SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 14, 1998
-------------------------------
PrimeSource Corporation
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Pennsylvania 0000-21750 23-1430030
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
4350 Haddonfield Road, Suite 222, Pennsauken, New Jersey 08109
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 488-4888
---------------------------
N/A
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(Former name or former address, if changed since last report.)
<PAGE>
This report amends the current report on Form 8-K dated September 28, 1998 of
PrimeSource Corporation (the "Registrant"). This report contains the financial
statements and pro forma financial information required to be provided under
Item 7 of the Form 8-K. Other than this addition, there has been no change in
the information set forth in the Form 8-K.
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
a. On September 14, 1998 (the "Closing Date"), the Registrant acquired the
business including certain assets, and assumed certain liabilities, of the
Graphic Arts Supply Group ("GASG") of Bell Industries Inc.("Bell"),
pursuant to an asset purchase agreement ("Agreement") dated August 28,
1998. The Registrant acquired inventory, receivables, depreciable assets,
customer lists, and certain other tangible and intangible assets, and
assumed certain accounts payable and other accrued liabilities for a net
purchase price of approximately $43.5 million, subject to a post-closing
dollar-for-dollar adjustment to the extent the tangible net worth of the
net assets acquired is greater or less than $31 million on the Closing
Date. In addition, Bell has guaranteed $1.7 million of receivables and $2.7
million of inventory specifically identified by the Registrant. To the
extent the Registrant has not realized the cost of these assets at the end
of a six-month period from the Closing Date, Bell will purchase the assets
and/or reimburse the Registrant for the unrealized value.
The consideration for the sale was arrived at as a result of arms-length
negotiations between the Registrant and Bell. On the Closing Date,
$22,247,000 was paid with the balance payable over ninety days. Funding for
the acquisition is provided from the Registrant's revolving credit
agreement with PNC Bank (agent bank), First Union National Bank and Mellon
Bank, a $10 million uncommitted credit line with PNC Bank and funds from
operations.
b. The acquired assets were used primarily in the supply and distribution of
photographic and graphic arts supplies and equipment. Registrant intends to
continue to use the assets for the same purpose.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
Item 7(a) Financial Statements of Business Acquired
<PAGE>
Bell Industries, Inc. -
Graphics Imaging Group
Report and Financial Statements
December 31, 1997
<PAGE>
Report of Independent Accountants
To the Board of Directors and Shareholders of
PrimeSource Corporation
In our opinion, the accompanying balance sheet and the related statements of
income and changes in parent company investment and of cash flows present
fairly, in all material respects, the financial position of Bell Industries,
Inc. - Graphics Imaging Group (the "Company") at December 31, 1997, and the
results of its operations and its cash flows for the year in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management, our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit
of these statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
/C/ PricewaterhouseCoopers LLP
Los Angeles, California
November 16, 1998
<PAGE>
<TABLE>
Bell Industries Inc. -
Graphics Imaging Group
Balance Sheet
(Dollars in thousands)
<CAPTION>
June 30, December 31,
1998 1997
(Unaudited)
- --------------------------------------------------------------------------------
Assets
Current assets:
<S> <C> <C>
Cash ............................................... $ 212 $ 18
Accounts receivable, less allowance for doubtful
accounts of $461 and $854 ...................... 21,853 24,227
Inventories ........................................ 19,345 22,344
Deferred income taxes .............................. 251 406
Prepaid expenses and other ......................... 100 101
- --------------------------------------------------------------------------------
Total current assets ...................... 41,761 47,096
- --------------------------------------------------------------------------------
Properties, at cost
Leasehold improvements ............................. 379 332
Machinery, equipment and other ..................... 3,206 3,220
- --------------------------------------------------------------------------------
3,585 3,552
Less accumulated depreciation ...................... (2,483) (2,271)
- --------------------------------------------------------------------------------
Total properties .......................... 1,102 1,281
- --------------------------------------------------------------------------------
Goodwill, less accumulated amortization of $286 and $221 2,960 3,025
Other assets ........................................... 154 63
- --------------------------------------------------------------------------------
Total assets ........................................... $ 45,977 $ 51,465
================================================================================
Liabilities and Parent Company Investment
Current liabilities:
Accounts payable ................................... $ 10,455 $ 10,853
Accrued payroll and benefits ....................... 985 955
Other accrued liabilities .......................... 890 908
- --------------------------------------------------------------------------------
Total current liabilities ................. 12,330 12,716
Parent company investment .............................. 33,647 38,749
Commitments and contingencies
- --------------------------------------------------------------------------------
Total liabilities and parent company investment ........ $ 45,977 $ 51,465
================================================================================
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
Bell Industries, Inc. -
Graphics Imaging Group
Statement of Income and Changes in Parent Company Investment
(Dollars in thousands)
<CAPTION>
Six Months Year Ended
Ended June 30, December 31,
1998 1997
(Unaudited)
- -----------------------------------------------------------------------
<S> <C> <C>
Net sales .................................... $ 71,474 $156,288
- ------------------------------------------------------------------------
Costs and expenses
Cost of products sold ..................... 59,962 131,724
Selling and administrative ................ 7,305 17,334
Depreciation and amortization ............. 380 834
Allocated expenses ........................ 1,516 2,721
- ------------------------------------------------------------------------
Income before income taxes ................... 2,311 3,675
Income tax provision ......................... 971 1,564
- ------------------------------------------------------------------------
Net income ................................... 1,340 2,111
Remittances (to) from parent ................. (6,442) 4,545
Parent company investment, beginning of period 38,749 32,093
- ------------------------------------------------------------------------
Parent company investment, end of period ..... $ 33,647 $ 38,749
========================================================================
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
Bell Industries, Inc. -
Graphics Imaging Group
Statement of Cash Flows
(Dollars in thousands)
<CAPTION>
Six Months Year Ended
Ended June 30, December 31,
1998 1997
(Unaudited)
- ----------------------------------------------------------------------------
Cash flows from operating activities:
<S> <C> <C>
Net income .................................... $ 1,340 $ 2,111
Adjustments to reconcile net income to net
cash provided by operating activities -
Depreciation and amortization ............. 380 834
Provision for losses on accounts receivable 230 518
Deferred income taxes ..................... 155 (94)
Changes in assets and liabilities -
Accounts receivable ....................... 2,144 (1,890)
Inventories ............................... 2,999 (3,994)
Accounts payable .......................... (398) (2,573)
Accrued payroll and benefits .............. 30 105
Other ..................................... (108) 233
- ----------------------------------------------------------------------------
Net cash provided by (used in) operating activities 6,772 (4,750)
- ----------------------------------------------------------------------------
Cash flows from investing activities:
Purchases of properties, net .................. (136) (138)
- ----------------------------------------------------------------------------
Cash flows from financing activities:
Remittances (to) from parent .................. (6,442) 4,545
- ----------------------------------------------------------------------------
Net increase (decrease) in cash ............... 194 (343)
Cash at beginning of period ................... 18 361
- ----------------------------------------------------------------------------
Cash at end of period ......................... $ 212 $ 18
============================================================================
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
Bell Industries, Inc. -
Graphics Imaging Group
Notes to Financial Statements
- --------------------------------------------------------------------------------
NOTE 1: Description of Business
Bell Industries, Inc. - Graphics Imaging Group ("Graphics" or the "Company")
distributes graphics and electronic imaging supplies and equipment throughout
the upper Midwest and Western United States to the advertising and printing
industries. The Company is based in Los Angeles, California and markets products
through thirteen sales locations. Major product lines distributed by the Company
include film, plates, chemicals and other printing supplies from Agfa, DuPont,
Eastman Kodak, Imation, Konica, and Western Litho as well as prepress and
related electronic imaging equipment from Agfa, Apple, Howtek, Intergraph, and
Screen.
Prior to the sale of the Company to PrimeSource Corporation ("PSC") on September
14, 1998 (see Note 7), Graphics was an operating segment of Bell Industries,
Inc. ("Bell"). The financial statements of the Company are comprised of account
balances which have been carved out of Bell. They include the Company's
historical financial position, results of operations and cash flows previously
included in Bell's financial statements.
NOTE 2: Summary of Significant Accounting Policies
Basis of presentation
The financial statements of the Company have been prepared in accordance with
generally accepted accounting principles ("GAAP") and include accounts related
to Graphics which have been carved out of Bell. Significant intercompany
accounts and transactions have been eliminated.
Allocations
Bell incurs certain administrative costs, which are charged to Graphics,
including direct costs and certain allocated costs. Such expenses include
accounting services, corporate wages, computerized information systems services
and support, data processing, insurance, and legal services. All allocations are
based on assumptions that Bell management believes are reasonable under the
circumstances. However, these allocations are not necessarily indicative of the
costs and expenses that would have resulted if the Company had been operated as
a separate entity or indicative of future results of the business.
Parent company investment includes Graphics' accumulated earnings and Bell's net
investment in Graphics. For financial statement presentation purposes, interest
has been allocated to the Company on a basis consistent with and relative to
Bell's overall capital structure, after giving effect to debt incurred by Bell
that specifically relates to other operating segments, at Bell's average
borrowing rate of approximately 7%. Interest expense of $343,000 and $749,000
for the six months ended June 30, 1998 and for the year ended December 31, 1997
is included in allocated expenses. No actual interest was paid to Bell by the
Company during the periods presented.
