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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 14, 2000 (August 10,
2000)
AMERICAN PAD & PAPER COMPANY
(Exact name of registrant as specified in its charter)
Commission file number 1-11803
Delaware 04-3164298
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17304 Preston Road, Suite 700, Dallas, TX 75252-5613
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (972) 733-6200
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Item 5. Other.
On August May 9, 2000, American Pad & Paper Company (OTCBB:AMPPQ) (AP&P)
completed the sale of its Creative Card division to Taylor Corporation for $6
million; on August 2, 2000, the Company signed an Asset Purchase Agreement with
an affiliate of American Tissue Inc. for the sale of its Ampad and Forms
divisions for $67.1 million; and on August 10, 2000, the Company signed an Asset
Purchase Agreement for the sale of its Williamhouse division with an affiliate
of Saratoga Partners IV, L.P. for an enterprise value of approximately $110
million. Proceeds from these pending sales will be used to reduce the Company's
debt. Once these sales transactions are completed, there will be no operating
divisions remaining to further assist in reduction of the Company's debt
obligations. As stated in the Company's most recent Form 10-Q filed with the
Securities and Exchange Commission (SEC) for the period ending March 31, 2000,
the Company's debt obligations included a debtor-in-possession financing
facility, a bank credit facility and 13% senior subordinated notes in the
approximate aggregate amount of $430 million. While it is not possible at this
time to predict the final outcome of the Company's Chapter 11 cases, under these
circumstances, management believes it is unlikely that its current equity
holders will receive any value from the final disposition of the bankruptcy
cases.
Effective the date of this filing on Form 8K, the Company will cease
filing with the SEC reports on Forms 10-Q and 10-K so that the Company's limited
resources can be focused on completing the asset sales and the bankruptcy
process. As the Company's major operating divisions have either been sold or
have sales pending, it is the Company's belief that it not possible to prepare
financial reports, with comparable previous periods, that would convey
meaningful information to stockholders.
The Asset Purchase Agreement for the sale of the Company's Williamhouse
division is incorporated herein as Exhibit 00.03.
Exhibit
00.03 Asset Purchase Agreement among Willhouse Acquisition Corp., as Buyer,
and American Pad & Paper Company, American Pad & Paper Company of
Delaware, Inc., WR Acquisition, Inc., AP&P Manufacturing, Inc. and
American Pad & Paper Sales Company, Inc., as Sellers, dated as of
August 10, 2000.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
American Pad & Paper Company
August 14, 2000 /s/ David N. Pilotte
Date David N. Pilotte
Vice President and Corporate Controller
Principal Accounting Officer
ASSET PURCHASE AGREEMENT
among
WILLHOUSE ACQUISITION CORP.,
as Buyer
and
AMERICAN PAD & PAPER COMPANY,
AMERICAN PAD & PAPER COMPANY OF DELAWARE, INC.,
WR ACQUISITION, INC.,
AP&P MANUFACTURING, INC. and
AMERICAN PAD & PAPER SALES COMPANY, INC., as Sellers
Dated as of August 10, 2000
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms .......................................1
Section 1.2 Other Definitional Provisions...............................13
ARTICLE II
THE ACQUISITION
Section 2.1. Assets to Be Conveyed Free and Clear of Encumbrances........13
Section 2.2. Purchase Price for Acquired Assets..........................13
Section 2.3. Adjustment to Purchase Price................................14
Section 2.4. Liabilities Assumed by Buyer................................17
Section 2.5. Payment of Purchase Price for Acquired Assets...............17
Section 2.6. Further Assurances..........................................17
Section 2.7. Closing.....................................................18
ARTICLE III
CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES
Section 3.1. Access and Information......................................18
Section 3.2. Conduct of Business.........................................19
Section 3.3. Proration of Taxes..........................................20
Section 3.4. Sales Taxes.................................................20
Section 3.5. Treatment of Contracts......................................20
Section 3.6. Filings, Consents and Approvals.............................21
Section 3.7. Notice of Actions and Proceedings...........................22
Section 3.8. Purchase Price Allocation...................................22
Section 3.9. Bankruptcy Court Approval...................................22
Section 3.10. Notice of Filings...........................................23
Section 3.11. Buyer's Conduct of Business.................................23
Section 3.12. Due Diligence...............................................23
Section 3.13. Financing...................................................23
Section 3.14. Information Update..........................................23
Section 3.15. Section 351 Treatment.......................................24
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Page
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
Section 4.1. Organization and Good Standing..............................24
Section 4.2. Authorization of Agreement..................................24
Section 4.3. Ownership of Acquired Assets................................24
Section 4.4. Financial Condition.........................................25
Section 4.5. Real Property...............................................25
Section 4.6. Tangible Personal Property..................................26
Section 4.7. Intellectual Property Rights................................26
Section 4.8. Pension and Employee Benefit Plans..........................27
Section 4.9. Litigation..................................................27
Section 4.10. Contracts...................................................27
Section 4.11. Compliance with Law; Permits................................28
Section 4.12. Labor and Employment Matters................................28
Section 4.13. Environmental Matters.......................................29
Section 4.14. Retained Employees..........................................30
Section 4.15. Brokers.....................................................30
Section 4.16. Accuracy of Statements......................................30
Section 4.17. Certain Tax Matters.........................................30
Section 4.18. No Material Adverse Change..................................30
Section 4.19. Customers and Suppliers.....................................31
Section 4.20. Intercompany Arrangements...................................31
Section 4.21. Agreement Not in Breach of Other Instruments................31
Section 4.22. No Breach of Letter of Intent...............................31
Section 4.23. Conduct of Business.........................................31
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Section 5.1. Organization and Corporate Authority........................32
Section 5.2. Agreement Not in Breach of Other Instruments................32
Section 5.3. No Proceedings or Litigation................................32
Section 5.4. Capitalization..............................................32
ARTICLE VI
CONDITIONS TO THE ACQUISITION
Section 6.1. Conditions to Buyer's Obligations to Consummate the
Acquisition.................................................33
Section 6.2. Conditions to Sellers' Obligations to Consummate the
Acquisition.................................................36
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Page
ARTICLE VII
AMENDMENT; TERMINATION; LIQUIDATED DAMAGES
Section 7.1. Amendment...................................................38
Section 7.2. Termination.................................................38
Section 7.3. Effect of Termination.......................................39
Section 7.4. Termination Fee.............................................39
Section 7.5. Liquidated Damages..........................................39
Section 7.6. Guarantee of Buyer's Obligation Under Section 7.4...........39
ARTICLE VIII
BUYER PROTECTION AND SALE PROVISIONS
Section 8.1. Buyer's Expenses............................................40
Section 8.2. Topping Fee.................................................40
Section 8.3. Sale Hearing................................................40
ARTICLE IX
MISCELLANEOUS
Section 9.1. Expenses....................................................40
Section 9.2. Entire Agreement; Disclosures in Writing....................41
Section 9.3. Counterparts................................................41
Section 9.4. Headings....................................................41
Section 9.5. Notices.....................................................41
Section 9.6. Governing Law...............................................42
Section 9.7. Waiver of Jury Trial; Consent to Jurisdiction...............42
Section 9.8. Non-Survival of Representations and Warranties..............44
Section 9.9. Binding Effect; Assignment..................................44
Section 9.10. Further Assurances..........................................44
Section 9.11. Waivers and Amendments; Non-Contractual Remedies............44
Section 9.12. Public Announcements........................................44
Section 9.13. Incorporation of Exhibits and Schedules.....................44
Section 9.14. Severability................................................45
Section 9.15. Third-Party Beneficiaries...................................45
Section 9.16. Headings....................................................45
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EXHIBITS
A Form of Bills of Sale and Assignment Agreements
B Form of Owned Real Property Transfer Documents
C Form of Assignment of Leases
D Interim Order
E [Reserved]
F Form of Certificate of Designations for Class A Preferred Stock
G Form of Certificate of Designations for Class B Preferred Stock
H [Reserved]
I [Reserved]
J Form of Guarantee
K [Reserved]
L Form of Transitional Services Agreement
M Form of Trademark License Agreement
N Form of Stockholders' Agreement
SCHEDULES
1.1(d) Fixed Assets
1.1(d-1) Excluded Office Furniture
1.1(e) Intellectual Property
1.1(f) Permits
11(g) Assumed Liabilities
1.1(h) Collective Bargaining Agreements
1.1(i) Environmental Site Assessments
1.1(j) Leased Real Property
1.1(k) Owned Real Property
1.1(l) Excluded Assets
1.1(m) Insurance
1.1(o) Excluded Liabilities
2.3(b) Example of Calculation of Net Working Capital
2.3(f) Baseline Working Capital Amount
3.2(a) Senior Management Members
3.5(b) Assumed Contracts
4.4 Financial Statements
4.5 Condition of Real Property
4.6 Condition of Fixed Assets
4.8 Employee Benefit Plans
4.9 Litigation
4.10 Contracts
4.12 Labor and Employment Matters
4.13 Environmental Matters
4.17 Tax Jurisdictions
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4.19 Customer and Supplier Matters
4.20 Intercompany Arrangements
4.21 Sellers' Consents and Approvals
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of
August 10, 2000, is by and among WILLHOUSE ACQUISITION CORP., a Delaware
corporation ("Buyer"), American Pad & Paper Company, a Delaware corporation
("AP&P"), American Pad & Paper Company of Delaware, Inc., a Delaware corporation
("AP-Delaware"), WR Acquisition, Inc., a Delaware corporation ("WR
Acquisition"), AP&P Manufacturing, Inc., a Wisconsin corporation
("AP-Manufacturing"), and American Pad & Paper Sales Company, Inc., a Delaware
corporation (together with AP&P, AP-Delaware, WR Acquisition and
AP-Manufacturing, the "Sellers").
Recitals:
A........Sellers are debtors in Chapter 11 case numbers
00-00066 through 00-00072, jointly administered under case number 00-00066 (the
"Case") pending before the Court (as hereinafter defined).
B........Sellers desire to sell, and Buyer desires to buy, the
assets of Sellers' Williamhouse division pursuant to the terms and conditions of
this Agreement (the "Acquisition").
ARTICLE I
DEFINITIONS
Section 1.1. Certain Defined Terms. As used herein, each
of the following terms shall have the meanings ascribed thereto below:
"AP&P" shall have the meaning set forth in the Preamble.
"AP-Delaware" shall have the meaning set forth in the
Preamble.
"AP-Manufacturing" shall have the meaning set forth in the
Preamble.
"Accounts Payable" shall mean the trade accounts payable to
suppliers and vendors of the Business for goods ordered by, or services provided
to, the Business after the Petition Date.
"Accounts Receivable" shall have the meaning set forth in the
definition of "Acquired Assets" in this Section 1.1.
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"Accrued Expenses" shall have the meaning set forth in the
definition of "Assumed Liabilities" in this Section 1.1.
"Acquired Assets" shall mean all assets of Sellers used in the
Business other than Excluded Assets and shall include, without limitation:
(a) All accounts receivable, notes and notes receivable
(including any assets pledged, guarantees and other security given to secure
payment thereunder) of the Business existing on the Closing Date (the "Accounts
Receivable");
(b) All inventories of raw material, work-in-process and
finished goods of the Business which exist on the Closing Date (collectively,
the "Inventory"), whether located at the premises of the Business or elsewhere,
including, without limitation, any inventory owned by the Business which is in
transit or held by third parties on consignment;
(c) All office supplies, maintenance supplies and other
similar items of the Business that exist on the Closing Date;
(d) The machinery, equipment, furniture and fixtures owned by
Sellers and used in the Business on the Closing Date and the corporate furniture
located at the offices of Sellers in Dallas, Texas on the Closing Date, whether
or not used in the Business on the Closing Date (the "Fixed Assets"), whether or
not fully depreciated on the books and records of the Business, including,
without limitation, the assets listed on Schedule 1.1(d) attached and excluding
the office furniture of Sellers previously sold or committed to be sold by
Sellers to a third party and as listed on Schedule 1.1(d-1);
(e) To the extent used in the Business, the patents and patent
applications, patent rights, copyrights, copyright applications, trademarks and
trademark applications (including all the goodwill associated therewith),
service marks, service mark applications, trade names and trade name
registrations (in any such case, whether registered or to be registered in the
United States of America or elsewhere), licenses, common law trademarks, all
processes, inventions, trade secrets, trade names, computer programs, formulae,
URLs, domain names, know-how and other intangible personal property and all
licensed or similar agreements or arrangements to which Sellers are a party,
either as licensee or licensor for such items specified in this Section 1.1(e)
(all of the foregoing being hereinafter referred to collectively as
"Intellectual Property"), including, without limitation, those listed on
Schedule 1.1(e) attached hereto
(f) All Permits held by the Business, including, without
limitation, those listed on Schedule 1.1(f), to the extent such Permits are
transferable to Buyer;
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(g) All rights of the Business under express or implied
warranties from the suppliers of the Business with respect to the Acquired
Assets and all other rights and intangible assets relating to the Acquired
Assets;
(h) The Owned Real Property;
(i) All rights of Sellers under the Assumed Contracts;
(j) All of Sellers' right, title and interest to all leased
personal property (including without limitation all right, title and interest
under capital leases), including all options to purchase leased personal
property, used in the Business on the Closing Date;
(k) All of Sellers' assignable rights and interests under all
insurance policies and all of Sellers' rights and interests under all insurance
claims (whether asserted before or after the Closing Date) relating to the
Business, including, without limitation, those listed on Schedule 1.1(m); and
(l) All of Sellers' right, title and interest to all
management information systems (whether leased or owned) used in the Business.
