ASSET PURCHASE AGREEMENT
DRAFT — May 2, 2025 — CONFIDENTIAL
by and among
CRESTLINE PACKAGING SOLUTIONS LLC an Ohio limited liability company
("Buyer")
and
ALLEGHENY VALLEY PACKAGING, INC. a Pennsylvania corporation
("Seller")
Calderwood & Harkness LLP 600 Lexington Avenue, 30th Floor New York, NY 10022 Matter No. 1006-00006
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement" or "APA"), dated as of May 2, 2025, is entered into by and among CRESTLINE PACKAGING SOLUTIONS LLC, an Ohio limited liability company ("Buyer"), and ALLEGHENY VALLEY PACKAGING, INC., a Pennsylvania corporation ("Seller"). Buyer and Seller are sometimes referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, Seller is engaged in the business of manufacturing corrugated packaging, folding cartons, specialty chemical-resistant coatings, and food-grade packaging (the "Business"), operating from facilities located in Butler, Pennsylvania and Meadville, Pennsylvania;
WHEREAS, Seller desires to sell, transfer, assign, convey, and deliver to Buyer, and Buyer desires to purchase and acquire from Seller, substantially all of the assets of Seller used in or related to the Business, upon the terms and subject to the conditions set forth herein;
WHEREAS, in connection with such acquisition, Buyer shall assume certain specified liabilities of Seller relating to the Business, upon the terms and subject to the conditions set forth herein; and
WHEREAS, the board of directors of Seller and the shareholders of Seller have approved the execution, delivery, and performance of this Agreement and the consummation of the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants, and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I — DEFINITIONS
Section 1.01 — Definitions
As used in this Agreement, the following terms shall have the meanings set forth below:
"Acquired Assets" means all assets, properties, and rights of every kind and nature, whether real, personal, or mixed, tangible or intangible, wherever located and whether or not reflected on the books and records of Seller, that are owned or held by Seller and used in or related to the Business, other than the Excluded Assets, as more particularly described in Section 2.01.
"Action" means any claim, action, suit, arbitration, inquiry, proceeding, hearing, or investigation by or before any Governmental Authority or any arbitral body.
"Adjustment Amount" means the amount, if any, by which the Closing Net Working Capital as finally determined pursuant to Section 3.03 exceeds or is less than the Target Net Working Capital, subject to the NWC Collar. For the avoidance of doubt, the Adjustment Amount shall be zero if the Closing Net Working Capital falls within the NWC Collar (i.e., is between $12,150,000 and $12,650,000).
"Affiliate" means, with respect to any Person, any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" (including the terms "controlling," "controlled by," and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract, or otherwise.
"Allegheny Valley Packaging 401(k) Profit Sharing Plan" means the defined contribution retirement plan maintained by Seller for the benefit of eligible employees of Seller, administered through Patriot Plan Administrators LLC, as such plan may be amended from time to time.
"Allocation" has the meaning set forth in Section 3.05.
"Ancillary Agreements" means the Bill of Sale, the Assignment and Assumption Agreement, the Deeds, the Escrow Agreement, the Transition Services Agreement, the Trademark License Agreement, the Non-Competition and Non-Solicitation Agreements, the Consulting Agreement, the intellectual Property Assignment Agreement, and each other agreement, instrument, or document to be executed and delivered in connection with the transactions contemplated by this Agreement.
"APA" or "Agreement" means this Asset Purchase Agreement, including all Exhibits and Schedules hereto, as it may be amended, supplemented, or modified from time to time in accordance with its terms.
"Assumed Contracts" means the Contracts set forth on Schedule 2.01(f), including customer supply agreements, vendor and raw material supply agreements (including, without limitation, the containerboard supply agreement with Consolidated Linerboard Corp.), equipment leases, and the Collective Bargaining Agreement, in each case as in effect on the Closing Date.
"Assumed Liabilities" has the meaning set forth in Section 2.03.
"Basket" means
"Bill of Sale" means the Bill of Sale to be delivered by Seller to Buyer at the Closing in substantially the form of Exhibit A attached hereto.
"Business" means the business of manufacturing corrugated packaging, folding cartons, specialty chemical-resistant coatings, and food-grade packaging, together with all ancillary and related operations, as conducted by Seller as of the date hereof and as of the Closing Date.
"Business Day" means any day other than a Saturday, Sunday, or day on which commercial banks in New York, New York are authorized or required by Law to remain closed.
"Butler Property" means the real property located at 250 Industrial Boulevard, Butler, Pennsylvania 16001, consisting of approximately 285,000 square feet of improvements situated on approximately 22.5 acres, together with all buildings, structures, improvements, fixtures, and appurtenances thereon, and all easements, rights-of-way, and other rights appurtenant thereto.
"Buyer" means Crestline Packaging Solutions LLC, an Ohio limited liability company, with its principal headquarters located at 4100 Commerce Parkway, Suite 800, Akron, Ohio 44308.
"Buyer Indemnified Parties" has the meaning set forth in Section 10.02.
"Buyer's Accountant" means Hargrove Thornton LLP.
"Closing" means the consummation of the transactions contemplated by this Agreement, including the purchase and sale of the Acquired Assets and the assumption of the Assumed Liabilities.
"Closing Date" means the date on which the Closing occurs, which is estimated to be July 31, 2025, or such other date as may be mutually agreed upon by the Parties.
"Closing Net Working Capital" means the Net Working Capital calculated as of 11:59 p.m. Eastern Time on the day immediately preceding the Closing Date, determined in accordance with the methodologies and accounting principles set forth on Schedule 3.03.