Cash
Bell provides centralized treasury functions and financing for Graphics. Under
Bell's cash management program, zero balance accounts are utilized. As such, the
Company maintains minimal cash balances.
Bank overdraft balances have been reclassified to accounts payable in the
accompanying balance sheet.
<PAGE>
Bell Industries, Inc. -
Graphics Imaging Group
Notes to Financial Statements
- --------------------------------------------------------------------------------
Revenue recognition and receivables
Sales are recognized and trade receivables are recorded when products are
shipped. Concentrations of credit risk with respect to trade receivables are
limited due to the large number and general dispersion of trade accounts, which
constitute the Company's customer base. The Company performs ongoing credit
evaluations of its customers and generally does not require collateral.
Inventories
Inventories are stated at the lower of cost (determined using weighted average
method) or market (net realizable value).
Properties, depreciation and amortization
All properties are depreciated using the straight-line method based on estimated
useful lives, which range from 2 to 10 years for equipment. Leasehold
improvements are amortized over the shorter of their estimated useful life or
the term of the lease. Depreciation and amortization of properties charged to
operations amounted to $315,000 and $704,000 for the six months ended June 30,
1998 and for the year ended December 31, 1997, respectively.
Goodwill
Cost in excess of the fair value of net assets of purchased businesses
(goodwill) is amortized using the straight-line method over 25 years. Periodic
evaluations of the recorded value of operating assets, including goodwill, are
performed. Impairment is recognized when the estimated future undiscounted cash
flows from the use of the assets are less than the recorded value.
Income taxes
The taxable income of Graphics was included in the tax returns of Bell. As such,
separate income tax returns were not prepared or filed for Graphics. The
provision for income taxes in the accompanying statement of operations has been
determined based on pre-tax financial accounting income of the Company. Deferred
tax balances are recognized for the expected tax consequences of temporary
differences between the tax basis of assets and liabilities and their reported
amounts. The balance sheet does not reflect income taxes payable as such amounts
are paid by Bell.
Use of estimates
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
<PAGE>
Bell Industries, Inc. -
Graphics Imaging Group
Notes to Financial Statements
- --------------------------------------------------------------------------------
Interim financial data
The interim financial data as of and for the six months ended June 30, 1998 are
unaudited. In the opinion of management, all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of the results for the
interim period have been included.
NOTE 3: Income Taxes
The income tax provision (benefit) charged to operations was as follows (in
thousands):
<TABLE>
<CAPTION>
Six months ended Year ended
June 30, 1998 December 31, 1997
(unaudited)
- -------------------------------------------------------------
Current
<S> <C> <C>
Federal ............... $ 614 $ 1,296
State ................. 202 362
Deferred
Federal ............... 139 (84)
State ................. 16 (10)
- -------------------------------------------------------------
$971 $ 1,564
- -------------------------------------------------------------
</TABLE>
A reconciliation of the federal statutory tax rate to the effective tax rate
follows:
<TABLE>
<CAPTION>
Six months ended Year ended
June 30, 1998 December 31, 1997
(unaudited)
- -------------------------------------------------------------------------
<S> <C> <C>
Federal statutory rate ............ 34.0% 34.0%
State taxes, net of federal benefit 6.0 6.0
Non-deductible entertainment ...... 1.3 1.6
Other ............................. 0.7 1.0
- -------------------------------------------------------------------------
Effective tax rate ................ 42.0% 42.6%
==========================================================================
</TABLE>
The provision (credit) for deferred income taxes is summarized as follows (in
thousands):
<TABLE>
<CAPTION>
Six months ended Year ended
June 30, 1998 December 31, 1997
(unaudited)
- -----------------------------------------------------------------
<S> <C> <C>
Receivables allowance ..... $ 145 $(79)
Inventory capitalization... 10 (15)
- -----------------------------------------------------------------
$ 155 $(94)
=================================================================
</TABLE>
<PAGE>
Bell Industries, Inc. -
Graphics Imaging Group
Notes to Financial Statements
- --------------------------------------------------------------------------------
Deferred tax balances were composed of the following (in thousands):
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
(unaudited)
- ------------------------------------------------------------------
Deferred tax assets:
<S> <C> <C>
Receivables allowance ..... $175 $321
Inventory capitalization... 76 85
- ------------------------------------------------------------------
$251 $406
==================================================================
</TABLE>
NOTE 4: Employee Benefit and Deferred Compensation Plans
Bell sponsors a qualified, trusteed, savings and profit sharing plan for
eligible employees, which includes employees of Graphics. Employees must
contribute at least 1% of their annual compensation to participate in the plan.
Bell's contributions to the plan are determined by the Board of Directors. The
Company's allocated share of contributions, determined based on the number of
Graphics' employees to total Bell employees, was approximately $60,000 and
$135,000 for the six months ended June 30, 1998 and for the year ended December
31, 1997, respectively.
Bell sponsors deferred compensation plans for certain directors, officers and
other key employees, which includes certain employees of Graphics. Expenses
associated with the deferred compensation element of these plans were not
significant to Graphics.
Bell provides postretirement medical coverage for qualifying employees,
including employees of Graphics, who were employed prior to January 1, 1998.
Annual costs and accumulated and vested benefit obligations relating to
postretirement medical benefits were not significant to Graphics.
NOTE 5: Leases
At December 31, 1997, the Company had operating leases on certain of its
facilities and equipment expiring in various years through 2001. Rent expense
pertaining to operating leases was $546,000 and $1,114,000 for the six months
ended June 30, 1998 and for the year ended December 31, 1997, respectively.
Minimum annual rentals on operating leases in effect at December 31, 1997 are as
follows (in thousands):
<TABLE>
<S> <C>
1998 $ 776
1999 462
2000 258
2001 20
- -----------------------
$1,516
=======================
</TABLE>
Subsequent to December 31, 1997, certain leases were amended or extended
resulting in additional minimum annual rentals through 2003 of $1,102,000.
<PAGE>
Bell Industries, Inc. -
Graphics Imaging Group
Notes to Financial Statements
- --------------------------------------------------------------------------------
NOTE 6: Commitments and Contingencies
The Company is involved in litigation incidental to its business. In the opinion
of management, the expected outcome of such litigation will not materially
affect the Company's financial position or results of operations.
NOTE 7: Subsequent Event
On August 28, 1998, PSC and Bell entered into an Asset Purchase Agreement (the
"Agreement") whereby substantially all Graphics assets and liabilities would be
purchased or assumed by PSC. This transaction closed on September 14, 1998 in
accordance with the provisions of the Agreement.
<PAGE>
Item 7(b) Pro forma Financial Information
The following unaudited pro forma condensed balance sheet as of June 30, 1998
gives effect to the acquisition of GASG as if the purchase had been consummated
on June 30, 1998. The unaudited pro forma condensed statement of operations for
the year ended December 31, 1997 and the six months ended June 30, 1998 gives
effect to the combination as if the purchase had been consummated at the
beginning of such periods. These unaudited pro forma financial statements have
been prepared based on PrimeSource Corporation's (PrimeSource) financial
statements and the financial statements of GASG included under Item 7(a) above.
These unaudited pro forma financial statements are not necessarily indicative of
the results that actually would have occurred if the combination had taken place
during such periods or which may be attained in the future.
