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As filed with the Securities and Exchange Commission on October 1, 2004

Registration No. 333-118750



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


Amendment No. 1
to
Form S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933


BLUELINX HOLDINGS INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware   5031   77-0627356
(State or Other Jurisdiction of
Incorporation or Organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification Number)

4300 Wildwood Parkway
Atlanta, Georgia 30339
(770) 953-7000

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices)

Barbara V. Tinsley, Esq.
General Counsel and Secretary
4300 Wildwood Parkway
Atlanta, Georgia 30339
(770) 953-7000

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)


Copies to:

Michael R. Littenberg, Esq.
Schulte Roth & Zabel LLP
919 Third Avenue
New York, NY 10022
Ph: (212) 756-2000
Fax: (212) 593-5955
  Robert E. Buckholz, Jr., Esq.
Sullivan & Cromwell LLP
125 Broad Street
New York, NY 10004
Ph: (212) 558-4000
Fax: (212) 558-3588

        Approximate date of commencement of the proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.


        If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

        If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

        If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

        If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

        If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o


        The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.





Explanatory Note

        This Amendment No. 1 amends and supplements the Registration Statement on Form S-1 No. 333-118750 originally filed with the Securities and Exchange Commission (the "SEC") on September 2, 2004 (the "Registration Statement") by BlueLinx Holdings Inc., a Delaware corporation (the "Company"), relating to the offering of our common stock. Terms not otherwise defined herein shall have the meaning ascribed to them in the Registration Statement.

        The sole purpose of this Amendment No. 1 is to file certain related exhibits.



PART II

Information Not Required in the Prospectus

Item 13. Other Expenses of Issuance and Distribution

        The following table shows the costs and expenses, other than underwriting discounts and commissions, payable in connection with the sale and distribution of the securities being registered. Except as otherwise noted, we will pay all of these amounts. All amounts except the SEC registration fee and the NASD fee are estimated. All amounts will be filed by amendment.

SEC Registration Fee   $ 19,005
New York Stock Exchange Listing Fee     250,000
NASD Fee     15,500
Accounting Fees and Expenses      
Legal Fees and Expenses      
Printing Fees and Expenses      
Blue Sky Fees and Expenses      
Miscellaneous      
   
Total   $  
   

Item 14. Indemnification of Directors and Officers

Indemnification Under the Delaware General Corporation Law

        Section 145 of the DGCL authorizes a corporation to indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding, if the person acted in good faith and in a manner the person reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person's conduct was unlawful. In addition, the DGCL does not permit indemnification in any threatened, pending or completed action or suit by or in the right of the corporation in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation, unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability, but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses, which such court shall deem proper. To the extent that a present or former director or officer of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to above, or in defense of any claim, issue or matter, such person shall be indemnified against expenses, including attorneys' fees, actually and reasonably incurred by such person. Indemnity is mandatory to the extent a claim, issue or matter has been successfully defended. The DGCL also allows a corporation to provide for the elimination or limit of the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that such provision shall not eliminate or limit the liability of a director:

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        These provisions will not limit the liability of directors or officers under the federal securities laws of the United States.

Indemnification Under Our Certificate of Incorporation

        Article V of our certificate of incorporation provides that, to the fullest extent permitted by the DGCL, as the same may be amended and supplemented from time to time, the personal liability of our directors shall be eliminated.

Indemnification Under Our Bylaws

        Section 6.01 of Article VI of our bylaws provides that we shall indemnify and hold harmless, to the fullest extent permitted by applicable law, any person who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or officer of the Company or, while a director or officer of the Company, is or was serving at the request of the Company as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys' fees) reasonably incurred by such person.

Indemnification Under Indemnification Agreements With Our Directors and Officers

        Reference is made to the form of Indemnification Agreement to be entered into between us and each of our directors and certain of our officers pursuant to which we will agree to indemnify these persons to the fullest extent permitted by Delaware law, as the same may be amended from time to time.

Item 15. Recent Sales of Unregistered Securities.

        The following is a list of all securities sold or issued by us within the past three years:

(1)
In May 2004, we issued 18,099,900 shares of our common stock to Cerberus ABP Investor LLC for an aggregate purchase price of $4,524,975.00. The shares were issued in reliance on Section 4(2) of the Securities Act as the sale of the securities did not involve a public offering. Appropriate legends were affixed to the share certificate issued in such transaction.

