EXHIBIT 2.1 ASSET PURCHASE AGREEMENT

Asset Purchase Agreement

You are currently viewing:

This Asset Purchase Agreement involves

Rock-Tenn CO | ROCK-TENN PACKAGING AND PAPERBOARD, LLC | GULF STATES PAPER CORPORATION | GULF STATES-TEXAS, L.P.

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.

Title: EXHIBIT 2.1 ASSET PURCHASE AGREEMENT
Governing Law: North Carolina Date: 8/9/2005
Industry: Paper and Paper Products Law Firm: Rogers & Hardin LLP; King & Spalding LLP Sector: Basic Materials

<PAGE>

EXHIBIT 2.1

ASSET PURCHASE AGREEMENT

BY AND BETWEEN

ROCK-TENN COMPANY,

ROCK-TENN PACKAGING AND PAPERBOARD, LLC

AND

GULF STATES PAPER CORPORATION

GSPC ENTERPRISES, INC.

GULF STATES-TEXAS, L.L.C.

GULF STATES-TEXAS, L.P.

AS OF APRIL 27, 2005

<PAGE>

TABLE OF CONTENTS

<TABLE>

Page

----

<S> <C>

ARTICLE I. PURCHASE AND SALE......................................................................... 1

Section 1.1. Agreement to Purchase and Sell....................................................... 1

Section 1.2. Included Assets...................................................................... 2

Section 1.3. Excluded Assets...................................................................... 4

Section 1.4. Assumption of Assumed Liabilities.................................................... 5

Section 1.5. Excluded Liabilities................................................................. 6

Section 1.6. Assets Owned By Affiliates........................................................... 7

Section 1.7. Designation of Buyer Affiliates...................................................... 7

ARTICLE II. PURCHASE PRICE............................................................................ 7

Section 2.1. Purchase Price....................................................................... 7

Section 2.2. Payment of Purchase Price............................................................ 7

Section 2.3. Adjustment of Purchase Price......................................................... 9

Section 2.4. Physical Inventory................................................................... 10

Section 2.5. Sales and Transfer Taxes and Fees; Reporting and Payment;

Other Closing Costs and Expenses.............................................................. 10

Section 2.6. Proration of Ad Valorem Taxes and Other Expenses..................................... 11

Section 2.7. Certain Assignments.................................................................. 11

Section 2.8. Accounts Receivable.................................................................. 12

Section 2.9. Pre-Closing Capital Expenditures..................................................... 13

ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER.................................................. 13

Section 3.1. Organization......................................................................... 13

Section 3.2. Authorization........................................................................ 13

Section 3.3. Absence of Restrictions and Conflicts................................................ 14

Section 3.4. Subsidiaries; Joint Venture.......................................................... 15

Section 3.5. Ownership of Assets and Related Matters.............................................. 15

Section 3.6. Financial Statements................................................................. 20

Section 3.7. No Undisclosed Liabilities........................................................... 20

Section 3.8. Absence of Certain Changes........................................................... 21

Section 3.9. Legal Proceedings.................................................................... 22

Section 3.10. Compliance with Law.................................................................. 22

Section 3.11. Contracts............................................................................ 23

Section 3.12. Tax Returns; Taxes................................................................... 24

Section 3.13. Employees............................................................................ 25

Section 3.14. Employee Benefit Plans............................................................... 26

Section 3.15. Labor Relations...................................................................... 28

Section 3.16. Insurance............................................................................ 29

Section 3.17. Environmental, Health and Safety Matters............................................. 29

</TABLE>

<PAGE>

<TABLE>

<S> <C>

Section 3.18. Patents, Trademarks, Trade Names..................................................... 32

Section 3.19. Transactions with Associates......................................................... 32

Section 3.20. Customer and Supplier Relations...................................................... 33

Section 3.21. Brokers, Finders and Investment Bankers.............................................. 33

Section 3.22. Product Warranties and Liability..................................................... 34

Section 3.23. Rebates.............................................................................. 34

ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYER................................................... 35

Section 4.1. Organization......................................................................... 35

Section 4.2. Authorization........................................................................ 35

Section 4.3. Absence of Restrictions and Conflicts................................................ 35

Section 4.4. Brokers and Finders.................................................................. 36

Section 4.5. Litigation........................................................................... 36

ARTICLE V. CERTAIN COVENANTS AND AGREEMENTS.......................................................... 36

Section 5.1. Conduct of Business by Seller........................................................ 36

Section 5.2. Inspection and Access to Information................................................. 39

Section 5.3. No Solicitation; Acquisition Proposals............................................... 40

Section 5.4. Reasonable Efforts; Further Assurances; Cooperation.................................. 40

Section 5.5. Public Announcements................................................................. 42

Section 5.6. Real Property Title Reports.......................................................... 42

Section 5.7. Casualty............................................................................. 42

Section 5.8. Condemnation......................................................................... 43

Section 5.9. HSR Filings.......................................................................... 43

Section 5.10. Bulk Sales Waiver.................................................................... 44

Section 5.11. Notification of Changes.............................................................. 44

Section 5.12. Transition Services Agreement........................................................ 44

Section 5.13. Litigation Support................................................................... 44

Section 5.14. Handling of Excluded Assets.......................................................... 44

Section 5.15. Seller JV Tax Matter................................................................. 45

Section 5.16. SEC Financial Statements............................................................. 45

Section 5.17. Chip Supply Agreement................................................................ 46

Section 5.18. Customer and Supplier Visits......................................................... 46

Section 5.19. Release of Obligations and Replacement Arrangements.................................. 46

Section 5.20. Excluded Mill Property............................................................... 47

Section 5.21. Net Worth and Sale Agreement......................................................... 48

Section 5.22. Release of Encumbrances.............................................................. 48

Section 5.23. Option Agreement..................................................................... 48

Section 5.24. Maplesville Agreement................................................................ 48

Section 5.25. Headquarters Lease................................................................... 49

ARTICLE VI. EMPLOYEES AND EMPLOYEE BENEFIT PLANS...................................................... 49

Section 6.1. Employment of Seller's Employees..................................................... 49

Section 6.2. Welfare and Fringe Benefit Plans..................................................... 50

</TABLE>

<PAGE>

<TABLE>

<S> <C>

Section 6.3. Workers' Compensation; Disability.................................................... 51

Section 6.4. Employment Taxes; Filing Requirements................................................ 51

Section 6.5. Access to Records.................................................................... 51

Section 6.6. 401(k) Plan.......................................................................... 52

Section 6.7. Pension Plan for Business Employees, Labor Agreement................................. 52

Section 6.8. Post-Retirement Life Insurance Benefits.............................................. 53

Section 6.9. WARN Act............................................................................. 53

Section 6.10. Deferred Compensation Plans.......................................................... 53

ARTICLE VII. CONFIDENTIAL INFORMATION AND TRADE SECRETS................................................ 54

Section 7.1. Definitions.......................................................................... 54

Section 7.2. Trade Secrets........................................................................ 54

Section 7.3. Confidential Information............................................................. 54

Section 7.4. Severability......................................................................... 55

Section 7.5. Injunctive Relief.................................................................... 55

ARTICLE VIII. CONDITIONS................................................................................ 55

Section 8.1. Conditions to Each Party's Obligations............................................... 55

Section 8.2. Conditions to Obligations of Buyer................................................... 56

Section 8.3. Conditions to Obligations of Seller.................................................. 56

ARTICLE IX. CLOSING................................................................................... 57

Section 9.1. The Closing.......................................................................... 57

Section 9.2. Documents to be Delivered by Seller.................................................. 57

Section 9.3. Documents to be Delivered by Buyer................................................... 59

ARTICLE X. INDEMNIFICATION........................................................................... 59

Section 10.1. Indemnification Obligations of Seller................................................ 59

Section 10.2. Indemnification Obligations of the Buyer Parties..................................... 60

Section 10.3. Indemnification Procedure............................................................ 61

Section 10.4. Claims Period........................................................................ 63

Section 10.5. Indemnification Basket and Cap....................................................... 63

Section 10.6. Indemnification Limits............................................................... 64

Section 10.7. Other Matters........................................................................ 66

Section 10.8. Treatment of Indemnification Payments................................................ 67

Section 10.9. No Waiver............................................................................ 67

ARTICLE XI. TERMINATION............................................................................... 68

Section 11.1. Termination.......................................................................... 68

Section 11.2. Effect of Termination................................................................ 69

Section 11.3. Termination Fee...................................................................... 69

ARTICLE XII. MISCELLANEOUS PROVISIONS.................................................................. 70

</TABLE>

iii

<PAGE>

<TABLE>

Section 12.1. Notices.............................................................................. 70

Section 12.2. Amendment............................................................................ 71

Section 12.3. Extension; Waiver.................................................................... 71

Section 12.4. Exhibits; Schedules; Entire Agreement................................................ 71

Section 12.5. Assignment; Successors in Interest; Joint and Several................................ 72

Section 12.6. Number; Gender....................................................................... 72

Section 12.7. Captions............................................................................. 72

Section 12.8. Controlling Law...................................................................... 72

Section 12.9. Seller Knowledge..................................................................... 72

Section 12.10. Severability......................................................................... 72

Section 12.11. Facsimile Signature; Counterparts.................................................... 72

Section 12.12. Third-Party Beneficiaries............................................................ 73

Section 12.13. No Presumption Against Drafter....................................................... 73

Section 12.14. Consent to Jurisdiction, Etc......................................................... 73

</TABLE>

EXHIBITS

<TABLE>

<S> <C>

Exhibit A Transition Services Agreement

Exhibit B Chip Supply Agreement

Exhibit C Option Agreement

Exhibit D Maplesville Agreement

Exhibit E Headquarters Lease

Exhibit F Rooster Bridge Lease

Exhibit G Seller Opinion

</TABLE>

<PAGE>

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of April 27,

2005, by and between ROCK-TENN COMPANY, a Georgia corporation ("Buyer Parent"),

ROCK-TENN PACKAGING AND PAPERBOARD, LLC, a Georgia limited liability company and

a wholly-owned indirect subsidiary of Buyer Parent ("Buyer," and together with

Buyer Parent, the "Buyer Parties"), and GULF STATES PAPER CORPORATION, a

Delaware corporation ("Seller Parent"), GSPC ENTERPRISES, INC., a Delaware

corporation, and a wholly-owned subsidiary of Seller Parent ("Seller Sub I"),

GULF STATES-TEXAS, L.L.C., a Delaware limited liability company, whose member

interests are wholly owned by Seller Sub I ("Seller Sub II"), GULF STATES-TEXAS,

L.P., a Delaware limited partnership, whose partners are Seller Sub I and Seller

Sub II ("Seller Sub III") (Seller Parent, Seller Sub I, Seller Sub II and Seller

Sub III are collectively, and individually where the context so requires or

permits, referred to as "Seller").

W I T N E S S E T H:

WHEREAS, Seller is engaged, among other things, in the production and sale

of paperboard and packaging; and

WHEREAS, Seller wishes to sell its Pulp and Paperboard Division,

Paperboard Packaging Division, Resolution Packaging operations and Livingston

Box operations (collectively, the "Business") and its joint venture interest

(the "Seller JV Interest") in GSD Packaging, L.L.C., a Delaware limited

liability company ("Seller JV"), including, without limitation, all of the

assets used or held for use in connection with the Business as described herein

and Buyer desires to purchase the Business and the Seller JV Interest, all

subject to the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and of the mutual

covenants and agreements set forth herein, the parties hereto agree as follows:

ARTICLE I.

