Document:

EXHIBIT 10.6

 

Asset
Purchase Agreement

(Reno/Sparks)

 

This ASSET PURCHASE
AGREEMENT (this “Agreement”) is made and entered into as of June 2, 2004
(the “Effective Date”) by and between CROWN PACIFIC LIMITED PARTNERSHIP,
a Delaware limited partnership (“Seller”), Debtor-in-Possession under
Jointly Administered Case No. 03-11258-PHX-RJA (the “Case”) in the
United States Bankruptcy Court for the District of Arizona (the “Bankruptcy
Court”) filed on June 29, 2003 (the “Petition Date”) under Chapter
11 of Title 11 of the United States Code (the “Bankruptcy Code”), and
RENO LUMBER, a Nevada corporation (“Buyer”).

 

Recitals:

 

A.            Seller owns and operates a contractor supply
business in Sparks, Nevada (the “Business”).

 

B.            Seller wishes to sell substantially all assets
associated with the Business to Buyer, and Buyer wishes to purchase such assets
from Seller, in each case on the terms and conditions set forth in this
Agreement.

 

Agreements:

 

In consideration of the
foregoing, the mutual covenants of the parties set forth in this Agreement, and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties, intending to be legally bound, agree as
follows:

 

1.             Purchase and Sale.

 

1.1           Agreement to Purchase and Sell. On the terms and subject to the conditions
set forth in this Agreement, Seller agrees to sell, transfer, assign, convey,
and deliver to Buyer, and Buyer agrees to purchase from Seller, all of Seller’s
right, title, and interest as of the Closing Date in and to the following
assets (collectively, the “Purchased Assets”):

 

1.1.1.       Contracts.  To
the extent transferable, Seller’s right, title, and interest (i) as lessee
under those equipment leases and similar arrangements listed on Schedule A-1
to this Agreement (the “Personal Property Leases”), and (ii) as a party
to those other contracts, licenses, agreements, and similar arrangements listed
on Schedule A-2 to this Agreement and all purchase orders arising out of
the operation of the Business and outstanding as of the Closing Date,
including, without limitation, those purchase orders listed on Schedule A-3
to be delivered at Closing (the “Other Contracts”);

 

1.1.2.       Real Property and
Improvements.  Seller’s right, title and interest in and
to: (a) the real property described in the legal descriptions listed on Schedule
A-4 to this Agreement (“the “Real Property”), and (b) all
improvements located thereon (the “Improvements”);

 

1.1.3.       Personal Property. 
Those items of equipment and tangible personal property owned by Seller
and listed on Schedule B-1 (buildings, machinery and equipment) and Schedule
B-2 (office furniture and equipment) to this Agreement and any other
tangible personal property acquired by Seller after the Effective Date and
prior to the Closing Date exclusively in connection with the Business (the “Personal
Property”);

 

1.1.4.       Intangible Property.  All
intangible personal property owned or held by Seller and used solely and
exclusively in connection with the Business, but in each case only to the
extent of Seller’s interest therein and only to the extent transferable,
together with the Books and Records (the “Intangible Property”);

 

1.1.5.       Receivables.  All
accounts receivable arising out of the operation of the Business and
outstanding as of the Closing Time (excluding accounts receivable from other
divisions of Seller) and, subject to the provisions of Section 1.2, all causes
of action relating thereto (the “Receivables”); and

 

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1.1.6.       Inventory.  All
inventories of lumber, other wood products, and other products held for resale
by the Business, or in transit to the Business, or otherwise prepaid, in the
Ordinary Course of Business as of the Closing Time, wherever located,
including, without limitation, those inventories or products in transit listed
on Schedule C to be delivered at Closing (the “Inventory”).

 

1.2           Excluded Assets. 
Notwithstanding anything to the contrary in this Agreement, the
Purchased Assets shall not include (collectively, the “Excluded Assets”)
(i) all cash and cash equivalents, (ii) any Personal Property Lease or Other
Contract that is terminated or expires prior to the Closing Date in accordance
with its terms or in the Ordinary Course of Business, (iii) Seller’s rights
under this Agreement and to all cash and non-cash consideration payable or
deliverable hereunder, (iv) any and all rights to the use of the names
“Alliance Lumber” and “Crown Pacific,” (v) all preference or avoidance claims
and actions of Seller, including any such claims or actions arising under
Sections 544, 547, 548, 549, and 550 of the Bankruptcy Code, (vi) Inventory
sold or otherwise transferred by Seller in the Ordinary Course of Business
prior to the Closing Date, (vii) insurance proceeds, claims and causes of action
with respect to, or arising in connection with, any Excluded Asset, and (viii)
those items listed on Schedule D to this Agreement.

 

2.             Purchase Price and Payment; Assumption of
Liabilities; Cure Costs.

 

2.1           Purchase Price.  In
consideration of the sale, transfer, and conveyance to Buyer of the Purchased
Assets, Buyer shall, at the Closing (i) pay to Seller cash in an amount (the “Purchase
Price”) equal to (x) the Estimated Transaction Value, less (y) the Current
Liabilities, less (z) the pre-Petition Date Claims listed on Schedule E
to this Agreement; and (ii) assume the Assumed Liabilities.  Not less than two (2) Business Days prior to
the anticipated Closing Date, Buyer shall give Seller notice of the Estimated
Transaction Value as of the close of business on the Friday immediately prior
to the anticipated Closing Date.  The
Purchase Price shall be adjusted after the Closing to reflect any difference
between the Estimated Transaction Value and the Actual Transaction Value, as
provided in Section 2.4. 
Notwithstanding the foregoing, in no event shall Seller owe any amount
to Buyer as a result of Buyer’s acquisition of the Business.

 

2.2           Deposit Escrow.  Subject to the terms and
conditions of an escrow agreement (the “Deposit Escrow Agreement”)
entered into among Buyer, Seller and the Deposit Escrow Agent (as defined
below), substantially in the form attached hereto as Exhibit A, on or
prior to the Effective Date, Buyer shall deliver to and deposit in trust with
JP Morgan Chase Bank or other similar escrow agent or company mutually
acceptable by written agreement between Buyer and Seller (the “Deposit
Escrow Agent”), the sum of Three Hundred Fifty Thousand Dollars ($350,000)
(the “Deposit”) in immediately available, good funds.  Upon receipt of the Deposit, the Deposit
Escrow Agent shall immediately deposit the Deposit into an account pursuant to
the Deposit Escrow Agreement.  The
Deposit Escrow Agent shall return to Buyer the Deposit (and any interest
accrued thereon) upon the earlier of (A) Buyer’s termination of this Agreement
under Section 8.1.1 as a result of the failure of a condition to Buyer’s
obligations, as set forth in Section 4.2 (a “Seller Default Termination”),
(B) Seller’s termination of this Agreement at its election under Section 8.1.1
unless there has been a Buyer Default Termination, (C) mutual termination of
this Agreement under Section 8.1.2, or (D) pursuant to Section 2.4.4.  The Deposit Escrow Agent shall deliver the
Deposit (and any interest accrued thereon) to Seller upon the earlier of (A)
Seller’s termination of this Agreement under Section 8.1.1 as a result of the
failure of a condition to Seller’s obligations set forth in Sections 4.1.1 or
4.1.2 (a “Buyer Default Termination”) or (B) the Closing.  Promptly upon the occurrence of any of the
events described in the immediately preceding two sentences, Seller and Buyer
shall jointly instruct the Deposit Escrow Agent to release the Deposit in
accordance with this Section 2.2.  The
Deposit Escrow Agent’s escrow fees and charges shall be paid one-half by Seller
and one-half by Buyer, in which respect the Seller and the Buyer shall not be
jointly liable since each shall only be liable for its own part (one-half) of
the said fees and charges.

 

2.3           Payment of Purchase Price. 
Buyer shall pay the Purchase Price less the Deposit to Seller in United
States dollars by completed wire transfer of immediately available funds on the
Closing Date.

 

2.4           Transaction Value Adjustment.

 

2.4.1.       Statement of Transaction
Value.  Within five (5) Business Days after the
Closing Date, Buyer shall deliver the Statement of Transaction Value to Seller.

 

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2.4.2.       Objections. 
Seller shall have thirty (30) calendar days after the delivery of the
Statement of Transaction Value within which to give Buyer notice of any
objection to any amount set forth therein. 
Buyer shall, and shall direct its employees to, cooperate with Seller,
at no expense to Seller, and provide Seller with access to all Books and
Records necessary, in reviewing the Statement of Transaction Value.  Any such notice shall identify the specific
amounts to which Seller objects and shall set forth with reasonable specificity
the basis for Seller’s objections.  All
amounts set forth in the Statement of Transaction Value to which Seller does
not object as provided in this Section 2.4.2 shall irrevocably be deemed
approved by Seller.