"Acquisition" shall have the meaning set forth in the Recitals
of this Agreement.
"Action" shall mean any claim, action, suit, arbitration,
inquiry, proceeding or investigation by or before any Governmental Authority.
"Additional Adjustment Cash Payment Reduction" shall have the
meaning set forth in Section 2.3(h).
"Additional Purchase Price Adjustment" shall have the meaning
set forth in Section 2.3(h).
"Adjusted Accounts Payable" shall mean an amount equal to the
product of (i) a fraction, the numerator of which is the outstanding accounts
payable of the Business on December 31, 2000 and the denominator of which is the
revenues of the Business for the three-month period ended December 31, 2000, and
(ii) the revenues of the Business for the three calendar month period
immediately preceding the Closing Date.
"Affiliate" shall mean, as to any Person, any other Person
directly or indirectly Controlling, Controlled by or under direct or indirect
common Control with such Person.
"Agent" shall mean the entity specified as the Agent in
Section 9.5 hereof.
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"Agreement" shall mean this Agreement and all Schedules and
Exhibits hereto, as each may be amended, supplemented or otherwise modified.
"Assumed Contracts" shall have the meaning set forth in
Section 3.5(b).
"Assumed Liabilities" shall mean, without duplication, (i) the
obligations of Sellers under any Assumed Contracts that first arise on or after
the Closing Date, (ii) the Accounts Payable, (iii) current liabilities in
respect of accrued expenses (including accrued wages, vacation pay, sick pay and
holiday pay), other than (x) any compensation, bonus or other liabilities to
employees arising as a result of the Transaction, (y) liabilities in respect of
workers' compensation claims incurred by Sellers in the ordinary course of
Business after the Petition Date and (z) severance obligations resulting from
the termination of employees ("Accrued Expenses"), (iv) any Permitted Liens, (v)
ordinary course balance sheet accruals arising after the Petition Date (other
than professional fees and other non-operating bankruptcy-related expenses of
the Business), (vi) the cure costs associated with Assumed Contracts, to the
extent described in Section 3.5(b), and (vii) the Liabilities listed on Schedule
1.1(g) hereto. Notwithstanding anything to the contrary in this Section 1.1,
none of the liabilities listed on Schedule 1.1(o) shall be an "Assumed
Liability" for purposes of this Agreement, including any liability for Taxes
arising from or with respect to the Acquired Assets or the operations of the
Business prior to the Closing or expenses associated with any employee defined
benefit plans.
"Bank Facility" shall mean a senior secured revolving credit
facility to be entered into by and between Buyer and the Lenders, which facility
will be secured by substantially all of the assets of Buyer, including, but not
limited to, accounts receivable, inventory, PP&E and real property owned by
Buyer.
"Bankruptcy Code" shall mean Title 11 of the United States
Code, ss.ss. 101, et seq., as amended and in effect on the Petition Date.
"Business" shall mean the business and operations of Sellers'
Williamhouse division, as currently conducted by Sellers.
"Business Day" shall mean any day excluding Saturday, Sunday
and any day which is a legal holiday under the Laws of the State of New York or
is a day on which banking institutions located in such state are authorized or
required by Law to close.
"Buyer" shall have the meaning set forth in the Preamble.
"Buyer Protection Provisions" shall mean the terms and
provisions of Sections 7.5, 8.1 and 8.2 herein.
"Case" shall have the meaning set forth in the Recitals to
this Agreement.
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"Cash Payment Reduction" shall have the meaning set forth in
Section 2.2(b).
"Cash Price Adjustment" shall have the meaning set forth in
Section 2.2(b).
"Change of Control" shall mean the occurrence of any of the
following events: (i) any transaction shall be consummated as a result of which
any entity (other than an Affiliate of Buyer, Saratoga or any other member of
the Saratoga Group) shall become the owner, beneficially or of record, directly
or indirectly, of capital stock which, immediately prior to any such event,
represents more than 50.0% of the aggregate voting power of the capital stock of
Buyer or (ii) Persons who at the Closing Date constituted a majority of the
board of directors of Buyer (together with any new directors whose election by
the board of directors of Buyer or whose nomination for election by the
stockholders of Buyer was approved by a majority of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the board of directors of Buyer then in
office.
"Class A Common Stock" shall mean common stock of Buyer
entitled to vote in the election of directors of Buyer. The Class A Common Stock
shall be entitled to one vote per share.
"Class A Preferred Stock" shall mean Class A Preferred Stock
of Buyer issued pursuant to a certificate of designations substantially in the
form of Exhibit F hereto.
"Class B Common Stock" shall mean common stock of Buyer that
shall be non-voting until the earlier of (i) the consummation of an offering of
common stock of Buyer registered under the Securities Act of 1933, as amended
(other than on Form S-8), after which time any shares of common stock of Buyer
shall constitute Public Stock and (ii) a Change of Control. Thereafter, the
Class B Common Stock shall be entitled to one vote per share.
"Class B Preferred Stock" shall mean Class B Preferred Stock
of Buyer issued pursuant to a certificate of designations substantially in the
form of Exhibit G hereto.
"Closing" shall have the meaning set forth in Section 2.7.
"Closing Date" shall have the meaning set forth in Section
2.7.
"Collective Bargaining Agreements" shall mean the collective
bargaining agreements listed on Schedule 1.1(h) hereto.
"Contracts" shall mean all contracts, agreements, indentures,
notes, bonds, loans, instruments, leases, subleases, deeds of trust, conditional
sales contracts, mortgages,
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franchises, licenses, commitments or other binding arrangements relating to the
Business, currently in effect, to which any of Sellers is a party or by which
the Acquired Assets are bound.
"Control" shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of securities or partnership interests
or by contract, assignment or otherwise. The terms "Controlling" and
"Controlled" shall have meanings correlative to the foregoing.
"Court" shall mean the United States District Court for the
District of Delaware having jurisdiction over the Case and, to the extent of any
reference under Section 157, title 28, United States Code, the unit of such
District Court constituted under Section 151, Title 28, United States Code.
"Court Documents" shall have the meaning set forth in Section
3.10.
"Court Filings" shall have the meaning set forth in Section
3.10.
"Cut-Off Date" shall mean August 18, 2000.
"Dollars" and "$" shall mean lawful currency of the United
States of America.
"EBITDA" shall mean, for any period, the net income plus
interest expense, income tax expense, depreciation, amortization, management
fees (in an amount up to an annual rate of $535,000) and actual and reasonable
expenses, all non-cash expenses (other than ordinary accruals) and all
nonrecurring charges and expenses for such period less any cash payments made
during such period for which a reserve or charge was previously taken during
such period and was added back to net income for purposes of calculating EBITDA
for such period.
"Employee Benefit Plan" shall mean each ERISA Plan and each
other pension, profit sharing, retirement, bonus, deferred compensation,
severance pay or insurance plan for current or former officers or employees,
which currently is established, maintained, contributed to or legally obligated
to be contributed to by Sellers for the Business or with respect to which the
Business may incur liability.
"Encumbrance" shall mean any Lien, claim, option, leasehold
interest, right of way, option, restriction or other right of any person or
entity of any kind or any nature whatsoever.
"Environment" shall mean any indoor or outdoor ambient air,
surface water, ground water, drinking water, building surface, material surface,
land surface or subsurface strata, including, without limitation, natural
resources.
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"Environmental Laws" shall mean any Law and the common law
relating or applicable to pollution or protection of human or worker safety and
health or the Environment, including, without limitation, any of the foregoing
relating or applicable to emissions, discharges, spills, Releases or threatened
Releases of any Hazardous Materials into the Environment, or human or natural
resource exposure to any Hazardous Materials, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of any Hazardous Materials.
"Environmental Liabilities" shall mean any liability or
obligation, including, without limitation, liability for investigatory costs,
oversight costs, remediation and cleanup costs, governmental or private response
costs and cost recovery actions, natural resource damages, property damages,
personal injuries, consequential economic damages, administrative, civil or
criminal penalties or forfeitures, and attorneys' fees or other costs of
defending an Action asserting liability under any Environmental Law.
"Environmental Site Assessments" means the environmental site
assessments listed on Schedule 1.1(i) hereto.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"ERISA Pension Plan" shall mean an employee pension benefit
plan as defined in Section 3(2) of ERISA.
"ERISA Plan" shall mean an ERISA Pension Plan or an ERISA
Welfare Plan.
"ERISA Welfare Plan" shall mean an employee welfare benefit
plan as defined in Section 3(1) of ERISA.
"Estate" shall mean the estate created in the Case.
"Excess Cure Amount" shall have the meaning set forth in
Section 3.5(b)
"Excluded Assets" shall mean the assets of Sellers listed on
Schedule 1.1(l) hereto and shall include, without limitation, any Inventory
constituting raw materials used solely in Sellers' AMPAD division or products
used solely in Sellers' AMPAD division.
"Final Order" shall mean (i) an order of the Court as to which
the time to appeal, petition for certiorari or move for reargument or rehearing
has expired and as to which no appeal, petition for certiorari or other
proceedings for reargument or rehearing shall then be pending, or (ii) if an
appeal, writ of certiorari, reargument or rehearing thereof has been filed or
sought, such order of the Court shall have been affirmed by the highest court to
which such
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order was appealed, or certiorari shall have been denied or reargument or
rehearing shall have been denied or resulted in no modification of such order,
and the time to take any further appeal, petition for certiorari or move for
reargument or rehearing shall have expired; provided that the possibility that a
motion under Rule 59 or Rule 60 of the Federal Rules of Civil Procedure, or any
analogous rule under the Bankruptcy Rules, may be filed with respect to such
order shall not cause such order not to be a Final Order.
"Financial Statements" shall have the meaning set forth in
Section 4.4.
"Financing Commitment" shall mean an executed financing
commitment letter relating to the Bank Facility containing commercially
reasonable terms and conditions customary for transactions similar to the
Transactions.
"Fixed Assets" shall have the meaning set forth in the
definition of "Acquired Assets" in this Section 1.1.
"GAAP" shall mean generally accepted accounting principles in
effect in the United States, consistently applied.
"Governmental Approvals" shall mean the consents, approvals,
authorizations and other requirements prescribed by any Law (including, without
limitation, the HSR Act) which must be obtained or satisfied by Sellers or Buyer
and which are necessary for the execution and delivery by Sellers of this
Agreement and the Transaction Documents or for the consummation of any of the
Transactions in accordance with the terms of this Agreement and the Transaction
Documents.
"Governmental Authority" shall mean any domestic or foreign,
federal, state, county, parish, municipal or other local court, agency,
department, legislative body, commission, council, board or other administrative
or governmental body.
"Hazardous Materials" shall mean any substance that is defined
as a "hazardous waste," "hazardous substance," "hazardous material," "extremely
hazardous substance," "toxic substance," "pollutant," "contaminant" or "solid
waste" under, or otherwise regulated by or subject to, any Environmental Law.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Independent Accountants" shall have the meaning set forth in
Section 2.3(d).
"Intellectual Property" shall have the meaning set forth in
the definition of "Acquired Assets" in this Section 1.1.
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"Interim Order" shall mean the Order of the Court entered in
the Case on July 28, 2000 and attached hereto as Exhibit D.
"Inventory" shall have the meaning set forth in the definition
of "Acquired Assets" in this Section 1.1.
"Law" shall mean any statute, law (including common law),
rule, regulation, ordinance, order, decree, ruling, Permit, authorization,
action, restriction, requirement or policy of any Governmental Authority (each
as may be in effect from time to time).
"Leased Real Property" shall mean all of the real property
interests leased by Sellers for use in the Business and listed on Schedule
1.1(j) hereto.
"Lenders" shall mean the lenders under the Bank Facility.
"Letter of Intent" shall mean the letter of intent dated as of
July 14, 2000 between AP&P and Saratoga.
"Liability" shall mean any debt, liability or obligation,
whether accrued, contingent, disputed, undisputed, secured, unsecured,
liquidated, unliquidated, matured or unmatured.
"Lien" shall mean any lien on, charge against, or interest in
property to secure payment of a debt or performance of a liability, whether
granted voluntarily or involuntarily, including without limitation, any security
interest, pledge, mortgage, deed of trust, deed to secure debt, assignment or
other claim or charge, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to
sell or give a lien or security interest and any filing of or agreement to file
any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction).
"Liquidated Damages" shall have the meaning set forth in
Section 7.5.