PURCHASE AND SALE

Section 1.1. AGREEMENT TO PURCHASE AND SELL. Subject to the terms and

conditions of this Agreement, at the Closing (as hereinafter defined) and except

for the Excluded Assets (as hereinafter defined), Seller shall grant, sell,

assign, transfer and deliver to Buyer, and Buyer will purchase and acquire from

Seller, all right, title and interest of Seller in and to (a) the Business, (b)

the Seller JV Interest and (c) all of the assets, properties and rights of

Seller, of every kind and description, real, personal and mixed, tangible and

intangible, wherever situated and used or held for use in connection with the

Business (which Business, Seller JV Interest, assets, properties and rights are

hereinafter more particularly defined collectively as the "Assets"), free and

clear of all mortgages, liens, pledges, security interests, charges, claims,

restrictions and encumbrances of any nature whatsoever, except Permitted

Encumbrances (as hereinafter defined) and Assumed Liabilities (as hereinafter

defined).

<PAGE>

Section 1.2. INCLUDED ASSETS. Except as otherwise expressly set forth in

Section 1.3 hereof, the Assets shall include, without limitation, the following

assets, properties and rights of Seller as of the Closing Date (as hereinafter

defined):

(a) all accounts receivable, notes receivable and related

instruments, prepaid expenses, deposits, sureties, advances, and credits of the

Business;

(b) all inventories, including finished products,

work-in-process, raw materials, spare parts, replacement parts, component parts,

stores and supplies, office supplies and other inventory items of the Business

including, without limitation, such inventory (i) located on the Seller Real

Property (as hereinafter defined), and (ii) located in the warehouse facility

owned by Seller in Maplesville, Alabama (the "Maplesville Facility")

(collectively, the "Inventory");

computers, vehicles, furniture, fixtures, tools, dies, molds, parts, rolling

stock, and other tangible personal property of the Business (together with the

Inventory, collectively, the "Tangible Personal Property");

(d) unless not assigned pursuant to Section 2.7(b), all right,

title and interest of Seller in (i) the Material Contracts (as hereinafter

defined) of Seller identified on Schedule 1.2(d) and (ii) all contracts (other

than Material Contracts, whether written or oral) of the Business in the

ordinary course, including, without limitation, all purchase orders, and

contracts with customers and suppliers (collectively, the "Assumed Contracts");

(e) all real property identified as "Fee Parcels" on Schedule

1.2(e) (the "Fee Parcels") and Seller Sub I's leasehold estate in the real

property located in Demopolis, Alabama and identified as "Leasehold Parcels" on

Schedule 1.2(e) (the "IDB Leasehold Parcel") pursuant to the applicable leases

described on Schedule 1.2(e) (the "IDB Leases") and the other "Leasehold

Parcels" described on Schedule 1.2(e) (together with the IDB Leasehold Parcel,

the "Leasehold Parcels"), including, without limitation, all easements and other

rights appurtenant to the Fee Parcels and the Leasehold Parcels, and including,

without limitation, all buildings, structures, fixtures and improvements located

on the Fee Parcels and the Leasehold Parcels, but expressly excluding the

"Excluded Mill Property" as defined in Section 5.20 (collectively, the Fee

Parcels, the Leasehold Parcels and such improvements (but excluding the Excluded

Mill Property), the "Seller Real Property");

(f) all goodwill, customer lists, patents, copyrights,

software, technical documentation, inventories, know-how, designs, shop and

royalty rights, trade secrets, trademarks, servicemarks, website addresses,

brand names and UPC codes, and trade names (and all registrations and rights

thereto and applications therefor, including all rights under contracts granting

any right, title, license or privilege under the intellectual property rights of

any third party), of the Business, including, without limitation, those set

forth on Schedule 1.2(f);

(g) except as provided in Section 1.3(d), all rights to causes

of action, lawsuits, judgments, claims and demands of any nature available to or

being pursued by Seller

<PAGE>

with respect to any Asset or the ownership, use, function or value of any Asset

or otherwise relating to the Business, whether arising by way of direct claim,

counterclaim or otherwise;

(h) except as provided in Section 1.3(e), all guarantees,

warranties, indemnities and similar rights in favor of Seller with respect to

any Asset or any Assumed Liability, and all proceeds under insurance policies

with respect to any Asset or any Assumed Liability (except to the extent such

proceeds constitute a reimbursement of Seller for amounts expended by Seller in

repairing or replacing any Asset);

(i) except as provided in Section 1.3(f), all permits,

licenses, approvals, authorizations, or similar rights of the Business

including, without limitation, those set forth on Schedule 1.2(i);

(j) all other tangible and intangible assets of any kind or

description of the Business, wherever located;

(k) all information, files, correspondence, records, data,

plans, contracts and recorded knowledge, wherever located, and whether in hard

copy, electronic or other form, including, without limitation, all customer,

supplier and vendor information, accounting books and records, property records,

production records, engineering records, environmental records, purchasing and

sale records, personnel and payroll records, medical, dental and 401(k) records

(including, but not limited to, current operational and administrative

information relating thereto and the individual participant's and dependent's

participation and experience therein) technical information, marketing and

advertising materials and information, data, operating and maintenance manuals,

credit data, marketing information, correspondence, invoices, forms, and

warranty information, of the Business; provided, however, that (i) Seller may

retain copies of any of the foregoing if necessary to comply with applicable law

or necessary in connection with the preparation of tax returns or financial

statements or in connection with the rights and obligations of Seller hereunder,

provided that Seller's retention of such copies shall be subject to Article VII

hereof and (ii) to the extent any of the foregoing relates primarily, but not

solely, to the Business or the Assets, Seller may omit, redact or otherwise keep

confidential any part of such information that relates solely to matters other

than the Business or the Assets;

(l) the Seller JV Interest;

(m) the IDB bonds related to the IDB Leasehold Parcel (the

"Bonds"); and

(n) the assets listed on Schedule 1.2(n).

For purposes of this Agreement, "Affiliates" shall mean with respect to any

party, a party, person or entity that, directly, or indirectly through one or

more intermediaries, controls, is controlled by, or is under common control

with, such party, where "control", "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 such party, whether

through the ownership of voting securities, by voting trust, contract or similar

arrangement, as trustee or executor, or otherwise.

<PAGE>

Section 1.3. EXCLUDED ASSETS. Notwithstanding anything to the contrary set

forth herein, the Assets shall not include the following assets, properties and

rights of Seller as of the Closing Date (collectively, the "Excluded Assets"):

(a) the purchase timber tracts set forth on Schedule 1.3(a);

(b) all cash of the Business;

which each of the following are true: (i) not used or held for use exclusively

in connection with the Business that are described on Schedule 1.3(c), (ii) not

carried on the books of the Business and (iii) not located on the Real Property;

(d) all rights to causes of action, lawsuits, judgments,

claims and demands of any nature available to or being pursued by Seller with

respect to any Excluded Asset or to the extent involving any Excluded Liability

or as otherwise as set forth on Schedule 1.3(d);

(e) all guarantees, warranties, indemnities and similar rights

in favor of Seller with respect to any other Excluded Asset or to the extent

involving any Excluded Liability that are available to or are being pursued by

Seller based on events, occurrences or conditions occurring or existing prior to

Closing, whether first asserted before or after the Closing Date;

(f) subject to Section 2.7(b), all permits, licenses,

approvals, authorizations, or similar rights of the Business that by their terms

are not assignable to Buyer;

(g) all rights to refunds of Taxes (as hereinafter defined)

(i) imposed upon and paid by Seller or its Affiliates or (ii) paid by Seller and

arising out of or relating to the Assets or the Business with respect to taxable

periods, or portions thereof, ending prior to the Closing Date (except for any

such refund that is included in the determination of Net Working Capital in the

Final Working Capital Schedule);

(h) the tradename `Gulf States Paper Corporation' and all

derivatives thereof;

(i) Seller's equity in and rights with respect to the "On

Point" joint venture;

(j) any contracts, agreements or instruments between the

Business and Seller or any of Seller's Affiliates, other than Seller JV Leases

and other contracts, agreements or instruments described in Schedule 1.3(j);

(k) that certain recovery boiler and other assets held for

sale described on Schedule 1.3(k);

(l) any assets and contracts listed on Schedule 1.3(l);

<PAGE>

(m) the Maplesville Facility;

(n) the rights that accrue to Seller under this Agreement and

the Ancillary Agreements (hereinafter defined);

(o) (i) any letters of credit, surety bonds, guarantees and

performance bonds listed on Schedule 1.3(o);

(p) the Excluded Mill Property; and

(q) all insurance policies and all proceeds thereunder (except

as set forth in Section 1.2(h)).

Section 1.4. ASSUMPTION OF ASSUMED LIABILITIES. Except as expressly

provided in this Section 1.4, notwithstanding anything to the contrary contained

in this Agreement, and regardless of whether such liability is disclosed in this

Agreement, or on any Schedule or Exhibit hereto, the Buyer Parties shall not

assume, agree to pay, perform and discharge, bear the economic burden of or in

any way be responsible for any debts, liabilities or obligations of Seller

(whether known or unknown, accrued or unaccrued, fixed or contingent), or any of

Seller's Affiliates, of any kind or nature whatsoever, arising out of, relating

to, resulting from, or caused by any transaction, status, event, condition,

occurrence or situation relating to, arising out of or in connection with the

Business or otherwise. As the sole exception to the foregoing, effective as of

the Closing Date, Buyer shall assume and agree to pay, discharge or perform, as

appropriate, the following liabilities and obligations of Seller existing as of

the Closing Date arising out of the conduct of the Business prior to the Closing

Date (collectively, the "Assumed Liabilities"):

(a) obligations of Seller under Assumed Contracts (including,

without limitation, obligations under the Labor Agreement) to the extent such

obligations arise or relate to periods after the Closing, are not required to be

performed prior to the Closing, do not arise or result from any breach or

default under such Assumed Contracts prior to the Closing and are disclosed on

the face of such Assumed Contracts;

(b) Current Liabilities (as hereinafter defined) relating to

the operation of the Business, but only to the extent such liabilities are

included in the determination of Net Working Capital in the Final Working

Capital Schedule (as determined in accordance with Section 2.2(a)); except that

(i) liabilities and obligations of Seller JV included in Current Liabilities

shall not be Assumed Liabilities (but sixty percent (60%) of the current

liabilities of the Seller JV shall be included in determining Net Working

Capital pursuant to Sections 2.2 and 2.3) and shall remain liabilities or

obligations of Seller JV after the Closing; and (ii) Assumed Liabilities shall

not include any reserves included in the Current Liabilities, but such reserves

shall be included in determining Net Working Capital pursuant to Sections 2.2

and 2.3. Seller will serve as paying agent for the Buyer as to all accounts

payable of the Business, and Buyer will assume all such accounts payable and

will advance funds to Seller to fund accounts payable payments as such payments

become due.

(d) the IDB Leases.