"Code" means the Internal Revenue Code of 1986, as amended from time to time, and any successor statute thereto. References to specific provisions of the Code shall include the corresponding provisions of any successor statute.
"Collective Bargaining Agreement" or "CBA" means the collective bargaining agreement between Seller and International Paperworkers Union Local 814, effective April 1, 2024, and expiring March 31, 2027, together with all amendments, supplements, side letters, memoranda of understanding, and related agreements entered into in connection therewith.
"Confidential Information" means all confidential or proprietary information of a Party or its Affiliates, including trade secrets, business plans, financial information, customer and supplier lists, pricing data, manufacturing processes, formulations, technical data, and other non-public information, whether in written, oral, electronic, or other form.
"Consolidated Linerboard Corp." means Consolidated Linerboard Corp., a Delaware corporation, the counterparty to Seller's containerboard supply agreement listed on Schedule 2.01(f).
"Consulting Agreement" means the Consulting Agreement to be entered into between Buyer and Michael G. Horvath at the Closing in substantially the form of Exhibit F attached hereto.
"Contracts" means all contracts, agreements, commitments, arrangements, understandings, leases, licenses, purchase orders, sales orders, indentures, notes, bonds, instruments, and other legally binding obligations, whether written or oral.
"De Minimis Threshold" means per individual claim or series of related claims.
"Debt Financing" means the debt financing contemplated by the commitment letter from Pinnacle National Bank, N.A. (Reference: PCL-2025-04-1187), dated April 22, 2025, in an aggregate principal amount of $130,000,000, on the terms described therein.
"Deeds" means the special warranty deeds to be delivered by Seller to Buyer at the Closing for each of the Butler Property and the Meadville Property, in substantially the form of Exhibit L attached hereto.
"Employee Benefit Plan" means any employee benefit plan, program, policy, practice, agreement, or arrangement, including any "employee benefit plan" as defined in Section 3(3) of ERISA, whether or not subject to ERISA, that is sponsored, maintained, contributed to, or required to be contributed to by Seller or any ERISA Affiliate for the benefit of any current or former employee, officer, director, or consultant of Seller.
"Environmental Claim" means any Action, notice, claim, demand, order, directive, investigation, or proceeding by any Person alleging actual or potential liability (including liability for investigatory costs, cleanup costs, governmental response costs, natural resource damages, property damages, personal injuries, or penalties) arising out of, based on, or resulting from (a) the presence, release, threatened release, or exposure to any Hazardous Substances, or (b) any actual or alleged violation of or liability under any Environmental Law.
"Environmental Laws" means all Laws relating to pollution, protection of the environment, natural resources, or human health and safety (to the extent relating to exposure to Hazardous Substances), including the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. § 9601 et seq.) ("CERCLA"), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.) ("RCRA"), the Clean Water Act (33 U.S.C. § 1251 et seq.) ("CWA"), the Clean Air Act (42 U.S.C. § 7401 et seq.) ("CAA"), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Emergency Planning and Community Right-to-Know Act (42 U.S.C. § 11001 et seq.), the Safe Drinking Water Act (42 U.S.C. § 300f et seq.), and their state equivalents, including the Pennsylvania Land Recycling and Environmental Remediation Standards Act (35 P.S. § 6026.101 et seq.) ("Pennsylvania Act 2"), the Pennsylvania Clean Streams Law (35 P.S. § 691.1 et seq.), the Pennsylvania Air Pollution Control Act (35 P.S. § 4001 et seq.), and all regulations, rules, and orders promulgated thereunder.
"Environmental Permits" means all permits, licenses, registrations, authorizations, approvals, consents, and certificates issued by any Governmental Authority pursuant to any Environmental Law that are required for the operation of the Business, including (a) the PA DEP Title V operating permit for the Butler facility (Permit No. TV-10-00287) and (b) the PA DEP General Permit GP-3 for the Meadville facility, and all other environmental permits, approvals, and authorizations relating to the Business.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"ERISA Affiliate" means any Person that, together with Seller, would be treated as a single employer under Section 414(b), (c), (m), or (o) of the Code or Section 4001(b)(1) of ERISA.
"Escrow Agent" means Atlantic Fiduciary Trust Company, a New York trust company, with offices located at 60 Wall Street, 22nd Floor, New York, New York 10005.
"Escrow Agreement" means the Escrow Agreement among Buyer, Seller, and the Escrow Agent in substantially the form of Exhibit B attached hereto, governing the deposit, maintenance, investment, and release of the Escrow Amount.
"Escrow Amount" means
"Estimated Closing Net Working Capital" has the meaning set forth in Section 3.03(a).
"Estimated Closing Statement" has the meaning set forth in Section 3.03(a).
"Excluded Assets" has the meaning set forth in Section 2.02.
"Excluded Liabilities" has the meaning set forth in Section 2.04.
"Final Closing Statement" has the meaning set forth in Section 3.03(c).
"Financial Statements" has the meaning set forth in Section 4.04.
"Fraud" means actual and intentional fraud (and not constructive fraud or negligent misrepresentation) with respect to the making of the representations and warranties set forth in this Agreement, which requires (a) a false representation of material fact made in the representations and warranties set forth in this Agreement, (b) with actual knowledge that such representation is false, (c) with the intention of inducing the Party to whom such representation is made to act or refrain from acting in reliance upon it, (d) causing such Party, in justifiable reliance upon such false representation, to take or refrain from taking action, and (e) causing such Party to suffer damage by reason of such reliance.
