<PAGE> 1
EXHIBIT 10.2
ASSET PURCHASE AGREEMENT dated as of May 3, 2000 (the "Agreement"),
among BAP Acquisition Corp., a Delaware corporation ("Buyer"), B.A. Pargh
Company, LLC, a Tennessee limited liability company ("Seller"), and the members
of Seller listed on Annex I hereto (collectively, the "Members").
WITNESSETH:
WHEREAS, Seller operates an office products wholesale distributor and
reseller business in the Central and Eastern United States and Puerto Rico (the
"Business");
WHEREAS, the Members own all of the issued and outstanding membership
interests in the Seller and the Members listed on Annex II hereto (the
"Officers") are actively engaged in the Business;
WHEREAS, based upon the representations, covenants, agreements and
warranties herein made by Seller and the Members, and subject to the terms and
conditions contained in this Agreement, Buyer wishes to acquire the Business and
all of Seller's assets, subject to certain liabilities, and to continue to
operate the Business;
WHEREAS, based upon the representations, covenants, agreements and
warranties herein made by Buyer, and subject to the terms and conditions
contained in this Agreement, Seller wishes to sell to Buyer the Business and all
of Seller's assets, subject to certain liabilities, for the consideration set
forth herein, including the assumption of such liabilities;
WHEREAS, the Members, as owners of Seller, will benefit from the
transactions contemplated hereby; and
WHEREAS, Seller, the Members and Buyer wish to provide for the
above-described acquisition and sale.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Buyer, Seller and the Members hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Defined Terms. As used herein, the terms below shall have the
following meanings:
"Action" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation, in each case, by or before any Governmental
Authority.
"Affiliate" of a Person means any other Person which, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person. The term "control" (including,
<PAGE> 2
with correlative meaning, the terms "controlled by" and "under common control
with"), as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.
"Ancillary Agreements" means the Employment Agreements, the Non-Compete
Agreements, and all other agreements required hereunder to consummate the
transactions contemplated hereby.
"Code" means the Internal Revenue Code and Treasury Regulations
thereunder.
"Consents" means any and all Permits and any and all consents,
approvals or waivers from third parties that are required for the consummation
of the transactions contemplated by this Agreement.
"Contracts" means all contracts, agreements, arrangements,
understandings, licenses, leases, subleases and commitments of any kind.
"Court Order" means any judgment, decision, consent decree, injunction,
ruling or order of any foreign, federal, state or local court or governmental
agency, department or authority that is binding on any Person or its property
under applicable Law.
"Default" means (a) a breach of or default under any Contract, (b) the
occurrence of an event that with the passage of time or the giving of notice or
both would constitute a breach of or default under any Contract or (c) the
occurrence of an event that with or without the passage of time or the giving of
notice or both would give rise to a right of termination, renegotiation or
acceleration under any Contract.
"Employment Agreements" means the Employment Agreements to be entered
into by Buyer and the Officers, substantially in the form of Exhibit 1.1A
hereof.
"Encumbrance" means any claim, lien, pledge, option, charge, easement,
security interest, deed of trust, mortgage, right-of-way, encroachment, building
or use restriction, conditional sales agreement, encumbrance or other right of
third parties, whether voluntarily incurred or arising by operation of law, and
includes any agreement to give any of the foregoing in the future, and any
contingent sale or other title retention agreement or lease in the nature
thereof.
"Financial Statements" means the balance sheet of Seller as of March
31, 2000 and the related statements of income of Seller for the one month and
three months then ended, a copy of which is attached as Schedule 3.3A hereto.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within
2
<PAGE> 3
the accounting profession), or in such other statements by such entity as may be
in general use by significant segments of the U.S. accounting profession, which
are applicable to the facts and circumstances on the date of determination.
"Governmental Authority" means any United States federal, state, local,
possession or foreign governmental, regulatory or administrative authority,
agency or commission, or any political subdivision thereof, or any court,
tribunal or arbitral body.
"HSR Act" means the Hart Scott Rodino Antitrust Improvements Act of
1976, as amended.
"Intellectual Property" means all trademarks, patents, copyrights,
tradenames, Business identifiers, service marks, logos, domain names, URLs and
all registrations and applications for registration thereof and all renewals or
reissues thereof, and all intangible property which is proprietary to Seller or
any Member and used or usable in the operation of the Business.
"Knowledge" or "to the knowledge" or "to the best of the knowledge" of
a party (or similar phrases) means to the extent of matters which are actually
known by such party and, with respect to Seller, shall mean the actual knowledge
of the Officers.
"Liability" means any direct or indirect liability, indebtedness,
obligation, commitment, expense, claim, deficiency, guaranty or endorsement of
or by any Person of any type, whether accrued, absolute, contingent, matured,
unmatured, liquidated, unliquidated, known or unknown.
"March 31 Balance Sheet" means the balance sheet of Seller as of March
31, 2000 included in the Financial Statements.
"Material Adverse Effect" or "Material Adverse Change" or a similar
phrase means, with respect to any Person, any material adverse effect on or
change with respect to (i) the business, operations, assets (taken as a whole),
liabilities (taken as a whole), condition (financial or otherwise) or results of
operations, of such Person, or (ii) the right or ability of such Person to
consummate any of the transactions contemplated hereby.
"Non-Compete Agreements" means the Non-Compete Agreements to be entered
into by Buyer, Seller and each of the Officers substantially in the form of
Exhibit 1.1B hereof.
"Permitted Encumbrances" means (a) liens for Taxes or governmental
charges or claims (i) not yet due and payable, or (ii) being contested in good
faith, if a reserve or other appropriate provision, if any, as shall be required
by GAAP shall have been made therefor, (b) statutory liens of landlords, liens
of carriers, warehouse persons, mechanics and material persons and other liens
imposed by law incurred in the ordinary course of business for sums (i) not yet
due and payable, or (ii) being contested in good faith, if a reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been made
therefor, (c) liens incurred or deposits made in connection with workers'
compensation, unemployment insurance and other similar types of social security
programs or to secure the performance of tenders, statutory obligations, surety
and
3
<PAGE> 4
appeal bonds, bids, leases, government contracts, performance and return of
money bonds and similar obligations, in each case in the ordinary course of
business, consistent with past practice, (d) easements, rights-of-way,
restrictions and other liens or Encumbrances, in each case, which do not
interfere with the ordinary conduct of business of Seller and do not materially
detract from the value of the property upon which such lien or Encumbrance
exists and (e) liens, claims and Encumbrances specifically identified and
designated as a Permitted Encumbrance on any Schedule attached hereto.
"Permits" means all licenses, permits, franchises, approvals,
authorizations, consents or orders of, or filings with, any Governmental
Authority, whether foreign, federal, state or local, necessary or desirable for
the past, present or anticipated conduct or operation of the Business or
ownership of the Assets.
"Person" means any person or entity, whether an individual, trustee,
corporation, limited liability company, general partnership, limited
partnership, trust, unincorporated organization, business association, firm,
joint venture, governmental agency or authority or any similar entity.
"Pre-petition Liabilities" means the Liabilities of the Seller
described on Schedule 3.3B hereto.
"Regulations" means any laws, statutes, ordinances, regulations, rules,
notice requirements, court decisions, agency guidelines, principles of law and
orders of any foreign, federal, state or local government and any other
governmental department or agency, including without limitation energy, motor
vehicle safety, public utility, zoning, building and health codes, environmental
Laws, occupational safety and health and laws respecting employment practices.
"RMA Inventory" means merchandise returned from customers that is not
suitable for resale or that is not returned to salable inventory.
"Seller Material Adverse Effect" or "Seller Material Adverse Change"
means a Material Adverse Effect with respect to Seller, the Business or the
Assets.
"Seller's Representative" means W. Alan Holman, as representative of
the Seller and the Members, or his designee.
"Services Agreement" means the contract dated July 15, 1999 identified
in the non-binding letter of intent between Seller and Daisytek International
Corporation.
"Tax" or "Taxes" means any and all Taxes, fees, levies, duties,
tariffs, imposts, and other charges of any kind (together with any and all
interest, penalties, additions to Tax and additional amounts imposed with
respect thereto) imposed by any government or Taxing authority, including,
without limitation: Taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth; Taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value added, or
4
<PAGE> 5
gains Taxes; license, registration and documentation fees; and customs' duties,
tariffs, and similar charges.
1.2 Interpretation Provisions.
(a) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement, and article, section,
schedule and exhibit references are to this Agreement unless otherwise
specified. The meaning of defined terms shall be equally applicable to the
singular and plural forms of the defined terms. The term "or" is disjunctive but
not necessarily exclusive. The terms "include" and "including" are not limiting
and mean "including without limitation."
(b) References to agreements and other documents shall be
deemed to include all subsequent amendments and other modifications thereto.
(c) References to statutes shall include all regulations
promulgated thereunder and references to statutes or regulations shall be
construed as including all statutory and regulatory provisions consolidating,
amending or replacing the statute or regulation.
(d) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the construction of this
Agreement.
(e) The language used in this Agreement shall be deemed to be
the language chosen by the parties to express their mutual intent, and no rule
of strict construction shall be applied against either party.
(f) The annexes, schedules and exhibits to this Agreement are
a material part hereof and shall be treated as if fully incorporated into the
body of the Agreement.
ARTICLE 2
SALE AND PURCHASE OF THE BUSINESS
2.1 Assets to be Sold. Subject to the terms and conditions set forth in
this Agreement, at the Closing (as defined in Section 8.1 hereof) Seller shall
sell, transfer, convey, assign and deliver to Buyer, and Buyer shall purchase
and acquire from Seller, all of Seller's right, title and interest in and to
Seller's assets (wherever located, tangible and intangible, real, personal or
mixed, whether known or unknown, accrued or contingent, and whether or not
carried on the books and records of Seller) and the Business (and the goodwill
associated therewith) as a going concern (collectively, the "Assets") (excluding
only the assets specified in Section 2.2 hereof), including, but not limited to,
the following:
(a) all of Seller's cash and cash equivalents on hand or in
banks;
5
<PAGE> 6
(b) all machinery, equipment, furniture, furnishings,
automobiles, trucks, vehicles, tools, dies, molds and parts and similar property
(including, but not limited to, any of the foregoing purchased subject to any
conditional sales or title retention agreement in favor of any other Person);
(c) all inventories of raw materials, work in process,
finished products, goods, spare parts, replacement and component parts, and
office and other supplies, wherever located including any items in transit to
Seller (the "Inventory");
(d) all rights in and to products sold or leased (including
unpaid sellers' rights of rescission, replevin, reclamation and rights to
stoppage in transit);
(e) all of the rights of the Seller under all Contracts,
including the Services Agreement, and any right to receive payment for products
sold or services rendered, and to receive goods and services, pursuant to such
Contracts and to assert claims and take other rightful actions in respect of
breaches, defaults and other violations of such Contracts;
(f) all credits, prepaid expenses, deferred charges, advance
payments, security deposits and prepaid items;
(g) all notes and accounts receivable held by the Seller and
all notes, bonds and other evidences of indebtedness of and rights to receive
payments from any Person held by the Seller, including all rights to receive
refunds, rebates and coop or promotional funds of any kind;
(h) all Intellectual Property and all rights thereunder or in
respect thereof relating to or used or held for use in connection with the
Business, including rights to sue for and remedies against past, present and
future infringements thereof, and rights of priority and protection of interests
therein under the laws of any jurisdiction worldwide and all tangible
embodiments thereof;
(i) all books, records, manuals and other materials (in any
form or medium), including all records and materials maintained at each office
or place of business of Seller, advertising matter, catalogues, price lists,
correspondence, mailing lists, lists of customers, distribution lists,
photographs, production data, sales and promotional materials and records,
purchasing materials and records, personnel records, manufacturing and quality
control records and procedures, blueprints, research and development files,
records, data and laboratory books, Intellectual Property disclosures, media
materials and plates, accounting records, sales order files and litigation
files;
(j) to the extent their transfer is permitted by law, all
Permits, including all applications therefor;
(k) all rights to causes of action, lawsuits, judgments,
claims and demands of any nature available to or being pursued by the Seller
with respect to the Business or any Contract, including the Services Agreement,
whether arising prior to or following the date hereof, or the ownership, use,
function or value of any Asset, whether arising by way of counterclaim or
otherwise; and
6
<PAGE> 7
(l) all guarantees, warranties, indemnities and similar rights
in favor of the Seller with respect to any Asset.