<PAGE>

Section 1.5. EXCLUDED LIABILITIES. Notwithstanding any other provision of

this Agreement, Buyer will not assume any, and Seller shall have responsibility

for and shall satisfy, all of the liabilities and obligations of Seller which

are not assumed by Buyer hereunder pursuant to Section 1.4 of this Agreement

(collectively, the "Excluded Liabilities"). The Excluded Liabilities shall

include, without limitation, the following:

(a) all liabilities relating to the Excluded Assets;

(b) all bank or other long-term liabilities of Seller or its

Affiliates whether or not related to the Business, other than (i) the IDB Leases

and (ii) the long-term liabilities assumed by Buyer as described in Section

1.4(c);

arising from the breach of, default under or failure to comply with, at any time

on or prior to the Closing Date, any Assumed Contract or the failure to timely

pay or perform any other liability or obligation at any time on or prior to the

Closing Date;

(d) any liability or obligation under Seller's Plans, except

with respect to Assumed Liabilities described in Sections 1.4(b) and 1.4(c)

hereof;

(e) except with respect to Assumed Liabilities described in

Sections 1.4(b) and 1.4(c), all liabilities and obligations with respect to any

claim, demand, damage, injury, death, action, suit, arbitration, inquiry,

proceeding, dispute, or investigation, alleged, asserted or otherwise,

regardless of whether any filing with or any action has been brought of any

nature, civil, criminal, regulatory, or otherwise, in law or in equity

(collectively, the "Actions") by or before any Authority (as hereinafter

defined) and based on events, occurrences or conditions occurring or existing

prior to Closing, whether first asserted before or after the Closing Date, at

law, in equity or otherwise, including without limitation any such matters

relating to any of Seller's employees, suppliers, contractors/subcontractors or

customers of the Business;

(f) except with respect to Assumed Liabilities described in

Section 1.4(b) or as otherwise provided in Section 2.5 or 2.6, all liabilities

for Taxes (as hereinafter defined) (i) imposed upon Seller or its Affiliates or

(ii) arising out of or relating to the Business or the Assets with respect to

taxable periods, or portions thereof, ending prior to the Closing Date;

(g) except as otherwise provided in this Agreement, any

liability or obligation of Seller arising or incurred in connection with the

negotiation, preparation and execution of this Agreement and the transactions

contemplated hereby and any fees and expenses of counsel, accountants, brokers,

financial advisors or other experts of Seller or any of its Affiliates;

(h) except with respect to Assumed Liabilities described in

Sections 1.4(b) and 1.4(c), any workers' compensation or employment claims

relating to the Business arising from the operation of the Business prior to the

Closing (whether asserted prior to or after the Closing);

<PAGE>

(i) except with respect to Assumed Liabilities described in

Section 1.4(b) or on Schedule 1.5(i), any liabilities or obligations owed by the

Business to Seller or any of its Affiliates;

(j) except with respect to Assumed Liabilities described in

Sections 1.4(b) and 1.4(c), any liabilities or obligations to any of Seller's

employees or former employees for or relating to periods prior to the Closing

Date;

(k) any Excluded Current Liability (hereinafter defined); and

(l) all liabilities and obligations of Seller and its

Affiliates not relating to the operation of the Business.

All liabilities or obligations of Seller JV shall remain liabilities or

obligations of Seller JV after the Closing.

Section 1.6. ASSETS OWNED BY AFFILIATES. To the extent that any Assets are

owned by any Affiliate of Seller (other than the assets of Seller JV reflected

on the Financial Statements), Seller shall cause such Affiliate to transfer such

Assets to Buyer on or before the Closing Date.

Section 1.7. DESIGNATION OF BUYER AFFILIATES. The Buyer Parties may

designate one or more Affiliates to acquire at the Closing all or part of the

Assets or to assume all or part of the Assumed Liabilities; provided, however,

that the Buyer Parties shall remain jointly and severally liable to Seller for

the Assumed Liabilities and all of their other obligations under this Agreement.

ARTICLE II.

PURCHASE PRICE

Section 2.1. PURCHASE PRICE. Subject to adjustment pursuant to Section

2.2, the aggregate amount of cash consideration to be paid for the Business and

the Assets (the "Purchase Price") shall be (w) Five Hundred Forty Million

Dollars ($540,000,000), plus (x) the Pre-Closing Capital Expenditures

(hereinafter defined), minus (y) the AR Bad Debt Reserve (hereinafter defined)

to the extent that Buyer has elected to reduce the Purchase Price by such amount

pursuant to Section 2.8(b) minus (z) $18,982 (which amount has been calculated

as provided in Schedule 2.1).

Section 2.2. Payment of Purchase Price.

(a) Prior to the Closing, Seller and Buyer shall agree upon

the estimated Working Capital Deficit or Working Capital Surplus, as the case

may be. For purposes of this Agreement, the term "Working Capital Deficit" shall

mean the amount by which the Net Working Capital is less than Eighty-Three

Million, Eight Hundred Eighty-Five Thousand Dollars ($83,885,000) (the "Target

Working Capital") and the term "Working Capital Surplus" shall mean the amount

by which the Net Working Capital exceeds the Target Working Capital. Seller

represents that the Target Working Capital has been determined in accordance

with the calculations set forth on Schedule 2.2(a) attached hereto, which

calculations are based upon the

<PAGE>

relevant accounts of Seller and Seller JV as of October 31, 2004 and in

accordance with Seller's divisional accounting policies and principles described

on Schedule 2.2(a) (the "Divisional Accounting Policies") applied consistently

with past practices. Buyer and Seller agree that the determination of the amount

of Net Working Capital as described in Section 2.2(a) shall be calculated in the

same manner as the Target Working Capital as shown on Schedule 2.2(a), including

adjustments set forth therein, and in accordance with the Divisional Accounting

Policies applied consistently with past practices. For purposes of this

Agreement, the term "Net Working Capital" shall mean an amount equal to the

Current Assets (hereinafter defined) on the Closing Date, minus the Current

Liabilities (hereinafter defined) on the Closing Date. For purposes of this

Agreement, "Current Assets" shall mean all current assets of the Business and

60% of the current assets of Seller JV as described on Schedule 2.2(a) hereto,

other than the Excluded Assets. "Current Liabilities" shall mean the current

liabilities of the Business and 60% of the current liabilities of Seller JV as

described on Schedule 2.2(a) hereto other than the Excluded Liabilities and

shall include 50% of the Demopolis maintenance outage reserve (100% of the

weekly accrual of which is $90,000) for the Combined Business for the period

commencing on January 3, 2005 and ending on the Closing Date; provided, however,

that Buyer may elect not to assume any current liability by giving written

notice to Seller prior to Closing specifying the current liability which Buyer

elects not to assume (the "Excluded Current Liability"), in which case such

Excluded Current Liability shall not be an Assumed Liability for any purposes

including for the purpose of the determination of Net Working Capital in the

Final Working Capital Schedule. In the event Buyer and Seller are unable to

reach agreement regarding the estimated amount of the Working Capital Deficit or

the Working Capital Surplus, as the case may be, the estimated amount of the

Working Capital Deficit or the Working Capital Surplus, as the case may be,

shall be the arithmetical average of the amounts reasonably estimated in good

faith by Buyer and Seller.

(b) On the Closing Date, Buyer shall pay or cause to be paid

to Seller an amount equal to the Purchase Price minus the estimated Working

Capital Deficit, if any, determined in accordance with Section 2.2(a), or plus

the estimated Working Capital Surplus, if any, determined in accordance with

Section 2.2(a).

of the Final Working Capital Schedule (hereinafter defined) in accordance with

Section 2.3:

(1) If there is a Working Capital Deficit, then Seller

shall pay to Buyer an amount equal to the Working Capital Deficit minus the

amount subtracted from the Purchase Price with respect to an estimated Working

Capital Deficit, if any, determined in accordance with Section 2.2(a) or plus

the amount added to the Purchase Price with respect to an estimated Working

Capital Surplus, if any, determined in accordance with Section 2.2(a).

Notwithstanding the foregoing, in the event the estimated Working Capital

Deficit determined in accordance with Section 2.2(a) exceeds the Working Capital

Deficit, Buyer shall pay Seller an amount equal to the excess of the estimated

Working Capital Deficit determined in accordance with Section 2.2(a) over the

Working Capital Deficit. If a dispute exists between the parties regarding the

amount of the Working Capital Deficit, the party owing payment shall pay to the

other party the uncontested amount at the time the dispute is submitted to the

Arbitrator (as hereinafter defined) for determination pursuant to Section

2.3(c).

<PAGE>

(2) In the event there is a Working Capital Surplus,

then Buyer shall pay to Seller an amount equal to the Working Capital Surplus

minus the amount added to the Purchase Price with respect to an estimated

Working Capital Surplus, if any, determined in accordance with Section 2.2(a) or

plus the amount subtracted from the Purchase Price with respect to an estimated

Working Capital Deficit, if any, determined in accordance with Section 2.2(a).

Notwithstanding the foregoing, in the event the estimated Working Capital

Surplus determined in accordance with Section 2.2(a) exceeds the Working Capital

Surplus, Seller shall pay to Buyer an amount equal to the excess of the

estimated Working Capital Surplus determined in accordance with Section 2.2(a)

over the Working Capital Surplus. If a dispute exists between the parties

regarding the amount of Working Capital Surplus, the party owing payment shall

pay to the other party the uncontested amount at the time the dispute is

submitted to the Arbitrator for determination pursuant to Section 2.3(c).

(3) Any payment made pursuant to this Section 2.2(c)

shall include simple interest from the Closing Date through the date of such

payment at a per annum rate equal to the Federal Funds Rate plus 100 basis

points on the Closing Date (the "Agreed Rate") .

(d) All payments required under this Section 2.2 or any other

provision hereof shall be made in cash by wire transfer of immediately available

funds to such bank account(s) as shall be designated in writing by the

recipient.

Section 2.3. ADJUSTMENT OF PURCHASE PRICE.

(a) As soon as practicable, but in any event within sixty (60)

days after the Closing Date, Seller shall prepare, or cause to be prepared, and

deliver to Buyer a statement of the Net Working Capital (the "Preliminary

Working Capital Schedule"). Such statement shall be prepared in accordance with

the Divisional Accounting Policies consistently applied.

(b) Buyer shall have sixty (60) days following receipt of the

Preliminary Working Capital Schedule during which to notify Seller in writing of

any dispute of any item contained in the Preliminary Working Capital Schedule,

which notice shall set forth in reasonable detail the basis for such dispute. In

the event Buyer does not notify Seller in writing of any such dispute within

such 60-day period, the Preliminary Working Capital Schedule shall be deemed to

be the "Final Working Capital Schedule." In the event that Buyer does notify

Seller of a dispute within such 60-day period, Buyer and Seller shall cooperate

in good faith to resolve such dispute as promptly as possible, and if such

dispute is resolved, the Final Working Capital Schedule shall be prepared in

accordance with the agreement of Buyer and Seller with respect thereto.

dispute regarding the Preliminary Working Capital Schedule within fifteen (15)

days following notice of such dispute, such dispute shall be submitted to, and

all issues having a bearing on such dispute shall be resolved by Deloitte or a

nationally recognized accounting firm selected by Buyer and Seller (such

identified accounting firm or, if applicable, the firm so selected, the

"Arbitrator"). Such resolution shall be final and binding on the parties. The

Arbitrator shall be instructed to use

<PAGE>

commercially reasonable efforts to complete its work within thirty (30) days

following its engagement. Each of Seller and Buyer shall pay one-half of the

expenses of the Arbitrator.

(d) Seller, Buyer and their respective accountants and other

representatives shall fully cooperate with the other in the preparation and

review of the Preliminary Working Capital Schedule including, without

limitation, by providing access to accountant's work papers relevant to the

Preliminary Working Capital Schedule, as well as the books and records related

thereto.