"Fundamental Representations" means (a) with respect to Seller, the representations and warranties set forth in Section 4.01 (Organization and Good Standing), Section 4.02 (Authority; Binding Effect), Section 4.03 (No Conflicts; Consents), Section 4.18 (Title to Assets), Section 4.24 (Brokers), and Section 4.25 (Tax Matters); and (b) with respect to Buyer, the representations and warranties set forth in Section 5.01 (Organization and Good Standing), Section 5.02 (Authority; Binding Effect), Section 5.03 (No Conflicts; Consents), and Section 5.07 (Brokers).
"GAAP" means United States generally accepted accounting principles as in effect from time to time, consistently applied.
"Governmental Authority" means any federal, state, provincial, local, municipal, or foreign government, or any court, administrative agency, commission, regulatory body, authority, or other governmental or quasi-governmental instrumentality or political subdivision thereof.
"Hazardous Substances" means any substance, material, waste, pollutant, or contaminant that is defined, listed, regulated, or otherwise classified as hazardous, toxic, radioactive, or dangerous, or as a pollutant or contaminant, under any Environmental Law, including petroleum and petroleum products, asbestos and asbestos-containing materials, polychlorinated biphenyls, per- and polyfluoroalkyl substances (PFAS), trichloroethylene ("TCE"), and any other substance regulated under any Environmental Law.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"Indebtedness" means, with respect to any Person, without duplication, (a) all indebtedness for borrowed money, (b) all obligations evidenced by notes, bonds, debentures, or similar instruments, (c) all obligations under capital leases (determined in accordance with GAAP), (d) all obligations under letters of credit (to the extent drawn), (e) all guarantees by such Person of obligations of others described in clauses (a) through (d), (f) all accrued and unpaid interest, premiums, penalties, breakage costs, and other fees and expenses related to the foregoing, and (g) with respect to Seller specifically, the outstanding balance under Seller's revolving credit facility with Merchants & Traders Bank (outstanding balance approximately $14,200,000 under a $20,000,000 facility) and any other indebtedness reflected on Schedule 2.04(a).
"Indemnification Cap" means
"Indemnified Party" means any Buyer Indemnified Party or Seller Indemnified Party entitled to indemnification under Article X.
"Indemnifying Party" means the Party from which indemnification is sought under Article X.
"intellectual Property" means all intellectual property and proprietary rights of any kind, including (a) patents, patent applications, and patent disclosures, together with all reissues, continuations, continuations-in-part, divisions, extensions, and reexaminations thereof, (b) trademarks, service marks, trade dress, trade names, logos, and corporate names, together with all translations, adaptations, derivations, and combinations thereof and all applications, registrations, and renewals in connection therewith, (c) copyrights and copyrightable works, together with all applications, registrations, and renewals in connection therewith, (d) trade secrets, know-how, proprietary processes, formulae, formulations (including proprietary formulations for specialty chemical-resistant coatings and food-grade packaging), recipes, compositions, methods, techniques, manufacturing processes, and technical data, (e) computer software, databases, and documentation, (f) customer lists, supplier lists, mailing lists, and other proprietary business information, and (g) all other proprietary rights relating to any of the foregoing.
"Knowledge of Seller" or "Seller's Knowledge" means the actual knowledge of Gerald W. Horvath (President), Michael G. Horvath (Vice President of Operations), and Diane L. Pulaski (Chief Financial Officer and Controller), in each case after reasonable inquiry of those employees of Seller who would reasonably be expected to have knowledge of the applicable matter.
"Law" means any federal, state, provincial, local, municipal, or foreign statute, law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree, or other order or requirement enacted, issued, promulgated, enforced, or entered by any Governmental Authority.
"Lien" means any lien, pledge, mortgage, deed of trust, security interest, charge, claim, easement, encroachment, restriction, option, right of first refusal, right of first offer, encumbrance, or other similar restriction or limitation of any kind.
"Limited Guarantee" means the limited guarantee to be executed and delivered by Ridgeway Capital Partners Fund III, LP (by its general partner, Ridgeway Capital GP III LLC) at or prior to the Closing in favor of Seller, guaranteeing certain payment obligations of Buyer under this Agreement.
"Losses" means any and all damages, losses, claims, liabilities, penalties, fines, costs, and expenses (including reasonable attorneys' fees, court costs, and expenses of investigation and litigation), whether or not involving a third-party claim.
"Material Adverse Effect" means any event, occurrence, fact, condition, change, development, or effect that, individually or in the aggregate, (a) is, or would reasonably be expected to be, materially adverse to the business, results of operations, financial condition, assets, or liabilities of the Business, taken as a whole, or (b) prevents or materially delays the ability of Seller to consummate the transactions contemplated by this Agreement; provided, however, that none of the following, individually or in the aggregate, shall be deemed to constitute, or shall be taken into account in determining whether there has been, a Material Adverse Effect: (i) changes in general economic or political conditions or in the financial, banking, or securities markets generally, (ii) changes generally affecting the corrugated packaging, folding carton, or specialty coatings industries, (iii) changes in applicable Law or in GAAP or other applicable accounting standards or interpretations thereof, (iv) the outbreak, escalation, or worsening of hostilities, acts of war, sabotage, or terrorism, or any material worsening thereof, (v) earthquakes, hurricanes, floods, or other natural disasters, (vi) any epidemic, pandemic, or disease outbreak (including COVID-19 or any variant thereof or any related quarantine or shutdown), (vii) the announcement or pendency of the transactions contemplated by this Agreement or the identity of Buyer, including any impact on relationships with customers, suppliers, employees, or Governmental Authorities, (viii) any action taken (or omitted to be taken) by Seller at the written request or with the prior written consent of Buyer; provided, further, that in the case of clauses (i) through (vi) , such changes, events, or developments do not disproportionately affect the Business relative to other companies operating in the corrugated packaging and specialty coatings industries.
