EXHIBIT 10.15
JOINT VENTURE AGREEMENT
AMONG
GEORGIA-PACIFIC CORPORATION,
CHESAPEAKE CORPORATION,
WISCONSIN TISSUE MILLS INC., AND
GEORGIA-PACIFIC TISSUE, LLC
DATED AS OF OCTOBER 4, 1999
TABLE OF CONTENTS
ARTICLE I ORGANIZATION OF THE COMPANY.......................................1
1.1 FORMATION OF THE COMPANY.............................................1
ARTICLE II CONTRIBUTION OF THE BUSINESSES...................................2
2.1 CONTRIBUTION OF ASSETS; ASSUMPTION OF LIABILITIES....................2
2.2 RETAINED G-P ASSETS AND LIABILITIES..................................3
2.3 RETAINED WISCO ASSETS AND LIABILITIES................................3
2.4 CLOSING OF TRANSACTION...............................................3
2.5 POST-CLOSING ADJUSTMENT..............................................6
2.6 TRANSFER TAXES AND RECORDING FEES....................................9
2.7 REQUIRED CONSENTS....................................................9
2.8 OWNERSHIP OF THE COMPANY; SPECIAL DISTRIBUTION......................10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF CSK PARTIES..................10
3.1 ORGANIZATION AND QUALIFICATION......................................11
3.2 CORPORATE AUTHORIZATION.............................................11
3.3 CONSENTS AND APPROVALS..............................................11
3.4 NON-CONTRAVENTION...................................................11
3.5 BINDING EFFECT......................................................12
3.6 FINANCIAL STATEMENTS: ABSENCE OF CERTAIN CHANGES....................12
3.7 LITIGATION AND CLAIMS...............................................13
3.8 TAXES...............................................................13
3.9 EMPLOYEES, PENSION AND OTHER BENEFIT PLANS..........................14
3.10 COMPLIANCE WITH LAWS...............................................17
3.11 ENVIRONMENTAL MATTERS..............................................17
3.12 INTELLECTUAL PROPERTY..............................................18
3.13 LABOR MATTERS......................................................19
3.14 CONTRACTS..........................................................20
3.15 REAL ESTATE LEASES.................................................21
3.16 ENTIRE BUSINESS; TITLE TO PROPERTY.................................21
3.17 FINDER'S FEES......................................................22
3.18 INSURANCE..........................................................22
3.19 NO UNDISCLOSED LIABILITIES.........................................22
3.20 NO MATERIAL ADVERSE CHANGE.........................................23
3.21 INDEBTEDNESS FOR BORROWED MONEY....................................24
3.22 KNOWLEDGE AS OF CLOSING DATE.......................................24
3.23 NO OTHER REPRESENTATIONS OR WARRANTIES.............................24
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF G-P...........................25
4.1 ORGANIZATION AND QUALIFICATION......................................25
4.2 CORPORATE AUTHORIZATION.............................................25
4.3 CONSENTS AND APPROVALS..............................................25
4.4 NON-CONTRAVENTION...................................................25
4.5 BINDING EFFECT......................................................26
4.6 FINANCIAL STATEMENTS: ABSENCE OF CERTAIN CHANGES....................26
4.7 LITIGATION AND CLAIMS...............................................27
4.8 TAXES...............................................................27
4.9 EMPLOYEES, PENSION AND OTHER BENEFIT PLANS..........................28
4.10 COMPLIANCE WITH LAWS...............................................30
4.11 ENVIRONMENTAL MATTERS..............................................30
4.12 INTELLECTUAL PROPERTY..............................................31
4.13 LABOR MATTERS......................................................31
4.14 CONTRACTS..........................................................32
4.15 REAL ESTATE LEASES.................................................33
4.16 ENTIRE BUSINESS; TITLE TO PROPERTY.................................33
4.17 FINDER'S FEES......................................................33
4.18 INSURANCE..........................................................33
4.19 NO UNDISCLOSED LIABILITIES.........................................34
4.20 NO MATERIAL ADVERSE CHANGE.........................................34
4.21 INDEBTEDNESS FOR BORROWED MONEY....................................36
4.22 KNOWLEDGE AS OF CLOSING DATE.......................................36
4.23 ORGANIZATION OF COMPANY............................................36
4.24 AUTHORIZATION OF COMPANY...........................................36
4.25 ACTIVITIES OF COMPANY..............................................36
4.26 NO OTHER REPRESENTATIONS OR WARRANTIES.............................36
ARTICLE V COVENANTS........................................................36
5.1 COVENANTS REGARDING EMPLOYEES.......................................36
5.2 COMPLIANCE WITH WARN AND SIMILAR LAWS...............................37
5.3 FURTHER ASSURANCES..................................................37
5.4 USE OF G-P INTELLECTUAL PROPERTY AND CSK MARKS......................37
5.5 CERTAIN MATTERS RELATED TO RETAINED AND ASSUMED LIABILITIES.........37
5.6 INTERCOMPANY AGREEMENTS.............................................37
5.7 RECORDS AND RETENTION AND ACCESS....................................38
5.8 INSURANCE...........................................................38
5.9 SPECIAL CSK RETAINED LIABILITY......................................39
5.10 PREPARATION OF REGISTRATION STATEMENT..............................39
5.11 USE OF WISCO NAME..................................................39
5.12 PRORATION OF CERTAIN CHARGES.......................................39
ARTICLE VI CONDITIONS TO CLOSING...........................................40
[Intentionally Deleted].................................................40
ARTICLE VII SURVIVAL; INDEMNIFICATION......................................40
7.1 SURVIVAL............................................................40
7.2 INDEMNIFICATION BY G-P..............................................40
7.3 INDEMNIFICATION BY CSK..............................................41
7.4 INDEMNIFICATION BY THE COMPANY......................................42
7.5 INDEMNIFICATION PROCEDURES..........................................42
7.6 ACKNOWLEDGMENT REGARDING ENVIRONMENTAL LIABILITIES..................44
7.7 CHARACTERIZATION OF INDEMNIFICATION PAYMENTS........................44
ARTICLE VIII TAX COVENANTS.................................................45
8.1 LIABILITY FOR TAXES.................................................45
8.2 PREPARATION OF TAX RETURNS..........................................46
8.3 AMENDED TAX RETURNS.................................................48
8.4 CARRY BACKS AND CARRY FORWARDS......................................48
8.5 ADDITIONAL TAX MATTERS..............................................49
8.6 TAX CONTROVERSIES; COOPERATION......................................50
ARTICLE IX TERMINATION.....................................................51
[Intentionally Deleted].................................................51
ARTICLE X MISCELLANEOUS....................................................51
10.1 NOTICES............................................................51
10.2 AMENDMENT; WAIVER..................................................52
10.3 ASSIGNMENT.........................................................52
10.4 ENTIRE AGREEMENT...................................................52
10.5 FULFILLMENT OF OBLIGATIONS.........................................52
10.6 PARTIES IN INTEREST................................................52
10.7 PUBLIC DISCLOSURE..................................................53
10.8 EXPENSES...........................................................53
10.9 SCHEDULES..........................................................53
10.10 BULK TRANSFER LAWS................................................53
10.11 GOVERNING LAW; SUBMISSION TO JURISDICTION; SELECTION OF FORUM.....53
10.12 COUNTERPARTS......................................................53
10.13 HEADINGS..........................................................53
10.14 SEVERABILITY......................................................54
10.15 INJUNCTIVE RELIEF.................................................54
ARTICLE XI DEFINITIONS AND TERMS...........................................54
11.1 SPECIFIC DEFINITIONS...............................................54
11.2 OTHER TERMS........................................................70
11.3 OTHER DEFINITIONAL PROVISIONS......................................70
JOINT VENTURE AGREEMENT
This JOINT VENTURE AGREEMENT (the "Agreement") dated as of October 4,
1999, among Chesapeake Corporation, a Virginia corporation ("CSK"), Wisconsin
Tissue Mills Inc., a Delaware corporation and a wholly owned subsidiary of CSK
("WISCO"), Georgia-Pacific Corporation, a Georgia corporation ("G-P"), and
Georgia-Pacific Tissue, LLC, a Delaware limited liability company (the
"Company").
PRELIMINARY STATEMENTS
WHEREAS, G-P is engaged, in part, in the business of producing,
selling, licensing and manufacturing tissue products for the "away from home"
markets and certain related products (the "Commercial Tissue Business");
WHEREAS, G-P has determined that it will contribute certain assets and
liabilities of its Commercial Tissue Business to the Company;
WHEREAS, WISCO is engaged in the Commercial Tissue Business through
WISCO and its Contributed Subsidiaries (the "WISCO Business"); and
WHEREAS, G-P and CSK have determined that it is in the best interests
of their respective shareholders to engage in the Commercial Tissue Business
through a joint venture.
NOW, THEREFORE, G-P, the CSK Parties and the Company agree as follows:
ARTICLE I
ORGANIZATION OF THE COMPANY
1.1 FORMATION OF THE COMPANY. G-P has caused each of the following to
occur:
(a) ORGANIZATION OF THE COMPANY. The Company is organized as a
limited liability company under the laws of the State of
Delaware.
(b) ORGANIZATIONAL DOCUMENTS. The Company's Certificate of
Formation was filed with the Secretary of State of Delaware, a
copy of which is set forth as Exhibit 1.1A hereto.
ARTICLE II
CONTRIBUTION OF THE BUSINESSES
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2.1 CONTRIBUTION OF ASSETS; ASSUMPTION OF LIABILITIES. On the terms and
subject to the conditions set forth herein and in the Ancillary
Agreements, at the Closing the parties shall take the following
actions, which shall be deemed to take place simultaneously with the
execution of this Agreement as part of the Closing:
(a) WISCO CONTRIBUTION; ASSUMPTION OF LIABILITIES. (i) WISCO shall
contribute, convey, transfer, assign and deliver to the
Company, and the Company shall accept and acquire from WISCO,
all right, title and interest of the CSK Parties in and to the
WISCO Contributed Assets, free and clear of all Encumbrances
(other than Permitted Encumbrances); and (ii) WISCO shall
assign to the Company and the Company shall assume and agree
to pay, honor, discharge and perform the WISCO Assumed
Liabilities. The parties agree that the WISCO Assumed
Liabilities are intended to be, and the parties shall treat
them as, "qualified liabilities" under Section 1.707-5(a)(6)
of the Treasury Regulations unless different treatment is
required under applicable law.
(b) BORROWING BY THE COMPANY; SPECIAL DISTRIBUTION. The Company
will incur the Company Debt in such amounts and on such terms
as set forth on Exhibit 2.8A and will use the net proceeds of
the Company Debt solely (after deducting borrowing expenses
consisting of legal fees, accounting fees, printing fees,
filing fees and underwriting fees, not to exceed $8 million,
including refinancings and replacements thereof) to fund the
Special Distribution to WISCO in the amount of $755,200,000
which shall be declared and paid to WISCO immediately after
the contribution of the WISCO Contributed Assets in accordance
with Section 2.8 hereof. The parties agree that Company Debt
(other than amounts borrowed and used to pay expenses incurred
in connection with the related borrowing expenses) is
allocable to, and shall be allocated to, WISCO under Sections
1.752-2 and 1.707-5(b) of the Treasury Regulations.
(c) G-P CONTRIBUTION; ASSUMPTION OF LIABILITIES. (i) G-P shall
contribute, convey, transfer, assign and deliver to the
Company, and the Company shall accept and acquire from G-P,
all right, title and interest of G-P in and to the G-P
Contributed Assets, free and clear of all Encumbrances (other
than Permitted Encumbrances); and (ii) G-P shall assign to the
Company and the Company shall assume and agree to pay, honor,
discharge and perform the G-P Assumed Liabilities. The parties
agree that the G-P Assumed Liabilities are intended to be, and
the parties shall treat them as, "qualified liabilities" under
Section 1.707-5(a)(6) of the Treasury Regulations unless
different treatment is required under applicable law.
(d) ISSUANCE OF UNITS. The Company will issue to WISCO and G-P the
number of Units, evidencing their respective equity interests
in the Company, in accordance with Section 2.8(b) hereof.
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(e) OPERATING AGREEMENT. G-P and WISCO shall enter into an
Operating Agreement, substantially in the form of Exhibit 2.1E
hereto, the terms of which shall govern the management and
operations of the Company.
2.2 RETAINED G-P ASSETS AND LIABILITIES. Notwithstanding anything herein to
the contrary, (i) from and after the Closing each of G-P and its
Affiliates shall retain all of its direct or indirect right, title and
interest in and to, and there shall be excluded from the sale,
conveyance, assignment or transfer to the Company hereunder, the G-P
Retained Assets and the G-P Retained Liabilities, and (ii) the G-P
Retained Liabilities shall not be assumed by the Company hereunder.
2.3 RETAINED WISCO ASSETS AND LIABILITIES. Notwithstanding anything herein
to the contrary, (i) from and after the Closing each of the CSK Parties
and their Affiliates shall retain all of its direct or indirect right,
title and interest in and to, and there shall be excluded from the
sale, conveyance, assignment or transfer to the Company hereunder, the
WISCO Retained Assets and the WISCO Retained Liabilities, and (ii) the
WISCO Retained Liabilities shall not be assumed by the Company
hereunder.
2.4 CLOSING OF TRANSACTION. The Closing of the transactions contemplated by
this Agreement shall take place at the offices of G-P at 10:00 a.m.
(Atlanta time), on October 4, 1999, or at such other time and place as
the parties hereto may mutually agree. The date on which the Closing
occurs is called the "Closing Date." The Closing shall be deemed
effective at 12:01 a.m. (Atlanta time), on October 3, 1999 (the
"Effective Time"). To effect the steps set forth in Section 2.1 hereof,
the parties shall execute and deliver to each other and to third
parties, as appropriate, all documents reasonably necessary to effect
the Closing. Without limiting the generality of the foregoing,
(a) CSK PARTIES' DELIVERIES. The appropriate CSK Parties shall
execute and deliver:
(i) to the Company, limited warranty deeds, in form and
substance reasonably acceptable to G-P, transferring
all WISCO Owned Real Property to the Company;
(ii) to the Company, assignments, or where necessary
subleases, in form and substance reasonably
acceptable to G-P, assigning or subleasing to the
Company all WISCO Real Property Leases;
(iii) to the Company, assignments, in form and substance
reasonably acceptable to G-P, assigning to the
Company all WISCO Intellectual Property;
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(iv) to the Company, bills of sale, certificates of title,
assignments, and all other instruments of transfer,
in form and substance reasonably acceptable to G-P,
transferring to the Company all WISCO Contributed
Assets other than the WISCO Real Property or the
WISCO Intellectual Property which are being
transferred to the Company pursuant to the conveyance
documents described in clauses (i) - (iii) above;
(v) to the Company, such instruments of assumption and
other instruments or documents, in form and substance
reasonably acceptable to G-P, as may be necessary to
effect assignment of the WISCO Assumed Liabilities to
the Company;
(vi) to the Company or G-P, as appropriate, a duly
executed copy of each of the Ancillary Agreements to
which any CSK Party is a party;
(vii) to G-P and the Company, the opinion of Hunton &
Williams, counsel to the CSK Parties, substantially
in the form of Exhibit 2.4A(vii) hereto;
(viii) to the Company, evidence reasonably satisfactory to
G-P that all Encumbrances other than Permitted
Encumbrances on any of the WISCO Contributed Assets
have been released;
(ix) to the Company, stock certificates or other evidence
of ownership of each of the Contributed Subsidiaries,
in each case duly endorsed for transfer to the
Company;
(x) to G-P and the Company from WISCO, a duly executed
Operating Agreement;
(xi) to G-P, the WISCO Debt Indemnity;
(xii) to G-P, current title reports for all WISCO owned
Real Property;
(xiii) to G-P, evidence that all officers (other than
officers of WMex) and directors of the WISCO
Contributed Subsidiaries have resigned, effective as
of the Closing, except as G-P shall otherwise
request; and
(xiv) to G-P and/or the Company, as appropriate, such other
instruments or documents, in form and substance
reasonably acceptable to G-P, as may be necessary to
effect the Closing and the contribution of the WISCO
Contributed Assets in accordance with this Agreement.
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(b) G-P DELIVERIES. G-P shall execute and deliver:
(i) to the Company, limited warranty deeds, in
form and substance reasonably acceptable to
WISCO, transferring all G-P Owned Real
Property to the Company;
(ii) to the Company, assignments, or where
necessary subleases, in form and substance
reasonably acceptable to WISCO, assigning or
subleasing to the Company all G-P Real
Property Leases;
(iii) to the Company, a royalty free license,
substantially in the form set forth in
Schedule 5.4, licensing to the Company the
G-P Intellectual Property;
(iv) to the Company, bills of sale, certificates
of title, assignments, and all other
instruments of transfer, in form and
substance reasonably acceptable to WISCO,
transferring to the Company all G-P
Contributed Assets other than the G-P Real
Property or the G-P Intellectual Property
which are being transferred or licensed to
the Company pursuant to the conveyance
documents described in clauses (i) - (iii)
above;
(v) to the Company, such instruments of
assumption and other instruments or
documents, in form and substance reasonably
acceptable to WISCO, as may be necessary to
effect assignment of the G-P Assumed
Liabilities to the Company;
(vi) to the Company or WISCO, as appropriate, a
duly executed copy of each of the Ancillary
Agreements, including the G-P Guarantee, to
which G-P is a party;
(vii) to the Company, WISCO and CSK, a copy of the
opinion of the General Counsel of G-P,
substantially in the form of Exhibit
2.4B(vii) hereto;
(viii) to the Company, evidence reasonably
satisfactory to WISCO that all Encumbrances
other than Permitted Encumbrances on any of
the G-P Contributed Assets have been
released;
(ix) to WISCO and the Company, a duly executed
Operating Agreement;
(x) to WISCO, current title reports for all G-P
owned Real Property; and
(xi) to WISCO and/or the Company, as appropriate,
such other
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instruments or documents, in form and
substance reasonably acceptable to WISCO, as
may be necessary to effect the Closing and
the contribution of the G-P Contributed
Assets in accordance with this Agreement.
(c) DELIVERIES BY THE COMPANY. The Company shall execute
and deliver:
(i) to the CSK Parties and G-P, such instruments
of assumption and other instruments or
documents, in form and substance reasonably
acceptable to WISCO and G-P, as may be
necessary to effect the Company's assumption
of the Assumed Liabilities;
(ii) to G-P or the CSK Parties, as appropriate, a
duly executed copy of each of the Ancillary
Agreements to which the Company is a party;
(iii) to G-P, certificates representing the number
of Units issuable to G-P as determined in
accordance with Section 2.8 hereof;
(iv) to WISCO, certificates representing the
number of Units issuable to WISCO as
determined in accordance with Section 2.8
hereof;
(v) to WISCO, the Special Distribution; and
(vi) to G-P and WISCO, as appropriate, such other
instruments or documents, in form and
substance reasonably acceptable to WISCO and
G-P, as may be necessary to effect the
Closing.
2.5 POST-CLOSING ADJUSTMENT
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(a) Within 90 days following the Closing, the Company shall
prepare, or cause to be prepared, and deliver to G-P and WISCO
a statement (the "Closing Working Capital Statement") which
shall set forth the Working Capital of each of the G-P
Business and the WISCO Business as of the Determination Date
(the "Closing Working Capital"). The amounts so computed shall
be used to determine the final amount of the Working Capital
of each of the Businesses (the "Post-Closing Adjustment"). The
Closing Working Capital Statement shall be prepared in
accordance with GAAP using the same principles, practices and
procedures that were used in preparing the WISCO Financial
Statements and the G-P Financial Statements.
(b) G-P, WISCO and their respective accountants and the Company's
accountants shall have 30 days after the delivery of the
Closing Working Capital Statement to review the Closing
Working Capital Statement. In the event that G-P or WISCO
determines that the Closing Working Capital for either party,
as derived from the Closing Working Capital Statement, has not
been determined on the basis set forth in Section 2.5(a), G-P
or WISCO shall inform the other in writing (the "Objection"),
setting forth a specific description of the basis of the
Objection and the adjustments to the Closing Working Capital
which either G-P or WISCO believes should be made, which
Objection must be delivered to the other party on or before
the last day of such 30-day period. The party receiving an
Objection shall then have 30 days to review and respond to the
Objection. The parties shall attempt in good faith to reach an
agreement with respect to any matters in dispute. If the
parties are unable to resolve all of their disagreements with
respect to the determination of the foregoing items within 45
days following the delivery of an Objection, they shall refer
their remaining differences to Ernst & Young LLP or such other
firm mutually agreed to by the parties (the "CPA Firm"), who
shall, acting as experts and not as arbitrators, determine in
accordance with this Agreement, and only with respect to the
remaining differences so submitted, whether and to what
extent, if any, the Closing Working Capital as derived from
the Closing Working Capital Statement requires adjustment. The
parties shall direct the CPA Firm to use its best efforts to
render its determination within 30 days after such submission.
The CPA Firm's determination shall be conclusive and binding
upon G-P, WISCO and the Company. The fees and disbursements of
the CPA Firm shall be paid one-half by G-P and one-half by
WISCO. G-P, the Company and WISCO shall make readily available
to the CPA Firm all relevant Books and Records and any work
papers (including those of the parties' respective
accountants) Relating to the Closing Working Capital Statement
and all other items reasonably requested by the CPA Firm. The
"Final Working Capital Statement" shall be deemed to be (i)
the Closing Working Capital Statement in the event that no
Objection is delivered by G-P or WISCO during the 30-day
period specified above, or (ii) if an objection is
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delivered by G-P or WISCO, the Closing Working Capital
Statement, as adjusted by either (A) the agreement of the
parties or (B) the CPA Firm.
(c) G-P and WISCO shall have the opportunity to participate in the
preparation of the Closing Working Capital Statement by (i)
observing the physical inventory taken in connection therewith
(which may begin prior to the Closing Date), (ii) attending
any audit planning meetings in connection therewith, (iii)
meeting with and discussing procedures with the Company and
its accountants, and (iv) otherwise having full access to all
information used by the Company in preparing the Closing
Working Capital Statement, including the Books and Records and
the work papers of its accountants (subject to execution of
any necessary waivers or indemnifications required by the
Company's accountants).
(d) In reviewing any Objection, G-P and WISCO and their respective
accountants shall have full access to all information used by
the other party in preparing such Objection, including the
work papers of the other party's and the Company's accountants
(subject to the reviewing party executing any necessary
waivers or indemnifications required by the objecting party's
accountants).