Section 2.4. PHYSICAL INVENTORY. For purposes of calculating the Net

Working Capital, the identification and valuation of the Inventory purchased by

Buyer hereunder and the inventory of Seller JV shall be determined based upon a

physical inventory jointly conducted by Buyer and Seller on or before the

Closing Date; provided, however, that the value of the Inventory set forth on

the books of the Business as of the Closing Date and the inventory of Seller JV

shall only be adjusted for (a) any quantity discrepancies and (b) any

adjustments necessary to conform the value of Inventory to the Divisional

Accounting Policies. If in connection with determining the Net Working Capital,

Buyer determines in good faith that the inventory value of any inventory should

be adjusted downward to conform to the Divisional Accounting Policies, then

Seller shall have the option to exclude the affected Inventory not yet sold by

Buyer from the Assets by written notice to Seller prior to calculation of the

Net Working Capital, and promptly following such notice, such Inventory will be

transferred back to Seller and shall not be included in the Net Working Capital

included on the Final Working Capital Schedule and thereafter not included in

the definition of "Inventory" hereunder (any inventory so excluded being

referred to as "Excluded Inventory"). At Seller's request, Buyer shall use

commercially reasonable efforts to sell any Excluded Inventory in the ordinary

course of business for up to 120 days after the Closing Date and shall pay over

to Seller the net proceeds of any such sale actually collected by Buyer, less

customer discounts and freight charges or any other amounts paid or payable by

Buyer with respect thereto, and as to any unsold Excluded Inventory, Buyer shall

make Excluded Inventory available to Seller, at Seller's expense, at the

expiration of the 120-day period; provided, however, that Buyer shall have no

liability to Seller if such Excluded Inventory is not sold or is sold at a

discount with the prior written consent of Seller.

Section 2.5. SALES AND TRANSFER TAXES AND FEES; REPORTING AND PAYMENT;

OTHER CLOSING COSTS AND EXPENSES. Seller and Buyer shall each pay when due one

half of any and all transfer, documentary, sales, use, stamp, registration, and

other such Taxes, and all conveyance fees, recording charges, and other fees and

charges (including any penalties and interest) incurred in connection with the

consummation of the transactions contemplated by this Agreement, and Seller

shall, at its own expense, timely file all necessary Tax Returns (as defined in

Section 3.12(b)) and other documentation with respect to all such Taxes, fees,

and charges. Buyer will pay all costs and expenses incurred by Buyer in

connection with any title insurance examinations or title policy premiums,

surveys, environmental assessments, and all other diligence conducted by Buyer

in connection herewith. Buyer and Seller shall each pay one-half of the filing

fee to be paid in connection with the filings to be made pursuant to Section 5.9

to comply with the requirements of the Hart-Scott-Rodino Antitrust Improvements

Act of 1976, as amended (the "HSR Act"). All other costs and expenses shall be

borne by the party incurring such costs or expenses.

<PAGE>

Section 2.6. PRORATION OF AD VALOREM TAXES AND OTHER EXPENSES.

(a) All ad valorem Taxes levied with respect to all Real

Property and all personal property constituting the Assets and any portion

thereof for the year in which the Closing occurs shall be prorated per diem as

of the Closing Date, with Seller responsible for all Taxes applicable to the

period prior to the Closing Date and with Buyer responsible for all Taxes

applicable to the period on and after the Closing Date. The portion of such

Taxes applicable to the period prior to the Closing Date shall be included as

accrued liabilities of the Business for purposes of determining the Net Working

Capital on the Preliminary Working Capital Schedule and the Final Working

Capital Schedule and to the extent so included shall be paid when due by Buyer.

If the amount of any such Taxes is not known as of the Closing Date, such Taxes

shall be prorated based on the Tax bills for the immediately preceding year, and

the parties will, on a post-closing basis, reprorate such Taxes once the actual

Taxes are known, and shall remit to each other any amounts owed, which

obligation shall survive the Closing hereunder. Seller shall, prior to the

Closing Date, pay all assessments and ad valorem Taxes levied with respect to

the Assets due and payable for all periods prior to the Closing Date.

(b) All other expenses of the Business that are incurred for a

period that relate to a period before or after the Closing Date and of the type

where benefit is received by both Buyer and Seller shall be prorated on a daily

basis between Seller and Buyer as of the Closing Date, and the portion relating

to the periods prior to the Closing Date shall be included as accrued

liabilities of the Business for purposes of determining the Net Working Capital

on the Preliminary Working Capital Schedule and the Final Working Capital

Schedule. Seller agrees that all expenses, charges, bills, or trade accounts

maintained or incurred by Seller or its agents in connection with the management

or operation of the Business or otherwise accrued for the period prior to the

Closing Date that are not Assumed Liabilities will be paid in full by Seller in

a timely manner; provided, however, that all such expenses, charges, bills, or

trade accounts that have accrued but have not been billed as of the Closing

Date, that are not Assumed Liabilities, will be paid in full by Seller at the

time Seller receives the bills. Without limiting the generality of the

foregoing, the following items will be adjusted as of the Closing Date:

(1) rent (excluding rents due under the IDB Leases,

which match the interest payments on the Bonds) and other charges payable under

leases for any leased real property or leased personal property and all service

charges under the IDB Leases;

(2) water and utility charges and sanitary sewer Taxes;

(3) charges under service, management or other

agreements, if any, that remain in effect after the Closing Date and are

expressly assumed by Buyer; and

(4) other operating expenses not covered by any of the

above subparagraphs.

Section 2.7. CERTAIN ASSIGNMENTS.

(a) Buyer and Seller shall use commercially reasonable efforts

to obtain each consent necessary to assign any Asset, including the Assumed

Contracts, to Buyer, and Buyer

<PAGE>

and Seller shall use commercially reasonable efforts to obtain all requisite

consents under the IDB Leases in order to assign the IDB Leases to Buyer.

(b) Notwithstanding anything to the contrary in this

Agreement, this Agreement shall not constitute an agreement to assign or

transfer any governmental approval, instrument, contract, lease, Permit or other

agreement or arrangement or any claim, right or benefit arising thereunder or

resulting therefrom if an assignment or transfer or an attempt to make such an

assignment or transfer without the consent of a third party or Authority (as

hereinafter defined) would constitute a breach or violation thereof or affect

adversely the right of Buyer or Seller thereunder; and any transfer or

assignment to Buyer by Seller of any interest under any such instrument,

contract, lease, Permit or other agreement or arrangement that requires the

consent of a third party or Authority shall be made subject to such consent or

approval being obtained. In the event any such consent or approval is not

obtained on or prior to the Closing Date, Seller and Buyer shall continue to use

all commercially reasonable efforts to obtain any such approval or consent after

the Closing Date until such time as such consent or approval has been obtained,

and Seller will cooperate with Buyer in any lawful or economically feasible

arrangement to provide that Buyer shall receive the interest of Seller in the

benefits under any such instrument, contract, lease, Permit or other agreement

or arrangement, including, without limitation, performance by Seller as agent,

if economically feasible; provided that if Buyer shall receive the interest of

Seller in the benefits under any such instrument, contract, lease, Permit or

other agreement or arrangement prior to such time as consent or approval has

been obtained, Buyer shall undertake to pay or satisfy the corresponding

liabilities for the enjoyment of such benefit to the extent Buyer would have

been responsible therefor hereunder if such consent or approval had been

obtained. Notwithstanding the foregoing, if any consent or approval has not been

obtained as of the Closing with respect to any instrument, contract, lease,

Permit or other agreement or arrangement of the Combined Business, then, at

Buyer's request, Seller shall transfer and assign to Buyer such instrument,

contract, lease, Permit or other agreement or arrangement with a disclaimer of

any warranties with respect to such assignment.

Section 2.8. ACCOUNTS RECEIVABLE.

(a) Prior to the Closing Date, Seller agrees to review its

accounts receivable and to write off long delinquent accounts and other accounts

of doubtful collectability.

(b) Prior to the Closing Date, Buyer agrees to notify Seller

in writing that it elects one of the following, which election shall be binding

on the parties:

(1) at the Closing, the Purchase Price shall be reduced

by an amount equal to the bad debt reserve for accounts receivables determined

in accordance with the methodology for establishing bad debt reserves reflected

in the Carve Out Audited Financial Statements (the "AR Bad Debt Reserve"); or

(2) if accounts receivable outstanding at the Closing

included in the Net Working Capital on the Final Working Capital Schedule are

not collected within one year after the Closing Date, then Seller Parent will

pay to Buyer the gross book value of such uncollected accounts receivable in

excess of One Million Dollars ($1,000,000) and Buyer will promptly transfer back

to Seller such uncollected accounts receivable.

<PAGE>

Section 2.9. PRE-CLOSING CAPITAL EXPENDITURES. In the event that Seller

proposes after the date hereof and prior to the Closing Date to make any new

discretionary, non-maintenance capital expenditures with respect to the Business

that individually or in the aggregate exceed $100,000, Seller will promptly

provide written notice to Buyer containing a description of the purpose for any

such capital expenditure, the estimated amount of any such capital expenditure

and such other information as Buyer may reasonably request. Buyer shall notify

Seller in writing as promptly as practicable after receipt of such notice

whether or not Buyer approves any such proposed capital expenditure by Seller.

If Buyer disagrees with Seller with regard to the need for any such capital

expenditure, the amount of any such capital expenditure or any other issue

relating to such capital expenditure, Buyer shall promptly notify Seller, and

the parties shall promptly discuss any such disagreement and attempt in good

faith to reach a mutual agreement with respect to the proposed capital

expenditure. If the parties reach a mutual agreement with respect to any such

proposed capital expenditure, Seller shall make the approved capital

expenditures in accordance with the agreement of the parties and shall deliver

to Buyer immediately prior to Closing a statement of all expenditures actually

made by Seller in connection with such capital expenditures approved by Buyer,

and the amount of such approved capital expenditures actually paid by Seller in

excess of $100,000 shown on such statement (the "Pre-Closing Capital

Expenditures") shall be added to the Purchase Price in accordance with Section

2.1. In the event that the project in respect of any such approved capital

expenditures is not completed on or before the Closing Date, Buyer shall assume

all obligations of Seller with respect to any remaining costs of such approved

capital expenditure as of Closing and such costs shall be Assumed Liabilities

hereunder.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller represents and warrants to the Buyer Parties as follows:

Section 3.1. ORGANIZATION. Each of Seller Parent and Seller Sub I is a

corporation duly organized, each of Seller Sub II and Seller JV is a limited

liability company duly formed, Seller Sub III is a limited partnership duly

formed, and each of Seller and Seller JV is validly existing and in good

standing under the laws of Delaware and has all requisite power and authority

(corporate and other) to own, lease and operate its properties and to carry on

its business as now being conducted, including, without limitation, the

Business. Each of Seller and Seller JV is duly qualified to transact business

and is in good standing as a foreign corporation or foreign limited liability

company or foreign limited partnership in each jurisdiction where the character

of its activities requires such qualification, except where the failure to be so

qualified would not have a Material Adverse Effect. Each of Seller and Seller JV

has heretofore made available to Buyer true, correct and complete copies of its

certificates of incorporation, certificates of formation, bylaws and operating

or partnership agreements in effect as of the date hereof.

Section 3.2. AUTHORIZATION. Each Seller has the full power and authority

to execute and deliver this Agreement and any other certificate, agreement,

document or other instrument to be executed and delivered by it in connection

with the transactions contemplated hereby and the consummation hereof at Closing

(collectively, the "Seller Ancillary Documents") and to perform

<PAGE>

its obligations hereunder and thereunder and to consummate the transactions

contemplated hereby and thereby. The execution and delivery of this Agreement

and the Seller Ancillary Documents by each Seller and the performance by each

Seller of its obligations hereunder and thereunder and the consummation of the

transactions provided for herein and therein have been duly and validly

authorized by all necessary corporate or other action on the part of each

Seller. The board of directors, the stockholders, the partners and the members

of each Seller have approved the execution, delivery and performance of this

Agreement and the Seller Ancillary Documents and the transactions contemplated

hereby and thereby. This Agreement has been, and the applicable Seller Ancillary

Documents will be as of the Closing Date, duly executed and delivered by each

Seller and assuming the due and valid authorization, execution and delivery

thereof by the other parties thereto, do or will, as the case may be, constitute

the valid and binding agreements of such Seller, enforceable against such Seller

in accordance with their respective terms, subject to applicable bankruptcy,

insolvency and other similar Laws (as defined herein) affecting the

enforceability of creditors' rights generally, general equitable principles and

the discretion of courts in granting equitable remedies.

Section 3.3. ABSENCE OF RESTRICTIONS AND CONFLICTS. Except as set forth in

Schedule 3.3, the execution, delivery and performance of this Agreement and the

Seller Ancillary Documents, the consummation of the transactions contemplated by

this Agreement and the Seller Ancillary Documents and the fulfillment of and

compliance with the terms and conditions of this Agreement and the Seller

Ancillary Documents do not or will not, with the passing of time or the giving

of notice or both, violate or conflict with, constitute a breach of or default

under, result in the loss of any benefit under, or permit the acceleration of

any obligation under, (a) any term or provision of any certificate of

incorporation, certificates of formation, bylaws or operating or partnership

agreements of Seller or Seller JV, (b) any Assumed Contract, (c) any contract or

agreement to which Seller JV is a party, including, without limitation, the

Seller JV Leases (as hereinafter defined), (d) any judgment, decree or order of

any Authority to which Seller or Seller JV is a party or by which Seller, Seller

JV or any of the Assets or the assets of Seller JV is bound or (e) any Law

applicable to Seller, Seller JV or their respective businesses, excluding from

the foregoing clauses (d) and (e) such conflicts, losses of benefits or

accelerations (i) that are not material to the Combined Business or (ii) that

become applicable as a result of the lines of business in which Buyer is engaged

(to the extent different from the Combined Business) or as a result of any acts

or omissions by Buyer (other than actions required or contemplated by this

Agreement). Except as set forth on Schedule 3.3 hereof, no consent or approval

is required for the transfer or assignment of any Assumed Contract to Buyer.

Except for (i) compliance with the applicable requirements of the HSR Act and

(ii) consents required under IDB Leases, no consent, approval, order or

authorization of, or registration, declaration or filing with, any Authority

with respect to Seller or Seller JV is required in connection with the

execution, delivery or performance of this Agreement or the Seller Ancillary

Documents by Seller or the consummation of the transactions contemplated by this

Agreement or the Seller Ancillary Documents by Seller, excluding those consents,

approvals, orders, authorizations, registrations or declarations (i) that are

not material to the Combined Business or (ii) that become applicable as a result

of the line of business in which Buyer is engaged (to the extent different from

the Combined Business) or as a result of any acts or omissions by Buyer (other

than actions required or contemplated by this Agreement).

<PAGE>

Section 3.4. SUBSIDIARIES; JOINT VENTURE. Seller Parent owns 100% of the

issued and outstanding equity of Seller Sub I and no other Person has any right,

title or interest in or to Seller Sub I. Seller Sub I owns 100% of the issued

and outstanding equity of Seller Sub II and no other Person has any right, title

or interest in or to Seller Sub II. Seller Sub I and Seller Sub II own all of

the partnership interests in Seller Sub III, and no other Person has any right,

title or interest in Seller Sub III. Schedule 3.4 sets forth each of the owners

of Seller JV and their respective equity interests and no other person has any

right, title or interest in or the Seller JV. Other than the Seller JV Interest

and the wholly-owned subsidiaries of Seller Parent listed on Schedule 3.4,

Seller does not own, directly or indirectly, any capital stock or any other

equity or debt securities of any corporation, firm, partnership, limited

liability company, joint venture, association or other entity that owns any

portion of the Business or any of Assets or any other assets or property

utilized in or necessary to the operation of the Business or the Assets. Seller

has delivered to Buyer a true and correct copy of the Limited Liability Company

Agreement of GSD Packaging, LLC dated as of August 31, 1998, as amended by (i)

that certain First Amendment to Limited Liability Company Agreement of GSD

Packaging, LLC effective as of October 1, 1999, (ii) that certain Second

Amendment to Limited Liability Company Agreement of GSD Packaging, LLC effective

December 30, 2001, and (iii) that certain Third Amendment to Limited Liability

Company Agreement of GSD Packaging, LLC effective March 3, 2002 (as amended, the

"JV Agreement") and the JV Agreement is in full force and effect. Except for the

amendments set forth in the preceding sentence, the JV Agreement has not been

amended, modified or otherwise revised. The representations and warranties of

Seller set forth in the JV Agreement were true and correct in all material

respects when made and Seller has performed its covenants and agreements set

forth in the JV Agreement in all material respects that are required to be

performed prior to the date hereof.

Section 3.5. OWNERSHIP OF ASSETS AND RELATED MATTERS.

(a) REAL PROPERTY.

(1) Schedule 3.5(a) sets forth the street addresses of

and true, correct and complete legal descriptions of (a) the Seller Real

Property, which includes the Columbus, Georgia and Hazelton, Pennsylvania Fee

Parcels that are owned by Seller Parent and leased to Seller JV (the "Seller JV

Leased Parcels") pursuant to the leases (the "Seller JV Leases") described on

Schedule 3.5(a), and (b) the real property, the easements, and appurtenances

thereto, and all buildings, structures, fixtures and improvements located

thereon owned by Seller JV (the "Seller JV Fee Parcel") (the items described in

(a) through (b) are collectively referred to as the "Real Property"). Except for

the Real Property, there is no other real property or improvements that are used

in connection with the operation of the Business other than Seller's corporate

headquarters in Tuscaloosa, Alabama ("Seller's Corporate Offices") and other

than as set forth on Schedule 3.5(a). Seller has good, marketable and insurable

fee simple title to the Fee Parcels, and a valid, enforceable and insurable

leasehold estate in the Leasehold Parcels, and Seller JV has good, marketable,

and insurable fee simple title to the Seller JV Fee Parcel and Seller JV has a

valid, enforceable, and insurable leasehold estate in the Seller JV Leased

Parcels, all free and clear of all liens, pledges, mortgages, security

interests, charges, claims, leasehold interests, tenancies, restrictions and

encumbrances of any nature whatsoever other than (A) liens for Taxes not yet due

and payable or that are properly being contested in good faith, (provided that

Schedule 3.5(a) only lists such liens as of the date of this

<PAGE>

Agreement), (B) statutory liens of landlords and liens of carriers,

warehousemen, mechanics, materialmen and repairmen incurred in the ordinary

course of business and not yet delinquent by more than thirty (30) days or that

are being properly contested in good faith, as listed on Schedule 3.5(a)

(provided that Schedule 3.5(a) only lists such liens as of the date of this

Agreement), (C) zoning, building or other restrictions, variances, covenants,

rights-of-way, easements and other nonmonetary encumbrances to title

(collectively, "NonMonetary Encumbrances"), none of which NonMonetary

Encumbrances, individually or in the aggregate, (1) materially interfere with

the present use or occupancy of any of the Real Property, (2) have a material

adverse effect on the value thereof or its use or (3) would materially impair

the ability of Buyer or Seller JV to use, occupy or sell the Fee Parcel or the

Seller JV Fee Parcel or to use, occupy or sublet the Leasehold Parcels or the

Seller JV Leased Parcels or to assign the IDB Leases or the Seller JV Leases, in

each case for its respective present use, (D) the lien associated with the

indebtedness relating to Seller's facility located in Hazelton, Pennsylvania

(the "Hazelton Lien"), which lien Seller shall cause to be satisfied at or prior

to Closing and (E) those items listed as Permitted Encumbrances on Schedule

3.5(a) to the extent constituting an encumbrance on the Real Property; provided,

however, as to items listed on Schedule 3.5(a) as Permitted Encumbrances, such

items shall not be Permitted Encumbrances if such items, when considered solely

in light of information with respect thereto reflected on surveys of the

applicable Real Property secured by Buyer pursuant to Section 5.6 hereof, fail

to satisfy either or both of clause (1) and clause (3) of the definition of

NonMaterial Encumbrances set forth in this Section 3.5(a) (the matters described

in clauses (A) through (E) hereof, subject to the proviso set forth immediately

following (E), are collectively "Permitted Encumbrances");

(2) Seller has heretofore delivered to Buyer true,

correct and complete copies of all deeds, certificates of occupancy, title

insurance policies, title reports, surveys, zoning reports, environmental

assessments or reports and all other similar documents (including all amendments

thereof) in the possession or control of Seller relating to the Real Property,

including, without limitation, the IDB Leases and the Seller JV Leases;

(3) Except for Permitted Encumbrances, (A) no portion of

the Real Property is subject to any recorded rights of way, building use

restrictions, exceptions, variances, reservations or limitations of any nature

whatsoever (each a "Restriction"), or (B) to the knowledge of Seller, no portion

of the Real Property is subject to any unrecorded Restriction;

(4) The buildings, structures, fixtures and improvements

on the Real Property (collectively, the "Improvements") currently are and have

continuously been maintained in good order and repair, ordinary wear and tear

excepted, but except for and subject to the representations and warranties set

forth in this Agreement, are otherwise being transferred on a "where is" and, as

to the condition, "as is" basis;

(5) There are no eminent domain, condemnation, taking,

or other similar proceedings pending or, to the knowledge of Seller or Seller

JV, threatened, with respect to or affecting any portion of the Real Property or

access thereto or any Improvements by any governmental or quasi-governmental

entity or agency or any utility company having similar rights or powers of

eminent domain;

<PAGE>

(6) There are no writs, injunctions, decrees, orders or

judgments outstanding, nor any actions, claims, suits or proceedings pending,

or, to the knowledge of Seller or Seller JV, threatened, relating to the

ownership, lease, use, occupancy or operation of the Real Property or any

portion thereof or the Improvements;

(7) Seller and Seller JV, respectively, are in

possession of all of the Real Property and all Improvements located thereon, and

except as set forth on Schedule 3.5(a), there are no leases, subleases, Permits

or other agreements granting rights to possession of the Real Property or any

portion thereof to which Seller or Seller JV is a party or by which Seller,

Seller JV or the Real Property or the Improvements are bound, and there are no

outstanding options or rights of first refusal to purchase the Real Property or

any portion thereof or interest therein to which Seller or Seller JV is a party

or by which Seller, Seller JV or the Real Property or the Improvements are

bound;

(8) The use and operation of the Real Property and the

Improvements in the conduct of the Business do not violate in any material

respect any instrument of record or agreement affecting the Real Property and

the Improvements or any portion thereof, including without limitation the

Permitted Encumbrances. There are no material violations of any covenant,

condition, restriction, easement or order of any Authority having jurisdiction

over the Real Property or the Improvements or any other person entitled to

enforce the same affecting the Real Property, the Improvements, or the use or

occupancy thereof;

(9) The Real Property and Improvements comply in all

material respects with all applicable building, zoning, subdivision and other

land use and similar applicable Laws affecting the Real Property (collectively,

the "Real Property Laws"), and Seller and Seller JV have not received any notice

in writing of any material violation or claimed violation of any Real Property

Law. To the knowledge of Seller, there are no pending changes in any Real

Property Law affecting the ownership, alteration, use, occupancy or operation of

any portion of the Real Property or the Improvements. All Improvements have

received all material approvals of Authorities (including, without limitation,

licenses and Permits) required in connection with the operation thereof and have

been operated and maintained in all material respects in accordance with all

applicable Laws;

(10) Each parcel of land constituting a portion of the

Real Property is assessed for real property Tax purposes as a wholly independent

Tax lot, separate from adjoining land or improvements not constituting a part of

that parcel. There are no pending Tax appeals or appeals therefrom with respect

to any portion of the Real Property;

(11) All utilities, including gas, electricity, water,

telephone, sanitary sewer and storm sewer, necessary for the operation of the

Business are available at the Real Property in quantities sufficient for the

conduct of the Business in the ordinary course as it is conducted by Seller in

the ordinary course and are provided to the Real Property via public rights of

way or via easements that are appurtenant easements benefiting the applicable

portion thereof and, to the knowledge of Seller, such easements are permanent

and irrevocable (subject to any future actions by any Authority that could

adversely affect any such easements); and

<PAGE>

(12) Each parcel of land constituting a portion of the

Real Property abuts upon and has direct vehicular access to a paved public right

of way and access to such public right of way is available with curb cuts to

service the Business as it is conducted by Seller.

(b) NECESSARY ASSETS. Other than the Excluded Assets described

on Schedule 1.3(c), all assets owned by Seller, Seller JV, and their respective

Affiliates that are used or held for use in the operation of the Business are

included in the Assets or are owned by Seller JV. Other than the Excluded Assets

described on Schedule 1.3(c), the Assets constitute all of the assets necessary

and sufficient to conduct the operations of the Combined Business (as defined in

Section 3.6) as it is conducted by Seller in the ordinary course. Seller has and

will convey to Buyer at the Closing good and marketable title to the Assets free

and clear of all liens, pledges, security interests, charges, claims,

restrictions and encumbrances of any nature whatsoever other than Permitted

Encumbrances and Assumed Liabilities, if applicable. Except as set forth on

Schedule 3.5(b), there are no letters of credit or performance bonds required to

conduct the Combined Business as they are currently conducted.

Property of Seller and each item of personal property of Seller JV ("Seller JV

Personal Property") has been maintained in the ordinary course of business and

is in good operating condition, ordinary wear and tear excepted, in light of the

age and use made of such Tangible Personal Property in conducting the operation

of the Business or of such Seller JV Personal Property in connection with the

operation of Seller JV's business, but, except for and subject to the

representations and warranties set forth in this Agreement, is otherwise being

transferred on a "where is" and, as to condition, "as is" basis. Except as set

forth on Schedule 3.5(c), Seller and Seller JV are the fee simple owners,

respectively, of the Tangible Personal Property and Seller JV Personal Property

and no person other than Seller or Seller JV owns any equipment or other

tangible assets or properties situated on the Real Property or the Improvements.

Except as set forth on Schedule 3.5(c), since December 31, 2003, Seller and

Seller JV have not sold, transferred or disposed of any assets related to the

Business for an aggregate purchase price in excess of $250,000 other than sales

of Inventory in the ordinary course of business.

(d) INVENTORIES. The portion of the Tangible Personal Property

consisting of Inventory of Seller and Seller JV Personal Property consisting of

inventory of Seller JV, respectively, included in the Assets (i) are sufficient

for the operation of the Combined Business as it is conducted in the ordinary

course by Seller, (ii) consist of items which are good and merchantable within

normal trade tolerances, (iii) are of a quality and quantity presently usable or

saleable in the ordinary course of business of Seller and Seller JV (subject to

applicable reserves consistent with the Divisional Accounting Policies applied

consistently with past practice), and (iv) are valued on the books and records

of Seller and Seller JV on the FIFO basis at the lower of cost or market with

the cost determined under methods consistent with the Divisional Accounting

Policies applied consistently with past practice.

(e) LEASES. Seller and Seller JV have delivered true, correct

and complete copies of the IDB Leases, the Seller JV Leases, the sublease for

the "Rooster Bridge Chip Mill" property (the "Chip Mill Lease") and all

documents, instruments and files material thereto. The IDB Leases, the Chip Mill

Lease and the Seller JV Leases are in full force and

<PAGE>

effect and have not been modified or amended in any respect. Seller and Seller

JV, respectively, are not now, nor have Seller or Seller JV ever been, in

default under the IDB Leases, the Chip Mill Lease or the Seller JV Leases,

respectively, and there are no events or circumstances known to Seller which,

with the giving of notice or passage of time, or both, would constitute defaults

under the IDB Leases, the Chip Mill Lease or the Seller JV Leases, respectively,

and Seller and Seller JV have never received any notice (oral or written)

alleging any such default. To the knowledge of Seller, the landlord under each

of the IDB Leases or the Chip Mill Lease is not now nor has such landlord ever

been, in default of their obligations under the IDB Leases or the Chip Mill

Lease nor are there any events or circumstances which, with the giving of notice

or passage of time, or both, would constitute defaults thereunder. There are no

consents required under the IDB Leases or the Chip Mill Lease to the assignment

of the IDB Leases or the Chip Mill Lease to Buyer or Buyer's acquisition of the

Seller JV Interests, except as set forth on Schedule 3.5(e). Seller Parent is

the owner and holder of all of the interest of the landlord under the Seller JV

Leases and has not pledged or assigned such interest or any rent payable

thereunder.

(f) IDB BONDS. Seller Parent is the registered owner and

holder of all of the Bonds, free and clear of all liens, claims and encumbrances

other than transfer restrictions in the Bond Documents (hereinafter defined),

and Seller Parent has not transferred or assigned the Bonds or any interest

therein and has not pledged or encumbered the Bonds or Seller Parent's interest

therein or any right to payments thereunder. Schedule 3.5(f) contains a listing

of all of the Bonds and the outstanding principal and interest amounts payable

thereunder. Seller has delivered to Buyer true, correct and complete copies of

the Bonds and all documents, instruments and files material thereto

(collectively, the "Bond Documents"). The Bond Documents are in full force and

effect and have not been redeemed, modified or amended in any respect. The Bonds

have not been redeemed in whole or in part. Seller Parent has received all

payments due under the Bonds in full as and when due and in a timely fashion. To

Seller's knowledge there are no defaults or events which, with the giving of

notice or passage of time, or both, would constitute a default by the Board or

the Trustee (as such terms are defined in the Bonds, respectively) under the

Bonds, the Indentures (as defined in the Bonds) or any of the documents or

instruments delivered in connection therewith. Legal title to the IDB Leasehold

Parcel is in the Board, and by reason thereof the IDB Leasehold Parcel is, on

the date of this Agreement, treated as exempt from state and local ad valorem

taxes, subject to payment of the service payments referenced in Article X of the

IDB Leases. Seller has not paid any ad valorem taxes with respect to the IDB

Leasehold Parcel during the entire period that the IDB Leases has been in

effect, although the service payments referenced in Article X of the IDB Leases

were timely paid as and when due, and Seller has not received any notice (oral

or written) from the Tax Assessor of Marengo County, Alabama, the Revenue

Commissioner of Marengo County, Alabama, or the Alabama Department of Revenue,

or any other Authority questioning in any matter whether the IDB Leasehold

Parcel is exempt from ad valorem taxation. Seller has not received any notice of

any change in the status of the tax exemptions relating to the Bonds and there

is no Action pending or, to Seller's knowledge, threatened with respect to the

Bonds or the tax exemptions relating thereto.

(g) ACCOUNTS RECEIVABLE. The accounts receivable of Seller

included in the Assets and the accounts receivable of Seller JV shown in the

Carve Out Audited Financial Statements arose from bona fide transactions in the

ordinary course of business, have been

<PAGE>

executed on terms consistent with the past practice of Seller and Seller JV and

are not subject to any counterclaims or setoffs (except for the amount of any

applicable existing reserves for counterclaims or setoffs).

(h) NO THIRD PARTY OPTIONS. Except as set forth on Schedule

3.5(h), there are no existing agreements, options, commitments or rights with,

of or to any person to acquire (i) any part of or interest in the Combined

Business or (ii) any of the Assets owned by Seller or (iii) to the knowledge of

Seller, any of the Assets leased to Seller or (iv) any of Seller JV's assets

(other than in connection with the sale of Inventory in the ordinary course of

business).

Section 3.6. FINANCIAL STATEMENTS.

(a) Seller has delivered to Buyer the following: (i) the

audited balance sheets of the Business and the Seller JV (collectively, the

"Combined Business") as of January 2, 2005 and December 28, 2003 and (ii) the

audited statements of income, shareholders' equity and cash flows of the

Combined Business for the fiscal years ended January 2, 2005, December 28, 2003

and June 2, 2002 and the seven-month period ended December 29, 2002

(collectively, including the notes thereto, the "Carve Out Audited Financial

Statements"). In addition, Seller has delivered to Buyer: (i) the unaudited

balance sheets of the Combined Business as of April 3, 2005 and (ii) the

unaudited statements of income, shareholders' equity and cash flows of the

Combined Business for the three-month periods ended April 3, 2005, which

financial statements have been prepared in a manner consistent with the Carve

Out Audited Financial Statements (collectively, including the notes thereto, the

"Interim Financial Statements" and, together with the Carve Out Audited

Financial Statements, the "Financial Statements"). The Financial Statements

fairly present, in all material respects, the financial condition and results of

operations of the Combined Business as of the dates and for the fiscal periods

presented, reflect the minority interest in Seller JV not owned by Seller, and

have been prepared in accordance with generally accepted accounting principles,

consistently applied in the periods presented (except as noted therein) and in

accordance with the requirements of the Securities Act of 1933, as amended, the

Securities and Exchange Act of 1934, as amended, and the rules and regulations

of the Securities and Exchange Commission promulgated thereunder, including,

without limitation, Regulation S-X.

(b) Except as disclosed on Schedule 3.6(b), Seller has not

engaged in any securitization transactions or "off-balance sheet arrangements"

(as defined in Item 303(a) of Regulation S-K of the Securities and Exchange

Commission).

Section 3.7. NO UNDISCLOSED LIABILITIES. Except as disclosed in Schedule

3.7, Seller and Seller JV do not have any liabilities or obligations related to

the Combined Business, contingent or otherwise which are not adequately

reflected, noted or provided for in the Financial Statements, except liabilities

and obligations incurred since April 3, 2005 in the ordinary course of business

consistent with past practices.

<PAGE>

Section 3.8. ABSENCE OF CERTAIN CHANGES.

(a) Except as set forth on Schedule 3.8(a), since January 2,

2005, nothing has occurred with respect to the Combined Business that has had

Material Adverse Effect and to the knowledge of Seller, nothing has occurred

with respect to the Combined Business that is reasonably likely to have a

Material Adverse Effect. Except as set forth on Schedule 3.8(a), since January

2, 2005, Seller and Seller JV, respectively, have each:

(1) used its commercially reasonable efforts to preserve

intact the goodwill and business organization of the Combined Business, and

preserve the relationships of the Combined Business with customers, suppliers,

employees, and others having business relationships with Seller or Seller JV

relating to the Combined Business;

(2) maintained Tangible Personal Property, including

Inventory, and otherwise maintained the Assets at ordinary levels and otherwise

in the ordinary course of business consistent with past practice;

(3) extended credit to customers, collected accounts

receivable and paid accounts payable and similar obligations in the ordinary

course of business consistent with past practice; and

(4) conducted the Combined Business in the ordinary

course on a basis consistent with past practice.

(b) Except as set forth on Schedule 3.8(b), since December 31,

2003, with respect to the Combined Business, Seller and Seller JV, respectively,

each have not:

(1) received notification in writing of a material

violation of any Law applicable to the Combined Business or the Assets;

(2) made any change in pricing its Inventory for resale

other than changes made in the ordinary course of business;

(3) made a disposition of assets relating to the

Combined Business in excess of $100,000, other than dispositions of Inventory in

the ordinary course of business;

(4) entered into employment, severance, compensation or

similar agreements with employees of the Combined Business except for (A)

incentive programs that by their terms expire at or before Closing or (B) in the

ordinary course of business;

(5) made increases in compensation or benefits payable

to any employees of the Combined Business other than in the ordinary course of

business;

(6) granted any license or sublicense of any rights

under or with respect to any patents, copyrights, software or other intellectual

property;

<PAGE>

(7) suffered any extraordinary loss, damage, destruction

or casualty loss to the Combined Business or waived any rights of value, whether

or not covered by insurance and whether or not in the ordinary course of

business; or

(8) entered into any commitment to make capital

expenditures with an aggregate value in excess of $250,000, that has not been

fully paid or satisfied.

Section 3.9. LEGAL PROCEEDINGS. Except as set forth in Schedule 3.9 or

Schedule 3.15, as of the date of this Agreement, there are no suits, actions,

claims, proceedings or investigations pending or, to the knowledge of Seller and

Seller JV, threatened against, relating to or involving the Combined Business or

any of the Assets, before any Authority that, if finally determined adversely,

would reasonably be expected to result in a payment to the claimant in excess of

$100,000. None of such suits, actions, claims, proceedings or investigations, if

finally determined adversely, are reasonably likely, individually or in the

aggregate, to have a Material Adverse Effect (as hereinafter defined). Except as

set forth on Schedule 3.9, Seller and Seller JV are not subject to any judgment,

decree, injunction, rule or order of any Authority, Seller and Seller JV are not

subject to any governmental restriction expressly applicable to Seller or Seller

JV which is reasonably likely to (a) have a Material Adverse Effect or (b) to

cause a material limitation on Buyer's ability to operate the Combined Business

after the Closing as it is conducted by Seller and Seller JV in the ordinary

course. For purposes of this Agreement, "Material Adverse Effect" means any

effects, events, occurrences or states of facts that, individually or in the

aggregate, (a) are, or would reasonably be expected to be, materially adverse to

the business prospects, operations, assets, liabilities, results of operations

or condition (financial or otherwise) of the Combined Business, Seller JV and

Assets taken as a whole, (b) are, or would reasonably be expected to be,

materially adverse to the value, serviceability, condition, or operation of the

mill and related Improvements located on the Leased Parcel in Demopolis,

Alabama, or (c) is likely to prevent or materially delay consummation of any of

the transactions contemplated by this Agreement; provided that in each case a

Material Adverse Effect will not be deemed to include effects, events,

occurrences or states of facts (1) generally affecting the paper, paperboard or

packaging industries, (2) resulting from general economic, business, political

or financial conditions (including changes in interest levels or prices of

securities), (3) arising from national or international political or social

conditions, including the engagement by the United States in hostilities,

whether or not pursuant to the declaration of a national emergency or war, or

the occurrence of any military or terrorist attack, (4) resulting from a change

in Buyer's credit rating or a change in the market price of Buyer's common

stock, or (5) any Customer Disruption (hereinafter defined) with respect to a

customer of the Combined Business resulting from any proposed change

communicated prior to the Closing Date by Buyer to such customer with respect to

service levels, pricing or plant locations serving or applicable to such

customer after the Closing Date.

Section 3.10. COMPLIANCE WITH LAW. Except as set forth on Schedule 3.10,

Seller and Seller JV have all material authorizations, approvals, licenses,

permits and orders of and from all governmental and regulatory officers and

bodies necessary to carry on the Combined Business as it is conducted by Seller

and Seller JV in the ordinary course, to own or hold under lease the properties

and assets it owns or holds under lease and to perform all of its obligations

under the agreements to which each is a party (collectively, "Permits"). Since

January 1, 2000, Seller and Seller JV have operated the Combined Business in

compliance in all material respects with all

<PAGE>

applicable Laws, regulations, policies and orders (including, without

limitation, Laws relating to employment of labor or use or occupancy of

properties or any part thereof) of any Authority applicable to or having

jurisdiction over the Assets or the Combined Business. For purposes of this

Agreement, "Authority" means any tribunal or arbitrator(s) of competent

jurisdiction, any self-regulatory organization, and any entity exercising

executive, legislative, judicial, regulatory or administrative functions of or

pertaining to government, including any governmental or quasi-governmental

authority, agency, department, board, commission or instrumentality of the

United States, any foreign nation or government, or any domestic or foreign

state, county, city or other political subdivision. Schedule 3.10 sets forth a

true, correct and complete list of all material Permits of Seller and Seller JV

related to the Combined Business. For purposes of this Agreement, "Law" shall

mean any federal, state or local law (including, without limitation, common

law), rule, regulation or governmental requirement of any kind, and the rules,

regulations, guidelines, directives, rulings, policies and orders thereunder or

pursuant thereto.

Section 3.11. CONTRACTS.

(a) Schedule 3.11 contains a correct and complete list of

every contract, agreement, relationship, commitment or arrangement in effect on

the date hereof (collectively, the "Material Contracts"), written or oral,

relating to the Combined Business to which any of Seller or Seller JV is a party

or by which the Combined Business, the Assets or assets of Seller JV are bound

and which is:

(1) an agreement (or group of related agreements) for

the lease of personal property to or from any Person providing for lease

payments reasonably expected to require an annual commitment or payment of more

than $100,000 in 2005 or any year thereafter;

(2) an agreement for the purchase or lease of any real

property reasonably expected to require an annual commitment or payment of more

than $100,000 in 2005 or any year thereafter (including, without limitation, the

Seller JV Leases);

(3) an agreement for the purchase or lease of any

machinery, equipment or other capital assets with a value in excess of $500,000;

(4) an agreement (or group of related agreements) for

the purchase or sale of raw materials, commodities, supplies, products, or other

personal property, or for the furnishing or receipt of services, (A) the

performance of which will extend over a period of more than one year or involve

consideration in excess of $500,000, or (B) that constitutes a requirements or

output contract;

(5) an agreement concerning a partnership, limited

liability company or joint venture;

(6) an agreement (or group of related agreements) under

which it has created, incurred, assumed, or guaranteed any indebtedness for

borrowed money, or any capitalized lease obligation, in excess of $100,000;

<PAGE>

(7) an agreement concerning confidentiality,

exclusivity, exclusive dealing or noncompetition or otherwise restricting or

limiting the conduct of the Combined Business;

(8) an agreement between the Combined Business, on the

one hand, and Seller or its Affiliates or Seller JV or its Affiliates, on the

other hand;

(9) a collective bargaining agreement;

(10) an agreement for the employment of any individual

employed in the Business on a full-time, part-time, consulting, or other basis

or providing severance benefits that involve compensation or severance benefits

in excess of $50,000 or that has a term in excess of 6 months;

(11) an agreement with a sales representative or broker

or any other agreement requiring the payment of any commissions, fees or other

compensation to third parties relating to the purchase or sale of any products

or services of or relating to the Combined Business;

(12) an agreement under which the consequences of a

default or termination would have a Material Adverse Effect;

(13) any other agreement (or group of related

agreements) the performance of which involves consideration in excess of

$500,000;

(14) any other material agreement, contract or

commitment outside the ordinary course of business.

(b) Seller has delivered to Buyer a correct and complete copy

of each written Material Contract (as amended to date) and a written summary

setting forth the terms and conditions of each oral Material Contract. With

respect to each such Material Contract (other than oral agreements), to the

knowledge of Seller, the agreement is legal, valid, binding, enforceable, and in

full force and effect. Neither Seller nor Seller JV is in breach or default, and

to the knowledge of Seller, no event has occurred which with notice or lapse of

time would constitute a breach or default by Seller or Seller JV, or permit

termination, modification, or acceleration, under any Material Contract. To the

knowledge of Seller, no other party is in breach or default, and no event has

occurred which with notice or lapse of time would constitute a breach or default

by Seller or Seller JV, or permit termination, modification, or acceleration,

under any Material Contract.

Section 3.12. TAX RETURNS; TAXES.

(a) (i) Seller Parent has been an S corporation (within the

meaning of Section Section 1361(a)(1) of the Code) since December 30, 2002, (ii)

Seller Sub I is a C corporation (within the meaning of Section 1361(a)(2) of the

Code), and (iii) Seller Sub II has been disregarded as an entity separate from

its owner for federal income tax purposes pursuant to Treasury Regulations

section 301.7701-3(b)(ii) at all relevant times. Seller JV qualifies (and has

since the day of its formation qualified) to be treated as a partnership for

federal income Tax

<PAGE>

purposes and none of Seller JV or its members or any Authority has taken a

position inconsistent with such treatment. Each of Seller and Seller JV has duly

and timely filed all Tax Returns required to be filed by it, and all such Tax

Returns were correct and complete in all material respects, except for such

failure of compliance as would not, individually or in the aggregate, have a

Material Adverse Effect. All material Taxes owed by Seller or Seller JV (whether

or not shown on any Tax Returns), which, if unpaid, may result in a Lien on the

Assets or for which Buyer is or may be liable in the capacity of transferee of

the Assets, have been paid. Except as set forth on Schedule 3.12(a), since

December 31, 2001, no material Tax deficiencies have been asserted against

Seller or Seller JV as a result of any examination by the Internal Revenue

Service (the "IRS") or any other Authority. To the knowledge of Seller, there

are no pending material claims asserted for any Taxes of Seller or Seller JV or

outstanding agreements or waivers extending the statutory period of limitation

applicable to any Tax Return of Seller or Seller JV for any period. Seller JV

has made all required estimated and other Tax payments and deposits and has

complied for all prior periods in all material respects with the Tax withholding

and related reporting provisions of all applicable federal, state, local,

foreign and other Laws. Each of Seller and Seller JV has made available to Buyer

true, correct and complete copies of such Tax Returns as have been requested by

Buyer. Each of Seller and Seller JV has timely made and transmitted to the

appropriate authorities all required employee withholding payments and reports.

There are no Tax liens upon the Assets or the assets, properties, and rights of

Seller JV, except for current Taxes not yet due and payable. None of Seller JV's

payroll, property, or receipts, or other factors used in a particular state's

apportionment or allocation formula results in an apportionment or allocation of

business income to any state other than as set forth on Schedule 3.12(a) and

Seller JV has no nonbusiness income that is allocated, apportioned, or otherwise

sourced to any state other than as separately identified as such on Schedule

3.12(a).