"Material Contracts" means the Contracts set forth on Schedule 4.12, consisting of approximately 47 contracts.
"Meadville Property" means the real property located at 1480 Conneaut Lake Road, Meadville, Pennsylvania 16335, consisting of approximately 110,000 square feet of improvements situated on approximately 8.2 acres, together with all buildings, structures, improvements, fixtures, and appurtenances thereon, and all easements, rights-of-way, and other rights appurtenant thereto.
"Merchants & Traders Bank" means Merchants & Traders Bank, a Pennsylvania state-chartered bank, as lender under Seller's revolving credit facility.
"Net Working Capital" means, as of any date of determination, the current assets of the Business minus the current liabilities of the Business, in each case calculated using the methodologies, line items, and accounting principles set forth on Schedule 3.03, consistently applied in accordance with GAAP as applied by Seller in the preparation of the Financial Statements.
"Neutral Accountant" means an independent accounting firm of national or regional standing mutually agreed upon by Buyer and Seller, which firm shall not be Hargrove Thornton LLP, Pendleton & Sawyer CPAs LLP, or any Affiliate thereof.
"Non-Competition and Non-Solicitation Agreements" means the Non-Competition and Non-Solicitation Agreements to be executed and delivered at the Closing by Gerald W. Horvath and Michael G. Horvath, respectively, in substantially the forms of Exhibit E-1 and Exhibit E-2 attached hereto.
"NWC Collar" means the range of plus or minus $250,000 from the Target Net Working Capital (i.e., $12,150,000 to $12,650,000), within which no adjustment to the Purchase Price shall be made.
"Order" means any order, writ, judgment, injunction, decree, stipulation, determination, decision, ruling, or award entered by or with any Governmental Authority.
"Ordinary Course of Business" means the ordinary and usual course of normal day-to-day operations of the Business, consistent with past custom and practice (including with respect to quantity, frequency, timing, and amount).
"Outside Date" means September 30, 2025.
"PA Bulk Sale Tax Clearance Certificate" means the tax clearance certificate issued by the Pennsylvania Department of Revenue in connection with the bulk sale or transfer of assets provisions of Pennsylvania law, confirming that Seller has satisfied all Tax obligations required to be satisfied in connection with the transactions contemplated hereby.
"Patriot Plan Administrators LLC" means Patriot Plan Administrators LLC, the third-party administrator of the Allegheny Valley Packaging 401(k) Profit Sharing Plan.
"Permitted Liens" means (a) statutory Liens for Taxes, assessments, or other governmental charges not yet due and payable or that are being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP, (b) mechanics', carriers', workers', repairers', materialmen's, and similar Liens arising or incurred in the Ordinary Course of Business for amounts not yet due and payable, (c) pledges or deposits to secure obligations under workers' compensation, unemployment insurance, social security, or similar legislation, (d) zoning, entitlement, building, and other land use regulations imposed by any Governmental Authority having jurisdiction over the Real Property that are not violated by the current use or occupancy of the Real Property, (e) utility easements, rights-of-way, covenants, conditions, restrictions, reservations, and other similar encumbrances of record that do not materially interfere with the current use of the Real Property, (f) Liens arising under the Assumed Contracts, and (g) such other Liens as are set forth on Schedule 4.10(a) or Schedule 4.11.
"Person" means any individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization, Governmental Authority, or any other entity.
"Post-Closing Tax Period" means any taxable period beginning after the Closing Date and the portion of any Straddle Period beginning after the Closing Date.
"Pre-Closing Environmental Condition" means any contamination, release, threatened release, or disposal of Hazardous Substances at, on, under, or migrating from the Real Property, or any violation of Environmental Laws, in each case to the extent existing, occurring, or arising out of facts or circumstances that existed at or prior to the Closing Date.
"Pre-Closing Tax Period" means any taxable period ending on or before the Closing Date and the portion of any Straddle Period ending on and including the Closing Date.
"Purchase Price" means $180,000,000 (One Hundred Eighty Million Dollars), subject to adjustment as set forth in Section 3.03.
"R&W Insurance Policy" means the representations and warranties insurance policy issued by Northbridge Specialty Insurance Company (Policy No. NSW-2025-07812) in favor of Buyer.
"Real Property" means the Butler Property and the Meadville Property, collectively.
"Representative" means, with respect to any Person, such Person's officers, directors, managers, members, partners, shareholders, employees, agents, attorneys, accountants, advisors, bankers, consultants, and other representatives.
"Restricted Period" has the meaning ascribed to such term in the Non-Competition and Non-Solicitation Agreements.
"Reverse Termination Fee" has the meaning set forth in Section 11.03.
"Ridgeway Capital Partners Fund III, LP" means Ridgeway Capital Partners Fund III, LP, a Delaware limited partnership, acting by and through its general partner, Ridgeway Capital GP III LLC, a Delaware limited liability company.
"Seller" means Allegheny Valley Packaging, Inc., a Pennsylvania corporation, with its principal headquarters located at 250 Industrial Boulevard, Butler, Pennsylvania 16001. PA DOS Entity ID: 6519847. EIN: 25-1784632.
"Seller Disclosure Schedules" means the disclosure schedules delivered by Seller to Buyer concurrently with the execution of this Agreement.
"Seller Indemnified Parties" has the meaning set forth in Section 10.03.
"Seller's Accountant" means Pendleton & Sawyer CPAs LLP.
"Seller's Environmental Indemnity Cap" means $8,000,000 (Eight Million Dollars).