"Management Stock and Options" shall mean incentive stock and
stock options issued by Buyer to certain members of management of Buyer.
"Material Adverse Effect" shall mean any condition, change or
event that, individually or in the aggregate, would materially and adversely
affect the Acquired Assets, operations, financial condition or prospects of the
Business taken as a whole.
"Net Working Capital" shall have the meaning set forth in
Section 2.3(b).
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"Order" shall mean any order, writ, judgment, injunction,
decree, determination or award of a Governmental Authority.
"Outside Date" shall have the meaning set forth in Section
7.2(g)(A).
"Owned Real Property" shall mean the interests in the real
property owned by Sellers and listed and described on Schedule 1.1(k) attached
hereto, including, without limitation, buildings, structures and improvements
(including construction in progress) located thereon, fixtures contained therein
and appurtenances thereto, together with all servitudes, easements, rights of
way and other real property rights related thereto.
"Permits" shall mean all permits, licenses, certificates,
franchises and other authorizations, consents and approvals of any Governmental
Authority.
"Permitted Encumbrances" shall mean (a) Permitted Liens and
(b) zoning restrictions, covenants, easements, rights of way, licenses, profits,
restrictions or other Encumbrances (other than Liens) on Real Property or minor
irregularities in the title thereto that do not, individually or in the
aggregate, impair (i) the use thereof in the operation of the Business as it is
presently conducted by Sellers and is presently contemplated by Sellers to be
conducted in the future, or (ii) the value thereof to Sellers or Buyer in the
conduct of the Business as it is presently conducted by Sellers.
"Permitted Liens" shall mean any Liens which secure any
Assumed Liabilities.
"Person" shall mean any natural person, corporation,
partnership, firm, joint venture, association, joint-stock company, limited
liability company, trust, unincorporated organization, governmental or
regulatory body or other entity.
"Petition Date" shall mean January 10, 2000, the date on which
the Case was commenced in the Court.
"Preliminary Assumed Contracts" shall have the meaning set
forth in Section 3.5(b).
"Preliminary Statement" shall have the meaning set forth in
Section 2.3(b).
"Public Stock" shall mean any shares of common stock of any
class that are listed on a national securities exchange or that have been
accepted for inclusion in the Nasdaq National Market or any similar national
over-the-counter market.
"Purchase Price" shall have the meaning set forth in Section
2.2(a).
"Purchase Price Adjustment" shall have the meaning set forth
in Section 2.3(f).
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"Real Property" shall mean the Leased Real Property and the
Owned Real Property.
"Rejected Contracts" shall have the meaning set forth in
Section 3.5(b).
"Release" shall mean any spilling, leaking, leaching, pumping,
pouring, emitting, emptying, placing, discharging, injecting, escaping, dumping
or disposing into the Environment, whether intentional or unintentional.
"Representatives" shall mean, with respect to any party, the
directors, officers, employees, representatives or agents of such party or its
Affiliates and its accountants, legal counsel and financial advisors.
"Sale Order" shall mean a Final Order of the Court which,
among other things, contains the provisions described in Section 3.9 and is
otherwise in form and substance reasonably satisfactory to Buyer and Sellers.
"Saratoga" shall mean Saratoga Partners IV, L.P.
"Saratoga Group" shall mean Saratoga and such other investors
as Saratoga may invite to participate on or prior to the Closing Date, or within
12 months of the Closing Date, in the purchase of Class A Preferred Stock, Class
B Preferred Stock and/or Class A Common Stock of Buyer pursuant to Section
2.2(iii), (iv) and (v); provided that any such other investor that participates
in the purchase of Capital Stock of Buyer more than 30 days after the Closing
Date shall only have the right to purchase non-voting shares of Capital Stock.
"Sellers" shall have the meaning set forth in the Preamble;
provided that, for purposes of Section 2.2 hereof, Sellers shall include the
designees of Sellers.
"Senior Notes" shall mean ten year senior unsecured notes
issued by Buyer bearing interest at the rate of ten percent (10%) per annum.
Interest on the Senior Notes shall be payable, at the option of Buyer, in cash
or additional Senior Notes until the earlier of (i) the three year anniversary
of the Closing Date and (ii) the date on which any of the Preferred Stock of
Buyer is redeemed, with all interest payments in cash thereafter. Interest on
the Senior Notes shall accrue from the Closing Date and be payable quarterly,
commencing on the date that is two and one-half months following the Closing
Date. The Senior Notes will be subject to a trust indenture including covenants
customary for high yield senior unsecured notes, including a negative pledge and
dividend restrictions. Buyer shall select the indenture trustee, which trustee
shall be reasonably satisfactory to Sellers and the lenders under Sellers'
existing senior secured credit facilities. The reasonable and customary fees and
expenses of the indenture trustee, including reasonable legal fees and expenses,
in establishing, administering and enforcing the trust shall be borne by Buyer.
The Senior Notes will be redeemable, at the
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option of Buyer, in whole or in part, until two years following the Closing Date
at a ten percent (10%) discount to face value; provided, that if the Senior
Notes are redeemed in part, the aggregate amount of face value of Senior Notes
that may be redeemed by Buyer shall not exceed $35,000,000. The Senior Notes
shall contain such other terms as shall be mutually satisfactory to Buyer,
Sellers, the Lenders and the lenders under Sellers' existing senior secured
credit facilities.
"Taxes" shall mean all taxes, charges, fees, imposts, levies
or other assessments, including, without limitation, all net income, gross
receipts, sales, use, ad valorem, value added, transfer, franchise, profits,
inventory, capital stock, license, withholding, payroll, employment, social
security, unemployment, excise, severance, stamp, occupation, and property
taxes, customs duties, fees, assessments and charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or additional
amounts imposed by any taxing authority (domestic or foreign) and any interest
and penalties imposed with respect to the filing, obligation to file or failure
to file any Tax return, and shall include any transferee liability in respect of
Taxes.
"Termination Date" shall have the meaning set forth in Section
7.2.
"Termination Fee" shall have the meaning set forth in Section
7.4.
"Texas Form Policy" shall have the meaning set forth in
Section 6.1(d)(iv).
"Title Company" shall have the meaning set forth in Section
6.1(d)(iv).
"Topping Fee" shall have the meaning set forth in Section 8.2.
"Transaction Documents" shall mean the contracts, agreements,
documents and instruments contemplated to be entered into by the terms of this
Agreement.
"Transactions" shall mean the Acquisition and related
transactions contemplated by this Agreement or the Transaction Documents.
"Transitional Services Agreement" shall mean an agreement
among Sellers and Buyer, substantially in the form attached hereto as Exhibit L.
"Unions" shall mean (i) the Williamhouse Employees Independent
Association and (ii) the United Steelworkers of America (Aluminum, Brick and
Glass Workers Division), AFL-CIO-CLC, Local No. 198-G.
"WR Acquisition" shall have the meaning set forth in the
Preamble.
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Section 1.2. Other Definitional Provisions.
(a)......The words "hereof," "hereto," "herein" and
"hereunder" and words of similar import, when used in this Agreement, shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement. References herein to Sections, Schedules and Exhibits shall be
construed as references to Sections, Schedules and Exhibits of this Agreement
unless the context otherwise requires.
(b)......Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
ARTICLE II
THE ACQUISITION
Section 2.1. Assets to Be Conveyed Free and Clear of
Encumbrances. On the terms and subject to the conditions set forth in this
Agreement, on the Closing Date, Sellers shall convey, transfer, assign, sell and
deliver to Buyer, and Buyer shall acquire, accept and purchase, all of the
Acquired Assets, free and clear of all Encumbrances other than Permitted
Encumbrances. Sellers shall not transfer to Buyer, and Buyer is not purchasing
hereunder, the Excluded Assets.
To the extent any rights or assets of Sellers primarily relate
to the Business as it has been conducted by Sellers or are otherwise necessary
for the ownership and use of the Acquired Assets and the conduct of the Business
as conducted by Sellers, but are not properly itemized or do not appear in the
applicable Schedules where required, then, unless this Agreement otherwise
provides directly for Buyer to provide for or obtain such rights or assets in a
different way or unless such rights or assets are specifically included in
Excluded Assets, the general language set forth in the definition of "Acquired
Assets" shall govern and such rights and assets shall nonetheless be deemed
transferred to Buyer at Closing.
Section 2.2. Purchase Price for Acquired Assets.
(a)......Subject to Section 2.2(b) below, the purchase price
for the Acquired Assets (the "Purchase Price") shall consist of the following:
(i) Twenty-Four Million Dollars ($24,000,000) in cash from the
proceeds of borrowings by Buyer under the Bank Facility;
(ii) Senior Notes with an aggregate initial face amount of
Sixty-Five Million Dollars ($65,000,000);
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(iii) Six Million Dollars ($6,000,000) in cash from the proceeds
of the sale by Buyer to the Saratoga Group of 6,000 shares of Class A
Preferred Stock;
(iv) Eight Million Dollars ($8,000,000) in cash from the
proceeds of the sale by Buyer to the Saratoga Group of 8,000 shares of
Class B Preferred Stock;
(v) One Million Dollars ($1,000,000) in cash from the proceeds
of the sale by Buyer to the Saratoga Group of 1,000,000 shares of Class
A Common Stock;
(vi) 6,545 shares of Class B Preferred Stock, representing 45%
of the issued and outstanding shares of Class B Preferred Stock of
Buyer; and
(vii) 818,182 shares of Class B Common Stock, representing 45%
of the aggregate issued and outstanding shares of common stock of Buyer
(without giving effect to the dilutive effects of the Management Stock
and Options).
(b)......In the event that on the Closing Date the cash
payment by Buyer under Section 2.2(a)(i) would result in the amount of cash on
hand of Buyer plus the amount actually available immediately thereafter to Buyer
for borrowing under the Bank Facility (including that any borrowing base and
other conditions to borrowing thereunder affected by such cash payment have been
satisfied) being less than $20,000,000, the Purchase Price shall be adjusted as
follows:
(i) the cash payment under Section 2.2(a)(i) shall be reduced
by an amount equal to the amount by which $20,000,000 would exceed the
amount of cash on hand of Buyer plus the amount actually available
thereafter to Buyer for borrowing under the Bank Facility, up to a
maximum reduction of $4,000,000 (the amount of any such reduction, the
"Cash Payment Reduction"); and
(ii) the face amount of Senior Notes of Buyer due to Sellers
under Section 2.2(a)(ii) shall be increased by $1.111 for each $1 of
the Cash Payment Reduction (the "Cash Price Adjustment").
Section 2.3. Adjustment to Purchase Price. The Purchase Price
shall be subject to adjustment after the Closing in accordance with the
following procedures:
(a) On the Closing Date, Sellers and Buyer will jointly
conduct a physical count of the Inventory.
(b) Promptly after the Closing Date, Sellers, with the
assistance and cooperation of personnel of the Business employed by
Buyer after the Closing Date, will prepare and present to Buyer (with a
copy to Agent) a statement in reasonable detail of
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Net Working Capital (as hereinafter defined) as of the Closing Date (the
"Preliminary Statement") in the form and with the accounting categories and
layout set forth in the example attached hereto as Schedule 2.3(b). The
Preliminary Statement shall be delivered to Buyer and Agent no later than
30 days after the Closing Date. "Net Working Capital" shall mean (i) the
sum of the trade and non-trade accounts receivable and Inventory (before
reserves and excluding accrued capitalized variances from standard costs)
less (ii) the Accounts Payable and Accrued Expenses, all as determined in a
manner consistent with the Financial Statements. Net Working Capital shall
be determined without giving effect to the transactions contemplated by
this Agreement. Net Working Capital shall not reflect or include any amount
with respect to any of the Excluded Assets or any Liabilities that are not
Assumed Liabilities.
(c) Buyer and its accountants shall have the right to review
the work papers of Sellers utilized in preparing the Preliminary
Statement and shall have full access to the books, records, properties
and personnel of Sellers for purposes of verifying the accuracy and
fairness of the presentation of Net Working Capital in the Preliminary
Statement. The Preliminary Statement shall be binding on Buyer, unless
Buyer presents to Sellers written notice of disagreement within 30 days
after receipt of the Preliminary Statement specifying in reasonable
detail the nature and extent of the disagreement.
(d) If Buyer and Sellers are unable to resolve any such
disagreement within 15 days after Sellers receive notice of such
disagreement, the disagreement shall be referred for final
determination to Ernst & Young LLP or, if Ernst & Young LLP is unable
or unwilling to make such final determination, to such other
independent accounting firm as the parties shall mutually designate.
The accounting firm so designated to make the final determination is
hereinafter referred to as the "Independent Accountants."
(e) Net Working Capital shall be deemed to have been finally
determined upon the first to occur of (i) written acceptance of the
Preliminary Statement by Buyer, (ii) Buyer's failure to object thereto
within 30 days of receipt thereof, or (iii) notification by the
Independent Accountants of their final determination thereof.