(e) If the Closing Working Capital of either Business as reflected
on the Final Working Capital Statement is less than
$32,515,000 with respect to the G-P Business or $73,218,000
with respect to the WISCO Business (the "Target Working
Capital"), then within 10 Business Days following issuance of
the Final Working Capital Statement, any party whose Closing
Working Capital is below its Target Working Capital shall (as
an additional contribution to the Company) make a payment in
immediately available funds to the Company equal to the
difference between such Business' Target Working Capital, plus
interest at the prime rate (as set forth in the "Money Rates"
section of The Wall Street Journal) on such amount from the
Closing Date through the date of payment. If the Closing
Working Capital of either Business as reflected on the Final
Working Capital Statement is greater than the Target Working
Capital of such Business, then within 10 Business Days
following issuance of the Final Working Capital Statement, the
Company shall refund such excess by (i) making a payment to
any party whose Closing Working Capital exceeded its Target
Working Capital, in immediately available funds, equal to such
excess to the extent of the sum of the amount of cash
theretofor contributed to the Company by such party plus the
amount of accounts receivable contributed by such party to and
collected by the Company, and (ii) if the excess is greater
than the amount described in (i), the remainder of the excess
shall be refunded by the Company's reassignment to such party
of accounts receivable (theretofor contributed by such party)
in an aggregate amount equal to such remainder. In addition,
the Company shall pay such party interest at the prime rate
(as
8
set forth in the "Money Rates" section of The Wall Street
Journal) on such excess from the Closing Date through the date
of payment.
(f) In preparing the Closing Working Capital Statement, (i)
liabilities of the Company Related to this transaction shall
not be treated as liabilities, and (ii) no liabilities or
reserves shall be established for matters for which G-P, CSK
or the Company is (or but for the Cap or the Deductible would
be) entitled to indemnification hereunder.
(g) Any payments made to or from the Company pursuant to Section
2.5(e) shall not result in any change in the value of either
party's Business as set forth in Section 2.8 hereof or either
party's Capital Account or Percentage Interest (as both terms
are defined in the Operating Agreement).
2.6 TRANSFER TAXES AND RECORDING FEES. Each party shall be responsible for
any and all Taxes or fees imposed or incurred by reason of the transfer
of its Contributed Assets and Assumed Liabilities hereunder and/or the
filing or recording of any instruments necessary to effect the transfer
of its Contributed Assets and Assumed Liabilities hereunder, regardless
of when such Taxes or fees are levied or imposed, including sales, use,
value-added, excise, real estate transfer, lease assignment, stamp,
documentary and similar Taxes and fees (the "Transfer Cost"). To the
extent under applicable law the transferee is responsible for filing
Tax Returns in respect of Transfer Costs, the Company shall prepare all
such Tax Returns. The parties shall provide such certificates and other
information and otherwise cooperate to the extent reasonably required
to minimize Transfer Costs.
2.7 REQUIRED CONSENTS. Each of G-P and the CSK Parties shall use
commercially reasonable efforts to obtain, at its sole expense, each
Consent Related to its own Business listed on Schedule 3.3(a) for the
CSK Parties and Schedule 4.3(a) for G-P (other than those Consents
marked with an asterisk on either such Schedule), and any other
material Consent not listed on Schedule 3.3 or Schedule 4.3, if any, if
such Consent is required to operate such Business after Closing as such
Business has been operated over the 12-month period immediately prior
to Closing. If a party has not obtained a Consent (other than a
Required Consent), the Closing of the transactions contemplated by this
Agreement shall not constitute a transfer, or any attempted transfer,
of any Contract or asset, the transfer of which requires such Consent.
Rather, following the Closing, such party shall use commercially
reasonable efforts at its sole expense, and the other party (or
parties) and the Company shall cooperate in such efforts, to obtain
promptly such Consent or to enter into reasonable and lawful
arrangements (including subleasing or subcontracting if permitted)
reasonably acceptable to the other party to provide to the Company the
full economic (taking into account Tax Costs and benefits) and
operational benefits and liabilities and for substantially similar time
periods, as the Company would have had if such Consent had been
obtained as of Closing. Once such Consent for the transfer of a
Contributed
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Asset not transferred at the Closing is obtained, the party receiving
such Consent shall promptly transfer, or cause to be transferred, such
Contributed Asset to the Company for no additional consideration and
without changing any party's Capital Account or Percentage Interest (as
both terms are defined in the Operating Agreement).
2.8 OWNERSHIP OF THE COMPANY; SPECIAL DISTRIBUTION.
(a) The value of contributions of each of G-P and WISCO has been
determined by multiplying 7.38 by the actual 1998 EBITDA for
the G-P Business and the WISCO Business respectively. The
value of the WISCO Business for purposes of this Agreement
shall be $775,000,000 and the value of the G-P Business for
purposes of this Agreement shall be $376,400,000.
(b) Simultaneously with the Closing, the Company shall incur debt
in an amount sufficient to fund a special distribution to
WISCO (the "Company Debt") that will result in a reduction in
WISCO's Percentage Interest (as defined in the Operating
Agreement) in the Company to a 5% equity interest in the
Company (the "Special Distribution") immediately after payment
of the Special Distribution. The Company Debt shall be in such
amount and on such terms as is set forth on Exhibit 2.8A. G-P
shall provide to the Company's lenders a full and
unconditional guaranty of payment of the Company Debt
substantially in the form of Exhibit 2.8B hereto (the "G-P
Guarantee"). WISCO shall provide to G-P an indemnity
substantially in the form of Exhibit 2.8C hereto (the "WISCO
Debt Indemnity") indemnifying G-P against certain amounts
which may be incurred or paid by, or assessed against, G-P
under the G-P Guarantee.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CSK PARTIES
The CSK Parties represent and warrant to G-P and the Company as
follows:
10
3.1 ORGANIZATION AND QUALIFICATION.
(a) Each of the CSK Parties is a corporation or limited liability
company, duly organized, validly existing and in good standing
under the laws of its state of organization as set forth on
Schedule 3.1. The CSK Parties collectively have all requisite
corporate or limited liability company power and authority to
own and operate the WISCO Contributed Assets and to carry on
the WISCO Business as currently conducted.
(b) Each of the CSK Parties is duly qualified to do business and
is in good standing as a foreign corporation or limited
liability company in the jurisdictions listed on Schedule 3.1,
which are the only jurisdictions where the ownership or
operation of the WISCO Contributed Assets or the conduct of
the WISCO Business requires such qualification, except where
the failure to be so qualified would not have a Material
Adverse Effect.
3.2 CORPORATE AUTHORIZATION. Each of the CSK Parties has full corporate
power and authority to execute and deliver this Agreement, and to
perform its obligations hereunder and under any agreement or contract
contemplated hereby, including the Ancillary Agreements. The execution,
delivery and performance by the CSK Parties of this Agreement and any
agreement or contract contemplated hereby has been duly and validly
authorized by all necessary corporate action and no additional
corporate authorization is required in connection with the execution,
delivery and performance by each of the CSK Parties of this Agreement
and any agreement or contract contemplated hereby.
3.3 CONSENTS AND APPROVALS. Except as specifically set forth in Schedule
3.3 or as required by the HSR Act, no Consent is required to be
obtained by the CSK Parties from, and no notice or filing is required
to be given by the CSK Parties to, or made by the CSK Parties with, any
Governmental Authority or other Person or under any Contract listed, or
required to be listed, on Schedule 3.14 in connection with the
execution, delivery and performance by the CSK Parties of this
Agreement, each of the Ancillary Agreements, any other agreement or
contract contemplated hereby and the contribution of the WISCO
Contributed Assets, except where the failure to obtain any such Consent
or Consents, give any such notice or notices or make any such filing or
filings would not have a Material Adverse Effect.
3.4 NON-CONTRAVENTION. Except as set forth on Schedule 3.3, the execution,
delivery and performance by the CSK Parties of this Agreement and each
of the Ancillary Agreements, and the consummation of the transactions
contemplated hereby and thereby, does not and will not (i) violate any
provision of the certificate of incorporation or bylaws of any of the
CSK Parties or any Contributed Subsidiary; (ii) subject to obtaining
the Consents referred to in Section 3.3, conflict with, or result in
the breach of, or constitute a default under, or result in the
termination, cancellation or
11
acceleration (whether after the filing of notice or the lapse of time
or both) of any right or obligation of any of the CSK Parties or any
Contributed Subsidiary under, or to a loss of any benefit to which any
of the CSK Parties or any Contributed Subsidiary is entitled under, any
Contract or result in the creation of any Encumbrance (other than a
Permitted Encumbrance) upon any of the WISCO Contributed Assets; or
(iii) assuming compliance with the matters set forth in Section 3.3,
violate, or result in a breach of or constitute a default under any
Law, rule, regulation, judgment, injunction, order, decree or other
restriction of any court or Governmental Authority to which any of the
CSK Parties or any Contributed Subsidiary is subject, including any
Governmental Authorization, except in each case, such matter or matters
that would not have a Material Adverse Effect.
3.5 BINDING EFFECT. This Agreement constitutes, and each of the Ancillary
Agreements when executed and delivered by the parties thereto will
constitute, a valid and legally binding obligation of each of the CSK
Parties that is a party thereto, enforceable with respect to such party
in accordance with its terms, except as the enforceability thereof may
be limited or otherwise effected by bankruptcy, insolvency,
reorganization, moratorium and similar laws of general applicability
Relating to, or affecting, creditors rights and to general equity
principles.
3.6 FINANCIAL STATEMENTS: ABSENCE OF CERTAIN CHANGES.
(a) Attached as Schedule 3.6(a) are the following financial
statements of the WISCO Business: Unaudited Balance Sheet,
Statement of Income and Statement of Cash Flows, as of and for
(i) the years ended December 31, 1997 and 1998 (the "WISCO
Annual Financial Statements"); and (ii) the period ended April
30, 1999 (the "WISCO April Financial Statements").
(Collectively the financial statements described in this
Section 3.6(a) shall be referred to as the "WISCO Financial
Statements.")
(b) Exhibit 3.6(b) sets forth the line items and a definition for
each such line item contained in each of the WISCO Financial
Statements.
(c) The WISCO Financial Statements are true and correct in all
material respects, present fairly the combined financial
position and results of operation, divisional equity and cash
flows of the WISCO Business as of the dates and for the
periods presented, and were prepared in accordance with GAAP
applied on a basis consistent with past practice of the WISCO
Business. The WISCO Financial Statements reflect the
underlying Books and Records of the WISCO Business, which are
complete and accurate in all material respects. Except as
described on Schedule 3.6(c), consistent accounting policies
and accrual methods were used in all periods presented. All
non-recurring or unusual income or expense items over
$500,000, as reflected in the 1998 Statement of Income of
WISCO, have been disclosed
12
in footnotes to the WISCO Financial Statements.
(d) Except as described in the notes to the WISCO Financial
Statements, all accounts receivable reflected on the WISCO
Financial Statements are bona fide receivables, accounted for
in accordance with GAAP (including, without limitation,
appropriate reserves), and represent amounts due with respect
to actual transactions in the operation of the WISCO Business;
it being understood that this representation shall not be
deemed to constitute a warranty or guaranty that all such
accounts receivable shall be collected.
3.7 LITIGATION AND CLAIMS. Except as disclosed on Schedule 3.7:
(a) There is no action (whether civil, criminal or
administrative), suit, demand, claim, dispute, hearing,
proceeding (including condemnation or other proceeding in
eminent domain) or investigation pending or, to the Knowledge
of any of the CSK Parties, threatened, Related to the WISCO
Business or any of the WISCO Contributed Assets or included in
the WISCO Assumed Liabilities, that individually or in the
aggregate is reasonably expected to have a Material Adverse
Effect.
(b) None of the WISCO Contributed Assets is subject to any order,
writ, judgment, award, injunction, or decree of or settlement
enforceable in any court or governmental or regulatory
authority of competent jurisdiction or any arbitrator or
arbitrators.
3.8 TAXES. Except as disclosed on Schedule 3.8:
(a) The CSK Parties have duly and timely filed (or have caused to
be duly and timely filed), taking into account any valid
extension of the time for filing, each Tax Return required to
be filed with any Tax Authority which includes or is based
upon the WISCO Contributed Assets, or the operations,
ownership or activities of the WISCO Business, and all Taxes
due and payable (whether or not shown on or required to be
shown on a Tax Return) have been paid prior to their due
dates; provided, however, that the representations and
warranties set forth in this paragraph are made only to the
extent that (i) such Taxes are or may become Encumbrances on
the WISCO Contributed Assets, or (ii) the Company is or may be
liable in the capacity of transferee of the Contributed
Assets.
(b) The CSK Parties have duly and timely filed (or have caused to
be duly and timely filed), taking into account any valid
extension of the time for filing, each Tax Return which
includes or is based upon the assets, operations, ownership or
activities of any of the WISCO Contributed Subsidiaries, and
all Taxes due and payable (whether or not shown on or required
to be shown on a Tax Return) have been paid prior to their due
dates.
13
(c) None of the WISCO Contributed Assets, including the assets of
the WISCO Contributed Subsidiaries (i) is subject to any lien
(other than a Permitted Encumbrance) arising in connection
with any failure or alleged failure to pay any Taxes, (ii)
secures any debt the interest on which is tax-exempt under
Section 103(a) of the Code, (iii) is required to be or is
being depreciated under the alternative depreciation system
under Section 168(g)(2) of the Code, (iv) is "limited use
property" with the meaning of Revenue Procedure 76-30, or (v)
will be treated as owned by any other Person pursuant to the
provisions of former Section 168(f)(8) of the Code.
(d) The CSK Parties (with respect to the WISCO Business) or the
WISCO Contributed Subsidiaries have withheld and paid all
material Taxes required to have been withheld and paid in
connection with amounts paid or owing to any Employee,
independent contractor, creditor, shareholder or other party.
(e) There are no pending, proposed or, to the knowledge of WISCO,
threatened audits, assessments or claims from any Tax
Authority for deficiencies, penalties or interest against any
of the CSK Parties (with respect to the WISCO Contributed
Assets or the WISCO Business), any of the WISCO Contributed
Subsidiaries or any of their assets, operations or activities;
provided, however, that the representations and warranties set
forth in this paragraph are made only to the extent that (i)
such Taxes are or may become Encumbrances on the WISCO
Contributed Assets, or (ii) the Company is or may be liable in
the capacity of transferee of the Contributed Assets.
(f) No CSK Party nor any WISCO Contributed Subsidiary owns,
directly or indirectly, and none of the WISCO Contributed
Assets consists of, any interest in any entity classified as a
partnership for United States federal income Tax purposes.
(g) With respect to the WISCO Business, other than WMex, the CSK
Parties do not have and have not had a permanent establishment
in any foreign country as defined in any applicable Tax treaty
or convention between the United States and such foreign
country.
3.9 EMPLOYEES, PENSION AND OTHER BENEFIT PLANS.
(a) Schedule 3.9(a) lists all the Employees who, as of August 31,
1999, were employed by WISCO or the WISCO Contributed
Subsidiaries with respect to the WISCO Business, together with
their respective positions, years of
14
employment, and rates of remuneration, as of August 31, 1999.
(b) Except as disclosed on Schedule 3.9(b), no CSK Party is a
party to nor does it sponsor, maintain, or contribute to any
Employee Plans that provide benefits to Employees or Retired
Employees of the WISCO Business.
(c) WISCO has delivered to G-P true, complete and up-to-date
copies of all documents embodying the CSK Plans including,
without limitation, all amendments thereto, all funding
agreements thereunder (including, but not limited to, trust
agreements), all summaries of such CSK Plans provided to
Employees, Retired Employees, directors, officers,
shareholders or their dependents with respect to the WISCO
Business, and all material communications received from or
sent to regulatory authorities within the prior two (2) plan
years with respect to each such CSK Plan as well as the most
recent valuation for each defined contribution retirement plan
maintained by any of the CSK Parties and the most recent
actuarial valuation for each of the CSK Plans for which such
valuations are required. The applicable CSK Party has
delivered to G-P a complete written description of all
unwritten CSK Plans, and will deliver such other documentation
with respect to any CSK Plan as is reasonably requested by
G-P.
(d) Except as disclosed on Schedule 3.9(d), no promise or
commitment has been made by any CSK Party (i) to amend any of
the CSK Plans or to provide increased benefits thereunder to
any Employees, Retired Employees, directors, officers,
shareholders of the WISCO Business or the WISCO Contributed
Subsidiaries, or their dependents, except pursuant to the
requirements, if any, of the CSK Plans or any collective
bargaining agreement, or (ii) to establish any new Employee
Plan. Except as disclosed on Schedule 3.9(d), no amendment to
any CSK Plan has been adopted by any CSK Party since June 30,
1999. Except as disclosed on Schedule 3.9(d), one or more of
the CSK Parties has the right pursuant to the terms of each
CSK Plan and all agreements Related to such plan unilaterally
to terminate such plan (or its participation in such plan) or
to amend the terms of such plan at any time except as provided
under a collective bargaining agreement. Except as disclosed
on Schedule 3.6(a) or Schedule 3.9(d) or as set forth in the
Human Resources Agreement, the transactions contemplated by
this Agreement will not result in any additional payments to,
or increase the vested interest of, any Employee, Retired
Employee, director, officer, shareholder, or their dependents
under any CSK Plan; and the transactions contemplated by this
Agreement will not result in any payment to any Employee or
Retired Employee, director, officer, or shareholder of any CSK
Party which will be subject to Section 280G of the Code.
15
(e) Each CSK Plan has been established, maintained, and
administered in substantial compliance with its terms and all
related documents or agreements and in substantial compliance
with applicable provisions of ERISA, the Code, and other
applicable Laws.
(f) Except as disclosed on Schedule 3.9(f), all required employer
contributions, premium payments and employee contributions
under the CSK Plans have been made and remitted to the funding
agents or accrued or booked thereunder within the time
prescribed by any such CSK Plan and the Laws. All insurance
premiums required with respect to any CSK Plan, including any
premiums payable to the Pension Benefit Guarantee Corporation,
have been paid, made, accrued or booked within the time
prescribed by any such CSK Plan and the applicable Law. All
benefits, expenses and other amounts due and payable to or
under any CSK Plan, and all contributions, transfers or
payments required to be made to any CSK Plan, have been paid,
made, accrued or booked within the time prescribed by any such
CSK Plan and the Laws. Except as disclosed on Schedule 3.9(f),
all of the assets which have been set aside in a trust or
account (other than an account which is part of a CSK Party's
general assets) to satisfy any obligation under any CSK Plan
are shown on the books and records of each such trust and each
such account at their fair market value, such current fair
market value as of the last valuation date is equal to or
exceeds the present value of any obligation under the CSK
Plan, and the liabilities for all other obligations under any
CSK Plan are accurately set forth in the WISCO Financial
Statements.
(g) Except as disclosed on Schedule 3.9(g), there is no pending
or, to the Knowledge of the CSK Parties, threatened claim with
respect to a CSK Plan (other than routine and reasonable
claims for benefits made in the ordinary course of the WISCO
Business) or with respect to the terms and conditions of
employment or termination of employment by any Employee, or
Retired Employee, and no audit or investigation by any
governmental or other law enforcement agency is pending or has
been proposed with respect to any CSK Plan.
(h) Except as disclosed on Schedule 3.9(h), no CSK Plan is subject
to Title IV of ERISA. Neither any of the CSK Parties nor any
Related Person has incurred any material liability under or
pursuant to Title I or IV of ERISA or the penalty, excise tax
or joint and several liability provisions of the Code relating
to employee benefit plans and, to the Knowledge of the CSK
Parties, no event or condition has occurred or exists which
could result in any material liability to a CSK Party, such
Related Person or the Company or G-P under or pursuant to
Title I or IV of ERISA or such penalty, excise tax or joint
and several liability provisions of the Code. No CSK Plan has
incurred an "accumulated funding deficiency" within the
meaning of such sections of the Code and ERISA, whether or not
waived; and no such CSK
16
Plan has been terminated. Except as disclosed on Schedule
3.9(h), none of the CSK Parties contribute to, nor do they
have any obligation to contribute to, a multiemployer plan as
defined in Section 4001(a)(3) of ERISA with regard to the
Employees or Retired Employees.
(i) Each of the CSK Plans that is intended to be qualified under
Section 401(a) of the Code, and the trust, if any, forming a
part thereof, has received a favorable determination letter
from the Internal Revenue Service as to the qualification of
its form under the Code and to the effect that each such trust
is exempt from taxation under Section 501(a) of the Code and,
to the Knowledge of the CSK Parties, nothing has occurred
since the date of such determination letter that adversely
affects such qualification or tax-exempt status. Except as
disclosed in Schedule 3.9(i), all reports and other documents
required to be filed with any governmental agency or
distributed to plan participants or beneficiaries (including,
but not limited to, actuarial reports, audits or Tax Returns)
have been duly filed or distributed on a timely basis, and
copies thereof have been or will be furnished to G-P prior to
the Closing.
3.10 COMPLIANCE WITH LAWS. Except as set forth in Schedule 3.10, the WISCO
Business is being conducted in compliance with all Laws applicable to
the WISCO Business and, as of the Closing, the Company will have
(subject to obtaining the Consents) all Governmental Authorizations
necessary for the conduct of the WISCO Business as currently conducted,
except for such non-compliance or the failure to obtain such Consent or
Consents which would not have a Material Adverse Effect; it being
understood that nothing in this representation is intended to address
any compliance issue that is the subject of the representations and
warranties set forth in Sections 3.7, 3.8, 3.9, 3.11, 3.12, or 3.13
hereof, and that the CSK Parties make no representations in this
Section 3.10 as to the transferability or assignability of any such
Governmental Authorizations. None of the CSK Parties has received
written notice that any material Governmental Authorization may be
suspended, revoked, modified or canceled.
3.11 ENVIRONMENTAL MATTERS.
(a) Schedule 3.11(a) sets forth a list of all material
Environmental Permits in connection with the WISCO Business.