2.2 Excluded Assets. The following assets (collectively, the "Excluded
Assets") shall be retained by Seller and no interest in them shall be assigned,
transferred, conveyed or delivered to Buyer:
(a) the organizational documents, operating agreement and
minutes of Member meetings of Seller;
(b) all rights of the Seller under this Agreement; and
(c) all Inventory which, as of the Closing Date, (i) is RMA
Inventory, (ii) is in the aggregate in excess of 76 days cost of good sold
determined on the basis of sales during the 12 month period prior to the Closing
Date, (iii) has a "freshness dating" expiration date prior to the Closing Date,
or (iv) is not included in Seller's then current catalogue, except for any of
the foregoing which Buyer, in its sole discretion, elects to purchase and
include in the Assets being transferred hereunder; and
(d) the automobile and other assets listed on Schedule 2.2(d)
hereto.
2.3 Assumed Liabilities. Subject to the terms and conditions set forth
in this Agreement, at the Closing, Buyer shall assume and agree to pay, perform
and discharge all of the following obligations and liabilities of Seller
(collectively the "Assumed Liabilities"):
(a) all liabilities of Seller set forth on the March 31
Balance Sheet in the amounts set forth therein, to the extent not paid,
satisfied or discharged prior to or as of the Closing Date without violation or
breach of the terms thereof;
(b) all liabilities and obligations of Seller not set forth on
the March 31 Balance Sheet and arising in the ordinary course of the Business
after March 31, 2000, to the extent set forth on the Final Closing Balance Sheet
(as defined in Section 2.7 below) in the amounts set forth therein;
(c) all liabilities and obligation of Seller under the
Services Agreement, whenever and however arising; and
(d) to the extent arising after the Closing Date and relating
to the period after the Closing Date, all liabilities and obligations of Seller
under (i) the Contracts listed on Schedule 3.9(a) hereto, (ii) Contracts
existing as of the date hereof that are not required to be listed on Schedule
3.9(a) hereto but that were entered into in the ordinary course of the Business
and (iii) Contracts hereafter entered into by Seller in the ordinary course of
the Business in compliance with Section 5.1 hereof and without violation of any
other term or provision contained herein (collectively, the "Assumed
Contracts"), other than damages, penalties or other
7
<PAGE> 8
like liabilities or obligations arising from or as a result of a breach of any
Assumed Contract by Seller or Seller's failure to satisfy any requirement which
it was required to satisfy on or prior to the Closing, and provided further,
that with respect to any Assumed Contract that is not consistent with the
representations and warranties of Seller contained herein, Buyer shall have no
liabilities or obligations thereunder except to the extent of any benefit
thereunder provided to Buyer.
2.4 Excluded Liabilities. Except for the Assumed Liabilities, Buyer
does not assume or agree to discharge or perform any Liabilities of Seller or
any predecessor or affiliate thereto, it being expressly agreed and understood
that, except for the Assumed Liabilities, Buyer does not agree to assume, nor
shall have any responsibility, liability or obligation for any Liabilities of
Seller or the Members, including the following (collectively, the "Retained
Liabilities"):
(a) any liability or obligation of Seller or any Member based
upon, arising out of or otherwise in respect of the negotiation and preparation
of this Agreement or any of the Schedules or Exhibits hereto, or the
consummation of the transactions contemplated hereby, including without
limitation, any Tax liability so arising;
(b) except as otherwise set forth herein, any liability or
obligation based upon, arising out of or otherwise in respect of, any accounts
payable, trade payables, employee wages, employee benefits, product liability,
product warranty, or any Contract to which Seller is a party;
(c) any liability or obligation of Seller or any Member, or
any consolidated group of which Seller is or has been a member, for any federal,
state, county or local Taxes, or any interest, additions to and/or penalties
thereon, accrued for, applicable to or arising during any period whether prior
to or following the date hereof;
(d) any liability or obligation of Seller or any Member for
any cause of action, claim, demand, breach or violation of any kind or
description, whether arising under any contract, agreement, law, rule or
Regulation, or otherwise, including without limitation, any claim for or
relating to personal injury, malpractice, negligence, fraud, discrimination,
sexual harassment, wrongful termination, property damage, money laundering,
racketeering, conspiracy or any environmental claim or remedial claim;
(e) except as otherwise set forth herein, any liability or
obligation, including any obligation to provide severance, retirement or
post-retirement benefits, arising under any collective bargaining agreement,
union contract, employment agreement or other agreement or understanding of any
kind relating to employment of any employee or group of employees; and
(f) any liability or obligation of Seller to any Member.
2.5 Consideration. Subject to the adjustment set forth below, as the
total consideration (the "Purchase Price") for the Assets to be sold by Seller
to Buyer pursuant hereto, Buyer shall:
(a) at the Closing, pay Seller by wire transfer (to an account
designated by Seller at least five business days prior to the Closing) the sum
of $2,000,000 (the "Closing Cash Amount");
8
<PAGE> 9
(b) subject to the provisions hereof, on the first business
day following the 150th day after the Closing Date (the "Second Payment Date"),
pay Seller by wire transfer (to the account previously designated by Seller or
as the Seller's Representative shall otherwise direct) the sum of $1,090,166
(the "Escrowed Consideration"); and
(c) at the Closing, assume the Assumed Liabilities.
2.6 Escrowed Consideration. (a) The Buyer shall hold the Escrowed
Consideration as collateral security for the obligations of Seller and the
Members pursuant to Articles 9 and 10 hereof, and to facilitate the Purchase
Price adjustments, if any, set forth below. Subject to the Purchase Price
adjustments, if any, set forth below, and provided Seller and the Members have
complied with all of their respective covenants and obligations hereunder, Buyer
shall pay the Escrowed Consideration to Seller in accordance with Section 2.5
(b) above.
(b) On the Second Payment Date, the Seller shall deposit
$500,000 of the Escrowed Consideration (the "Escrow Amount") with Allen D.
Lentz, as Escrow Agent (the "Escrow Agent") in accordance with that certain
Escrow Agreement dated as of the date hereof by and among the Seller and the
Members (the "Escrow Agreement"). The Escrow Amount shall be held in escrow by
the Escrow Agent pursuant to the terms of the Escrow Agreement and shall be
collateral security for the obligations of the Seller and the Members pursuant
to Articles 9 and 10 hereof. During the one year period following the Closing
Date (and thereafter if, and for so long as, the Buyer then has a pending claim
for indemnification hereunder), the Escrow Amount shall not be distributed to
the Seller or any of the Members, nor shall the Escrow Agreement be modified,
amended or terminated, in each case, without the prior written consent of the
Buyer. If on the Second Payment Date the then remaining Balance of the Escrowed
Consideration is less than $500,000, the Seller and the Members shall deposit
such difference with the Escrow Agent.
2.7 Price Adjustment.
(a) As soon as practicable after the Closing, but not later
than 120 days after the Closing, Buyer and Seller's Representative shall jointly
prepare a balance sheet setting forth the Assets and the Assumed Liabilities as
of the Closing Date (the "Closing Balance Sheet") and the Purchase Price
adjustments set forth below. The Closing Balance Sheet shall be prepared (i) in
accordance with GAAP and (ii) on a basis consistent with Schedule 2.7 hereto
(notwithstanding that the provisions of such Schedule may not be in accordance
with GAAP), and all Assets shall be valued at the lower of cost or fair market
value as of the Closing Date. In addition, the Closing Balance Sheet shall
reflect the parties' mutual agreement in respect of the Services Agreement as
provided in Section 5.10 below.
(b) In the event Buyer and Seller's Representative shall
disagree upon any item to be set forth on the Closing Balance Sheet or any
Purchase Price adjustment, Buyer and Seller's Representative shall use their
good faith efforts to resolve such dispute. Failing such resolution,
9
<PAGE> 10
Buyer and Seller's Representative shall submit the dispute for resolution to an
independent accounting firm jointly selected by Buyer and Seller's
Representative. Such firm shall decide such dispute in accordance with the terms
and provisions of this Agreement. The decision of such firm shall be final and
binding and the fees and expenses of such firm shall be apportioned by such firm
between the Buyer and Seller on a basis that is proportionate to the extent to
which such firm's decision conforms to the Buyer's and Seller's Representative's
respective positions. Such Closing Balance Sheet and the Purchase Price
adjustments, as agreed upon by the Buyer and Seller's Representative, or as
determined by the independent accounting firm, are hereinafter referred to as
the "Final Closing Balance Sheet" and the "Final Purchase Price Adjustments,"
respectively.
(c) The Purchase Price will be adjusted as follows:
(i) The Purchase Price will be decreased, dollar for dollar,
by the amount which is the greatest of: (1) the amount by which the Closing Net
Worth (as hereinafter defined) is less than $1,841,354, (2) the amount by which
the Closing Net Working Capital (as hereinafter defined) is less than
$1,736,655, (3) the amount of Excess Liabilities (as hereinafter defined) and
(4) the amount of Current Ratio Excess Liabilities (as hereinafter defined); and
(ii) [deleted]
(d) As used herein, (i) "Closing Net Worth" shall mean the
difference between the Assets (excluding goodwill) and the Assumed Liabilities
as set forth on the Final Closing Balance Sheet, as calculated in accordance
with the provisions of Schedule 2.7 attached hereto, (ii) "Closing Net Working
Capital" shall mean the difference between the Assets (excluding goodwill,
property and equipment) and the Assumed Liabilities as set forth on the Final
Closing Balance Sheet, as calculated in accordance with the provisions of
Schedule 2.7 attached hereto, (iii) "Excess Liabilities" shall mean any
Liability or group of related Liabilities included in the Assumed Liabilities as
set forth on the Final Closing Balance Sheet (other than the Pre-petition
Liabilities), which in the aggregate is in excess of 38 days cost of goods sold
determined on the basis of the 12 months of sales prior to the Closing Date and
calculated in a manner consistent with the calculation set forth on Schedule 2.7
hereto and (iv) "Current Ratio Excess Liabilities" shall mean the amount by
which the Assumed Liabilities set forth on the Final Closing Balance Sheet
exceed the quotient obtained by dividing the Assets set forth on the Final
Closing Balance Sheet (excluding goodwill, property and equipment) by 1.149, as
calculated in accordance with the provisions of Schedule 2.7 attached hereto.
(e) Promptly following the determination of the Final Purchase
Price Adjustments, the Buyer shall deduct from the Escrowed Consideration and
retain for itself the amount, if any, of any decrease in the Purchase Price and
continue to hold the remaining balance in accordance with Section 2.5 (b) above.
If the amount of the decrease in the Purchase Price exceeds the amount of the
Escrowed Consideration, the Buyer shall retain the entire Escrowed Consideration
for itself and the Seller shall promptly pay to the Buyer the amount of such
shortfall.
10
<PAGE> 11
2.8 Allocation of Purchase Price. The parties agree to
allocate the Purchase Price (as adjusted pursuant to Section 2.7) and the
Assumed Liabilities among the respective Assets and Assumed Liabilities in
accordance with an allocation schedule to be prepared by the Buyer, which
allocation schedule shall be prepared on a basis which is consistent with the
Final Closing Balance Sheet and the applicable requirements, including Section
1060, of the Code. The parties will each report the federal, state and local and
other Tax consequences of the purchase and sale contemplated hereby (including
the filing of all applicable Internal Revenue Service forms) in a manner
consistent with such allocation.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller and each Member hereby makes, jointly and severally, as of the
date hereof and as of the Closing Date, the following representations and
warranties to Buyer; provided, however, that for each Member other than the
Officers, such representations are only made to the best of their knowledge.
3.1 Organization; Authorization; Etc.
(a) Seller is a limited liability company, duly organized and
validly existing and in good standing under the laws of the State of Tennessee.
Seller (i) has all requisite power and authority to own all of its properties
and assets and to carry on the Business as it is now being conducted, and (ii)
is in good standing, and is duly licensed, authorized or qualified to transact
business in each jurisdiction in which the ownership or lease of real property
or the conduct of the Business requires it to be so qualified, except where the
failure to be in good standing or to be duly licensed, authorized or qualified
to transact business, would not reasonably be expected to, individually or in
the aggregate, have a Material Adverse Effect. Seller has heretofore delivered
or made available to Buyer complete and correct copies of its organizational
documents as in effect of the date hereof. Each jurisdiction in which Seller is
qualified to do business as a foreign corporation is set forth in Schedule
3.1.(a).