(f) If Net Working Capital, as finally determined, is less
than the amount set forth on Schedule 2.3(f), the Purchase Price shall
be deemed reduced by such difference. The amount of any reduction in
the Purchase Price shall be refunded by the Sellers to Buyer as
provided for in Section 2.3(g) below. If Net Working Capital, as
finally determined, is greater than the amount set forth on Schedule
2.3(f), the Purchase Price shall be deemed increased by such
difference. The amount of any increase in the Purchase Price shall be
paid by Buyer to the Sellers as provided for in Section 2.3(g) below.
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Such reduction or increase in the Purchase Price shall be referred to
herein as the "Purchase Price Adjustment."
(g) The Purchase Price Adjustment shall be paid in cash by the
Sellers or Buyer, as the case may be; provided that (i) in the case of
a Purchase Price Adjustment to be paid by the Sellers to Buyer, if the
portion of the Purchase Price provided for in Section 2.2(a) was
increased by the Cash Price Adjustment, the Sellers shall pay the
Purchase Price Adjustment in the form of Senior Notes to the extent of
the Cash Price Adjustment, and (ii) in the case of a Purchase Price
Adjustment to be paid by Buyer to the Sellers, Buyer shall pay the
Purchase Price Adjustment in the form of Senior Notes to the extent
that inclusion of the amount of the Purchase Price Adjustment as part
of the Purchase Price paid on the Closing Date would have resulted in
the application of the Cash Price Adjustment (without giving effect to
the maximum reduction of $4,000,000 provided for in Section 2.2(b)(i)),
in each case using the same valuation method as that used in the
calculation of the Cash Price Adjustment in Section 2.2(b)(ii).
(h) The Purchase Price, as adjusted by the Purchase Price
Adjustment, if any, shall be subject to an additional increase, if
applicable, in accordance with the following procedure:
(i) As soon as practicable after December 31, 2000,
Buyer shall prepare and present to Sellers a statement in
reasonable detail of the outstanding accounts payable of the
Business as of December 31, 2000 and, if applicable, the
Purchase Price shall be deemed increased (the "Additional
Purchase Price Adjustment") by the extent to which the
outstanding Adjusted Accounts Payable of the Business on
December 31, 2000 exceeds the sum of (A) the Accounts Payable
included in the calculation of Net Working Capital pursuant to
Sections 2.3(b) and 2.3(f) and (B) $4,000,000.
(ii) To the extent there are any disagreements
regarding the calculation of Accounts Payable contained in the
statement delivered pursuant to Section 2.3(h)(i) above, such
disagreements shall be resolved in accordance with procedures
substantially similar to those contained in Sections 2.3(c),
(d) and (e) relating to Net Working Capital.
(iii) Subject to Section 2.3(h)(iv) below, the
Additional Purchase Price Adjustment shall be paid to Sellers
in cash.
(iv) In the event that borrowings under the Bank
Facility incurred by Buyer to make the cash payment
contemplated by Section 2.3(h)(iii) above would result in the
amount of cash on hand of Buyer plus the amount immediately
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thereafter actually available to Buyer for borrowing under the
Bank Facility (including that any borrowing base and other
conditions to borrowing affected by such cash payment
thereunder have been satisfied) being less than $15,000,000,
the Additional Purchase Price Adjustment shall be paid as
follows:
(A) the cash portion of the Additional Purchase Price
Adjustment shall be reduced by an amount equal to the
amount by which $15,000,000 (less the aggregate
amount, if any, used by Buyer to redeem Senior Notes
subsequent to the Closing Date) would exceed the
amount of cash on hand of Buyer plus the amount
actually available thereafter to Buyer for borrowing
under the Bank Facility (the "Additional Adjustment
Cash Payment Reduction"); and
(B) Buyer shall issue to Sellers $1.111 face amount of
Senior Notes for each $1 of the Additional Adjustment
Cash Payment Reduction.
(i) The fees and disbursements of the accountants of Buyer
shall be paid by Buyer. The fees and disbursements of Sellers'
accountants shall be paid by Sellers. The fees and disbursements of the
Independent Accountants incurred pursuant to this Section 2.3 shall be
borne equally, one-half by Sellers and one-half by Buyer.
Section 2.4. Liabilities Assumed by Buyer. As further
consideration for consummation of the Transactions, at the Closing, Buyer shall
assume and agree to thereafter pay when due and discharge the Assumed
Liabilities. Buyer shall assume or be liable for no Liabilities of Sellers other
than the Assumed Liabilities. Except as to the Assumed Liabilities, Buyer is not
a successor to Sellers, and none of Buyer, Buyer's Representatives or its or
their Affiliates shall have any liability for claims against Sellers (whether or
not currently known) as a result of Buyer's purchase of the Acquired Assets or
the consummation of the Transactions hereunder.
Section 2.5. Payment of Purchase Price for Acquired Assets. At
the Closing, Buyer shall pay the Purchase Price to Sellers which, in the case of
any cash payments due to Sellers, shall be by wire transfer to an account
designated in writing by Sellers to Buyer.
Section 2.6. Further Assurances. From time to time after the
Closing, Sellers will execute and deliver or will cause to be executed and
delivered to Buyer such instruments of sale, transfer, conveyance, assignment
and delivery, consents, assurances, powers of attorney and other instruments as
may be reasonably requested by Buyer's Representatives in order to vest in Buyer
all right, title and interest of Sellers in and to the Acquired Assets and
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otherwise in order to carry out the purposes and intent of this Agreement and
the Transaction Documents.
Section 2.7. Closing. The closing of the Transactions (the
"Closing") shall, unless another date, time or place is agreed to in writing by
the parties hereto, take place at the offices of Gibson, Dunn & Crutcher LLP,
200 Park Avenue, New York, New York 10166-0193 at 10:00 a.m. local time, on
August 28, 2000 (such date, or such other date as is agreed to in writing by the
parties hereto, is referred to herein as the "Closing Date").
ARTICLE III
CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES
Section 3.1. Access and Information. From the date hereof to
the Closing Date, Sellers shall, and shall cause Sellers' Representatives to,
provide Buyer and Buyer's Representatives reasonable access to Sellers'
Representatives related to the Business, and the properties, offices and other
facilities of the Business during normal business hours and in a manner not
unreasonably disruptive to the operation of the Business and to all books and
records of the Business (including, without limitation, reasonable access to the
outside auditors of the Business and their work papers), and shall furnish to
Buyer all financial and operating data and other information regarding the
Business and the Acquired Assets that Buyer may from time to time reasonably
request, to the extent such information is in the possession or control of
Sellers or Sellers' Representatives. All information provided by Sellers to
Buyer or Buyer's Representatives shall be accurate and complete in all material
respects and shall be set forth in reasonable detail. All information provided
by Sellers to Buyer or Buyer's Representatives or obtained by Buyer or Buyer's
Representatives relating to the Business in the course of Buyer's review,
including without limitation, the Environmental Site Assessments, shall be
treated as confidential information by Buyer and Buyer shall instruct all of its
Representatives as to the confidentiality of all such information. Buyer shall
be liable for all damage or injury to any person or property resulting from, or
arising out of (i) the disclosure of any such confidential information by Buyer
or Buyer's Representatives, except (x) as required by the Court or any other
valid order by a court or other governmental agency or body, (y) as required by
applicable Law or (z) for information which is in the public domain through no
fault of the Buyer, (ii) any testing conducted by Buyer or Buyer's
Representatives, or (iii) from such visits or inspection of the Business,
whether occasioned by the acts of Buyer or any of its Representatives, and Buyer
shall indemnify and hold harmless Sellers and their Representatives from any and
all Liabilities resulting therefrom. This indemnification by Buyer shall survive
the Closing or the termination of this Agreement, as applicable. Notwithstanding
anything to the contrary contained or implied in this Agreement, the aggregate
liability of Buyer pursuant to this Section
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3.1, together with any amounts paid or payable to Sellers pursuant to Section
7.4, shall be limited to $1,000,000.
Section 3.2. Conduct of Business.
(a)......From the date hereof to the Closing Date, except as
permitted by the prior written consent of Buyer, or as required by the Court or
applicable Law: (1) the Business shall be conducted only in, and Sellers shall
not take any action in connection with the operation of the Business except in
the ordinary course of business and in a manner consistent with past practice of
the Business; (2) Sellers shall use reasonable efforts to preserve the Business
substantially intact, to maintain the Acquired Assets in working order,
condition and repair (subject to ordinary wear and tear), to comply with all
material Laws applicable to the Business (subject to Sellers taking or omitting
to take any actions, which action or omission is asserted by a Governmental
Authority to be a violation of any Law the application of which to Sellers, the
Business or the Transactions is being or will be contested by Sellers in good
faith in appropriate proceedings before the Court or another court of competent
jurisdiction), to keep available the services of employees whose continuing
employment in connection with the Business is advantageous to the conduct of the
Business, and to preserve the present relationships of the Business with
customers and suppliers and other Persons with which the Business has
significant business relations (excluding any such customers or suppliers whose
entire business relationship with the Business is set forth in Contracts with
Sellers that constitute Rejected Contracts); (3) Sellers shall not make any
purchase, sale or disposition of any asset or property of the Business,
including any of the Acquired Assets, other than the sale of Inventory in the
ordinary course of business, and shall not mortgage, pledge, subject to a lien
or otherwise encumber any of the properties or assets of the Business, including
any of the Acquired Assets; (4) Sellers shall not materially change accounting
policies or procedures relating to the Business; (5) Sellers shall not take any
actions or omit to take any actions, the effect of which would result in (i)
material acceleration of the sale of Inventory or material acceleration of the
generation or collection of Accounts Receivable or (ii) material deferral or
delay in the payment of accounts payable or capital expenditures relative to the
past practices of the Business; (6) Sellers shall not increase or make any other
material change in the compensation or benefit arrangements for any officer,
director, employee, stockholder, consultant or agent of Sellers employed at or
in connection with the Business; (7) Sellers shall continue to support the
motion before the Court on the date of this Agreement regarding the extension of
employee retention bonuses (as in effect on the date of the Letter of Intent
dated July 14, 2000 by and between AP&P and Saratoga (the "Letter of Intent"))
and shall pay any such retention bonuses to employees unless the compensation
committee of the board of directors of Sellers determines in good faith, based
on information obtained by Sellers after the date of this Agreement, regarding
the conduct of any employee that a retention bonus should not be paid to any
such employee (and Sellers shall provide prompt notice of any such decision to
Buyer); (8) Sellers shall not terminate any members of the senior management of
the Business listed on Schedule
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3.2(a) without the prior approval of the compensation committee of the board of
directors of Sellers (and, in the event that the compensation committee shall
determine to terminate any such person listed on Schedule 3.2(a), Sellers shall
provide prompt notice of such decision to Buyer); (9) Sellers shall not modify,
amend or otherwise alter or change any of the material terms or provisions of
any Assumed Contract; and (10) Sellers shall continue to seek customary trade
credit and shall make payments to trade vendors in the ordinary course of
business.
(b)......In the event that Sellers intend to take any action
or not to take any action which action or omission, pursuant to Section 3.2(a)
hereof, requires the prior written consent of Buyer, Sellers will, as soon as
practicable, inform Buyer of the proposed action or omission and a proposed
reasonable time frame for obtaining the required written consent. With respect
to any such proposed action or omission, Sellers and Buyer shall use reasonable
efforts to resolve any disputes regarding the proposed action or omission so
that the necessary written consent to the proposed action can be provided by
Buyer within the appropriate time frame.
Section 3.3. Proration of Taxes. All Real Property and
personal property Taxes with respect to the Acquired Assets for the tax years
occurring prior to the tax year in which the Closing Date occurs shall not be
Assumed Liabilities, and all liens, encumbrances or claims related thereto shall
be transferred, pursuant to an order of the Court, to the Purchase Price at the
Closing. All Real Property and personal property Taxes with respect to the
Acquired Assets for the tax year in which the Closing Date occurs shall be
prorated through the Closing Date based on the most current assessment
information available from the applicable taxing authority where the Acquired
Assets are located. All special assessments against the Acquired Assets for
utilities or otherwise shall not be Assumed Liabilities, and all liens,
encumbrances or claims related thereto shall be transferred, pursuant to an
order of the Court, to the Purchase Price at the Closing (and, to the extent not
due and payable at the time of Closing, shall be allocated among Buyer and
Sellers in accordance with customary practice in the applicable jurisdiction).
Section 3.4. Sales Taxes. To the extent the sale of the
Acquisition Assets and other Transactions contemplated hereby are subject under
applicable Law to sales, transfer, use, stamp or similar Taxes that are not
exempt under Bankruptcy Code section 1146, such Taxes shall be borne equally by
Buyer and Sellers.
Section 3.5. Treatment of Contracts.
(a)......Collective Bargaining Agreements. Until the Closing
Date, the Collective Bargaining Agreements will remain in full force and effect.
On the Closing Date, the Collective Bargaining Agreements will be assumed and
assigned to Buyer and on that date and thereafter, the Collective Bargaining
Agreements shall be effective between Buyer and the respective Unions.