<PAGE>
<TABLE>
PRO FORMA CONDENSED COMBINED BALANCE SHEET
(Unaudited)
June 30, 1998
<CAPTION>
----------------------------------------------------
Pro Forma
PrimeSource GASG(1) Adjustments(2) Combined
----------------------------------------------------
(Dollars in thousands)
ASSETS
Current Assets
<S> <C> <C> <C>
Cash ........................................ $ 0 $ 212 $ 212
Receivables ................................. 65,242 21,853 87,095
Inventories ................................. 49,402 19,345 68,747
Other current assets ........................ 4,305 351 4,656
- ------------------------------------------------------------------------------------------------------
Total Current Assets ........................ 118,949 41,761 160,710
Property, plant and equipment, net ............ 12,251 1,102 $ (25) (e) 13,328
Goodwill ...................................... 4,484 2,960 (2,960) (b)
13,200 (d)
25 (e) 17,709
Other assets .................................. 3,467 154 3,621
- ------------------------------------------------------------------------------------------------------
Total Assets .................................. $139,151 $ 45,977 $ 10,240 $195,368
======================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt ........... $ 1,327 $ 1,327
Accounts payable ............................ 32,373 $ 10,455 42,828
Payable to Bell ............................. $ 21,253 (c) 21,253
Book overdraft .............................. 5,293 5,293
Other accrued liabilities ................... 8,359 1,875 700 (c) 10,934
- ------------------------------------------------------------------------------------------------------
Total Current Liabilities ................... 47,352 12,330 21,953 81,635
- ------------------------------------------------------------------------------------------------------
Long-term obligations, net of current portion . 33,168 21,934 (c) 55,102
Accrued pension and other liabilities ......... 4,228 4,228
- ------------------------------------------------------------------------------------------------------
Total Liabilities ............................. 84,748 12,330 43,887 140,965
- ------------------------------------------------------------------------------------------------------
Shareholders' Equity
Common stock ................................ 65 65
Additional paid-in capital .................. 25,647 25,647
Retained earnings ........................... 28,691 28,691
Parent company investment ................... 33,647 (33,647)(a) 0
- ------------------------------------------------------------------------------------------------------
Total Shareholders' Equity .................. 54,403 33,647 (33,647) 54,403
- ------------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity ..... $139,151 $ 45,977 $ 10,240 $195,368
======================================================================================================
</TABLE>
<PAGE>
<TABLE>
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(Unaudited)
<CAPTION>
For the six months ended June 30, 1998
------------------------------------------------------
Pro Forma
PrimeSource GASG(1) Adjustments(3) Combined
------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Sales .............................. $ 206,374 $ 71,474 $ 277,848
Cost of Sales ...................... 168,344 59,962 228,306
- -------------------------------------------------------------------------------------------
Gross Margin ....................... 38,030 11,512 49,542
Selling and administrative expenses 31,586 7,305 38,891
Depreciation and amortization ...... 1,123 380 $ 274 (a) 1,777
Allocated expenses ................. 1,516 (343)(b) 1,173
- -------------------------------------------------------------------------------------------
Income From Operations ............. 5,321 2,311 69 7,701
Interest expense ................... (1,454) (1,536)(c) (2,990)
Other income-net ................... 180 180
- -------------------------------------------------------------------------------------------
Income Before Income Taxes ......... 4,047 2,311 (1,467) 4,891
Income tax expense (benefit) ....... 1,665 971 (576)(d) 2,060
- -------------------------------------------------------------------------------------------
Net income.......................... $ 2,382 $ 1,340 $ (891) $ 2,831
===========================================================================================
Net income per share:
Basic .......................... $ .37 $ .43
Diluted ........................ .36 .42
===========================================================================================
</TABLE>
<PAGE>
<TABLE>
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(Unaudited)
<CAPTION>
For the year ended December 31, 1997
------------------------------------------------------
Pro Forma
PrimeSource GASG(1) Adjustments(3) Combined
------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Sales .............................. $ 414,867 $ 156,288 $ 571,155
Cost of Sales ...................... 343,116 131,724 474,840
- -------------------------------------------------------------------------------------------
Gross Margin ....................... 71,751 24,564 96,315
Selling and administrative expenses 60,845 17,334 78,179
Depreciation and amortization ...... 2,412 834 $ 561 (a) 3,807
Allocated expenses ................. 2,721 (749)(b) 1,972
- -------------------------------------------------------------------------------------------
Income From Operations ............. 8,494 3,675 188 12,357
Interest expense ................... (2,913) (3,072)(c) (5,985)
Gain on sale of capital lease ...... 3,658 3,658
Loss on business divestiture ....... (401) (401)
Other income-net ................... 515 515
- -------------------------------------------------------------------------------------------
Income Before Income Taxes ......... 9,353 3,675 (2,884) 10,144
Income tax expense (benefit) ....... 3,862 1,564 (1,133)(d) 4,293
- -------------------------------------------------------------------------------------------
Net income.......................... $ 5,491 $ 2,111 $ (1,751) $ 5,851
===========================================================================================
Net income per share:
Basic .......................... $ .84 $ .90
Diluted ........................ .83 .88
===========================================================================================
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
NOTE 1 PRO FORMA HISTORICAL ACCOUNTS
Represents the historical accounts of GASG for each of the periods
presented as shown in the financial statements presented under Item 7(a)
above.
NOTE 2 PRO FORMA CONDENSED BALANCE SHEET - ADJUSTMENTS
(a) Eliminate GASG parent company investment.
(b) Eliminate GASG historical goodwill.
<TABLE>
<CAPTION>
(c) Record cost of acquisition as follows(in thousands):
<S> <C>
Additional debt .................................. $21,934
Payable to Bell, payable within 90 days of closing 21,253
Accrued acquisition expenses ..................... 700
-------------------------------------------------------------
Total ............................................ $43,887
=============================================================
</TABLE>
(d) Record goodwill on acquisition
(e) Adjust tangible assets to fair value.
NOTE 3 PRO FORMA CONDENSED RESULTS OF OPERATIONS-ADJUSTMENTS (in thousands)
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1998 December 31, 1998
--------------------------------------
(a) Adjust selling and administrative expenses
<S> <C> <C>
Eliminate GASG historical goodwill amortization..... ($ 57) ($ 100)
Add amortization of goodwill on acquisition ........ 331 661
------------------------------------------------------------------------------------------
Adjustment to selling and administrative expenses..... $ 274 $ 561
==========================================================================================
(b) Eliminate interest charge in GASG allocated expenses ($ 343) ($ 749)
==========================================================================================
(c) Record interest expense on acquisition.............. ($1,536) ($3,072)
==========================================================================================
(d) Record tax provision on pro forma adjustments ...... ($ 576) ($1,133)
==========================================================================================
</TABLE>
<PAGE>
EXHIBITS
Exhibit No. Name of Exhibit
- ---------- ---------------------------------------
2 ASSET PURCHASE AGREEMENT
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PRIMESOURCE CORPORATION
(REGISTRANT)
BY /s/ WILLIAM A. DEMARCO
William A. Demarco
Vice President of Finance and
Chief Financial Officer
DATE November 25, 1998
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT ("Agreement") made this 28 day of August, 1998
between PrimeSource Corporation ("PrimeSource") and Bell Industries, Inc.
("Bell"), and sets out the terms and conditions pursuant to which PrimeSource
will purchase certain of Bell's assets.
Unless otherwise specifically noted, all assets, liabilities,
inventory, leases, lists, names, records, etc. being purchased or assumed by
PrimeSource hereunder pertain solely to the Graphic Arts Supply Group of Bell
(herein "GASG").
ARTICLE 1
CLOSING AND PURCHASE OF ASSETS
1.1 Closing and Closing Date. The closing of the transactions
contemplated hereby (the "Closing") shall occur at the offices of Bell in El
Segundo, California on the "Closing Date" which shall be on September 14, 1998,
or some other mutually agreeable date, but in no event later than October 30,
1998 (the "Termination Date").
1.2 Purchase of Assets from Bell. On the Closing Date, subject to the
terms and conditions hereof and in reliance upon the representations, warranties
and agreements contained herein, PrimeSource shall purchase from Bell and Bell
shall sell, convey, transfer and assign to PrimeSource, free and clear of all
liens and encumbrances, subject to Section 2.2, the following assets as of the
Closing Date, in each case pertaining solely to the GASG assets (collectively,
the "Assets"): <PAGE>
(a) All inventory of GASG (including new and used equipment
and parts). Such purchased inventory shall be set out on Schedule 1.2(a) which
will be prepared by Bell and attached to this Agreement when the Closing Balance
Sheet has been finalized. A physical inventory of GASG inventory will be taken
jointly by PrimeSource and Bell as of the Closing Date. The items identified by
the physical inventory shall provide the basis for determination of the unit
quantities of the inventories for preparation of the Closing Balance Sheet, with
individual items valued at Bell's book value which is in accordance with
generally accepted accounting principles consistently applied ("GAAP").
Items on order by Bell as of the Closing Date and not yet received into
inventory shall be paid for by PrimeSource, provided such items for stock are in
usual amounts and ordered in the normal course of the GASG business. To the
extent any ordered (but not received) inventory stock has been recorded as a
liability as of the Closing Date, such liability will not be deemed outstanding
for the purpose of determining the Final Purchase Price. (b) All accounts and
notes receivable of GASG as of the Closing Date (the "Receivables"). The
Receivables shall be listed on Schedule 1.2(b) which shall be prepared by Bell
and attached hereto within 12 days of Closing.
(c) GASG's customer lists, trademarks, servicemarks and
tradenames as listed on Schedule 1.2(c).
(d) Contracts, open orders, books and records, or copies
thereof, of GASG. All of such items will be listed on Schedule 1.2(d) to be
attached prior to or at Closing. Bell may keep photocopies of all such items,
and in the event that PrimeSource wishes to dispose of any such items within
five years the originals shall be returned to Bell.
(e) All property, plant and equipment of GASG valued at GASG's
net depreciable basis. A final listing of such assets will be prepared by Bell
and attached hereto within 12 days of Closing as Schedule 1.2(e).
(f) All other miscellaneous tangible assets of GASG as listed
on the Closing Balance Sheet.
PrimeSource is only purchasing those Assets described in 1.2
(a) through (f) above and shall in no regard be deemed a legal successor to
Bell.
<PAGE>
1.3 Purchase Price. The purchase price ("Purchase Price") for the
Assets shall be Forty Three Million Five Hundred Thousand Dollars ($43,500,000);
provided however, the final Purchase Price shall be increased or decreased
dollar-for-dollar to the extent the net tangible assets being purchased by
PrimeSource have a value on the Closing Date greater or less than Thirty One
Million Dollars ($31,000,000). Net tangible assets shall mean total tangible
assets acquired (inventory, property, plant, and equipment, Receivables,
pre-paid expenses, and other items classified as tangible assets per GAAP), net
of reserves, and less the book value of Assumed Liabilities, all valued based
upon Bell's book values in accordance with GAAP or as otherwise set out herein.