(b) For purposes of this Agreement:

(1) "Tax" or "Taxes" means any federal, state, local, or

foreign income, gross receipts, license, payroll, employment, excise, severance,

stamp, occupation, premium, windfall profits, environmental (including Taxes

under Section 59A of the Code), customs duties, capital stock, franchise,

profits, withholding, social security (or similar), unemployment, disability,

real property, personal property, sales, use, transfer, registration, value

added, alternative or add-on minimum, estimated, or other Tax of any kind

whatsoever, whether computed on a separate or consolidated, unitary or combined

basis or in any other manner, including any interest, penalty, or addition

thereto, whether disputed or not and including any obligation to or addition

thereto, whether disputed or not and including any obligation to indemnify or

otherwise assume or succeed to the Tax liability of any other Person; and

(2) "Tax Return" means any return, declaration, report,

claim for refund, or information return or statement relating to Taxes,

including any schedule or attachment thereto, and including any amendment

thereof.

Section 3.13. EMPLOYEES. Seller has provided to Buyer a true and complete

list as of the date of such list of all of the employees of Seller and Seller JV

involved in the operation of the Combined Business as of a recent date

specifying their job title, hire date, vacation accrual date, vesting service

date, annual salary or hourly wages, bonus or commission terms and any other

material terms of employment, together with an appropriate notation next to the

name of

<PAGE>

any employee on such list to whom Seller and Seller JV has made commitments for

any compensation in excess of $100,000 or for any period in excess of six months

which are binding on Seller and Seller JV, other than commitments for benefits

pursuant to plans disclosed in Section 3.14 hereof. Seller has also provided

Buyer with a list of all employees of Seller or Seller JV engaged in the

Combined Business that were as of the dates of such information on leave,

together with an indication of the type of leave for each such employee and such

list will be updated as of a date within five (5) business days of the Closing

Date.

Section 3.14. EMPLOYEE BENEFIT PLANS.

(a) Schedule 3.14 sets forth a true and complete list of each

"employee benefit plan," as such term is defined in section 3(3) of the Employee

Retirement Income Security Act of 1974, as amended ("ERISA"), whether or not

subject to ERISA, and each bonus, incentive or deferred compensation, 401(k),

severance, termination, retention, change of control, stock option, stock

appreciation, stock purchase, phantom stock or other equity-based, performance

or other employee or retiree benefit or compensation plan, program, arrangement,

agreement, policy or understanding that provides welfare, personal monetary

benefits or compensation in respect of any employee or former employee employed

or formerly employed in the operation of the Combined Business (whether as a W-2

employee, an independent contractor, a consultant or otherwise) or the

beneficiaries or dependents of any such employee or former employee (such

employees, former employees, beneficiaries and dependents collectively the

"Employees") or under which any Employee is or may become eligible to

participate or derive a benefit and that is or has been maintained or

established by Seller or Seller JV or any other trade or business, whether or

not incorporated, which, together with Seller or Seller JV, is or would have

been at any date of determination occurring within the preceding six (6) years

treated as a single employer, or multiple employer, under section 414 of the

Code (such other trades and businesses collectively the "Related Persons"), or

to which Seller or Seller JV or any Related Person contributes or is or has been

within the preceding six (6) years obligated or required to contribute or with

respect to which Seller, Seller JV or the Combined Business may have any

liability or obligation (collectively, the "Plans" and each Plan in which

employees of Seller JV have participated or currently participate, a "Seller JV

Plan"). For purposes of this Agreement, the Seller JV Plans, Gulf States Paper

Corporation Retirement Plan, (the "Pension Plan"), the Gulf States Paper

Corporation Savings and Investment Plan, the Gulf States Paper Corporation

Demopolis Enhanced Savings and Investment Plan, the Gulf States Paper

Corporation Savings and Investment Plan - Livingston Box Employees and the Gulf

States Paper Corporation Demopolis Hourly Employee Savings and Investment Plan

are referred to as the "Qualified Plans".

(b) Seller has provided to Buyer true, correct and complete

copies of all material documents relating to the Plans and Employees, including

but not limited to: (i) all current plan documents, amendments, trust

instruments and other material agreements adopted or entered into in connection

with each of the Plans; (ii) with respect to the Seller JV Plans, all insurance

and annuity contracts related to any Plans; (iii) with respect to the Seller JV

Plans, all administrative notices and forms used for the Plans, including the

notices and election forms used to notify Employees and their dependents of

their continuation coverage rights under any Plans which are group health plans;

and (iv) the most recently available Form 5500 annual reports, actuarial

reports, summary plan descriptions and favorable determination letters or

<PAGE>

opinion letters for the Plans. Except as set forth on Schedule 5.1(l), since the

date these documents and information were supplied to Buyer, no plan amendments

have been adopted, no changes to these documents have been made, and no

amendments or changes will be adopted or made prior to the Closing Date.

401(a) of the Code, and the trust (if any) forming a party thereof, has received

a favorable determination letter from the IRS as to its qualification under the

Code, or with respect to any prototype plans, the prototype sponsor has received

an opinion letter from the IRS that the form of the plan satisfied section

401(a) of the Code and the plan sponsor has not altered the prototype plan, and

to the effect that each such trust is exempt from taxation under section 501(a)

of the Code, and to the knowledge of Seller nothing has occurred since the date

of such determination letter that could adversely affect such qualification or

tax-exempt status.

(d)

(1) No material liability has been or is expected to be

incurred by Seller or Seller JV, any Related Person, any related individual who

is a fiduciary of any Plan or the Combined Business (either directly or

indirectly, including as a result of an indemnification obligation) 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 that

could, following the Closing, become or remain a liability of the Combined

Business or become a liability of Buyer or of any employee benefit plan

established or contributed to by Buyer and to the knowledge of Seller, no event,

transaction or condition has occurred or exists that could reasonably be

expected to result in any such liability to the Combined Business or, following

the Closing, Buyer. To the knowledge of Seller, no party in interest (as defined

in ERISA) or disqualified person (as defined in the Code) of any Plan has

engaged in any prohibited transaction (within the meaning of section 406 of

ERISA or section 4975 of the Code).

(2) Each of the Qualified Plans has been drafted,

amended, operated and administered in all material respects in compliance with

all applicable Laws. Without limiting the foregoing, the Pension Plan is in

compliance with section 412 of the Code and section 302 and Title IV of ERISA.

There are no pending or, to the knowledge of Seller, threatened claims by or on

behalf of any of the Qualified Plans or by any Employee, former Employee, Plan

participant, beneficiary of an Employee, former Employee or Plan participant, or

any other Person involving any such Qualified Plan or the assets of any

Qualified Plan (other than routine claims for benefits). No material lien exists

or, to the knowledge of Seller, can reasonably be expected to exist, and no Tax

has been imposed or can reasonably be expected to be imposed, with respect to

any Qualified Plan.

(3) No Plan is a "multiemployer plan" within the meaning

of section 4001(a)(3) of ERISA or is a "multiple employer plan" within the

meaning of sections 4063 or 4064 of ERISA.

(4) No Plan provides welfare benefits, including,

without limitation, death or medical benefits (whether or not insured), with

respect to current or former Employees beyond their retirement or other

termination of service, other than (A) coverage

<PAGE>

provided pursuant to the terms of any Plan specifically identified as providing

such coverage in Schedule 3.14 or mandated by section 4980B of the Code, or (B)

the post-retirement life insurance benefits set forth in Schedule 1.4(c). Except

as set forth in this Agreement, the consummation of the transactions

contemplated by this Agreement will not result in any increase in the amount of

compensation or benefits or the acceleration of the vesting, except as may be

required as a result of a partial termination of the Pension Plan, or timing of

payment of any compensation or benefits payable to or in respect of any New

Employee.

(5) All contributions required to be made to any

Qualified Plan by applicable Law or by any plan document or other contractual

undertaking, and all premiums due or payable with respect to insurance policies

funding or providing benefits pursuant to any Qualified Plans, have been timely

made or paid.

(e) Notwithstanding the foregoing provisions of this Section

3.14, or any other provision of this Agreement to the contrary, except as

expressly provided in Sections 6.6, 6.7 and 6.8 hereof, Buyer (i) shall not

assume the sponsorship of any of the Plans, (ii) shall not become a

participating employer under any of the Plans, and (iii) except as expressly

provided in Section 1.4(c), shall have no duties or responsibilities under, or

with respect to, any of the Plans.

(f) Levels of insurance reserves, trust funding, and accrued

liabilities with regard to all Plans which are maintained by or for Seller JV

and to which such reserves or liabilities do or should apply are described on

Schedule 3.14, and such levels are reasonable and sufficient to provide for all

incurred but unreported claims and any retroactive or prospective premium

adjustments.

Section 3.15. LABOR RELATIONS. Except as set forth in Schedule 3.15, as of

the date hereof, with respect to the Combined Business since January 1, 2001:

(a) employees of Seller and Seller JV have not been and are not represented by a

labor organization which was either National Labor Relations Board ("NLRB")

certified or voluntarily recognized, (b) Seller and Seller JV have not been and

are not a signatory to a collective bargaining agreement with any labor

organization; (c) Seller has not received notice of and, to the knowledge of

Seller, no representation election petition has been filed by employees of

Seller or Seller JV or is pending with the NLRB and no union organizing campaign

involving employees of Seller or Seller JV has occurred or is in progress; (d)

Seller has not received notice of and, to the knowledge of Seller, no NLRB

unfair labor practice claims have been filed and are presently pending against

Seller or Seller JV or any labor organization representing their employees; (e)

no grievance or arbitration demand, whether or not filed pursuant to a

collective bargaining agreement is pending against Seller or Seller JV; (f) no

strike, handbilling, picketing, work stoppage (sympathetic or otherwise), work

slowdown, lockout, or other known "concerted action" involving the employees of

Seller or Seller JV has occurred or is in progress; (g) no breach of contract

and/or denial of fair representation claim has been filed or is pending against

Seller or Seller JV, and none is known to Seller to be pending against any labor

organization representing their employees; (h) no claim for unpaid wages or

overtime or for child labor or record keeping violations have been filed or are

pending against Seller or Seller JV under the Fair Labor Standards Act,

Davis-Bacon Act, Walsh-Healey Act, or Service Contract Act or any other Federal,

state or local Law, regulation, or ordinance; (i) to the knowledge of Seller, no

<PAGE>

discrimination and/or retaliation claim has been filed or is pending against

Seller or Seller JV under the 1866 or 1964 Civil Rights Acts, the Equal Pay Act,

the Age Discrimination in Employment Act, as amended, the Americans with

Disabilities Act, the Family and Medical Leave Act, the Fair Labor Standards

Act, the Employee Retirement Security Act or any other federal Law or any

comparable state law regulating discrimination or any other aspect of the

workplace; (j) if Seller or Seller JV are a federal or state contractor

obligated to develop and maintain an affirmative action plan, to the knowledge

of Seller, no discrimination claim, show cause notice, conciliation proceeding,

sanctions or debarment proceeding has been filed or is pending with Office of

Federal Contract Compliance Programs ("OFCCP") or any other federal agency or

any comparable state agency or court and no desk audit or on-site review is in

progress; (k) no citation has been issued in writing by Occupational Safety and

Health Administration ("OSHA") against Seller or Seller JV which has not been

cured in all material respects and to the knowledge of Seller, no notice of

contest or OSHA administrative enforcement proceeding involving Seller or Seller

JV has been filed and is pending or is uncured; (l) no workers' compensation or

retaliation claim is pending against Seller or Seller JV; and/or (m) no citation

of Seller or Seller JV has been issued in writing and no enforcement proceeding

has been initiated or is pending under any federal immigration

SITE SEARCH

AGREEMENTS / CONTRACTS

CLAUSES

Search Contract Clauses >>

Browse Contract Clause Library>>

Get Email Updates