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(b)......Assumed Contracts; Rejected Contracts. Attached
hereto as Schedule 3.5(b) is a schedule of Contracts to be assumed by Sellers
and assigned to Buyer on the Closing Date under Section 365 of the Bankruptcy
Code (the "Preliminary Assumed Contracts"). Prior to the Closing, Buyer may, as
permitted by the Court and with the consent of Sellers, designate additional
Contracts as Contracts to be assumed by Sellers and assigned to Buyer and/or
eliminate some or all of the Preliminary Assumed Contracts. Schedule 3.5(b)
shall be updated at Closing to reflect the final list of Contracts to be assumed
by Sellers and assigned to Buyer (the "Assumed Contracts"). With respect to the
Assumed Contracts, Sellers shall cure any past defaults in order to assume and
assign to Buyer the Assumed Contracts in accordance with Section 365 of the
Bankruptcy Code. Schedule 3.5(b) sets forth the amount necessary to cure any
past defaults under each Assumed Contract. The expenses of curing any past
defaults under the Assumed Contracts shall be borne by Buyer; provided that if
(i)(x) an Assumed Contract is not on schedule 3.5(b) (as in effect at the
Cut-Off Date) or (y) such expenses with respect to an Assumed Contract that is
on such Schedule 3.5(b) exceeds the amount for such contract on such Schedule
3.5(b) by more than 20% (such amount in excess of 20%, the "Excess Cure
Amount"), (ii) Buyer desires to assume such contract and (iii) such contract is
reasonably necessary to the Business and is not reasonably replaceable by Buyer
without material cost or delay, the cost of curing past defaults with respect to
any such contracts described in clause (i) (x) above and the Excess Cure Amount
for such contracts described in clause (i) (y) above shall be borne 80% by
Sellers and 20% by Buyer up to a maximum amount for Sellers of $75,000. If the
cost of curing past defaults referred to in the proviso to the immediately
preceding sentence would cause the share of such costs to the borne by Sellers
to exceed $75,000 but for the maximum amount set forth in the immediately
preceeding sentence, Buyers shall not be obligated to close the Transaction
unless Sellers agree to bear 100% of such excess. Subject to the payment of
amounts necessary to cure any pre-petition defaults as set forth on Schedule
3.5(b), each of the Contracts may be assumed by Sellers and assigned to Buyer.
Buyer shall assume all rights and obligations of Sellers arising on or after the
Closing Date under the Assumed Contracts. Contracts that are not Assumed
Contracts shall (to the extent permitted by the Bankruptcy Code and the Court)
be rejected by Sellers ("Rejected Contracts"), unless Buyer otherwise consents
in the case of one or more individual contracts. Upon request of Buyer, Sellers
shall cooperate with and provide reasonable assistance to Buyer in Buyer's
efforts to negotiate acceptable terms and conditions of post-Closing Contracts
with the parties to any Rejected Contract. Notwithstanding any other provision
of this Section 3.5(b), Sellers shall have the right in their discretion to
reject any Contract (other than an Assumed Contract) which in their judgment
Sellers believe must be rejected to maintain the viability of the Business prior
to the Closing Date or to comply with any order of the Court.
Section 3.6. Filings, Consents and Approvals. From and after
the date hereof until the Closing Date, each of Sellers and Buyer shall file or
cause to be filed with the Federal Trade Commission and United States Department
of Justice any notifications required to be filed under the HSR Act with respect
to the Acquisition or the Transactions. During this period,
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each party shall consult with the other as to the appropriate time of filing of
such notifications, shall cooperate with each other as to the preparation of
such notifications and shall use its reasonable efforts to make such filings at
the agreed upon time, and to respond promptly to any requests for additional
information made by any such agency. Sellers and Buyer shall promptly take all
reasonable actions required to obtain all Governmental Approvals and to give all
notices and make all filings with, any Governmental Authorities necessary to
authorize, approve or permit the consummation of the Transactions in accordance
with the terms of the Transaction Documents.
Section 3.7. Notice of Actions and Proceedings. From and after
the date hereof until the Closing Date, Sellers shall promptly notify Buyer of
any written notice received by Sellers with respect to Actions commenced or, to
its knowledge, threatened, involving or affecting Sellers or the Business or
which could reasonably be expected to have a Material Adverse Effect. Upon the
receipt by Sellers of any acquisition proposal relating to the Business from a
third party, Sellers will promptly notify Buyer and indicate in such notice the
identity of the offeror and a complete and accurate description of the material
terms thereof. In addition, Sellers shall provide Buyer with copies of any such
acquisition proposal and all documents related thereto.
Section 3.8. Purchase Price Allocation. Sellers and Buyer
agree to use their reasonable best efforts to agree, on or before the Closing,
as to an allocation of the Purchase Price between and among the Acquired Assets.
Section 3.9. Bankruptcy Court Approval. Sellers shall use
their reasonable best efforts to obtain the Sale Order, which shall, among other
things, (i) determine that this Agreement was proposed and negotiated by Buyer
and Sellers in good faith and at arm's length and represents the highest and
best offer for the Acquired Assets and should be approved; (ii) determine that
Buyer is a good faith purchaser under Section 363(m) of the Bankruptcy Code and
that the provisions of Section 363(n) of the Bankruptcy Code have not been
violated; (iii) authorize and direct Sellers to sell the Acquired Assets to
Buyer pursuant to this Agreement and Section 363 of the Bankruptcy Code, free
and clear of all Liens, claims, interests, liabilities and Encumbrances
(including any and all "interests" in the Acquired Assets within the meaning of
Section 363(f) of the Bankruptcy Code), other than the Assumed Liabilities and
any Environmental Liabilities that attach to the owner of any of the Acquired
Assets by operation of law; (iv) authorize and direct Sellers to assume and
assign the Assumed Contracts to Buyer under Section 365 of the Bankruptcy Code;
(v) authorize and direct Sellers to perform any and all of their obligations
under the Buyer Protection Provisions and Section 9.17 (including the payment of
any amounts required thereunder) free and clear of all Liens, claims, interests
and Encumbrances of any Person (including, without limitation, any prepetition
creditors and debtor-in-possession lenders); (vi) authorize and direct Sellers
to execute, deliver, perform under, consummate and implement this Agreement,
together with all
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additional instruments and documents that may be reasonably necessary or
desirable to implement the foregoing; (vii) permanently enjoin each and every
holder of a Liability that is not an Assumed Liability from commencing,
continuing or otherwise pursuing or enforcing any remedy, claim or cause of
action against Buyer relative to such Liability; and (viii) provide that the
proceeds of the sale of the Business shall first be applied to the payment of
the Topping Fee, the Expense Reimbursement and the Liquidated Damages, if any,
in the event that Buyer is not the winning bidder for the Business.
Section 3.10. Notice of Filings. From and after the date
hereof until the Closing Date, Sellers shall provide Buyer with drafts of all
documents, agreements or other instruments proposed to be included in any
filings with the Court related to this Transaction (each, a "Court Document"
and, collectively, "Court Documents") and a reasonable opportunity for Buyer to
comment thereon prior to the filing of any such Court Document with the Court
(Court Documents so filed, collectively, "Court Filings"). Sellers shall provide
Buyer with all Court Filings in a timely manner and shall provide notice to
Buyer of any developments relating to the Business or the Transactions that
Sellers, in their reasonable good faith judgment, determine are material.
Section 3.11. Buyer's Conduct of Business. From and after the
Closing Date until December 31, 2000, Buyer shall conduct the Business in the
ordinary course of business with regard to accounts payable, including, without
limitation, seeking normal trade credit and making payments to vendors in the
ordinary course of business.
Section 3.12. Due Diligence. On or prior to the Cut-Off Date,
Buyer shall advise Sellers either that (a) its due diligence investigation
(including, without limitation, the current and future status of customer and
supplier relationships) of the Business and the Acquired Assets and the
employment arrangements between Buyer and John Grymes have been satisfactorily
completed or (b) such investigation and/or arrangement has not been
satisfactorily completed.
Section 3.13. Financing. On or prior to the Cut-Off Date,
Buyer shall either (a) provide to Sellers a copy of a Financing Commitment or
advise Sellers that it is waiving its rights with regard to this Section 3.13 or
(b) advise Sellers that it has not been able to obtain a Financing Commitment
and that it is not waiving its rights with regard to this Section 3.13.
Section 3.14. Information Update. If and to the extent Sellers
become aware, after reasonable inquiry, that any of the representations or
warranties of Sellers contained in Sections 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10,
4.11, 4.12, 4.13, 4.14, 4.16, 4.17, 4.18, 4.19 and/or 4.20 are not true and
correct, Sellers shall promptly furnish to Buyer such amended schedules or other
information in writing to fully advise Buyer of such facts; provided that if any
such representations or warranties referenced above shall become untrue or
incorrect after the Cut-Off Date, such shall not alter Buyer's obligations under
this Agreement.
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Section 3.15. Section 351 Treatment. Buyer and Sellers agree
to treat the Transaction as one subject to Section 351 of the Internal Revenue
Code of 1986, as amended, unless, on or prior to the Cut-Off Date, Sellers shall
have notified Buyer that they have determined, in their sole discretion, that
any such treatment would have adverse consequences for the Sellers.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereto jointly and severally represent and warrant to
Buyer as follows:
Section 4.1. Organization and Good Standing. Each of Sellers
is a duly organized corporation, validly existing and in good standing under the
Laws of the State of Delaware (or, in the case of AP-Manufacturing, the State of
Wisconsin), with full power to carry on the Business as it is now conducted and
to own, lease or operate the Acquired Assets. Each of Sellers is qualified to do
business and is in good standing in each jurisdiction in which the nature of the
Business or the character of such Seller's properties makes such qualification
necessary.
Section 4.2. Authorization of Agreement. Subject to approval
of the Court, each of Sellers has all requisite power and authority to enter
into this Agreement and the Transaction Documents and to consummate the
Transactions. This Agreement and all other Transaction Documents to be executed
by Sellers in connection herewith have been (or upon execution will have been)
duly executed and delivered by Sellers, have been effectively authorized by all
necessary action of Sellers, and subject to approval of the Court constitute (or
upon execution will constitute), legal, valid and binding obligations of Sellers
enforceable against Sellers in accordance with its terms.
Section 4.3. Ownership of Acquired Assets. Sellers are the
lawful owners of or have the right to use each of the Acquired Assets. Upon
transfer to Buyer on the Closing Date of ownership of the Acquired Assets that
are owned by Sellers, Buyer will have good and marketable title to the Acquired
Assets (other than the Owned Real Property, which is dealt with in Section 4.5),
free and clear of all Encumbrances, except for Permitted Encumbrances. Upon
transfer to Buyer on the Closing Date of all of Sellers' interest in the
Acquired Assets that are leased or licensed by Sellers or otherwise subject to a
limited interest in favor of any of Sellers, Buyer shall acquire all of such
interest of Sellers in such Acquired Assets, free and clear of all Encumbrances,
except for Permitted Encumbrances. Each of the Acquired Assets, other than the
Inventory and the Intellectual Property, is in reasonable operating condition
and repair (subject to normal wear and tear) and is suitable for the purposes
for which it presently
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is used. The Acquired Assets constitute all of the assets necessary for the
conduct by Sellers on the Closing Date of the Business as conducted by Sellers.
Section 4.4. Financial Condition. Sellers have furnished to
Buyer the audited and unaudited financial statements or reports set forth on
Schedule 4.4 hereto (the "Financial Statements"). The Financial Statements: (i)
except as may be indicated in the notes thereto, were prepared in accordance
with GAAP (subject to, in the case of unaudited statements or reports, the
absence of any footnote disclosures or normal recurring year-end audit
adjustments required by GAAP); and (ii) fairly present, in all material
respects, the financial position, results of operations and cash flows of the
Business as of the dates thereof and periods covered thereby.
Section 4.5. Real Property. Except as set forth on Schedule
4.5, Sellers have good and marketable title in fee simple, or with respect to
the Owned Real Property located in Texas, good and indefeasible title in fee
simple, to all of the Owned Real Property as set forth on Schedule 1.1(k), free
and clear of all Encumbrances other than any Lien that will be satisfied and
discharged on the Closing Date and Permitted Encumbrances. Sellers have made
available to Buyer all deeds, title insurance policies, surveys, mortgages and
other Contracts granting or relating to Sellers' ownership of such Owned Real
Property that are in the actual possession or control of Sellers.
Except as indicated on Schedule 4.5:
(a) the Real Property constitutes all of the real property
interests that are used in connection with the operation of the Business;
(b) Sellers enjoy sole peaceful and undisturbed possession of
the Real Property;
(c) all of the buildings, fixtures and other improvements
located on the Real Property are in working condition and repair, ordinary wear
and tear excepted; the Real Property (and all of the buildings, fixtures and
other improvements located thereon) and the operation thereof as presently
conducted are not in material violation of any applicable building code, zoning
ordinance or other Law; and no Seller has received any written notice of any
violation of any Law or any written notice of the existence of any contemplated
condemnation or eminent domain proceeding with respect to the Real Property;
(d) the Real Property has sufficient access to public roads
and is supplied with sufficient utilities to permit the operation of the
Business as it is currently conducted on such Real Property and no Seller has
received any written notice of termination of such access or utilities; and
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(e) there are no leases, subleases, licenses or concessions or
other agreements, written or oral, granting to any Person other than Sellers the
right of use or occupancy of any portion of any Real Property.