 

2.4.3.       Disputes.  If
Seller gives notice in accordance with Section 2.4.2 objecting to any amounts
set forth in the Statement of Transaction Value, then the parties shall
negotiate in good faith in an effort to resolve such objections. If the parties
are unable to resolve any such objections within ten (10) Business Days after
Seller’s notice of objection is given, then the issues in dispute shall be
submitted to the Accountants for resolution. In such event, (i) each party
shall furnish to the Accountants such workpapers and other documents and
information relating to the disputed issues as are in the possession or control
of such party and shall be afforded an opportunity to present to the
Accountants the basis for its view with respect to the disputed issues and to
discuss the determination of the disputed issues with the Accountants, (ii) the
determination by the Accountants shall be final and binding on the parties, and
(iii) Seller and Buyer shall each pay, and shall each be liable only for,
one-half of the fees and expenses of the Accountants. Seller and Buyer shall
direct the Accountants to use all reasonable efforts to complete their
determination of the disputed issues within thirty (30) calendar days after
they are submitted to the Accountants.

 

2.4.4.       Payments.  On
the third Business Day following (i) the expiration of the thirty (30) calendar
day period referred to in Section 2.4.2 if Seller fails to give a notice of
objection as provided therein, or (ii) the resolution of any objections set
forth in Seller’s notice pursuant to Section 2.4.2, whether by agreement of the
parties or determination by the Accountants pursuant to Section 2.4.3, the
appropriate adjusting payment shall be made in accordance with this Section
2.4.4.  If the Actual Transaction Value,
as determined in accordance with this Section 2.4, as of the Closing Date is
greater than the Estimated Transaction Value, then Buyer shall pay the
Transaction Value Difference to Seller by wire transfer of immediately
available funds.  If the Actual
Transaction Value, as determined in accordance with this Section 2.4, is less
than the Estimated Transaction Value, then Seller shall pay the Transaction
Value Difference directly to Buyer by wire transfer of immediately available
funds.

 

2.5           Cure Costs.  Buyer agrees to satisfy, as
and when due, all cure obligations due and owing under the Contracts assumed by
Buyer at the Closing which the Bankruptcy Court orders to be paid as a
condition to Seller’s assumption and assignment to Buyer of the Contracts in
accordance with Section 365 of the Bankruptcy Code or otherwise
transferred.  Prior to the Closing Date,
Buyer and Seller shall cooperate in good faith to determine all such cure
obligations.

 

3.             Pre-Closing Matters.

 

3.1           Operation of Business.

 

3.1.1.       Between the Effective Date and the Closing Date, Seller shall:

 

(a)           Use commercially reasonable efforts to conduct the Business and operate
and maintain the Purchased Assets in the Ordinary Course of Business;

 

(b)           Not sell, lease, or otherwise transfer or dispose of any material
Purchased Assets, or any interest therein, other than transfers and
dispositions, including the sale of lumber, other wood products, and other
products, made in the Ordinary Course of Business;

 

(c)           Not permit or allow any material Purchased Assets to become subject to
any additional Lien (other than Permitted Encumbrances); and

 

(d)           Use its commercially reasonable efforts to maintain the relations and
goodwill with suppliers, customers, and others having business relationships
with Seller in connection with the Business.

 

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3.1.2.       Between the Effective Date and the Closing Date, Operator shall perform
all of his operational and management functions in the Ordinary Course of
Business.

 

3.2           Access to Information. 
Between the Effective Date and the Closing Date, Seller shall, upon
reasonable advance notice from Buyer to Seller, (i) afford to Buyer and its
Representatives access (during normal business hours), in a manner so as not to
interfere with Seller’s normal operations and subject to reasonable
restrictions imposed by Seller, to all key employees and to the Purchased
Assets, including the Books and Records, and (ii) cause its Representatives to
furnish Buyer with such financial and operating data and other information with
respect to the Business and the Purchased Assets as may be within Seller’s possession
or control and as Buyer may reasonably request.  Buyer shall have no right hereunder to conduct any environmental
or other assessment of the Property other than visual inspection and document
review.  Buyer expressly acknowledges
and agrees that nothing in this Section 3.2 is intended to give rise to any
contingency to Buyer’s obligation to proceed with the transactions contemplated
herein.

 

3.3           Public Announcements. 
Except as otherwise required by applicable Legal Requirements, any
public announcement or similar publicity with respect to this Agreement or the
transactions herein contemplated shall be issued, if at all, only with such
contents, at such time, and in such manner as the parties may mutually agree.
If a party believes that it is required by applicable Legal Requirements to
make any such public announcement, it shall first provide to the other party
the content of the proposed announcement, the reasons such announcement is
required to be made, and the time and place that the announcement will be made.

 

3.4           Damage or Destruction.  In
the event of any damage to or destruction of a Purchased Asset (other than
normal wear and tear) (a “Loss”) between the Effective Date and the
Closing Date, (i) Buyer shall not be entitled to terminate this transaction,
and (ii) the Purchase Price shall be reduced by an amount equal to the
estimated cost to repair or restore the Purchased Asset to substantially its
condition immediately prior to the occurrence of such Loss (to the extent, if
any, that Seller has not completed such repair or restoration).  The estimated cost to repair or restore the
Purchased Asset to substantially its condition immediately prior to the
occurrence of such loss shall be agreed to by Seller and Buyer or, if they are
unable to agree, shall be determined by an independent, qualified insurance
adjuster selected by the parties (or, if they are unable to agree on such
selection, one appointed by the Bankruptcy Court upon application by either
party).  Seller shall be entitled to
retain any insurance proceeds paid or payable on account of such Loss.

 

3.5           Bankruptcy Court Approval. 
Promptly following the Effective Date, Seller shall file a motion with
the Bankruptcy Court requesting, and shall thereafter use commercially
reasonable efforts to obtain, entry of an order (the “Approval Order”)
which (i) approves the sale of the Purchased Assets to Buyer on the terms and
conditions set forth in this Agreement and authorizes Seller to proceed with
the transactions herein contemplated, (ii) includes a specific finding that
Buyer is a good faith purchaser of the Purchased Assets and is entitled to the
protection afforded by Section 363(m) of the Bankruptcy Code, (iii) states that
the sale of the Purchased Assets to Buyer shall be free and clear of all Liens
whatsoever (except as expressly provided in this Agreement), and (iv) approves
Seller’s assumption and assignment of the pre-Petition Date Contracts pursuant
to Section 365 of the Bankruptcy Code and orders Buyer to pay any cure amounts
payable to the other parties to such Contracts as a condition to such
assumption and assignment.

 

3.6           Overbid Protection. 
Seller shall not consider an offer from a prospective purchaser who
offers to bid for the Purchased Assets at an auction with respect to the sale thereof
unless such prospective purchaser offers to purchase the Purchased Assets for
consideration that is at least One Hundred Thousand Dollars and No Cents
($100,000) greater than the consideration set forth in this Agreement
(including, without limitation, all cash, non-cash consideration and assumed
liabilities).

 

4.             Conditions to Closing.

 

4.1           Seller’s Conditions. 
Seller’s obligation to close this transaction shall be subject to and
contingent upon the satisfaction (or waiver by Seller in its sole discretion)
of each of the following conditions:

 

4.1.1.       All representations and warranties of Buyer set forth in this Agreement
(considered collectively) and each such representation and warranty (considered
individually) shall have been true and correct as of

 

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the Effective Date and shall
be true and correct in all material respects as of the Closing Date, as if made
on the Closing Date.

 

4.1.2.       All of the covenants and obligations that Buyer is obligated to perform
or comply with pursuant to this Agreement prior to or at the Closing
(considered collectively) and each such covenant and obligation (considered
individually) shall have been performed and complied with in all material
respects.

 

4.1.3.       Buyer shall have made the deliveries of documents and funds required to
be made pursuant to Section 5.3.

 

4.1.4.       As of the Closing Date, there shall not be in effect any Legal
Requirement or any Order that prohibits the transfer of any material portion of
the Purchased Assets by Seller to Buyer.

 

4.1.5.       Since the Effective Date, there shall not have been commenced or
Threatened against Seller or any Affiliate of Seller any Proceeding (i) seeking
material Damages or other material relief in connection with any aspect of this
transaction, or (ii) that could reasonably be expected to have the effect of
preventing or making illegal this transaction.