(b) Each of the Members has full power, capacity and authority
to execute and deliver this Agreement and each of the Ancillary Agreements to
which he or she may be a party and to perform his or her obligations hereunder
and thereunder. This Agreement has been duly executed and delivered by and,
assuming the due execution and delivery thereof by Buyer, is (and, upon the
execution and delivery thereof, each of the Ancillary Agreements to which each
Member may be a party will be) the legal, valid and binding obligation of each
of the Members and, is (and will be) enforceable against each of the Members in
accordance with its terms, except that enforceability may be limited by the
effect of (i) bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws relating to or affecting the rights of
creditors or (ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
(c) The execution, delivery and performance by Seller of this
Agreement and
11
<PAGE> 12
each of the Ancillary Agreements to which it may be a party and the consummation
of the transactions contemplated hereby and thereby have been duly authorized by
the Members of Seller, and no additional proceedings (corporate or otherwise) on
the part of any of the Members or Seller are necessary to authorize the
execution, delivery and performance hereof or thereof and the consummation of
the transactions contemplated hereby and thereby. This Agreement has been duly
executed and delivered by and, assuming the due execution and delivery thereof
by Buyer, is (and, upon the execution and delivery thereof, each of the
Ancillary Agreements to which Seller may be a party will be) the legal, valid
and binding obligation of Seller and, is (and will be) enforceable against
Seller in accordance with its terms, except that enforceability may be limited
by the effect of (i) bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws relating to or affecting the rights
of creditors or (ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
(d) Except as set forth in Schedule 3.1(d), the execution and
delivery of this Agreement and the Ancillary Agreements by Seller and the
Members, to the extent each may be a party thereto, and the consummation by
Seller and the Members of the transactions contemplated hereby and thereby will
not (i) violate any provision of the certificate of formation or operating
agreement or similar organizational instrument of Seller, (ii) result in a
violation of any provision of, or constitute a default (with or without notice
or lapse of time) under, or give rise to a right of termination, cancellation or
acceleration of (or entitle any party to accelerate whether after the giving of
notice or lapse of time or both) any obligation under, or result in the
imposition of any lien upon or the creation of a security interest in any of
Seller's assets or properties pursuant to, any agreement (whether written or
oral), contract, commitment, note, bond, debt instrument, mortgage, indenture,
lien, lease agreement or other instrument, or any judgment, injunction, order or
decree to which Seller or any of the Members is a party or by which any of them
or their respective properties are or is bound, or (iii) violate or conflict
with any United States (federal, state or local) or foreign (federal, provincial
or local) law, statute, ordinance, rule or regulation ("Law") or any Court Order
applicable to Seller or any of the Members or their respective properties.
(e) Except as set forth in Schedule 3.1(e), no consent,
approval, order or authorization of, or registration, declaration or filing with
(i) any governmental authority or (ii) any individual, corporation or other
entity (including any holder of Seller's securities) is required by or with
respect to Seller or any Member in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby.
3.2 Capitalization; Structure; No Investments.
(a) The Members own all of the membership and equity interests
in and of the Seller, and there are no securities of Seller convertible into or
exchangeable for membership or equity interests or voting securities of Seller
or any options, warrants or other rights to acquire from Seller, or obligations
of Seller to issue, any membership or equity interests, voting securities or
securities convertible into or exchangeable for membership or equity interests
12
<PAGE> 13
or voting securities of Seller. Schedule 3.2(a) sets forth the respective
membership interests of each Member.
(b) Seller has no subsidiaries nor any equity investment of
any kind in any corporation, partnership, limited liability company, joint
venture or other legal entity.
3.3 Financial Statements. Schedule 3.3A sets forth a true, correct and
complete copy of the Financial Statements. The Financial Statements were
prepared in accordance with (i) GAAP consistently applied for all periods
presented (except as otherwise expressly set forth in Schedule 3.3A and
identified as an exception thereto) and (ii) the books of account and other
financial records of the Seller. The Financial Statements present fairly the
financial condition, Members' equity and results of operations of Seller as at
the respective dates of and for the periods referred to therein. Schedule 3.3B
sets forth a true, correct and complete copy of the Pre-petition Liabilities and
all of such Liabilities are included in the March 31 Balance Sheet.
3.4 Title to Properties; Encumbrances.
(a) Seller has good, valid and marketable title to, or holds
by valid and existing lease or license, free and clear of all Encumbrances, all
of the Assets and all other real or personal property set forth on the March 31,
2000 Balance Sheet or currently used by it in, or reasonably necessary to enable
it to carry on, the Business as presently conducted, except for Permitted
Encumbrances and except for properties disposed of in the ordinary course of
business consistent with past practice.
(b) The Assets comprise all assets and services required for
the continued conduct of the Business as now being conducted. The Assets, taken
as a whole, constitute all the properties and assets relating to or used or held
for use in connection with the Business during the past twelve months (except
Inventory sold, cash disposed of, accounts receivable collected, prepaid
expenses realized, Contracts fully performed, properties or assets replaced by
equivalent or superior properties or assets, in each case in the ordinary course
of business, and the Excluded Assets). Except for Excluded Assets, there are no
assets or properties used in the operation of the Business and owned by any
Person other than the Seller. The Assets are in all material respects adequate
for the purposes for which such assets are currently used or are held for use,
and are in reasonably good repair and operating condition (subject to normal
wear and tear) and, to the knowledge of the Seller, there are no facts or
conditions affecting the Assets which could, individually or in the aggregate,
interfere in any material respect with the use, occupancy or operation thereof
as currently used, occupied or operated, or their adequacy for such use.
3.5 Intellectual Property.
(a) Seller owns, or has a valid license to use, all of the
Intellectual Property, if any, which are currently used by it in, and are
reasonably necessary to enable it to carry on, its business as presently
conducted. Schedule 3.5 lists (i) all material Intellectual Property, including
jurisdictions in which each such material Intellectual Property right has been
issued or registered, and (ii) all material licenses, sublicenses and other
agreements, pursuant to which Seller has
13
<PAGE> 14
received or given a right to use such Intellectual Property right from or to a
third party.
(b) Except as disclosed in Schedule 3.5, as to all Intellectual
Property set forth therein: (i) such Intellectual Property is owned, licensed or
leased by the Seller, free and clear of any Encumbrance, (ii) to the knowledge
of the Seller, no Action has been made or asserted or are pending against the
Seller based upon or challenging or seeking to deny or restrict the use by the
Seller of any of such Intellectual Property; (iii) to the knowledge of the
Seller, no Person is using any patents, copyrights, trademarks, service marks,
trade names, trade secrets or similar property that infringe upon such
Intellectual Property or upon the rights of the Seller therein; (iv) the Seller
has not granted any license or other right currently outstanding to any other
Person WITH respect to such Intellectual Property; and (v) the consummation of
the transactions contemplated by this Agreement will not result in the
termination or material impairment of any of such Intellectual Property.
(c) The Seller has delivered to the Buyer correct and complete
copies of all licenses for all Intellectual Property set forth in Schedule 3.5
as to which the Seller is a licensor or licensee. Each such license is legal,
valid, binding, enforceable and in full force and effect in all material
respects with respect to the Seller and, to the knowledge of the Seller, with
respect to all other parties thereto and is the entire agreement between the
respective licenser and licensee with respect to such license and no Default
currently exists thereunder.
3.6 Labor Matters. Except as set forth in Schedule 3.6, as of the date
hereof, (i) Seller is not involved in or, to Seller's knowledge, threatened with
any labor dispute, arbitration, lawsuit or administrative proceeding relating to
labor matters involving the employees of Seller (excluding routine workers'
compensation claims) that would reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect on Seller; (ii) Seller is not a
party to, bound by, or charged with any violation of, any collective bargaining
agreement, contract or other understanding with a labor union or labor
organization; (iii) Seller is not engaged in any unfair labor practices, or been
charged or threatened with any charges of unfair labor practices; (iv) to the
knowledge of Seller, there is no activity involving any labor union or similar
organization of Seller seeking representation of any group of employees of
Seller, to certify a collective bargaining unit or engaging in any other
organizational activity and there are no strikes, shutdowns, work stoppages,
lockouts, or threats thereof, by or with respect to any group of employees of
Seller; (v) no executive or key employee of Seller has indicated that he or she
is considering terminating his or her employment; (vi) no employee or former
employee of Seller is entitled to any severance payment or similar payment,
either by statute or by contract, upon the termination of his or her employment;
(vii) Seller is currently in compliance with all applicable laws, rules and
regulations relating to the employment of labor, including those related to
wages, hours, collective bargaining and the payment and withholding of Taxes and
other sums as required by the appropriate Governmental Authority and has
withheld and paid to the appropriate Governmental Authority or is holding for
payment not yet due to such Governmental Authority all amounts required to be
withheld from such employees of Seller and is not liable for any arrears of
wages, Taxes, penalties or other sums for failure to comply with any of the
foregoing; (viii) Seller has paid in full to all employees of Seller or
adequately accrued for in accordance with GAAP consistently applied all wages,
salaries, commissions, bonuses (to the extent declared or earned), benefits and
other compensation due to or on behalf of such
14
<PAGE> 15
employees; (ix) there is no material claim with respect to payment of wages,
salary or overtime pay that has been asserted or is now pending or, to the
knowledge of the Seller, threatened before any Governmental Authority with
respect to any persons currently or formerly employed by Seller; and (x) there
is no charge of discrimination or unlawful conduct in employment or employment
practices, for any reason, including, without limitation, age, gender, race,
religion or other legally protected category, or sexual harassment, which has
been asserted in the past 12 months or is now pending or, to the knowledge of
the Seller, threatened in writing.
3.7 Customers. Schedule 3.7 hereto sets forth a list of Seller's ten
largest customers in order of dollar volume of sales for the seven month period
ending March 31, 2000, showing the approximate total sales in dollars by Seller
to each such customer during each such period. To the best of its knowledge,
Seller is not engaged in any disputes with any such customers except for minor
bill adjustments and similar disputes in the ordinary course of business and
Seller has no knowledge of any facts that are reasonably likely to result in a
material adverse change in the business relationship of Seller with such
customers, nor has Seller received any written notice to the effect that any
material adverse change may occur in the business relationship of Seller with
any such customers.
3.8 Compliance with Regulations. Except as set forth in Schedule 3.8,
to Seller's knowledge, the conduct of the business of Seller complies in all
material respects with, and Seller is not currently in violation or breach of,
all applicable Regulations and all Court Orders applicable thereto.
3.9 Material Contracts.
(a) Schedule 3.9(a) identifies each of the following Contracts
to which Seller is a party or otherwise is bound:
(i) all Contracts evidencing indebtedness for money borrowed,
including guarantees;
(ii) all Contracts relating to employment, compensation of or
benefits for officers, employees or consultants of Seller;
(iii) all noncancellable Contracts for the purchase or supply
of materials, supplies, services, merchandise or equipment involving the future
payment to, or sale or provision of goods or services by, Seller of more than
$10,000;
(iv) any Contract not entered into in the ordinary course of
the Business of Seller;
(v) any Contract containing restrictions on the operations of
Seller or any restrictions on its ability to compete in any geographic region or
in any line of business;
(vi) any lease of real property and all personal property
leases calling for annual lease payments after the date hereof in excess of
$10,000;
15
<PAGE> 16
(vii) all broker, distributor, dealer, manufacturer's
representative, franchise, agency, consignment, sales promotion, marketing and
advertising Contracts;
(viii) all Contracts with any Governmental Authority;
(ix) all Contracts pursuant to which Seller is appointed or
designated as the exclusive distributor of any product or services;
(x) all Contracts between the Seller and any Member or any
Affiliate of any Member, to the extent such Contract will remain in force and
effect following the Closing hereunder; and
(xi) each and every other Contract which is material to the
financial condition, earnings, operations or business of Seller.
The Contracts identified in Schedule 3.9(a) are collectively
referred to herein as the " Material Contracts".