Two dollars of the Purchase Price will be allocated to items in 1.2 (c) & (d)
for income tax purposes.
The final Purchase Price for the Assets will be determined by
a Closing Balance Sheet and final schedules of GASG as of the Closing Date which
will be prepared in accordance with GAAP by Bell and based on the criteria above
in 1.2 (a), (b) & (e) for valuing assets and delivered to PrimeSource within 40
days of Closing; provided, however, that there will be no reserve for inventory
and the reserve for receivables will be $220,529. Along with the Closing Balance
Sheet, Bell shall prepare and deliver to PrimeSource a calculation of "net
tangible assets" of GASG as of the Closing Date based upon the Closing Balance
Sheet. Bell shall promptly provide PrimeSource access to all related accounting
entries, working papers and such other documentation as may be reasonably
requested by PrimeSource. In the event that PrimeSource disputes any item set
forth in, or any item omitted from, the Closing Balance Sheet, or the
calculation of "net tangible assets", the parties shall attempt, in good faith,
to resolve such dispute or controversy. In the event the parties cannot resolve
such dispute or controversy, it shall be resolved in accordance with the
procedures set forth below. Within 20 days of the receipt of the Closing Balance
Sheet, final schedules and calculation of "net tangible assets", PrimeSource
shall give notice to Bell setting forth in reasonable detail the basis for any
such dispute or controversy. PricewaterhouseCoopers LLP ("Accountants"),
independent accountants for both PrimeSource and Bell, shall promptly commence a
review of the matter and issue its decision to both parties within 15 days. If
either party is not satisfied with the opinion so rendered, then within10 days
of receipt of the decision it will so notify the other party, and PrimeSource
<PAGE>
and Bell shall jointly, within 10 days thereafter, appoint a national accounting
firm other than Accountants to resolve such dispute or controversy. If the
parties cannot agree on the selection of such national accounting firm, they
shall select such national accounting firm by lot among the "Big-Five"
accounting firms other than Accountants (the "Neutral Accountants") to resolve
such dispute or controversy. The Neutral Accountants shall make their
determination as to such dispute or controversy within 30 days of their
appointment and their determination shall be final, binding and conclusive as
between PrimeSource and Bell, absent fraud or manifest error. The fees and
disbursements of the Neutral Accountants shall be apportioned between
PrimeSource and Bell in such manner as the Neutral Accountants shall deem
equitable in light of the issues raised and the degree to which the parties
prevail on each such issue. Upon final determination, if the net tangible assets
are more or less than $31 million, the difference will be transmitted to the
other party within three business days by bank wire, except that in the event
that the net tangible assets are less than $31 million and there remains
outstanding any unpaid portion of the Purchase Price, the difference may be
offset against said unpaid amount.
1.4 Delivery and Payment. At the Closing Date, Bell shall execute and
deliver to PrimeSource a Bill of Sale transferring the Assets (in the form of
Exhibit A attached), an Assignment of Contracts specifically related to the
Assets and business of the GASG (in the form of Exhibit B attached), and such
other documents as PrimeSource may reasonably request so as to effect a complete
and valid transfer to PrimeSource of the Assets, free and clear of all liens and
encumbrances. The assumed Purchase Price of $43.5 million, less a good faith
estimate by Bell of the Receivables as of the Closing Date (the "Estimated
Receivables") shall be paid by PrimeSource to Bell at Closing by bank wire.
Until the sooner of ninety (90) days after the Closing Date or amounts
equal to the Estimated Receivables have been received by Bell, customer checks
relating to both the Receivables and post-closing receivables shall go into the
existing Bell lockbox at First Chicago Bank number 100630 located in Pasadena,
California (account number 55-50807), the Bell/Olsen bank account (account
number 115-5083423) at NorWest Bank located in Omaha, Nebraska, or the
Bell/Olsen bank account (account number 635-5038443) at NorWest Bank located in
Minneapolis, Minnesota. All funds attributable to Receivables shall be wired to
Bell as it from time to time may designate. As soon as practical after the close
of business of each day, Bell shall wire all funds relating to post-receivables
to PrimeSource's bank account at First Union Bank, ABA No. 031201467, account
number 2000107583787. Funds will be allocated in accordance with the invoice(s)
<PAGE>
designated by the customer or if no designation is made and the amount paid does
not match any unpaid invoice, then the payment will be applied to the oldest
unpaid invoice. As soon as an amount equal to the Estimated Receivables has been
received, then the receipts of all Receivables collected thereafter shall be
transmitted to PrimeSource's bank account above. If after ninety (90) days an
amount equal to the Estimated Receivables has not been received by Bell,
PrimeSource shall wire Bell to its account at Union Bank of California, Los
Angeles, California (account number 0710004048) the balance of the Estimated
Receivables, irrespective of whether the funds for the remaining Receivables
have been collected or whether there exists a dispute regarding the proper
valuations thereof as set forth on the Closing Balance Sheet.
1.5 Guarantee of Certain Receivables. Bell guarantees that the
following receivables will be paid within 6 months of the Closing Date: all
non-Olson accounts receivable from Schedule 1.2(b) that will be listed on
Schedule 1.5 to be prepared by PrimeSource within 14 days of the Closing Date
and to contain not more than $1,700,000 of sums specified by PrimeSource.
Within 10 days of the end of the six-month period, PrimeSource will
provide Bell with an accurate list of the items qualifying for the guarantee
under this ss.1.5 and Bell will purchase such accounts by bank wire within 10
days of receipt of this list. Upon receipt of these funds PrimeSource will
immediately assign these accounts to Bell along with any supporting
documentation.
<PAGE>
1.6 Guarantee of Certain Inventory. PrimeSource may designate up to
$2.7 million of the inventory items listed on Schedule 1.2(a) for inclusion on a
Schedule 1.6 to be prepared by PrimeSource within 14 days from the Closing Date
and attached hereto. Bell guarantees that PrimeSource will realize sale or
return proceeds from each item on Schedule 1.6, during the six-month period
beginning on the Closing Date, that are not less than the book value of such
item on Schedule 1.2(a). At the end of the six-month period, Bell shall pay
PrimeSource for (a) the value of the inventory items listed on Schedule 1.6 that
have not been sold or returned to vendors, (b) for each item sold by PrimeSource
or returned to its vendor for an amount less than its value stated on Schedule
1.6, the difference between the sale price (or return proceeds) and the value
listed on Schedule 1.6, and (c) any additional expenses approved in advance by
Bell incurred on the sale of Schedule 1.6 items during the six-month period such
as special sales incentives, conversion costs, and freight costs of returning
items to vendors and transferring items to other locations.
Within 10 days of the end of the six-month period, PrimeSource will
provide Bell with an accurate list of the items qualifying for guarantee under
this ss.1.6 and Bell will pay PrimeSource the total amount owed under this
guarantee by bank wire within 10 days of receipt of this list. Upon receipt of
these funds PrimeSource will make any Schedule 1.6 unsold inventory available to
Bell.
PrimeSource agrees to make commercially reasonable efforts to sell or
return the inventory on Schedule 1.6 during the six-month post-Closing period.
1.7 Liabilities and Potential Liabilities. PrimeSource does not assume
any past, present or future liabilities or obligations of Bell pursuant to this
Agreement or otherwise, whether such liabilities or obligations are known or
unknown, actual or contingent, asserted or not, except as specified below
(herein the "Assumed Liabilities") which will be assumed by PrimeSource at the
Closing Date and PrimeSource shall execute and deliver to Bell at Closing as
Assumption of Liabilities Agreement in the form of Exhibit B hereto evidencing
such assumption:
a. the liabilities of GASG as reflected on the Closing
Balance Sheet including accounts payable;
b. the contingent and unknown liabilities of the GASG up
to $870,000 in the aggregate after receipt of any
insurance proceeds from Bell insurance coverage, but
excluding environmental liabilities, any accounts
payable or other known liabilities not properly
recorded in accordance with GAAP or this Agreement,
and any liabilities in connection with employment
agreements with B. Greenspan, R. Greenspan, T.J.
Dunn, J.
Hasse and T. Neis;
<PAGE>
c. personal property leases (trucks, forklifts,
telephone systems, etc.), an accurate list of which
are attached hereto as Schedule 1.7(c);
d. real estate leases, an accurate list of which is
attached hereto as Schedule 1.7(d);
e. supply contracts entered into prior to the Closing
Date;
f. the employment agreement with Earl Olson; and
g. all consignment agreements.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF BELL
Bell represents and warrants to PrimeSource that:
2.1 Authority. Bell is a corporation duly organized, validly existing,
and in good standing under the laws of the state of California. The execution
and delivery of this Agreement and the related documents to PrimeSource, and the
consummation of the transactions contemplated by this Agreement have been duly
authorized and each will be a valid and binding obligation of Bell. All
corporate action on the part of Bell and its directors and shareholders
necessary for the authorization, execution, delivery and performance of all
obligations of Bell under this Agreement and related documents has been taken.