"Straddle Period" means any taxable period that includes but does not end on the Closing Date.
"Target Net Working Capital" means $12,400,000 (Twelve Million Four Hundred Thousand Dollars), which amount is based on the trailing twelve-month average Net Working Capital of the Business.
"Tax" or "Taxes" means any and all federal, state, provincial, local, foreign, and other taxes, levies, fees, imposts, duties, and charges of whatever kind (including income, franchise, profits, gross receipts, excise, real property, personal property, sales, use, transfer, withholding, employment, payroll, social security, workers' compensation, unemployment, occupation, capital stock, ad valorem, value added, stamp, documentary, alternative minimum, and estimated taxes), and any interest, penalties, additions to tax, or additional amounts imposed by any Governmental Authority with respect thereto, and any liability for any of the foregoing as a transferee, successor, or by contract, or pursuant to Treasury Regulation § 1.1502-6 or any similar provision of state, local, or foreign Law.
"Tax Return" means any return, declaration, report, statement, claim for refund, information return, or other document required to be filed with any Governmental Authority with respect to Taxes, including any schedule or attachment thereto and any amendment thereof.
"Transaction Expenses" means all fees, costs, expenses, and other amounts incurred by or on behalf of Seller in connection with the negotiation, preparation, execution, and consummation of the transactions contemplated by this Agreement, including (a) all fees and expenses of Broadmoor Strauss & Kline LLP (legal counsel to Seller), (b) all fees and expenses of Veltrano Hargrave & Co. (investment banker to Seller), (c) all fees and expenses of Pendleton & Sawyer CPAs LLP, and (d) all other out-of-pocket costs and expenses of Seller's Representatives.
"Transfer Taxes" means all transfer, documentary, sales, use, stamp, registration, real estate transfer, recording, and similar Taxes and fees (including any penalties, interest, and additions thereto) arising out of or in connection with the transactions contemplated by this Agreement, including the Pennsylvania Realty Transfer Tax.
"Transition Services Agreement" or "TSA" means the Transition Services Agreement to be entered into by Buyer and Seller at the Closing in substantially the form of Exhibit C attached hereto.
"WARN Act" means the Worker Adjustment and Retraining Notification Act of 1988, as amended (29 U.S.C. § 2101 et seq.), and any similar state or local Law.
Section 1.02 — Rules of Construction
Unless the context of this Agreement otherwise requires:
(a) The headings and captions contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
(b) The words "include," "includes," and "including" when used herein shall be deemed in each case to be followed by the words "without limitation."
(c) Words in the singular shall be held to include the plural, and vice versa, and words of one gender shall be held to include the other genders, as the context requires.
(d) The terms "hereof," "herein," "herewith," "hereby," "hereunder," and derivative or similar words refer to this Agreement as a whole and not to any particular provision of this Agreement.
(e) References herein to any particular Section, Article, Exhibit, or Schedule mean a Section or Article of, or an Exhibit or Schedule to, this Agreement, unless another agreement is specified.
(f) References herein to any Person include such Person's heirs, executors, administrators, legal representatives, successors, and permitted assigns.
(g) The Schedules and Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein.
(h) All references to currency or "$" shall mean the lawful currency of the United States of America.
(i) References to "days" mean calendar days unless otherwise specified as "Business Days."
(j) All references to time shall mean Eastern Time unless otherwise expressly specified.
(k) The Parties have participated jointly in the negotiation and drafting of this Agreement, and in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions hereof.
(l) The phrase "made available" or "delivered" means that the information referred to has been made available on or before the date of this Agreement in the electronic data room established by Seller for purposes of the transactions contemplated hereby.
ARTICLE II — PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES
Section 2.01 — Acquired Assets
Upon the terms and subject to the conditions of this Agreement, at the Closing, Seller shall sell, transfer, assign, convey, and deliver to Buyer, and Buyer shall purchase and acquire from Seller, free and clear of all Liens (other than Permitted Liens), all of Seller's right, title, and interest in, to, and under all of the following assets, properties, and rights (collectively, the "Acquired Assets"):
(a) Tangible Personal Property. All tangible personal property of every kind, including all machinery, equipment, tools, dies, molds, patterns, jigs, fixtures, furniture, furnishings, vehicles, forklifts, rolling stock, computers, servers, telecommunications equipment, office equipment, and other tangible assets owned by Seller and located at or used in connection with the Butler Property and the Meadville Property, as more particularly described on Schedule 2.01(a).
(b) Inventory. All inventory of the Business, wherever located, including all raw materials (including containerboard, coatings, inks, adhesives, and other packaging materials), work-in-process, finished goods, packaging materials, supplies, spare parts, and other inventoriable items, in each case as of the Closing Date.
(c) Accounts Receivable. All accounts receivable, notes receivable, trade receivables, and other receivables of the Business, whether or not billed, and all rights to receive payments arising from the conduct of the Business, in each case as of the Closing Date.
(d) intellectual Property. All intellectual Property owned by Seller and used in or related to the Business, including all trademarks, trade names (other than the corporate name "Allegheny Valley Packaging, Inc." to the extent set forth in Section 2.02(e)), service marks, logos, patents, patent applications, copyrights, trade secrets, proprietary formulations for specialty chemical-resistant coatings and food-grade packaging , manufacturing processes, know-how, technical data, customer lists, supplier lists, and all goodwill associated with any of the foregoing.
(e) Real Property. The Real Property, consisting of the Butler Property and the Meadville Property, together with all buildings, structures, improvements, fixtures, and appurtenances located thereon, and all easements, rights-of-way, hereditaments, and other rights and privileges appurtenant thereto.
(f) Assumed Contracts. All right, title, and interest of Seller in, to, and under the Assumed Contracts set forth on Schedule 2.01(f) (consisting of approximately 47 material contracts), including customer supply agreements, vendor and raw material supply agreements (including the containerboard supply agreement with Consolidated Linerboard Corp.), equipment leases, and the Collective Bargaining Agreement with International Paperworkers Union Local 814, in each case together with all amendments, modifications, supplements, renewals, and extensions thereof.
(g) Permits and Licenses. All governmental permits, licenses, registrations, authorizations, approvals, consents, certifications, variances, and similar rights issued by any Governmental Authority and used in or necessary for the operation of the Business, to the extent transferable under applicable Law, including the Environmental Permits (PA DEP Title V operating permit, Permit No. TV-10-00287, for the Butler facility and PA DEP General Permit GP-3 for the Meadville facility) and all other permits listed on Schedule 4.09.
(h) Books and Records. All books, records, files, documents, data, correspondence, and other information (in whatever form or medium), other than the Excluded Assets described in Section 2.02(c), relating to the Business or the Acquired Assets, including customer and supplier records, production records, quality control records, equipment maintenance records, safety records, and personnel records (to the extent transfer thereof is permitted by applicable Law).
(i) Prepaid Expenses. All prepaid expenses, advance payments, deposits, security deposits, prepaid insurance premiums (to the extent relating to Assumed Contracts), credits, and similar items relating to the Business or the Acquired Assets, in each case as of the Closing Date.
(j) Claims and Rights of Recovery. All claims, causes of action, choses in action, rights of recovery, rights of set-off, and rights of recoupment of Seller against third parties, in each case to the extent relating to the Acquired Assets or the Assumed Liabilities and
(k) Goodwill. All goodwill and going concern value of the Business.
(l) Communications. All telephone numbers, fax numbers, e-mail addresses, uniform resource locators (URLs), website domains, social media accounts (including accounts on Westmark Health IT, Kestrel Services Inc., Northpoint Services Inc., and similar platforms), and other communication identifiers used in or associated with the Business.
Section 2.02 — Excluded Assets
Notwithstanding anything to the contrary in Section 2.01 or elsewhere in this Agreement, the following assets of Seller are excluded from the Acquired Assets and shall be retained by Seller (collectively, the "Excluded Assets"):
(a) Cash and Cash Equivalents. All cash on hand, cash in bank accounts, cash equivalents, marketable securities, and short-term investments of Seller, wherever located.
(b) Tax Refunds and Credits. All Tax refunds, Tax credits, Tax deposits, and Tax overpayments of Seller for any Pre-Closing Tax Period, and all rights to receive any of the foregoing.
(c) Corporate Records. Seller's minute books, stock transfer ledgers, stock certificates, corporate seal, Tax Returns, and corporate formation and governance records; provided, however, that Buyer shall have the right to make and retain copies of any such records to the extent they relate to the Acquired Assets, the Assumed Liabilities, or the Business.
(d) Insurance Policies. All insurance policies of Seller and all rights thereunder, including any claims, proceeds, premium refunds, and other rights of recovery relating thereto, whether arising before, on, or after the Closing Date.
(e) Corporate Name. The corporate name "Allegheny Valley Packaging, Inc." and any trade name, trademark, or service mark incorporating such name; provided, however, that Buyer shall be granted a non-exclusive, royalty-free, transitional license to use such name for a period of months following the Closing Date solely in connection with winding down operations under that name, on the terms and conditions set forth in the Trademark License Agreement in substantially the form of Exhibit D attached hereto.
(f) 401(k) Plan. The Allegheny Valley Packaging 401(k) Profit Sharing Plan and all assets, rights, and obligations thereunder, including all trust assets, administrative records, and related agreements with Patriot Plan Administrators LLC.
(g) Rights Under This Agreement. All rights of Seller under this Agreement and each Ancillary Agreement to which Seller is a party, including the right to receive the Purchase Price and other consideration contemplated hereby.
(h) Other Excluded Assets. Any other assets specifically listed on Schedule 2.02.
Section 2.03 — Assumed Liabilities
At the Closing, Buyer shall assume and agree to pay, perform, and discharge when due, in accordance with their respective terms, the following liabilities and obligations of Seller (collectively, the "Assumed Liabilities"):
(a) Trade Payables and Accrued Expenses. All trade payables, accounts payable, accrued expenses, and other current liabilities of the Business arising in the Ordinary Course of Business that remain unpaid as of the Closing Date, in each case to the extent included as a current liability in the calculation of the Closing Net Working Capital.
(b) Assumed Contract Obligations. All liabilities and obligations arising under or relating to the Assumed Contracts, in each case to the extent such liabilities and obligations arise out of or relate to the period from and after the Closing Date and are required to be performed after the Closing Date; provided, however, that Buyer shall not assume any liability or obligation arising out of or relating to any breach, default, violation, or non-compliance by Seller under any Assumed Contract occurring or existing at or prior to the Closing.
(c) Product Warranty Obligations. All warranty obligations for products manufactured and shipped by the Business on or after the Closing Date, in accordance with Seller's standard warranty terms as set forth on Schedule 4.20.
(d) Prorated Property Taxes. The portion of any real property Taxes and personal property Taxes with respect to the Acquired Assets that is attributable to the Post-Closing Tax Period, prorated as of the Closing Date in accordance with Section 8.03(e) . For the avoidance of doubt, Seller shall be responsible for the portion of such Taxes attributable to the Pre-Closing Tax Period.