(2)
In May 2004, we issued 95,000 shares of our series A preferred stock to Cerberus ABP Investor LLC for an aggregate purchase price of $95,000,000.00. The shares were issued in reliance on Section 4(2) of the Securities Act as the sale of the securities did not involve a public offering. Appropriate legends were affixed to the share certificate issued in such transaction.

(3)
In May 2004, we issued shares of our common stock in private placements to certain of our executives as follows:

(i)
700,000 shares to Charles H. McElrea for an aggregate purchase price of $175,000.00;

(ii)
500,000 shares to George R. Judd for an aggregate purchase price of $125,000.00;

(iii)
300,000 shares to Steven C. Hardin for an aggregate purchase price of $75,000.00;

(iv)
200,000 shares to David J. Morris for an aggregate purchase price of $50,000.00;

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        All of the foregoing shares were issued in reliance on Section 4(2) of the Securities Act as none of the sales of the securities involved a public offering. Each of the purchasers represented to us that he was an accredited investor and was acquiring the shares for investment and not distribution, and appropriate legends were affixed to the share certificates issued in each transaction.

(4)
On August 30 and 31, 2004, we granted options to purchase 1,259,000 shares of our common stock to certain of our employees and independent directors pursuant to our equity incentive plan at an exercise price of $3.75 per share. The options were issued pursuant to compensatory plans or agreements with employees and directors in reliance on Rule 701 of the Securities Act.

        There were no underwriters employed in connection with the sales and issuances described in paragraphs (1) through (4).

Item 16. Exhibits and Financial Statement Schedules.


EXHIBIT INDEX

Exhibit
Number

  Description
   
1.1 * Form of Underwriting Agreement    
3.1 * Amended and Restated Certificate of Incorporation of the Registrant to become effective upon closing of this offering    
3.2 * Amended and Restated Bylaws of the Registrant to become effective upon closing of this offering    
4.1 * Specimen of Common Stock Certificate    
4.2 ** Registration Rights Agreement, dated as of May 7, 2004, by and among Registrant and the initial holders specified on the signature pages thereto    
4.3 ** Letter Agreement, dated as of August 30, 2004, by and among Registrant, Cerberus ABP Investors LLC, Charles H. McElrea, George R. Judd, David J. Morris, James C. Herbig, Wayne E. Wiggleton and Steven C. Hardin    
5.1 * Opinion of Schulte Roth & Zabel LLP    
10.1 ** Asset Purchase Agreement, dated as of March 12, 2004, by and among Georgia-Pacific Corporation, Georgia-Pacific Building Material Sales, Ltd. and BlueLinx Corporation    
10.2 ** First Amendment to Asset Purchase Agreement, dated as of May 6, 2004, by and among Georgia-Pacific, Georgia-Pacific Building Material Sales, Ltd. and BlueLinx Corporation    
10.3 **† Master Purchase, Supply and Distribution Agreement, dated May 7, 2004 by and between BlueLinx Corporation and Georgia-Pacific    
         

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10.4 ** Loan and Security Agreement, dated as of May 7, 2004, by and among BlueLinx Corporation, the financial institutions from time to time party thereto as lenders, Congress in its capacity as administrative and collateral agent, and Congress and Goldman Sachs Credit Partners L.P., as co-lead arrangers and co-syndication agents    
10.5 ** Severance Agreement between BlueLinx Corporation and Charles H. McElrea, dated May 7, 2004    
10.6 ** Severance Agreement between BlueLinx Corporation and David J. Morris, dated May 7, 2004    
10.7 ** Severance Agreement between BlueLinx Corporation and George R. Judd, dated May 7, 2004    
10.8 ** Severance Agreement between BlueLinx Corporation and Steven C. Hardin, dated May 7, 2004    
10.9 ** Severance Agreement between BlueLinx Corporation and Barbara V. Tinsley, dated May 7, 2004    
10.10 ** BlueLinx Holdings Inc. Equity Incentive Plan    
10.11 ** Form of Indemnification Agreement    
21.1 ** List of subsidiaries of the Registrant    
23.2 * Consent of Schulte Roth & Zabel LLP (incorporated by reference in Exhibit 5.1)    
24   Power of Attorney (included on signature page of initial filing)   (A)

*
To be filed by amendment.

**
Filed herewith.

Portions of this document will be omitted and filed separately with the SEC pursuant to a request for confidential treatment in accordance with Rule 24b-2 of the Exchange Act.

(A)
Previously filed on the signature page of the Company's Registration Statement on Form S-1 (Reg. No. 333-118750) originally filed with the SEC on September 2, 2004

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Item 17. Undertakings.

        Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

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SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, BlueLinx Holdings Inc. has duly caused this amendment to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Atlanta, State of Georgia, on the 1st day of October, 2004.

    BLUELINX HOLDINGS INC.

Date: October 1, 2004

 

By:

/s/  
CHARLES H. MCELREA      
     
Name: Charles H. McElrea
Title: Chief Executive Officer

        Pursuant to the requirements of the Securities Act of 1933, this amendment to the registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature
  Title
  Date

 

 

 

 

 
/s/  CHARLES H. MCELREA      
Charles H. McElrea
  Chief Executive Officer and Director (principal executive officer)   October 1, 2004

*

David J. Morris

 

Chief Financial Officer and Treasurer (
principal financial and accounting officer)

 

October 1, 2004

*

Joel A. Asen

 

Director

 

October 1, 2004

*

Jeffrey J. Fenton

 

Chairman of the Board of Directors

 

October 1, 2004

*

Stephen E. Macadam

 

Director

 

October 1, 2004

*

Steven F. Mayer

 

Director

 

October 1, 2004

*

Michael Rossi

 

Director

 

October 1, 2004

*

Alan H. Schumacher

 

Director

 

October 1, 2004
         

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*

Lenard B. Tessler

 

Director

 

October 1, 2004

*

Robert G. Warden

 

Director

 

October 1, 2004

*By:

 

/s/  
BARBARA V. TINSLEY      
Barbara V. Tinsley
Attorney-in-fact

 

 

 

 

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EXHIBIT INDEX

Exhibit Number

  Description
   
1.1 * Form of Underwriting Agreement    
3.1 * Amended and Restated Certificate of Incorporation of the Registrant to become effective upon closing of this offering    
3.2 * Amended and Restated Bylaws of the Registrant to become effective upon closing of this offering    
4.1 * Specimen of Common Stock Certificate    
4.2 ** Registration Rights Agreement, dated as of May 7, 2004, by and among Registrant and the initial holders specified on the signature pages thereto    
4.3 ** Letter Agreement, dated as of August 30, 2004, by and among Registrant, Cerberus ABP Investors LLC, Charles H. McElrea, George R. Judd, David J. Morris, James C. Herbig, Wayne E. Wiggleton and Steven C. Hardin    
5.1 * Opinion of Schulte Roth & Zabel LLP    
10.1 ** Asset Purchase Agreement, dated as of March 12, 2004, by and among Georgia-Pacific Corporation, Georgia-Pacific Building Material Sales, Ltd. and BlueLinx Corporation    
10.2 ** First Amendment to Asset Purchase Agreement, dated as of May 6, 2004, by and among Georgia-Pacific, Georgia-Pacific Building Material Sales, Ltd. and BlueLinx Corporation    
10.3 **† Master Purchase, Supply and Distribution Agreement, dated May 7, 2004 by and between BlueLinx Corporation and Georgia-Pacific    
10.4 ** Loan and Security Agreement, dated as of May 7, 2004, by and among BlueLinx Corporation, the financial institutions from time to time party thereto as lenders, Congress in its capacity as administrative and collateral agent, and Congress and Goldman Sachs Credit Partners L.P., as co-lead arrangers and co-syndication agents    
10.5 ** Severance Agreement between BlueLinx Corporation and Charles H. McElrea, dated May 7, 2004    
10.6 ** Severance Agreement between BlueLinx Corporation and David J. Morris, dated May 7, 2004    
10.7 ** Severance Agreement between BlueLinx Corporation and George R. Judd, dated May 7, 2004    
10.8 ** Severance Agreement between BlueLinx Corporation and Steven C. Hardin, dated May 7, 2004    
10.9 ** Severance Agreement between BlueLinx Corporation and Barbara V. Tinsley, dated May 7, 2004    
10.10 ** BlueLinx Holdings Inc. Equity Incentive Plan    
10.11 ** Form of Indemnification Agreement    
21.1 ** List of subsidiaries of the Registrant    
23.2 * Consent of Schulte Roth & Zabel LLP (incorporated by reference in Exhibit 5.1)    
24   Power of Attorney (included on signature page of initial filing)   (A)

*
To be filed by amendment.

**
Filed herewith.

Portions of this document will be omitted and filed separately with the SEC pursuant to a request for confidential treatment in accordance with Rule 24b-2 of the Exchange Act.