Neither the execution of this Agreement and related documents nor the
performance by Bell of the transactions required hereunder and thereunder will
constitute a violation of or default under, any law, regulation, order,
contract, commitment, or restriction of any kind to which Bell is a party or by
which Bell is bound, subject, however, to the fulfillment of the conditions set
forth in Sections 5.4 and 5.5.
2.2 Title and Condition of Assets. Bell will have at Closing good and
marketable title to the Assets, free and clear of all title defects, security
interests, pledges, options, claims, liens, encumbrances, and restrictions of
any nature whatsoever (including, without limitation, leases, chattel mortgages,
conditional sale contracts, purchase money security interests, collateral
security arrangements and other title or interest-retaining agreements);
provided, however, to the extent that any Asset is encumbered by bank financing,
such lien may remain on the Asset after Closing and Bell hereby agrees to hold
PrimeSource harmless from such lien(s), and further provided that the parties
agree that certain vendors' and lessors' approvals will not be obtained by the
Closing Date.
<PAGE>
2.3 Litigation and Other Proceedings. Other than as set out on Schedule
2.3 hereto, Bell is not a party to any pending or, to the best knowledge of
Bell, threatened action, suit, labor dispute, proceeding, investigation, or
discrimination claim in or by any court or governmental agency arising from the
actions or inaction's of Bell which could have any significant adverse impact on
PrimeSource or its business after Closing. Bell is not subject to any order,
writ, judgment, decree or injunction barring or adversely affecting the Assets
or transactions contemplated hereby.
2.4 Personnel Matters. Bell shall retain responsibility for any and all
liability incurred in connection with the termination of its employees as of the
Closing Date, whether or not such employees are subsequently offered employment
by PrimeSource except to the extent any such liabilities are Assumed
Liabilities. Bell represents that it has no labor unions and that there has been
no union organizing activities related to Bell since January 1, 1996.
To the best of Bell's knowledge, Bell has not violated any
employment laws, the violation of which would have a material adverse effect on
the Assets or Assumed Liabilities. Schedule 2.4 discloses any existing GASG
employee leave of absence that has been identified or designated as a leave of
absence subject to the FMLA.
No promise has been made by Bell to any of its GASG employees
that PrimeSource will continue, assume or otherwise be responsible for any of
the employee benefits that Bell has provided or is providing to such employees,
or that PrimeSource will provide any employee benefits to employees who are
hired by PrimeSource subsequent to Closing.
2.5 Accuracy of Financial Information. The Closing Balance Sheet to be
delivered to PrimeSource by Bell after the Closing Date will be prepared from
(and will be in accordance with) the books and records of the Company, will be
prepared in accordance with GAAP except as set forth on Schedule 2.5 or as
otherwise specified in this Agreement, and will fairly present in all material
respects as of the Closing Date the financial condition of GASG.
All other financial information concerning GASG delivered and
to be delivered to PrimeSource by Bell on or prior to the Closing Date (a) fully
and fairly reflect the transactions set forth therein as recorded on the books
and records of Bell in accordance with Bell's past practices and (b) fairly
present in all material respects as of the dates indicated the information set
forth therein.
<PAGE>
2.6 Brokers. PrimeSource will not be obligated to pay any broker's or
finder's fees as a result of activities by Bell.
2.7 Taxes. Bell has filed all tax returns or reports which could affect
the Assets or Assumed Liabilities which were required to be filed by it for all
periods prior to or including the Closing Date, and such returns or reports are
correct and complete in all material respects. All federal, state and local
income, profits, franchise, sales, use, occupation, property, excise, payroll,
withholding, employment, estimated and other taxes of any nature, including
interest, penalties and other additions to such taxes applicable to the assets,
liabilities and business of GASG ("Taxes"), payable by, or due from, Bell for
all periods prior to the date hereof have been fully paid or adequately reserved
for by Bell, or, with respect to Taxes required to be accrued, Bell has properly
accrued such Taxes. All Taxes which Bell is required by law to withhold or
collect relating to the business of GASG have been duly withheld or collected
and have been paid over the appropriate governmental agency or authority or are
properly recorded as a liability on the books of Bell.
2.8 Property, Plant and Equipment. The assets on Schedule 1.2(e) are
being directly utilized in GASG's business. Such assets that, as of the Closing
Date, have not been fully depreciated by Bell, are in existence and in working
condition, in accordance with industry standards taking into account the age
thereof.
2.9 Reliance. The foregoing representations and warranties are made by
Bell with the knowledge and expectation that PrimeSource is placing complete
reliance thereon.
2.10 Insurance. Bell will cooperate with PrimeSource in asserting
coverage under Bell's insurance policies for claims and litigation arising
before and after the Closing Date that pertain to activities or omissions of
Bell relating to the business of GASG prior to the Closing Date when such a
claim is filed against PrimeSource or PrimeSource is named as a defendant in
such litigation.
<PAGE>
2.11 Environmental Matters. Bell reasonably believes that it has
obtained and is in compliance with all permits, licenses and such other
authorizations required to be obtained for the operation of GASG's business and
the ownership and use of the Assets under current applicable federal, state and
local laws, rules and regulations relating to pollution or protection of human
health and the environment, except for any permits, licenses or authorizations
which, if not obtained or complied with, would not have a material adverse
effect on business or liabilities of GASG.
2.12 Certain Events. Except as disclosed in Schedule 2.12 hereto, since
June 30, 1998 Bell has operated the business in the ordinary course and, except
as set forth on Schedule 2.12 hereto, there has not occurred:
(a) any damage, destruction or loss (whether or not
covered by insurance) materially adversely affecting
the Assets or Assumed Liabilities;
(b) any sale, transfer, pledge or other disposition of
any tangible or intangible Assets except in the
ordinary course of business;
(c) any capital appropriation or expenditure or
commitment therefor on behalf of Bell for the GASG
business in excess of $25,000;
(d) any event or any other change in the condition of
Bell which has, or could reasonably be expected to
have, a material adverse effect on the Assets, the
Assumed Liabilities, or the GASG business;
(e) any default by Bell in any material liability or
obligation relating to the GASG business or any
material adverse change in the terms of any contract
or instrument relating to the business of GASG;
<PAGE>
(f) any waiver, cancellation, sale or other disposition,
for less than the face amount thereof, of any
material claim or right which Bell has against others
which relate to the GASG business or the Assets;
(g) any change in any method of accounting or
accounting practice relating to the GASG
business; or
(h) any notices that any supplier or customer has taken
or contemplates any steps which could materially and
adversely disrupt the GASG business.
2.13 Contracts. Bell has in all material respects performed all of its
obligations required to be performed by it to the date hereof under, and is not
in default in any material respect under, any contract that PrimeSource is
assuming under Section 1.7 above.
2.14 Condition of Facilities. To the best of Bell's knowledge, the GASG
facilities are in material compliance with local building, zoning and fire
protection laws and regulations, and have no known defect which could materially
adversely effect the business of GASG.
2.15 Transactions with Affiliates. During the last two years, with
respect to or for the GASG business, Bell has not purchased, leased, or
otherwise acquired any material property or assets or obtained material property
or assets or obtained any material services from, or sold, leased or otherwise
disposed of any material property or provided any material services to, any
person or entity which is an "affiliate" of Bell or any officer or director of
Bell or any member of the immediate family of such officer and director.
2.16 Material Misstatements or Omissions. No representation or warranty
of Bell in this Agreement nor in any document, statement, certificate, or
schedule furnished or to be furnished to PrimeSource pursuant hereto, or in
connection with the transactions contemplated hereby (taken as a whole),
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact, necessary to make the statements or facts
contained therein or herein not misleading. All representations and warranties
of Bell shall be deemed made as of the date of this Agreement and again as of
the Closing Date.
<PAGE>
2.17 Other Negotiations. Prior to the termination of this Agreement, Bell shall
not pursue, initiate, encourage or engage in any negotiations or discussions
with, or provide any information to, any other person or entity (other than
PrimeSource and its representatives) regarding the sale of any of the Assets.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PRIMESOURCE
PrimeSource hereby represents and warrants to Bell that:
3.1 Authority. PrimeSource is a corporation duly organized, validly
existing, and in good standing under the laws of the Commonwealth of
Pennsylvania and has full corporate power and authority to enter into this
Agreement and to perform its obligations under this Agreement. The execution,
delivery, and performance of this Agreement by PrimeSource have been duly
authorized by all necessary action of the Board of Directors of PrimeSource or
its Executive Committee under delegated authority and is a valid and binding
obligation of PrimeSource. PrimeSource has duly and validly executed and
delivered this Agreement, and this Agreement constitutes a valid, binding and
enforceable obligation of PrimeSource in accordance with its terms. Neither the
execution of this Agreement and related documents nor the performance by
PrimeSource of the transactions required hereunder and thereunder will
constitute a violation of or default under, any law, regulation, order,
contract, commitment, or restriction of any kind to which PrimeSource is a party
or by which PrimeSource is bound subject, however, to the fulfillment of the
conditions set forth in Sections 4.6 and 4.7.
3.2 Accuracy of Documents and Information. All instruments, agreements,
other documents, and written information delivered and to be delivered to Bell
or its representatives by PrimeSource are and will be complete and correct in
all material respects as of the Closing Date.
<PAGE>
3.3 Employees and Employee Benefits. PrimeSource agrees that, immediately
following the Closing, it shall offer employment to each employee of the GASG.