Section 4.6. Tangible Personal Property. Schedule 1.1(d) sets
forth a listing of the Fixed Assets of the Business. Except as otherwise
disclosed on Schedule 4.6, all Fixed Assets included in the Acquired Assets are
in working order and suitable for the use for which they are intended (ordinary
wear and tear excepted).
Section 4.7. Intellectual Property Rights. There is listed on
Schedule 1.1(e) (i) an identification of each item of Intellectual Property used
by Sellers in the conduct of the Business and (ii) a true and complete list of
all licenses or similar agreements or arrangements to which any Seller is a
party either as licensee or licensor for each such item of Intellectual
Property. Except as otherwise indicated on Schedule 1.1 (e), Sellers have good
and valid title to and own all of such Intellectual Property free and clear of
all Encumbrances or have licensed from third parties the exclusive right to use,
sell, transfer, license (or sublicense) and dispose of each item of Intellectual
Property and all such Intellectual Property will be transferred to Buyer at the
Closing free and clear of all Encumbrances. Sellers represent and warrant:
(a) There have not been any actions or other judicial or
adversary proceedings involving Sellers concerning any of the
Intellectual Property included in the Acquired Assets, nor is any such
action or proceeding threatened;
(b) Sellers have the right and authority to use all items of
Intellectual Property included in the Acquired Assets in connection
with the conduct of the Business in the manner presently conducted and
to convey such right and authority to Buyer, and such use does not
conflict with, infringe upon or violate any patent, copyright,
trademark, service mark, trade secret, trade name or other right of any
other person, firm or corporation;
(c) There are no outstanding, nor are there any threatened,
disputes or disagreements with respect to any licenses or similar
agreements or arrangements included in the Intellectual Property
included in the Acquired Assets;
(d) The conduct of the Business does not conflict with any
patent, copyright, trademark, service mark, trade secret, trade name or
other similar rights of others; and
(e) Sellers are not in breach of any of the material
provisions of any agreement or license forming a part of the
Intellectual Property and each item of Intellectual Property licensed
thereunder may be used by Buyer after the Closing in the Business
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pursuant to the applicable license or agreement with respect thereto
without the consent of any third party.
Section 4.8. Pension and Employee Benefit Plans.
(a)......Except as set forth on Schedule 4.8 attached hereto,
there are no Employee Benefit Plans.
(b)......Sellers have made available to Buyer true and correct
copies of each Employee Benefit Plan set forth on Schedule 4.8.
(c)......Buyer will not, as a result of consummation of the
Transactions, assume any Liabilities with regard to the Employee Benefit Plans,
except to the extent any such Liabilities are Assumed Liabilities.
(d)......Sellers have no liability (including any contingent
liability) with respect to any multiemployer plan, within the meaning of Section
3(37) of ERISA, arising out of or relating to the Business.
Section 4.9. Litigation. Except for matters which are
described on Schedule 4.9, there are no claims, disputes, actions, proceedings
or investigations of any nature before any Governmental Authority pending or, to
the actual knowledge of Sellers, threatened, involving the Business that, if
determined adversely to Sellers, would, individually or in the aggregate, have a
Material Adverse Effect.
Section 4.10. Contracts.
(a)......Except (i) as set forth on Schedule 4.10 or (ii) for
events of default arising as a result of the filing of a petition for relief
under Chapter 11 of the Bankruptcy Code:
(A) the Contracts constitute lawful, valid and legally binding
obligations of the parties thereto and are enforceable in accordance with their
terms;
(B) each Contract is in full force and effect and constitutes
the entire agreement by and between the parties thereto; and
(C) in all material respects, all obligations required to be
performed under the Contracts by Sellers and the other parties thereto on or
prior to the date hereof have been performed, and no event has occurred or
failed to occur which constitutes, or with the giving of notice, the lapse of
time or both would constitute, a default by any of Sellers under the Contracts.
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(b)......Each of the Contracts may be assumed by Sellers and
assigned to Buyer in accordance with Section 3.5(b); the amounts necessary to
cure any such defaults are as set forth on Schedule 3.5(b).
Section 4.11. Compliance with Law; Permits. The Business as
presently conducted does not violate, in any material respect, any Law. Sellers
have obtained all material Permits required for the conduct of the Business as
presently conducted. To the extent such Permits are transferable, Sellers shall
fully cooperate so as to permit Buyer to continue to have the use and benefit
thereof and the rights granted thereby after the Closing shall have occurred. To
the extent such Permits are not transferable, Sellers shall reasonably cooperate
with and assist Buyer in applying for replacement Permits. All Permits listed on
Schedule 1.1(f) may be transferred to Buyer pursuant to their terms.
Section 4.12. Labor and Employment Matters.
(a)......Except as set forth on Schedule 4.12, with regard to
the Business there is no (i) collective bargaining agreement or other labor
agreement to which any Seller is a party or by which such Seller is bound other
than the Collective Bargaining Agreements; (ii) employment, retainer,
consulting, or incentive plan, policy or contract to which any Seller is a party
or by which it is bound (other than any Employee Benefit Plan); or (iii) plan or
agreement under which "fringe benefits" (including, but not limited to, vacation
plans or programs, sick leave plans or programs and related benefits) are
afforded any employees of Sellers (other than any Employee Benefit Plan).
(b)......No party to any such plan, policy or contract is in
default with respect to any material term or condition thereof, nor has any
event occurred which through the passage of time or the giving of notice, or
both, would constitute a default thereunder or would cause the acceleration of
any obligation of any party thereto.
(c)......Except as set forth on Schedule 4.12, with regard to
the Business there is no (i) unfair labor practice complaint against any of
Sellers pending before the National Labor Relations Board or any state or local
agency or any basis for any such complaint; (ii) pending labor strike or other
material labor trouble; (iii) pending labor grievance or outstanding workers'
compensation claims; (iv) pending representation question respecting the
employees of the Business; (v) pending arbitration proceedings arising out of or
under the Collective Bargaining Agreements; or (vi) pending or, to the actual
knowledge of Sellers, threatened claim against Sellers regarding the discharge
or dismissal of any employee or the failure to hire any individual employee and,
to the actual knowledge of Sellers, there is no basis for any such claim.
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Section 4.13. Environmental Matters.
(a)......Except as disclosed in the Environmental Site
Assessments or on Schedule 4.13 hereto:
(i) No Hazardous Materials have been used, manufactured,
produced, constructed, deposited, disposed of, stored, released or
otherwise located on, under, in or about any Real Property, in a manner
or condition which constitutes a material violation of or for which
remediation is required under any Environmental Law;
(ii) No Hazardous Materials have migrated, or due to their
location are threatening to migrate, from any Real Property on, under,
in or about other properties, and no Hazardous Materials have migrated,
or due to their location are threatening to migrate, from other
properties on, under, in or about any Real Property, in a manner or
condition which constitutes a material violation of or for which
remediation is required under any Environmental Law;
(iii) No underground improvement, including, without limitation,
any treatment, sump or storage tank, or related piping, or water, gas
or oil well, was or has been installed or located on any Real Property,
in a manner or condition which constitutes a material violation of or
material liability under any Environmental Law;
(iv) Neither Sellers nor any officers thereof have received any
written notice or other written communication concerning, or otherwise
have knowledge of, (A) any material violation or alleged violation of
or material liability under Environmental Laws arising out of the
conduct of the Business or the Real Property or the Acquired Assets
(except for any such violations which have been corrected to the
satisfaction of the appropriate Governmental Authority); (B) any
alleged liability for environmental damages, third party injury or
property damages arising under Environmental Laws and relating to any
Real Property or Acquired Assets or arising out of the conduct of the
Business; or (C) any alleged liability for the presence or suspected
presence of Hazardous Materials on, under or emanating from any Real
Property;
(v) None of the Business, the Acquired Assets or the Real
Property is the subject of any order, judgment or decree issued by any
Governmental Authority, or subject to any other material liability,
under Environmental Laws and, to the knowledge of Sellers, no
circumstances exist which could reasonably be expected to result in any
of the foregoing; and
(vi) The transaction contemplated under this Agreement will not
require any notification, disclosure, registration, reporting, filing,
investigation or remediation under Environmental Laws.
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(b)......Except as disclosed in the Environmental Site
Assessments or on Schedule 4.13, each of Sellers has been and remains in
compliance in all material respects with the terms and conditions of each Permit
issued to such Seller in connection with Environmental Laws by any Governmental
Authority with respect to the activity of the Business. No other material
Permits were or are required pursuant to Environmental Laws for the Business.
Immediately prior to the Closing, each such Permit issued to Sellers under
Environmental Laws in connection with the Business will be in full force and
effect and Sellers have no reason to believe any such Permits will be revoked or
modified prior to their expiration or will not be renewed without the incurrence
of material expenditures.
Section 4.14. Retained Employees. Since December 31, 1999,
there has been no material change in the rate of compensation of the employees
of the Business and the compensation of such employees for 1999 was consistent
with past practices of Sellers for similar employees in similar situations.
Section 4.15. Brokers. Buyer will not, as a result of
consummation of the Transactions, become liable for any fee or commission
payable to any broker, finder or investment banker working for or on behalf of
Sellers.
Section 4.16. Accuracy of Statements. Neither this Agreement,
nor any schedule, exhibit, statement, list, document, certificate or other
information furnished by or on behalf of Sellers to Buyer in connection with
this Agreement, when read together, contains any untrue statement of a material
fact or omission of a material fact necessary to make the statements contained
herein or therein, in light of the circumstances in which they are made, not
misleading.
Section 4.17. Certain Tax Matters.
(a)......Sellers have filed or will file when due all Tax
returns, statements, reports, and forms required to be filed or furnished with
respect to the Business for all tax periods ending on or before the Closing
Date, and such returns, statements, reports, and forms have been or will be
complete and accurate in all material respects. To the extent permitted by the
Bankruptcy Code, Sellers have paid all Taxes due with respect to the Business,
and there are no Tax liens on the Acquired Assets.
(b)......Schedule 4.17 contains a list of all states and other
jurisdictions in which Tax returns have been filed or Taxes have been paid with
respect to the Business or the Acquired Assets since January 1, 1999.
Section 4.18. No Material Adverse Change. There has been no
change in the business, operations, assets, liabilities, condition (financial or
otherwise), prospects or results of operations of the Business since June 30,
2000 which could, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
Section 4.19. Customers and Suppliers. Other than the
customers and suppliers and the amounts set forth on Schedule 4.19, (i) since
January 1, 1999, no material customer or supplier of the Business has
terminated, or materially reduced, and no such customer or supplier of the
Business has given notice that it may terminate or materially reduce its
relationship with Sellers prior to the Closing Date, and (ii) Sellers have no
knowledge that any such material customers or suppliers of the Business may not
continue equivalent relationships with Buyer subsequent to the Closing Date;
provided that, for purposes of this clause (ii), the knowledge of Sellers shall
be limited to the knowledge of Gregory Maio, Richard Huntoon and Jeffrey
Kirchmer.
Section 4.20. Intercompany Arrangements. Except as set forth
on Schedule 4.20, there are no agreements or arrangements between the Business
and Sellers or any of their affiliates relating to the purchase or sale of
products, the provision of services or the joint use of any facilities.
Section 4.21. Agreement Not in Breach of Other Instruments.
Except as set forth on Schedule 4.21 and except for the Sale Order, the
execution and delivery of this Agreement, the consummation of the Transactions
and the fulfillment of the terms hereof by the Sellers require no action on
their part by or in respect of, or any filing with or notice to, any
governmental or regulatory body, agency or official. Except as set forth on
Schedule 4.21, the execution and delivery of this Agreement, the consummation of
the Transactions and the fulfillment of the terms hereof will not result in a
breach of any of the terms or provisions of, or constitute a default under, or
conflict with, any Seller's certificate of incorporation or formation, as the
case may be, Seller's by-laws or operating agreement, as the case may be, or any
Order of any Governmental Authority or any Law applicable to any Seller, its
constituent members or any of their respective Affiliates.
Section 4.22. No Breach of Letter of Intent. There has been no
breach on the part of Sellers, or any one of them, of the provisions of
paragraph 4(b) or any other material provisions of the Letter of Intent.
Section 4.23. Conduct of Business. There are no existing plans
by any of Sellers to conduct the Business in a manner other than consistent with
past practices.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
Section 5.1. Organization and Corporate Authority. Buyer is a
corporation duly organized, validly existing and in good standing under the Laws
of the State of Delaware and has all requisite power and authority to enter into
this Agreement and to consummate the Transactions. This Agreement and all other
agreements herein contemplated to be executed in connection herewith have been
(or upon execution will have been) duly executed and delivered by Buyer, have
been effectively authorized by all necessary action, and constitute (or upon
execution will constitute) legal, valid and binding obligations of Buyer,
enforceable against Buyer in accordance with its terms.