(b) Except as would not have a Material Adverse Effect, or as
disclosed on Schedule 3.11(b):
17
(i) The Environmental Permits are all the permits,
licenses, certificates and authorizations of, and
registrations with, any of the Environmental
Authorities pursuant to the Environmental Laws
necessary to conduct the WISCO Business substantially
as presently conducted. The Environmental Permits are
in full force and effect and the CSK Parties are in
compliance in all respects thereunder. The
consummation of the transactions contemplated
hereunder will not require any renewal, consent,
amendment or other action in connection with any of
the Environmental Permits. The CSK Parties are in
compliance with the Environmental Laws applicable to
the conduct of the WISCO Business.
(ii) There is no claim, suit, action or other proceeding,
including appeals and applications for review,
outstanding or pending against any CSK Party pursuant
to any of the Environmental Laws Relating to the
WISCO Business.
(iii) No CSK Party has any liability for any release,
spill, leakage, pumping, emission, emptying,
discharge, injection, escape, leaching, disposal or
dumping of any Hazardous Substances on or from any of
the WISCO Real Property, except in such manner or
quantity as would not constitute a violation of any
of the Environmental Laws or Environmental Permits.
(iv) The CSK Parties have maintained all records in
respect of the WISCO Business required by the
Environmental Laws and Environmental Permits in the
manner and for the time periods so required.
(v) Since June 30, 1994, no CSK Party has received any
notice of investigation or non-compliance or written
order from any of the Environmental Authorities,
including any notice of contamination or clean-up
requirements, pursuant to any of the Environmental
Laws with respect to the WISCO Business.
3.12 INTELLECTUAL PROPERTY
(a) Schedule 3.12 sets forth a list and description (including the
country of registration) of all issued or registered foreign and domestic
Intellectual Property currently (or, to the Knowledge of the CSK Parties, within
the last 12 months) used in the WISCO Business (other than "shrink wrap"
consumer software licenses). No third party has rights in, or otherwise has the
right to restrict use of, WISCO Intellectual Property owned by any CSK Party,
and, to the Knowledge of the CSK Parties, no third party has rights in, or
otherwise has the right to restrict
18
the Company's use of, the WISCO Intellectual Property owned by any CSK Party as
of and following the Closing.
(b) To the Knowledge of the CSK Parties, no product, component,
method, process, or material (including computer software) used, sold or
manufactured by the WISCO Business infringes on, misappropriates, or otherwise
violates a valid and enforceable intellectual property right of any other
Person.
(c) There are no demands, actions or proceedings pending or, to
the Knowledge of the CSK Parties, threatened, against the CSK Parties Relating
to the WISCO Business alleging infringement, misappropriation, or violation of
any intellectual property right of any other Person, and, to the Knowledge of
the CSK Parties, no Person is infringing, misappropriating, challenging or
violating, the Intellectual Property owned by any CSK Party, except for
challenges, infringements, misappropriation or violations which, individually or
in the aggregate, would not have a Material Adverse Effect.
(d) All of the WISCO Intellectual Property will be transferred to
the Company at Closing, except to the extent certain Intellectual Property used
by the CSK Parties to provide services under the Transition Services Agreement
is specifically excluded thereunder. The CSK Parties agree that Intellectual
Property provided under the Transition Services Agreement will be provided to
the Company on and after Closing on the same terms and conditions under which it
was available to the WISCO Business prior to the Closing in accordance with the
terms of the Transition Services Agreement.
(e) Schedule 3.12(e) sets forth the CSK Parties' efforts at
addressing the Year 2000 issue in the WISCO Business. The information set forth
therein is accurate as of the date hereof, in all material respects. The CSK
Parties have developed and begun implementing a Project Plan to remediate and/or
replace Computer Systems that are used or relied upon in the WISCO Business but
are not Year 2000 Ready. Such remediation and/or replacement is scheduled to be
completed in 1999.
3.13 LABOR MATTERS. Except as disclosed on Schedule 3.13:
(a) As of the date hereof, none of the CSK Parties is a party to
any labor or collective bargaining agreement or similar agreement with respect
to Employees of the WISCO Business, no such Employees are represented by any
labor organization and, to the Knowledge of the CSK Parties, there are no
organizing or de-certification activities (including any demand for recognition
or certification proceedings pending or threatened to be brought or filed with
the National Labor Relations Board or other labor relations tribunal) involving
the WISCO Business;
(b) As of the date hereof, there are no strikes, work stoppages,
slowdowns, lockouts, unfair labor practice charges pending or, to the Knowledge
of the CSK Parties, threatened against or involving the Employees of the WISCO
Business;
19
(c) Within the 90-day period immediately preceding the Effective
Time, no Employee of the WISCO Business has been laid off or terminated for
reasons other than a discharge for cause, voluntary resignation or retirement.
(d) There are no complaints, charges, claims or grievances against
the CSK Parties pending or, to the Knowledge of the CSK Parties, threatened to
be brought or filed with any Governmental Authority, arbitrator or court based
on or arising out of the employment by the CSK Parties of any Employee of the
WISCO Business, except for those which, individually or in the aggregate, would
not have a Material Adverse Effect;
(e) The CSK Parties are in compliance with all Laws Relating to
the employment of labor, including all such Laws Relating to wages, hours,
collective bargaining, discrimination, civil rights, safety and health,
immigration, workers' compensation, layoffs, and the collection and payment of
withholding and/or Social Security Taxes and similar Taxes, except where the
failure to be in compliance would not have a Material Adverse Effect; and
(f) The CSK Parties have given all notices required to be given
prior to the Closing Date under the Worker Adjustment and Retraining
Notification Act, 29 U.S.C. Section 2101 et seq. ("WARN"), or under any similar
provision of any federal, state, regional, foreign, or local Law, rule, or
regulation (referred to collectively with WARN as "WARN Obligations") Relating
to any plant closing or mass layoff that occurred during the 90 days immediately
preceding the Effective Time and pertaining to the WISCO Business.
3.14 CONTRACTS. Schedule 3.14 sets forth a list, as of the date
hereof, of each Contract that is Related to the WISCO Business other than (a)
WISCO Leased Real Property, which are listed on Schedule 3.15, and collective
bargaining agreements which are listed on Schedule 3.13, (b) purchase orders or
similar agreements for the purchase or sale of goods or services in the ordinary
course of business, (c) confidentiality agreements entered into in the ordinary
course of business in connection with the purchase and sale of Inventory, and
(d) any Contract which requires a payment or imposes an obligation on either
party thereto of less than $1,000,000 in the aggregate. Schedule 3.14 also
identifies any Contract that contains a non-compete covenant or similar
provision that could materially restrict the Company in its conduct of the WISCO
Business following Closing, any employment agreement with any Employee of the
WISCO Business, any employment agreement included in the WISCO Contributed
Assets or WISCO Assumed Liabilities, any Contract between any Affiliates of CSK,
on one hand, and any of the CSK Parties or any of the WISCO Contributed
Subsidiaries, on the other, any agreements Related to payments in lieu of taxes,
any agreement or license Related to Intellectual Property (other than "shrink
wrap" consumer software licenses), leases and license agreements for any
Computer Systems (other than "shrink wrap" consumer software licenses), all
material agreements for telecommunications voice (including without limitation,
local, long distance and toll free service) and data services, Internet access,
hosting and use services. Schedule 3.14 also identifies any Contract concerning
any environmental liability with respect to the WISCO Business. Each Contract
set forth on Schedule 3.14 is a valid and binding agreement of the applicable
CSK Party and, to the Knowledge of the CSK Parties, is in full force and effect.
Except as otherwise provided in Schedule 3.14, no CSK Party is, and, to their
Knowledge, no
20
other party thereto is, in default in any material respect under
any Contract listed on Schedule 3.14 or any collective bargaining agreement
listed on Schedule 3.13.
3.15 REAL ESTATE LEASES. Schedule 3.15 sets forth a list, as of the
date hereof, of each written WISCO Real Estate Lease with a term of more than
one month that is Related to the WISCO Business. Each WISCO Real Estate Lease
set forth on Schedule 3.15 is a valid and binding agreement of a CSK Party and
is in full force and effect. There are no defaults by the applicable CSK Party
under any WISCO Real Estate Lease listed on Schedule 3.15 which defaults have
not been cured or waived and which would, individually or in the aggregate, have
a Material Adverse Effect.
3.16 ENTIRE BUSINESS; TITLE TO PROPERTY.
(a) Except as set forth in Schedule 3.16(a) and Schedule 3.6(a),
the WISCO Contributed Assets, the assets held by the WISCO Contributed
Subsidiaries, the WISCO Retained Assets (including cash and cash accounts,
disbursement accounts, invested securities and other short and medium term
investments, the CSK Marks and CSK Plans, and WISCO's and CSK's insurance
policies), and the rights specifically provided or made available to the Company
under the Ancillary Agreements, include all of the buildings, machinery,
equipment and other assets (whether tangible or intangible) necessary for the
Company immediately after Closing to conduct in all material respects the WISCO
Business as conducted as of the date hereof, and as conducted during the
12-month period prior to the date hereof (subject to changes expressly permitted
by the terms hereof to be made after the date hereof); provided, however, that
no representation is made as to the assignability of Government Authorizations.
(b) A CSK Party has good (and, in the case of its Owned Real
Property, marketable) title to, or a valid and binding leasehold interest in,
the WISCO Contributed Assets, free and clear of all Encumbrances, except (i) as
set forth in Schedule 3.16(b), and (ii) any Permitted Encumbrances.
(c) The capital structure of each of the WISCO Contributed
Subsidiaries is as set forth in Schedule 3.16(c). The shares of stock or
membership interests, as applicable, of the WISCO Contributed Subsidiaries
included in the WISCO Contributed Assets constitute 100% of the issued and
outstanding shares of stock or membership interests, as applicable, of each
WISCO Contributed Subsidiary. All shares of stock , membership interests or
other form of ownership of the WISCO Contributed Subsidiaries included in the
WISCO Contributed Assets are validly issued, fully paid and non-assessable.
Except as set forth on Schedule 3.16(c), (i) there are no options, warrants, or
similar rights to purchase any of the shares or membership interests of any of
the WISCO Contributed Subsidiaries, and no obligations binding upon any WISCO
Contributed Subsidiary to issue, sell, redeem, purchase or exchange any of its
capital stock or membership interests or any right relating thereto, and (ii)
there are no shareholders' agreements, voting agreements, voting trusts or other
agreements or rights of third parties with respect to or affecting any of the
WISCO Contributed Subsidiaries or any of their shares of stock or membership
interests, as applicable. Wisconsin Tissue Management, LLC has entered into no
agreements and conducted no business and contains only those assets and
liabilities specifically set forth in
21
Schedule 3.16(c), except, in each case, as set forth in the Human Resources
Agreement. WMex assumed no liabilities or obligations of any other CSK Party
Related to or arising from the sale of its capital stock to WISCO. CSK has
provided G-P with true and correct copies of all documentation Related to such
sale.
(d) The WISCO Contributed Assets and the assets of the WISCO
Contributed Subsidiaries are in good operating condition and repair (subject to
normal wear and tear). Except as set forth on Schedule 3.16(d), the CSK Parties
have no Knowledge of any material structural or mechanical defects with respect
to any buildings, improvements or equipment included in the WISCO Contributed
Assets, which defects are reasonably likely to have a Material Adverse Effect.
(e) None of the WISCO Owned Real Property or the WISCO Leased Real
Property or other assets of the WISCO Business (except as set forth in the
Transition Services Agreement) are owned, used or occupied in whole or in part
by CSK or any of its Affiliates other than in connection with the operation of
the WISCO Business.
3.17. FINDER'S FEES. Except for Salomon Smith Barney & Co., whose
fees will be paid by CSK, there is no investment banker, broker or finder which
has been retained by or is authorized to act on behalf of any CSK Party who
might be entitled to any fee or commission from G-P or the Company in connection
with the transactions contemplated by this Agreement.
3.18 INSURANCE. Schedule 3.18 attached hereto sets forth the
following information with respect to each insurance policy to which any CSK
Party or a WISCO Contributed Subsidiary, with respect to the WISCO Business, has
been a party, a named insured, or otherwise the beneficiary of coverage at any
time within the past five years:
(a) the name of the insurer, the name of the policyholder, and the name
of each covered insured;
(b) the scope, period and amount of coverage; and
(c) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
Schedule 3.18 also describes any self insurance arrangements affecting
the WISCO Business. As of the date hereof, no CSK Party has received any written
notice of any retroactive premium increase or assessment applicable to the WISCO
Business. Except as disclosed on Schedule 3.18, all of such policies are in full
force and effect.
3.19 NO UNDISCLOSED LIABILITIES. With respect to the WISCO Business
no CSK Party has any obligations or liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise, whether or not known to such CSK Party,
whether due or to become due and regardless of when asserted) arising out of
transactions entered into at or prior to the Closing, or any action or inaction
at or prior to the Closing, or any state of facts existing at or prior to the
22
Closing other than: (a) liabilities set forth on the WISCO Financial Statements
(including any notes thereto, if any); (b) liabilities and obligations arising
from or in connection with matters disclosed pursuant to the CSK Parties'
representations and warranties in this Agreement or in the Disclosure Schedules
(none of which, except as set forth on Schedule 3.7, is a liability resulting
from a breach of contract, breach of warranty, tort, infringement claim or
lawsuit), other than liabilities and obligations arising from or in connection
with matters disclosed pursuant to Section 3.11; (c) liabilities and obligations
arising from or in connection with matters disclosed pursuant to Section 3.11;
(d) liabilities and obligations which have arisen after April 30, 1999 in the
ordinary course of business (none of which, except as set forth on Schedule 3.7,
is a liability resulting from a breach of contract, breach of warranty, tort,
infringement claim or lawsuit); and (e) such other liabilities or obligations
that do not have a Material Adverse Effect.
3.20 NO MATERIAL ADVERSE CHANGE. Except as disclosed on Schedule
3.20, since April 30, 1999, the CSK Parties have conducted the WISCO Business in
the ordinary course and in a manner consistent with the practices applied during
the periods specified in the WISCO Financial Statements, and there has been no
Material Adverse Effect in the WISCO Business. Except as set forth on Schedule
3.20, and except as such does not have a Material Adverse Effect, no CSK Party
has with respect to the WISCO Business:
(a) been a party to any corporate reorganization, restructuring or
merger or amalgamation or amended its certificate or articles of incorporation
or bylaws;
(b) declared or paid any dividend or declared or made any other
distribution (whether in cash, stock or property) on any of the shares of its
capital stock;
(c) incurred or discharged any obligation or liability (whether
accrued, absolute or contingent) other than in the ordinary course of and in a
manner consistent with past practices for the WISCO Business;
(d) entered into any transaction, contract, agreement, indenture,
instrument or commitment other than in the ordinary course of and in a manner
consistent with past practices for the WISCO Business;
(e) suffered or incurred any material damage, destruction, loss or
liability (whether or not covered by any insurance);
(f) experienced any strike, lockout or other labor trouble such as
slow down or work stoppage, or any loss of any of its key Employees, customers,
suppliers or distributors;
(g) suffered any shortage or cessation or interruption of raw
materials, supplies or utilities that could have a Material Adverse Effect on
the WISCO Business;
(h) made any change in its accounting principles, policies and
practices as utilized in the preparation of the WISCO Financial Statements;
23
(i) made any loan or advance, or assumed, guaranteed, endorsed or
otherwise become liable with respect to the liabilities or obligations of any
other Person or entity, or permitted any of its assets to be subjected to any
lien or security interest (except for Permitted Encumbrances);
(j) granted to any customer any allowance or discount or changed
its pricing, credit or payment policies other than in the ordinary course of and
in a manner consistent with past practices for the WISCO Business (except for
non-material variations therefrom in the aggregate);
(k) incurred any indebtedness, liability or obligation (absolute,
accrued, contingent or otherwise) other than in the ordinary course of and in a
manner consistent with past practices for the WISCO Business;
(l) sold, leased or otherwise disposed of any of its assets or any
right, title or interest therein other than in the ordinary course of and in a
manner consistent with past practices for the WISCO Business;
(m) made any payment to, or for the benefit of, any present or
former Employee, director, officer or shareholder otherwise than at the regular
rates payable to them, by way of salary, pension, bonus or other remuneration
consistent with past practices for the WISCO Business;
(n) committed to any capital expenditure project or made any
investment, in either case in excess of Five Hundred Thousand Dollars ($500,000)
not disclosed to G-P prior to the date of this Agreement; or
(o) authorized or agreed to do any of the foregoing matters referred to
in this Section 3.20.
3.21 INDEBTEDNESS FOR BORROWED MONEY. There is no indebtedness for
borrowed money included in the WISCO Assumed Liabilities.
3.22 KNOWLEDGE AS OF CLOSING DATE. The CSK Parties have no Knowledge,
as of the Closing Date, that any representation or warranty made by G-P in
Article IV (and related schedules) is untrue.
3.23 NO OTHER REPRESENTATIONS OR WARRANTIES. Except for the
representations and warranties contained in this Article III, no CSK Party nor
any other Person makes any other express or implied representation or warranty
on behalf of the CSK Parties.
24
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF G-P
G-P represents and warrants to the CSK Parties and the Company as
follows:
4.1 ORGANIZATION AND QUALIFICATION. G-P is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Georgia and has all requisite corporate power and authority to own and operate
the G-P Contributed Assets and to carry on the G-P Business as currently
conducted. G-P is duly qualified to do business and is in good standing as a
foreign corporation in the jurisdictions listed on Schedule 4.1, which are the
only jurisdictions where the ownership or operation of the G-P Contributed
Assets or the conduct of the G-P Business requires such qualification, except
where the failure to be so qualified would not have a Material Adverse Effect.
4.2 CORPORATE AUTHORIZATION. G-P has full corporate power and
authority to execute and deliver this Agreement, and to perform its obligations
hereunder and under any agreement or contract contemplated hereby, including the
Ancillary Agreements. The execution, delivery and performance by G-P of this
Agreement and the agreements and contracts contemplated hereby has been duly and
validly authorized by all necessary corporate action and no additional corporate
authorization is required in connection with the execution, delivery and
performance by G-P of this Agreement and the agreements and contracts
contemplated hereby.
4.3 CONSENTS AND APPROVALS. Except as specifically set forth in
Schedule 4.3 or as required by the HSR Act, no Consent is required to be
obtained by G-P from, and no notice or filing is required to be given by G-P to
or made by G-P with, any Governmental Authority or other Person or under any
Contract listed, or required to be listed, on Schedule 4.14 in connection with
the execution, delivery and performance by G-P of this Agreement, each of the
Ancillary Agreements, any other agreement or contract contemplated hereby and
the contribution of the G-P Contributed Assets, except where the failure to
obtain any such Consent or Consents, give any such notice or notices or make any
such filing or filings would not have a Material Adverse Effect.
4.4 NON-CONTRAVENTION. Except as set forth on Schedule 4.3, the
execution, delivery and performance by G-P of this Agreement and each of the
Ancillary Agreements, and the consummation of the transactions contemplated
hereby and thereby, does not and will not (i) violate any provision of the
certificate of incorporation or bylaws of G-P; (ii) subject to obtaining the
Consents referred to in Section 4.3, conflict with, or result in the breach of,
or constitute a default under, or result in the termination, cancellation or
acceleration (whether after the filing of notice or the lapse of time or both)
of any right or obligation of G-P under, or to a loss of any benefit to which
G-P is entitled under, any Contract or result in the creation of any Encumbrance
(other than a Permitted Encumbrance) upon any of the G-P Contributed Assets; or
(iii) assuming compliance with the matters set forth in Section 4.3, violate, or
result in a breach of or constitute a default under any Law, rule, regulation,
judgment, injunction, order, decree or other restriction of any court or
Governmental Authority to which G-P is subject, including any Governmental
25
Authorization, except in each case, such matter or matters that would not have a
Material Adverse Effect.
4.5 BINDING EFFECT. This Agreement constitutes, and each of the
Ancillary Agreements when executed and delivered by the parties thereto will
constitute, a valid and legally binding obligation of G-P, enforceable with
respect to G-P in accordance with its terms, except as the enforceability
thereof may be limited or otherwise effected by bankruptcy, insolvency,
reorganization, moratorium and similar laws of general applicability Relating
to, or affecting, creditors rights and to general equity principles.
4.6 FINANCIAL STATEMENTS; ABSENCE OF CERTAIN CHANGES.
(a) Attached as Schedule 4.6(a) are the following financial
statements of the G-P Business: Unaudited Balance Sheet, Statement of Income and
Statement of Cash Flows, as of and for (i) the years ended December 31, 1997 and
1998 (the "G-P Annual Financial Statements"); and (ii) the period ended April
30, 1999 (the "G-P April Financial Statements"). (Collectively the financial
statements described in this Section 4.6(a) shall be referred to as the "G-P
Financial Statements.")
(b) Exhibit 3.6(b) sets forth the line items and a definition for
each such line item contained in each of the G-P Financial Statements.
(c) The G-P Financial Statements are true and correct in all
material respects, present fairly the combined financial position and results of
operation, divisional equity and cash flows of the G-P Business as of the dates
and for the periods presented, and were prepared in accordance with GAAP applied
on a basis consistent with past practice of the G-P Business. The G-P Financial
Statements reflect the underlying Books and Records of the G-P Business, which
are complete and accurate in all material respects. Except as described in the
footnotes to the G-P Financial Statements, consistent accounting policies and
accrual methods were used in all periods presented. All non-recurring or unusual
income or expense items over $500,000, as reflected in the 1998 Statement of
Income of G-P, have been disclosed in footnotes to the G-P Financial Statements.
(d) Except as described in the notes to the G-P Financial
Statements, all accounts receivable reflected on the G-P Financial Statements
are bona fide receivables, accounted for in accordance with GAAP (including,
without limitation, appropriate reserves), representing amounts due with respect
to actual transactions in the operation of the G-P Business; it being understood
that this representation shall not be deemed to constitute a warranty or
guaranty that all such accounts receivable shall be collected.
26
4.7 LITIGATION AND CLAIMS. Except as disclosed on Schedule 4.7:
(a) There is no action (whether civil, criminal or
administrative), suit, demand, claim, dispute, hearing, proceeding (including
condemnation or other proceeding in eminent domain) or investigation pending or,
to the Knowledge of G-P, threatened, Related to the G-P Business or any of the
G-P Contributed Assets or included in the G-P Assumed Liabilities, that
individually or in the aggregate is reasonably expected to have a Material
Adverse Effect.
(b) None of the G-P Contributed Assets is subject to any order,
writ, judgment, award, injunction, or decree of or settlement enforceable in any
court or governmental or regulatory authority of competent jurisdiction or any
arbitrator or arbitrators.
