Agreement, should have
been disclosed by a party to this Agreement in a representation and warranty or
otherwise, then, upon the happening of such event, such party shall promptly
disclose the happening of such event to the other parties hereto. No
notification under this Section 6.18 shall be deemed to cure any breach, default
or event of default or render any warranty, covenant or representation true or
otherwise relieve a party from any obligation hereunder.
6.19 Efforts to Consummate. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its reasonable best efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate, as promptly as practicable,
the transactions contemplated hereby, including, but not limited to, filing all
such reports, notifications and other filings pursuant to federal, state, local
or governmental regulation and obtaining all necessary consents, waivers,
authorizations, orders, approvals, Licenses and Permits, licenses and/or waivers
of third parties, whether private or governmental, required of it to enable it
to comply with the conditions precedent t |