These employees will be identified by payroll code or otherwise on Schedule 3.3
to be attached hereto prior to Closing (collectively, the "Employees"), such
employment to be effective as of the Closing Date. Such employment shall be
offered on terms reasonably comparable to those such Employee now enjoys and is
entitled to receive from Bell immediately before the Closing, but consistent
with PrimeSource compensation programs. Each such offer of employment to an
Employee (i) shall be consistent with the employment policies and practices of
PrimeSource and (ii) shall be contingent on such Employee assigning his or her
personnel file to PrimeSource. PrimeSource represents and warrants to Bell that
it intends to continue such employment arrangements with such Employees for a
period of at least 90 days following the Closing Date, subject to terminations
for good cause or otherwise in the ordinary course of PrimeSource's business.
In connection with the foregoing, PrimeSource acknowledges and agrees
that it is responsible for the notice and other obligations, if any, imposed by
the WARN Act with respect to any termination of GASG employees on or after the
Closing Date and the foregoing paragraph is provided to Bell for the sole
purpose of relieving it from any obligations under the WARN Act.
The provisions of the foregoing two paragraphs are for the benefit of
Bell and PrimeSource only, and no other person or entity (including without
limitation past, present or future employees of the GASG) will be deemed a
third-party beneficiary of this Agreement.
All employees of Bell hired by PrimeSource will be given credit for
their past service with Bell for purposes of calculating (a) eligibility to
enroll in the PrimeSource 401(k) Savings Plan, and (b) vacation time under the
PrimeSource vacation plan, however, the Bell vacation entitlement formula will
continue to apply until January 1, 1999. No credit for prior service will be
given for the PrimeSource pension plan or other benefits.
Bell employees hired by PrimeSource shall be eligible to participate in
PrimeSource's health benefits (medical, dental, vision, life insurance, AD&D
insurance, and short & long term disability) on the first of the month following
thirty days of service with PrimeSource and other benefits normally accorded to
new employees. For the interim period of time from the Closing Date until such
first of the month, the former Bell employees may retain certain prior health
benefit coverage under Bell's plans under the provisions of COBRA and
PrimeSource will pay Bell the COBRA rate for such coverage. For this interim
period, PrimeSource will collect the normal Bell employee contributions for such
coverage from the former Bell employees who want COBRA coverage for this interim
period.
<PAGE>
3.4 Other Proceedings. PrimeSource is not subject to any order, writ,
judgment, decree or injunction barring or adversely affecting the transactions
contemplated hereby.
3.5 Brokers. Bell will not be obligated to pay any broker's or finder's
fee as a result of activities of PrimeSource.
3.6 Material Misstatements or Omissions. No representation or warranty
of PrimeSource in this Agreement nor in any document, statement, certificate, or
schedule furnished or to be furnished to Bell pursuant hereto, or in connection
with the transactions contemplated hereby (taken as a whole), contains or will
contain any untrue statement of a material fact, or omits or will omit to state
a material fact, necessary to make the statements or facts contained therein or
herein not misleading. All representations and warranties of PrimeSource shall
be deemed made as of the date of this Agreement and again as of the Closing
Date.
ARTICLE 4
CONDITIONS PRECEDENT TO PRIMESOURCE'S PURCHASE OBLIGATIONS
The obligation of PrimeSource to close the transactions
described above is subject to the fulfillment of all of the following conditions
at or prior to the Closing Date, any one or more of which may be waived by
PrimeSource in its sole discretion.
4.1 No Litigation. No suit, investigation, action or other proceedings
shall be seriously threatened or pending before any court or governmental agency
which may bar or adversely affect the transactions contemplated by this
Agreement or otherwise adversely affect the business of GASG. In the event
PrimeSource becomes aware of any of the foregoing proceedings, it shall
immediately notify Bell of such proceedings and the court or agency wherein such
proceeding is involved or threatened.
<PAGE>
4.2 Representations and Warranties. The representations and warranties
of Bell set forth herein shall be true and correct in all material respects as
of the Closing Date.
4.3 No Adverse Event. The Assets shall not have been substantially
damaged or otherwise adversely affected in any material respect by any casualty,
act of God or any judicial, administrative or governmental proceeding. Bell
assumes all risk of loss due to fire or other casualty up to the time of
Closing. In the event any such loss occurs prior to the Closing Date, or in the
event the business of Bell is closed or interrupted by reason of any event not
in the ordinary course of business, PrimeSource shall have the right to
terminate this Agreement by written notice to Bell received prior to the Closing
Date, and upon such termination there shall be no further liability on the part
of Bell or PrimeSource hereunder.
4.4 Documents. All actions, instruments, resolutions, certificates, and
documents reasonably requested by PrimeSource to be executed and delivered to
PrimeSource in order to convey the Assets to PrimeSource as provided in 1.4 and
carry out this Agreement, and all other relevant legal matters, shall be
reasonably satisfactory to PrimeSource.
4.5 Non-Compete. Bell shall have executed a five-year Non-Compete
Agreement in the form attached as Exhibit 4.5.
4.6 Hart-Scott-Rodino. The waiting period under the Hart-Scott-Rodino
Antitrust Improvement Act of 1976 (the "HSR Act") with respect to the
transaction contemplated by this Agreement shall have expired or been
terminated. The U.S. Department of Justice or Federal Trade Commission shall not
have issued any adverse order or instigated any investigation of the instant
transaction.
4.7 Financing. PrimeSource shall have obtained the consent of its
revolving credit lenders under its Credit Agreement dated as of November 1,
1996.
<PAGE>
ARTICLE 5
CONDITIONS PRECEDENT TO BELL'S OBLIGATIONS
The obligations of Bell to consummate the transactions contemplated by
this Agreement are subject to the fulfillment, prior to or at the Closing Date,
of each of the following conditions, any one or a portion of which may be
waived, in writing, by Bell:
5.1 Representations, Warranties and Covenants of PrimeSource. All
representations and warranties made in this Agreement by PrimeSource shall be
true and correct in all material respects as of the Closing Date as fully as
though such representations and warranties had been made on and as of the
Closing Date, and PrimeSource shall have in all respects performed and complied
with its obligations under all the covenants, agreements and conditions required
by this Agreement and all related documents.
5.2 Payment of Purchase Price. PrimeSource shall have paid
the Purchase Price to Bell in accordance with 1.4.
5.3 Resale Certificate. PrimeSource shall deliver to Bell a properly
completed and executed resale exemption certificate indicating that the
inventory type assets are being purchased by PrimeSource for the purpose of
resale in the normal course of PrimeSource's business.
5.4 Hart-Scott-Rodino. The waiting period under the HSR Act with
respect to the transaction contemplated by this Agreement shall have expired or
been terminated. The U.S. Department of Justice or Federal Trade Commission
shall not have issued any adverse order or instigated any investigation of the
instant transaction.
5.5 Lenders' Approval. Bell shall have obtained the consent of its
lenders under its Credit Agreement dated as of January 7, 1997 to the
transactions contemplated herein.
<PAGE>
ARTICLE 6
COVENANTS OF BELL
Bell hereby covenants and agrees with PrimeSource as follows:
6.1 Conduct of Bell Prior to Closing. Between the date hereof and the
Closing, Bell shall:
not increase the rate of compensation of any Bell employee who
may be hired by PrimeSource at the Closing except as in accordance with Bell's
past practices and, in the event Bell has increased the rate of compensation of
any such employee PrimeSource shall be so notified at least five days before
Closing;
use reasonable best efforts to maintain good relations with its
customers and suppliers;
not take any action or fail to take any action which taking or
failure would directly or indirectly have a material adverse impact on the
Assets (including subjecting them to any lien or encumbrance) or the
transactions contemplated hereby;
not knowingly take any action or, insofar as it is able to do
so, suffer to be taken any action that will cause any representation, warranty,
or schedule to this Agreement to be untrue at the Closing Date;
continue to conduct the business of Bell consistent with good
business practices; and
take all steps reasonably necessary so as to be able to
transfer the Assets and Assumed Liabilities to PrimeSource on the Closing Date
in accordance with the terms of this Agreement.
6.2 Publicity. The timing and content of any disclosure to vendors or
customers must be approved in advance by PrimeSource.
<PAGE>
6.3 SAP Business System. From the Closing Date through February 28,
1999, PrimeSource will utilize Bell's SAP computer business system while
PrimeSource transitions the GASG business to the PrimeSource business system in
accordance with Schedule 6.3. The charge to PrimeSource for use of the SAP
system and supporting Bell personnel shall be $80,000 per month (prorated for
any partial month) through December 1998, and reimbursement for Bell's actual
out-of-pocket costs for January and February 1999.
6.4 Existing Warranties. Existing manufacturer and third party
warranties on the Assets are assigned to PrimeSource as of the Closing Date.
Except as specifically agreed otherwise herein, BELL MAKES NO REPRESENTATIONS OR
WARRANTIES OF ANY NATURE, EXPRESS OR IMPLIED, CONCERNING THE ASSETS, INCLUDING
WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
6.5 Use of Names. PrimeSource shall be entitled to use the Bell name
and all fictitious or assumed business names utilized by the GASG for a period
of 6 months after the Closing Date and leave the Bell name on inventory being
purchased hereunder for one year from the Closing Date.
6.6 Dealerships. Bell shall cooperate with and support PrimeSource in
any efforts to transfer dealerships utilized by the GASG business.
6.7 Officer's Certificate. If this Agreement is executed prior to the
Closing Date, the President and CFO of each party will reaffirm its own
representations and warranties hereunder at and as of the Closing Date by
Officer's Certificate.
6.8 Nonassignable Contracts. Nothing in this Agreement shall be
construed as an attempt or agreement to assign any contract or claim as to which
a required third party consent to assignment cannot be obtained. Bell agrees to
use its best efforts to obtain the consent of each other party to any such
contract, right or commitment to the assignment thereof to PrimeSource in all
cases in which such consent is required for assignment or transfer. If, however,
following the Closing, there is any contract, right or other commitment which
would have been assigned had the required consent been obtained, or any claim
for which consent to the assignment thereof cannot be obtained, Bell and
PrimeSource agree to take such action, to the extent permitted by applicable
law, in order for PrimeSource to obtain the benefit and assume the obligations
thereunder, including Bell designating PrimeSource as Bell's subcontractor or
agent for purposes of performing such contracts and Bell collecting monies due
under such contracts and paying the same promptly over to PrimeSource.
<PAGE>
ARTICLE 7
INDEMNIFICATION
7.1 Indemnification by Bell. From and after the Closing, Bell agrees to
defend, indemnify, and hold PrimeSource harmless from and against, and to
reimburse PrimeSource with respect to, any and all losses, damages, liabilities,
claims, judgments, settlements, costs, and expenses (including reasonable
attorney's fees) of every nature whatsoever incurred by PrimeSource by reason of
or arising out of or in connection with:
(i) any breach of any warranty or representation given by Bell
in this Agreement or in any schedule, or other document delivered to PrimeSource
pursuant to the provisions of this Agreement;
(ii) any claims made against PrimeSource for liabilities of
Bell or for operations of Bell prior to Closing which are not Assumed
Liabilities;
(iii) failure, partial or total, of Bell to perform any
agreement or covenant required by this Agreement or any other document delivered
to PrimeSource pursuant to this Agreement to be performed by it; and
(iv) the failure of the parties to comply with any bulk
transfer or bulk sales law or fraudulent conveyance law applicable to the
transactions contemplated herein.
<PAGE>
7.2 Sole and Exclusive Remedy. Except for fraud and gross negligence,
and except for any right to seek specific performance or recession, the
indemnification provided under this Article 7 shall be the sole and exclusive
remedy of the parties with respect to the breach of any covenant, representation
or warranty contained herein.
7.3 Permissible Offsets. PrimeSource shall make demand on Bell in
writing for the payment of any amounts due pursuant to this Article 7. In the
event the entire amount is not paid to PrimeSource within twenty-five days of
Bell's receipt of its demand, PrimeSource shall have the right, at its option
and in addition to any other remedies available to it, to enforce its claim by
setoff against, or deduction from, any amounts due or which may become due to
Bell or any assignee; provided PrimeSource may not offset against the Purchase
Price. If Bell disputes the amount claimed to be due under this Article 7 within
said twenty-five days, then the dispute shall be submitted to binding
arbitration in accordance with Section 8.10 of this Agreement.
7.4 Defense of Claim. If any claim of liability is made by a third
person against PrimeSource based on any liability, the existence of which would
give rise to a claim for indemnification under this Article 7, PrimeSource shall
with reasonable promptness give to Bell written notice of the claim and request
Bell to defend the same. Bell shall have the right to defend against such
liability at their expense, and shall give written notice to PrimeSource of the
commencement of such defense with reasonable promptness after receipt of the
written notice of the claim from PrimeSource. Failure to receive notice from
PrimeSource shall not relieve Bell of any liability which it might otherwise
have to PrimeSource under this Article 7 unless such failure materially,
adversely affects Bell's ability to defend against such claim. PrimeSource, its
successors and assigns shall be entitled at its own expense to participate with
Bell in such defense, but shall not be entitled in any way to release, waive,
settle, modify or pay such claim without the consent of Bell. In the event Bell
has assumed said defense and have employed counsel with respect thereto which
represents Bell and PrimeSource, PrimeSource shall also be entitled to employ
<PAGE>
separate counsel at its own expense. In the event Bell does not accept the
defense of the matter as provided above, PrimeSource shall have the full right
to defend against such liability, at Bell's expense, and shall be entitled to
settle or agree to pay in full such claimed liability in its sole discretion.
Bell and PrimeSource, and their successors and assigns, shall, in any event,
cooperate in the defense of such action and the records of each shall be
available to the other with respect to such defense.
7.5 Limitations on Indemnification. The indemnification obligations in
this Article 7 shall expire four years after Closing, except for claims arising
from potential (a) federal, state and local tax liabilities, (b) environmental
claims, and (c) claims involving clear title to the Assets which shall not
expire until 60 days after the expiration of all applicable statutes of
limitation.
7.6 Indemnification by PrimeSource. PrimeSource agrees to defend,
indemnify, and hold Bell, its officers, directors, shareholders and agents
harmless from and against, and to reimburse them with respect to, any and all
losses, damages, liabilities, claims, judgments, settlements, costs, and
expenses (including attorneys' fees) of every nature whatsoever incurred by them
by reason of or arising out of or in connection with (i) any breach of any
representation or warranty of PrimeSource contained in this Agreement, (ii) the
failure, partial or total, of PrimeSource to perform any agreement or covenant
required by this Agreement or any other document delivered to Bell pursuant to
this Agreement to be performed by it, (iii) any liability assumed by PrimeSource
hereunder, and (iv) the operation of the GASG business after Closing.
7.7 Insurance. The amount of any indemnification under this Agreement
will be reduced by any insurance proceeds paid to the claiming party as a result
of the loss or other matter for which indemnification is sought, as adjusted for
any increased insurance premiums. The claiming party will be obligated to submit
to its insurance carrier all coverable claims and pursue such claims against its
insurance carrier in good faith, and will not abandon or compromise any such
claim without the consent of the other party, which consent will not
unreasonably be withheld.
<PAGE>
ARTICLE 8
MISCELLANEOUS
8.1 HSR Act Filing and Expenses. PrimeSource and Bell shall pay their
own costs and expenses, including legal and accounting fees, relating to this
Agreement, without regard to whether the transaction is consummated.
Notwithstanding the foregoing, the parties shall jointly make the HSR Act
pre-merger clearance filing and share equally the out-of-pocket expenses
associated with the preparation and filing of this document, including legal
fees. PrimeSource shall be obligated, as the buyer of assets, to pay the HSR Act
filing fee.
8.2 Owned Real Estate. GASG operating facilities owned by Bell in
Omaha, NE and St. Paul, MN shall be leased to PrimeSource on a triple net lease
basis on the lease forms attached as Exhibits 8.2(a) and 8.2(b).
8.3 Sales Tax. PrimeSource shall be responsible for and shall pay or
reimburse when and if due, all applicable sales, transfer, excise, use or
similar tax which may be imposed by any domestic authority in connection with
the sale of the Assets.
8.4 Amendment. This Agreement shall not be amended, except by a writing
duly executed by both parties hereto.
8.5 Entire Agreement. This Agreement, including the schedules delivered
pursuant to this Agreement, contains all of the terms and conditions agreed upon
by the parties relating to the subject matter of this Agreement and supersedes
all prior agreements, negotiations, and communications of the parties, whether
oral or written, respecting that subject matter.
8.6 Governing Law. This Agreement shall be governed by, and
construed in accordance with the laws of the Commonwealth of Pennsylvania.
<PAGE>
8.7 Notices. All notices, requests, demands, and other communications
made in connection with this Agreement shall be in writing and shall be deemed
to have been duly given on the date of receipt or telecopy, if hand delivered or
telecopied to the persons identified below, or the third day after mailing if
mailed by certified mail, postage prepaid, return receipt requested addressed as
follows:
If to PrimeSource: With a copy to:
----------------- --------------
PrimeSource Corporation PrimeSource Corporation
4350 Haddonfield Rd., Suite 222 355 Treck Drive
Pennsauken, NJ 08109 Seattle, WA 98188
Attention: Chief Financial Officer Attention: General Counsel
Fax: 609-486-2999 Fax: 206-394-5587
If to Bell: With a copy to:
---------- --------------
Gordon Graham Eric Webber
Bell Industries, Inc. Irell & Manella
2201 E. El Segundo Boulevard 333 South Hope Street, Suite 3300
El Segundo, CA 90245 Los Angeles, CA 90071
Fax: 310-563-2500 Fax: 213-229-0515
Such addresses may be changed, from time to time, by means of a notice
given in the manner provided in this Section 8.5.
8.8 Severability. If any provision of this Agreement is held to be
unenforceable for any reason, it shall be modified rather than voided, if
possible, in order to achieve the intent of the parties to this Agreement to the
fullest extent possible. In any event, all other provisions of this Agreement
shall be deemed valid and enforceable to the full extent.