 

4.1.6.       Neither the consummation of this transaction nor the performance of
Seller’s obligations hereunder shall, directly or indirectly (with or without
notice, lapse of time, or both), contravene, conflict with, result in a
violation of, or cause Seller or any Affiliate of Seller to suffer any material
adverse consequence under any applicable Legal Requirement or Order that has
been published, introduced, or otherwise proposed by or before any Governmental
Authority since the Effective Date.

 

4.1.7.       The Bankruptcy Court shall have entered the Approval Order and such
order shall not have been stayed as of the Closing Date.

 

4.2           Buyer’s Conditions. 
Buyer’s obligation to close this transaction shall be subject to and
contingent upon the satisfaction (or waiver by Buyer in its sole discretion) of
each of the following conditions:

 

4.2.1.       All representations and warranties of Seller set forth in this
Agreement (considered collectively) and each such representation and warranty
(considered individually) shall have been true and correct in all material
respects as of the Effective Date and shall be true and correct in all material
respects as of the Closing Date, as if made on the Closing Date.

 

4.2.2.       All of the covenants and obligations that Seller is obligated to
perform or comply with pursuant to this Agreement prior to or at the Closing
(considered collectively) and each such covenant and obligation (considered
individually) shall have been performed and complied with in all material
respects.

 

4.2.3.       Seller shall have made the deliveries of documents required to be made
pursuant to Section 5.2.1.

 

4.2.4.       Since the Effective Date, there shall not have been commenced or
Threatened against Buyer or any Affiliate of Buyer any Proceeding (i) seeking
material Damages or material other relief in connection with, any aspect of
this transaction, or (ii) that could reasonably be expected to have the effect
of preventing or making illegal this transaction.

 

4.2.5.       Neither the consummation of this transaction nor the performance of
Buyer’s obligations hereunder shall, directly or indirectly (with or without
notice, lapse of time, or both), contravene, conflict with, result in a
violation of, or cause Buyer or any Affiliate of Buyer to suffer any material
adverse consequence under any applicable Legal Requirement or Order that has
been published, introduced, or otherwise proposed by or before any Governmental
Authority since the Effective Date.

 

4.2.6.       The Bankruptcy Court shall have entered the Approval Order and such
order shall not have been stayed as of the Closing Date.

 

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5.             Closing.

 

5.1           Time and Place of Closing.  The
Closing shall take place at the offices of Andrews Kurth LLP, 600 Travis, Suite
4200, Houston, Texas, or at such other location as the parties may mutually
agree. Subject to the provisions of Section 8, the Closing shall take place
commencing at a time and on a date mutually acceptable to the parties within
three (3) Business Days after the later of (x) entry of the Approval Order or
(y) delivery of the notice specified in Section 2.1.

 

5.2           Seller’s Deliveries to Buyer at Closing.  At
the Closing, Seller shall deliver, or cause to be delivered, to Buyer:

 

5.2.1.       A Bill of Sale, substantially in the form of Exhibit B to this
Agreement (the “Bill of Sale”), conveying the Personal Property and the
Inventory to Buyer, duly executed by Seller.

 

5.2.2.       An Assignment and Assumption Agreement, substantially in the form of Exhibit
C to this Agreement (the “Assignment and Assumption Agreement”),
duly executed by Seller and providing for (a) the assignment to Buyer of the
Contracts, and (b) Buyer’s performance and discharge of the Assumed Liabilities
and indemnification of Seller in respect thereof (including, without
limitation, indemnification in respect of any legal fees or other costs
incurred by Seller in exercising its right to indemnity).

 

5.2.3.       A Special warranty deed, substantially in the form of Exhibit D
to this Agreement (the “Deed”), duly executed by Seller, in respect of
the Real Property.

 

5.2.4.       Written certification evidencing Seller’s satisfaction of all of
Seller’s covenants and obligations set forth in Sections 4.1.1 and 4.1.2.

 

5.3           Buyer’s Deliveries to Seller at Closing.  At
the Closing, Buyer shall deliver, or cause to be delivered, to Seller:

 

5.3.1.       The Purchase Price, less the Deposit (which shall be released to Seller,
together with all interest thereon, by the Deposit Escrow Agent), by wire
transfer of immediately available funds.

 

5.3.2.       The Assignment and Assumption Agreement, duly executed by Buyer.

 

5.3.3.       The Bill of Sale, duly executed by Buyer.

 

5.3.4.       Written certification evidencing Buyer’s satisfaction of all of Buyer’s
covenants and obligations set forth in Sections 4.2.1 and 4.2.2.

 

5.3.5.       Appropriate evidence of all necessary action by Buyer in connection
with the transactions contemplated hereby, including, without limitation: (i)
certified copies of resolutions duly adopted by Buyer’s Board of Directors
approving the transactions contemplated by this Agreement and authorizing the
execution, delivery, and performance by Buyer of this Agreement; and (ii) a
certificate as to the incumbency of officers of Buyer executing this Agreement
and any instrument or other document delivered in connection with the
transactions contemplated by this Agreement.

 

5.4           Taxes.  In accordance with Section
1146(c) of the Bankruptcy Code, the making or delivery of any instrument to
evidence, effectuate, or perfect the rights, transfers, and conveyances
contemplated by this Agreement shall be in contemplation of a plan or plans of
reorganization to be confirmed in the Case and, as such, shall be free and
clear of any and all Taxes and any such instrument may, at the request of
Buyer, contain an endorsement to that effect. 
In the event that, notwithstanding the foregoing, any Taxes are assessed
on the transfer of the Purchased Assets to Buyer, such Taxes shall be paid by
Buyer, and Buyer shall complete and file all returns associated therewith.

 

5.5           Prorations.  Rent, current taxes and other
amounts due that relate or are attributable to the Business and/or the Real
Property and the Personal Property Leases shall be prorated between Seller and
Buyer as of

 

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the Closing Date.  All obligations due in respect of periods on or prior to the
Closing Date (other than the Assumed Liabilities) shall be paid in full or
otherwise satisfied by Seller, and all obligations due in respect of periods
after the Closing Date (in addition to the Assumed Liabilities) shall be paid
in full or otherwise satisfied by Buyer. 
Rent shall be prorated on the basis of a thirty (30) day month.

 

5.6           Possession.  Buyer shall be entitled to
possession of the Purchased Assets immediately upon the Closing.

 

5.7           Closing Costs. 
Buyer shall pay (i) any recording fees with respect to the Deed, and
(ii) if Buyer elects to obtain title insurance with respect to the Real
Property and the Improvements, the premium for insurance, as well as for any
endorsements thereto that Buyer elects to obtain.

 

6.             Representations and Warranties.

 

6.1           Seller’s Representations and Warranties. 
Seller represents and warrants to Buyer as follows:

 

6.1.1.       Organization and Good Standing. Seller is a limited partnership duly formed, validly existing, and in
good standing under the laws of the State of Delaware. Crown Management is a
limited partnership duly formed, validly existing, and in good standing under
the laws of the State of Delaware and is the sole general partner of Seller.

 

6.1.2.       Authority; No Conflict.

 

(a)           Upon obtaining the Approval Order, this Agreement shall constitute the
legal, valid, and binding obligation of Seller, enforceable against Seller in
accordance with its terms. Upon their execution and delivery by Seller at the
Closing, each of the Seller Closing Documents will constitute the legal, valid,
and binding obligations of Seller, enforceable against Seller in accordance
with their respective terms. Subject to obtaining the Approval Order and
applicable provisions of bankruptcy law, Seller has full partnership power,
authority, and capacity to execute and deliver this Agreement and each of the
Seller Closing Documents and to perform its obligations hereunder and
thereunder.

 

(b)           Upon obtaining the Approval Order, neither the execution and delivery
of this Agreement, nor the performance of any of Seller’s obligations hereunder,
nor the consummation of the transactions herein contemplated will, directly or
indirectly (with or without notice, lapse of time, or both), (i) contravene or
result in a violation of any provision of Seller’s Organizational Documents or
any resolution adopted by the Board of Control, by the general or limited
partners of Crown Management, or by the limited partners of Seller; (ii)
contravene or result in a violation of any Legal Requirement or any Order to
which Seller or any of the Purchased Assets is subject; or (iii) contravene or
result in a violation or breach of any provision of, or give any Person the
right to declare a default or exercise any remedy under, any agreement,
instrument, or writing of any nature to which Seller is a party or by which Seller
or any of its assets or properties is bound.