4.8 TAXES. Except as disclosed on Schedule 4.8:
(a) G-P has duly and timely filed (or has caused to be duly and
timely filed) taking into account any valid extension of the time for filing,
each Tax Return required to be filed with any Tax Authority which includes or is
based upon the G-P Contributed Assets, or the operations, ownership or
activities of the G-P Business, and all Taxes due and payable (whether or not
shown on or required to be shown on a Tax Return) have been paid prior to their
due dates; provided, however, that the representations and warranties set forth
in this paragraph are made only to the extent that (i) such Taxes are or may
become Encumbrances on the G-P Contributed Assets, or (ii) the Company is or may
be liable in the capacity of transferee of the Contributed Assets.
(b) G-P has duly and timely filed (or has caused to be duly and
timely filed), taking into account any valid extension of the time for filing,
each Tax Return which includes or is based upon the assets, operations,
ownership or activities of the G-P Business, and all Taxes due and payable
(whether or not shown on or required to be shown on a Tax Return) have been paid
prior to their due dates.
(c) None of the G-P Contributed Assets (i) is subject to any lien
(other than a Permitted Encumbrance) arising in connection with any failure or
alleged failure to pay any Taxes, (ii) secures any debt the interest on which is
Tax-exempt under Section 103(a) of the Code, (iii) is required to be or is being
depreciated under the alternative depreciation system under Section 168(g)(2) of
the Code, (iv) is "limited use property" with the meaning of Revenue Procedure
76-30, or (v) will be treated as owned by any other Person pursuant to the
provisions of former Section 168(f)(8) of the Code.
(d) G-P (with respect to the G-P Business) has withheld and paid
all material Taxes required to have been withheld and paid in connection with
amounts paid or owing to any Employee, independent contractor, creditor,
shareholder or other party.
(e) There are no pending, proposed or, to the Knowledge of G-P,
threatened audits, assessments or claims from any Tax Authority for
deficiencies, penalties or interest against G-P (with respect to the G-P
Contributed Assets or the G-P Business or any of its assets, operations
27
or activities); provided, however, that the representations and warranties set
forth in this paragraph are made only to the extent that (i) such Taxes are or
may become Encumbrances on the G-P Contributed Assets, or (ii) the Company is or
may be liable in the capacity of transferee of the Contributed Assets.
(f) None of the G-P Contributed Assets consists of any interest in
any entity classified as a partnership for United States federal income Tax
purposes.
(g) With respect to the G-P Business, G-P does not have and has
not had a permanent establishment in any foreign country, as defined in any
applicable Tax treaty or convention between the United States and such foreign
country.
4.9 EMPLOYEES, PENSION AND OTHER BENEFIT PLANS.
(a) Schedule 4.9(a) lists all the Employees who, as of October 1,
1999, were employed by G-P with respect to the G-P Business, together with their
respective positions, years of employment, and rates of remuneration, as of
August 20, 1999.
(b) Except as disclosed on Schedule 4.9(b), G-P is not a party to
nor does it sponsor, maintain, or contribute to any Employee Plans that provide
benefits to Employees or Retired Employees of the G-P Business.
(c) G-P has delivered to CSK true, complete and up-to-date copies
of all documents embodying the G-P Plans including, without limitation, all
amendments thereto, all funding agreements thereunder (including, but not
limited to, trust agreements), all summaries of such G-P Plans provided to any
of their Employees, directors, officers, shareholders or their dependents with
respect to the G-P Business, as well as the most recent valuation for each
defined contribution retirement plan maintained by G-P and the most recent
actuarial valuation for each of the G-P Plans for which such valuations are
required. G-P has delivered to CSK a complete written description of all
unwritten G-P Plans, and will deliver such other documentation with respect to
any G-P Plan as is reasonably requested by CSK.
(d) Except as disclosed on Schedule 4.6(a) or Schedule 4.9(d) or
as set forth in the Human Resources Agreement, the transactions contemplated by
this Agreement will not result in any additional payments to, or increase the
vested interest of, any Employee, Retired Employee, director, officer,
shareholder, or their dependents under any G-P Plan; and the transactions
contemplated by this Agreement will not result in any payment to any Employee or
Retired Employee, director, officer, or shareholder of G-P which will be subject
to Section 280G of the Code.
(e) Each G-P Plan has been established, maintained and
administered in substantial compliance with its terms and all related documents
or agreements and in substantial compliance with applicable provisions of ERISA,
the Code, and other applicable Laws.
(f) Except as disclosed on Schedule 4.9(f), all required employer
contributions, premium payments and employee contributions under the G-P Plans
have been made and
28
remitted to the funding agents or accrued or booked thereunder within the time
prescribed by any such G-P Plan and the Laws. All insurance premiums required
with respect to any G-P Plan, including any premiums payable to the Pension
Benefit Guarantee Corporation, have been paid, made, accrued or booked within
the time prescribed by any such G-P Plan and the applicable Law. All benefits,
expenses and other amounts due and payable to or under any G-P Plan, have been
paid, made, accrued or booked within the time prescribed by any such G-P Plan
and the Laws. Except as disclosed on Schedule 4.9(f), all of the assets which
have been set aside in a trust or account (other than an account which is part
of G-P's general assets) to satisfy any obligation under any G-P Plan are shown
on the books and records of each such trust and each such account at their fair
market value, such current fair market value as of the last valuation date is
equal to or exceeds the present value of any obligation under the G-P Plan, and
the liabilities for all other obligations under any G-P Plan are accurately set
forth in the G-P Financial Statements.
(g) Except as disclosed on Schedule 4.9(g), there is no pending
or, to the Knowledge of G-P, threatened claim with respect to a G-P Plan (other
than routine and reasonable claims for benefits made in the ordinary course of
the G-P Business) or with respect to the terms and conditions of employment or
termination of employment by any Employee, or Retired Employee, and no audit or
investigation by any governmental or other law enforcement agency is pending or
has been proposed with respect to any G-P Plan.
(h) Except as disclosed on Schedule 4.9(h), no G-P Plan is subject
to Title IV of ERISA. Neither G-P nor any Related Person has incurred any
material liability under or pursuant to Title I or IV of ERISA or the penalty,
excise tax or joint and several liability provisions of the Code Relating to
employee benefit plans and, to the Knowledge of G-P, no event or condition has
occurred or exists which could result in any material liability to G-P, such
Related Person or the Company or a CSK Party under or pursuant to Title I or IV
of ERISA or such penalty, excise tax or joint and several liability provisions
of the Code. No G-P Plan has incurred an "accumulated funding deficiency" within
the meaning of such sections of the Code and ERISA, whether or not waived; and
no such G-P Plan has been terminated. Except as disclosed on Schedule 4.9(h),
G-P does not contribute to, or have any obligation to contribute to, a
multiemployer plan as defined in Section 4001(a)(3) of ERISA with regard to the
Employees or Retired Employees.
(i) Each of the G-P Plans that is intended to be qualified under
Section 401(a) of the Code, and the trust, if any, forming a part thereof, has
received a favorable determination letter from the Internal Revenue Service as
to the qualification of its form under the Code and to the effect that each such
trust is exempt from taxation under Section 501(a) of the Code and, to the
Knowledge of G-P nothing has occurred since the date of such determination
letter that adversely affects such qualification or tax-exempt status. Except as
disclosed in Schedule 4.9(i), all reports and other documents required to be
filed with any governmental agency or distributed to plan participants or
beneficiaries (including, but not limited to, actuarial reports, audits or Tax
Returns) have been duly filed or distributed on a timely basis, and copies
thereof have been or will be furnished to CSK upon reasonable request.
29
4.10 COMPLIANCE WITH LAWS. Except as set forth in Schedule 4.10,
the G-P Business is being conducted in compliance with all applicable Laws to
the G-P Business and, as of the Closing, the Company will have (subject to
obtaining the Consents) all Governmental Authorizations necessary for the
conduct of the G-P Business as currently conducted, except for such
non-compliance or the failure to obtain such Consent or Consents which would not
have a Material Adverse Effect; it being understood that nothing in this
representation is intended to address any compliance issue that is the subject
of the representations and warranties set forth in Sections 4.7, 4.8, 4.9, 4.11,
4.12, or 4.13 hereof, and that G-P makes no representations in this Section 4.10
as to the transferability or assignability of any such Governmental
Authorizations. G-P has not received written notice that any Governmental
Authorization may be suspended, revoked, materially modified or canceled.
4.11 ENVIRONMENTAL MATTERS.
(a) Schedule 4.11(a) sets forth a list of all material Environmental
Permits in connection with the G-P Business.
(b) Except as would not have a Material Adverse Effect, or as
disclosed on Schedule 4.11(b):
(i) The Environmental Permits are all the permits, licenses,
certificates and authorizations of, and registrations with, any of the
Environmental Authorities pursuant to the Environmental Laws necessary to
conduct the G-P Business substantially as presently conducted. The Environmental
Permits are in full force and effect and G-P is in compliance in all respects
thereunder. The consummation of the transactions contemplated hereunder will not
require any renewal, consent, amendment or other action in connection with any
of the Environmental Permits. G-P is in compliance with the Environmental Laws
applicable to the conduct of the G-P Business.
(ii) There is no claim, suit, action or other proceeding,
including appeals and applications for review, outstanding or pending against
G-P pursuant to any of the Environmental Laws Relating to the G-P Business.
(iii) G-P has no liability for any release, spill, leakage,
pumping, emission, empty, discharge, injection, escape, leaching, disposal or
dumping of any Hazardous Substances on or from any of the G-P Real Property,
except in such manner or quantity as would not constitute a violation of any of
the Environmental Laws or Environmental Permits.
(iv) G-P has maintained all records in respect of the G-P
Business required by the Environmental Laws and Environmental Permits, in the
manner and for the time periods as so required.
(v) Since June 30, 1994, G-P has received no notice of
investigation or non-compliance or written order from any of the Environmental
Authorities, including any notice of contamination or clean-up requirements,
pursuant to any of the Environmental Laws with respect to the G-P Business.
30
(c) G-P has no liability for release of PCB's and other Hazardous
Substances into the Fox River, Wisconsin or its associated waterways.
4.12 INTELLECTUAL PROPERTY.
(a) Schedule 4.12 sets forth a list and description (including the
country of registration) of all issued or registered U.S., Canadian and Mexican
patents and trademarks comprising the owned G-P Intellectual Property currently
(or, to the Knowledge of G-P, within the last 12 months) used in the G-P
Business (other than "shrink wrap" consumer software licenses). No third party
has rights in, or otherwise has the right to restrict G-P's use of, G-P
Intellectual Property owned by G-P, and, to G-P's Knowledge, no third party has
rights in, or otherwise has the right to restrict the Company's use of the G-P
Intellectual Property as of and following the Closing.
(b) To the Knowledge of G-P, no product, component, method,
process, or material (including computer software) used, sold or manufactured by
the G-P Business infringes on, misappropriates, or otherwise violates a valid
and enforceable intellectual property right of any other Person.
(c) There are no demands, actions or proceedings pending or, to
the Knowledge of G-P, threatened, against G-P Relating to the G-P Business
alleging infringement, misappropriation or violation of any intellectual
property right of any other Person, and, to the Knowledge of G-P, no Person is
infringing, misappropriating, challenging, or violating, the Intellectual
Property owned by G-P, except for challenges, infringements, misappropriation or
violations which, individually or in the aggregate, would not have a Material
Adverse Effect.
(d) All of the G-P Intellectual Property will be licensed to the
Company at Closing, except to the extent certain Intellectual Property used by
G-P to provide services under the Operational Support Agreement is specifically
excluded thereunder. G-P agrees that Intellectual Property provided under the
Operational Support Agreement will be provided to the Company on and after
Closing on the same terms and conditions under which it was available to the G-P
Business prior to the Closing in accordance with the terms of the Transition
Services Agreement.
(e) Schedule 4.12(e) sets forth G-P's efforts at addressing the
Year 2000 issue in the G-P Business. The information set forth therein is
accurate as of the date hereof, in all material respects. G-P has developed and
begun implementing a Project Plan to remediate and/or replace Computer Systems
that are used or relied upon in the G-P Business but are not Year 2000 Ready.
Such remediation and/or replacement is scheduled to be completed in 1999.
4.13 LABOR MATTERS. Except as disclosed on Schedule 4.13:
(a) As of the date hereof, G-P is not a party to any labor or
collective bargaining agreement or similar agreement with respect to Employees
of the G-P Business, no such Employees are represented by any labor organization
and, to the Knowledge of G-P, there are no organizing or de-certification
activities (including any demand for recognition or certification
31
proceedings pending or threatened to be brought or filed with the National Labor
Relations Board or other labor relations tribunal) involving the G-P Business;
(b) As of the date hereof, there are no strikes, work stoppages,
slowdowns, lockouts, unfair labor practice charges pending or, to the Knowledge
of G-P, threatened against or involving the Employees of the G-P Business;
(c) There are no complaints, charges, claims or grievances against G-P
pending or, to the Knowledge of G-P, threatened to be brought or filed with any
Governmental Authority, arbitrator or court based on or arising out of the
employment by G-P of any Employee of the G-P Business, except for those which,
individually or in the aggregate, would not have a Material Adverse Effect;
(d) G-P is in compliance with all Laws Relating to the employment of
labor, including all such Laws Relating to wages, hours, collective bargaining,
discrimination, civil rights, safety and health, immigration, workers'
compensation, layoffs, and the collection and payment of withholding and/or
Social Security Taxes and similar Taxes, except where the failure to be in
compliance would not have a Material Adverse Effect; and
(e) G-P has given all notices required to be given prior to the Closing
Date under WARN Obligations Relating to any plant closing or mass layoff that
occurred during the 90 days immediately preceding the Effective Time pertaining
to the G-P Business.
4.14 CONTRACTS. Schedule 4.14 sets forth a list, as of the date hereof,
of each Contract that is Related to the G-P Business other than (a) G-P Real
Property Leases, which are listed on Schedule 4.15, and collective bargaining
agreements, which are listed on Schedule 4.13, (b) purchase orders or similar
agreements for the purchase or sale of goods or services in the ordinary course
of business, (c) confidentiality agreements entered into in the ordinary course
of business in connection with the purchase and sale of Inventory, and (d) any
Contract which requires a payment or imposes an obligation on either party
thereto of less than $1,000,000 in the aggregate. Schedule 4.14 also identifies
any Contract that contains a non-compete covenant or similar provision that
could materially restrict the Company in its conduct of the G-P Business
following Closing, any employment agreement with any Employee of the G-P
Business, any employment agreement included in the G-P Contributed Assets or G-P
Assumed Liabilities, any Contract between any Affiliates of G-P, on one hand,
and G-P on the other hand, any agreements Related to payments in lieu of taxes,
any agreement or license Related to Intellectual Property (other than "shrink
wrap" consumer software licenses), leases and license agreements for any
Computer Systems (other than "shrink wrap" consumer software licenses), all
material agreements for telecommunications voice (including without limitation,
local, long distance and toll free service) and data services, Internet access,
hosting and use services. Each Contract set forth on Schedule 4.14 is a valid
and binding agreement of G-P and, to the Knowledge of G-P, is in full force and
effect. Except as otherwise provided in Schedule 4.14, G-P is not, and, to G-P's
Knowledge, no other party thereto is, in default in any material respect under
any Contract listed on Schedule 4.14 or any collective bargaining agreement
listed on Schedule 4.13.
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4.15 REAL ESTATE LEASES. Schedule 4.15 sets forth a list, as of the
date hereof, of each material written G-P Real Estate Lease with a term of more
than one month that is Related to the G-P Business. Each G-P Real Estate Lease
set forth on Schedule 4.15 is a valid and binding agreement of G-P and is in
full force and effect. There are no defaults under any G-P Real Estate Lease
listed on Schedule 4.15 which defaults have not been cured or waived and which
would, individually or in the aggregate, have a Material Adverse Effect.
4.16 ENTIRE BUSINESS; TITLE TO PROPERTY
(a) Except as set forth in Schedule 4.16(a) and Schedule 4.6(a),
the G-P Contributed Assets, the G-P Retained Assets (including cash and cash
accounts, disbursement accounts, invested securities and other short and medium
term investments, the G-P Marks, the G-P Plans, and G-P's insurance policies),
and the rights specifically provided or made available to the Company under the
Ancillary Agreements, include all of the buildings, machinery, equipment and
other assets (whether tangible or intangible) necessary for the Company
immediately after Closing to conduct in all material respects the G-P Business
as conducted as of the date hereof, and as conducted during the 12-month period
prior to the date hereof (subject to changes expressly permitted by the terms
hereof to be made after the date hereof); provided, however, that no
representation is made as to the assignability of Government Authorizations.
(b) G-P has good (and, in the case of its Owned Real Property,
marketable) title to, or a valid and binding leasehold interest in, the G-P
Contributed Assets, free and clear of all Encumbrances, except (i) as set forth
in Schedule 4.16(b) and (ii) any Permitted Encumbrances.
(c) G-P Contributed Assets do not include any equity interest in
any Subsidiary.
(d) The G-P Contributed Assets are in good operating condition and
repair (subject to normal wear and tear). Except as set forth on Schedule
4.16(d), to G-P's Knowledge, there are no material structural or mechanical
defects with respect to any buildings, improvements or equipment included in the
G-P Contributed Assets, which defects are reasonably likely to have a Material
Adverse Effect.
4.17 FINDER'S FEES. Except for Morgan Stanley Dean Witter Co.,
whose fees will be paid by G-P, there is no investment banker, broker or finder
which has been retained by or is authorized to act on behalf of G-P who might be
entitled to any fee or commission from G-P or the Company in connection with the
transactions contemplated by this Agreement.
4.18 INSURANCE. Schedule 4.18 attached hereto sets forth the
following information with respect to each insurance policy to which G-P, with
respect to the G-P Business, has been a party, a named insured, or otherwise the
beneficiary of coverage at any time with in the past five years:
(a) the name of the insurer, the name of the policyholder, and the name
of each covered insured;
33
(b) the scope, period and amount of coverage; and
(c) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
Schedule 4.18 also describes any self insurance arrangements affecting the G-P
Business. As of the date hereof, G-P has not received any written notice of any
retroactive premium increase or assessment applicable to the G-P Business.
Except as disclosed on Schedule 4.18, all of such policies are in full force and
effect.
4.19 NO UNDISCLOSED LIABILITIES. With respect to the G-P Business,
G-P does not have any obligations or liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise, whether or not known to G-P, whether due
or to become due and regardless of when asserted) arising out of transactions
entered into at or prior to the Closing, or any action or inaction at or prior
to the Closing, or any state of facts existing at or prior to the Closing other
than: (a) liabilities set forth on G-P's Financial Statements (including any
notes thereto, if any); (b) liabilities and obligations arising from or in
connection with matters disclosed pursuant to G-P's representations and
warranties in this Agreement or in the Disclosure Schedules (none of which,
except as set forth on Schedule 4.7, is a liability resulting from a breach of
contract, breach of warranty, tort, infringement claim or lawsuit), other than
liabilities and obligations arising from or in connection with matters disclosed
pursuant to Section 4.11; (c) liabilities and obligations arising from or in
connection with matters disclosed pursuant to Section 4.11; (d) liabilities and
obligations which have arisen after April 30, 1999 in the ordinary course of
business (none of which, except as set forth on Schedule 4.7, is a liability
resulting from a breach of contract, breach of warranty, tort, infringement
claim or lawsuit); and (e) such other liabilities or obligations that do not
have a Material Adverse Effect.
4.20 NO MATERIAL ADVERSE CHANGE. Except as disclosed on Schedule 4.20,
since April 30, 1999, G-P has conducted the G-P Business in the ordinary course
and in a manner consistent with the practices applied during the periods
specified in the G-P Financial Statements, and there has been no Material
Adverse Effect in the G-P Business. Except as set forth on Schedule 4.20, and
except as such does not have a Material Adverse Effect, G-P has not with respect
to the G-P Business:
(a) been a party to any corporate reorganization, restructuring or
merger or amalgamation or amended its certificate or articles of incorporation
or bylaws;
(b) declared or paid any dividend or declared or made any other
distribution (whether in cash, stock or property) on any of the shares of its
capital stock;
(c) incurred or discharged any obligation or liability (whether
accrued, absolute or contingent) other than in the ordinary course of and in a
manner consistent with past practices for the G-P Business;
34
(d) entered into any transaction, contract, agreement, indenture,
instrument or commitment other than in the ordinary course of and in a manner
consistent with past practices for the G-P Business;
(e) suffered or incurred any material damage, destruction, loss or
liability (whether or not covered by any insurance);
(f) experienced any strike, lockout or other labor trouble such as slow
down or work stoppage, or any loss of any of its key Employees, customers,
suppliers or distributors;
(g) suffered any shortage or cessation or interruption of raw
materials, supplies or utilities that could have a Material Adverse Effect on
the G-P Business;
(h) made any change in its accounting principles, policies and
practices as utilized in the preparation of the G-P Financial Statements;
(i) made any loan or advance, or assumed, guaranteed, endorsed or
otherwise become liable with respect to the liabilities or obligations of any
other Person or entity, or permitted any of its assets to be subjected to any
lien or security interest (except for Permitted Encumbrances);
(j) granted to any customer any allowance or discount or changed its
pricing, credit or payment policies other than in the ordinary course of and in
a manner consistent with past practices for the G-P Business (except for
non-material variations therefrom in the aggregate;
(k) incurred any indebtedness, liability or obligation (absolute,
accrued, contingent or otherwise) other than in the ordinary course of and in a
manner consistent with past practices for the G-P Business;
(l) sold, leased or otherwise disposed of any of its assets or any
right, title or interest therein other than in the ordinary course of and in a
manner consistent with past practices for the G-P Business;
(m) made any payment to, or for the benefit of, any present or former
Employee, director, officer or shareholder otherwise than at the regular rates
payable to them, by way of salary, pension, bonus or other remuneration
consistent with past practices for the G-P Business;
(n) committed to any capital expenditure project or made any
investment, in either case in excess of Five Hundred Thousand Dollars ($500,000)
not disclosed to CSK prior to the date of this Agreement; or
(o) authorized or agreed to do any of the foregoing matters referred to
in this Section 4.20.
35
4.21 INDEBTEDNESS FOR BORROWED MONEY There is no indebtedness for
borrowed money included in the G-P Assumed Liabilities.
4.22 KNOWLEDGE AS OF CLOSING DATE. G-P has no Knowledge, as of the
Closing Date, that any representation or warranty made by the CSK Parties in
Article III (and related schedules) is untrue.
4.23 ORGANIZATION OF COMPANY. The Company is a limited liability
company, duly organized, validly existing and in good standing under the laws of
the State of Delaware.
4.24 AUTHORIZATION OF COMPANY. The Company has full limited liability
company power and authority to execute and deliver this Agreement, and to
perform its obligations hereunder and under any agreement or contract
contemplated hereby, including the Ancillary Agreements. The execution, delivery
and performance by the Company of this Agreement and the agreements and
contracts contemplated hereby has been duly and validly authorized and no
additional limited liability company authorization or consent is required in
connection with the execution, delivery and performance by the Company of this
Agreement and the agreements and contracts contemplated hereby.
4.25 ACTIVITIES OF COMPANY. Other than entering into this Agreement and
the agreements and contracts contemplated hereby, the Company has not entered
into any agreements or conducted any other business.
4.26 NO OTHER REPRESENTATIONS OR WARRANTIES. Except for the
representations and warranties contained in this Article IV, neither G-P, nor
any other Person makes any other express or implied representation or warranty
on behalf of G-P.
ARTICLE V
COVENANTS
5.1 COVENANTS REGARDING EMPLOYEES.
(a) At the Closing, G-P, the CSK Parties and the Company shall enter
into the Human Resources Agreement, and shall take all actions required by them
pursuant to such Human Resources Agreement.
(b) CSK shall retain sponsorship of the CSK Plans, and neither the
Company nor G-P shall be entitled to any assets or be liable for any obligations
of the CSK Plans except as provided in the Human Resources Agreement.
36
(c) G-P shall retain sponsorship of the G-P Plans and no CSK Party
shall be entitled to any assets or be liable for any obligations of the G-P
Plans except as provided in the Human Resources Agreement.
5.2 COMPLIANCE WITH WARN AND SIMILAR LAWS. The Company will timely give
all notices required to be given with respect to WARN Obligations Relating to
actions taken on and after the Closing Date.
5.3 FURTHER ASSURANCES. At any time after the Closing Date, the CSK
Parties, G-P and the Company shall promptly execute, acknowledge and deliver any
other assurances or documents reasonably requested by the Company, G-P or the
CSK Parties, as the case may be, and necessary for them or it to satisfy their
or its respective obligations hereunder or obtain the benefits contemplated
hereby. Without limiting the generality of the foregoing, the Company agrees
that if any of the Contributed Subsidiaries are found to own assets that are not
part of the WISCO Contributed Assets, or if any Retained Assets are
inadvertently transferred to the Company, the Company shall transfer such assets
to G-P or the appropriate CSK Party, as applicable, at G-P's or such CSK Party's
expense, as applicable, but without consideration. If after the Closing either
the Company, a CSK Party or G-P identifies any assets of any CSK Party or G-P
that Relates to the Business and is not a Retained Asset of the CSK Party or GP,
the party retaining any such assets shall transfer such assets to the Company at
the transferring party's expense without further consideration.
5.4 USE OF G-P INTELLECTUAL PROPERTY AND CSK MARKS. At Closing, G-P
shall provide to the Company a non-exclusive license, substantially in the form
set forth in Schedule 5.4(a) hereto, to use the G-P Intellectual Property.
5.5 CERTAIN MATTERS RELATED TO RETAINED AND ASSUMED LIABILITIES.
(a) With respect to all Retained Liabilities and in particular
indemnification under Sections 7.2(a)(ii) and 7.3(a)(ii), the Company shall, at
the expense of the CSK Parties or G-P as applicable, provide reasonable
cooperation including providing the CSK Parties or G-P, as applicable, as
promptly as practicable with any notices and other information received by the
Company as well as all relevant materials, information and data requested by the
CSK Parties or G-P, as applicable, including reasonable access (without charge)
to Employees of the Company and to the Real Property.
(b) With respect to all Assumed Liabilities, G-P or the CSK Parties,
as the case may be, shall, at the Company's expense, reasonably cooperate with
the Company, provide the Company as promptly as possible with any notices and
other information received by such parties as well as all relevant materials,
information and data requested by the Company and shall grant the Company,
without charge, reasonable access to Employees of the CSK Parties or G-P, as
applicable.
5.6 INTERCOMPANY AGREEMENTS.
37
(a) As of the Effective Time, G-P shall terminate and shall cause its
Affiliates to terminate, any and all agreements between G-P and its Affiliates
to the extent such agreements Relate to the G-P Business, except as contemplated
in the Ancillary Agreements. Without limiting the foregoing, all intercompany
loans between G-P and any of its Affiliates Relating to the G-P Business shall
be paid or otherwise eliminated prior to the Effective Time.
(b) As of the Effective Time, the CSK Parties shall terminate and shall
cause its Affiliates to terminate, any and all agreements between any of the CSK
Parties and its Affiliates to the extent such agreements Relate to the WISCO
Business, except as contemplated in the Ancillary Agreements. Without limiting
the foregoing, all intercompany loans between the CSK Parties and any of its
Affiliates Relating to the WISCO Business shall be paid or otherwise eliminated
prior to the Effective Time.
5.7 RECORDS AND RETENTION AND ACCESS. The Company shall keep and
preserve in an organized and retrievable manner the Books and Records it
receives from either party for at least seven years from the Closing Date. The
Company shall neither dispose of nor destroy such Books and Records without
first offering to turn over possession thereof to the party that contributed
such Books and Records by written notice to such party at least thirty (30) days
prior to the proposed date of such disposition or destruction. While such Books
and Records remain in existence, each party shall allow the other party, its
representatives, attorneys and accountants, at the requesting party's expense,
access to the Books and Records upon reasonable request and advance notice and
during normal business hours for the purpose of interviewing, examining and
copying in connection with such parties' preparation of financial statements.
5.8 INSURANCE.
(a) G-P and the CSK Parties shall use commercially reasonable efforts
to assign to the Company, to the fullest extent, all of the benefits and rights
under any insurance policies held by them and/or any of their Affiliates with
respect to any Losses arising out of, Related to or in connection with the
Contributed Assets, the Assumed Liabilities and their respective Businesses
(other than benefits and rights to the extent Related to Retained Assets or
Liabilities) with respect to events occurring prior to the Closing Date (it
being understood that to the extent rights under such insurance policies include
claims for Losses related to Contributed Assets, then such claims shall be
reflected as an insurance receivable on the Closing Working Capital Statement).
The Company shall have the right to such benefits and rights only to the extent
actually paid or payable, and exclusive of any deductibles (including pass
through deductibles for which either party or any Affiliate of such party is
required to reimburse the insurer). To the extent such assignment is not
permitted, G-P or the CSK Parties, as applicable, shall use commercially
reasonable efforts on the Company's behalf to obtain such proceeds or benefits
for the Company, or otherwise to provide the Company with the benefit equivalent
to that which would have been available had such assignment been permitted.
(b) The CSK Parties and G-P shall cooperate with the Company in
obtaining insurance policies for the Business to be in effect from and after
Closing. Notwithstanding such
38
assistance, all decisions with respect to such policies shall be made solely by
the Company, and neither the CSK Parties nor G-P shall have any liability,
whether to the Company or to any other Person, whether as an advisor, broker or
otherwise, under any other theory, in connection with providing such assistance
and cooperation. The CSK Parties and G-P make no assurances whatsoever with
respect to such insurance coverage, including the availability or price thereof.
5.9 SPECIAL CSK RETAINED LIABILITY. Notwithstanding Section 2.1(a)
hereof, CSK shall retain and be solely responsible for, and CSK and WISCO shall
indemnify and hold harmless the Company, G-P and all G-P Affiliates from and
against, any and all costs, liabilities, damages, expenses or Losses of any kind
whatsoever which may be incurred by or assessed against any of them arising out
of or in any way related to the release, spill, leak, pumping, pouring,
emitting, emptying, discharge, injecting, escaping, leaching, dumping, disposal
or arranging for disposal (hereinafter "release") of (i) PCBs and/or any other
Hazardous Substance into, on or around the Fox River in Wisconsin and its
associated waterways by any CSK Parties, and (ii) PCBs into, on or around any
landfill, disposal site or dump located in Wisconsin, by CSK, WISCO or any of
their Affiliates or successors or predecessors in interest (the "Fox River
Liability"). The Company shall provide reasonable cooperation to CSK, WISCO and
their predecessors or successors in interest in their defense of any liability
for the release of PCBs and/or other Hazardous Substances into, on or around the
Fox River and its associated waterways, and all costs incurred by the Company in
so cooperating will be reimbursed to it by CSK or WISCO. Such indemnification
shall not be limited by any Survival Period, Deductible or WISCO Cap set forth
in Article VII. For purposes of this Section 5.9, the term "Fox River Liability"
shall not include liability for dumping or disposal of Hazardous Substances by
WISCO at the Vinland #1 and #2 disposal sites owned by WISCO.
5.10 PREPARATION OF REGISTRATION STATEMENT. As soon as practicable
after the execution and delivery of this Agreement, the Company and G-P shall
prepare and file with the Securities and Exchange Commission the Registration
Statement in connection with the registration under the Securities Act of debt
to be incurred by the Company to refinance the Company Debt. The CSK Parties
each shall cooperate to the extent such cooperation is reasonably required to
file such Registration Statement; provided that the CSK Parties shall not be
required to execute any documents other than a WISCO debt indemnity as
contemplated in the Operating Agreement.
5.11 USE OF WISCO NAME. As soon as practicable and in any event within
three months following the Closing, WISCO shall change its corporate name, and
immediately following the Closing neither WISCO, CSK nor any Subsidiary or
Affiliate of CSK shall make use of the names "Wisconsin Tissue Mills",
"Wisconsin Tissue" or "WISCO" or any names confusingly similar to such names
other than in connection with the defense of litigation.
5.12 PRORATION OF CERTAIN CHARGES. The following charges and payments
may be prorated on a per diem basis and apportioned between each party
transferring Contributed Assets on the one hand and the Company on the other, as
of the Closing Date: property taxes, utility charges, prepaid items, license and
permit fees, and similar charges imposed with respect to the Contributed Assets.
To the extent not reflected on the Final Working Capital Statement, each
39
party transferring Contributed Assets shall be liable for (and shall reimburse
the Company to the extent the Company shall have paid) that portion of such
charges Relating to, or arising in respect to, periods on or prior to the
Closing Date, and the Company shall be liable for (and shall reimburse the Party
contributing such assets to the extent the contributing party shall have paid)
that portion of the charges Relating to, or arising in respect to, periods after
the Closing Date.
ARTICLE VI
CONDITIONS TO CLOSING
[Intentionally Deleted]
ARTICLE VII
SURVIVAL; INDEMNIFICATION
7.1 SURVIVAL. The representations and warranties contained in this
Agreement shall survive the Closing (regardless of any investigation, inquiry or
examination made by or on behalf of, or any Knowledge of any party hereto or the
acceptance of any party or on its behalf of a certificate and opinion) for the
respective periods (each, a "Survival Period") set forth in this Section 7.1.
All of the representations and warranties of the CSK Parties and G-P contained
in this Agreement and all claims and causes of action with respect thereto shall
terminate on April 30, 2001, except that (a) the representations and warranties
set forth in Section 3.11, 3.19(c) and 4.11(a)-(b) shall terminate upon the
expiration of the 36 month period commencing on the Closing Date, (b) the
representations and warranties set forth in Sections 3.8, 3.9, 3.12, and 4.8,
4.9, and 4.12 shall survive until the expiration of the applicable statute of
limitation (including any extension thereof), and (c) the representations and
warranties set forth in Sections 3.1, 3.2, 3.5, 3.17, and 4.1, 4.2, 4.5,
4.11(c), and 4.17 shall have no expiration date. Any claim for indemnification
for breach of a representation and warranty must be made during the applicable
Survival Period. In the event notice (within the meaning of Section 7.5(a)) of
any claim for indemnification for a breach of a representation or warranty is
given within the applicable Survival Period, an Indemnifying Party's obligations
with respect to such indemnification claim shall survive until such time as such
claim is finally resolved.
7.2 INDEMNIFICATION BY G-P.
(a) G-P shall indemnify, defend and hold harmless CSK, WISCO, their
Affiliates and, if applicable, their respective directors, officers,
shareholders, partners, members, attorneys, accountants, agents and Employees
and their heirs, successors and assigns (the "WISCO Indemnified Parties") and
the Company from, against and in respect of any damages, claims, losses,
charges, actions, suits, proceedings, deficiencies, Taxes, interest, penalties,
and reasonable costs and expenses (including reasonable attorneys' fees, removal
costs, remediation costs, closure costs, fines, penalties and expenses of
investigation and ongoing monitoring) (collectively, the "Losses") imposed on,
sustained, incurred or suffered by or asserted against any
40
of the WISCO Indemnified Parties or the Company, directly or indirectly,
Relating to or arising out of:
(i) subject to Section 7.2(b), any breach of any representation or
warranty made by G-P in this Agreement;
(ii) the G-P Retained Liabilities; and
(iii) the breach of any covenant or agreement of G-P contained in
this Agreement.
(b) G-P shall not be liable to the WISCO Indemnified Parties or the
Company for any Losses with respect to the matters contained in Section
7.2(a)(i) (other than the representation in Section 4.6) until the Losses
therefrom first exceed an aggregate amount equal to $3,760,000 (the "G-P
Deductible"), and in that event, G-P shall be liable for all Losses in excess
thereof up to an aggregate amount equal to 50% of the value of the G-P Business
as set forth in Section 2.8(a) hereof (the "G-P Cap"); PROVIDED, HOWEVER, that
the G-P Deductible and the G-P Cap shall not apply to claims arising out of the
breach of a representation or warranty, if such representation or warranty was
made fraudulently by G-P or if such representation or warranty was, to the
Knowledge of G-P, false at the time made.
7.3 INDEMNIFICATION BY CSK.
(a) CSK and its Affiliates shall indemnify, defend and hold harmless
G-P, its Affiliates and, if applicable, their respective directors, officers,
shareholders, partners, members, lenders, attorneys, accountants, agents and
Employees and their heirs, successors and assigns (the "G-P Indemnified
Parties") and the Company from, against and in respect and to the extent of any
Losses imposed on, sustained, incurred or suffered by or asserted against each
of the G-P Indemnified Parties or the Company, directly or indirectly, Relating
to or arising out of:
(i) subject to Section 7.3(b), any breach of any representation or
warranty made by any CSK Party in this Agreement;
(ii) the WISCO Retained Liabilities; and
(iii) the breach of any covenant or agreement of any CSK Party
contained in this Agreement.
(b) CSK shall not be liable to the G-P Indemnified Parties or the
Company for any Losses with respect to the matters contained in Section
7.3(a)(i) (other than the representation in Section 3.6) until the Losses
therefrom first exceed an aggregate amount equal to $7,750,000 (the "WISCO
Deductible"), and in that event, WISCO shall be liable for all Losses in excess
thereof paid or suffered by G-P or the Company up to an aggregate amount equal
to 50% of the value of the WISCO Business as set forth in Section 2.8 hereof
(the "WISCO Cap"); PROVIDED, HOWEVER, that the WISCO Deductible and the WISCO
Cap shall not apply to claims arising out of the
41
breach of a representation or warranty, if such representation or warranty was
made fraudulently by WISCO or if such representation or warranty was, to the
Knowledge of WISCO, false at the time made.
7.4 INDEMNIFICATION BY THE COMPANY.
The Company shall indemnify, defend and hold harmless the G-P
Indemnified Parties or the WISCO Indemnified Parties, as the case may be, from
and against and in respect and to the extent of any Losses imposed on,
sustained, incurred or suffered by or asserted against either the G-P
Indemnified Parties or the WISCO Indemnified Parties, directly or indirectly,
Relating to or arising out of (i) the breach of any covenant or agreement of the
Company in this Agreement; or (ii) the Assumed Liabilities; provided that the
Company shall have no indemnification obligations hereunder for any Losses
resulting from a payment of a claim made pursuant to clauses (i) and (ii) above
and incurred or suffered by any Person solely in such Person's capacity as a
member of the Company, equity owner or debt holder of the Company, including
Losses for diminution of the value of such equity, debt or member interest.
7.5 INDEMNIFICATION PROCEDURES.
(a) Any Indemnified Person making a claim for indemnification pursuant
to Section 7.2, 7.3 or 7.4 above (an "Indemnified Party") must give the party
from whom indemnification is sought (an "Indemnifying Party") notice of such
claim (in a manner consistent with Section 10.1 hereof) describing such claim
with reasonable particularity and the nature and amount of the Loss to the
extent that the nature and amount of such Loss is known at such time (an
"Indemnification Claim Notice") promptly after the Indemnified Party receives
any written notice of any action, lawsuit, proceeding, investigation or other
claim (a "Proceeding") against or involving the Indemnified Party by a
Governmental Authority or other third party or otherwise discovers the
liability, obligations or facts giving rise to such claim for indemnification;
provided that the failure to notify or delay in notifying an Indemnifying Party
will not relieve the Indemnifying Party of its obligations pursuant to Section
7.2, 7.3 or 7.4, as applicable, except to the extent that (and only to the
extent that) such failure shall have (i) caused or materially increased the
Indemnifying Party's liability, (ii) resulted in the forfeiture by the
Indemnifying Party of substantial rights and defenses or (iii) otherwise
materially prejudiced the Indemnifying Party.
(b) The Indemnifying Party shall have 30 days from the date the
Indemnification Claim Notice is deemed given pursuant to Section 10.1 hereof
(the "Notice Period") to notify the Indemnified Party (i) whether or not the
Indemnifying Party disputes the liability of the Indemnifying Party to the
Indemnified Party with respect to such claim or demand and (ii) whether or not
it desires to defend the Indemnified Party against such claim or demand.
(c) If (i) the Indemnifying Party agrees in writing that the subject
matter of the claim is subject to indemnification under this Article VII and
(ii) the claim for indemnification does not relate to a matter (A) that, if
determined adversely, could reasonably be expected to expose the Indemnified
Party to criminal prosecution or penalties, (B) that, if determined adversely,
could
42
reasonably be expected to result in the imposition of a consent order,
injunction or decree which would significantly restrict the activity or conduct
of the Indemnified Party or any Affiliate thereof, or (C) as to which the
Indemnified Party shall have reasonably concluded, in good faith, after
consultation with the Indemnifying Party, that such representation is likely to
result in a conflict of interest or materially jeopardize the viability of such
defense, then the Indemnifying Party shall have the right to defend the
Indemnified Party by appropriate proceedings and shall have the sole power to
direct and control such defense. If any Indemnified Party desires to participate
in any such defense, it may do so at its sole cost and expense.
(d) If the claim relates to a matter for which both the Indemnifying
Party and any Indemnified Party could be liable or responsible hereunder, such
as a Loss for which both parties could be partially liable due to the applicable
Cap and the Deductible, the Indemnifying Party and the Indemnified Parties shall
cooperate in good faith in the defense of such action. In such event, no party
shall settle any claim without the prior consent of the other party (which
consent shall not be unreasonably withheld); provided, however, that neither an
Indemnified Party nor an Indemnifying Party shall be required to consent to any
settlement if the proposed settlement (i) does not provide for a full release of
all claims against such party, (ii) is on a basis which would result in the
imposition of a consent order, injunction or decree or any other restriction on
the activity or conduct of such party, or (iii) is on a basis which could, in
such party's judgment, expose such party to criminal liability or requires an
admission of wrongdoing by such party. If an Indemnified Party or an
Indemnifying Party does not consent to a definitive settlement proposed by the
other party (with respect to which a settlement agreement has been agreed to by
all parties other than such party) which settlement satisfies the foregoing
clauses (i) through (iii), then the party declining such settlement shall
thereafter have full control of the defense of such claim, and the maximum
liability of the party that proposed such settlement shall be as though such
matter had settled on the terms so proposed, including the amount of the
proposed settlement, together with all legal costs and expenses incurred in
connection with such matter through and including the proposed settlement date.
For purposes of Section 7.2 or 7.3, the actual amount of the Loss up to the
amount of such party's maximum liability (determined in accordance with the
preceding sentence) shall be the amount of the Loss of such Party for purposes
of determining whether the applicable Deductible has been met. Notwithstanding
anything in Section 7.2 or 7.3 to the contrary, if an Indemnified Party and all
other parties other than the Indemnifying Parties have reached a definitive
settlement agreement which satisfies the foregoing clauses (i) through (iii),
the amount of the Loss for purposes of determining whether the applicable Cap
has been met shall equal the amount contemplated by such definitive settlement
regardless of the actual amount of such Loss. If the parties agree to the
settlement, the relative liabilities of the parties for such Losses shall be
determined as provided in the other provisions of this Article VII.
(e) All costs and expenses incurred by the Indemnifying Party in
defending a claim or demand under Section 7.4(c), and all costs and expenses
incurred by the Indemnified Party in defending a claim or demand which the
Indemnifying Party has elected not to defend (including by virtue of its failure
to give timely notice to the Indemnified Party) or is not permitted to defend
under Section 7.4(c) shall be a liability of, and shall be paid by, the
Indemnifying Party, subject to any applicable Deductible and Cap.
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(f) To the extent the Indemnifying Party shall direct, control or
participate in the defense or settlement of any third-party claim or demand, the
Indemnified Party will give the Indemnifying Party and its counsel access to,
during normal business hours, the relevant business records and other documents,
and shall permit them to consult with the Employees and counsel of the
Indemnified Party. The Indemnifying Party and Indemnified Parties shall use
their best efforts in the defense of all such claims.
(g) In connection with the indemnification obligations set forth in
Sections 7.2(a)(ii) and 7.3(a)(ii), CSK Parties, G-P and the Company shall
comply with the obligations contained in Section 5.5.
7.6 ACKNOWLEDGMENT REGARDING ENVIRONMENTAL LIABILITIES. G-P and each of
the CSK Parties acknowledge the allocation of relative responsibility for
liabilities under Environmental Laws under this Agreement is a material term of
this Agreement, and that (i) they have taken such matters into consideration in
determining the financial and other terms of this transaction, and (ii) they
understand that the Company is accepting all risks resulting or arising in any
way from any known or unknown liabilities in connection with such matters
arising in connection with or in any way relating to the Businesses (other than
the Retained Environmental Liabilities of either G-P or the CSK Parties) and
that CSK and WISCO are retaining all risks Relating to the Retained
Environmental Liabilities and indemnifying G-P and the Company for certain
Losses Relating to environmental matters under Section 7.3(a) and Section 5.9.
G-P and the CSK Parties acknowledge that none of them shall have any claim of
any nature against the other or the other's Affiliates in connection with any
matters Relating to known or unknown soil or groundwater contamination or any
other claims under any Environmental Laws, other than as set forth herein.
7.7 CHARACTERIZATION OF INDEMNIFICATION PAYMENTS. (a) To the extent the
Company is an Indemnified Party, any payments to the Company pursuant to this
Article VII shall not result in an adjustment to any party's capital account in
the Company or percentage of ownership interest of the Company; and (b) all
amounts paid to G-P, or CSK, as the case may be, under this Article VII shall
not be treated as adjustments to the amount contributed to the Company by G-P or
CSK, pursuant to Section 2.4(a) or (b) hereof.
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ARTICLE VIII
TAX COVENANTS
8.1 LIABILITY FOR TAXES.
(a) CSK shall be liable for, and shall indemnify, defend and hold the
Company harmless from and against, and shall be entitled to all refunds of, any
and all Taxes imposed on or with respect to the WISCO Contributed Subsidiaries,
or their respective assets, operations or activities for any Pre-Closing Period,
except to the extent that any such Taxes are reflected on the Final Working
Capital Statement or result from a carryback from any Post-Closing Period;
provided, however, that the amount of any indemnity obligation of CSK shall be
reduced by the amount of any Tax Benefits (for any period) realized or to be
realized by the Company, G-P or its Affiliates, or any Contributed Subsidiary as
a result of any adjustment to a Tax item for any Pre-Closing Period.
(b) The Company shall be liable for, and shall indemnify, defend and
hold CSK harmless from and against, any and all Taxes imposed on or with respect
to the Contributed Subsidiaries or their respective operations, ownership,
assets or activities for any Post-Closing Period.
(c) Tax items shall be apportioned between Pre-Closing Periods and
Post-Closing Periods based on a closing of the Books and Records of the relevant
entity or entities as of the Closing Date (provided that (i) depreciation,
amortization and depletion for any Straddle Period shall be apportioned on a
daily pro rata basis and (ii) any Taxes imposed on a periodic basis (including
Real Property Taxes, but not including Taxes based on income and receipts) for
any Straddle Period shall be apportioned on a daily pro rata basis).
Notwithstanding anything to the contrary in the preceding sentence, the parties
agree that for U.S. federal income Tax purposes, Tax items for any Straddle
Period shall be apportioned between Pre-Closing Periods and Post-Closing Periods
in accordance with U.S. Treasury Regulation Section 1.1502-76(b), which
regulation shall be reasonably interpreted by the parties in a manner intended
to achieve the method of apportionment described in the preceding sentence.
Neither CSK nor G-P will exercise any option or election (including any election
to ratably allocate a Tax year's items under Treasury Regulation Section
1.1502-76(b) (2) (ii)) to allocate Tax items in a manner inconsistent with this
section.
(d) G-P shall be liable for, and shall indemnify, defend and hold the
Company harmless from and against, and shall be entitled to all refunds of, any
and all Taxes imposed on or with respect to the G-P Contributed Subsidiaries, or
their respective assets, operations or activities for any Pre-Closing Period,
except to the extent that any such Taxes are reflected on the Final Working
Capital Statement or result from a carryback from any Post-Closing Period;
provided, however, that the amount of any indemnity obligation of G-P shall be
reduced by the amount of any Tax Benefits (for any period) realized or to be
realized by the Company, CSK or its Affiliates, or any Contributed Subsidiary as
a result of any adjustment to a Tax item for any Pre-Closing Period.
45
(e) The Company shall be liable for, and shall indemnify, defend and
hold G-P harmless from and against, any and all Taxes imposed on or with respect
to the Contributed Subsidiaries or their respective operations, ownership,
assets or activities for any Post-Closing Period.
(f) Tax items shall be apportioned between Pre-Closing Periods and
Post-Closing Periods based on a closing of the Books and Records of the relevant
entity or entities as of the Closing Date (provided that (i) depreciation,
amortization and depletion for any Straddle Period shall be apportioned on a
daily pro rata basis and (ii) any Taxes imposed on a periodic basis (including
Real Property Taxes, but not including Taxes based on income and receipts) for
any Straddle Period shall be apportioned on a daily pro rata basis).
Notwithstanding anything to the contrary in the preceding sentence, the parties
agree that for U.S. federal income Tax purposes, Tax items for any Straddle
Period shall be apportioned between Pre-Closing Periods and Post-Closing Periods
in accordance with U.S. Treasury Regulation Section 1.1502-76(b), which
regulation shall be reasonably interpreted by the parties in a manner intended
to achieve the method of apportionment described in the preceding sentence.
Neither G-P nor CSK will exercise any option or election (including any election
to ratably allocate a Tax year's items under Treasury Regulation Section
1.1502-76(b) (2) (ii)) to allocate Tax items in a manner inconsistent with this
section.
8.2 PREPARATION OF TAX RETURNS.
(a) CSK shall have the right and obligation to timely prepare and file,
and cause to be timely prepared and filed, when due (taking into account any
valid extension of the time for filing), any Tax Return that is required to
include the operations, ownership, assets or activities of WISCO, with respect
to the WISCO Contributed Assets, or of any WISCO Contributed Subsidiary for Tax
Periods ending on or before the Closing Date. CSK shall provide the Company with
copies of any such Tax Returns (to the extent that they relate to the WISCO
Contributed Assets or the Business and reasonably may have a material effect on
the Company's or its Affiliates' liability for Taxes) at least 30 days prior to
the due date (as extended) for filing such Tax Returns. In the event that the
Company reasonably determines that any such Tax Return should be modified, the
Company shall notify CSK of the Company's proposed modifications no later than
15 days from the date of receipt of such Tax Return. To the extent that CSK
disagrees with such modifications, the Company and CSK shall endeavor to agree
on the positions to be taken on such return. To the extent that they are unable
to do so, a CPA Firm (other than the regular auditor of CSK, G-P or the Company)
shall be retained to determine the position to be taken, with the fees and
expenses of such CPA Firm to be borne equally by WISCO and the Company. Any such
Tax Return which CSK is required to prepare under the terms hereof shall (to the
extent such Tax Return relates to the WISCO Contributed Assets or the Business
and reasonably may have a material effect on the Company or its Affiliates' Tax
liability) be prepared in accordance with past Tax accounting practices used
with respect to the Tax Returns in question (unless such past practices are no
longer permissible under the Applicable Tax Law), and to the extent any item is
not covered by such past practices (or such past practices are no longer
permissible under the Applicable Tax Law), in accordance with reasonable Tax
accounting practices selected by CSK. The Company shall have the right and
46
obligation to timely prepare and file, or cause to be timely prepared and filed,
when due (taking into account any valid extension of the time for filing), all
Tax Returns that are required to include the operations, ownership, assets or
activities Related to the Business after the Closing Date or of any WISCO
Contributed Subsidiary for any Tax Period ending after the Closing Date
(including, solely with respect to the WISCO Contributed Subsidiaries, Straddle
Period Tax Returns). The Company shall provide CSK with copies of any Straddle
Period Tax Returns required to be filed by the Company hereunder at least 30
days prior to the due date (as extended) for filing such Tax Returns. In the
event CSK reasonably determines that any Straddle Period Tax Return should be
modified, CSK shall notify the Company of CSK's proposed modifications no later
than fifteen days from the date of receipt of such Tax Return. To the extent
that the Company disagrees with such modifications, the Company and CSK shall
endeavor to agree on the positions to be taken on such return. To the extent
that they are unable to do so, a CPA Firm (other than the regular auditor of
CSK, the Company or G-P) shall be retained to determine the position to be
taken, with the fees and expenses of such accounting firm to be borne equally by
CSK and the Company. Any Straddle Period Tax Return which the Company is
required to prepare under the terms hereof shall be prepared in accordance with
past Tax accounting practices used with respect to the Tax Returns in question
(unless such past practices are no longer permissible under the Applicable Tax
Law), and to the extent any item is not covered by such past practices (or such
past practices are no longer permissible under the Applicable Tax Law), in
accordance with reasonable Tax accounting practices selected by the Company and
CSK.
(b) CSK and the Company shall prepare and provide to each other such
Tax information as is reasonably requested by the other party with respect to
the operations, ownership, assets or activities of the WISCO Business, with
respect to the WISCO Contributed Assets, or of any WISCO Contributed Subsidiary
to the extent such information is relevant to any Tax Return which CSK or the
Company has the right and obligation hereunder to file.
(c) To the extent necessary to comply with the provisions of Section
8.1, as between CSK and the Company, the party not preparing a Tax Return shall
pay the party preparing such Tax Return an amount equal to the non-preparing
party's share of the Taxes shown on such Tax Return, if any, determined in
accordance with the principles of Section 8.1, not later than 2 Business Days
before the filing of such Tax Return.
47
8.3 AMENDED TAX RETURNS.
(a) Any amended Tax Return or claim for Tax refund for any WISCO
Contributed Subsidiary for any Pre-Closing Period other than a Straddle Period
shall be filed, or caused to be filed, only by CSK, who shall not be obligated
to make (or cause to be made) such filing. CSK shall not, without the prior
written consent of the Company (which consent shall not be unreasonably withheld
or delayed), make or cause to be made, any such filing, to the extent such
filing, if accepted, reasonably might change the Tax liability of the Company or
any Affiliate of the Company for any Post-Closing Period. At the Company's
request, CSK shall file an amended Tax Return with respect to Taxes accrued on
the Final Working Capital Statement, except to the extent CSK reasonably
objects.
(b) Any amended Tax Return or claim for Tax refund for any Straddle
Period shall be filed by the party responsible for filing the original Tax
Return hereunder if either the Company or CSK so requests, except that such
filing shall not be done without the consent (which shall not be unreasonably
withheld or delayed) of the Company (if the request is made by CSK) or of CSK
(if the request is made by the Company).
(c) Any amended Tax Return or claim for Tax refund for any Post-Closing
Period other than a Straddle Period shall be filed, or caused to be filed, only
by the Company, who shall not be obligated to make (or cause to be made) such
filing. The Company shall not, without the prior written consent of CSK file, or
cause to be filed, any such filing to the extent that such filing, if accepted,
reasonably might change the Tax liability of CSK or any Affiliates of CSK for
any Pre-Closing Period or otherwise under this Agreement.
8.4 CARRY BACKS AND CARRY FORWARDS.
(a) Unless CSK, in its sole and absolute discretion, consents, the
Company shall not and shall not permit any WISCO Contributed Subsidiary to carry
back any Losses or credits accruing after the Closing Date to any Tax Return of
CSK, a WISCO Contributed Subsidiary, or any Affiliate of either CSK or a WISCO
Contributed Subsidiary for any Pre-Closing Period. To the extent permitted by
Applicable Tax Law, the Company shall and shall cause each WISCO Contributed
Subsidiary to make any elections and take all such actions necessary to avoid
any such carry back. To the extent that, under Applicable Tax Law, and with
CSK's consent, a WISCO Contributed Subsidiary carries back any Losses or credits
accruing after the Closing Date to any Tax Return of CSK or its Affiliates, CSK
shall pay to the Company the excess of the amount of (i) any Tax Benefit
actually realized by CSK and its Affiliates as a result of such carry back
promptly after such Tax Benefits are realized, over (ii) the amount of any Taxes
incurred by CSK and its Affiliates as a result of such carryback (including
without limitation, any Taxes incurred or to be incurred as a result of any
refund of Taxes or interest thereon). The amount of any Tax Benefit shall be
determined (i) by comparing the liability of CSK and its Affiliates for Taxes,
determined without the carry back, to the liability of CSK and its Affiliates
for Taxes, taking into account the carry back and (ii) by treating the carry
back as the last item claimed by CSK and its Affiliates in any given Tax Period.
48
(b) CSK shall not be liable hereunder for any decrease to any net
operating loss carry forward or any other Tax attributes available to a WISCO
Contributed Subsidiary resulting from adjustments by any Tax Authority to any
item of income, deduction, credit, or exclusion on Tax Returns for which CSK is
responsible.
8.5 ADDITIONAL TAX MATTERS.
(a) As of the Closing Date, CSK shall cause all Tax allocation, Tax
sharing, Tax reimbursement and similar arrangements or agreements applicable to
the WISCO Business between CSK and any Affiliates, on the one hand, and any of
the WISCO Contributed Subsidiaries, on the other, to be extinguished and
terminated with respect to such WISCO Contributed Subsidiaries and any rights or
obligations existing under any such agreement or arrangement to be no longer
enforceable, except to the extent reflected on the Final Working Capital
Statement.
(b) After the Closing Date, the Company will cause appropriate
Employees of the WISCO Contributed Subsidiaries to prepare usual and customary
Tax Return packages with respect to the Tax Period beginning January 1, 1999 and
ending as of the Closing Date. The Company will use its commercially reasonable
efforts to cause such Tax Return packages to be delivered to CSK on or before
March 1, 2000, but in any event not later that May 1, 2000.
(c) CSK and G-P agree that the Company will acquire hereunder
substantially all of the property used in the WISCO Business and that in
connection therewith the Company will employ individuals who immediately before
the Closing Date were employed in such trade or business by WISCO or the WISCO
Contributed Subsidiaries. Accordingly, pursuant to the Alternate Procedure
permitted by Rev. Proc. 96-60, 1996-2 C.B. 399, provided that the applicable CSK
Party makes available to the Company all necessary payroll records for the
calendar year that includes the Closing Date, the Company will furnish a Form
W-2 to each Employee employed by the Company who had been employed by the WISCO
Business, disclosing all wages and other compensation paid for such calendar
year, and Taxes withheld therefrom, and WISCO and the applicable CSK Party will
be relieved of the responsibility to do so.
(d) If the Company or any WISCO Contributed Subsidiary receives a
refund with respect to Taxes of any WISCO Contributed Subsidiary attributable to
a Pre-Closing Period (other than a Tax refund accrued as an asset on the Final
Working Capital Statement) or a refund of Taxes accrued as a liability on the
Final Working Capital Statement, the Company shall pay, within the thirty (30)
days following the receipt of such Tax refund, the amount of such Tax refund
(reduced by the amount of any Taxes it incurs or will incur as a result of its
accrual or receipt of such refund or any interest thereon), to CSK. If CSK
receives a Tax refund with respect to Taxes of any WISCO Contributed Subsidiary
attributable to any Post-Closing Period or any Tax refund accrued as an asset on
the Final Working Capital Statement, CSK will pay, within thirty (30) days
following the receipt of such refund, the amount of such Tax refund (reduced by
the amount of any Taxes it incurs or will incur as a result of its accrual or
receipt of such refund or any interest thereon), to the Company. In the case of
any refund with respect to
49
Taxes of a WISCO Contributed Subsidiary attributable to a Straddle Period, the
Tax refund shall be apportioned between Pre-Closing Periods and Post-Closing
Periods in accordance with the principles of Section 8.1(c) hereof; provided
that to the extent any Tax refund for a Straddle Period was accrued on the Final
Working Capital Statement, such refund shall be for the account of the Company.
8.6 TAX CONTROVERSIES; COOPERATION.
(a) CSK shall control any audit, dispute, administrative, judicial or
other proceeding Related to Tax Returns filed for Pre-Closing Periods, and the
Company shall control any audit, dispute, administrative, judicial or other
proceeding Related to Tax Returns filed for Post-Closing Periods and Straddle
Periods of any WISCO Contributed Subsidiary. Subject to the preceding sentence,
in the event an adverse determination may result in each party having
responsibility for any amount of Taxes, each party shall be entitled to fully
participate in that portion of the proceedings Relating to the Taxes with
respect to which it may incur liability hereunder. For purposes of this Section
8.6(a), the term "participation" shall include (i) participation in conferences,
meetings or proceedings with any Tax Authority, the subject matter of which
includes an item for which such party may have liability hereunder, (ii)
participation in appearances before any court or tribunal, the subject matter of
which includes an item for which a party may have liability hereunder, and (iii)
with respect to the matters described in the preceding clauses (i) and (ii),
participation in the submission and determination of the content of the
documentation, protests, memorandum of fact and law, briefs, and the conduct of
oral arguments and presentations.
(b) The Company and CSK shall not agree to settle any Tax liability or
compromise any claim with respect to Taxes, which settlement or compromise may
affect the liability for Taxes (or right to a Tax Benefit) hereunder of the
other party, without such other party's consent (which consent shall not be
unreasonably withheld or delayed).
(c) G-P and CSK shall bear their own expenses incurred in connection
with audits and other administrative judicial proceedings Relating to Taxes for
which such party or its Affiliates are liable.
(d) The CSK Parties, G-P, the Company, and the Contributed Subsidiaries
shall cooperate (and cause their Affiliates to cooperate) with each other and
with each other's agents, including accounting firms and legal counsel, in
connection with Tax matters Relating to the Contributed Assets or the
Contributed Subsidiaries, including (i) preparation and filing of Tax Returns,
(ii) determining the liability and amount of any Taxes due or the right to and
amount of any refund of Taxes, (iii) examinations of Tax Returns, and (iv) any
administrative or judicial proceeding in respect of Taxes assessed or proposed
to be assessed. Such cooperation shall include (without limitation) each party
making all information and documents in its possession relating to the
Contributed Subsidiaries available to the other party. The parties shall retain
all Tax Returns, schedules and work papers, and all material records and other
documents Relating thereto, until one year after the expiration of the
applicable statute of limitations (including, to the extent notified by any
party, any extension thereof) of the Tax Period to which such Tax
50
Returns and other documents and information relate. Each of the parties shall
also make available to the other party, as reasonably requested and available,
personnel (including officers, directors, Employees and agents) responsible for
preparing, maintaining, and interpreting information and documents relevant to
Taxes, and personnel reasonably required as witnesses or for purposes of
providing information or documents in connection with any administrative or
judicial proceedings Relating to Taxes.
ARTICLE IX
TERMINATION
[Intentionally Deleted]
ARTICLE X
MISCELLANEOUS
10.1 NOTICES. All notices and other communications required or
permitted by this Agreement shall be in writing and shall be delivered by
personal delivery, by nationally recognized overnight carrier service, by
facsimile, by first class mail or by certified or registered mail, return
receipt requested, addressed to the party for whom it is intended at its address
below, or such other address as may be designated in writing hereafter by such
Person. Notices shall be deemed given one day after sent, if sent by overnight
courier; when delivered and receipted for, if hand delivered; when received, if
sent by facsimile or other electronic means or by first class mail; or when
receipted for (or upon the date of attempted delivery where delivery is refused
or unclaimed), if sent by certified or registered mail, return receipt
requested.
To G-P: GEORGIA-PACIFIC CORPORATION
133 Peachtree Street, N.E.
Atlanta, GA 30303
Attn: General Counsel
Facsimile: (404) 230-7543
To CSK or WISCO: CHESAPEAKE CORPORATION
1021 East Cary Street
Richmond, VA 23218-2350
Attn: General Counsel
Facsimile: (804) 697-1192
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To the Company: GEORGIA-PACIFIC TISSUE, LLC
55 Park Place
Atlanta, GA 30303
Attn: President
Facsimile: (404) 230-1763
With a copy to: GEORGIA-PACIFIC CORPORATION
133 Peachtree Street, N.E.
Atlanta, GA 30303
Attn: General Counsel
Facsimile: (404) 230-7543
10.2 AMENDMENT; WAIVER. Any provision of this Agreement may be amended
or waived if, and only if, such amendment or waiver is in writing and signed, in
the case of an amendment, by G-P, CSK and the Company, or in the case of a
waiver, by the party against whom the waiver is to be effective. No failure or
delay by any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by Law.
10.3 ASSIGNMENT. No party to this Agreement may assign any of its
rights or obligations under this Agreement without the prior written consent of
the other party hereto (which consent shall not be unreasonably withheld),
except that (i) G-P may collaterally assign its rights and obligations under
this Agreement to a lender as security for the Company Debt and (ii) following
Closing, G-P and CSK may assign their rights, but not their obligations, to any
Person to whom G-P or CSK may transfer their Units in the Company if permitted
under the Operating Agreement.
10.4 ENTIRE AGREEMENT. This Agreement (including the Preliminary
Statements, all Schedules and Exhibits hereto and the Ancillary Agreements)
contains the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings,
oral or written, with respect to such matters, except for the obligations of the
parties under the Confidentiality Agreement.
10.5 FULFILLMENT OF OBLIGATIONS. Any obligation of any party to any
other party under this Agreement or any of the Ancillary Agreements, which
obligation is performed, satisfied or fulfilled by an Affiliate of such party,
shall be deemed to have been performed, satisfied or fulfilled by such party.
10.6 PARTIES IN INTEREST. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and
permitted assigns. Nothing in this Agreement, express or implied, is intended to
confer upon any Person other than G-P, the CSK Parties, the Company or their
respective successors or permitted assigns, any rights or remedies under or by
reason of this Agreement.
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10.7 PUBLIC DISCLOSURE. Notwithstanding anything herein to the
contrary, except as may be required to comply with the requirements of any
applicable Laws and the rules and regulations of any stock exchange upon which
the securities of one of the parties (or its Affiliate) is listed, no press
release or similar public announcement or communication shall, prior to the
Closing, be made or caused to be made concerning the execution or performance of
this Agreement unless specifically approved in advance by all parties hereto
which approval shall not be unreasonably withheld, conditioned or delayed.
10.8 EXPENSES. Except as otherwise expressly provided in this
Agreement, whether or not the transactions contemplated by this Agreement are
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be borne by the party incurring
such expenses.
10.9 SCHEDULES. The disclosure of any matter in any Disclosure Schedule
shall not be deemed to constitute an admission by G-P or the CSK Parties or to
otherwise imply that any such matter is material for the purposes of this
Agreement.
10.10 BULK TRANSFER LAWS. The parties acknowledge that none of them has
taken, and none of them intends to take, any action required to comply with any
applicable bulk sale or bulk transfer laws or similar laws; provided that the
CSK parties on the one hand and G-P on the other shall indemnify the other party
and the Company for any Losses arising from such non-compliance.
10.11 GOVERNING LAW; SUBMISSION TO JURISDICTION; SELECTION OF FORUM.
This Agreement shall be governed by, and construed in accordance with, the laws
of the State of Delaware. Each party hereto agrees that it shall bring any
action or proceeding in respect of any claim arising out of or Related to this
Agreement or the transactions contained in or contemplated by this Agreement,
whether in tort or contract or at law or in equity, exclusively in the United
States District Court or the state court sitting in New Castle County, Delaware
(the "Chosen Court") and (i) irrevocably submits to the exclusive jurisdiction
of the Chosen Court, (ii) waives any objection to laying venue in any such
action or proceeding in the Chosen Court, (iii) waives any objection that the
Chosen Courts are an inconvenient forum or do not have jurisdiction over any
party hereto, and (iv) agrees that service of process upon such party in any
such action or proceeding shall be effective if notice is given in accordance
with Section 10.1 of this Agreement.
10.12 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which shall
constitute one and the same Agreement.
10.13 HEADINGS. The heading references herein and the table of contents
hereto are for convenience purposes only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
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10.14 SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
10.15 INJUNCTIVE RELIEF. The parties hereto acknowledge and agree that
in the event of breach or non-compliance with any of the provisions of this
Agreement monetary damages shall not constitute a sufficient remedy.
Consequently, in the event of such a breach, G-P, the Company, WISCO or CSK, as
the aggrieved party shall be entitled to injunctive or other equitable relief,
including specific performance, in order to enforce or prevent any violation of
such provisions, in addition to any other rights or remedies to which it may be
entitled at law or otherwise.
ARTICLE XI
DEFINITIONS AND TERMS
11.1 SPECIFIC DEFINITIONS. As used in this Agreement, the following
terms shall have the meanings set forth or as referenced below:
11.1.1 "AFFILIATES" shall mean, with respect to any Person, any Persons
directly or indirectly controlling, controlled by or under common control with,
such other Person as of the date on which, or at any time during the period for
which, the determination of affiliation is being made. For the purpose of this
definition, "control" means (i) the ownership or control of 50% or more of the
equity interest in any Person, or (ii) the ability to direct or cause the
direction of the management or affairs of a Person, whether through the direct
or indirect ownership of voting interests, by contract or otherwise.
11.1.2 "AGREEMENT" shall mean this Agreement (including the Preliminary
Statements set forth above and all Schedules and Exhibits), as the same may be
amended or supplemented from time to time in accordance with the terms hereof.
11.1.3 "ANCILLARY AGREEMENTS" shall mean the Human Resources Agreement,
the Operating Agreement, the Parent Roll Supply Agreement, the Management
Support Agreement, the Operational Support Agreement, the Transition Services
Agreement, the G-P Guarantee and the WISCO Debt Indemnity.
11.1.4 "APPLICABLE TAX LAW" shall mean any Law of any nation, state,
region, province, locality, municipality or other jurisdiction Relating to
Taxes, including regulations and
54
other official pronouncements of any governmental entity or political
subdivision of such jurisdiction charged with interpreting such Laws.
11.1.5 "ASSUMED LIABILITIES" shall mean all debts, liabilities,
commitments, or obligations whatsoever, other than Retained Liabilities, Related
to either WISCO's or G-P's Business or Related to either WISCO's or G-P's
Contributed Assets, whether arising before or after the Closing and whether
known or unknown, fixed or contingent, including the following:
(i) all debts, liabilities, obligations or commitments Related to or
arising under the Contracts to the extent such Contracts are assigned to the
Company, including the Real Estate Leases;
(ii) all debts, liabilities, obligations or commitments Related to the
Real Property;
(iii) the current liabilities;
(iv) except for the Retained Environmental Liabilities, all liabilities
under Environmental Laws Related to the ownership, operation or conduct of the
Business or the Real Property; and
(v) all liabilities with respect to all actions, suits, proceedings,
disputes, claims or investigations Related to the Business or that otherwise are
Related to the Contributed Assets, at law, in equity or otherwise.
11.1.6 "BOOKS AND RECORDS" shall mean originals or true and correct
copies of all lists, files, data and databases and documents Relating to
customers, suppliers and products of the Business, the Contributed Assets, or
the Assumed Liabilities, all personnel records or files regarding any Employee
of the WISCO Business or the G-P Business as applicable, all environmental audit
reports (and similar documentation) and assessments with respect to the
Business, and all general ledgers and underlying books of original entry and
other financial records of the Business, except to the extent included in the
Retained Assets.
11.1.7 "BUSINESS" shall mean with respect to either G-P on the one
hand, or the CSK Parties on the other hand, its Commercial Tissue Business.
11.1.8 "BUSINESS DAY" shall mean any day other than a Saturday, a
Sunday or a day on which banks in New York City are authorized or obligated by
law or executive order to close.
11.1.9 "CHOSEN COURT" shall have the meaning set forth in Section
10.11.
11.1.10 "CLOSING" shall mean the closing of the transactions
contemplated by this Agreement.
11.1.11 "CLOSING DATE" shall have the meaning set forth in Section 2.4.
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11.1.12 "CLOSING WORKING CAPITAL" shall have the meaning set forth in
Section 2.5(a).
11.1.13 "CLOSING WORKING CAPITAL STATEMENT" shall have the meaning set
forth in Section 2.5(a).
11.1.14 "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
11.1.15 "COMMERCIAL TISSUE BUSINESS" shall have the meaning set forth
in the Preliminary Statements to this Agreement.
11.1.16 "COMPANY" shall have the meaning set forth in the preamble to
this Agreement.
11.1.17 "COMPANY DEBT" shall have the meaning set forth in Section
2.8(b).
11.1.18 "COMPUTER SYSTEM" shall mean any and all computers (including
without limitation personal computers, mid-range computers and mainframes),
process and distributed control systems and software applications and operating
systems and any other hardware, equipment, and facilities and infrastructure
systems containing an embedded computer chip.
11.1.19 "CONFIDENTIALITY AGREEMENT" shall mean the Confidentiality
Agreement between CSK and G-P dated as of November 4, 1997, as amended by letter
dated June 11, 1999.
11.1.20 "CONSENT" shall mean any consent, approval, authorization,
waiver, permit, grant, franchise, concession, agreement, license, exemption or
order of, registration, certificate, declaration or filing with, or report or
notice to any Person, including any Governmental Authority, including those
identified on Schedules 3.3 and 4.3.
11.1.21 "CONTRACTS" shall mean all agreements, contracts, leases,
purchase orders, trade billback, refund and other arrangements, incentive
agreements, commitments, collective bargaining agreements, and licenses that are
related to the G-P Business or the WISCO Business or their respective
Contributed Assets or to which such Contributed Assets are subject, except to
the extent included in such party's Retained Assets.
11.1.22 "CONTRIBUTED ASSETS" shall mean all of the assets of a party
which Relate to the G-P Business or the WISCO Business, whether tangible or
intangible, real or personal, as they exist on the date hereof, with such
changes, deletions or additions thereto as may occur from the date hereof to the
Closing Date in the ordinary course of business or are otherwise permitted by
this Agreement (except, in each case, for the Retained Assets), including the
following:
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(i) the Real Property;
(ii) the Fixtures and Equipment;
(iii) the current assets;
(iv) in the case of WISCO, the WISCO Intellectual Property;
(v) the Books and Records;
(vi) the Contracts;
(vii) the stock or other ownership interests of the Contributed
Subsidiaries;
(viii) all Governmental Authorizations which are transferable without
obtaining any Consent; and
(ix) with respect to the WISCO Business, all computer hardware and
peripherals, audio-visual equipment, RF and barcode scanning and
telecommunications equipment, whether owned or leased by any of the CSK Parties,
and all software (including without limitation all operating system and
application software), whether owned or licensed by any of the CSK Parties.
11.1.23 "CPA FIRM" shall have the meaning set forth in Section 2.5(b).
11.1.24A "CSK" shall have the meaning set forth in the preamble to this
Agreement.
11.1.24B "CSK MARKS" shall mean any mark that is owned by CSK and that
is described in the license agreement between CSK and WISCO that is among the
Contracts assigned by WISCO to the Company at Closing pursuant to Section
2.4(a)(iv) hereof.
11.1.24C "CSK PARTIES" or "CSK PARTY" shall mean, as the context
requires, CSK, WISCO and the WISCO Contributed Subsidiaries, or as the context
requires, any one of the foregoing.
11.1.24D "CSK PLAN" shall mean those Employee Plans (including all
assets and liabilities Related to such Employee Plans) pursuant to which any
Employee or Retired Employee of the WISCO Business or the WISCO Contributed
Subsidiaries is entitled to benefits.
11.1.25 "DEDUCTIBLE" shall have the meaning set forth in Section
7.2(b).
11.1.26 "DETERMINATION DATE" as used in Section 2.5(a) shall mean the
Effective Time.
11.1.27 "DISCLOSURE SCHEDULES" shall mean the Disclosure Schedules
dated the date hereof delivered by G-P or the CSK Parties in connection with
this Agreement.
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11.1.28 "EFFECTIVE TIME" shall have the meaning set forth in Section
2.4.
11.1.29 "EMPLOYEE" shall mean, with respect to the G-P Business or the
WISCO Business, an individual who is employed by such party, whether salaried or
hourly and whether on lay-off or medical, family or other authorized leave of
absence; provided that, with respect to the G-P Business, Employee shall not
include any Employee located at G-P's Palatka, Florida, Crossett, Arkansas, Port
Hudson, Louisiana, Plattsburgh, New York or Bellingham, Washington facilities.
11.1.29A "EMPLOYEE PLANS" shall mean as to any party all "employee
welfare benefit plans" and "employee pension benefit plans" as respectively
defined in Sections 3(1) and 3(2) of ERISA, all employee benefit and pension
plans, all other bonus, deferred compensation, retirement, savings, excess
benefit, stock option or purchase, retention, termination, severance and
incentive plans, contracts, programs, funds, arrangements, policies, or
practices and all other plans, contracts, programs, funds, arrangements,
policies, or practices (whether voluntary or compulsory) that provide or may
provide money (other than as current salary or wages), services, property or
other benefits, whether written or oral and whether funded or unfunded,
including (without limitation) any that have been frozen or terminated since
April 30, 1999, and any trust, escrow or similar agreement related thereto,
whether written or oral and whether funded or unfunded, which are established
and maintained by any of the parties hereto with respect to any of their
Employees, Retired Employees, independent contractors, directors, officers,
shareholders, or their dependents or which are established or maintained by any
party (or any Person that together with any party is or would have been as of
the date of the Agreement treated as a single employer under Section 414 of the
Code) (the "Related Persons") or with respect to which any party or any
Affiliate thereof have made or are required to make payments, transfers or
contributions.
11.1.30 "ENCUMBRANCES" shall mean liens, charges, encumbrances,
security interests, options or any other restrictions or third-party rights,
including any required third party consents.
11.1.31A "ENVIRONMENT" means soil, land, water and air in their natural
state, including, without limitation, land surface or subsurface strata, surface
water, ground water and ambient air.
11.1.31B "ENVIRONMENTAL AUTHORITIES" means all federal, state or local
governmental bodies or regulatory agencies, foreign or domestic, charged with
enforcing any of the Environmental Laws.
11.1.31C "ENVIRONMENTAL LAW" shall mean any applicable federal, state,
local, common or foreign law, statute, ordinance, rule, regulation, code, order,
judgment, decree or injunction Relating to (i) the protection of the Environment
(including air, water vapor, surface water, groundwater, drinking water supply,
surface or subsurface land), (ii) the exposure to, or the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling,
58
protection, release, spill or discharge or disposal of Hazardous Substances, or
(iii) workplace safety or health.
11.1.31D "ENVIRONMENTAL PERMITS" means all permits, licenses,
certificates and authorizations of, and registrations with, any of the
Environmental Authorities pursuant to any of the Environmental Laws, issued or
granted to any of the CSK Parties or G-P, as the context requires for the
purpose of conducting the WISCO Business or the G-P Business as presently
conducted.
11.1.32 "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and regulations promulgated thereunder.
11.1.33 "FINAL WORKING CAPITAL STATEMENT" shall have the meaning set
forth in Section 2.5(b).
11.1.34 "FINANCIAL STATEMENTS" shall mean the WISCO Financial
Statements, the G-P Financial Statements or both, as the context may require, as
defined in Sections 3.6 and 4.6 respectively.
11.1.35 "FIXTURES AND EQUIPMENT" shall mean all furniture, fixtures,
furnishings, machinery, vehicles, equipment (including computer hardware,
computer terminals, network servers, and research and development equipment) and
other tangible personal property Related to either the G-P Business or the WISCO
Business.
11.1.36 "FORMER FACILITY" shall mean a facility or property previously
owned or operated by a party or its predecessors in the conduct of the G-P
Business or the WISCO Business that is not located on the Real Property or the
Retained Real Property.
11.1.37 "FOX RIVER LIABILITY" shall have the meaning set forth in
Section 5.9.
11.1.38 "GAAP" shall mean United States generally accepted accounting
principles, consistently applied.
11.1.39A "G-P" shall have the meaning set forth in the preamble to this
Agreement.
11.1.39B "G-P APRIL FINANCIAL STATEMENTS" shall have the meaning set
forth in Section 4.6(a).
11.1.39C "G-P ASSUMED LIABILITIES" shall mean the Assumed Liabilities
transferred to the Company by G-P.
11.1.39D "G-P BUSINESS" shall mean all of the business of G-P conducted
at its Gary, Indiana, Battleboro, Vermont, and LaGrange, Georgia facilities,
together with certain assets and liabilities associated with its Crossett,
Arkansas, and Palatka, Florida facilities, as more fully described in Schedule
2.1(c) hereof.
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11.1.39E "G-P CAP" shall have the meaning set forth in Section 7.2(b).
11.1.39F "G-P CONTRIBUTED ASSETS" shall mean the Contributed Assets
transferred to the Company by G-P as set forth on Schedule 2.1(c).
11.1.39G "G-P FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 4.6(a).
11.1.39H "G-P GUARANTEE" shall have the meaning set forth in Section
2.8(b).
11.1.39I "G-P INDEMNIFIED PARTIES" shall have the meaning set forth in
Section 7.3(a).
11.1.39J "G-P INTELLECTUAL PROPERTY" shall mean the Intellectual
Property of G-P.
11.1.39K "G-P OWNED REAL PROPERTY" shall mean the Owned Real Property
of the G-P Business.
11.1.39L "G-P PLAN" shall mean those Employee Plans (including all
assets and liabilities Related to such Employee Plans) of G-P or any Affiliate
of G-P pursuant to which any Employee or Retired Employee of the G-P Business is
entitled to benefits.
11.1.39M "G-P REAL PROPERTY" shall mean the Real Property of the G-P
Business.
11.1.39N "G-P REAL PROPERTY LEASES" shall mean the leases Relating to
the Leased Real Property of the G-P Business.
11.1.39O "G-P RETAINED ASSETS" shall mean the Retained Assets of the
G-P Business as described in Section 11.1.74 hereof.
11.1.39P "G-P RETAINED LIABILITIES" shall mean the Retained Liabilities
of the G-P Business.
11.1.40 "GOVERNMENTAL AUTHORITY" shall mean any nation or government,
any state, province or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including any government authority,
agency, department, board, commission or instrumentality of the United States,
any State of the United States or any political subdivision thereof.
11.1.41 "GOVERNMENTAL AUTHORIZATIONS" shall mean all licenses, permits,
franchises, certificates of occupancy, other certificates and other
authorizations and approvals required to carry on a Business as currently
conducted under the applicable laws, ordinances or regulations of any
Governmental Authority.
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11.1.42 "HAZARDOUS SUBSTANCES" shall mean (i) petroleum, petroleum
byproducts and any petroleum fractions; (ii) any substance or any material
containing a substance, defined as hazardous or toxic or words of similar
meaning or effect under the following United States federal statutes and their
state counterparts, as well as such statutes' implementing regulations: the
Hazardous Materials Transportation Act, the Resource Conservation and Recovery
Act, the Comprehensive Environmental Response, Compensation and Liability Act,
the Clean Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the
Toxic Substances Control Act, the Federal Insecticide, Fungicide, and
Rodenticide Act, and the Clean Air Act; and (iii) any other materials as to
which liability or standards of conduct are imposed pursuant to any
Environmental Law.
11.1.43 "HSR ACT" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
11.1.44 "HUMAN RESOURCES AGREEMENT" shall mean an agreement to be
entered into on the Closing Date by and among G-P, WISCO, CSK and the Company
substantially in the form of Exhibit 11.1.44 attached hereto.
11.1.45 "INDEMNIFICATION CLAIM NOTICE" shall have the meaning set forth
in Section 7.5(a).
11.1.46 "INDEMNIFIED PARTIES" shall have the meaning set forth in
Section 7.5(a).
11.1.47 "INDEMNIFYING PARTY" shall have the meaning set forth in
Section 7.5(a).
11.1.48 "INTELLECTUAL PROPERTY" shall mean (except to the extent
included in the Retained Assets) the following intellectual property (and the
rights associated therewith) Related to the G-P Business or the WISCO Business
or their Contributed Assets:
(a) trademarks, service marks, brand names, certification marks, trade
dress, assumed names, Internet domain names, trade names and other indications
of origin, the goodwill associated with the foregoing and registrations in any
jurisdiction of, and applications in any jurisdiction to register, the foregoing
(including any extension, modification or renewal of any such registration or
application);
(b) patents, applications for patents (including provisional,
divisional, continuation, and continuation-in-part applications), and any
renewals, extensions or reissues thereof, in any jurisdiction;
(c) invention disclosures and innovations (whether or not patentable
and whether or not reduced to practice);
61
(d) non-public information, trade secrets confidential information,
know how, proprietary technology and rights in any jurisdiction to limit the use
or disclosure thereof by any Person;
(e) copyrighted works and registrations or applications for
registration of copyrights in any jurisdiction, and any renewals or extensions
thereof;
(f) any similar intellectual property or proprietary rights; and
(g) any claims or causes of action arising out of or Related to any
infringement or misappropriation of any of the foregoing occurring before or
after the Closing.
11.1.49 "INVENTORY" shall mean all inventory held for resale in
connection with the G-P Business or the WISCO Business, all raw materials, work
in process, finished products, office supplies, storeroom inventory, spare parts
and equipment, wrapping, supply and packaging items, of such Business.
11.1.50 "IRS" shall mean the Internal Revenue Service.
11.1.51 "KNOWLEDGE" or any similar phrase means the actual knowledge
without investigation of those management employees of G-P, CSK and WISCO
identified on Exhibit 11.1.51.
11.1.52 "LAWS" shall mean any federal, state, foreign or local law,
statute, ordinance, rule, code, regulation, order, judgment or decree of any
Governmental Authority.
11.1.53 "LEASED REAL PROPERTY" shall mean all land (including, to the
extent included in any such lease, any timberlands and tree farms associated
with the Contributed Assets), buildings, fixtures and other Real Property leased
on the date hereof by a party or one of the Contributed Subsidiaries as lessee
pursuant to the Real Estate Leases used by the G-P Business or the WISCO
Business.
11.1.54 "LOSSES" shall have the meaning set forth in Section 7.2.
11.1.55 "MANAGEMENT SUPPORT AGREEMENT" shall mean the agreement
substantially in the form set forth as Exhibit 11.1.55 attached hereto between
G-P and the Company pursuant to which G-P shall supply management services to
the Company.
11.1.56 "MATERIAL ADVERSE EFFECT" shall mean any and all events,
changes or effects that have occurred which have a material adverse effect upon
the value of the Contributed Assets or the G-P Business or the WISCO Business,
as the case may be, taken as a whole, involving an aggregate amount equal to or
exceeding $350,000.
11.1.57 "NOTICE PERIOD" shall have the meaning set forth in Section
7.5(b).
11.1.58 "OBJECTION" shall have the meaning set forth in Section 2.5(b).
62
11.1.59 "OPERATING AGREEMENT" shall mean that certain Operating
Agreement among G-P, CSK and the Company to be dated as of the Closing
substantially in the form of Exhibit 2.1E, that shall govern the rights and
obligations of the Members of the Company.
11.1.60 "OPERATIONAL SUPPORT AGREEMENT" shall mean the agreement
substantially in the form set forth as Exhibit 11.1.60 attached hereto by and
among G-P, WISCO, CSK and the Company.
11.1.61 "OWNED REAL PROPERTY" shall mean all land and all buildings,
fixtures, and other improvements owned by either the WISCO Business or the G-P
Business.
11.1.62 "PARENT ROLL SUPPLY AGREEMENT" shall mean the agreement
substantially in the form of Exhibit 11.1.62 attached hereto pursuant to which
G-P shall supply paper products to the Company.
11.1.63 "PERMITTED ENCUMBRANCES" shall mean, with respect to any
party's Encumbrances, (i) those expressly disclosed in the G-P or WISCO
Financial Statements; (ii) liens for Taxes (which are not related to income,
sales or withholding Taxes), assessments and other governmental charges not yet
due and payable or due but not delinquent as of the Closing Date or being
contested in good faith by appropriate proceedings and for which adequate
reserves have been established on the Final Working Capital Statement; (iii)
mechanic's, workmen's, repairmen's, warehousemen's, carriers, or other like
liens arising or incurred in the ordinary course of business for amounts which
are not delinquent and which will not individually or in the aggregate have a
Material Adverse Effect, original purchase price conditional sales contracts and
equipment leases with third parties entered into in the ordinary course of
business; (iv) with respect to either the G-P Real Property or the WISCO Real
Property, (A) easements, quasi-easements, licenses, covenants, rights-of-way and
other similar restrictions, including any other agreements, conditions,
restrictions, or other matters which would be shown by a current title report or
other similar report or listing, (B) any conditions that may be shown by a
current survey, title report or physical inspection, and (C) zoning, building
and other similar restrictions; and (v) Encumbrances not described in the
foregoing clauses (i) through (iv) and which, individually or in the aggregate,
would not have a Material Adverse Effect (all items included in the foregoing
clauses (i) through (v), including any matter set forth in Schedules 3.16(b) or
4.16(b), are referred to collectively herein as the "Permitted Encumbrances").
11.1.64 "PERSON" shall mean an individual, a corporation, a
partnership, an association, a trust or other entity or organization.
11.1.65 "POST-CLOSING PERIOD" shall mean, with respect to any
Contributed Subsidiary, any Tax Period commencing after the Closing Date and the
portion of any Straddle Period commencing after the Closing Date.