8.9 Survival of Representation and Warranties. All representations and
warranties contained in this Agreement, including the schedules delivered
pursuant to this Agreement, shall survive the Closing Date for the period of
indemnification in 7.5 or one year, whichever is longer.
<PAGE>
8.10 Waiver. Waiver of any term or condition of this Agreement by any
party shall not be construed as a waiver of a subsequent breach or failure of
the same term or condition, or a waiver of any other term or condition of this
Agreement.
8.11 Assignment. No party to this Agreement may assign, by operation of
law or otherwise, all or any portion of its rights, obligations, or liabilities
under this Agreement without the prior written consent of the other party to
this Agreement, which consent may be withheld in the absolute discretion of the
party asked to grant such consent. Any attempted assignment in violation of this
Section shall be void.
8.12 Arbitration. In the event of any dispute between Bell and
PrimeSource relating to this Agreement, the parties agree that such dispute
shall be resolved by means of binding arbitration in accordance with the
commercial arbitration rules of the American Arbitration Association, and
judgment upon the award rendered by the arbitrator(s) may be entered in any
court of competent jurisdiction. Depositions may be taken and other discovery
obtained during such arbitration proceedings to the same extent as authorized in
civil judicial proceedings in the state in which the arbitration is held. The
arbitrator(s) shall be limited to awarding compensatory damages and fees (in
accordance with 8.12) and shall have no authority to award punitive, exemplary
or similar type damages. If PrimeSource requests the arbitration then it will be
held in Los Angeles, CA. If Bell requests the arbitration then it will be held
in Philadelphia, PA.
8.13 Attorneys' Fees. In the event that either party to this Agreement
is required to, or does, maintain or defend any claim or cause of action against
or brought by, as the case may be, the other arising out of or relating to this
Agreement, the prevailing party in any such claim, or cause of action, or
arbitration, or trial or appeal therefrom, shall be entitled to recover from the
other its reasonable attorneys' fees incurred therein, in addition to its costs,
expenses and disbursements, including the costs of the arbitration proceeding.
<PAGE>
8.14 Cooperation. Bell will fully cooperate with PrimeSource and with
PrimeSource's counsel and accountants in connection with any steps required to
be taken as part of Bell's obligations under this Agreement. Bell and
PrimeSource will use their reasonable best efforts to cause all conditions to
the parties' obligations to effect the Closing under this Agreement to be
satisfied as promptly as possible and to obtain all consents and approvals
necessary for the due and punctual performance of this Agreement and for the
satisfaction of the conditions hereof.
8.15 Authority. Each party signing below represents and warrants that
it has authority to execute this Agreement and to perform its obligations
hereunder. Each person signing on behalf of such party represents and warrants
that he has been duly authorized to execute this Agreement on behalf of such
party.
8.16 Termination of Bell's Rights. If Bell fails to satisfy in all
material respects any of the conditions to Closing specified in Article 4 at or
prior to Closing, and such failure either is not waived in writing by
PrimeSource or cured by Bell prior to the Termination Date, then PrimeSource
may, without liability, terminate this Agreement, provided PrimeSource has
satisfied (or stood ready to satisfy) all of PrimeSource's conditions specified
in Article 5, or such conditions have otherwise been satisfied or waived, by
written notice to Bell.
8.17 Termination of PrimeSource's Rights. If PrimeSource fails to
satisfy in all material respects any of the conditions to Closing specified in
Article 5 at or prior to Closing, and such failure either is not waived in
writing by Bell or cured by PrimeSource prior to the Termination Date, then Bell
may, without liability, terminate this Agreement, provided Bell has satisfied
(or stood ready to satisfy) all of Bell's conditions specified in Article 4, or
such conditions have otherwise been satisfied or waived, by written notice to
PrimeSource.
8.18 Other Termination. If no Closing occurs prior to the Termination
Date, and the failure to close is not the result of Bell's or PrimeSource's
failure to satisfy in all material respects any of the conditions to Closing
specified in Articles 4, 5, or 6 at or prior to the Termination Date, other than
the parties failing to agree to the Schedules contemplated by 1.2 hereof, then
any party hereto may terminate this Agreement by written notice to the other
parties hereto without further liability to any of the parties under this
Agreement.
<PAGE>
IN WITNESS WHEREOF, PrimeSource and Bell have executed this Agreement
as of the date first written above.
PRIMESOURCE CORPORATION BELL INDUSTRIES, INC.
BY: BY:
President President
By s/James F. Mullan/____
<PAGE>
NON-COMPETE AGREEMENT
Agreement made and entered into the 14th day of September, 1998, by and
between PrimeSource Corporation ("PrimeSource") and Bell Industries, Inc.
("Bell").
Whereas, PrimeSource has agreed to acquire certain assets of Bell, and
Bell desires that PrimeSource acquire such assets and will financially benefit
from such sale to PrimeSource,
Whereas, a significant concern of PrimeSource relating to its purchase
of assets from Bell is maintaining PrimeSource's competitive position in Bell's
business, the parties have agreed to enter into this Agreement to protect that
competitive position.
Now, therefore, in consideration of the purchase of said assets and the
mutual covenants and conditions contained herein, Bell agrees that it will not,
for a period of five years following the date first above written, solicit or
call on, directly or indirectly, any customer of Bell's Graphic Arts Supply
Group for the purpose of selling graphic arts supplies, equipment or services,
nor will it for such period engage in any activities directly or indirectly
competitive with the graphic arts supplies and equipment distribution services
of PrimeSource in the United States. During the term of this Agreement Bell will
not, directly or indirectly, solicit for employment any current employee of
PrimeSource or any former employee whose employment with PrimeSource terminated
less than 180 days prior to such hiring by Bell. In the event of an actual or
threatened breach of any provisions of this paragraph, PrimeSource shall be
entitled to an injunction restraining Bell from such activity without the
necessity of posting a bond or other security. Nothing herein stated shall be
construed as prohibiting PrimeSource from pursuing any other remedy available to
PrimeSource for such breach or threatened breach, including the recovery of
damages.
The parties agree and acknowledge that the time, scope, geographic
extent and other provisions of the foregoing paragraph have been specifically
negotiated by sophisticated parties in good faith and with the advice of
independent counsel, and do hereby agree that such time, scope, geographic
extent and other provisions are fair and reasonable under the circumstances.
Bell agrees that if a court should hold any portion of the foregoing paragraph
to be unenforceable for any reason, the maximum restrictions of time, scope, and
geographic extent reasonable under the circumstances, as determined by the
court, will be substituted for the provision held enforceable.
<PAGE>
Bell recognizes that it may have copies of Bell customer lists, pricing
information, and other non-public information relating to Bell's former graphic
arts supplies and equipment distribution business and that it is obligated to
preserve the confidentiality of such information for the benefit of PrimeSource.
It is specifically understood that in the event of litigation resulting
from a breach of any covenant herein, the prevailing party shall be entitled to
recover all costs it incurs, including a reasonable attorney's fee. Each
covenant of this Agreement shall be construed as severable and independent,
fully enforceable and binding upon the parties. The laws of the Commonwealth of
Pennsylvania shall govern the interpretation and enforceability of this
Agreement.
In witness whereof, the parties have executed this Agreement as of the
date first above written.
PRIMESOURCE CORPORATION BELL INDUSTRIES, INC.
By __________________________ By __________________________
President President
By s/James F. Mullan
<PAGE>
Exhibit A
BILL OF SALE
Bill of Sale given to PrimeSource Corporation, a Pennsylvania
corporation ("Purchaser") by Bell Industries, Inc., a California corporation
("Seller").
1. Conveyance. In exchange for One Dollar and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Seller does hereby sell, transfer, assign, and deliver to Purchaser all of
Seller's right, title, and interest in those certain assets together with all
revenues therefrom (the "Assets") set forth in Article 1 of the Asset Purchase
Agreement by and between Seller and Purchaser, dated August ___, 1998,
("Agreement"), the terms and conditions of which are incorporated herein by this
reference, in "AS IS" condition and without warranty except as may otherwise be
set out in the Agreement.
2. Representations and Warranties. Seller represents and warrants that
Seller has good and marketable title to the Assets, has not conveyed or assigned
any of the Assets or any interest therein to any other person, and that the
Assets are free and clear of all liens, encumbrances, security interests,
pledges, and other rights or claims by any third party except as may be
permitted by the Agreement.
3. Convenants of Further Assurance. Seller hereby agrees to execute any
and all additional instruments and to take any and all further actions
reasonably requested by Purchaser to effect the transfer of and to vest title to
the Assets in Purchaser.
4. Successors and Assigns. This Assignment shall be binding upon,
enforceable by and shall insure to the benefit of the respective successors and
assigns of the parties hereto.
IN WITNESS WHEREOF, Seller has executed this Bill of Sale the ___ day
of ________, 1998.
BELL INDUSTRIES, INC.
By: _____________________________
Its: _____________________________
By s/James F. Mullan/
<PAGE>
BELL CLOSING STATEMENT
September 14, 1998
Purchase Price 43,500,000
Good Faith Estimate of Receivables (21,253,000)
Total Due to Bell at Closing $22,247,000
BELL INDUSTRIES, INC. PRIMESOURCE CORPORATION
By _______________________ By __________________________
By: s/James F. Mullan/