(b) Except as expressly set forth and identified in Schedule
3.9(a):
(i) Seller has delivered to Buyer true, correct and complete
copies of all Material Contracts;
(ii) Neither the execution, delivery and performance of this
Agreement or the Ancillary Agreements nor the consummation of the transactions
contemplated hereby or thereby will conflict in any respect with or result in a
breach of, or give rise to a right of termination of, or accelerate the
performance required by, any terms of any Material Contracts or constitute a
Default thereunder; and
(iii) Each of the Material Contracts is valid and existing in
full force and effect; Seller has, in all material respects, performed all
obligations required to be performed by it under and is not in Default in any
material respect under, in material conflict in any respect with, or in material
violation in any respect of, any of the Material Contracts; and Seller has not
received notice of noncompliance or alleged noncompliance with any of the
Material Contracts; to the knowledge of the Seller, each other party to any
Material Contract has, in all material respects, performed all obligations
required to be performed by it under, and is not in Default in any material
respect under, in material conflict in any respect with, or in material
violation in any respect of, any of the Material Contracts.
3.10 Taxes. Seller has properly prepared and filed all Tax returns
required to be filed by it in connection with its business, operations and
assets and all Taxes due thereunder have been timely paid. True and complete
copies of all such Tax returns for Seller have been delivered to the Buyer.
Except as set forth on Schedule 3.10, Seller does not have any unpaid liability
for any Taxes whatsoever that arose or otherwise was incurred in connection with
the Business. No
16
<PAGE> 17
proposed Taxes, additions to Tax, interest or penalties have been asserted or
are pending against Seller and no such matters are under discussion with the
applicable Taxing authorities. There are no agreements, waivers or other
arrangements providing for extensions of time with respect to the assessment or
collection of any unpaid Tax against Seller. Seller has withheld or otherwise
collected all Taxes or amounts it was required to withhold or collect under any
applicable law, including, without limitation any amounts required to be
withheld or collected with respect to employee income Tax withholding, social
security, unemployment compensation, sales or use Taxes or workmen's
compensation, and all such amounts have been timely remitted to the proper
authorities.
3.11 Employee Benefit Matters.
(a) Except as set forth in Schedule 3.11, Seller does not
maintain, sponsor or contribute to any plans for pension, profit-sharing,
deferred compensation, severance pay, bonuses, stock options, stock purchases,
or any other retirement or deferred benefit, or for any health, accident or
other welfare plan, or any other employee or retired employee benefits or
incentive plan, program, contract, understanding or arrangement in which any of
Seller's employees, former employees, retired employees or consultants (or
beneficiaries of any of the foregoing) is entitled to participate. The plans,
programs, contracts, understandings and arrangements listed in Schedule 3.11 are
hereinafter referred to as the "Employee Plans." Seller has supplied Buyer with
complete and accurate copies of each such Employee Plan.
(b) None of the Employee Plans is a Multiemployer Plan (within
the meaning of Section 3(37) of ERISA) or a single employer pension plan (within
the meaning of Section 4001(a)(15) of ERISA) for which Seller could incur
liability under Section 4063 or 4064 of ERISA (a "Multiple Employer Plan"). None
of the Employee Plans provides for the payment of separation, severance,
termination or similar type benefits to any Person or obligates Seller to pay
separation, severance, termination or similar type benefits solely as a result
of any transaction contemplated by this Agreement or as a result of a "change in
control", within the meaning of such term under Section 280G of the Code.
(c) Each Employee Plan is operated in all material respects in
accordance with the requirements of all Regulations, including, without
limitation, ERISA and the Code, and, to the knowledge of the Seller, all persons
who participate in the operation of such Employee Plans and all Employee Plan
"fiduciaries" (within the meaning of Section 3(21) of ERISA) have acted in all
material respects in accordance with the provisions of all Regulations,
including, without limitation, ERISA and the Code. Seller has performed all
material obligations required to be performed by it under, is not in any
material respect in default under or in violation of, and has no knowledge of
any default or violation by any party to any Employee Plan. No legal action,
suit or claim is pending or, to the knowledge of the Seller, threatened with
respect to any Employee Plan (other than claims for benefits in the ordinary
course) and, to the knowledge of the Seller, no fact or event exists that could
give rise to any such action, suit or claim.
(d) To the best of Seller's knowledge, each Employee Plan which
is intended to be qualified under Section 401(a) of the Code or Section 401(k)
of the Code has received a favorable determination letter from the IRS that it
is so qualified and each trust established in
17
<PAGE> 18
connection with any Employee Plan which is intended to be exempt from federal
income Taxation under Section 501(a) of the Code is so exempt and, to the
knowledge of the Seller, no fact or event has occurred since the date of such
determination letter from the IRS to adversely affect the qualified status of
any such Employee Plan or the exempt status of any such trust. To the best of
Seller's knowledge, each trust maintained or contributed to by Seller which is
intended to be qualified as a voluntary employees' beneficiary association and
which is intended to be exempt from federal income Taxation under Section
501(c)(9) of the Code has received a favorable determination letter from the IRS
that it is so qualified and so exempt, and, to the knowledge of the Seller, no
fact or event has occurred since the date of such determination by the IRS to
adversely affect such qualified or exempt status.
(e) To the knowledge of the Seller, there has been no prohibited
transaction (within the meaning of Section 406 of ERISA or Section 4975 of the
Code) with respect to any Employee Plan. To the knowledge of the Seller, the
Seller has not incurred any liability for any excise Tax arising under Section
4971, 4972, 4980 or 4980B of the Code and, to the knowledge of the Seller, no
fact or event exists which could give rise to any such liability. The Seller has
not incurred any material liability under, arising out of or by operation of
Title IV of ERISA (other than liability for premiums to the Pension Benefit
Guaranty Corporation arising in the ordinary course), including, without
limitation, any material liability in connection with the termination or
reorganization of any employee benefit plan subject to Title IV of ERISA or the
withdrawal from any Multiemployer Plan or Multiple Employer Plan; and, to the
knowledge of the Seller, no fact or event exists which could give rise to any
such liability. No complete or partial termination has occurred within the five
years preceding the date hereof with respect to any Employee Plan subject to
Title IV of ERISA. No reportable event (within the meaning of Section 4043 of
ERISA) has occurred or is expected to occur with respect to any Employee Plan
subject to Title IV of ERISA. No Employee Plan had an accumulated funding
deficiency (within the meaning of Section 302 of ERISA or Section 412 of the
Code), whether or not waived, as of the most recently ended plan year of such
Employee Plan. None of the assets of Seller is the subject of any lien arising
under Section 302(f) of ERISA or Section 412(n) of the Code; Seller has not been
required to post any security under Section 307 of ERISA or Section 401(a)(29)
of the Code; and, to the knowledge of the Seller, no fact or event exists which
could give rise to any such lien or requirement to post any such security.
(f) All employer and employee contributions, premiums or
payments required to be made with respect to any Employee Plan have been made on
or before their due dates. All such contributions have been fully deducted for
income Tax purposes and no such deduction has been challenged or disallowed by
any Governmental Authority and, to the knowledge of the Seller, no fact or event
exists which could give rise to any such challenge or disallowance. As of the
date hereof and as of the Closing Date, no Employee Plan which is subject to
Title IV of ERISA has or will have an "unfunded benefit liability" (within the
meaning of Section 4001(a)(18) of ERISA).
3.12 No Material Adverse Change. Except as set forth in Schedule 3.12,
since March 31, 2000, there has not been any event, occurrence or circumstance
that has had, individually or in the aggregate, a Material Adverse Effect on
Seller, or any event, occurrence or circumstance that would reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect on
Seller.
18
<PAGE> 19
3.13 Brokers, Finders, Etc. Neither Seller nor any of the Members has
employed, or is subject to any claim of, any broker, finder, or similar
consultant or intermediary in connection with the transactions contemplated by
this Agreement which might be entitled to a fee or commission upon the
consummation of the transactions contemplated hereby.
3.14 Inventory. Except as set forth in Schedule 3.14, all of Seller's
Inventory is located at the distribution center described in the Services
Agreement. Seller has good and marketable title to all of its Inventory, free
and clear of all Encumbrances. Except as set forth in Schedule 3.14, the
Inventory does not include any items held on consignment for others, nor is any
Inventory of Seller held by others on consignment and Seller is not under any
obligation or liability with respect to accepting returns of Inventory or
merchandise in the possession of its customers other than in the ordinary course
of the Business consistent with past practice. All Inventory is of a quantity
and quality which is usable in the ordinary course of the Business consistent
with past practice and within a reasonable period of time and is in good and
merchantable condition in all material respects.
3.15 Bank Accounts, Etc. Schedule 3.15 sets forth a list of all bank
accounts, safe deposit boxes, and lock boxes of Seller including, with respect
to each such account and lock box, identification of all authorized signatories.
3.16 Insurance. Schedule 3.16 sets forth a list of all general
liability, product liability, fire, casualty, motor vehicle and other insurance
or bonding maintained by or on behalf of Seller or any of its respective
employees as of the date hereof. All requirements and provisions of all such
policies are being substantially complied with. No notice of cancellation has
been given to or received by Seller with respect to any such insurance policy.
To the knowledge of Seller, no such policies are or will become subject to an
assessment due to any retroactive rate or audit adjustments or coinsurance
arrangements, other than under worker's compensation insurance policies in the
ordinary course of business.
3.17 Recent Operations. Since March 31, 2000, the Business has been
conducted in all material respects in the ordinary course and consistent with
past practice, and, except as set forth in Schedule 3.17, since March 31, 2000,
the Seller has not:
(a) permitted or allowed any of its assets or properties
(whether tangible or intangible) to be subjected to any Encumbrance, other than
Encumbrances that will be released at or prior to the Closing;
(b) amended, terminated, canceled or compromised any material
claims or waived any other rights of value in excess of $10,000;
(c) sold, transferred, leased, subleased, licensed or
otherwise disposed of any properties or assets, real, personal or mixed
(including, without limitation, leasehold interests and intangible property), of
or relating to the Business in excess of $10,000, other than the sale of
19
<PAGE> 20
Inventory and used machinery and equipment in the ordinary course of the
Business consistent with past practice;
(d) disclosed to a third party any material Intellectual
Property to which, or under which, it has any right or license and which is
confidential to the Business or permitted to lapse any material Intellectual
Property (or any registration thereof or any application relating thereto), to
which, or under which, it has any right or license;
(e) (i) granted or proposed any increase, or announced any
increase, in the wages, salaries, compensation, bonuses, incentives, pension or
other benefits payable by it to any of its employees, other than aggregate
increases which do not exceed $250,000, or (ii) established or increased or
promised or proposed to increase any benefits under any Employee Plan, in either
case except as required by law and except for ordinary increases consistent with
the past practice of the Business;
(f) made any change in any method of accounting or accounting
practice or policy, other than such changes required by GAAP;
(g) made or changed any express or deemed election or settled
or compromised any liability with respect to Taxes or prepaid any Taxes, except
in the ordinary course of the Business consistent with past practice, or as may
be required by any applicable law, rule or regulation;
(h) failed to pay any material amount to any creditor which
may cause or result in a Material Adverse Effect upon the Business;
(i) redeemed any of its membership interests or declared, made
or paid any dividends or distributions (whether in cash, securities or other
property);
(j) made any capital expenditure or commitment for any capital
expenditure in excess of $50,000 individually or $250,000 in the aggregate;
(k) merged with, entered into a consolidation with or acquired
(by purchase, merger, consolidation, stock acquisition or otherwise) a
substantial portion of the assets or business of any other Person or any
division or line of business thereof or acquired any material assets other than
in the ordinary course of the Business consistent with past practice;
(l) entered into any Contract with any Member or any Affiliate
thereof;
(m) made any loan to, guaranteed any Indebtedness of or
otherwise incurred any Indebtedness on behalf of, any Person in excess of
$10,000 which remains outstanding;
(n) materially amended, modified or consented to the
termination of any Material Contract or any of its rights therein;
20
<PAGE> 21
(o) suffered any casualty loss or damage with respect to any
of its assets, plant, property or equipment which would have a replacement cost
of more than $100,000, whether or not such losses or damage shall have been
covered by insurance; or
(n) agreed, whether in writing or otherwise, to take any of
the actions specified in this Section or granted any options to purchase, rights
of first refusal, rights of first offer or any other similar rights with respect
to any of the actions specified in this Section, except as expressly
contemplated by this Agreement.
3.18 Suppliers. Listed in Schedule 3.18 are the names and addresses of
all the suppliers from whom the Seller ordered materials, supplies, merchandise
and other goods for the Business and to which Seller paid, or is obligated to
pay, an aggregate purchase price of $25,000 or more during the seven month
period ended on March 31, 2000 and the amount for which each such supplier
invoiced Seller during such period. Except as disclosed in Schedule 3.18, to
Seller's knowledge, none of the suppliers listed in Schedule 3.18 will not sell
materials, supplies, merchandise and other goods to the Buyer at any time after
the Closing Date on the same or similar terms and conditions as those applicable
to Seller, subject to general price increases.
