EX-2.1
JOINT VENTURE AGREEMENT
AMONG
GEORGIA-PACIFIC CORPORATION,
CHESAPEAKE CORPORATION,
WISCONSIN TISSUE ▇▇▇▇▇ 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 8
2.7 REQUIRED CONSENTS 8
2.8 OWNERSHIP OF THE COMPANY; SPECIAL DISTRIBUTION 8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF CSK PARTIES 9
3.1 ORGANIZATION AND QUALIFICATION 9
3.2 CORPORATE AUTHORIZATION 9
3.3 CONSENTS AND APPROVALS 9
3.4 NON-CONTRAVENTION 10
3.5 BINDING EFFECT 10
3.6 FINANCIAL STATEMENTS: ABSENCE OF CERTAIN CHANGES 10
3.7 LITIGATION AND CLAIMS 11
3.8 TAXES 11
3.9 EMPLOYEES, PENSION AND OTHER BENEFIT PLANS 12
3.10 COMPLIANCE WITH LAWS 14
3.11 ENVIRONMENTAL MATTERS 14
3.12 INTELLECTUAL PROPERTY 15
3.13 LABOR MATTERS 16
3.14 CONTRACTS 17
3.15 REAL ESTATE LEASES 18
3.16 ENTIRE BUSINESS; TITLE TO PROPERTY 18
3.17 FINDER'S FEES 19
3.18 INSURANCE 19
3.19 NO UNDISCLOSED LIABILITIES 19
3.20 NO MATERIAL ADVERSE CHANGE 20
3.21 INDEBTEDNESS FOR BORROWED MONEY 21
3.22 KNOWLEDGE AS OF CLOSING DATE 21
3.23 NO OTHER REPRESENTATIONS OR WARRANTIES 21
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF G-P 22
4.1 ORGANIZATION AND QUALIFICATION 22
4.2 CORPORATE AUTHORIZATION 22
4.3 CONSENTS AND APPROVALS 22
4.4 NON-CONTRAVENTION 22
4.5 BINDING EFFECT 23
4.6 FINANCIAL STATEMENTS: ABSENCE OF CERTAIN CHANGES 23
4.7 LITIGATION AND CLAIMS 24
4.8 TAXES 24
4.9 EMPLOYEES, PENSION AND OTHER BENEFIT PLANS 25
4.10 COMPLIANCE WITH LAWS 27
4.11 ENVIRONMENTAL MATTERS 27
4.12 INTELLECTUAL PROPERTY 28
4.13 LABOR MATTERS 28
4.14 CONTRACTS 29
4.15 REAL ESTATE LEASES 30
4.16 ENTIRE BUSINESS; TITLE TO PROPERTY. 30
4.17 FINDER'S FEES 30
4.18 INSURANCE 30
4.19 NO UNDISCLOSED LIABILITIES 31
4.20 NO MATERIAL ADVERSE CHANGE 31
4.21 INDEBTEDNESS FOR BORROWED MONEY. 33
4.22 KNOWLEDGE AS OF CLOSING DATE 33
4.23 ORGANIZATION OF COMPANY 33
4.24 AUTHORIZATION OF COMPANY 33
4.25 ACTIVITIES OF COMPANY 33
4.26 NO OTHER REPRESENTATIONS OR WARRANTIES 33
ARTICLE V COVENANTS 33
5.1 COVENANTS REGARDING EMPLOYEES 33
5.2 COMPLIANCE WITH WARN AND SIMILAR LAWS 34
5.3 FURTHER ASSURANCES 34
5.4 USE OF G-P INTELLECTUAL PROPERTY AND CSK MARKS 34
5.5 CERTAIN MATTERS RELATED TO RETAINED AND ASSUMED
LIABILITIES 34
5.6 INTERCOMPANY AGREEMENTS 34
5.7 RECORDS AND RETENTION AND ACCESS 35
5.8 INSURANCE 35
5.9 SPECIAL CSK RETAINED LIABILITY 36
5.10 PREPARATION OF REGISTRATION STATEMENT. 36
5.11 USE OF WISCO NAME 36
5.12 PRORATION OF CERTAIN CHARGES 36
ARTICLE VI CONDITIONS TO CLOSING 37
[Intentionally Deleted] 37
ARTICLE VII SURVIVAL; INDEMNIFICATION 37
7.1 SURVIVAL 37
7.2 INDEMNIFICATION BY G-P 37
7.3 INDEMNIFICATION BY CSK 38
7.4 INDEMNIFICATION BY THE COMPANY 39
7.5 INDEMNIFICATION PROCEDURES 39
7.6 ACKNOWLEDGMENT REGARDING ENVIRONMENTAL LIABILITIES 41
7.7 CHARACTERIZATION OF INDEMNIFICATION PAYMENTS 41
ARTICLE VIII TAX COVENANTS 42
8.1 LIABILITY FOR TAXES 42
8.2 PREPARATION OF TAX RETURNS 43
8.3 AMENDED TAX RETURNS 45
8.4 CARRY BACKS AND CARRY FORWARDS 45
8.5 ADDITIONAL TAX MATTERS 46
8.6 TAX CONTROVERSIES; COOPERATION 47
ARTICLE IX TERMINATION 48
[Intentionally Deleted] 48
ARTICLE X MISCELLANEOUS 48
10.1 NOTICES 48
10.2 AMENDMENT; WAIVER 49
10.3 ASSIGNMENT 49
10.4 ENTIRE AGREEMENT 49
10.5 FULFILLMENT OF OBLIGATIONS 49
10.6 PARTIES IN INTEREST 49
10.7 PUBLIC DISCLOSURE 50
10.8 EXPENSES 50
10.9 SCHEDULES 50
10.10 BULK TRANSFER LAWS 50
10.11 GOVERNING LAW; SUBMISSION TO JURISDICTION; SELECTION
OF 50
10.12 COUNTERPARTS 50
10.13 HEADINGS 50
10.14 SEVERABILITY 51
10.15 INJUNCTIVE RELIEF 51
ARTICLE XI DEFINITIONS AND TERMS 51
11.1 SPECIFIC DEFINITIONS 51
11.2 OTHER TERMS 67
11.3 OTHER DEFINITIONAL PROVISIONS 67
JOINT VENTURE AGREEMENT
This JOINT VENTURE AGREEMENT (the "Agreement") dated as of
October 4, 1999, among Chesapeake Corporation, a Virginia
corporation ("CSK"), Wisconsin Tissue ▇▇▇▇▇ 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.