63
11.1.66 "PRE-CLOSING PERIOD" shall-mean, with respect to any
Contributed Subsidiary, any Tax Period ending on or before the Closing Date and
the portion of any Straddle Period ending on the Closing Date.
11.1.67 "PROCEEDING" shall have the meaning set forth in Section
7.5(a).
11.1.68 "PROJECT PLAN" shall mean a plan to remediate and/or replace
Computer Systems that are not Year 2000 Ready.
11.1.69 "REAL ESTATE LEASES" shall mean those agreements pursuant to
which a party or one or more of its Contributed Subsidiaries leases, subleases,
licenses, or otherwise uses or licenses, Real Property, including land (and
everything growing upon the land, to the extent included in such Real Estate
Lease), buildings, structures and improvements thereon or appurtenances thereto,
which are identified on Schedules 3.15 and 4.15.
11.1.70 "REAL PROPERTY" shall mean the Owned Real Property and the
Leased Real Property.
11.1.71 "REGISTRATION STATEMENT" shall mean the Registration Statement
on Form S-1, or other appropriate form, including any pre-effective or
post-effective amendments or supplements thereto, filed with the Securities and
Exchange Commission by the Company under the Securities Act with respect to the
Company Debt.
11.1.72 "RELATED TO" OR "RELATING TO" shall mean primarily related to,
or used primarily in connection with.
11.1.73 "REQUIRED CONSENT" shall mean any Consents specifically
identified on Schedule 3.3 or Schedule 4.3 as a "Required Consent" and each
other material Consent, which may be a Consent listed on Schedule 3.3 or
Schedule 4.3.
11.1.74 "RETAINED ASSETS" shall mean
(i) the assets (including Real Property, tangible personal property,
accounts receivable, intellectual property and contracts) Related to all
businesses conducted by CSK or G-P and any of their respective Affiliates other
than the Commercial Tissue Business, provided, however, with respect to G-P, all
tangible assets located at G-P's Palatka, Florida, Crossett, Arkansas, Port
Hudson, Louisiana, Plattsburgh, New York, Bellingham, Washington and Atlanta,
Georgia facilities and any tangible asset used in part in the consumer tissue
business at G-P's offices located in Atlanta, Georgia shall constitute G-P
Retained Assets, except for the assets specifically listed on Schedule 2.1(c)
consisting of dedicated commercial tissue converting lines which shall be
included in the G-P Contributed Assets, and all G-P Intellectual Property;
(ii) the stock or other ownership interests of all Subsidiaries of
either G-P or CSK other than the Contributed Subsidiaries;
64
(iii) all cash and cash accounts, disbursement accounts, outstanding
checks and disbursements, investment securities and other short-term and
medium-term investments and non-trade accounts receivable from either G-P or CSK
or their respective Affiliates and owing to the G-P Business or WISCO Business,
respectively;
(iv) all deferred Tax assets of G-P or CSK;
(v) all prepaid Taxes to the extent such prepaid Taxes are not
reflected on the Final Working Capital Statement;
(vi) all refunds of Taxes to the extent such Taxes are not reflected on
the Final Working Capital Statement;
(vii) all Tax Returns and related work papers of G-P, CSK or their
respective Affiliates;
(viii) all Books and Records which G-P or the CSK Parties are required
by law to retain, provided that G-P, CSK or WISCO shall provide the Company with
complete copies of such Books and Records;
(ix) all G-P Plans, all CSK Plans, and all assets of such Plans except
as contemplated by the Human Resources Agreement;
(x) all Governmental Authorizations to the extent not transferable
without obtaining a Consent;
(xi) the CSK Marks subject to the license assigned pursuant hereto;
(xii) the Retained Real Property and any financial instruments Related
to the Retained Real Property;
(xiii) all of G-P's or CSK's insurance policies, subject to the rights
of WISCO or any Contributed Subsidiary under such insurance policies of CSK and
the rights of the Company if any under such policies;
(xiv) all contracts between either G-P or CSK and their respective
Subsidiaries other than the Contributed Subsidiaries, including Georgia-Pacific
S.A.; and
(xv) those assets of the CSK Parties specifically identified on
Schedule 2.3.
11.1.75 "RETAINED ENVIRONMENTAL LIABILITIES" has the meaning set forth
in the definition of "Retained Liabilities."
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11.1.76 "RETAINED LIABILITIES" shall mean all of the following debts,
liabilities, commitments or obligations, whether arising before or after the
Closing and whether known or unknown, fixed or contingent:
(i) all liabilities Related to the Retained Assets;
(ii) all (A) liabilities under Environmental Laws with respect to any
Former Facility, (B) liabilities in connection with the Retained Real Property
and (C) with respect to WISCO and CSK, the Fox River Liability (collectively,
the "Retained Environmental Liabilities");
(iii) all liabilities which are retained by G-P or WISCO or CSK under
the Ancillary Agreements;
(iv) all liabilities under the G-P or CSK Plans, except to the extent
such liabilities are specifically assumed by the Company or G-P pursuant to the
Human Resources Agreement;
(v) all liabilities for Taxes imposed with respect to the taxable
periods, or portions thereof, ending on or before the Closing Date except to the
extent that any such Taxes are reflected on the Final Working Capital Statement;
(vi) all liabilities for non-trade accounts payable to CSK or G-P or
their respective Affiliates which arise prior to the Closing Date;
(vii) all liabilities for indebtedness for borrowed money and any other
obligation which are fixed as to amount and certainty as of the Closing or which
are secured by a lien that is not a Permitted Encumbrance on any of the
Contributed Assets, but not including liabilities under Contracts included in
the Contributed Assets and Assumed Liabilities;
(viii) all severance, termination, change of control and similar
agreements, payments, debts, obligations or liabilities with respect to any
director, officer, employee or consultant of G-P, the CSK Parties or any of
their Subsidiaries which exist as of or prior to the Closing (after taking into
account the transactions contemplated by this Agreement), other than (i)
obligations under any collective bargaining agreement, and (ii) obligations
under any severance employment, consulting, or other agreement entered into or
assumed by the Company;
(ix) all liabilities and obligations with respect to G-P's interest in
Georgia-Pacific S.A., including all contractual obligations;
(x) all liabilities and obligations that any party hereto agrees to
retain in any Ancillary Agreement;
(xi) all other liabilities and obligations for which CSK, WISCO or G-P
has expressly assumed responsibility pursuant to this Agreement or the Ancillary
Agreements;
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(xii) all debts, liabilities or obligations whatsoever, that do not
Relate to the G-P Business or the WISCO Business or that do not otherwise Relate
to the Contributed Assets; and
(xiii) all liabilities and obligations of the WISCO Business described
on Schedule 2.3.
11.1.77 "RETAINED REAL PROPERTY" shall mean the Real Property retained
by WISCO or G-P.
11.1.78 "RETIRED EMPLOYEE" means as to any party, former Employees who
retain rights under any of such party's Employee Plans.
11.1.79 "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
11.1.80 "STRADDLE PERIOD" shall mean, with respect to any Contributed
Subsidiary, any Tax Period that begins before and ends after the Closing Date.
11.1.81 "SPECIAL DISTRIBUTION" shall have the meaning set forth in
Section 2.8(b).
11.1.82 "SUBSIDIARY" shall mean, with respect to any Person, any
corporation, partnership, joint venture or other legal entity of which such
Person, either directly or through or together with any other Subsidiary of such
Person, owns any equity interests.
11.1.83 "SURVIVAL PERIOD" shall have the meaning set forth in Section
7.1.
11.1.84 "TARGET WORKING CAPITAL" shall have the meaning set forth in
Section 2.5(e).
11.1.85 "TAX" or "TAXES" shall mean all federal, state, local or
foreign taxes, including but not limited to income, gross receipts, windfall
profits, goods and services, value added, severance, property, production,
sales, use, license, excise, franchise, employment, withholding or similar
taxes, together with any interest, additions or penalties with respect thereto
and any interest in respect of such additions or penalties.
11.1.86 "TAX AUTHORITY" shall mean, with respect to any Tax, the
governmental entity or political subdivision thereof that imposes such Tax, and
the agency (if any) charged with the administration or collection of such Taxes
for such entity or subdivision.
11.1.87 "TAX BENEFIT" shall mean the amount by which a Person's Tax
liability is actually reduced (including any related interest actually received
from a Tax Authority in connection therewith).
11.1.88 "TAX PERIOD" shall mean, with respect to any Tax, the period
for which the Tax is reported as provided under Applicable Tax Laws.
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11.1.89 "TAX RETURN" shall mean, with respect to any Tax, any
information return with respect to such Tax, any report, statement, declaration
or document required to be filed under the Applicable Tax Law in respect of such
Tax, any claim for refund of Taxes paid, and any amendment or supplement to any
of the foregoing.
11.1.90 "TRANSFER COSTS" shall have the meaning set forth in Section
2.6.
11.1.91 "TRANSITION SERVICES AGREEMENT" shall mean the agreement
substantially in the form of Exhibit 11.1.91 attached hereto to be entered into
at the Closing among the Company, CSK and WISCO under which CSK and its
Affiliates will provide transition services requested by the Company in order to
allow it to operate the WISCO Business after the Closing in a manner consistent
with past practices.
11.1.92 "WARN" shall have the meaning set forth in Section 3.13(e).
11.1.93 "WARN OBLIGATIONS" shall have the meaning set forth in Section
3.13(e).
11.1.94A "WISCO" shall have the meaning set forth in the preamble to
this Agreement.
11.1.94B "WISCO APRIL FINANCIAL STATEMENTS" shall have the meaning set
forth in Section 3.6(a).
11.1.94C "WISCO ASSUMED LIABILITIES" shall mean all Assumed Liabilities
transferred to the Company by WISCO.
11.1.94D "WISCO BUSINESS" shall have the meaning set forth in the
Preliminary Statements to this Agreement.
11.1.94E "WISCO CAP" shall have the meaning set forth in Section
7.3(b).
11.1.94F "WISCO CONTRIBUTED ASSETS" shall mean all assets used directly
and predominantly in the Commercial Tissue Business conducted by CSK whether
directly or through WISCO or its Contributed Subsidiaries.
11.1.94G "WISCO CONTRIBUTED SUBSIDIARIES" shall mean the Contributed
Subsidiaries of WISCO as set forth on Schedule 3.16(c).
11.1.94H "WISCO DEBT INDEMNITY" shall have the meaning set forth in
Section 2.8(b).
11.1.94I "WISCO FINANCIAL STATEMENTS" shall have the meaning set forth
in Section 3.6(a).
11.1.94J "WISCO INDEMNIFIED PARTIES" shall have the meaning set forth
in Section 7.2(a).
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11.1.94K "WISCO INTELLECTUAL PROPERTY" shall mean the Intellectual
Property of WISCO (and CSK to the extent utilized in the WISCO Business) and
includes, without limitation, the WISCO Marks.
11.1.94L "WISCO LEASED REAL PROPERTY" shall mean the Leased Real
Property of WISCO.
11.1.94M "WISCO MARKS" shall mean any mark currently owned by the WISCO
Business and any mark owned by the CSK Parties that include the words, phrases
and names "Wisconsin Tissue Mills", "Wisconsin Tissue" or "WISCO", or any
variation thereof, and any trademark, service mark, trade dress, symbol or logo
using such words, phrases or names and any variation thereof.
11.1.94N "WISCO OWNED REAL PROPERTY" shall mean the Owned Real Property
Related to the WISCO Business.
11.1.94O "WISCO REAL PROPERTY" shall mean the Real Property used in
connection with the WISCO Business.
11.1.94P "WISCO REQUIRED CONSENT" shall mean the Required Consents
pursuant to the WISCO Business and set forth on Schedule 3.3.
11.1.94Q "WISCO RETAINED ASSETS" shall mean the Retained Assets of the
WISCO Business as described in Section 11.1.74 hereof.
11.1.94R "WISCO RETAINED LIABILITIES" shall mean the Retained
Liabilities of the WISCO Business.
11.1.95 "WMEX" shall mean Wisconsin Tissue de Mexico, S.A. de C.V., a
corporation organized under the laws of Mexico and a wholly owned subsidiary of
WISCO.
11.1.96 "WORKING CAPITAL" shall mean the excess of current assets over
current liabilities at the Determination Date on a consolidated basis as
determined in accordance with Section 2.5.
11.1.97 "YEAR 2000 READY" shall mean that the Computer System when used
in accordance with its associated documentation, will not be materially
adversely affected by date data but instead will process such date data
accurately with the implementation of a tested procedure, or is not Year 2000
compliant but will not cause any such processing problem. Year 2000 Ready also
means that the applicable Computer System when used in accordance with its
associated documentation will accurately process date data such that, no value
for a date prior to year 2028 will cause any interruption in processing;
date-based functionality operates consistently for dates prior to, during and
after Year 2000 (through year 2027); in all interfaces and data storage, the
century or any other date is specified either explicitly or by algorithms or
69
inferencing rules; and leap years will be accurately recognized and processed.
If implemented properly, the Project Plan should be successful in making all
material Computer Systems Year 2000 Ready, except to the extent that a Computer
System interfaces or exchanges data with other software, firmware, hardware or
other similar or related items of automated, computerized or software systems
that are not Year 2000 compliant.
11.2 OTHER TERMS. Other terms may be defined elsewhere in the text of
this Agreement, and unless otherwise indicated shall have such meanings
throughout this Agreement.
11.3 OTHER DEFINITIONAL PROVISIONS.
(a) The words "whereof", "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. The word
"including" means "including without limitation."
(b) The terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United States dollars.
IN WITNESS WHEREOF, the parties have executed this Joint Venture
Agreement as of the date first written above.
WISCONSIN TISSUE MILLS INC.
By: /s/William T. Tolley
Name: William T. Tolley
Title: Vice President
GEORGIA-PACIFIC CORPORATION
By: /s/Michael C. Burandt
Name: Michael C. Burandt
Title: Senior Vice President -
Packaged Products
CHESAPEAKE CORPORATION
By: /s/William T. Tolley
70
Name: William T. Tolley
Title: Senior Vice President - Finance
and Chief Financial Officer
GEORGIA-PACIFIC TISSUE, LLC
By: /s/Michael C. Burandt
Name: Michael C. Burandt
Title: Manager
71
EXHIBIT 3.6(b)
-- The "Unaudited Balance Sheet" should be defined to include the
following line items, with specific representations for each line item:
-- Receivables (Represents amounts due from sales to outside
customers; determined in accordance with GAAP; stated at
estimated net realizable value with adequate reserves for
customer deductions, cash rebates, and uncollectible
accounts).
-- Inventories (Represents raw materials, operating supplies and
packaging materials, storeroom parts and supplies, work in
process, and finished goods held for resale; determined in
accordance with GAAP stated at cost without LIFO reserves, and
with adequate reserves for obsolescence).
-- Prepaid Expenses and Other Current Assets (all known prepaid
expenses, deferred expenses and other current assets; expected
to be amortized or settled within one year; excluding income
taxes and debt.
-- Current Assets (Represents the sum total of Receivables plus
Inventories plus Prepaid Expenses and Other Current Assets as
defined above).
-- Property, Plant and Equipment (Represents land, buildings,
machinery and equipment, and construction in progress; owned
or leased under capital leases; stated at cost less
accumulated depreciation in accordance with GAAP).
-- Other Noncurrent Assets (Represents all known other noncurrent
assets; excluding any noncurrent assets related to income
taxes and debt).
-- Total Assets (Represents the sum total of Current Assets plus
Property, Plant and Equipment plus Other Noncurrent Assets as
defined above).
-- Accounts Payable (Represents all known amounts payable to
vendors; payable within one year; incurred in the normal
conduct of business).
-- Accrued Expenses and Other Current Liabilities (Represents all
known other accrued expenses, deferred revenues and current
liabilities; expected to be amortized or settled within one
year; incurred in the normal conduct of business; including
adequate provision for the current portion of any loss
contingencies required to be accrued in accordance with SFAS
No. 5; excluding any liabilities related to income taxes and
debt).
-- Current Liabilities (Represents the sum total of Accounts
Payable plus Accrued Expenses and Other Current Liabilities as
defined above).
-- Long-term Liabilities (Represents all known long-term
liabilities; incurred in the normal conduct of business;
including adequate provision for the non-current portion of
any loss contingencies required to be accrued in accordance
with SFAS No. 5; excluding any liabilities related to income
taxes and debt).
-- Total Liabilities (Represents the sum total of Current
Liabilities plus Long-term Liabilities as defined above).
-- Equity (Represents Total Assets minus Total Liabilities as
defined above).
-- Total Liabilities and Equity (Represents the sum total of
Total Liabilities plus Equity as defined above).
-1-
-- Working Capital (Represents Current Assets minus Current
Liabilities as defined above).
-- : The "Unaudited Statement of Income" should be defined to include the
following income statement line items, with specific representations
for each line item:
-- Net Sales (Represents net revenues from sales to outside
customers; determined in accordance with GAAP; excluding sales
to Affiliates).
-- Cost of Sales (Represents all known costs for procuring,
manufacturing and handling products sold to outside customers;
excluding depreciation and amortization expenses;
-- Selling, General and Administrative Expenses (Represents all
known selling, general and administrative expenses for the
period; excluding depreciation and amortization expenses);
-- Other Income (Represents all known other income for the
period).
-- Other Expense (Represents all known other expenses for the
period; excluding depreciation and amortization expenses;
excluding interest expense; and excluding income taxes).
-- Earnings Before Interest, Income Taxes, Depreciation and
Amortization (Represents Net Sales minus Cost of Sales minus
Selling, General and Administrative Expenses plus Other Income
minus Other Expense as defined above).
-- Depreciation and Amortization Expenses (Represents all known
depreciation and amortization expenses for the period,
including the depreciation expense component of tissue parent
roll manufacturing costs).
-- Earnings Before Interest and Income Taxes (Represents Earnings
Before Interest, Income Taxes, Depreciation and Amortization
minus Depreciation and Amortization Expenses as defined
above).
-- The "Unaudited Statement of Cash Flows" should be defined to include
the following cash flow statement line items:
-- Earnings Before Interest and Income Taxes (As defined above).
-- Depreciation and Amortization Expenses (As defined above).
-- Earnings Before Interest, Income Taxes, Depreciation and
Amortization (As defined above).
-- Income Tax Expense (Represents the provision for income taxes,
based on the estimated effective tax rate for the period).
-- Change in Working Capital (Represents Working Capital as of
the beginning of the period minus Working Capital as of the
end of the period).
-- Cash Provided by Operations (Represents Earnings Before
Interest, Income Taxes, Depreciation and Amortization minus
Income Tax Expense)
-- Capital Expenditures (Represents all known capitalizable
expenditures for property, plant and equipment in the period).
-- Other Investing Activities (Represents other cash provided or
used in the period, not reflected elsewhere in the Statement
of Free Cash Flows; excluding cash provided by or used for
financing activities).
-- Free Cash Flow (Cash Provided by Operations minus Capital
Expenditures minus Other Investing Activities as defined
above).
SCHEDULES AND EXHIBITS
SCHEDULES
- ---------
Schedule 2.1(c) G-P Contributed Assets
Schedule 2.3 WISCO Retained Assets and Retained Liabilities
Schedule 3.1 CSK Parties Qualifications
Schedule 3.3 WISCO Consent and Approvals
Schedule 3.6(a) Financial Statements
Schedule 3.6(c) Changes in Accounting Methods
Schedule 3.7 Litigation and Claims
Schedule 3.8 Taxes
Schedule 3.9(a) Employees
Schedule 3.9(b) Employee Plans
Schedule 3.9(d) Changes to Plans
Schedule 3.9(f) Funding of Plans
Schedule 3.9(g) Claims Regarding Plans
Schedule 3.9(h) Multi-Employer Plans
Schedule 3.9(i) Plan Documents
Schedule 3.10 Compliance with Laws
Schedule 3.11(a) Environmental Permits
Schedule 3.11(b) Environmental Matters
Schedule 3.12 Intellectual Property
Schedule 3.12(e) Year 2000
Schedule 3.13 Labor Matters
Schedule 3.14 Material Contracts
Schedule 3.15 WISCO Real Estate Leases
Schedule 3.16(a) Exceptions to Entire Business
Schedule 3.16(b) Encumbrances
Schedule 3.16(c) Contributed Subsidiaries
Schedule 3.16(d) Condition of Assets
Schedule 3.18 Insurance
Schedule 3.20 Material Adverse Change
Schedule 4.1 G-P Qualifications
Schedule 4.3 G-P Consent and Approvals
Schedule 4.6(a) Financial Statements
Schedule 4.7 Litigation and Claims
Schedule 4.8 Taxes
Schedule 4.9(a) Employees
Schedule 4.9(b) Employee Plans
Schedule 4.9(d) Changes to Plans
Schedule 4.9(f) Funding of Plans
Schedule 4.9(g) Claims Regarding Plans
Schedule 4.9(h) Multi-Employer Plans
Schedule 4.9(i) Plan Documents
Schedule 4.10 Compliance with Laws
Schedule 4.11(a) Environmental Permits
Schedule 4.11(b) Environmental Matters
Schedule 4.12 Intellectual Property
Schedule 4.12(e) Year 2000
Schedule 4.13 Labor Matters
Schedule 4.14 Material Contracts
Schedule 4.15 G-P Real Estate Leases
Schedule 4.16(a) Exceptions to Entire Business
Schedule 4.16(b) Encumbrances
Schedule 4.16(c) Condition of Assets
Schedule 4.18 Insurance
Schedule 4.20 Material Adverse Changes
Schedule 5.4(a) G-P Intellectual Property
EXHIBITS
- --------
Exhibit 1.1A Certificate of Formation
Exhibit 2.1E Form of Operating Agreement
Exhibit 2.4A(vii) Opinion of Hunton & Williams
Exhibit 2.4B(vii) Opinion of General Counsel of G-P
Exhibit 2.8A Company Debt Commitment Letter and Promissory Note
Exhibit 2.8B G-P Guarantee
Exhibit 2.8C WISCO Debt Indemnity
Exhibit 3.6(b) Financial Statement Line Items
Exhibit 11.1.44 Form of Human Resources Agreement
Exhibit 11.1.51 Individuals with Knowledge
Exhibit 11.1.55 Form of Management Support Agreement
Exhibit 11.1.60 Form of Operational Support Agreement
Exhibit 11.1.62 Form of Parent Roll Supply Agreement
Exhibit 11.1.91 Form of Transition Services Agreement