Section 5.2. Agreement Not in Breach of Other Instruments. The
execution and delivery of this Agreement, the consummation of the Transactions
and the fulfillment of the terms hereof by Buyer require no action on its part
by or in respect of, or any filing with or notice to, any governmental or
regulatory body, agency or official. The execution and delivery of this
Agreement, the consummation of the Transactions and the fulfillment of the terms
hereof will not result in a breach of any of the terms or provisions of, or
constitute a default under, or conflict with, the certificate of incorporation
or by-laws of Buyer or any Order of any Governmental Authority or any Law
applicable to Buyer, its constituent members or any of their respective
Affiliates.
Section 5.3. No Proceedings or Litigation. To the knowledge of
Buyer, no Action by any Governmental Authority or other person has been
instituted or threatened which questions the validity or legality of the
Transactions contemplated herein and which could reasonably be expected to
damage Buyer materially if the Transactions contemplated hereby are consummated,
including any material adverse effect on the right or ability of Buyer to own,
operate, possess or transfer the Acquired Assets after the Closing.
Section 5.4. Capitalization. Immediately after the Closing,
the authorized capital stock of Buyer will consist of (i) 10,000,000 shares of
Common Stock, (A) 8,000,000 of which are designated Class A Common Stock, of
which 1,000,000 shares will be issued and outstanding and (B) 2,000,000 of which
are designated Class B Common Stock, of which 818,182 shares will be issued and
outstanding, and (ii) 2,000,000 shares of Preferred Stock, (A) 1,320,000 of
which are designated Class A Preferred Stock, of which 6,000 shares will be
issued and outstanding and (B) 680,000 of which are designated Class B Preferred
Stock, of which 14,545 shares will be issued and outstanding. The outstanding
indebtedness of Buyer, immediately after the Closing, will consist solely of
indebtedness represented by the Senior Notes, borrowings under the Bank Facility
and indebtedness, if any, included in the Assumed Liabilities.
ARTICLE VI
CONDITIONS TO THE ACQUISITION
Section 6.1. Conditions to Buyer's Obligations to Consummate
the Acquisition. The obligations of Buyer to consummate the Acquisition and the
other Transactions to be consummated at the Closing as contemplated by this
Agreement shall be subject to the satisfaction or waiver by Buyer in writing on
or prior to the Closing Date of each of the following conditions:
(a) Representations, Warranties, Covenants and Agreements.
(i) Each of the representations and warranties of Sellers
(other than the representation and warranty contained in Section 4.18)
shall be true and correct in all material respects as of the date
hereof, and as of the Cut-Off Date, unless the failure of any such
representations or warranties so to be true and correct as of such date
would not have a Material Adverse Effect.
(ii) Each of the covenants and agreements of Sellers to be
performed after the date hereof and prior to the Closing or such other
time period as specifically set forth in a particular covenant or
agreement shall have been duly performed in all material respects by
the prescribed date or for the duration of the prescribed time period.
(iii) Each of the representations and warranties of Sellers
contained in Sections 4.1, 4.2, 4.3, 4.15 and 4.21 shall be true and
correct as of the Closing Date, unless the failure of any such
representations and warranties to be true and correct as of such date
would not have a Material Adverse Effect.
(iv) For purposes of this Section 6.1(a), any references to
materiality or to Material Adverse Effect contained in the
representations and warranties shall be disregarded.
(b) Consents. All of the Governmental Approvals shall have
been received on or prior to the Closing Date.
(c) No Orders. On the Closing Date, there shall be no Order of
any nature issued by a Governmental Authority of competent jurisdiction
in effect that directs that the Transactions not be consummated.
(d) Additional Closing Documents. Buyer shall have received at
the Closing the following documents, dated the Closing Date:
(i) Bills of sale and assignment and assumption
agreements substantially in the form attached hereto as
Exhibit A, covering the items of personal property and the
Assumed Contracts included in the Acquired Assets to be
transferred or assigned to Buyer at the Closing;
(ii) Grant deeds or similar forms of conveyance
substantially in the form attached hereto as Exhibit B,
covering the Owned Real Property to be conveyed to Buyer
pursuant to this Agreement;
(iii) Assignments of leases substantially in the form
attached hereto as Exhibit C, transferring the leasehold
estate granted to the Sellers under the leases covering the
Leased Real Property, which leases are Assumed Contracts;
(iv) Such further instruments of sale, transfer,
conveyance, assignment or delivery covering the Acquired
Assets or any part thereof as Buyer may reasonably require to
assure the full and effective sale, transfer, conveyance,
assignment or delivery to it of the Acquired Assets to be
transferred to Buyer under this Agreement;
(v) Title insurance policies issued by Chicago Title
Insurance Company (the "Title Company") under (A) an ALTA
(1992) Extended Coverage Owner's Policy insuring good and
marketable title of Buyer in and to those portions of the
Owned Real Property not located in Texas and (B) the standard
Owner Policy of Title Insurance promulgated by the Texas State
Board of Insurance (the "Texas Form Policy") insuring good and
indefeasible title of Buyer in and to those portions of the
Owned Real Property located in Texas, subject only to
Permitted Encumbrances, for the amounts as may be reasonably
specified by Buyer and otherwise in form and substance
reasonably acceptable to Buyer (which shall be obtained at the
expense of Buyer);
(vi) A current completion or "as built" survey for
each Owned Real Property and each material Leased Real
Property and the improvements located thereon, in such form as
shall be required by the Title Company to omit the so-called
standard survey exceptions from the title insurance policies
issued at Closing, and certified in a manner reasonably
satisfactory to Buyer and as otherwise required by the Title
Company;
(vii) Affidavits duly executed by each Seller stating
its United States taxpayer identification number and that it
is not a foreign person pursuant to Treasury Regulation
Section 1.1445-2(b) and such other affidavits, certificates
and instruments duly executed by Sellers as shall be
reasonably required to induce the Title Company to issue the
title insurance policies contemplated herein;
(viii) Evidence reasonably satisfactory to Buyer of the
release or satisfaction of all Encumbrances on the Acquired
Assets other than Permitted Encumbrances; and
(ix) Such other documents as may be specified herein
or in the Transaction Documents or as Buyer may reasonably
request.
(e) The Interim Order and the Sale Order. The Sale Order shall
have been entered and neither the Interim Order nor the Sale Order
shall have been modified, amended, dissolved, revoked or rescinded in
any material respect.
(f) Possession. Simultaneously with the consummation of the
transfer of the Acquired Assets, Sellers will deliver sole possession
of all Acquired Assets or the rights thereto to Buyer.
(g) Financing. (i) Buyer shall have received cash proceeds
from borrowings under the Bank Facility sufficient to enable Buyer to
pay the Purchase Price required by Section 2.2(a)(i), as adjusted by
the Cash Price Adjustment, if any; and (ii) after giving effect to the
Closing and the payment of the Purchase Price, Buyer shall have at
least $20 million actually available thereafter for borrowing under the
Bank Facility (including that any borrowing base and other conditions
to borrowing thereunder have been satisfied); provided that if either
of (i) or (ii) above is not true as a result of (x) a failure to
satisfy conditions precedent to borrowings under the Bank Facility, the
satisfaction of which conditions precedent is solely within the control
of Buyer or (y) a failure of Buyer to obtain a Financing Commitment by
the Cut-Off Date, such shall not constitute a condition excusing Buyer
from its obligations to consummate the Acquisition and the other
Transactions to be consummated at the Closing.
(h) Transitional Services Agreement. Buyer shall have received
an executed transitional services agreement, substantially in the form
attached hereto as Exhibit L, for a term of at least 12 months,
pursuant to which AP&P shall provide appropriate financial, accounting,
employee benefit and other services to the Business.
(i) Intellectual Property Filings. Sellers shall have executed
and filed, in suitable form, each filing, notice, registration or other
document required to effectuate and perfect the transfer or assignment
of each item of Intellectual Property to be transferred to Buyer
hereunder, including, without limitation, such filings as may be
required pursuant to the rules and regulations of the United States
Patent and Trademark Office and its foreign equivalents.
(j) Simultaneous Closing. Subject to the terms and conditions
set forth in this Agreement, the closing of the Transactions
contemplated to be consummated at the Closing shall occur
simultaneously.
(k) Collective Bargaining Agreements. The unions party to the
Collective Bargaining Agreements shall have consented to the assignment
to Buyer of the Collective Bargaining Agreements on substantially the
same terms as in effect on the date of this Agreement.
(l) Certain Exhibits and Schedules. Each of the Schedules
required under this Agreement, the form of the Senior Notes and the
related trust indenture and each Exhibit to this Agreement (other than
any such Exhibits that shall be attached to this Agreement on the date
hereof) shall be in form and substance reasonably satisfactory to Buyer
on or prior to the Cut-Off Date.
Section 6.2. Conditions to Sellers' Obligations to Consummate
the Acquisition. The obligation of Sellers to consummate the Acquisition and the
other Transactions to be consummated at the Closing as contemplated by this
Agreement shall be subject to the satisfaction or waiver in writing by Sellers
on or prior to the Closing Date of each of the following conditions:
(a) Representations, Warranties, Covenants and Agreements.
(i) Each of the representations and warranties of Buyer
contained in this Agreement shall be true and correct in all material
respects as of the date hereof, and as of the Closing Date, unless the
failure of such representations and warranties so to be true and
correct does not materially and adversely affect the ability of Buyer
to consummate the Transactions.
(ii) Each of the covenants and agreements of Buyer to be
performed after the date hereof and prior to the Closing Date or such
other time period as specifically set forth in a particular covenant or
agreement shall have been duly performed by the prescribed date or for
the duration of the prescribed time period, in all material respects.
(b) Consents. All of the Governmental Approvals shall have
been received on or prior to the Closing Date.
(c) No Orders. On the Closing Date, there shall be no Order of
any nature issued by a Governmental Authority of competent jurisdiction
in effect that directs that the Transactions not be consummated.
(d) Interim Order and Sale Order. The Sale Order shall have
been entered and neither the Interim Order nor the Sale Order shall
have been modified, amended, dissolved, revoked or rescinded in any
material respect; provided that, for purposes of this Section 6.2(d),
the Sale Order need not be a Final Order.
(e) Certain Closing Deliveries. Sellers shall have received
from Buyer any other documents required to be delivered by Buyer to
Sellers pursuant to the provisions of this Agreement or the Transaction
Documents in form and substance reasonably satisfactory to Sellers.
(f) Certain Agreements. Sellers shall have received (i) an
executed transitional services agreement, substantially in the form
attached hereto as Exhibit L, pursuant to which Buyer shall provide,
for a limited period of time, management information services to
Sellers' AMPAD and Forms divisions or any buyer thereof and (ii) a
fully-paid trademark license agreement, substantially in the form
attached hereto as Exhibit M, related to the "Peel & Seel" trademark in
favor of Sellers' AMPAD and Forms divisions or any buyer thereof;
provided that such license shall relate only to the channels of
distribution currently used by the Ampad and Forms divisions (which do
not include jobber and merchant distribution channels).
(g) Stockholders' Agreement. Holders of Capital Stock shall
have entered into a stockholders' agreement substantially in the form
attached hereto as Exhibit N with respect to the ownership of Capital
Stock of Buyer.
(h) Simultaneous Closing. Subject to the terms and conditions
set forth in this Agreement, the closing of the Transactions
contemplated to be consummated at the Closing shall occur
simultaneously.
(i) Certain Exhibits and Schedules. Each of the Schedules
required under this Agreement, the form of the Senior Notes and the
related indenture and each Exhibit to this Agreement (other than any
such Exhibits that shall be attached to this Agreement on the date
hereof) shall be in Form and substance reasonably satisfactory to
Sellers on or prior to the Cut-Off Date.
ARTICLE VII
AMENDMENT; TERMINATION; LIQUIDATED DAMAGES
Section 7.1. Amendment. Subject to any Court approval
requirement that may be applicable,this Agreement may be amended by the written
agreement of Sellers and Buyer, with the written consent of Agent, at any time
prior to the Closing Date.