 

6.1.3.       Certain Proceedings.
Except for the Case, no Proceeding is pending or, to Seller’s Knowledge, has
been Threatened, against Seller that challenges, or could reasonably be
expected to have the effect of preventing, making illegal, or otherwise
materially interfering with, the transactions herein contemplated.

 

6.2           Buyer’s Representations and Warranties. Buyer represents and warrants to Seller as
follows:

 

6.2.1.       Organization and Good Standing. Buyer is a California corporation, duly incorporated, validly
existing, and in good standing under the laws of the State of California.

 

6.2.2.       Authority; No Conflict.

 

(a)           This Agreement constitutes the legal, valid, and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms. Upon their
execution and delivery by Buyer

 

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at
the Closing, each of the Buyer Closing Documents will constitute the legal,
valid, and binding obligations of Buyer, enforceable against Buyer in
accordance with their respective terms. Buyer has full corporate power,
authority, and capacity to execute and deliver this Agreement and each of the
Buyer Closing Documents and to perform its obligations hereunder and thereunder.

 

(b)           Neither the execution and delivery of this Agreement, nor the
performance of any of Buyer’s obligations hereunder, nor the consummation of
the transactions herein contemplated will, directly or indirectly (with or
without notice, lapse of time, or both), (i) contravene or result in a
violation of any provision of Buyer’s Organizational Documents or any
resolution adopted by the Board of Directors or the shareholders of Buyer; or
(ii) contravene or result in a violation of any Legal Requirement or any Order
to which Buyer is subject; or (iii) contravene or result in a violation or
breach of any provision of, or give any Person the right to declare a default
or exercise any remedy under, any agreement, instrument, or writing of any
nature to which Buyer is a party or by which Buyer or any of its assets or
properties is bound.

 

6.2.3.       Certain Proceedings.
No Proceeding is pending or, to Buyer’s Knowledge, has been Threatened against
Buyer that challenges, or could reasonably be expected to have the effect of
preventing, making illegal, or otherwise materially interfering with, the
transactions herein contemplated.

 

6.2.4.       Buyer has sufficient funds available to consummate the transactions
contemplated hereby.

 

6.3           “AS IS” Transaction. As a material inducement to Seller to enter
into this Agreement and to consummate the transactions herein contemplated,
Buyer hereby acknowledges and agrees as follows:

 

6.3.1.       Buyer has conducted all investigations, inspections, studies, tests,
and analyses it desired to conduct with respect to the Business and the
Purchased Assets and acknowledges that it has been provided sufficient access
to the Purchased Assets, including the Books and Records, and to key employees
for such purpose. In entering into this Agreement, Buyer is relying solely on
its own investigation and is assuming the risk that adverse physical, economic,
or other conditions or circumstances may not have been revealed by its
investigation.

 

6.3.2.       EXCEPT AS EXPRESSLY SET FORTH IN SECTION 6.1, NEITHER SELLER NOR ANY OF
ITS REPRESENTATIVES MAKES OR HAS MADE ANY REPRESENTATION OR WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO ANY MATTER RELATING TO THE
BUSINESS OR THE PURCHASED ASSETS, INCLUDING INCOME TO BE DERIVED OR EXPENSES TO
BE INCURRED IN CONNECTION THEREWITH; THE PHYSICAL CONDITION OF ANY OF THE
PURCHASED ASSETS AND ANY REAL PROPERTY OR IMPROVEMENTS, OR ANY PROPERTY WHICH
IS THE SUBJECT OF ANY OF THE PERSONAL PROPERTY LEASES OR ANY PART OF THE
FOREGOING; THE ENVIRONMENTAL CONDITION OF ANY REAL PROPERTY OR IMPROVEMENTS;
THE ZONING OF ANY REAL PROPERTY OR IMPROVEMENT; THE TRANSFERABILITY OF ANY OF
THE PURCHASED ASSETS; THE VALUE OF THE PURCHASED ASSETS (OR ANY PORTION
THEREOF); THE TERMS, AMOUNT, VALIDITY, OR ENFORCEABILITY OF ANY OF THE ASSUMED
LIABILITIES; THE TITLE TO ANY OF THE PURCHASED ASSETS (OR ANY PORTION THEREOF);
THE MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF ANY OF THE PURCHASED
ASSETS; OR ANY OTHER MATTER OR THING RELATED TO THE PURCHASED ASSETS OR THE
BUSINESS. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, SELLER HEREBY
EXPRESSLY DISCLAIMS ANY WARRANTY, EXPRESS OR IMPLIED, OF MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE AS TO ANY OF THE PURCHASED ASSETS (OR ANY
PORTION THEREOF).

 

6.3.3.       BUYER WILL ACCEPT THE PURCHASED ASSETS AT THE CLOSING “AS IS,” “WHERE
IS,” AND “WITH ALL FAULTS.”

 

6.4           No Survival of Representations and Warranties. The representations and warranties set
forth in Sections 6.1 and 6.2 shall not survive beyond the Closing Date.

 

8

 

7.             Additional Covenants.

 

7.1           Employee Matters.

 

7.1.1.       Offer of Employment. 
Buyer agrees to offer (or to cause one of its Affiliates to offer)
employment to substantially all employees who are in the active employment of
the Business on the Closing Date, on substantially the same terms and
conditions, in the aggregate, and at the same rate of pay, as such employee was
employed on the day prior to the Closing Date (the “Continuing Employees”);
provided, however, that Buyer shall have the right
to conduct customary employee background checks prior to offering employment to
any such employee.  Buyer will grant to
all Continuing Employees service credit for previous service recognized by
Seller for purposes of vacation and other benefits (whether or not accrued on
the financial statements of Seller).

 

7.1.2.       WARN Act. 
Buyer shall be responsible for and shall pay any and all liabilities or
obligations arising under the WARN Act, if any, arising out of or resulting
from layoffs of employees or any termination of their employment in the
Business which occurs on or after the Closing Date.  Buyer agrees to indemnify, and hold Seller and its successors
harmless from or against, any and all Damages which Seller may incur in connection
with any suit or claim of violation brought against Seller under the WARN Act
or any similar state or foreign law, which relates to transactions effected on
or after the Closing Date, or any other action taken by Buyer after the Closing
Date.

 

7.1.3.       Employee Benefits. 
Effective as of the Closing Date, Buyer shall establish a medical plan
for the Continuing Employees and their dependents and beneficiaries, without
preexisting condition exclusions, without waiting times for commencement of
coverage, or without other lapses in coverage. 
Notwithstanding the foregoing, any Continuing employee who had not
satisfied the waiting time for coverage with Seller shall be subject to the
waiting time established by Buyer.  In
addition, commencing on the Closing Date, Buyer shall provide the Continuing
Employees and their dependents and beneficiaries coverage under any other
pension, retirement, welfare and fringe benefit plans, programs, policies or
arrangements established by Buyer for such persons, who for all purposes of
this sentence will be credited, to the extent permissible under applicable law,
with all service recognized by Seller or its Affiliates.

 

7.1.4.       Forms W-2. 
Seller and Buyer agree that (i) Seller will issue a Form W-2 to each
individual who is employed in the Business as of, or prior to, the Closing Date
in respect of all payments made by Seller to each such individual on or prior
to the Closing Date, and (ii) Buyer will issue a Form W-2 to each Continuing
Employee in respect of all payments made by Buyer or any Affiliate of Buyer to
each such individual on or after the Closing Date.

 

7.2           Retention of and Access to Books and Records.

 

7.2.1.       Buyer agrees to retain the Books and Records for a period of seven (7)
years after the Closing Date.  Buyer
shall permit Seller (or its successors) and its Representatives to inspect and
copy, at Seller’s (or such successor’s) sole expense, any of the Books and
Records at any time during normal business hours, upon reasonable advance
notice.

 

7.2.2.       After the seven-year period referred to in Section 7.2.1, Buyer shall
provide not less than 30 nor more than 60 days notice to Seller (or its
successors, if previously identified by notice to Buyer) prior to any proposed
destruction or disposition of any of the Books and Records. Any such notice
shall identify with reasonable specificity the Books and Records to be
destroyed or disposed of and the date on which such destruction or disposition
will occur. If the recipient of any such notice wishes to obtain any of the Books
or Records to be destroyed or disposed of, it may do so by giving notice to
Buyer at any time prior to the scheduled date for destruction or
disposition.  All out-of-pocket costs of
delivering any such Books and Records to a requesting party shall be paid by
such party.