(e) Scheduled Assumed Liabilities. All other liabilities and obligations set forth on Schedule 2.03.
Section 2.04 — Excluded Liabilities
Notwithstanding anything to the contrary in this Agreement, Buyer shall not assume and shall have no responsibility or liability for any liabilities or obligations of Seller of any kind or nature, whether known or unknown, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, or due or to become due, other than the Assumed Liabilities (collectively, the "Excluded Liabilities"), including, without limitation, the following:
(a) Indebtedness. All Indebtedness of Seller, including, without limitation, the outstanding balance under Seller's revolving credit facility with Merchants & Traders Bank (approximately $14,200,000 as of the date hereof under a $20,000,000 facility), all accrued and unpaid interest, fees, premiums, and breakage costs relating thereto, and any other Indebtedness of Seller, all of which shall be repaid in full at the Closing from Seller's share of the Purchase Price pursuant to Section 3.02(c).
(b) Pre-Closing Tax Liabilities. All Tax liabilities of Seller for any Pre-Closing Tax Period, including all income, franchise, payroll, employment, withholding, and other Taxes, and the portion of Taxes for any Straddle Period attributable to the Pre-Closing Tax Period, determined in accordance with Section 8.03.
(c) Pre-Closing Product Liabilities. All product liability claims, personal injury claims, property damage claims, and similar claims arising out of or relating to products manufactured, sold, distributed, or shipped by Seller prior to the Closing Date, regardless of when such claims are asserted or discovered.
(d) Underfunded Pension Obligations. All liabilities arising under or in connection with any defined benefit pension plan or other retirement plan maintained by Seller or any ERISA Affiliate, including all underfunded pension obligations .
(e) Transaction Expenses. All Transaction Expenses of Seller, including fees and expenses of Broadmoor Strauss & Kline LLP (legal counsel) and Veltrano Hargrave & Co. (investment banker), Pendleton & Sawyer CPAs LLP (accountants), and any other advisors retained by Seller in connection with the transactions contemplated hereby.
(f) 401(k) Plan Liabilities. All liabilities arising out of or relating to Seller's sponsorship, maintenance, operation, administration, or termination of the Allegheny Valley Packaging 401(k) Profit Sharing Plan, including any liabilities under ERISA, the Code, or applicable Law.
(g) Environmental Liabilities. All Environmental Claims, remediation obligations, and other liabilities arising under Environmental Laws to the extent arising out of or relating to Pre-Closing Environmental Conditions at or prior to the Closing Date, except as expressly provided in Section 10.06 (Environmental Special Indemnity) and subject to Seller's environmental indemnification obligations under Article X.
(h) Excluded Asset Liabilities. All liabilities arising under or relating to the Excluded Assets.
(i) Pre-Closing Contract Breaches. All liabilities arising from any breach, default, violation, or non-compliance by Seller under any Assumed Contract occurring or existing at or prior to the Closing.
(j) Employment-Related Liabilities. All liabilities relating to (i) employment or termination of employment by Seller of any employee prior to the Closing, (ii) workers' compensation claims arising from incidents occurring prior to the Closing, (iii) any violation of applicable employment, labor, or workplace safety Laws by Seller prior to the Closing, and (iv) any other employee-related liabilities relating to the period prior to the Closing, except to the extent constituting Assumed Liabilities.
(k) Other Excluded Liabilities. All other liabilities and obligations of Seller that are not expressly assumed by Buyer as Assumed Liabilities pursuant to Section 2.03.
ARTICLE III — PURCHASE PRICE; CLOSING
Section 3.01 — Purchase Price
The aggregate purchase price for the Acquired Assets shall be $180,000,000 (One Hundred Eighty Million Dollars) (the "Purchase Price"), subject to adjustment as set forth in Section 3.03. The Purchase Price shall be paid and satisfied at the Closing in the manner set forth in Section 3.02.
Section 3.02 — Payment of Purchase Price at Closing
At the Closing, the Purchase Price shall be paid and satisfied as follows:
(a) Cash Payment to Seller. Buyer shall pay to Seller (or to Seller's designee), by wire transfer of immediately available funds in United States Dollars to the account or accounts designated in writing by Seller not later than two (2) Business Days prior to the Closing Date, an amount equal to (i) the Purchase Price, minus (ii) the Escrow Amount, minus (iii) the aggregate amount of all Indebtedness to be paid at the Closing pursuant to Section 3.02(c), minus (iv) the aggregate amount of all Transaction Expenses to be paid at the Closing pursuant to Section 3.02(d), plus or minus (v) the estimated Purchase Price adjustment, if any, determined pursuant to Section 3.03(b) based on the Estimated Closing Net Working Capital.
(b) Escrow Deposit. Buyer shall deposit the Escrow Amount of with the Escrow Agent (Atlantic Fiduciary Trust Company) by wire transfer of immediately available funds, to be held, invested, and released in accordance with the terms of the Escrow Agreement. The deposit of the Escrow Amount with the Escrow Agent shall constitute payment of a portion of the Purchase Price.
(c) Payoff of Indebtedness. Buyer shall pay, or cause to be paid, by wire transfer of immediately available funds directly to Merchants & Traders Bank (or such other holder of Indebtedness), the outstanding balance of Seller's revolving credit facility (approximately $14,200,000) and any other Indebtedness of Seller set forth on a payoff letter or payoff letters delivered by Seller to Buyer at in each case in the amounts and to the accounts specified in such payoff letters. Such payments shall be made on behalf of Seller and shall be treated as payment of a portion of the Purchase Price.