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ARTICLE II
CONTRIBUTION OF THE BUSINESSES
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;
(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;
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(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
& ▇▇▇▇▇▇▇▇, 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.
(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;
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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 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 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;
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(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.
(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 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.
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(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 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
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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
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
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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:
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
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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 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.
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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 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.
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(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 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
12
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.
(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.
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(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 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.
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(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):
(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 the Company's use of, the WISCO Intellectual Property
owned by any CSK Party as of and following the Closing.
15
(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;
(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.
16
(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 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.
17
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 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
18
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 ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & 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 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
19
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;
(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);
20
(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.
21
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,
22
rule, regulation, judgment, injunction, order, decree or other
restriction of any court or Governmental Authority to which G-P
is subject, including any Governmental 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.
23
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
24
or any of its 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 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 remitted to
25
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.
26
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.
27
(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
28
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.
29
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 ▇-▇ ▇▇▇▇▇, 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
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;
30
(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;
31
(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.
32
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.
(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.
33
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.
(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
34
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 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
35
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 ▇▇▇▇▇", "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 party transferring Contributed
Assets shall be liable for (and shall reimburse the Company to
36
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 of the
37
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 breach of a representation or warranty, if
38
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 reasonably be expected to result in the
imposition of a consent order, injunction or decree which would
39
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.
40
(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.
41
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
42
as a result of any adjustment to a Tax item for any Pre-Closing
Period.
(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
43
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 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.
44
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.
45
(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 Taxes
46
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 Returns and other documents and information
47
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
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To CSK or WISCO: CHESAPEAKE CORPORATION
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
48
To the Company: GEORGIA-PACIFIC TISSUE, LLC
▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: GEORGIA-PACIFIC CORPORATION
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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.
49
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.
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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 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.
52
11.1.11 "CLOSING DATE" shall have the meaning set forth in
Section 2.4.
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
53
permitted by this Agreement (except, in each case, for the
Retained Assets), including the following:
(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 ▇▇▇▇ 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.
54
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.
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 ▇▇▇▇▇▇, 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
55
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, 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.
56
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.
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.
57
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.
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 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
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;
58
(c) invention disclosures and innovations (whether or not
patentable and whether or not reduced to practice);
(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
59
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).
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.
60
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.
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 ▇▇▇▇▇▇, 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;
61
(ii) the stock or other ownership interests of all
Subsidiaries of either G-P or CSK other than the Contributed
Subsidiaries;
(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.
62
11.1.75 "RETAINED ENVIRONMENTAL LIABILITIES" has the
meaning set forth in the definition of "Retained Liabilities."
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;
63
(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;
(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).
64
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.
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).
65
11.1.94J "WISCO INDEMNIFIED PARTIES" shall have the meaning
set forth in Section 7.2(a).
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 ▇▇▇▇ currently owned
by the WISCO Business and any ▇▇▇▇ owned by the CSK Parties that
include the words, phrases and names "Wisconsin Tissue ▇▇▇▇▇",
"Wisconsin Tissue" or "WISCO", or any variation thereof, and any
trademark, service ▇▇▇▇, 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
66
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 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.
67
IN WITNESS WHEREOF, the parties have executed this Joint
Venture Agreement as of the date first written above.
WISCONSIN TISSUE ▇▇▇▇▇ INC.
By: ____________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
GEORGIA-PACIFIC CORPORATION
By: ___________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President -
Packaged Products
CHESAPEAKE CORPORATION
By: ___________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President -
Finance
and Chief Financial Officer
GEORGIA-PACIFIC TISSUE, LLC
By:______________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Manager
68
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).
- 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 & ▇▇▇▇▇▇▇▇
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