 

7.3           No Transition Services. Except as may be otherwise agreed in
writing by Seller and Buyer, as of the Closing Date, all data processing,
accounting, insurance, banking, legal, communications, and other services and
products provided by Seller or its Affiliates in respect of the Business and
the Purchased Assets, and any prior

 

9

 

agreements or understandings (written or
oral) with respect thereto, shall terminate and Buyer shall not be entitled to
any on-going benefit thereof.

 

7.4           No Use of Crown Pacific Name. Buyer shall (i) not, at any time after the
Closing, use in connection with the conduct of the Business or the ownership,
use, or operation of the Purchased Assets the names “Alliance Lumber” and
“Crown Pacific” or any name deceptively similar thereto and (ii) as soon as
reasonably practicable after the Closing Date, remove from the Purchased
Assets, other than Inventory, all references to the names “Alliance Lumber” and
“Crown Pacific” and their logos.

 

7.5           Allocation of Purchase Price.  The
Purchase Price shall be allocated among the Purchased Assets by Buyer, with
agreement by Seller, prior to the Closing Date, with adjustments as may be
determined in accordance with Section 2.4, subject to the following:  (i) such allocation shall be reflected in
the Tax returns (including, but not limited to, Internal Revenue Service Form
8594) that are filed by Buyer and the Seller in accordance with Section 1060 of
the Code (and any similar provision of state or local law, as appropriate),
with such adjustments as may be necessary pursuant to Section 2.4 hereof; and
(ii) Buyer and the Seller agree to treat and report in filings under the Code
(and any state or local law, as appropriate) (and, if necessary, to cause each
of their respective Affiliates to so treat and report) the transactions
contemplated by this Agreement in a manner consistent with one another.

 

8.             Termination.

 

8.1           Termination Events. This Agreement may, by notice given prior to
or at the Closing (which notice shall specify the grounds for termination), be
terminated:

 

8.1.1.       If all conditions to Closing required to obligate a party to close the
transactions set forth herein have been satisfied and such party has not
tendered performance of its Closing obligations or deliveries hereunder on or
before the Closing Date, then the party who is not then in default hereunder
may terminate this Agreement by delivering to the other written notice of
termination.  Any waiver of a condition
shall be effective only if such waiver is stated in writing and signed by the
waiving party; provided, however, that the consent of a party to
the Closing shall constitute a waiver by such party of any conditions to
Closing not satisfied as of the Closing Date; or

 

8.1.2.       By mutual written agreement of Seller and Buyer.

 

8.2           Effect of Termination.  If
this Agreement is terminated pursuant to Section 8.1, all further obligations
of the parties under this Agreement shall thereupon terminate, except that Sections
2.2, 10.2, 10.3, 10.7 through 10.13 and 10.15 through 10.18, inclusive, shall
survive; provided, however, that if this Agreement is
terminated by Seller because of a material Breach of this Agreement by Buyer or
because one or more of the conditions to Seller’s obligations under this
Agreement is not satisfied as a result of Buyer’s failure to comply with its
obligations under this Agreement, the Seller’s right to pursue all legal
remedies shall survive such termination unimpaired.

 

8.3           Break-Up Fee.  If
the Bankruptcy Court approves a sale of the Purchased Assets to a third party
other than Buyer (other than as a result of the failure of a condition to
Seller’s obligations set forth in Section 4.1), then this Agreement shall
terminate.  Upon consummation of such
transaction with such third party, Seller shall pay to Buyer by wire transfer
of immediately available funds to an account designated by Buyer, a termination
fee in the amount of $60,000, which shall constitute liquidated damages of
Buyer and shall be Buyer’s sole and exclusive remedy in respect of such
termination.

 

9.             Definitions and Interpretation.

 

9.1           Defined Terms. As used in this Agreement, the following
terms have the respective meanings set forth below:

 

“Accountants” means a
firm of independent certified public accountants jointly selected by the
parties or, if they are unable to agree within five additional Business Days,
appointed by the Bankruptcy Court upon the request of either party.

 

10

 

“Actions” has the
meaning set forth in Section 10.18.1.

 

“Actual Transaction Value”
means the Transaction Value, as of the Closing Time, as set forth in the
Statement of Transaction Value, or as otherwise determined pursuant to Section
2.4 in the event Seller objects thereto.

 

“Affiliate” means (i)
with respect to an individual (a) each member of such individual’s Family (as
hereinafter defined), (b) any Person that is directly or indirectly controlled
by such individual or one or more members of such individual’s Family, (c) any
Person in which such individual or one or more members of such individual’s
Family hold (individually or in the aggregate) a Material Interest (as
hereinafter defined), and (d) any Person with respect to which such individual
or one or more members of such individual’s Family serves as a director,
officer, partner, executor, or trustee (or in any similar capacity); or (ii)
with respect to any Person other than an individual (a) any Person that
directly or indirectly controls, is directly or indirectly controlled by, or is
directly or indirectly under common control with such Person, (b) any Person
that holds a Material Interest in such Person or in which such Person holds a
Material Interest, (c) each Person that serves as a director, officer, partner,
executor, or trustee of such Person (or in any similar capacity), (d) any
Person with respect to which such Person serves as general partner or trustee
(or in any similar capacity), and (e) any Affiliate of any individual described
in the foregoing clause (ii)(c) or (ii)(d). 
For purposes of this definition, (A) the “Family” of an
individual means the individual, the individual’s spouse, any other natural
person who is related to the individual or the individual’s spouse within the
second degree, and any other natural person who resides with the individual;
and (B) “Material Interest” means direct or indirect beneficial
ownership of voting securities or interests representing at least 20% of the
outstanding voting power of a Person or equity securities or interests
representing at least 20% of the outstanding equity securities or interests in
a Person.

 

“Agreement” means
this Asset Purchase Agreement.

 

“Approval Order” has
the meaning set forth in Section 3.5.

 

“Assignment and Assumption
Agreement” has the meaning set forth in Section 5.2.2.

 

“Assumed Liabilities”
means:

 

(i)            any and all liabilities and obligations
arising under, pursuant to, or in connection with the Contracts from and after
the Closing Date and/or otherwise required to be performed with respect to the
Purchased Assets on or after the Closing Date,

 

(ii)           all post-Petition Date liabilities that are Current Liabilities,

 

(iii)          all pre-Petition Date Claims that are set forth on Schedule E,

 

(iv)          any required COBRA continuation coverage to “M&A Qualified
Beneficiaries” (as defined in Treasury Regulation Section 54.4980B-9, Q/A-4)
resulting from the sale of the Business regardless of whether the Buyer is or
becomes a “successor employer” (as defined in Treasury Regulation Section
54.4980B-9 (Q/A-8(c)), and

 

(v)           all other liabilities and obligations to be assumed by Buyer pursuant
to this Agreement.

 

“Bankruptcy Code” has
the meaning set forth in the preamble.

 

“Bankruptcy Court”
has the meaning set forth in the preamble.

 

“Bill of Sale” has
the meaning set forth in Section 5.2.1.

 

“Board of Control”
means the Board of Control of Crown Management.

 

11

 

“Books and Records”
means all books and records of Seller that pertain exclusively to the conduct
of the Business, the ownership, use, and operation of the Purchased Assets, or
the payment or performance of the Assumed Liabilities, including any such
records maintained on computer and all related computer software.

 

“Breach” means any
inaccuracy in or breach of, or any failure to perform or comply with, any
representation, warranty, covenant, obligation, or other provision of this
Agreement or any document delivered pursuant to this Agreement.

 

“Business” has the
meaning set forth in Recital A.

 

“Business Day” means
any day other than a Saturday, Sunday, or other day on which commercial banks
in Reno, Nevada are authorized or required by applicable Legal Requirements to
be closed.

 

“Buyer” has the
meaning set forth in the preamble.

 

“Buyer Closing Documents”
means the documents to be executed and delivered by Buyer at the Closing
pursuant to Section 5.3.

 

“Buyer Default
Termination” has the meaning set forth in Section 2.2.

 

“Buyer’s Knowledge”
means that the Operator is actually aware of a particular fact or other matter.

 

“Case” has the
meaning set forth in the preamble.

 

“Claim” has the
meaning set forth in Section 101 of the Bankruptcy Code.

 

“Closing” means the
closing of this transaction, at which the events set forth in Section 5.2 shall
occur.

 

“Closing Date” means
the date on which the Closing occurs.

 

“Closing Time” means
the close of Seller’s business on the Closing Date.

 

“Code” means the
Internal Revenue Code of 1986, as amended.

 

“Continuing Employees”
has the meaning set forth in Section 7.1.1.

 

“Contracts” means the
Personal Property Leases and the Other Contracts.

 

“Crown Management”
means Crown Pacific Management Limited Partnership, a Delaware limited
partnership, the sole general partner of Seller.

 

“Current Liabilities”
means the sum of Seller’s accounts payable, accrued expenses, and other current
liabilities in connection with the Business or arising from the ownership or
operation of the Purchased Assets (including all amounts owed under financing
arrangements, whether classified as current or long-term), all as of the
Closing Time, in each case determined in accordance with generally accepted
accounting principles consistently applied in accordance with Seller’s past
practices; provided, however,
that Current Liabilities shall not include the following:

 

(i)            any inter- or intra-company liabilities,

 

(ii)           pre-Petition Date tax liabilities,

 

(iii)          pre-Petition Date Claims listed on Schedule E to this Agreement,

 

(iv)          any payroll or benefit liabilities arising out of the operation of the
Business prior to the Closing Time,

 

12

 

(v)           any sales or use tax liabilities arising out of the operation of the
Business prior to the Closing Time, and

 

(vi)          any loans or other financing provided to Seller pursuant to that
certain Post-Petition Financing Agreement with The CIT/Business Credit, Inc.,
dated June 29, 2003.

 

“Damages” means all
losses, liabilities, claims, damages (including incidental and consequential
damages), expenses (including costs of investigation and defense and reasonable
attorneys’ fees), and diminution of value, whether or not involving a
third-party claim, except to the extent, if any, that any such losses,
liabilities, claims, damages, expenses, or diminution in value are recovered
through insurance proceeds actually received (net of any costs incurred in
connection therewith, whether through retrospective premium adjustments,
experience-based premium adjustments, or otherwise).

 

“Deed” has the
meaning set forth in Section 5.2.3.

 

“Deposit” has the
meaning set forth in Section 2.2.

 

“Deposit Escrow Agent”
has the meaning set forth in Section 2.2.

 

“Deposit Escrow Agreement”
has the meaning set forth in Section 2.2.

 

“Effective Date” has
the meaning set forth in the preamble.

 

“Estimated Transaction
Value” means Seller’s good faith estimation of Transaction Value, which
estimation shall be conclusive for purposes of determining the Purchase Price,
subject only to post-Closing adjustment as provided in Section 2.4.

 

“Excluded Assets” has
the meaning set forth in Section 1.2.

 

“Governmental Authority”
means any national, federal, state, provincial, county, municipal, or local
government, or the government of any political subdivision of the any of the
foregoing, or any entity, authority, agency, ministry, or other similar body
exercising executive, legislative, judicial, regulatory, or administrative
authority or functions of or pertaining to the government, including any
quasi-governmental entity established to perform any such functions.

 

“Improvements” has
the meaning set forth in Section 1.1.2.

 

“Intangible Property”
has the meaning set forth in Section 1.1.4.

 

“Inventory” has the
meaning set forth in Section 1.1.6.

 

“Legal Requirement”
means any federal, state, local, municipal, foreign, international,
multinational, or other administrative Order, constitution, law, ordinance,
principle of common law, regulation, rule, statute, or treaty.

 

“Lien” means any
mortgage, deed of trust, pledge, assignment, security interest, encumbrance,
lien, charge, or claim of any kind or nature whatsoever in respect of any
property, including any of the foregoing created by, arising under, or
evidenced by any conditional sale or other title retention agreement, the
interest of a lessor under a capital lease, any financing lease having
substantially the same economic effect as any of the foregoing, or the filing
of a financing statement naming the owner of the property as to which such lien
relates as the debtor under the Uniform Commercial Code or any comparable law.

 

“Loss” has the
meaning set forth in Section 3.4.

 

“Operator” means Buck
Yaeger.

 

13

 

“Order” means any
award, decision, injunction, judgment, order, ruling, subpoena, or verdict
entered, issued, made, or rendered by any court, administrative agency, or
other Governmental Authority or by any arbitrator or mediator.

 

“Ordinary Course of
Business” means any action taken by a Person if, and only if, such action
is consistent with the past practices of such Person and is taken in the
ordinary course of the normal day-to-day operations of such Person.

 

“Organizational Documents”
means (i) the articles or certificate of incorporation and the bylaws of a
corporation, (ii) the partnership agreement and any statement of partnership of
a general partnership, (iii) the limited partnership agreement and certificate
of limited partnership of a limited partnership, (iv) any charter, operating
agreement, or similar document adopted or filed in connection with the
creation, formation, or organization of a Person, and (v) any amendment to any
of the foregoing.

 

“Other Contracts” has
the meaning set forth in Section 1.1.1.

 

“Permitted Encumbrances”
means with respect to any specified property, such defects, irregularities,
encumbrances, and other imperfections of title as normally exist with respect
to property similar in character, and, in any event, are not substantial in
character, amount, or extent, and do not materially detract from the value or
materially impair the use of the property in question.

 

“Person” means an
individual, partnership, corporation, limited liability company, joint stock
company, trust, unincorporated organization or association, joint venture, or
other organization, whether or not a legal entity, or a Governmental Authority.

 

“Personal Property”
has the meaning set forth in Section 1.1.3.

 

“Personal Property Leases”
has the meaning set forth in Section 1.1.1.

 

“Petition Date” has
the meaning set forth in the preamble.

 

“Proceeding” means
any action, arbitration, audit, hearing, litigation, or suit (whether civil,
criminal, administrative, investigative, or informal) commenced, brought,
conducted, or heard by or before, or otherwise involving, any Governmental
Authority, arbitrator, or mediator.

 

“Purchase Price” has
the meaning set forth in Section 2.1.

 

“Purchased Assets”
has the meaning set forth in Section 1.1.

 

“Real
Property” has the
meaning set forth in Section 1.1.2.

 

“Receivables” has the
meaning set forth in Section 1.1.5.

 

“Representative”
means, with respect to a particular Person, any director, officer, employee,
agent, consultant, advisor, or other representative of or to such Person,
including such Person’s attorneys, accountants, and financial advisors.

 

“Sale Motion” has the
meaning set forth in Section 3.5.

 

“Seller” has the
meaning set forth in the preamble.

 

“Seller Closing Documents”
means the documents to be executed and delivered by Seller at the Closing
pursuant to Section 5.2.

 

“Seller Default
Termination” has the meaning set forth in Section 2.2.

 

14

 

“Seller’s Knowledge”
means that either of Peter W. Stott or Steven E. Dietrich is actually aware of
a particular fact or other matter.

 

“Statement of Transaction
Value” means an unaudited statement of Transaction Value, including the
principal components thereof, as of the Closing Time, certified by the
Operator.

 

“Tax” means any tax
(including any income tax, capital gains tax, value-added tax, sales tax, excise
tax, property tax, gift tax, or estate tax), levy, assessment, tariff, duty
(including any customs duty), deficiency, or other fee, and any related charge
or amount (including any fine, penalty, interest, or addition to tax), imposed,
assessed, or collected by or under the authority of any Governmental Authority
or payable pursuant to any tax-sharing agreement or other Contract relating to
the sharing or payment of any such tax, levy, assessment, tariff, duty,
deficiency, or fee.

 

“Threatened” means,
with respect to a claim, Proceeding, dispute, action, or other matter, the
making of any demand or statement (written or oral), the giving of any written
notice, the occurrence of any event, or the existence of any circumstance that
would lead a prudent Person to conclude that such claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced, taken, or
otherwise pursued in the future.

 

“Transaction Value”
means an amount equal to the sum of:

 

(i)            90% of the book value of the Receivables,

 

(ii)           95% of the book value of the Inventory (valued at average cost, as
determined in a manner consistent with Seller’s internal operating statements)
that is located on the Real Property,

 

(iii)          100% of the book value of the Inventory (valued at average cost, as
determined in a manner consistent with Seller’s internal operating statements)
that is in transit or prepaid but not located on the Real Property,

 

(iv)          100% of the book value of the Real Property, Improvements and Personal
Property listed on Schedule B-1,

 

(v)           50% of the book value of the Personal Property listed on Schedule
B-2,

 

(vi)          100% of the cost of any items of Personal Property acquired by Seller
in the Ordinary Course of Business after the Effective Date and prior to the
Closing Date exclusively in connection with the Business, and

 

(vii)
100% of the book value of the notes receivable arising out of the operation of
the Business and outstanding on the Closing Time (valued at Seller’s net book
value, determined in accordance with generally accepted accounting principles
consistently applied in accordance with Seller’s past practice).

 

in each case (other than Inventory valuation)
determined in accordance with generally accepted accounting principles
consistently applied in accordance with Seller’s past practices.

 

“Transaction Value
Difference” means, as applicable, the Actual Transaction Value less the
Estimated Transaction Value, or the Estimated Transaction Value less the Actual
Transaction Value.

 

“WARN Act” means the
Worker Adjustment and Retraining Act, as amended.

 

9.2           Construction and Interpretation.

 

9.2.1.       The headings or titles of the sections of this Agreement are intended
for ease of reference only and shall have no effect whatsoever on the
construction or interpretation of any provision of this Agreement.  References herein to sections are to
sections of this Agreement unless otherwise specified.

 

15

 

9.2.2.       Meanings of defined terms used in this Agreement are equally applicable
to singular and plural forms of the defined terms. The masculine gender shall
also include the feminine and neutral genders and vice versa.

 

9.2.3.       As used herein, (i) the term “party” refers to a party to this
Agreement, unless otherwise specified, (ii) the terms “hereof,” “herein,”
“hereunder,” and similar terms refer to this Agreement as a whole and not to
any particular provision of this Agreement, (iii) the term “including” is not
limiting and means “including, without limitation,” (iv) the term “documents”
includes all instruments, documents, agreements, certificates, indentures,
notices, and other writings, however evidenced, and (v) the term “property”
includes any kind of property or asset, real, personal, or mixed, tangible or
intangible.

 

9.2.4.       In the event any period of time specified in this Agreement ends on a
day other than a Business Day, such period shall be extended to the next
following Business Day.  In the
computation of periods of time from a specified date to a later specified date,
the word “from” means “from and including,” the words “to” and “until” each
mean “to but excluding,” and the word “through” means “to and including.”

 

9.2.5.       This Agreement is the product of arm’s length negotiations among, and
has been reviewed by counsel to, the parties and is the product of all of the
parties. Accordingly, this Agreement shall not be construed for or against any
party by reason of the authorship or alleged authorship of any provision
hereof.

 

10.           Miscellaneous Provisions.

 

10.1         Survival.  Except for the covenants and
agreements that are expressly provided to be performed after the Closing Date
(including, without limitation, Section 10.1), none of the respective
representations, warranties, covenants and agreements of Seller and Buyer herein,
or in any certificates or other documents delivered prior to or at the Closing,
shall survive the Closing.

 

10.2         Expenses. Each party shall bear its respective expenses incurred in connection
with the preparation, execution, and performance of this Agreement and the
transactions herein contemplated, including all fees and expenses of its
Representatives and any brokerage or finders’ fees or commissions or any other
similar payment in connection with the transactions herein contemplated.

 

10.3         Attorneys’ Fees.  In
the event that either party hereto brings an action or other proceeding to
enforce or interpret the terms and provisions of this Agreement, the prevailing
party in that action or proceeding shall be entitled to have and recover from
the non-prevailing party all such fees, costs and expenses (including, without
limitation, all court costs and reasonable attorneys’ fees) as the prevailing
party may suffer or incur in the pursuit or defense of such action or
proceeding.

 

10.4         Reasonable Access to Records and Certain
Personnel.  As long as the Case is pending, (i) Buyer
shall permit Seller’s counsel and other professionals employed in the Case
reasonable access to the financial and other books and records relating to the
Purchased Assets or the Business (whether in documentary or data form) for the
purpose of the continuing administration of the Case (including, without
limitation, the pursuit of any avoidance, preference or similar action), which
access shall include (a) the right of such professionals to copy, at Seller’s
expense, such documents and records as they may request in furtherance of the
purposes described above, and (b) Buyer’s copying and delivering to Seller or
its professionals such documents or records as they may request, but only to
the extent Seller or its professionals furnishes Buyer with reasonably detailed
written descriptions of the materials to be so copied and Seller reimburses
Buyer for the reasonable costs and expenses thereof, and (ii) Buyer shall
provide Seller and such professionals (at no cost to Seller) with reasonable
access to various personnel to whom Seller will need continued access
post-closing during regular business hours to assist Seller in the continuing
administration of the Case, provided that such access does not unreasonably
interfere with Buyer’s business operations.

 

10.5         Binding Effect. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties and, subject to the
restrictions on assignment set forth herein, their respective successors and
assigns.

 

16

 

10.6         Assignment. Neither party shall assign any of its rights or obligations under
this Agreement without the prior written consent of the other party.  No assignment of this Agreement shall
release the assigning party from its obligations under this Agreement.

 

10.7         Notices. All notices under this Agreement shall be in writing.  Notices may be (i) delivered personally,
(ii) transmitted by facsimile, (iii) delivered by a recognized national
overnight delivery service, or (iv) mailed by certified United States mail,
postage prepaid and return receipt requested. 
Notices to any party shall be directed to its address set forth below,
or to such other or additional address as any party may specify by notice to
the other party.  Any notice delivered
in accordance with this Section 10.7 shall be deemed given when actually
received or, if earlier, (a) in the case of any notice transmitted by
facsimile, on the date on which the transmitting party receives confirmation of
receipt by facsimile transmission, telephone, or otherwise, if sent during the
recipient’s normal business hours or, if not, on the next Business Day, (b) in
the case of any notice delivered by a recognized national overnight delivery
service, on the next Business Day after delivery to the service or, if
different, on the day designated for delivery, or (c) in the case of any notice
mailed by certified U.S. mail, two Business Days after deposit therein.

 

	
  If to Seller:

  	
   

  	
  Crown Pacific Limited
  Partnership

  
	
   

  	
   

  	
  805 S.W. Broadway, Suite
  1500

  
	
   

  	
   

  	
  Portland, Oregon 97205

  
	
   

  	
   

  	
  Fax No.: 503-228-4875

  
	
   

  	
   

  	
  Attn:       P. A. (Tony) Leineweber

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
  Andrews Kurth LLP

  
	
   

  	
   

  	
  600 Travis, Suite 4200

  
	
   

  	
   

  	
  Houston, Texas 77002

  
	
   

  	
   

  	
  Fax No.:  713-238-7172

  
	
   

  	
   

  	
  Attn:        John Sparacino

  
	
   

  	
   

  	
   

  
	
  If
  to Buyer:

  	
   

  	
  Reno
  Lumber

  
	
   

  	
   

  	
  680 Spice Islands Drive

  
	
   

  	
   

  	
  Sparks, Nevada 89431

  
	
   

  	
   

  	
  Fax No.:

  	
   

  	
   

  
	
   

  	
   

  	
  Attn:  D.S. Yaeger

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
  Mr. Gary G. Perry

  
	
   

  	
   

  	
  2251 Fair Oaks Boulevard,
  Suite 200

  
	
   

  	
   

  	
  Sacramento, California
  95825

  
	
   

  	
   

  	
  Fax No.: 916-649-0742

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Ms. Cindy Hill

  
	
   

  	
   

  	
  Drinkwater Law Offices

  
	
   

  	
   

  	
  6490 S. McCarran Boulevard

  
	
   

  	
   

  	
  Suite B-15

  
	
   

  	
   

  	
  Reno, Nevada 89509

  
	
   

  	
   

  	
  Fax No.:  775-828-0858

  

 

10.8         Waiver. Any party’s failure to exercise any right or remedy under this
Agreement, delay in exercising any such right or remedy, or partial exercise of
any such right or remedy shall not constitute a waiver of that or any other
right or remedy hereunder.  A waiver of any
Breach of any provision of this Agreement shall not constitute a waiver of any
succeeding Breach of such provision or a waiver of such provision itself.  No waiver of any provision of this Agreement
shall be binding on a party unless it is set forth in writing and signed by
such party.

 

10.9         Amendment. This Agreement may not be modified or amended except by the written
agreement of all of the parties hereto.

 

17

 

10.10       Severability.  If any provision of this Agreement is held
invalid, illegal, or unenforceable, then (i) such provision shall be
enforceable to the fullest extent permitted by applicable law, and (ii) the
validity and enforceability of the other provisions of this Agreement shall not
be affected and all such provisions shall remain in full force and effect.

 

10.11       Integration.  This Agreement, including the Exhibits and
Schedules hereto, contains the entire agreement and understanding of the
parties with respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements with respect thereto.  The parties acknowledge and agree that there are no agreements or
representations relating to the subject matter of this Agreement, either
written or oral, express or implied, that are not set forth in this Agreement,
in the Exhibits and Schedules to this Agreement.