(d) Payment of Transaction Expenses. Buyer shall pay, or cause to be paid, by wire transfer of immediately available funds directly to the payees thereof, the Transaction Expenses of Seller as set forth on a Transaction Expense Certificate delivered by Seller to Buyer at or prior to the Closing. Such payments shall be made on behalf of Seller and shall be treated as payment of a portion of the Purchase Price.
Section 3.03 — Net Working Capital Adjustment
(a) Estimated Closing Statement. Not later than Business Days prior to the Closing Date, Seller shall prepare and deliver to Buyer a statement (the "Estimated Closing Statement") setting forth Seller's good faith estimate of the Closing Net Working Capital (the "Estimated Closing Net Working Capital"), together with reasonable supporting detail. The Estimated Closing Statement shall be prepared in accordance with the methodologies, line items, and accounting principles set forth on Schedule 3.03, applied on a basis consistent with GAAP as applied by Seller in the preparation of the Financial Statements. Buyer and its Representatives (including Hargrove Thornton LLP) shall have reasonable access to the books, records, and work papers of Seller used in the preparation of the Estimated Closing Statement and shall have the opportunity to review and comment on the Estimated Closing Statement prior to the Closing. Seller shall consider in good faith any comments received from Buyer prior to the Closing.
(b) Purchase Price Adjustment at Closing. The Purchase Price payable at the Closing shall be adjusted as follows:
(i) If the Estimated Closing Net Working Capital exceeds the upper boundary of the NWC Collar (i.e., exceeds $12,650,000), the Purchase Price payable at the Closing shall be increased, on a dollar-for-dollar basis, by the amount by which the Estimated Closing Net Working Capital exceeds $12,650,000.
(ii) If the Estimated Closing Net Working Capital is less than the lower boundary of the NWC Collar (i.e., is less than $12,150,000), the Purchase Price payable at the Closing shall be decreased, on a dollar-for-dollar basis, by the amount by which $12,150,000 exceeds the Estimated Closing Net Working Capital.
(iii) If the Estimated Closing Net Working Capital is within the NWC Collar (i.e., is equal to or greater than $12,150,000 and equal to or less than $12,650,000), no adjustment to the Purchase Price shall be made at the Closing pursuant to this Section 3.03(b).
(c) Post-Closing True-Up. Within ninety (90) days after the Closing Date, Buyer shall prepare and deliver to Seller a statement (the "Final Closing Statement") setting forth Buyer's calculation of the actual Closing Net Working Capital, calculated as of 11:59 p.m. Eastern Time on the day immediately preceding the Closing Date and prepared in accordance with the methodologies, line items, and accounting principles set forth on Schedule 3.03, applied on a basis consistent with GAAP as applied by Seller in the preparation of the Financial Statements. The Final Closing Statement shall be accompanied by reasonable supporting detail and work papers.
(d) Review Period. Seller shall have days after receipt of the Final Closing Statement (the "Review Period") to review the Final Closing Statement. During the Review Period, Buyer shall provide Seller and its Representatives (including Pendleton & Sawyer CPAs LLP) reasonable access to the books, records, work papers, and personnel of Buyer used in or relevant to the preparation of the Final Closing Statement. If Seller disagrees with Buyer's calculation of the Closing Net Working Capital as set forth in the Final Closing Statement, Seller shall, on or before the last day of the Review Period, deliver to Buyer a written notice of disagreement (a "Dispute Notice") setting forth in reasonable detail the items or amounts in dispute and the basis for Seller's disagreement, together with Seller's proposed calculation of each disputed item. If Seller does not deliver a Dispute Notice within the Review Period, the Final Closing Statement as delivered by Buyer shall be deemed final, conclusive, and binding on the Parties.
(e) Resolution of Disputes. If Seller timely delivers a Dispute Notice, the Parties shall attempt in good faith to resolve any disputed items within fifteen (15) days after delivery of the Dispute Notice. If the Parties are unable to resolve all disputed items within such fifteen (15)-day period, then any remaining disputed items shall be submitted to the Neutral Accountant for resolution. The Neutral Accountant shall act as an expert (and not as an arbitrator) and shall determine only those items that remain in dispute. The Neutral Accountant's determination of each disputed item shall not be less than the lower of Buyer's proposed amount and Seller's proposed amount, nor greater than the higher of such amounts. The Neutral Accountant shall render its determination in writing within thirty (30) days after its engagement, and such determination shall be final, conclusive, and binding on the Parties absent manifest error. The fees and expenses of the Neutral Accountant shall be borne by the Parties in inverse proportion to the amount by which each Party's position differs from the final determination.
(f) Post-Closing Payment. Within five (5) Business Days after the Closing Net Working Capital is finally determined pursuant to this Section 3.03 (whether by expiration of the Review Period, by mutual agreement of the Parties, or by determination of the Neutral Accountant):
(i) If the finally determined Closing Net Working Capital exceeds the Estimated Closing Net Working Capital (and the resulting adjustment exceeds the NWC Collar to the extent not already reflected in the Closing payment), Buyer shall pay to Seller the amount of such excess, by wire transfer of immediately available funds to the account designated in writing by Seller.
(ii) If the Estimated Closing Net Working Capital exceeds the finally determined Closing Net Working Capital (and the resulting adjustment exceeds the NWC Collar to the extent not already reflected in the Closing payment), Seller shall pay to Buyer the amount of such excess, by wire transfer of immediately available funds to the account designated in writing by Buyer.
(iii) For the avoidance of doubt, the Purchase Price adjustments under this Section 3.03 shall take into account the NWC Collar, and no adjustment shall be made for any portion of the difference between the finally determined Closing Net Working Capital and the Target Net Working Capital that falls within the NWC Collar range.