3.19 Disclosure. No representation or warranty made by Seller in this
Agreement and no statement contained in any Schedule delivered by or on behalf
of Seller pursuant to this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state any material fact
necessary to make the statements contained herein or therein not misleading.
3.20 Litigation. Except as set forth on Schedule 3.20, there is no
Action pending or, to Seller's knowledge, threatened against or affecting
Seller, nor is there any judgment, decree, injunction, ruling or order of any
Governmental Authority outstanding against Seller.
3.21 Absence of Undisclosed Liabilities. Seller has no Liabilities,
except for Liabilities which (i) are disclosed, accrued or reserved against on
the Financial Statements (including the financial statement notes thereto), (ii)
were incurred after March 31, 2000 in the ordinary course of the Business and
consistent with past practice and without violation or breach of any Material
Contract or Regulation, (iii) are disclosed in Schedule 3.21 and expressly
identified therein as a Liability, or (iv) arise under the Contracts in
accordance with the terms thereof (other than Liabilities arising from any
breach or violation by Seller of any of the terms or provisions thereof) .
3.22 Environmental Laws. To Seller's knowledge, Seller is currently,
and has been in the past, in compliance in all material respects, with all
applicable laws, rules, regulations, common law, ordinances, decrees, orders,
permits, and other binding legal requirements relating to health, safety,
pollution or protection of the environment ("Environmental Laws") and there are
no outstanding allegations or claims by any person or Governmental Authority
concerning Seller's compliance with Environmental Laws. To the knowledge of
Seller, there are no asbestos containing materials or underground storage tanks
located on any properties occupied by Seller
21
<PAGE> 22
3.23 Manufacturer Transactions. Schedule 3.23 hereto sets forth a true,
correct and complete description of all vendor rebates, refunds, coop
arrangements and other promotional programs offered by manufacturers or vendors
in which Seller is a participant and under which Seller currently expects to
receive, or be entitled to receive, payments or credits of $50,000 or more (for
any single manufacturer or vendor) for the seven month period ending March 31,
2000.
3.24 Accounts Receivable. To the best of Seller's knowledge, all of the
accounts and notes receivable of Seller set forth on the Financial Statements
(net of the applicable reserves reflected therein): (i) represent sales actually
made in the ordinary course of business for goods or services delivered or
rendered to unaffiliated customers in bona fide arm's length transactions, (ii)
except as set forth on Schedule 3.24, constitute valid claims, and (iii) to
Seller's knowledge, are good and collectible, in each case at the aggregate
recorded amounts thereof without valid right of recourse, defense, deduction,
return of goods, counterclaim, or offset and, as of the dates thereof, have been
or will be collected in the ordinary course of business and consistent with past
experience.
3.25 Restrictions on Business Activities. Except for this Agreement,
there is no agreement, judgment, injunction, order or decree binding upon Seller
which has or could reasonably be expected to have (after giving effect to the
consummation of the transactions contemplated hereby) the effect of prohibiting
or impairing the Business.
3.26 Real Property. The Seller does not own any real property.
3.27 Illegal Payments. To the knowledge of the Seller, neither Seller
nor any of its officers or agents has made any illegal payments to, or provided
any illegal benefit or inducement for, any supplier, customer or other person,
in an attempt to influence any such person to take or to refrain from taking any
action relating to Seller.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller and the Members that the
statements contained in this Article 4 are true and correct as of the date
hereof and as of the Closing Date.
4.1 Organization; Authorization; Etc.
(a) Buyer is a corporation, duly organized and validly
existing and in good standing under the laws of the State of Delaware. Buyer (i)
has all requisite power and authority to own all of its properties and assets
and to carry on its business as it is now being conducted, and (ii) is in good
standing, and is duly licensed, authorized or qualified to transact business in
each jurisdiction in which the ownership or lease of real property or the
conduct of its business requires it to be so qualified, except where the failure
to be in good standing or to be duly licensed, authorized or qualified to
transact business, would not reasonably be expected to,
22
<PAGE> 23
individually or in the aggregate, have a Material Adverse Effect. Buyer is an
indirect wholly-owned subsidiary of Daisytek International Corporation.
(b) The execution, delivery and performance by Buyer of this
Agreement and each of the Ancillary Agreements to which it may be a party and
the consummation of the transactions contemplated hereby and thereby have been
duly authorized by the Board of Directors and stockholders of Buyer, and no
additional proceedings (corporate or otherwise) on the part of Buyer are
necessary to authorize the execution, delivery and performance hereof or thereof
and the consummation of the transactions contemplated hereby and thereby. This
Agreement has been duly executed and delivered by and, assuming the due
execution and delivery thereof by Seller, is (and, upon the execution and
delivery thereof, each of the Ancillary Agreements to which Buyer may be a party
will be) the legal, valid and binding obligation of Buyer and, is (and will be)
enforceable against Buyer in accordance with its terms, except that
enforceability may be limited by the effect of (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws relating
to or affecting the rights of creditors or (ii) general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or in
equity).
(c) The execution and delivery of this Agreement and the
Ancillary Agreements by Buyer, and the consummation by Buyer of the transactions
contemplated hereby and thereby will not (i) violate any provision of the
certificate of incorporation or bylaws or similar organizational instrument of
Buyer, (ii) result in a violation of any provision of, or constitute a default
(with or without notice or lapse of time) under, or give rise to a right of
termination, cancellation or acceleration of (or entitle any party to accelerate
whether after the giving of notice or lapse of time or both) any obligation
under, or result in the imposition of any lien upon or the creation of a
security interest in any of Buyer's assets or properties pursuant to, any
agreement (whether written or oral), contract, commitment, note, bond, debt
instrument, mortgage, indenture, lien, lease agreement or other instrument, or
any judgment, injunction, order or decree to which Buyer is a party or by which
it or its properties are or is bound, or (iii) violate or conflict with any
Regulation or any Court Order applicable to Buyer or its properties.
(d) No consent, approval, order or authorization of, or
registration, declaration or filing with (i) any governmental authority or (ii)
any individual, corporation or other entity (including any holder of Buyer's
securities) is required by or with respect to Buyer in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
4.2 Litigation; Orders. There is no Action pending nor, to the
knowledge of Buyer, is any Action threatened against or involving Buyer or
affecting any properties or assets of Buyer, which, in any such case, could
reasonably be expected to (a) materially prevent or delay the ability of Buyer
to consummate the transactions contemplated hereby, or (b) individually or in
the aggregate, have a Material Adverse Effect on Buyer. Buyer is not subject to
any Order which could reasonably be expected to materially prevent or delay the
ability of Buyer to consummate the transactions contemplated hereby or,
individually or in the aggregate, have a Material Adverse Effect on Buyer.
23
<PAGE> 24
4.3 Brokers, Finders, Etc. Buyer has not employed, nor is subject to
any claim of, any broker, finder, or similar consultant or intermediary in
connection with the transactions contemplated by this Agreement which might be
entitled to a fee or commission from Buyer upon the consummation of the
transactions contemplated hereby.
4.4 Financial Ability. Buyer has the financial ability to consummate
the transactions contemplated by this Agreement and the Ancillary Agreements to
which it may be a party.
4.5 Disclosure. No representation or warranty made by the Buyer in this
Agreement contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact necessary to make the statements
contained herein or therein not misleading.
ARTICLE 5
ACTIONS BY SELLER AND BUYER PRIOR TO THE CLOSING
Seller and Buyer, as applicable, covenant and agree, and the Officers
covenant and agree to cause the Seller, to comply with the following for the
period from the date hereof through the Closing Date:
5.1 Conduct of Business. Seller shall, except as contemplated by this
Agreement, or as consented to by Buyer in writing, operate the Business in the
ordinary course of business and in accordance with past practice and will not
take any action inconsistent with this Agreement, the Ancillary Agreements or
the consummation of the Closing. Without limiting the generality of the
foregoing, Seller shall not, except as specifically contemplated by this
Agreement or as consented to by Buyer in writing:
(a) other than in the ordinary course of the Business,
consistent with past practice, incur any indebtedness for borrowed money, or
assume, guarantee, endorse (other than endorsements for deposit or collection in
the ordinary course of business), or otherwise become responsible for
obligations of any other Person;
(b) issue or commit to issue any membership interests or any
other securities or any securities convertible into membership interests or any
other securities;
(c) except as set forth in Schedule 5.1 (c), pay or incur any
obligation to pay any dividend or distribution in respect if any membership
interest or redeem or incur any obligation to redeem any membership interest;
(d) other than in the ordinary course of the Business,
consistent with past practice, mortgage, pledge or otherwise encumber any Assets
(except for Permitted Encumbrances) or sell, transfer, license or otherwise
dispose of any Assets;
(e) cancel, release or assign any indebtedness owed to it or
any claims or rights held by it;
24
<PAGE> 25
(f) make any investment of a capital nature either by purchase
of stock or securities, contributions to capital, property transfer or
otherwise, or by the purchase of any property or assets of any other Person;
(g) modify, amend, supplement or terminate any Material
Contract;
(h) enter into or modify any employment Contract (except for
Contracts which are cancelable by Seller without premium, penalty or severance
and upon not more than 30 days prior notice), (ii) pay any compensation to or
for any employee, officer or director other than pursuant to existing employment
arrangements, (iii) pay or agree to pay any bonus, incentive compensation,
service award or other like benefit or (iv) enter into or modify any other
Employee Plan;
(i) enter into or modify any Contract with any Member or any
Affiliate of any Member;
(j) make any change in any method of accounting or accounting
practice;
(k) fail to materially comply with all Regulations and Court
Orders applicable to the Assets and the Business consistent with past practices;
(l) fail to use its commercially reasonable efforts to (i)
maintain the Business, (ii) retain the services of its employees so that such
employees will remain available to Buyer on and after the Closing Date (provided
that Seller shall not be required by this Section 5.1(l) to enter into any
employment agreement with any Employee), (iii) maintain existing relationships
with suppliers and customers and others having business dealings with Seller and
(iv) otherwise to preserve the goodwill of the Business so that such
relationships and goodwill will be preserved on and after the Closing Date; or
(m) do any other act which would cause any representation or
warranty of Seller in this Agreement to be or become untrue in any material
respect or that is not in the ordinary course of business consistent with past
practice.
5.2 Full Access.
(a) Seller shall provide the Buyer and its officers,
directors, employees, attorneys, accountants, consultants, agents and other
representatives free and full access to, and the right to review and make
extracts from, inspect and appraise during normal business hours, Seller's
premises, properties, assets, records, Contracts and other documents,
instruments and agreements and consult with the officers, directors, employees,
attorneys, accountants, customers, suppliers, vendors, consultants, agents and
other representatives of the Seller for the purpose of conducting such
investigation and appraisal of the Business and the respective operations,
assets, properties and
25
<PAGE> 26
condition (financial or otherwise) of Seller as Buyer
shall desire to conduct, provided that such investigation shall not unreasonably
interfere with the Seller's business operations.
(b) The Buyer agrees to comply with and be bound by the terms
of that certain Confidentiality Agreement dated February 4, 2000 which shall
remain in full force and effect in accordance with its terms. In addition,
unless the Closing shall occur prior thereto, neither the Buyer nor any
Affiliate thereof shall, for a period of one year from the date hereof, recruit
or solicit to employ any person currently employed by the Seller.
5.3 Maintenance of Insurance. The Seller shall maintain in full force
and effect and renew at their respective expiration dates all of the current
insurance policies and binders covering the Business.
5.4 Standstill. Seller and the Officers shall neither discuss nor
negotiate with nor enter into any letter of intent or agreement with any Person
(other than the Buyer and its respective Affiliates, agents and representatives)
with respect to any direct or indirect sale or disposition of the Assets or any
direct or indirect sale or disposition of substantially all of the Business or
any material part thereof.
5.5 Authorizations, Notices and Consents.
(a) Each party will use its reasonable best efforts to obtain
all authorizations, consents, orders and approvals of all Governmental
Authorities and officials that may be or become necessary for his or its
execution and delivery of, and the performance of its obligations pursuant to,
this Agreement and the Ancillary Agreements and will cooperate fully with each
other party hereto in promptly seeking to obtain all such authorizations,
consents, orders and approvals. Each party hereto, to the extent required
thereunder, agrees to make the appropriate filing required under the HSR Act
with respect to the transactions contemplated by this Agreement as promptly as
possible following the execution and delivery hereof and to supply promptly to
the appropriate Governmental Authorities any additional information and
documentary material that may be lawfully requested pursuant to the HSR Act.