 

10.12       Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Arizona (without regard
to the principles thereof relating to conflicts of laws).

 

10.13       Jurisdiction.  BUYER AND SELLER AGREE THAT THE BANKRUPTCY
COURT SHALL HAVE EXCLUSIVE JURISDICTION OVER ALL DISPUTES AND OTHER MATTERS
RELATING TO (i) THE INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT OR ANY
ANCILLARY DOCUMENT EXECUTED PURSUANT HERETO; AND (ii) THE PURCHASED ASSETS AND
THE ASSUMED LIABILITIES, AND BUYER EXPRESSLY CONSENTS TO AND AGREES NOT TO
CONTEST SUCH EXCLUSIVE JURISDICTION.

 

10.14       Tax Effect.  None of the parties (nor such parties’
Representatives) has made or is making in this Agreement any representation to
any other party (or such party’s Representatives) concerning any of the tax
effects or consequences on the other party of the transactions provided for in
this Agreement.  Each party represents
that it has obtained, or may obtain, independent tax advice with respect
thereto and upon which it, if so obtained, has solely relied.

 

10.15       Execution.  This Agreement may be executed in any number
of counterparts, all of which together shall constitute one and the same
agreement. Each party may rely upon the signature of each other party on this
Agreement that is transmitted by facsimile as constituting a duly authorized,
irrevocable, actual, current delivery of this Agreement with the original ink
signature of the transmitting party.

 

10.16       Incorporation of Recitals, Exhibits, and Schedules.  The
recitals to this Agreement and all Exhibits and Schedules to this Agreement are
incorporated herein by this reference.

 

10.17       Further Assurances.  Each party agrees to execute and deliver
such additional documents and instruments as may reasonably be required to
effect fully the transactions herein contemplated, as long as the terms thereof
are consistent with the terms of this Agreement.

 

10.18       Releases; Waiver.

 

10.18.1.   Release by Buyer.  Each of Buyer and Operator
hereby agree as of the Closing Date to release, acquit, and forever discharge
Seller and each of its Affiliates and Representatives from any and all claims
and demands, actions and causes of action, costs, expenses, litigation costs,
attorneys’ fees, and compensation of any kind or nature whatsoever that each
may have, whether on account of or in anyway arising out of the Business, any
assets or liabilities referenced in this Agreement or otherwise, whether known
or unknown, foreseen or unforeseen, now existing or that may hereafter arise,
directly or indirectly, of every kind and character, under or pursuant to any
applicable law or theory (common or statutory and whether federal and/or
state), arising out of or attributable to any conduct, representations, acts,
actions, matters, or things done, omitted, or supposed to be done
(collectively, “Actions”) by any of Seller or its Affiliates or
Representatives on or prior to the Closing Date.

 

10.18.2.   Claims Waiver by Buyer. 
Buyer (i) shall acquire all pre-Petition Date Claims in favor of Persons
who have accounts payable that are set forth on Schedule E to this
Agreement and (ii) hereby waives and releases Seller, Crown Management and each
other debtor in the Case from any and all claims and causes of action with
respect to any and all such Claims.

 

18

 

10.18.3.   Release by Seller.  Seller agrees to seek entry
by the Bankruptcy Court of an order approving the release contemplated in this
Section 10.18.3 (which order Seller shall undertake good faith efforts to
obtain).  In the event that the
Bankruptcy Court enters an order approving the release set forth in this
Section 10.18.3, Seller, on behalf of itself and the other debtors in the Case,
shall as of the Closing Date release, acquit, and forever discharge Buyer and
Operator from any and all claims and demands, actions and causes of action,
costs, expenses, litigation costs, attorneys’ fees, and compensation of any
kind or nature whatsoever that each may have, whether on account of or in
anyway arising out of their employment agreements and/or non-compete agreements
with Seller and any potential avoidance actions that Seller or any of the other
debtors in the Case may have against Buyer or the Operator, whether known or
unknown, foreseen or unforeseen, now existing or that may hereafter arise,
directly or indirectly, of every kind and character, under or pursuant to any
applicable law or theory (common or statutory and whether federal and/or state),
arising out of or attributable to any Actions on or prior to the Closing Date
other than such Actions that are (x) attributable to the gross negligence or
willful misconduct of the Operator or (y) that are in violation of Section 3.1.

 

[Signature page follows]

 

19

 

IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date first set forth above.

 

	
  Seller:

  	
  CROWN
  PACIFIC LIMITED PARTNERSHIP,

  
	
   

  	
  a
  Delaware limited partnership

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Crown
  Pacific Management Limited

  
	
   

  	
   

  	
  Partnership,
  its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Peter W. Stott

  	
   

  
	
   

  	
   

  	
  Name:  Peter W. Stott

  
	
   

  	
   

  	
  Title:    President and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Buyer:

  	
  RENO
  LUMBER,

  
	
   

  	
  a
  Nevada corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  D.S. Yaeger

  	
   

  
	
   

  	
  Name:  D.S. Yaeger

  
	
   

  	
  Title:  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  Operator:

  	
  The
  undersigned hereby executes this Agreement

  solely for the purpose of agreeing to the covenants in

  Sections 3.1 and 10.18:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Buck Yaeger

  	
  /s/ Dale Eggers

  	
   

  
	
   

  	
  Buck
  Yaeger

  
								

 

20EXHIBIT 10.7

 

AMENDMENT NO. 1

TO

ASSET PURCHASE AGREEMENT

 

This AMENDMENT
NO. 1 TO ASSET PURCHASE AGREEMENT (this “Amendment”) is made and entered into as of
this 18th day of June, 2004 by and between CROWN PACIFIC LIMITED PARTNERSHIP, a
Delaware limited partnership (“Seller”),
on the one hand, and RENO LUMBER, a Nevada corporation (“Buyer”), on the other hand.  (All capitalized terms used but not defined
herein shall have the same definitions for such terms as set forth in the APA
referred to below.)

 

WHEREAS, Buyer
and Seller entered into that certain Asset Purchase Agreement, dated as of June
2, 2004 (the “APA”), pursuant to
which Seller agreed to sell, and Buyer agreed to buy, substantially all of the
assets associated with the Business; and

 

WHEREAS, Buyer
and Seller hereby desire to move a computer server from Schedule B-2 to
Schedule B-1 to reflect Buyer’s agreement to pay 100% of the book value
thereof;

 

NOW THEREFORE,
for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

 

1.             Amendment to Schedule B-2.  Schedule B-2 to the APA is hereby amended by
removing the following item of Personal Property therefrom:

 

	
  System

  	
   

  	
  Company

  	
   

  	
   

  	
   

  	
  Acquired

  	
   

  
	
  Number

  	
   

  	
  Number

  	
   

  	
  Description

  	
   

  	
  Date

  	
   

  
	
  4928

  	
   

  	
  020104

  	
   

  	
  VERSYSS SYSTEM-NOLAN MICRO
  SYSTEMS

  	
   

  	
  2/1/2004

  	
   

  

 

2.             Amendment to Schedule B-1.  Schedule B-1 to the APA is hereby amended by
inserting the following item of Personal Property thereon:

 

	
  System

  	
   

  	
  Company

  	
   

  	
   

  	
   

  	
  Acquired

  	
   

  
	
  Number

  	
   

  	
  Number

  	
   

  	
  Description

  	
   

  	
  Date

  	
   

  
	
  4928

  	
   

  	
  020104

  	
   

  	
  VERSYSS SYSTEM-NOLAN MICRO
  SYSTEMS

  	
   

  	
  2/1/2004

  	
   

  

 

3.             Continuation of APA.  Except as modified by this Amendment, the
APA shall continue in full force and effect.

 

4.             Counterparts.  This Amendment may be signed in counterparts
and may be executed by the exchange of facsimile signature pages.

 

 [SIGNATURE PAGE FOLLOWS]

 

 

IN WITNESS WHEREOF, the parties
hereto have executed this Amendment No. 1 to Asset Purchase Agreement as
of the day and year first above written.

 

	
   

  	
  CROWN PACIFIC LIMITED
  PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Crown Pacific Management
  Limited

  
	
   

  	
   

  	
  Partnership, its General
  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s Peter W. Stott

  	
   

  
	
   

  	
  Name:  Peter W. Stott

  
	
   

  	
  Title:

  	
  President and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  RENO LUMBER

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ D.S. Yaeger

  	
   

  
	
   

  	
  Name: 
  D.S. Yaeger

  
	
   

  	
  Title: Chief Executive Officer

  
						

 

2

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