Section 7.2. Termination. This Agreement may be terminated
prior to the Closing as follows (the actual date on which this Agreement is
terminated being referred to herein as the "Termination Date"):
(a) at any time on or prior to the Closing Date, by mutual
written consent of Sellers and
Buyer;
(b) at the election of Sellers, if any one or more of the
conditions to the obligations of Sellers to close as set forth in
Section 6.2 has not been fulfilled (other than as a result of the fault
of the Sellers) or cannot be fulfilled prior to the Outside Date;
(c) at the election of Buyer, if any one or more of the
conditions to the obligations of Buyer to close as set forth in Section
6.1 has not been fulfilled (other than as a result of the fault of
Buyer) or cannot be fulfilled prior to the Outside Date;
(d) at the election of Buyer, within five days of the Cut-Off
Date, if either or both of the items set forth in Section 3.12(b) or
Section 3.13(b) shall occur;
(e) by either Buyer or Sellers, if any Governmental Authority
of competent jurisdiction shall have issued an Order or taken any other
action restraining, enjoining or otherwise prohibiting the Transactions
(which the party seeking to terminate this Agreement shall have used
all reasonable efforts to have lifted or reversed) and such Order shall
have become final and nonappealable;
(f) by either Buyer or Sellers, upon the entry of an order of
the Court authorizing the sale of the Business to a Person other than
Buyer or another entity designated by Buyer; or
(g) by either Buyer or Sellers if:
(A) the Closing has not occurred on or before October 15, 2000,
unless extended by written notice delivered by Buyer or
Sellers at least five (5) Business Days prior to such date
(the "Outside Date") and agreed to by the other party, time
being of the essence;
(B) the Case is dismissed or converted to a Chapter 7
bankruptcy pursuant to provisions of the Bankruptcy Code; or
(C) the Sale Order has not been entered on or before October
14, 2000.
Section 7.3. Effect of Termination. If this Agreement is
terminated and the Transactions are not consummated, this Agreement shall become
void and of no further force and effect, except that any such termination shall
not affect (i) Buyer's indemnity obligations under Section 3.1; (ii) Sellers'
right to receive the Termination Fee, if applicable, (iii) Buyer's right to
receive the Topping Fee, if applicable; (iv) Buyer's right to receive the
Liquidated Damages, if applicable; or (v) the provisions of Article VIII hereof,
if applicable.
Section 7.4. Termination Fee. If (i) Buyer has provided to
Sellers the advice, notice or documents contemplated by Sections 3.12(a) and
3.13(a), (ii) the Closing has not occurred prior to the Outside Date (other than
as a result of a breach by any of Sellers under this Agreement) and (iii) there
is a breach by Buyer under this Agreement, then Buyer shall pay to Sellers a
termination fee in cash of One Million Dollars ($1,000,000) (the "Termination
Fee").
Section 7.5. Liquidated Damages. If (i) Buyer has provided to
Sellers the advice, notice or documents contemplated by Sections 3.12(a) and
3.13(a), (ii) the Closing has not occurred prior to the Outside Date (other than
as a result of a breach by Buyer under this Agreement or as a result of Buyer's
inability to close prior to the Outside Date), and (iii) Sellers have either (x)
notified Buyer that they have elected to pursue a stand-alone plan of
reorganization which does not constitute a liquidation of the Business or (y)
breached this Agreement, Sellers shall pay to Buyer, upon the confirmation of
such stand-alone plan in the case of clause (x) or upon the disposition of the
Business (other than a liquidation of the Business) in the case of clause (y),
liquidated damages of One Million Dollars ($1,000,000) ("Liquidated Damages").
Section 7.6. Guarantee of Buyer's Obligation Under Section
7.4. The Buyer's obligation pursuant to Section 7.4 shall be guaranteed pursuant
to a separate letter agreement by Saratoga or one of its affiliates reasonably
satisfactory to Sellers and substantially in the form of Exhibit J hereto.
ARTICLE VIII
BUYER PROTECTION AND SALE PROVISIONS
Section 8.1. Buyer's Expenses. Sellers shall reimburse Buyer
or its designees (the "Expense Reimbursement") as provided in the Interim Order:
Section 8.2. Topping Fee. In the event (a) Buyer has provided
Sellers the advice, notice or documents contemplated by Sections 3.12(a) and
3.13(a) and (b) Sellers sell all or a substantial part of the Business or
Sellers' stock to a party other than Buyer, Sellers shall pay to Buyer upon
closing of such alternative transaction a fee equal to Three Million Three
Hundred Forty-One Thousand Dollars ($3,341,000) (the "Topping Fee").
Section 8.3. Sale Hearing. Within two days after execution of
this Agreement by all parties, Buyer shall file with the Court a motion to
approve this Agreement and the Transactions pursuant to Section 363 of the
Bankruptcy Code, and shall request a hearing relative to such motion to be
scheduled for as early a date as practicable.
ARTICLE IX
MISCELLANEOUS
Section 9.1. Expenses.
(a)......Except as otherwise provided in Article VIII hereof
and in clause (b) below, Buyer and Sellers shall bear their own respective costs
and expenses (including, but not limited to, all compensation and expenses of
counsel, financial advisors, consultants, actuaries and independent accountants)
incurred in connection with the preparation and execution of this Agreement and
the Transaction Documents and consummation of the Transactions.
(b)......At the Closing, Sellers shall, as a net reduction to
the Cash Purchase Price, pay the following expenses of Buyer incurred in
connection with the Transactions: (i) the fees due to Saratoga and/or its
designees in an amount not to exceed $1.0 million; (ii) the fees due to Alex
Weiss and/or his designees in an amount not to exceed $1.0 million; (iii) the
commitment fees paid or payable by Buyer in connection with the Bank Facility;
and (iv) its legal, accounting, consulting, financing (other than financing
commitment fees) and other out-of-pocket expenses; provided that the aggregate
amount of fees and expenses payable to Buyer by Sellers pursuant to this clause
(b) shall not exceed $4.0 million.
Section 9.2. Entire Agreement; Disclosures in Writing. Except
as otherwise contemplated herein, this Agreement, together with the Schedules
and Exhibits hereto, constitutes the entire agreement of the parties with
respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.
Section 9.3. Counterparts. This Agreement and any amendments
hereto may be executed in one or more counterparts, each of which shall be
deemed to be an original by the party executing such counterpart, but all of
which shall be considered one and the same instrument.
Section 9.4. Headings. The section and paragraph headings
contained in this Agreement are for reference purposes only and shall not in any
way affect the meaning or interpretation of this Agreement.
Section 9.5. Notices. All notices hereunder shall be deemed
given if in writing and delivered or sent by telecopy, courier or by registered
or certified mail (return receipt requested) to the following addresses or
telecopier numbers (or at such other addresses or telecopier numbers as shall be
specified by like notice):
(a) if to Sellers, to:
American Pad & Paper Company
c/o Lazard Freres & Co., LLC
30 Rockefeller Plaza
New York, New York 10020
Attn: Tom Haack
Facsimile No.: (212) 332-1708
With a copy to:
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, New York 10166
Attn: Conor Reilly, Esq.
Facsimile No.: (212) 351-5247
American Pad & Paper Company
17304 Preston Road, Suite 700
Dallas, Texas 75252-5613
Attn: John H. Rodgers
Facsimile No.: (972) 733-6298
Agent
Bankers Trust Company
130 Liberty Street
New York, New York 10006
Attn: Robert Tinari
Facsimile No.: (212) 669-1575
Counsel to Agent
Luskin, Stern & Eisler LLP
330 Madison Avenue
New York, New York 10017
Attn: Richard Stern, Esq.
Facsimile No.: (212) 293-2705
(b) if to Buyer, to:
Willhouse Acquisition Corp.
c/o Saratoga Partners IV, L.P.
535 Madison Avenue
New York, New York 10022
Attn: Kirk Ferguson
Facsimile No.: (212) 906-7792
With a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attn: Robert Usadi, Esq.
Facsimile No.: (212) 269-5420
Any notice given by delivery, mail or courier shall be effective when received.
Any notice given by telecopier shall be effective upon oral or machine
confirmation of transmission.
Section 9.6. Governing Law. This Agreement shall be governed
by and construed in accordance with the Laws of the State of New York without
regard to the conflicts of law principles thereof, and, to the extent
applicable, the Bankruptcy Code.
Section 9.7. Waiver of Jury Trial; Consent to Jurisdiction.
EACH OF THE PARTIES HERETO HEREBY WAIVES TRIAL BY JURY IN ANY LITIGATION ARISING
OUT OF THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY
COURT IN WHICH SUCH LITIGATION MAY BE BROUGHT.
EACH PARTY HERETO IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF (A) THE SUPREME COURT OF THE STATE OF NEW YORK, NEW YORK COUNTY,
(B) THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND
(C) TO THE EXTENT APPLICABLE, THE UNITED STATES BANKRUPTCY COURT FOR THE
DISTRICT OF DELAWARE FOR THE PURPOSES OF ANY ACTION, SUIT OR OTHER PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT, OR ANY TRANSACTION CONTEMPLATED
HEREBY BUT FOR NO OTHER PURPOSE. EACH PARTY HERETO AGREES TO COMMENCE ANY
ACTION, SUIT OR PROCEEDING RELATING HERETO EITHER IN THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OR IF SUCH SUIT, ACTION OR OTHER
PROCEEDING MAY NOT BE BROUGHT IN SUCH COURT FOR JURISDICTIONAL REASONS, IN THE
SUPREME COURT OF THE STATE OF NEW YORK, NEW YORK COUNTY OR, TO THE EXTENT
APPLICABLE, THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE.
EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION TO THE
LAYING OF VENUE OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY IN (I) THE SUPREME COURT OF THE STATE OF
NEW YORK, NEW YORK COUNTY, (II) THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK OR (III) TO THE EXTENT APPLICABLE, THE UNITED
STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE, AND HEREBY FURTHER
IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY
SUCH COURT THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN ANY SUCH COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY HERETO ALSO HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE OR
OTHERWISE, IN ANY SUCH ACTION, SUIT OR PROCEEDING, ANY CLAIM THAT IT IS NOT
SUBJECT PERSONALLY TO THE JURISDICTION OF THE ABOVE-NAMED COURTS, THAT ITS
PROPERTY IS EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE VENUE OF ANY
SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN ONE OF THE ABOVE-NAMED COURTS IS
IMPROPER, OR THAT THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY MAY
NOT BE ENFORCED IN OR BY SUCH COURT.
Section 9.8. Non-Survival of Representations and Warranties.
The representations and warranties of Sellers and Buyer set forth in this
Agreement shall not survive the Closing. Other than as specifically provided for
herein in Sections 3.1, 7.4, 7.5, 8.1 and 8.2, no party hereto shall be liable
to any other party hereto for money damages as a result of such party's breach
of any of its obligations hereunder.
Section 9.9. Binding Effect; Assignment. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. This Agreement and the rights and
remedies hereunder are not assignable by Sellers or Buyer, without the prior
written consent of the other party; provided that Sellers may assign their
rights under this Agreement to their creditors and Buyer may assign its rights
under this Agreement to the Lenders. Notwithstanding the foregoing, the parties
hereto acknowledge that Sellers' execution of this Agreement is subject to
approval of the Court. This Agreement shall not be binding upon Sellers unless
and until it is approved by the Court in accordance with the applicable
provisions of the Bankruptcy Code.
Section 9.10. Further Assurances. Sellers, on the one hand,
and Buyer, on the other, agree, to the extent necessary (and only to such
extent), on or any time after the Closing Date, to execute and deliver, or to
cause to be executed and delivered, all such instruments, and to take all such
actions, as the other may reasonably request in order to effectuate the intent
and purposes of, and to carry out the terms of, this Agreement.
Section 9.11. Waivers and Amendments; Non-Contractual
Remedies. This Agreement may be amended, superseded, canceled, renewed or
extended, and the terms and conditions hereby may be waived, only by a written
instrument signed by the parties or, in the case of a waiver, by the party
waiving compliance. Except as otherwise provided herein, no delay on the part of
any party in exercising any right, power or privilege hereunder, nor any single
or partial exercise of any such right, power or privilege hereunder, shall
preclude any other or further exercise thereof or the exercise of any other such
right, power or privilege hereunder. The rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies that any party may
otherwise have at law or in equity.
Section 9.12. Public Announcements. Except as required by the
Court or applicable law, or in connection with obtaining the Sale Order, neither
Buyer nor Sellers shall issue any press release or make any public statement
regarding, or disclose to any third party any information regarding, this
Agreement or the Transactions contemplated hereby, without the prior written
consent of the other party.
Section 9.13. Incorporation of Exhibits and Schedules. The
Exhibits and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
Section 9.14. Severability. If any provision of this Agreement
(or any portion thereof) or the application of any such provision (or any
portion thereof) to any Person or circumstance shall be held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof (or the remaining portion thereof) or the application of such provision
to any other Persons or circumstances.
Section 9.15. Third-Party Beneficiaries. This Agreement shall
not confer any rights or remedies upon any Person other than the Parties hereto,
their respective successors and permitted assigns, the creditors of the Sellers
and the Lenders.
Section 9.16. Headings. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, this Agreement has been signed on behalf
of each of the parties hereto as of the date first above written.
WILLHOUSE ACQUISITION CORP.
By:
Name:
Title:
AMERICAN PAD & PAPER COMPANY
By:
Name:
Title:
AMERICAN PAD & PAPER COMPANY OF DELAWARE, INC.
By:
Name:
Title:
WR ACQUISITION, INC.
By:
Name:
Title:
AP&P MANUFACTURING, INC.
By:
Name:
Title:
AMERICAN PAD & PAPER SALES COMPANY, INC.
By:
Name:
Title: