JOINT VENTURE AGREEMENT
AMONG
GEORGIA-PACIFIC CORPORATION,
CHESAPEAKE CORPORATION,
WISCONSIN TISSUE MILLS INC., AND
GEORGIA-PACIFIC TISSUE, LLC
DATED AS OF OCTOBER 4, 1999
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TABLE OF CONTENTS
ARTICLE I ORGANIZATION OF THE COMPANY.......................................1
1.1 FORMATION OF THE COMPANY.............................................1
ARTICLE II CONTRIBUTION OF THE BUSINESSES...................................2
2.1 CONTRIBUTION OF ASSETS; ASSUMPTION OF LIABILITIES....................2
2.2 RETAINED G-P ASSETS AND LIABILITIES..................................3
2.3 RETAINED WISCO ASSETS AND LIABILITIES................................3
2.4 CLOSING OF TRANSACTION...............................................3
2.5 POST-CLOSING ADJUSTMENT..............................................6
2.6 TRANSFER TAXES AND RECORDING FEES....................................9
2.7 REQUIRED CONSENTS....................................................9
2.8 OWNERSHIP OF THE COMPANY; SPECIAL DISTRIBUTION......................10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF CSK PARTIES..................10
3.1 ORGANIZATION AND QUALIFICATION......................................11
3.2 CORPORATE AUTHORIZATION.............................................11
3.3 CONSENTS AND APPROVALS..............................................11
3.4 NON-CONTRAVENTION...................................................11
3.5 BINDING EFFECT......................................................12
3.6 FINANCIAL STATEMENTS: ABSENCE OF CERTAIN CHANGES....................12
3.7 LITIGATION AND CLAIMS...............................................13
3.8 TAXES...............................................................13
3.9 EMPLOYEES, PENSION AND OTHER BENEFIT PLANS..........................14
3.10 COMPLIANCE WITH LAWS...............................................17
3.11 ENVIRONMENTAL MATTERS..............................................17
3.12 INTELLECTUAL PROPERTY..............................................18
3.13 LABOR MATTERS......................................................19
3.14 CONTRACTS..........................................................20
3.15 REAL ESTATE LEASES.................................................21
3.16 ENTIRE BUSINESS; TITLE TO PROPERTY.................................21
3.17 FINDER'S FEES......................................................22
3.18 INSURANCE..........................................................22
3.19 NO UNDISCLOSED LIABILITIES.........................................22
3.20 NO MATERIAL ADVERSE CHANGE.........................................23
3.21 INDEBTEDNESS FOR BORROWED MONEY....................................24
3.22 KNOWLEDGE AS OF CLOSING DATE.......................................24
3.23 NO OTHER REPRESENTATIONS OR WARRANTIES.............................24
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF G-P...........................25
4.1 ORGANIZATION AND QUALIFICATION......................................25
4.2 CORPORATE AUTHORIZATION.............................................25
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4.3 CONSENTS AND APPROVALS..............................................25
4.4 NON-CONTRAVENTION...................................................25
4.5 BINDING EFFECT......................................................26
4.6 FINANCIAL STATEMENTS: ABSENCE OF CERTAIN CHANGES....................26
4.7 LITIGATION AND CLAIMS...............................................27
4.8 TAXES...............................................................27
4.9 EMPLOYEES, PENSION AND OTHER BENEFIT PLANS..........................28
4.10 COMPLIANCE WITH LAWS...............................................30
4.11 ENVIRONMENTAL MATTERS..............................................30
4.12 INTELLECTUAL PROPERTY..............................................31
4.13 LABOR MATTERS......................................................31
4.14 CONTRACTS..........................................................32
4.15 REAL ESTATE LEASES.................................................33
4.16 ENTIRE BUSINESS; TITLE TO PROPERTY.................................33
4.17 FINDER'S FEES......................................................33
4.18 INSURANCE..........................................................33
4.19 NO UNDISCLOSED LIABILITIES.........................................34
4.20 NO MATERIAL ADVERSE CHANGE.........................................34
4.21 INDEBTEDNESS FOR BORROWED MONEY....................................36
4.22 KNOWLEDGE AS OF CLOSING DATE.......................................36
4.23 ORGANIZATION OF COMPANY............................................36
4.24 AUTHORIZATION OF COMPANY...........................................36
4.25 ACTIVITIES OF COMPANY..............................................36
4.26 NO OTHER REPRESENTATIONS OR WARRANTIES.............................36
ARTICLE V COVENANTS........................................................36
5.1 COVENANTS REGARDING EMPLOYEES.......................................36
5.2 COMPLIANCE WITH WARN AND SIMILAR LAWS...............................37
5.3 FURTHER ASSURANCES..................................................37
5.4 USE OF G-P INTELLECTUAL PROPERTY AND CSK MARKS......................37
5.5 CERTAIN MATTERS RELATED TO RETAINED AND ASSUMED LIABILITIES.........37
5.6 INTERCOMPANY AGREEMENTS.............................................37
5.7 RECORDS AND RETENTION AND ACCESS....................................38
5.8 INSURANCE...........................................................38
5.9 SPECIAL CSK RETAINED LIABILITY......................................39
5.10 PREPARATION OF REGISTRATION STATEMENT..............................39
5.11 USE OF WISCO NAME..................................................39
5.12 PRORATION OF CERTAIN CHARGES.......................................39
ARTICLE VI CONDITIONS TO CLOSING...........................................40
[Intentionally Deleted].................................................40
ARTICLE VII SURVIVAL; INDEMNIFICATION......................................40
7.1 SURVIVAL............................................................40
7.2 INDEMNIFICATION BY G-P..............................................40
7.3 INDEMNIFICATION BY CSK..............................................41
7.4 INDEMNIFICATION BY THE COMPANY......................................42
7.5 INDEMNIFICATION PROCEDURES..........................................42
7.6 ACKNOWLEDGMENT REGARDING ENVIRONMENTAL LIABILITIES..................44
7.7 CHARACTERIZATION OF INDEMNIFICATION PAYMENTS........................44
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ARTICLE VIII TAX COVENANTS.................................................45
8.1 LIABILITY FOR TAXES.................................................45
8.2 PREPARATION OF TAX RETURNS..........................................46
8.3 AMENDED TAX RETURNS.................................................48
8.4 CARRY BACKS AND CARRY FORWARDS......................................48
8.5 ADDITIONAL TAX MATTERS..............................................49
8.6 TAX CONTROVERSIES; COOPERATION......................................50
ARTICLE IX TERMINATION.....................................................51
[Intentionally Deleted].................................................51
ARTICLE X MISCELLANEOUS....................................................51
10.1 NOTICES............................................................51
10.2 AMENDMENT; WAIVER..................................................52
10.3 ASSIGNMENT.........................................................52
10.4 ENTIRE AGREEMENT...................................................52
10.5 FULFILLMENT OF OBLIGATIONS.........................................52
10.6 PARTIES IN INTEREST................................................52
10.7 PUBLIC DISCLOSURE..................................................53
10.8 EXPENSES...........................................................53
10.9 SCHEDULES..........................................................53
10.10 BULK TRANSFER LAWS................................................53
10.11 GOVERNING LAW; SUBMISSION TO JURISDICTION; SELECTION OF FORUM.....53
10.12 COUNTERPARTS......................................................53
10.13 HEADINGS..........................................................53
10.14 SEVERABILITY......................................................54
10.15 INJUNCTIVE RELIEF.................................................54
ARTICLE XI DEFINITIONS AND TERMS...........................................54
11.1 SPECIFIC DEFINITIONS...............................................54
11.2 OTHER TERMS........................................................70
11.3 OTHER DEFINITIONAL PROVISIONS......................................70
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JOINT VENTURE AGREEMENT
This JOINT VENTURE AGREEMENT (the "Agreement") dated as of October 4,
1999, among Chesapeake Corporation, a Virginia corporation ("CSK"), Wisconsin
Tissue Mills Inc., a Delaware corporation and a wholly owned subsidiary of CSK
("WISCO"), Georgia-Pacific Corporation, a Georgia corporation ("G-P"), and
Georgia-Pacific Tissue, LLC, a Delaware limited liability company (the
"Company").
PRELIMINARY STATEMENTS
WHEREAS, G-P is engaged, in part, in the business of producing,
selling, licensing and manufacturing tissue products for the "away from home"
markets and certain related products (the "Commercial Tissue Business");
WHEREAS, G-P has determined that it will contribute certain assets and
liabilities of its Commercial Tissue Business to the Company;
WHEREAS, WISCO is engaged in the Commercial Tissue Business through
WISCO and its Contributed Subsidiaries (the "WISCO Business"); and
WHEREAS, G-P and CSK have determined that it is in the best interests
of their respective shareholders to engage in the Commercial Tissue Business
through a joint venture.
NOW, THEREFORE, G-P, the CSK Parties and the Company agree as follows:
ARTICLE I
ORGANIZATION OF THE COMPANY
1.1 FORMATION OF THE COMPANY. G-P has caused each of the following to
occur:
(a) ORGANIZATION OF THE COMPANY. The Company is organized as a
limited liability company under the laws of the State of
Delaware.
(b) ORGANIZATIONAL DOCUMENTS. The Company's Certificate of
Formation was filed with the Secretary of State of Delaware, a
copy of which is set forth as Exhibit 1.1A hereto.
ARTICLE II
CONTRIBUTION OF THE BUSINESSES
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2.1 CONTRIBUTION OF ASSETS; ASSUMPTION OF LIABILITIES. On the terms and
subject to the conditions set forth herein and in the Ancillary
Agreements, at the Closing the parties shall take the following
actions, which shall be deemed to take place simultaneously with the
execution of this Agreement as part of the Closing:
(a) WISCO CONTRIBUTION; ASSUMPTION OF LIABILITIES. (i) WISCO shall
contribute, convey, transfer, assign and deliver to the
Company, and the Company shall accept and acquire from WISCO,
all right, title and interest of the CSK Parties in and to the
WISCO Contributed Assets, free and clear of all Encumbrances
(other than Permitted Encumbrances); and (ii) WISCO shall
assign to the Company and the Company shall assume and agree
to pay, honor, discharge and perform the WISCO Assumed
Liabilities. The parties agree that the WISCO Assumed
Liabilities are intended to be, and the parties shall treat
them as, "qualified liabilities" under Section 1.707-5(a)(6)
of the Treasury Regulations unless different treatment is
required under applicable law.
(b) BORROWING BY THE COMPANY; SPECIAL DISTRIBUTION. The Company
will incur the Company Debt in such amounts and on such terms
as set forth on Exhibit 2.8A and will use the net proceeds of
the Company Debt solely (after deducting borrowing expenses
consisting of legal fees, accounting fees, printing fees,
filing fees and underwriting fees, not to exceed $8 million,
including refinancings and replacements thereof) to fund the
Special Distribution to WISCO in the amount of $755,200,000
which shall be declared and paid to WISCO immediately after
the contribution of the WISCO Contributed Assets in accordance
with Section 2.8 hereof. The parties agree that Company Debt
(other than amounts borrowed and used to pay expenses incurred
in connection with the related borrowing expenses) is
allocable to, and shall be allocated to, WISCO under Sections
1.752-2 and 1.707-5(b) of the Treasury Regulations.
(c) G-P CONTRIBUTION; ASSUMPTION OF LIABILITIES. (i) G-P shall
contribute, convey, transfer, assign and deliver to the
Company, and the Company shall accept and acquire from G-P,
all right, title and interest of G-P in and to the G-P
Contributed Assets, free and clear of all Encumbrances (other
than Permitted Encumbrances); and (ii) G-P shall assign to the
Company and the Company shall assume and agree to pay, honor,
discharge and perform the G-P Assumed Liabilities. The parties
agree that the G-P Assumed Liabilities are intended to be, and
the parties shall treat them as, "qualified liabilities" under
Section 1.707-5(a)(6) of the Treasury Regulations unless
different treatment is required under applicable law.
(d) ISSUANCE OF UNITS. The Company will issue to WISCO and G-P the
number of Units, evidencing their respective equity interests
in the Company, in accordance with Section 2.8(b) hereof.
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(e) OPERATING AGREEMENT. G-P and WISCO shall enter into an
Operating Agreement, substantially in the form of Exhibit 2.1E
hereto, the terms of which shall govern the management and
operations of the Company.
2.2 RETAINED G-P ASSETS AND LIABILITIES. Notwithstanding anything herein to
the contrary, (i) from and after the Closing each of G-P and its
Affiliates shall retain all of its direct or indirect right, title and
interest in and to, and there shall be excluded from the sale,
conveyance, assignment or transfer to the Company hereunder, the G-P
Retained Assets and the G-P Retained Liabilities, and (ii) the G-P
Retained Liabilities shall not be assumed by the Company hereunder.
2.3 RETAINED WISCO ASSETS AND LIABILITIES. Notwithstanding anything herein
to the contrary, (i) from and after the Closing each of the CSK Parties
and their Affiliates shall retain all of its direct or indirect right,
title and interest in and to, and there shall be excluded from the
sale, conveyance, assignment or transfer to the Company hereunder, the
WISCO Retained Assets and the WISCO Retained Liabilities, and (ii) the
WISCO Retained Liabilities shall not be assumed by the Company
hereunder.
2.4 CLOSING OF TRANSACTION. The Closing of the transactions contemplated by
this Agreement shall take place at the offices of G-P at 10:00 a.m.
(Atlanta time), on October 4, 1999, or at such other time and place as
the parties hereto may mutually agree. The date on which the Closing
occurs is called the "Closing Date." The Closing shall be deemed
effective at 12:01 a.m. (Atlanta time), on October 3, 1999 (the
"Effective Time"). To effect the steps set forth in Section 2.1 hereof,
the parties shall execute and deliver to each other and to third
parties, as appropriate, all documents reasonably necessary to effect
the Closing. Without limiting the generality of the foregoing,
(a) CSK PARTIES' DELIVERIES. The appropriate CSK Parties shall
execute and deliver:
(i) to the Company, limited warranty deeds, in form and
substance reasonably acceptable to G-P, transferring
all WISCO Owned Real Property to the Company;
(ii) to the Company, assignments, or where necessary
subleases, in form and substance reasonably
acceptable to G-P, assigning or subleasing to the
Company all WISCO Real Property Leases;
(iii) to the Company, assignments, in form and substance
reasonably acceptable to G-P, assigning to the
Company all WISCO Intellectual Property;
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(iv) to the Company, bills of sale, certificates of title,
assignments, and all other instruments of transfer,
in form and substance reasonably acceptable to G-P,
transferring to the Company all WISCO Contributed
Assets other than the WISCO Real Property or the
WISCO Intellectual Property which are being
transferred to the Company pursuant to the conveyance
documents described in clauses (i) - (iii) above;
(v) to the Company, such instruments of assumption and
other instruments or documents, in form and substance
reasonably acceptable to G-P, as may be necessary to
effect assignment of the WISCO Assumed Liabilities to
the Company;
(vi) to the Company or G-P, as appropriate, a duly
executed copy of each of the Ancillary Agreements to
which any CSK Party is a party;
(vii) to G-P and the Company, the opinion of Hunton &
Williams, counsel to the CSK Parties, substantially
in the form of Exhibit 2.4A(vii) hereto;
(viii) to the Company, evidence reasonably satisfactory to
G-P that all Encumbrances other than Permitted
Encumbrances on any of the WISCO Contributed Assets
have been released;
(ix) to the Company, stock certificates or other evidence
of ownership of each of the Contributed Subsidiaries,
in each case duly endorsed for transfer to the
Company;
(x) to G-P and the Company from WISCO, a duly executed
Operating Agreement;
(xi) to G-P, the WISCO Debt Indemnity;
(xii) to G-P, current title reports for all WISCO owned
Real Property;
(xiii) to G-P, evidence that all officers (other than
officers of WMex) and directors of the WISCO
Contributed Subsidiaries have resigned, effective as
of the Closing, except as G-P shall otherwise
request; and
(xiv) to G-P and/or the Company, as appropriate, such other
instruments or documents, in form and substance
reasonably acceptable to G-P, as may be necessary to
effect the Closing and the contribution of the WISCO
Contributed Assets in accordance with this Agreement.
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(b) G-P DELIVERIES. G-P shall execute and deliver:
(i) to the Company, limited warranty deeds, in
form and substance reasonably acceptable to
WISCO, transferring all G-P Owned Real
Property to the Company;
(ii) to the Company, assignments, or where
necessary subleases, in form and substance
reasonably acceptable to WISCO, assigning or
subleasing to the Company all G-P Real
Property Leases;
(iii) to the Company, a royalty free license,
substantially in the form set forth in
Schedule 5.4, licensing to the Company the
G-P Intellectual Property;
(iv) to the Company, bills of sale, certificates
of title, assignments, and all other
instruments of transfer, in form and
substance reasonably acceptable to WISCO,
transferring to the Company all G-P
Contributed Assets other than the G-P Real
Property or the G-P Intellectual Property
which are being transferred or licensed to
the Company pursuant to the conveyance
documents described in clauses (i) - (iii)
above;
(v) to the Company, such instruments of
assumption and other instruments or
documents, in form and substance reasonably
acceptable to WISCO, as may be necessary to
effect assignment of the G-P Assumed
Liabilities to the Company;
(vi) to the Company or WISCO, as appropriate, a
duly executed copy of each of the Ancillary
Agreements, including the G-P Guarantee, to
which G-P is a party;
(vii) to the Company, WISCO and CSK, a copy of the
opinion of the General Counsel of G-P,
substantially in the form of Exhibit
2.4B(vii) hereto;
(viii) to the Company, evidence reasonably
satisfactory to WISCO that all Encumbrances
other than Permitted Encumbrances on any of
the G-P Contributed Assets have been
released;
(ix) to WISCO and the Company, a duly executed
Operating Agreement;
(x) to WISCO, current title reports for all G-P
owned Real Property; and
(xi) to WISCO and/or the Company, as appropriate,
such other
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instruments or documents, in form and
substance reasonably acceptable to WISCO, as
may be necessary to effect the Closing and
the contribution of the G-P Contributed
Assets in accordance with this Agreement.
(c) DELIVERIES BY THE COMPANY. The Company shall execute
and deliver:
(i) to the CSK Parties and G-P, such instruments
of assumption and other instruments or
documents, in form and substance reasonably
acceptable to WISCO and G-P, as may be
necessary to effect the Company's assumption
of the Assumed Liabilities;
(ii) to G-P or the CSK Parties, as appropriate, a
duly executed copy of each of the Ancillary
Agreements to which the Company is a party;
(iii) to G-P, certificates representing the number
of Units issuable to G-P as determined in
accordance with Section 2.8 hereof;
(iv) to WISCO, certificates representing the
number of Units issuable to WISCO as
determined in accordance with Section 2.8
hereof;
(v) to WISCO, the Special Distribution; and
(vi) to G-P and WISCO, as appropriate, such other
instruments or documents, in form and
substance reasonably acceptable to WISCO and
G-P, as may be necessary to effect the
Closing.
2.5 POST-CLOSING ADJUSTMENT
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(a) Within 90 days following the Closing, the Company shall
prepare, or cause to be prepared, and deliver to G-P and WISCO
a statement (the "Closing Working Capital Statement") which
shall set forth the Working Capital of each of the G-P
Business and the WISCO Business as of the Determination Date
(the "Closing Working Capital"). The amounts so computed shall
be used to determine the final amount of the Working Capital
of each of the Businesses (the "Post-Closing Adjustment"). The
Closing Working Capital Statement shall be prepared in
accordance with GAAP using the same principles, practices and
procedures that were used in preparing the WISCO Financial
Statements and the G-P Financial Statements.
(b) G-P, WISCO and their respective accountants and the Company's
accountants shall have 30 days after the delivery of the
Closing Working Capital Statement to review the Closing
Working Capital Statement. In the event that G-P or WISCO
determines that the Closing Working Capital for either party,
as derived from the Closing Working Capital Statement, has not
been determined on the basis set forth in Section 2.5(a), G-P
or WISCO shall inform the other in writing (the "Objection"),
setting forth a specific description of the basis of the
Objection and the adjustments to the Closing Working Capital
which either G-P or WISCO believes should be made, which
Objection must be delivered to the other party on or before
the last day of such 30-day period. The party receiving an
Objection shall then have 30 days to review and respond to the
Objection. The parties shall attempt in good faith to reach an
agreement with respect to any matters in dispute. If the
parties are unable to resolve all of their disagreements with
respect to the determination of the foregoing items within 45
days following the delivery of an Objection, they shall refer
their remaining differences to Ernst & Young LLP or such other
firm mutually agreed to by the parties (the "CPA Firm"), who
shall, acting as experts and not as arbitrators, determine in
accordance with this Agreement, and only with respect to the
remaining differences so submitted, whether and to what
extent, if any, the Closing Working Capital as derived from
the Closing Working Capital Statement requires adjustment. The
parties shall direct the CPA Firm to use its best efforts to
render its determination within 30 days after such submission.
The CPA Firm's determination shall be conclusive and binding
upon G-P, WISCO and the Company. The fees and disbursements of
the CPA Firm shall be paid one-half by G-P and one-half by
WISCO. G-P, the Company and WISCO shall make readily available
to the CPA Firm all relevant Books and Records and any work
papers (including those of the parties' respective
accountants) Relating to the Closing Working Capital Statement
and all other items reasonably requested by the CPA Firm. The
"Final Working Capital Statement" shall be deemed to be (i)
the Closing Working Capital Statement in the event that no
Objection is delivered by G-P or WISCO during the 30-day
period specified above, or (ii) if an objection is
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delivered by G-P or WISCO, the Closing Working Capital
Statement, as adjusted by either (A) the agreement of the
parties or (B) the CPA Firm.
(c) G-P and WISCO shall have the opportunity to participate in the
preparation of the Closing Working Capital Statement by (i)
observing the physical inventory taken in connection therewith
(which may begin prior to the Closing Date), (ii) attending
any audit planning meetings in connection therewith, (iii)
meeting with and discussing procedures with the Company and
its accountants, and (iv) otherwise having full access to all
information used by the Company in preparing the Closing
Working Capital Statement, including the Books and Records and
the work papers of its accountants (subject to execution of
any necessary waivers or indemnifications required by the
Company's accountants).
(d) In reviewing any Objection, G-P and WISCO and their respective
accountants shall have full access to all information used by
the other party in preparing such Objection, including the
work papers of the other party's and the Company's accountants
(subject to the reviewing party executing any necessary
waivers or indemnifications required by the objecting party's
accountants).
(e) If the Closing Working Capital of either Business as reflected
on the Final Working Capital Statement is less than
$32,515,000 with respect to the G-P Business or $73,218,000
with respect to the WISCO Business (the "Target Working
Capital"), then within 10 Business Days following issuance of
the Final Working Capital Statement, any party whose Closing
Working Capital is below its Target Working Capital shall (as
an additional contribution to the Company) make a payment in
immediately available funds to the Company equal to the
difference between such Business' Target Working Capital, plus
interest at the prime rate (as set forth in the "Money Rates"
section of The Wall Street Journal) on such amount from the
Closing Date through the date of payment. If the Closing
Working Capital of either Business as reflected on the Final
Working Capital Statement is greater than the Target Working
Capital of such Business, then within 10 Business Days
following issuance of the Final Working Capital Statement, the
Company shall refund such excess by (i) making a payment to
any party whose Closing Working Capital exceeded its Target
Working Capital, in immediately available funds, equal to such
excess to the extent of the sum of the amount of cash
theretofor contributed to the Company by such party plus the
amount of accounts receivable contributed by such party to and
collected by the Company, and (ii) if the excess is greater
than the amount described in (i), the remainder of the excess
shall be refunded by the Company's reassignment to such party
of accounts receivable (theretofor contributed by such party)
in an aggregate amount equal to such remainder. In addition,
the Company shall pay such party interest at the prime rate
(as
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set forth in the "Money Rates" section of The Wall Street
Journal) on such excess from the Closing Date through the date
of payment.
(f) In preparing the Closing Working Capital Statement, (i)
liabilities of the Company Related to this transaction shall
not be treated as liabilities, and (ii) no liabilities or
reserves shall be established for matters for which G-P, CSK
or the Company is (or but for the Cap or the Deductible would
be) entitled to indemnification hereunder.
(g) Any payments made to or from the Company pursuant to Section
2.5(e) shall not result in any change in the value of either
party's Business as set forth in Section 2.8 hereof or either
party's Capital Account or Percentage Interest (as both terms
are defined in the Operating Agreement).
2.6 TRANSFER TAXES AND RECORDING FEES. Each party shall be responsible for
any and all Taxes or fees imposed or incurred by reason of the transfer
of its Contributed Assets and Assumed Liabilities hereunder and/or the
filing or recording of any instruments necessary to effect the transfer
of its Contributed Assets and Assumed Liabilities hereunder, regardless
of when such Taxes or fees are levied or imposed, including sales, use,
value-added, excise, real estate transfer, lease assignment, stamp,
documentary and similar Taxes and fees (the "Transfer Cost"). To the
extent under applicable law the transferee is responsible for filing
Tax Returns in respect of Transfer Costs, the Company shall prepare all
such Tax Returns. The parties shall provide such certificates and other
information and otherwise cooperate to the extent reasonably required
to minimize Transfer Costs.
2.7 REQUIRED CONSENTS. Each of G-P and the CSK Parties shall use
commercially reasonable efforts to obtain, at its sole expense, each
Consent Related to its own Business listed on Schedule 3.3(a) for the
CSK Parties and Schedule 4.3(a) for G-P (other than those Consents
marked with an asterisk on either such Schedule), and any other
material Consent not listed on Schedule 3.3 or Schedule 4.3, if any, if
such Consent is required to operate such Business after Closing as such
Business has been operated over the 12-month period immediately prior
to Closing. If a party has not obtained a Consent (other than a
Required Consent), the Closing of the transactions contemplated by this
Agreement shall not constitute a transfer, or any attempted transfer,
of any Contract or asset, the transfer of which requires such Consent.
Rather, following the Closing, such party shall use commercially
reasonable efforts at its sole expense, and the other party (or
parties) and the Company shall cooperate in such efforts, to obtain
promptly such Consent or to enter into reasonable and lawful
arrangements (including subleasing or subcontracting if permitted)
reasonably acceptable to the other party to provide to the Company the
full economic (taking into account Tax Costs and benefits) and
operational benefits and liabilities and for substantially similar time
periods, as the Company would have had if such Consent had been
obtained as of Closing. Once such Consent for the transfer of a
Contributed
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Asset not transferred at the Closing is obtained, the party receiving
such Consent shall promptly transfer, or cause to be transferred, such
Contributed Asset to the Company for no additional consideration and
without changing any party's Capital Account or Percentage Interest (as
both terms are defined in the Operating Agreement).
2.8 OWNERSHIP OF THE COMPANY; SPECIAL DISTRIBUTION.
(a) The value of contributions of each of G-P and WISCO has been
determined by multiplying 7.38 by the actual 1998 EBITDA for
the G-P Business and the WISCO Business respectively. The
value of the WISCO Business for purposes of this Agreement
shall be $775,000,000 and the value of the G-P Business for
purposes of this Agreement shall be $376,400,000.
(b) Simultaneously with the Closing, the Company shall incur debt
in an amount sufficient to fund a special distribution to
WISCO (the "Company Debt") that will result in a reduction in
WISCO's Percentage Interest (as defined in the Operating
Agreement) in the Company to a 5% equity interest in the
Company (the "Special Distribution") immediately after payment
of the Special Distribution. The Company Debt shall be in such
amount and on such terms as is set forth on Exhibit 2.8A. G-P
shall provide to the Company's lenders a full and
unconditional guaranty of payment of the Company Debt
substantially in the form of Exhibit 2.8B hereto (the "G-P
Guarantee"). WISCO shall provide to G-P an indemnity
substantially in the form of Exhibit 2.8C hereto (the "WISCO
Debt Indemnity") indemnifying G-P against certain amounts
which may be incurred or paid by, or assessed against, G-P
under the G-P Guarantee.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CSK PARTIES
The CSK Parties represent and warrant to G-P and the Company as
follows:
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3.1 ORGANIZATION AND QUALIFICATION.
(a) Each of the CSK Parties is a corporation or limited liability
company, duly organized, validly existing and in good standing
under the laws of its state of organization as set forth on
Schedule 3.1. The CSK Parties collectively have all requisite
corporate or limited liability company power and authority to
own and operate the WISCO Contributed Assets and to carry on
the WISCO Business as currently conducted.
(b) Each of the CSK Parties is duly qualified to do business and
is in good standing as a foreign corporation or limited
liability company in the jurisdictions listed on Schedule 3.1,
which are the only jurisdictions where the ownership or
operation of the WISCO Contributed Assets or the conduct of
the WISCO Business requires such qualification, except where
the failure to be so qualified would not have a Material
Adverse Effect.
3.2 CORPORATE AUTHORIZATION. Each of the CSK Parties has full corporate
power and authority to execute and deliver this Agreement, and to
perform its obligations hereunder and under any agreement or contract
contemplated hereby, including the Ancillary Agreements. The execution,
delivery and performance by the CSK Parties of this Agreement and any
agreement or contract contemplated hereby has been duly and validly
authorized by all necessary corporate action and no additional
corporate authorization is required in connection with the execution,
delivery and performance by each of the CSK Parties of this Agreement
and any agreement or contract contemplated hereby.
3.3 CONSENTS AND APPROVALS. Except as specifically set forth in Schedule
3.3 or as required by the HSR Act, no Consent is required to be
obtained by the CSK Parties from, and no notice or filing is required
to be given by the CSK Parties to, or made by the CSK Parties with, any
Governmental Authority or other Person or under any Contract listed, or
required to be listed, on Schedule 3.14 in connection with the
execution, delivery and performance by the CSK Parties of this
Agreement, each of the Ancillary Agreements, any other agreement or
contract contemplated hereby and the contribution of the WISCO
Contributed Assets, except where the failure to obtain any such Consent
or Consents, give any such notice or notices or make any such filing or
filings would not have a Material Adverse Effect.
3.4 NON-CONTRAVENTION. Except as set forth on Schedule 3.3, the execution,
delivery and performance by the CSK Parties of this Agreement and each
of the Ancillary Agreements, and the consummation of the transactions
contemplated hereby and thereby, does not and will not (i) violate any
provision of the certificate of incorporation or bylaws of any of the
CSK Parties or any Contributed Subsidiary; (ii) subject to obtaining
the Consents referred to in Section 3.3, conflict with, or result in
the breach of, or constitute a default under, or result in the
termination, cancellation or
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acceleration (whether after the filing of notice or the lapse of time
or both) of any right or obligation of any of the CSK Parties or any
Contributed Subsidiary under, or to a loss of any benefit to which any
of the CSK Parties or any Contributed Subsidiary is entitled under, any
Contract or result in the creation of any Encumbrance (other than a
Permitted Encumbrance) upon any of the WISCO Contributed Assets; or
(iii) assuming compliance with the matters set forth in Section 3.3,
violate, or result in a breach of or constitute a default under any
Law, rule, regulation, judgment, injunction, order, decree or other
restriction of any court or Governmental Authority to which any of the
CSK Parties or any Contributed Subsidiary is subject, including any
Governmental Authorization, except in each case, such matter or matters
that would not have a Material Adverse Effect.
3.5 BINDING EFFECT. This Agreement constitutes, and each of the Ancillary
Agreements when executed and delivered by the parties thereto will
constitute, a valid and legally binding obligation of each of the CSK
Parties that is a party thereto, enforceable with respect to such party
in accordance with its terms, except as the enforceability thereof may
be limited or otherwise effected by bankruptcy, insolvency,
reorganization, moratorium and similar laws of general applicability
Relating to, or affecting, creditors rights and to general equity
principles.
3.6 FINANCIAL STATEMENTS: ABSENCE OF CERTAIN CHANGES.
(a) Attached as Schedule 3.6(a) are the following financial
statements of the WISCO Business: Unaudited Balance Sheet,
Statement of Income and Statement of Cash Flows, as of and for
(i) the years ended December 31, 1997 and 1998 (the "WISCO
Annual Financial Statements"); and (ii) the period ended April
30, 1999 (the "WISCO April Financial Statements").
(Collectively the financial statements described in this
Section 3.6(a) shall be referred to as the "WISCO Financial
Statements.")
(b) Exhibit 3.6(b) sets forth the line items and a definition for
each such line item contained in each of the WISCO Financial
Statements.
(c) The WISCO Financial Statements are true and correct in all
material respects, present fairly the combined financial
position and results of operation, divisional equity and cash
flows of the WISCO Business as of the dates and for the
periods presented, and were prepared in accordance with GAAP
applied on a basis consistent with past practice of the WISCO
Business. The WISCO Financial Statements reflect the
underlying Books and Records of the WISCO Business, which are
complete and accurate in all material respects. Except as
described on Schedule 3.6(c), consistent accounting policies
and accrual methods were used in all periods presented. All
non-recurring or unusual income or expense items over
$500,000, as reflected in the 1998 Statement of Income of
WISCO, have been disclosed
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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
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employment, and rates of remuneration, as of August 31, 1999.
(b) Except as disclosed on Schedule 3.9(b), no CSK Party is a
party to nor does it sponsor, maintain, or contribute to any
Employee Plans that provide benefits to Employees or Retired
Employees of the WISCO Business.
(c) WISCO has delivered to G-P true, complete and up-to-date
copies of all documents embodying the CSK Plans including,
without limitation, all amendments thereto, all funding
agreements thereunder (including, but not limited to, trust
agreements), all summaries of such CSK Plans provided to
Employees, Retired Employees, directors, officers,
shareholders or their dependents with respect to the WISCO
Business, and all material communications received from or
sent to regulatory authorities within the prior two (2) plan
years with respect to each such CSK Plan as well as the most
recent valuation for each defined contribution retirement plan
maintained by any of the CSK Parties and the most recent
actuarial valuation for each of the CSK Plans for which such
valuations are required. The applicable CSK Party has
delivered to G-P a complete written description of all
unwritten CSK Plans, and will deliver such other documentation
with respect to any CSK Plan as is reasonably requested by
G-P.
(d) Except as disclosed on Schedule 3.9(d), no promise or
commitment has been made by any CSK Party (i) to amend any of
the CSK Plans or to provide increased benefits thereunder to
any Employees, Retired Employees, directors, officers,
shareholders of the WISCO Business or the WISCO Contributed
Subsidiaries, or their dependents, except pursuant to the
requirements, if any, of the CSK Plans or any collective
bargaining agreement, or (ii) to establish any new Employee
Plan. Except as disclosed on Schedule 3.9(d), no amendment to
any CSK Plan has been adopted by any CSK Party since June 30,
1999. Except as disclosed on Schedule 3.9(d), one or more of
the CSK Parties has the right pursuant to the terms of each
CSK Plan and all agreements Related to such plan unilaterally
to terminate such plan (or its participation in such plan) or
to amend the terms of such plan at any time except as provided
under a collective bargaining agreement. Except as disclosed
on Schedule 3.6(a) or Schedule 3.9(d) or as set forth in the
Human Resources Agreement, the transactions contemplated by
this Agreement will not result in any additional payments to,
or increase the vested interest of, any Employee, Retired
Employee, director, officer, shareholder, or their dependents
under any CSK Plan; and the transactions contemplated by this
Agreement will not result in any payment to any Employee or
Retired Employee, director, officer, or shareholder of any CSK
Party which will be subject to Section 280G of the Code.
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(e) Each CSK Plan has been established, maintained, and
administered in substantial compliance with its terms and all
related documents or agreements and in substantial compliance
with applicable provisions of ERISA, the Code, and other
applicable Laws.
(f) Except as disclosed on Schedule 3.9(f), all required employer
contributions, premium payments and employee contributions
under the CSK Plans have been made and remitted to the funding
agents or accrued or booked thereunder within the time
prescribed by any such CSK Plan and the Laws. All insurance
premiums required with respect to any CSK Plan, including any
premiums payable to the Pension Benefit Guarantee Corporation,
have been paid, made, accrued or booked within the time
prescribed by any such CSK Plan and the applicable Law. All
benefits, expenses and other amounts due and payable to or
under any CSK Plan, and all contributions, transfers or
payments required to be made to any CSK Plan, have been paid,
made, accrued or booked within the time prescribed by any such
CSK Plan and the Laws. Except as disclosed on Schedule 3.9(f),
all of the assets which have been set aside in a trust or
account (other than an account which is part of a CSK Party's
general assets) to satisfy any obligation under any CSK Plan
are shown on the books and records of each such trust and each
such account at their fair market value, such current fair
market value as of the last valuation date is equal to or
exceeds the present value of any obligation under the CSK
Plan, and the liabilities for all other obligations under any
CSK Plan are accurately set forth in the WISCO Financial
Statements.
(g) Except as disclosed on Schedule 3.9(g), there is no pending
or, to the Knowledge of the CSK Parties, threatened claim with
respect to a CSK Plan (other than routine and reasonable
claims for benefits made in the ordinary course of the WISCO
Business) or with respect to the terms and conditions of
employment or termination of employment by any Employee, or
Retired Employee, and no audit or investigation by any
governmental or other law enforcement agency is pending or has
been proposed with respect to any CSK Plan.
(h) Except as disclosed on Schedule 3.9(h), no CSK Plan is subject
to Title IV of ERISA. Neither any of the CSK Parties nor any
Related Person has incurred any material liability under or
pursuant to Title I or IV of ERISA or the penalty, excise tax
or joint and several liability provisions of the Code relating
to employee benefit plans and, to the Knowledge of the CSK
Parties, no event or condition has occurred or exists which
could result in any material liability to a CSK Party, such
Related Person or the Company or G-P under or pursuant to
Title I or IV of ERISA or such penalty, excise tax or joint
and several liability provisions of the Code. No CSK Plan has
incurred an "accumulated funding deficiency" within the
meaning of such sections of the Code and ERISA, whether or not
waived; and no such CSK
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Plan has been terminated. Except as disclosed on Schedule
3.9(h), none of the CSK Parties contribute to, nor do they
have any obligation to contribute to, a multiemployer plan as
defined in Section 4001(a)(3) of ERISA with regard to the
Employees or Retired Employees.
(i) Each of the CSK Plans that is intended to be qualified under
Section 401(a) of the Code, and the trust, if any, forming a
part thereof, has received a favorable determination letter
from the Internal Revenue Service as to the qualification of
its form under the Code and to the effect that each such trust
is exempt from taxation under Section 501(a) of the Code and,
to the Knowledge of the CSK Parties, nothing has occurred
since the date of such determination letter that adversely
affects such qualification or tax-exempt status. Except as
disclosed in Schedule 3.9(i), all reports and other documents
required to be filed with any governmental agency or
distributed to plan participants or beneficiaries (including,
but not limited to, actuarial reports, audits or Tax Returns)
have been duly filed or distributed on a timely basis, and
copies thereof have been or will be furnished to G-P prior to
the Closing.
3.10 COMPLIANCE WITH LAWS. Except as set forth in Schedule 3.10, the WISCO
Business is being conducted in compliance with all Laws applicable to
the WISCO Business and, as of the Closing, the Company will have
(subject to obtaining the Consents) all Governmental Authorizations
necessary for the conduct of the WISCO Business as currently conducted,
except for such non-compliance or the failure to obtain such Consent or
Consents which would not have a Material Adverse Effect; it being
understood that nothing in this representation is intended to address
any compliance issue that is the subject of the representations and
warranties set forth in Sections 3.7, 3.8, 3.9, 3.11, 3.12, or 3.13
hereof, and that the CSK Parties make no representations in this
Section 3.10 as to the transferability or assignability of any such
Governmental Authorizations. None of the CSK Parties has received
written notice that any material Governmental Authorization may be
suspended, revoked, modified or canceled.
3.11 ENVIRONMENTAL MATTERS.
(a) Schedule 3.11(a) sets forth a list of all material
Environmental Permits in connection with the WISCO Business.
(b) Except as would not have a Material Adverse Effect, or as
disclosed on Schedule 3.11(b):
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(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
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the Company's use of, the WISCO Intellectual Property owned by any CSK Party as
of and following the Closing.
(b) To the Knowledge of the CSK Parties, no product, component,
method, process, or material (including computer software) used, sold or
manufactured by the WISCO Business infringes on, misappropriates, or otherwise
violates a valid and enforceable intellectual property right of any other
Person.
(c) There are no demands, actions or proceedings pending or, to
the Knowledge of the CSK Parties, threatened, against the CSK Parties Relating
to the WISCO Business alleging infringement, misappropriation, or violation of
any intellectual property right of any other Person, and, to the Knowledge of
the CSK Parties, no Person is infringing, misappropriating, challenging or
violating, the Intellectual Property owned by any CSK Party, except for
challenges, infringements, misappropriation or violations which, individually or
in the aggregate, would not have a Material Adverse Effect.
(d) All of the WISCO Intellectual Property will be transferred to
the Company at Closing, except to the extent certain Intellectual Property used
by the CSK Parties to provide services under the Transition Services Agreement
is specifically excluded thereunder. The CSK Parties agree that Intellectual
Property provided under the Transition Services Agreement will be provided to
the Company on and after Closing on the same terms and conditions under which it
was available to the WISCO Business prior to the Closing in accordance with the
terms of the Transition Services Agreement.
(e) Schedule 3.12(e) sets forth the CSK Parties' efforts at
addressing the Year 2000 issue in the WISCO Business. The information set forth
therein is accurate as of the date hereof, in all material respects. The CSK
Parties have developed and begun implementing a Project Plan to remediate and/or
replace Computer Systems that are used or relied upon in the WISCO Business but
are not Year 2000 Ready. Such remediation and/or replacement is scheduled to be
completed in 1999.
3.13 LABOR MATTERS. Except as disclosed on Schedule 3.13:
(a) As of the date hereof, none of the CSK Parties is a party to
any labor or collective bargaining agreement or similar agreement with respect
to Employees of the WISCO Business, no such Employees are represented by any
labor organization and, to the Knowledge of the CSK Parties, there are no
organizing or de-certification activities (including any demand for recognition
or certification proceedings pending or threatened to be brought or filed with
the National Labor Relations Board or other labor relations tribunal) involving
the WISCO Business;
(b) As of the date hereof, there are no strikes, work stoppages,
slowdowns, lockouts, unfair labor practice charges pending or, to the Knowledge
of the CSK Parties, threatened against or involving the Employees of the WISCO
Business;
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(c) Within the 90-day period immediately preceding the Effective
Time, no Employee of the WISCO Business has been laid off or terminated for
reasons other than a discharge for cause, voluntary resignation or retirement.
(d) There are no complaints, charges, claims or grievances against
the CSK Parties pending or, to the Knowledge of the CSK Parties, threatened to
be brought or filed with any Governmental Authority, arbitrator or court based
on or arising out of the employment by the CSK Parties of any Employee of the
WISCO Business, except for those which, individually or in the aggregate, would
not have a Material Adverse Effect;
(e) The CSK Parties are in compliance with all Laws Relating to
the employment of labor, including all such Laws Relating to wages, hours,
collective bargaining, discrimination, civil rights, safety and health,
immigration, workers' compensation, layoffs, and the collection and payment of
withholding and/or Social Security Taxes and similar Taxes, except where the
failure to be in compliance would not have a Material Adverse Effect; and
(f) The CSK Parties have given all notices required to be given
prior to the Closing Date under the Worker Adjustment and Retraining
Notification Act, 29 U.S.C. Section 2101 et seq. ("WARN"), or under any similar
provision of any federal, state, regional, foreign, or local Law, rule, or
regulation (referred to collectively with WARN as "WARN Obligations") Relating
to any plant closing or mass layoff that occurred during the 90 days immediately
preceding the Effective Time and pertaining to the WISCO Business.
3.14 CONTRACTS. Schedule 3.14 sets forth a list, as of the date
hereof, of each Contract that is Related to the WISCO Business other than (a)
WISCO Leased Real Property, which are listed on Schedule 3.15, and collective
bargaining agreements which are listed on Schedule 3.13, (b) purchase orders or
similar agreements for the purchase or sale of goods or services in the ordinary
course of business, (c) confidentiality agreements entered into in the ordinary
course of business in connection with the purchase and sale of Inventory, and
(d) any Contract which requires a payment or imposes an obligation on either
party thereto of less than $1,000,000 in the aggregate. Schedule 3.14 also
identifies any Contract that contains a non-compete covenant or similar
provision that could materially restrict the Company in its conduct of the WISCO
Business following Closing, any employment agreement with any Employee of the
WISCO Business, any employment agreement included in the WISCO Contributed
Assets or WISCO Assumed Liabilities, any Contract between any Affiliates of CSK,
on one hand, and any of the CSK Parties or any of the WISCO Contributed
Subsidiaries, on the other, any agreements Related to payments in lieu of taxes,
any agreement or license Related to Intellectual Property (other than "shrink
wrap" consumer software licenses), leases and license agreements for any
Computer Systems (other than "shrink wrap" consumer software licenses), all
material agreements for telecommunications voice (including without limitation,
local, long distance and toll free service) and data services, Internet access,
hosting and use services. Schedule 3.14 also identifies any Contract concerning
any environmental liability with respect to the WISCO Business. Each Contract
set forth on Schedule 3.14 is a valid and binding agreement of the applicable
CSK Party and, to the Knowledge of the CSK Parties, is in full force and effect.
Except as otherwise provided in Schedule 3.14, no CSK Party is, and, to their
Knowledge, no
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other party thereto is, in default in any material respect under
any Contract listed on Schedule 3.14 or any collective bargaining agreement
listed on Schedule 3.13.
3.15 REAL ESTATE LEASES. Schedule 3.15 sets forth a list, as of the
date hereof, of each written WISCO Real Estate Lease with a term of more than
one month that is Related to the WISCO Business. Each WISCO Real Estate Lease
set forth on Schedule 3.15 is a valid and binding agreement of a CSK Party and
is in full force and effect. There are no defaults by the applicable CSK Party
under any WISCO Real Estate Lease listed on Schedule 3.15 which defaults have
not been cured or waived and which would, individually or in the aggregate, have
a Material Adverse Effect.
3.16 ENTIRE BUSINESS; TITLE TO PROPERTY.
(a) Except as set forth in Schedule 3.16(a) and Schedule 3.6(a),
the WISCO Contributed Assets, the assets held by the WISCO Contributed
Subsidiaries, the WISCO Retained Assets (including cash and cash accounts,
disbursement accounts, invested securities and other short and medium term
investments, the CSK Marks and CSK Plans, and WISCO's and CSK's insurance
policies), and the rights specifically provided or made available to the Company
under the Ancillary Agreements, include all of the buildings, machinery,
equipment and other assets (whether tangible or intangible) necessary for the
Company immediately after Closing to conduct in all material respects the WISCO
Business as conducted as of the date hereof, and as conducted during the
12-month period prior to the date hereof (subject to changes expressly permitted
by the terms hereof to be made after the date hereof); provided, however, that
no representation is made as to the assignability of Government Authorizations.
(b) A CSK Party has good (and, in the case of its Owned Real
Property, marketable) title to, or a valid and binding leasehold interest in,
the WISCO Contributed Assets, free and clear of all Encumbrances, except (i) as
set forth in Schedule 3.16(b), and (ii) any Permitted Encumbrances.
(c) The capital structure of each of the WISCO Contributed
Subsidiaries is as set forth in Schedule 3.16(c). The shares of stock or
membership interests, as applicable, of the WISCO Contributed Subsidiaries
included in the WISCO Contributed Assets constitute 100% of the issued and
outstanding shares of stock or membership interests, as applicable, of each
WISCO Contributed Subsidiary. All shares of stock , membership interests or
other form of ownership of the WISCO Contributed Subsidiaries included in the
WISCO Contributed Assets are validly issued, fully paid and non-assessable.
Except as set forth on Schedule 3.16(c), (i) there are no options, warrants, or
similar rights to purchase any of the shares or membership interests of any of
the WISCO Contributed Subsidiaries, and no obligations binding upon any WISCO
Contributed Subsidiary to issue, sell, redeem, purchase or exchange any of its
capital stock or membership interests or any right relating thereto, and (ii)
there are no shareholders' agreements, voting agreements, voting trusts or other
agreements or rights of third parties with respect to or affecting any of the
WISCO Contributed Subsidiaries or any of their shares of stock or membership
interests, as applicable. Wisconsin Tissue Management, LLC has entered into no
agreements and conducted no business and contains only those assets and
liabilities specifically set forth in
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Schedule 3.16(c), except, in each case, as set forth in the Human Resources
Agreement. WMex assumed no liabilities or obligations of any other CSK Party
Related to or arising from the sale of its capital stock to WISCO. CSK has
provided G-P with true and correct copies of all documentation Related to such
sale.
(d) The WISCO Contributed Assets and the assets of the WISCO
Contributed Subsidiaries are in good operating condition and repair (subject to
normal wear and tear). Except as set forth on Schedule 3.16(d), the CSK Parties
have no Knowledge of any material structural or mechanical defects with respect
to any buildings, improvements or equipment included in the WISCO Contributed
Assets, which defects are reasonably likely to have a Material Adverse Effect.
(e) None of the WISCO Owned Real Property or the WISCO Leased Real
Property or other assets of the WISCO Business (except as set forth in the
Transition Services Agreement) are owned, used or occupied in whole or in part
by CSK or any of its Affiliates other than in connection with the operation of
the WISCO Business.
3.17. FINDER'S FEES. Except for Salomon Smith Barney & Co., whose
fees will be paid by CSK, there is no investment banker, broker or finder which
has been retained by or is authorized to act on behalf of any CSK Party who
might be entitled to any fee or commission from G-P or the Company in connection
with the transactions contemplated by this Agreement.
3.18 INSURANCE. Schedule 3.18 attached hereto sets forth the
following information with respect to each insurance policy to which any CSK
Party or a WISCO Contributed Subsidiary, with respect to the WISCO Business, has
been a party, a named insured, or otherwise the beneficiary of coverage at any
time within the past five years:
(a) the name of the insurer, the name of the policyholder, and the name
of each covered insured;
(b) the scope, period and amount of coverage; and
(c) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
Schedule 3.18 also describes any self insurance arrangements affecting
the WISCO Business. As of the date hereof, no CSK Party has received any written
notice of any retroactive premium increase or assessment applicable to the WISCO
Business. Except as disclosed on Schedule 3.18, all of such policies are in full
force and effect.
3.19 NO UNDISCLOSED LIABILITIES. With respect to the WISCO Business
no CSK Party has any obligations or liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise, whether or not known to such CSK Party,
whether due or to become due and regardless of when asserted) arising out of
transactions entered into at or prior to the Closing, or any action or inaction
at or prior to the Closing, or any state of facts existing at or prior to the
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Closing other than: (a) liabilities set forth on the WISCO Financial Statements
(including any notes thereto, if any); (b) liabilities and obligations arising
from or in connection with matters disclosed pursuant to the CSK Parties'
representations and warranties in this Agreement or in the Disclosure Schedules
(none of which, except as set forth on Schedule 3.7, is a liability resulting
from a breach of contract, breach of warranty, tort, infringement claim or
lawsuit), other than liabilities and obligations arising from or in connection
with matters disclosed pursuant to Section 3.11; (c) liabilities and obligations
arising from or in connection with matters disclosed pursuant to Section 3.11;
(d) liabilities and obligations which have arisen after April 30, 1999 in the
ordinary course of business (none of which, except as set forth on Schedule 3.7,
is a liability resulting from a breach of contract, breach of warranty, tort,
infringement claim or lawsuit); and (e) such other liabilities or obligations
that do not have a Material Adverse Effect.