(A)
Previously filed on the signature page of the Company's Registration Statement on Form S-1 (Reg. No. 333-118750) originally filed with the SEC on September 2, 2004



QuickLinks

Explanatory Note
PART II Information Not Required in the Prospectus
EXHIBIT INDEX
SIGNATURES
EXHIBIT INDEX

Exhibit 4.2

 

EXECUTION COPY

 

 

 

REGISTRATION RIGHTS AGREEMENT

 

by and among

 

ABP DISTRIBUTION HOLDINGS INC.

 

and

 

THE INITIAL HOLDERS SPECIFIED

 

ON THE SIGNATURE PAGES HEREOF

 

Dated as of May 7, 2004

 

 

 



 

TABLE OF CONTENTS

 

1.

DEFINITIONS

 

 

 

 

2.

REGISTRATION UNDER THE SECURITIES ACT

 

2.1.

Demand Registration

 

2.2.

Incidental Registration

 

2.3.

S-3 Registration; Shelf Registration

 

2.4.

Expenses

 

2.5.

Underwritten Offerings

 

2.6.

Conversions; Exercises

 

2.7.

Postponements

 

 

 

 

3.

HOLDBACK ARRANGEMENTS

 

3.1.

Restrictions on Sale by Holders of Registrable Securities

 

3.2.

Restrictions on Sale by the Company and Others

 

3.3.

Confidentiality of Notices

 

 

 

 

4.

REGISTRATION PROCEDURES

 

4.1.

Obligations of the Company

 

4.2.

Seller Information

 

4.3.

Notice to Discontinue

 

 

 

 

5.

INDEMNIFICATION; CONTRIBUTION

 

5.1.

Indemnification by the Company

 

5.2.

Indemnification by Holders

 

5.3.

Conduct of Indemnification Proceedings

 

5.4.

Contribution

 

5.5.

Other Indemnification

 

5.6.

Indemnification Payments

 

 

 

 

6.

GENERAL

 

6.1.

Adjustments Affecting Registrable Securities

 

6.2.

Registration Rights to Others

 

6.3.

Availability of Information; Rule 144; Rule 144A; Other Exemptions

 

6.4.

Amendments and Waivers

 

6.5.

Notices

 

6.6.

Successors and Assigns

 

6.7.

Counterparts

 

6.8.

Descriptive Headings, Etc

 

6.9.

Severability

 

6.10.

Governing Law

 

6.11.

Consent to Jurisdiction

 

6.12.

Waiver of Jury Trial

 

 

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6.13.

Remedies; Specific Performance

 

6.14.

Entire Agreement

 

6.15.

Nominees for Beneficial Owners

 

6.16.

Further Assurances

 

6.17.

No Inconsistent Agreements

 

6.18.

Construction

 

 

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REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of May 7, 2004, by and among ABP Distribution Holdings Inc. a Georgia corporation (the “Company”), Cerberus ABP Investor LLC, a Delaware limited liability company (“Cerberus”), and the executives specified on the signature pages hereof (the “Executives” and together with Cerberus, the “Initial Holders”).

 

W I T N E S S E T H :

 

WHEREAS, the Company has entered into (i) Subscription Agreements with Cerberus (the “Cerberus Subscription Agreements”), pursuant to which Cerberus is acquiring shares of the Company’s Common Stock and (ii) Executive Purchase Agreements with each of the Executives, dated as of the Closing Date (together with the Cerberus Subscription Agreements, the “Stock Purchase Agreements”), pursuant to which the Company is issuing and selling and the Executives are purchasing shares of Common Stock;

 

WHEREAS, simultaneously herewith, the Company and each of the Initial Holders are entering into a Stockholders Agreement (the “Stockholders Agreement”); and

 

WHEREAS, in order to induce the Initial Holders to enter into the Stock Purchase Agreements and the Stockholders Agreement, the Company has agreed to provide certain registration rights on the terms and subject to the conditions set forth herein;

 

NOW, THEREFORE, in consideration of the premises and of the mutual agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:

 

1.                                       DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings:

 

Affiliate” shall mean with respect to any Person, any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such Person, and with respect to any individual, shall mean his or her spouse, sibling, child, step child, grandchild or parent of such Person, or the spouse thereof (“Immediate Family”), or a trust or family limited partnership for the benefit of any such Person or Persons and, with respect to Cerberus, shall mean its respective members, stockholders, general partners and/or limited partners, as applicable. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided, however, that beneficial ownership of 20% or more of the voting securities of a Person shall be deemed to be control.

 

Agents” shall have the meaning set forth in Section 5.1.

 



 

Blackout Period” shall have the meaning set forth in Section 2.7.

 

Cerberus Subscription Agreements” shall have the meaning set forth in the recitals.