(b) Each party hereto shall promptly give such notices to
third parties, and use its reasonable best efforts to obtain such third party
consents and estoppel certificates, as it may be required to deliver hereunder
in order to consummate the transactions contemplated herein, including consents
to the assignment of all Material Contracts, and each party hereto shall
cooperate with the other as may be necessary in giving such notices or obtaining
such consents or estoppels, provided, however, no party shall have any
obligation to give any guaranty or other material consideration, or to consent
to any change, modification or amendment to any Material Contract or any other
material agreement, lease, license or other instrument, in connection with the
obtaining of any consent or estoppel.
5.6 Notice of Developments. Prior to the Closing:
(a) The Seller shall give prompt notice to the Buyer of (i)
any circumstance, change in, or effect on the Business which has a Material
Adverse Effect, (ii) any material
26
<PAGE> 27
development affecting the ability of the Seller to consummate the transactions
contemplated by this Agreement and (iii) all events, circumstances, facts and
occurrences arising subsequent to the date hereof which would result in any
breach of a representation or warranty or covenant of the Seller in this
Agreement or which would have the effect of making any representation or
warranty of the Seller in this Agreement false or misleading in any respect.
(b) The Buyer shall give prompt notice to the Seller's
Representative of (i) any material development affecting the ability of Buyer to
consummate the transactions contemplated by this Agreement and (ii) all events,
circumstances, facts and occurrences arising subsequent to the date hereof which
would result in any breach of a representation or warranty or covenant of the
Buyer in this Agreement or which would have the effect of making any
representation or warranty of the Buyer in this Agreement false or misleading in
any respect.
(c) Any disclosure made pursuant to the preceding paragraphs
(a) or (b) shall not be deemed to cure any breach of a representation, warranty,
covenant or agreement or to satisfy any condition.
5.7 Further Assurances. Upon the terms and subject to the conditions
contained herein, the parties agree, in each case both before and after the
Closing, (i) to use all reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement and the Ancillary Agreements, (ii) to execute any documents,
instruments or conveyances of any kind which may be reasonably necessary or
advisable to carry out any of the transactions contemplated hereunder and
thereunder and (iii) to cooperate with each other in connection with the
foregoing.
5.8. Liability for Transfer Taxes. The Seller shall be responsible for
the timely payment of, and shall indemnify and hold harmless the Buyer against,
all sales (including, without limitation, bulk sales), use, value added,
documentary, stamp, gross receipts, registration, transfer, conveyance, excise,
recording, license and other similar Taxes and fees ("Transfer Taxes"), arising
out of or in connection with or attributable to the transactions effected
pursuant to this Agreement. The Seller shall prepare and timely file all Tax
returns required to filed in respect of Transfer Taxes (including, without
limitation, all notices required to be given with respect to bulk sales Taxes),
provided that the Buyer shall be permitted to prepare any such Tax returns that
are the primary responsibility of the Buyer under applicable law.
5.9. Certificates of Tax Authorities. On or before the Closing Date,
the Seller shall provide to the Buyer copies of certificates from the
appropriate Taxing authority stating that no Taxes are due to any state or other
Taxing authority for which the Buyer could have liability to withhold or pay
Taxes with respect to the transfer of the Assets or the Business, provided that
if the Seller shall fail to provide such certificates, the Buyer shall withhold
or, where appropriate, escrow such amount as necessary based upon the Buyer's
reasonable estimate of the amount of such potential liability, or as determined
by the appropriate Taxing authority, to cover such Taxes until such time as
certificates are provided.
5.10 Physical Inventory. Prior to the Closing Date, Buyer and Seller
shall conduct a
27
<PAGE> 28
complete physical count of Seller's Inventory. Each party shall bear its own
costs of such physical count. Prior to such count, and solely for purposes of
consummating the transactions contemplated herein, Buyer and Seller's
Representative shall mutually agree upon a methodology to determine the amount,
if any, of Seller's payable under the Services Agreement and the amount, if any,
of Seller's receivable under the Services Agreement. The amount of such payable
and/or receivable under the Services Agreement, as so determined by Buyer and
Seller's Representative, shall be conclusive solely and exclusively for purposes
of this Agreement and shall be reflected on the Final Closing Balance Sheet.
ARTICLE 6
CONDITIONS TO SELLER'S OBLIGATIONS
The obligation of the Seller to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction, or waiver
by the Seller's Representative, prior to or at the Closing, of each of the
following conditions precedent:
6.1 Representations and Warranties. The representations and warranties
made by the Buyer contained in this Agreement shall be true, correct and
complete in all material respects on and as of the Closing Date with the same
effect as though such representations and warranties were made or given on and
as of such date (other than such representations and warranties as are made as
of another specified date, which shall be true and correct as of such other
specified date).
6.2 Performance of Obligations. Buyer shall have performed and complied
with all of the covenants, agreements and conditions required by this Agreement
to be performed and complied with by it prior to or on the Closing Date.
6.3 Compliance Certificate. Buyer shall each have delivered to Seller's
Representative on the Closing Date a certificate signed by an authorized officer
thereof and dated as of the Closing Date to the effect that each of the
representations and warranties of Buyer contained in this Agreement is true,
correct and complete in all material respects as of the Closing Date (other than
such representations and warranties as are made as of another specified date,
which shall be true and correct as of such other specified date), and Buyer has
complied with, fulfilled and performed each of the covenants, terms and
conditions to be complied with, fulfilled or performed by it under this
Agreement on or prior to the Closing Date.
6.4 Absence of Litigation. No Action shall be threatened or pending on
the Closing Date in which it is sought to restrain or prohibit or to obtain
damages or other relief in connection with this Agreement or the consummation of
the transactions contemplated hereby, and no investigation that might result in
any such Action shall be pending or threatened.
6.5 Required Consents and Approvals; HSR. Each Governmental Authority
and all other Persons whose approval, consent or waiver may be necessary or
required with respect to the transactions contemplated herein shall have given
or granted such approval, consent or waiver. Specifically, but without limiting
the foregoing, if applicable, any waiting period (and any extension thereof)
under the HSR Act shall have expired or shall have been terminated.
28
<PAGE> 29
6.6 Resolutions. The Seller's Representative shall have received a true
and complete copy, certified by an officer of the Buyer, of the resolutions duly
adopted by the Board of Directors of the Buyer evidencing its authorization of
the execution and delivery of this Agreement and the Ancillary Agreements to
which it is a party and the consummation of the transactions contemplated hereby
and thereby.
6.7 Legal Opinion. The Seller's Representative shall have received a
legal opinion, dated as of the Closing Date, of counsel to the Buyer,
substantially in the form of Exhibit 6.7 hereto.
6.8 Additional Agreements. The Buyer shall have executed and delivered
the Employment Agreements and the Non-Compete Agreements.
6.9 Services Agreement. The Buyer and the Seller's Representative shall
have agreed upon the matters set forth in Section 5.10 above.
6.10 Closing Payment. The Buyer shall have made the payment of the
Closing Cash Amount as set forth in Section 2.5 above.
ARTICLE 7
CONDITIONS TO BUYER'S OBLIGATIONS
The obligation of the Buyer to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction, or waiver by the Buyer,
prior to or at the Closing, of each of the following conditions precedent:
7.1 Representations and Warranties. The representations and warranties
made by Seller contained in this Agreement shall be true, correct and complete
in all material respects on and as of the Closing Date with the same effect as
though such representations and warranties were made or given on and as of such
date (other than such representations and warranties as are made of another
specified date, which shall be true and correct as of such other specified
date).
7.2 Performance of Obligations. Seller shall have performed and
complied with all of the covenants, agreements and conditions required by this
Agreement to be performed and complied with by it prior to or on the Closing
Date.
7.3 Compliance Certificate. Seller shall have delivered to Buyer on the
Closing Date a certificate signed by or on behalf of Seller and dated as of the
Closing Date to the effect that each of the representations and warranties of
Seller contained in this Agreement is true, correct and complete in all material
respects as of the Closing Date (other than such representations and warranties
as are made of another specified date, which shall be true and correct as of
such other specified date), and Seller has complied with, fulfilled and
performed each of the covenants, terms and conditions to be complied with,
fulfilled or performed by Seller under this Agreement on or prior to the Closing
Date.
29
<PAGE> 30
7.4 Absence of Litigation. No Action shall be threatened or pending on
the Closing Date in which it is sought to restrain or prohibit or to obtain
damages or other relief in connection with this Agreement or the consummation of
the transactions contemplated hereby, and no investigation that might result in
any such Action shall be pending or threatened.
7.5 Required Consents and Approvals; HSR. Each Governmental Authority
and all other Persons whose approval, consent or waiver may be necessary or
required with respect to the transactions contemplated herein shall have given
or granted such approval, consent or waiver. Specifically, but without limiting
the foregoing, if applicable, any waiting period (and any extension thereof)
under the HSR Act shall have expired or shall have been terminated.
7.6 Good Standing Certificate. The Buyer shall have received a long
form good standing certificate from the Secretary of State (or other similar
official) of Seller's state of incorporation or organization and each other
jurisdiction set forth in Schedule 3.1(a) hereof, in each case dated as of a
date not earlier than five Business Days prior to the Closing Date and
accompanied by "bring down" certificates or similar assurances dated as of the
Closing Date.
7.7 Change of Name. The Buyer shall have received evidence that Seller
shall have changed its name to a name which does not include "B.A. Pargh" or
"Pargh" or any other name which is identified with the Business.
7.8 Legal Opinion. The Buyer shall have received a legal opinion, dated
as of the Closing Date, of counsel to the Seller and the Members, substantially
in the form of Exhibit 7.8 hereto.
7.9 Ancillary Agreements. The Officers shall have executed and
delivered the Employment Agreements and the Seller and the Officers shall have
executed and delivered the Non-compete Agreements.
7.10 Services Agreement. The Buyer and the Seller's Representative
shall have agreed upon the matters set forth in Section 5.10 above.
7.11 Bank Debt. The Buyer shall have received a certificate or written
statement of a duly authorized representative of First American National Bank
(the "Bank"), dated as of a date no earlier than five Business Days prior to the
Closing Date, setting forth, with respect to all indebtedness of the Seller to
the Bank: (i) the amount necessary to repay the Bank in full (including all
principal, interest, fees and other charges) together with a per diem amount for
each day thereafter, (ii) the address (or wire transfer account) to which such
payment should be delivered and (iii) the acknowledgment of the Bank that upon
its receipt (and collection) of such amount, all amounts owing to the Bank will
be satisfied and paid in full and all collateral and security given therefor
will be released and such Bank will execute and deliver such further termination
statements and similar releases as the Buyer may reasonably request in order to
evidence the foregoing.
7.12 Due Diligence. The Buyer shall have completed to its satisfaction
(in its sole and absolute discretion) its due diligence review and analysis of
the Business and the Seller; provided, however, the Buyer shall have a period of
five Business Days from the date hereof in
30
<PAGE> 31
which to notify the Seller's Representative that it is not so satisfied and in
the event the Buyer shall fail or elect not to so notify the Seller's
Representative, this condition (but not any other condition) shall be deemed
satisfied.
7.13 No Material Adverse Effect. No circumstance, change in, or effect
on the Business (including any labor dispute, loss of material customer or
supplier, shortage, cessation or interruption of inventory shipments or any
similar event, occurrence or circumstance) shall have occurred since March 31,
2000 which in the reasonable judgment of the Buyer has, or would have, a
Material Adverse Effect upon the Business.
7.14 Board of Directors Approval. The transactions contemplated hereby
shall have been approved by appropriate action of the Board of Directors of
Daisytek International Corporation.
7.15 Bank Approval. Daisytek International Corporation shall have
received the consent of its lenders to the consummation of the transactions
contemplated herein.