3.20 NO MATERIAL ADVERSE CHANGE. Except as disclosed on Schedule
3.20, since April 30, 1999, the CSK Parties have conducted the WISCO Business in
the ordinary course and in a manner consistent with the practices applied during
the periods specified in the WISCO Financial Statements, and there has been no
Material Adverse Effect in the WISCO Business. Except as set forth on Schedule
3.20, and except as such does not have a Material Adverse Effect, no CSK Party
has with respect to the WISCO Business:
(a) been a party to any corporate reorganization, restructuring or
merger or amalgamation or amended its certificate or articles of incorporation
or bylaws;
(b) declared or paid any dividend or declared or made any other
distribution (whether in cash, stock or property) on any of the shares of its
capital stock;
(c) incurred or discharged any obligation or liability (whether
accrued, absolute or contingent) other than in the ordinary course of and in a
manner consistent with past practices for the WISCO Business;
(d) entered into any transaction, contract, agreement, indenture,
instrument or commitment other than in the ordinary course of and in a manner
consistent with past practices for the WISCO Business;
(e) suffered or incurred any material damage, destruction, loss or
liability (whether or not covered by any insurance);
(f) experienced any strike, lockout or other labor trouble such as
slow down or work stoppage, or any loss of any of its key Employees, customers,
suppliers or distributors;
(g) suffered any shortage or cessation or interruption of raw
materials, supplies or utilities that could have a Material Adverse Effect on
the WISCO Business;
(h) made any change in its accounting principles, policies and
practices as utilized in the preparation of the WISCO Financial Statements;
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(i) made any loan or advance, or assumed, guaranteed, endorsed or
otherwise become liable with respect to the liabilities or obligations of any
other Person or entity, or permitted any of its assets to be subjected to any
lien or security interest (except for Permitted Encumbrances);
(j) granted to any customer any allowance or discount or changed
its pricing, credit or payment policies other than in the ordinary course of and
in a manner consistent with past practices for the WISCO Business (except for
non-material variations therefrom in the aggregate);
(k) incurred any indebtedness, liability or obligation (absolute,
accrued, contingent or otherwise) other than in the ordinary course of and in a
manner consistent with past practices for the WISCO Business;
(l) sold, leased or otherwise disposed of any of its assets or any
right, title or interest therein other than in the ordinary course of and in a
manner consistent with past practices for the WISCO Business;
(m) made any payment to, or for the benefit of, any present or
former Employee, director, officer or shareholder otherwise than at the regular
rates payable to them, by way of salary, pension, bonus or other remuneration
consistent with past practices for the WISCO Business;
(n) committed to any capital expenditure project or made any
investment, in either case in excess of Five Hundred Thousand Dollars ($500,000)
not disclosed to G-P prior to the date of this Agreement; or
(o) authorized or agreed to do any of the foregoing matters referred to
in this Section 3.20.
3.21 INDEBTEDNESS FOR BORROWED MONEY. There is no indebtedness for
borrowed money included in the WISCO Assumed Liabilities.
3.22 KNOWLEDGE AS OF CLOSING DATE. The CSK Parties have no Knowledge,
as of the Closing Date, that any representation or warranty made by G-P in
Article IV (and related schedules) is untrue.
3.23 NO OTHER REPRESENTATIONS OR WARRANTIES. Except for the
representations and warranties contained in this Article III, no CSK Party nor
any other Person makes any other express or implied representation or warranty
on behalf of the CSK Parties.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF G-P
G-P represents and warrants to the CSK Parties and the Company as
follows:
4.1 ORGANIZATION AND QUALIFICATION. G-P is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Georgia and has all requisite corporate power and authority to own and operate
the G-P Contributed Assets and to carry on the G-P Business as currently
conducted. G-P is duly qualified to do business and is in good standing as a
foreign corporation in the jurisdictions listed on Schedule 4.1, which are the
only jurisdictions where the ownership or operation of the G-P Contributed
Assets or the conduct of the G-P Business requires such qualification, except
where the failure to be so qualified would not have a Material Adverse Effect.
4.2 CORPORATE AUTHORIZATION. G-P has full corporate power and
authority to execute and deliver this Agreement, and to perform its obligations
hereunder and under any agreement or contract contemplated hereby, including the
Ancillary Agreements. The execution, delivery and performance by G-P of this
Agreement and the agreements and contracts contemplated hereby has been duly and
validly authorized by all necessary corporate action and no additional corporate
authorization is required in connection with the execution, delivery and
performance by G-P of this Agreement and the agreements and contracts
contemplated hereby.
4.3 CONSENTS AND APPROVALS. Except as specifically set forth in
Schedule 4.3 or as required by the HSR Act, no Consent is required to be
obtained by G-P from, and no notice or filing is required to be given by G-P to
or made by G-P with, any Governmental Authority or other Person or under any
Contract listed, or required to be listed, on Schedule 4.14 in connection with
the execution, delivery and performance by G-P of this Agreement, each of the
Ancillary Agreements, any other agreement or contract contemplated hereby and
the contribution of the G-P Contributed Assets, except where the failure to
obtain any such Consent or Consents, give any such notice or notices or make any
such filing or filings would not have a Material Adverse Effect.
4.4 NON-CONTRAVENTION. Except as set forth on Schedule 4.3, the
execution, delivery and performance by G-P of this Agreement and each of the
Ancillary Agreements, and the consummation of the transactions contemplated
hereby and thereby, does not and will not (i) violate any provision of the
certificate of incorporation or bylaws of G-P; (ii) subject to obtaining the
Consents referred to in Section 4.3, conflict with, or result in the breach of,
or constitute a default under, or result in the termination, cancellation or
acceleration (whether after the filing of notice or the lapse of time or both)
of any right or obligation of G-P under, or to a loss of any benefit to which
G-P is entitled under, any Contract or result in the creation of any Encumbrance
(other than a Permitted Encumbrance) upon any of the G-P Contributed Assets; or
(iii) assuming compliance with the matters set forth in Section 4.3, violate, or
result in a breach of or constitute a default under any Law, rule, regulation,
judgment, injunction, order, decree or other restriction of any court or
Governmental Authority to which G-P is subject, including any Governmental
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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.
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4.7 LITIGATION AND CLAIMS. Except as disclosed on Schedule 4.7:
(a) There is no action (whether civil, criminal or
administrative), suit, demand, claim, dispute, hearing, proceeding (including
condemnation or other proceeding in eminent domain) or investigation pending or,
to the Knowledge of G-P, threatened, Related to the G-P Business or any of the
G-P Contributed Assets or included in the G-P Assumed Liabilities, that
individually or in the aggregate is reasonably expected to have a Material
Adverse Effect.
(b) None of the G-P Contributed Assets is subject to any order,
writ, judgment, award, injunction, or decree of or settlement enforceable in any
court or governmental or regulatory authority of competent jurisdiction or any
arbitrator or arbitrators.
4.8 TAXES. Except as disclosed on Schedule 4.8:
(a) G-P has duly and timely filed (or has caused to be duly and
timely filed) taking into account any valid extension of the time for filing,
each Tax Return required to be filed with any Tax Authority which includes or is
based upon the G-P Contributed Assets, or the operations, ownership or
activities of the G-P Business, and all Taxes due and payable (whether or not
shown on or required to be shown on a Tax Return) have been paid prior to their
due dates; provided, however, that the representations and warranties set forth
in this paragraph are made only to the extent that (i) such Taxes are or may
become Encumbrances on the G-P Contributed Assets, or (ii) the Company is or may
be liable in the capacity of transferee of the Contributed Assets.
(b) G-P has duly and timely filed (or has caused to be duly and
timely filed), taking into account any valid extension of the time for filing,
each Tax Return which includes or is based upon the assets, operations,
ownership or activities of the G-P Business, and all Taxes due and payable
(whether or not shown on or required to be shown on a Tax Return) have been paid
prior to their due dates.
(c) None of the G-P Contributed Assets (i) is subject to any lien
(other than a Permitted Encumbrance) arising in connection with any failure or
alleged failure to pay any Taxes, (ii) secures any debt the interest on which is
Tax-exempt under Section 103(a) of the Code, (iii) is required to be or is being
depreciated under the alternative depreciation system under Section 168(g)(2) of
the Code, (iv) is "limited use property" with the meaning of Revenue Procedure
76-30, or (v) will be treated as owned by any other Person pursuant to the
provisions of former Section 168(f)(8) of the Code.
(d) G-P (with respect to the G-P Business) has withheld and paid
all material Taxes required to have been withheld and paid in connection with
amounts paid or owing to any Employee, independent contractor, creditor,
shareholder or other party.
(e) There are no pending, proposed or, to the Knowledge of G-P,
threatened audits, assessments or claims from any Tax Authority for
deficiencies, penalties or interest against G-P (with respect to the G-P
Contributed Assets or the G-P Business or any of its assets, operations
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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
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remitted to the funding agents or accrued or booked thereunder within the time
prescribed by any such G-P Plan and the Laws. All insurance premiums required
with respect to any G-P Plan, including any premiums payable to the Pension
Benefit Guarantee Corporation, have been paid, made, accrued or booked within
the time prescribed by any such G-P Plan and the applicable Law. All benefits,
expenses and other amounts due and payable to or under any G-P Plan, have been
paid, made, accrued or booked within the time prescribed by any such G-P Plan
and the Laws. Except as disclosed on Schedule 4.9(f), all of the assets which
have been set aside in a trust or account (other than an account which is part
of G-P's general assets) to satisfy any obligation under any G-P Plan are shown
on the books and records of each such trust and each such account at their fair
market value, such current fair market value as of the last valuation date is
equal to or exceeds the present value of any obligation under the G-P Plan, and
the liabilities for all other obligations under any G-P Plan are accurately set
forth in the G-P Financial Statements.
(g) Except as disclosed on Schedule 4.9(g), there is no pending
or, to the Knowledge of G-P, threatened claim with respect to a G-P Plan (other
than routine and reasonable claims for benefits made in the ordinary course of
the G-P Business) or with respect to the terms and conditions of employment or
termination of employment by any Employee, or Retired Employee, and no audit or
investigation by any governmental or other law enforcement agency is pending or
has been proposed with respect to any G-P Plan.
(h) Except as disclosed on Schedule 4.9(h), no G-P Plan is subject
to Title IV of ERISA. Neither G-P nor any Related Person has incurred any
material liability under or pursuant to Title I or IV of ERISA or the penalty,
excise tax or joint and several liability provisions of the Code Relating to
employee benefit plans and, to the Knowledge of G-P, no event or condition has
occurred or exists which could result in any material liability to G-P, such
Related Person or the Company or a CSK Party under or pursuant to Title I or IV
of ERISA or such penalty, excise tax or joint and several liability provisions
of the Code. No G-P Plan has incurred an "accumulated funding deficiency" within
the meaning of such sections of the Code and ERISA, whether or not waived; and
no such G-P Plan has been terminated. Except as disclosed on Schedule 4.9(h),
G-P does not contribute to, or have any obligation to contribute to, a
multiemployer plan as defined in Section 4001(a)(3) of ERISA with regard to the
Employees or Retired Employees.
(i) Each of the G-P Plans that is intended to be qualified under
Section 401(a) of the Code, and the trust, if any, forming a part thereof, has
received a favorable determination letter from the Internal Revenue Service as
to the qualification of its form under the Code and to the effect that each such
trust is exempt from taxation under Section 501(a) of the Code and, to the
Knowledge of G-P nothing has occurred since the date of such determination
letter that adversely affects such qualification or tax-exempt status. Except as
disclosed in Schedule 4.9(i), all reports and other documents required to be
filed with any governmental agency or distributed to plan participants or
beneficiaries (including, but not limited to, actuarial reports, audits or Tax
Returns) have been duly filed or distributed on a timely basis, and copies
thereof have been or will be furnished to CSK upon reasonable request.
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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.
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(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
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proceedings pending or threatened to be brought or filed with the National Labor
Relations Board or other labor relations tribunal) involving the G-P Business;
(b) As of the date hereof, there are no strikes, work stoppages,
slowdowns, lockouts, unfair labor practice charges pending or, to the Knowledge
of G-P, threatened against or involving the Employees of the G-P Business;
(c) There are no complaints, charges, claims or grievances against G-P
pending or, to the Knowledge of G-P, threatened to be brought or filed with any
Governmental Authority, arbitrator or court based on or arising out of the
employment by G-P of any Employee of the G-P Business, except for those which,
individually or in the aggregate, would not have a Material Adverse Effect;
(d) G-P is in compliance with all Laws Relating to the employment of
labor, including all such Laws Relating to wages, hours, collective bargaining,
discrimination, civil rights, safety and health, immigration, workers'
compensation, layoffs, and the collection and payment of withholding and/or
Social Security Taxes and similar Taxes, except where the failure to be in
compliance would not have a Material Adverse Effect; and
(e) G-P has given all notices required to be given prior to the Closing
Date under WARN Obligations Relating to any plant closing or mass layoff that
occurred during the 90 days immediately preceding the Effective Time pertaining
to the G-P Business.
4.14 CONTRACTS. Schedule 4.14 sets forth a list, as of the date hereof,
of each Contract that is Related to the G-P Business other than (a) G-P Real
Property Leases, which are listed on Schedule 4.15, and collective bargaining
agreements, which are listed on Schedule 4.13, (b) purchase orders or similar
agreements for the purchase or sale of goods or services in the ordinary course
of business, (c) confidentiality agreements entered into in the ordinary course
of business in connection with the purchase and sale of Inventory, and (d) any
Contract which requires a payment or imposes an obligation on either party
thereto of less than $1,000,000 in the aggregate. Schedule 4.14 also identifies
any Contract that contains a non-compete covenant or similar provision that
could materially restrict the Company in its conduct of the G-P Business
following Closing, any employment agreement with any Employee of the G-P
Business, any employment agreement included in the G-P Contributed Assets or G-P
Assumed Liabilities, any Contract between any Affiliates of G-P, on one hand,
and G-P on the other hand, any agreements Related to payments in lieu of taxes,
any agreement or license Related to Intellectual Property (other than "shrink
wrap" consumer software licenses), leases and license agreements for any
Computer Systems (other than "shrink wrap" consumer software licenses), all
material agreements for telecommunications voice (including without limitation,
local, long distance and toll free service) and data services, Internet access,
hosting and use services. Each Contract set forth on Schedule 4.14 is a valid
and binding agreement of G-P and, to the Knowledge of G-P, is in full force and
effect. Except as otherwise provided in Schedule 4.14, G-P is not, and, to G-P's
Knowledge, no other party thereto is, in default in any material respect under
any Contract listed on Schedule 4.14 or any collective bargaining agreement
listed on Schedule 4.13.
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4.15 REAL ESTATE LEASES. Schedule 4.15 sets forth a list, as of the
date hereof, of each material written G-P Real Estate Lease with a term of more
than one month that is Related to the G-P Business. Each G-P Real Estate Lease
set forth on Schedule 4.15 is a valid and binding agreement of G-P and is in
full force and effect. There are no defaults under any G-P Real Estate Lease
listed on Schedule 4.15 which defaults have not been cured or waived and which
would, individually or in the aggregate, have a Material Adverse Effect.
4.16 ENTIRE BUSINESS; TITLE TO PROPERTY
(a) Except as set forth in Schedule 4.16(a) and Schedule 4.6(a),
the G-P Contributed Assets, the G-P Retained Assets (including cash and cash
accounts, disbursement accounts, invested securities and other short and medium
term investments, the G-P Marks, the G-P Plans, and G-P's insurance policies),
and the rights specifically provided or made available to the Company under the
Ancillary Agreements, include all of the buildings, machinery, equipment and
other assets (whether tangible or intangible) necessary for the Company
immediately after Closing to conduct in all material respects the G-P Business
as conducted as of the date hereof, and as conducted during the 12-month period
prior to the date hereof (subject to changes expressly permitted by the terms
hereof to be made after the date hereof); provided, however, that no
representation is made as to the assignability of Government Authorizations.
(b) G-P has good (and, in the case of its Owned Real Property,
marketable) title to, or a valid and binding leasehold interest in, the G-P
Contributed Assets, free and clear of all Encumbrances, except (i) as set forth
in Schedule 4.16(b) and (ii) any Permitted Encumbrances.
(c) G-P Contributed Assets do not include any equity interest in
any Subsidiary.
(d) The G-P Contributed Assets are in good operating condition and
repair (subject to normal wear and tear). Except as set forth on Schedule
4.16(d), to G-P's Knowledge, there are no material structural or mechanical
defects with respect to any buildings, improvements or equipment included in the
G-P Contributed Assets, which defects are reasonably likely to have a Material
Adverse Effect.
4.17 FINDER'S FEES. Except for Morgan Stanley Dean Witter Co.,
whose fees will be paid by G-P, there is no investment banker, broker or finder
which has been retained by or is authorized to act on behalf of G-P who might be
entitled to any fee or commission from G-P or the Company in connection with the
transactions contemplated by this Agreement.
4.18 INSURANCE. Schedule 4.18 attached hereto sets forth the
following information with respect to each insurance policy to which G-P, with
respect to the G-P Business, has been a party, a named insured, or otherwise the
beneficiary of coverage at any time with in the past five years:
(a) the name of the insurer, the name of the policyholder, and the name
of each covered insured;
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(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;
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(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.
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4.21 INDEBTEDNESS FOR BORROWED MONEY There is no indebtedness for
borrowed money included in the G-P Assumed Lia