ARTICLE 8
CLOSING
8.1 Date of Closing. The closing of the transactions contemplated
hereby (the "Closing") shall take place at 10:00 a.m. local time at the offices
of counsel to the Seller on the first business day following the fulfillment or
waiver of the conditions set forth in Articles 6 and 7 hereof or at such other
time and place as the parties hereto may mutually agree. The date on which the
Closing occurs is hereinafter referred to as the "Closing Date." The following
transactions shall take place at the Closing, all of which shall be deemed to
have occurred simultaneously and none of which shall be deemed completed unless
and until all of them shall have been completed (or waived in writing by the
parties entitled to performance):
8.2 Deliveries by Seller. At the Closing, Seller shall deliver to Buyer
the following: (i) such bills of sale, assignments or other instruments of
transfer and assignment, in form and substance reasonably satisfactory to Buyer,
as are effective to vest in Buyer title to the Assets; (ii) the Ancillary
Agreements, duly executed by each party thereto other than Buyer; (iii) any
Consents required to be obtained by Seller; (iv) the Seller Closing certificates
set forth in Article 7 hereof; (v) an opinion of counsel to Seller dated as of
the Closing Date, in the form annexed hereto as Exhibit 7.8; and (vi) such other
documents and certificates duly executed as may reasonably be requested by Buyer
prior to the Closing Date.
8.3 Deliveries by Buyer. At the Closing, Buyer shall deliver to Seller
the following: (i) payment of the Closing Cash Amount; (ii) an Assumption
Agreement in the form annexed hereto as Exhibit 8.3; (iii) the Ancillary
Agreements to which Buyer is a party, duly executed by it; (iv) any Consents
required to be obtained by Buyer; (v) the Buyer Closing certificate set forth in
Article 6 hereof; (vi) an opinion of counsel to Buyer, dated as of the Closing
Date, in the form annexed hereto as Exhibit 6.7; and (vii) such other documents
and certificates duly executed as may reasonably be requested by Seller's
Representative prior to the Closing Date.
31
<PAGE> 32
8.4 Third Party Consents. Notwithstanding anything to the contrary in
this Agreement, this Agreement shall not constitute an agreement to assign or
transfer any Governmental Approval, Contract, 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 would constitute a breach or violation thereof or affect adversely the
rights of the Buyer or Seller thereunder; and any transfer or assignment to the
Buyer by Seller of any interest therein or thereunder that requires the consent
of a third party 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 shall continue to use all 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 the
Buyer in any lawful and economically feasible arrangement to provide that the
Buyer shall receive the interest of Seller in the benefits thereunder, including
performance by Seller, as agent, if economically feasible, provided that the
Buyer shall undertake to pay or satisfy the corresponding liabilities for the
enjoyment of such benefit to the extent the Buyer would have been responsible
therefor hereunder if such consent or approval had been obtained. Seller shall
pay and discharge, and shall indemnify and hold the Buyer harmless from and
against, any and all out-of-pocket costs of seeking to obtain or obtaining any
such consent or approval whether before or after the Closing Date. Nothing in
this Section shall be deemed a waiver by the Buyer of its right to have received
on or before the Closing an effective assignment of all of the Assets nor shall
this Section be deemed to constitute an agreement to exclude any assets from the
Assets.
ARTICLE 9
INDEMNIFICATION
9.1 Indemnification of by Seller and Members. From and after the
Closing, the Seller and the Members shall, jointly and severally, but subject to
the limitations of Section 9.3 hereof, reimburse, indemnify and hold harmless
the Buyer, and its parent corporation, officers, directors, employees, agents,
representatives and successors and assigns from and against and in respect of
each of the following (collectively, the "Buyer's Indemnification Events"):
(a) any and all damages, losses, deficiencies, liabilities,
claims, demands, charges, fines, penalties, costs and expenses of every nature
and character whatsoever, including, without limitation, reasonable attorneys'
fees and costs (collectively, the "Losses") that result from, relate to or arise
out of:
(i) any misrepresentation or breach of warranty of
the Seller or any Member in this Agreement or any of the Schedules provided
hereunder or any agreement, document, statement, list, certificate or instrument
furnished by or on behalf of the Seller in connection with the negotiation,
execution or performance of this Agreement and the transactions contemplated
herein;
(ii) the failure of the Seller to perform any
agreement or covenant on its part required to be performed on or before the
Closing Date (except to the extent waived by Buyer
32
<PAGE> 33
at or prior to the Closing) or the failure of Seller to perform any agreement or
covenant on its part required to be performed after the Closing Date;
(iii) any Retained Liabilities or Excluded Assets;
(iv) any and all Taxes of Seller, including all Taxes
arising from or related to the operation of the Business prior to the Closing
Date and all Taxes arising from or related to the consummation of the
transactions contemplated herein;
(v) any product liability claim with respect to
products sold by Seller prior to the Closing Date; and
(vi) the failure of Seller to comply with all
applicable bulk sales laws; and
(b) any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments, costs and other
expenses incident to any of the foregoing or to the successful enforcement of
this Section.
9.2 Indemnification of Seller and Members. From and after the Closing,
the Buyer shall, subject to the limitations of Section 9.3 hereof, reimburse,
indemnify and hold harmless Seller and the Members and each of their respective
heirs, estate, successors and assigns from and against and in respect of each of
the following (collectively, the "Seller's Indemnification Events"):
(a) any and all Losses that result from, relate to or arise
out of:
(i) any misrepresentation or breach of warranty of
the Buyer in this Agreement or any of the Schedules provided hereunder or any
agreement, document, statement, list, certificate or instrument furnished by or
on behalf of the Buyer in connection with the negotiation, execution or
performance of this Agreement and the transactions contemplated herein;
(ii) the failure of the Buyer to perform any
agreement or covenant on its part required to be performed on or before the
Closing Date (except to the extent waived by Seller's Representative at or prior
to the Closing) or the failure of the Buyer to perform any agreement or covenant
on its part required to be performed after the Closing Date;
(iii) any Assumed Liabilities;
(iv) any and all Taxes of Buyer, including all Taxes
arising from or related to the operation of the Business after the Closing; and
(v) any product liability claim with respect to
products sold by Buyer after the Closing Date; and
(b) any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments, costs and other
expenses incident to any of the foregoing or to the successful enforcement of
this Section.
33
<PAGE> 34
9.3 Limitations on Losses.
(a) In case any event shall occur that would otherwise entitle
any party to assert a claim for indemnification hereunder, no Losses shall be
deemed to have been sustained by such party to the extent of (i) any actual Tax
benefit or savings realized by such party with respect thereto (net of any Tax
cost attributable to the receipt of any indemnification payment hereunder) or
(ii) any proceeds (net of deductibles, Taxes and collection costs) received by
such party from any insurance policies maintained by or on behalf of such party
with respect to losses (net of any increase in insurance premiums attributable
to such recovery). The parties agree to submit a claim under any applicable
insurance policies prior to or promptly following making a request for
indemnification hereunder.
(b) The aggregate liability of any party in respect of
indemnification hereunder shall not exceed the Purchase Price, and the maximum
liability of (i) any Member other than the Officers in respect of
indemnification hereunder shall be equal to the cash portion of the Purchase
Price (minus the amount, if any, paid or retained in respect of the guaranteed
Receivables under Section 10.1(b) below), multiplied by such member's percentage
ownership interest in the Seller as set forth in Schedule 3.2(a) hereto and (ii)
any Officer in respect of indemnification hereunder shall be equal to the cash
portion of the Purchase Price (minus the amount, if any, paid or retained in
respect of the guaranteed Receivables under Section 10.1(b) below).
(c) The sum of all Losses incurred by the Buyer, or the sum of
all Losses incurred by the Seller and the Members in the aggregate, must exceed,
on a cumulative basis, $150,000 before such parties shall be entitled to
indemnification hereunder; provided, however, once such cumulative Losses exceed
$150,000, such parties shall be entitled to indemnification for all Losses. The
foregoing limitation shall not apply to any indemnification claim relating to
Taxes for the period prior to the Closing Date.
(d) No party shall have any liability in respect of
indemnification under Section 9.1(a)(i) or Section 9.2(a)(i) hereunder following
the one year anniversary date of the Closing Date; provided, however, the
representations and warranties of the Seller relating to (i) title to the Assets
shall survive indefinitely and (ii) Taxes and Tax matters shall survive until
the applicable statute of limitations has expired. The limitation set forth in
this paragraph shall not apply to any claim asserted on or before such one year
anniversary.
9.4 Notice and Procedure. Promptly after receipt by an indemnified
party of notice of the assertion of any claim by a Person not a party to this
Agreement (a "Third Party Claim") with respect to which such indemnified party
expects to make a request for indemnification hereunder, such indemnified party
shall give the indemnifying party written notice describing such claim in
reasonable detail. The indemnifying party shall, upon receipt of such notice, be
entitled to participate in or, at the indemnifying party's option, assume the
defense, appeal or settlement of, such claim with respect to which such
indemnity has been invoked with counsel selected by it and approved by the
indemnified party (such approval not to be unreasonably withheld), and the
indemnified party will fully cooperate with the indemnifying party in connection
therewith; provided, that the indemnified party shall be entitled to employ
separate counsel (at the expense of the indemnifying party) to represent such
indemnified party if counsel selected by the indemnifying
34
<PAGE> 35
party cannot, by reason of any actual or deemed conflict of interest, adequately
represent the interests of the indemnified party. In the event that the
indemnifying party fails to assume the defense, appeal or settlement of such
claim within 20 days after receipt of notice thereof from the indemnified party,
the indemnified party shall have the right to undertake the defense or appeal
of, or settle or compromise, such claim on behalf of and for the account and
risk of the indemnifying party. The indemnifying party shall not settle or
compromise any such claim without the indemnified party's prior written consent,
unless the terms of such settlement or compromise release the indemnified party
from any and all liabilities with respect to such Third Party Claim. Any
indemnifiable claim that is not a Third Party Claim shall be asserted by written
notice to the indemnifying party. If the indemnifying party does not respond to
such notice within 30 days, it shall have no further right to contest the
validity of such claim.
9.5 Nonexclusive Remedy. The indemnification rights of the parties
hereto under this Agreement shall be subject to, and deemed effective as of, the
Closing of the transactions contemplated hereunder and are independent of, and
in addition to, such other rights and remedies as the parties may have at law or
in equity for any fraud or willful failure to fulfill any agreement or covenant
hereunder on the part of any party hereto, including without limitation, each
party's right of, or to obtain, set-off, specific performance or rescission,
none of which rights or remedies shall be affected or diminished hereby. The
parties expressly agree that each party shall be entitled to rely upon the
representations, warranties and agreements set forth herein notwithstanding (i)
any investigation conducted, or information received (whether pursuant to the
terms hereof or otherwise) prior to the Closing or (ii) the decision of any
party to consummate the transactions described herein.
9.6 Escrowed Consideration. Subject to the limitations set forth in
Section 9.3 above, and for so long as the Buyer is holding the Escrowed
Consideration in accordance with the provisions hereof, the Buyer shall have the
right to offset any indemnification claim against the Escrowed Consideration
then being held by it; provided, however, that (i) such right of offset shall
not limit or otherwise restrict the indemnification and other rights of Buyer
hereunder or under applicable law, and (ii) Buyer shall give Seller's
Representative not less than ten business days prior notice of such offset, and
if Seller's Representative shall, within such ten day period, provide a notice
of dispute to such offset, then Buyer shall not exercise such right of offset
and shall continue to hold such Escrowed Consideration until such dispute shall
be resolved in accordance with the provisions of Section 2.7(b) hereof. Subject
to the provisions of Section 10.1 below, and provided Buyer has no outstanding
indemnification claims then pending, Buyer shall pay the Escrowed Consideration
to Seller in accordance with Section 2.5 (b) above.
ARTICLE 10
FURTHER AGREEMENTS
10.1 Guarantee of Collectibility of Receivables of Seller.
(a) Subject to the limitations set forth in this Section
10.1, Seller and the Members, jointly and severally, guarantee to Buyer that,
except to the extent of the reserve for doubtful accounts shown on the Final
Closing Balance Sheet, all accounts and notes receivable and other
35
<PAGE> 36
receivables reflected on said balance sheet (the "Receivables") will be valid
and legally binding obligations of the persons owing said amounts to Seller and
that the full amount of the Receivables will be paid to Buyer within 120 days of
the Closing Date.
(b) If any part of the Receivables has not been paid within
120 days of the Closing Date, then to the extent that such unpaid part of the
Receivables exceeds the reserve for doubtful accounts shown on the Final Closing
Balance Sheet, Buyer shall reassign to Seller such unpaid part of the
Receivables, free and clear of any Encumbrance arising on or after the Closing,
and Buyer shall retain for itself from the Escrowed Consideration an amount
equal to the face amount of such reassigned Receivables, and if there are
insufficient funds therefor remaining in the Escrowed Consideration, Seller
shall, within ten days of demand therefor, pay to Buyer the amount of such
deficiency.
(c) Buyer will use its good faith efforts to collect all of
the Receivables in accordance with the same efforts it uses to collect its own
accounts receivable; provided, however, that to the extent the Buyer commences
any legal proceedings or retains or employs any collection agents to collect the
Receivables, all expenses and costs of collection shall be reimbursed by Seller
to the Buyer.
(d) During the 120 day following the Closing Date, all monies
received by the Buyer from the account debtors of the Receivables shall be
applied in accordance with the payment instructions or designation of such
account debtors.
(e) Notwithstanding the foregoing, the maximum liability of
the Seller and the Members under this Section 10.1 shall not exceed the cash
portion of the Purchase Price.
10.2 Employment Matters.
(a) Seller will use all reasonable efforts to cause the
employees employed in the Business to make available their employment services
to the Buyer. For a period of two years from the Closing Date, neither Seller
nor any Member, nor any of their respective Affiliates, will solicit, offer to
employ or retain the services of or otherwise interfere with the relationship of
Buyer with any Person employed by or otherwise engaged to perform services for
Buyer in connection with the operation of the Business.
(b) Effective as of the Closing Date, Buyer shall, in its sole
and absolute discretion, offer employment to those employees selected by Buyer
who are employed by Seller in the operation of the Business at wage or salary
levels, as applicable, and with employee benefits, as determined by Buyer. Those
employees who accept such offers of employment effective as of the Closing Date
shall be referred to herein as the "Transferred Employees". Effective as of the
Closing Date, the Buyer shall assume the liability of Seller in respect of the
Transferred Employees for accrued but unpaid salaries, wages, vacation and sick
pay, and all payroll taxes related thereto, but only to the extent such
liability is accrued and reflected on the Final Closing Balance Sheet. Seller
shall remain responsible for payment of any and all retention, change in control
or other similar compensation or benefits which are or may become payable in
connection with the consummation
36
<PAGE> 37
of the transactions contemplated by this Agreement. Attached hereto as Schedule
10.2(b) is a list of all employees of the Seller and their respective years of
service. To the extent any of such employees shall be "Transferred Employees"
hereunder, Buyer shall credit such employees with the same years of service as
set forth on such Schedule.
(c) Neither the Buyer nor any of its Affiliates shall have any
Liability with respect to any employee of Seller or Employee Plan or any claim
thereof or related thereto except to the extent expressly provided in this
Section 10.2 with respect to the Transferred Employees. From and after the
Closing, the Seller shall remain solely responsible for any and all Liabilities
in respect of all of its employees, including the Transferred Employees and
their beneficiaries and dependents, relating to or arising in connection with or
as a result of (i) the employment or the actual or constructive termination of
employment of any such employee by Seller (including, without limitation, in
connection with the consummation of the transactions contemplated by this
Agreement), (ii) the participation in or accrual of benefits or compensation
under, or the failure to participate in or to accrue compensation or benefits
under, any Employee Plan or other employee or retiree benefit or compensation
plan, program, practice, policy, agreement or arrangement of Seller or (iii)
accrued but unpaid salaries, wages, bonuses, incentive compensation, vacation or
sick pay or other compensation or payroll items (including, without limitation,
deferred compensation), except, in any such case, to the extent any such
Liability is specifically assumed by Buyer pursuant to this Section 10.2.
(d) [deleted]
(e) Buyer shall provide the Transferred Employees and their
dependents and beneficiaries coverage under any welfare and fringe benefit
plans, programs, policies or arrangements established by the Buyer for such
Persons, provided that, from and after the Closing Date, the Seller shall remain
solely responsible for any and all Liabilities to or in respect of the
Transferred Employees or their beneficiaries or dependents relating to or
arising in connection with any claims, whether such claims are asserted before,
on or after the Closing Date, for life, disability, accidental death or
dismemberment, supplemental unemployment compensation, medical, dental,
hospitalization, other health or other welfare or fringe benefits or expense
reimbursements which claims relate to or are based upon an occurrence on or
before the Closing Date (including claims for continuing treatment in respect of
any illness, accident, disability, condition or confinement which occurs or
commences on or before the Closing Date).
(f) From and after the Closing Date, the Seller shall remain
solely responsible for any and all Liabilities relating to or arising in
connection with the requirements of section 4980B of the Code to provide
continuation of health care coverage under any Employee Plan in respect of (i)
all of its employees, other than the Transferred Employees and their covered
dependents, and (ii) to the extent related to a qualifying event occurring on or
before the Closing Date, Transferred Employees and their covered dependents.
(g) From and after the Closing Date, the Seller shall remain
solely responsible for any and all Liabilities to or in respect of any of its
employees relating to or arising in connection
37
<PAGE> 38
with any and all claims for workers' compensation benefits arising in connection
with any occupational injury or disease occurring or existing on or prior to the
Closing Date.
(h) Seller and the Buyer will (i) treat the Buyer as a
"successor employer" and Seller as a "predecessor," within the meaning of
sections 3121(a)(1) and 3306(b)(1) of the Code, with respect to Transferred
Employees who are employed by the Buyer for purposes of Taxes imposed under the
United States Federal Unemployment Tax Act ("FICA") or the United States Federal
Insurance Contributions Act ("FUTA") and (ii) cooperate with each other to
avoid, to the extent possible, the filing of more than one IRS Form W-2 with
respect to each such Transferred Employee for the calendar year within which the
Closing Date occurs.
(i) At the request of the Buyer with respect to any particular
applicable Tax law relating to employment, unemployment insurance, social
security, disability, workers' compensation, payroll, health care or other
similar Tax other than Taxes imposed under FICA and FUTA, Seller and the Buyer
will (i) treat the Buyer as a successor employer and Seller as a predecessor
employer, within the meaning of the relevant provisions of such Tax law, with
respect to Transferred Employees who are employed by the Buyer and (ii)
cooperate with each other to avoid, to the extent possible, the filing of more
than one individual information reporting form pursuant to each such Tax law
with respect to each such Transferred Employee for the calendar year within
which the Closing Date occurs.
ARTICLE 11
MISCELLANEOUS
11.1 Termination.
(a) This Agreement may be terminated at any time prior to
Closing:
(i) by mutual written consent of Buyer and Seller;
(ii) by Buyer or Seller if the Closing shall not have
occurred on or before May 31 , 2000, other than due to a breach of this
Agreement by the party seeking to terminate;
(iii) by Buyer if there is a material breach of any
representation or warranty set forth in Article 3 or any covenant or agreement
to be complied with or performed by Seller or any Member pursuant to the terms
of this Agreement;
(iv) by Buyer if Buyer notifies Seller in writing
prior to May 31, 2000 that it is not satisfied with its diligence review
pursuant to Section 7.10; or
(v) by Seller if there is a material breach of any
representation or warranty set forth in Article 4 hereof or of any covenant or
agreement to be complied with or performed by Buyer pursuant to the terms of
this Agreement;
(b) In the event of termination of this Agreement:
38
<PAGE> 39
(i) The provisions of the Confidentiality Agreement
shall continue in full force and effect; and
(ii) No party hereto shall have any liability to any
other party to this Agreement, except for any willful breach of, or knowing
misrepresentation made in, this Agreement occurring prior to the proper
termination of this Agreement.
11.2 Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by Seller or any Member without the prior
written consent of Buyer, or by Buyer without the prior written consent of
Seller's representative; provided, however, that Buyer may assign this Agreement
to any wholly-owned subsidiary of Daisytek International Corporation without
such consent of Seller's Representative.
11.3 Notices. Unless otherwise provided herein, any notice, request,
instruction or other document to be given hereunder by any party to the other
shall be in writing and delivered in person or by courier, sent by facsimile
transmission, sent via overnight delivery service or mailed by registered or
certified mail (such notice to be effective upon receipt), as follows:
If to a Member, to the address of such Member as set forth on
Annex 1 hereto.
If to Seller:
c/o W. Alan Holman
245 Great Circle Road
Nashville, TN 37228
With a copy to:
Allen D. Lentz, Esq.
Gullett, Sanford, Robinson & Martin, PLLC
230 Fourth Avenue, North
Nashville, TN 37219
If to Buyer:
Daisytek International Corporation
500 North Central Expressway
Plano, Texas 75074
Attention: Jack Kearney
Fax:
With a copy to:
Wolff & Samson, P.A.
5 Becker Farm Road
Roseland, New Jersey 07068
Attn: Morris Bienenfeld, Esq.
Fax: (973) 740-1407
39
<PAGE> 40
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
11.4 Choice of Law. This Agreement shall be construed, interpreted and
the rights of the parties determined in accordance with the laws of the State of
Delaware except with respect to matters of law concerning the internal corporate
affairs of any corporate entity which is a party to or the subject of this
Agreement, and as to those matters the law of the jurisdiction under which the
respective entity derives its powers shall govern.
11.5 Descriptive Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.6 Entire Agreement; Amendments and Waivers. This Agreement, together
with all exhibits and schedules hereto, and the Ancillary Agreements and the
Confidentiality Agreement, constitute the entire agreement among the parties
pertaining to the subject matter hereof and supersede all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties. No supplement, modification or waiver of this Agreement shall be
binding unless executed in writing by the Buyer and the Seller's Representative.
No waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (whether or not similar), nor
shall such waiver constitute a continuing waiver unless otherwise expressly
provided.
11.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.8 Invalidity. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement or any other such instrument.
11.9 Expenses. Except as otherwise provided in this Agreement, Buyer
will be liable for its, and the Members will be liable for the Seller's
expenses, incurred in connection with the negotiation, preparation and execution
of this Agreement.
11.10 Publicity. Except as otherwise required by law, neither party
shall issue any press release or make any public statement or filing regarding
the transactions contemplated hereby without the prior approval of the other
parties, and the parties hereto shall issue a mutually acceptable press release
as soon as practicable after the Closing Date.
40
<PAGE> 41
11.11 No Third Party Beneficiaries. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, including, without limitation, by way of subrogation, except
as specifically set forth in Article 9 hereof.
41
<PAGE> 42
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused this Agreement to be duly executed on its behalf by its officer thereunto
duly authorized, as of the day and year first above written.
BAP ACQUISITION CORP.
By:
-------------------------------
Name:
Title:
B.A. PARGH COMPANY, LLC
By:
-------------------------------
Name:
Title:
-----------------------------------
Bernard A. Pargh
-----------------------------------
W. Alan Holman
-----------------------------------
Christopher C. Tate
-----------------------------------
Amanda F. Pargh
-----------------------------------
Franklin A. Pargh
-----------------------------------
Ted Feldman
-----------------------------------
Scott Moskovitz
-----------------------------------
John D. Lentz
<PAGE> 43
<TABLE>
ANNEX I - List of Members
ANNEX II - Officers
<S> <C> <C>
Exhibit 1.1A - Form of Employment Agreements
Exhibit 1.1B - Form of Non-Compete Agreements
Exhibit 6.7 - Form of Opinion of Counsel to Buyer
Exhibit 7.8 - Form of Opinion of Counsel to Seller and Members
Exhibit 8.3 - Form of Assumption Agreement
Schedule 2.2(d) - Excluded Assets
Schedule 2.7 - Price Adjustment
Schedule 3.1(a) - Foreign Qualifications
Schedule 3.1(d) - Violations
Schedule 3.1(e) - Consents
Schedule 3.2(a) - Membership Interests
Schedule 3.5 - Intellectual Property
Schedule 3.6 - Labor Matters
Schedule 3.7 - Customers
Schedule 3.8 - Compliance with Regulations
Schedule 3.9(a) - Material Contracts
Schedule 3.10 - Taxes
Schedule 3.11 - Employee Benefits
Schedule 3.12 - No Material Adverse Change
Schedule 3.14 - Inventory
Schedule 3.15 - Bank Accounts
Schedule 3.16 - Insurance
Schedule 3.17 - Recent Operations
Schedule 3.18 - Suppliers
Schedule 3.20 - Litigation
Schedule 3.21 - Non-Disclosed Liabilities
Schedule 3.23 - Manufacturer Transactions
Schedule 3.24 - Accounts Receivable
Schedule 5.1(c) - Conduct of Business
Schedule 10.2(b) - Employee Years of Service
</TABLE>