 

Claims” shall have the meaning set forth in Section 5.1.

 

Closing Date” shall mean the date on which the transactions contemplated by that certain Asset Purchase Agreement, dated as of March 12, 2004, among ABP Distribution Inc., Georgia-Pacific Corporation and Georgia-Pacific Building Materials Sales, Ltd. are consummated.

 

Common Shares” shall mean, shares of the Company’s Common Stock.

 

Company” shall have the meaning set forth in the preamble.

 

Demand Registration” shall mean a registration required to be effected by the Company pursuant to Section 2.1.

 

Demand Registration Statement” shall mean a registration statement of the Company which covers the Registrable Securities requested to be included therein pursuant to the provisions of Section 2.1 and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference (or deemed to be incorporated by reference) therein.

 

Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations thereunder, or any successor statute.

 

Executives” shall have the meaning set forth in the preamble.

 

Holders” shall mean each of the Initial Holders for so long as it owns any Registrable Securities and such of its respective heirs, successors and permitted assigns (including any permitted transferees of Registrable Securities) who acquire or are otherwise the transferee of Registrable Securities, directly or indirectly, from such Initial Holder (or any subsequent Holder), for so long as such heirs, successors and permitted assigns own any Registrable Securities. For purposes of this Agreement, a Person will be deemed to be a Holder whenever such Person holds Registrable Securities, an option to purchase, or a security convertible into or exercisable or exchangeable for, Registrable Securities, whether or not such purchase, conversion, exercise or exchange has actually been effected and disregarding any legal restrictions upon the exercise of such rights. Registrable Securities issuable upon exercise of an option or upon conversion, exchange or exercise of another security shall be deemed outstanding for the purposes of this Agreement.

 

Holders’ Counsel” shall mean one firm of counsel (per registration) to the Holders of Registrable Securities participating in such registration, which counsel shall be selected (i) in the case of a Demand Registration or an S-3 Registration, by the Initiating Holders

 

2



 

holding a majority of the Registrable Securities for which registration was requested in the Request, and (ii) in all other cases, by the Majority Holders of the Registration.

 

Incidental Registration” shall mean a registration required to be effected by the Company pursuant to Section 2.2.

 

Incidental Registration Statement” shall mean a registration statement of the Company which covers the Registrable Securities requested to be included therein pursuant to the provisions of Section 2.2 and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference (or deemed to be incorporated by reference) therein.

 

Initial Holders” shall have the meaning set forth in the preamble.

 

Initial Public Offering” shall mean the first public offering of any class of equity securities of the Company pursuant to a registration statement filed with and declared effective by the SEC.

 

Initiating Holders” shall mean, with respect to a particular registration, the Holders who initiated the Request for such registration.

 

Inspectors” shall have the meaning set forth in Section 4.1(g).

 

Investor Holders” shall mean each of the Investors and its Affiliates for so long as it owns any Registrable Securities and such of its respective successors and permitted assigns (including any permitted transferees of Registrable Securities) who acquire or are otherwise the transferee of Registrable Securities, directly or indirectly, from such Investor (or any subsequent holder), for so long as such successors and permitted assigns own any Registrable Securities.

 

Investors” shall mean Cerberus.

 

Majority Holders of the Registration” shall mean, with respect to a particular registration, one or more Holders of Registrable Securities who would hold a majority of the Registrable Securities to be included in such registration.

 

Majority Investor Holders” shall mean one or more Investor Holders who hold a majority of the Registrable Securities then outstanding and held by the Investor Holders.

 

Majority Investor Holders of the Registration” shall mean, with respect to a particular registration, one or more Investor Holders of Registrable Securities who would hold a majority of the Registrable Securities held by Investor Holders to be included in such registration.

 

Management Holders” shall mean each of the Executives and their respective Affiliates, for so long as such Person owns any Registrable Securities.

 

NASD” shall mean the National Association of Securities Dealers, Inc.

 

3



 

Person” shall mean any individual, firm, partnership, corporation, trust, joint venture, association, joint stock company, limited liability company, unincorporated organization or any other entity or organization, including a government or agency or political subdivision thereof, and shall include any successor (by merger or otherwise) of such entity.

 

Prospectus” shall mean the prospectus included in a Registration Statement (including, without limitation, any preliminary prospectus and any prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), and any such Prospectus as amended or supplemented by any prospectus supplement, and all other amendments and supplements to such Prospectus, including post-effective amendments, and in each case including all material incorporated by reference (or deemed to be incorporated by reference) therein.

 

Records” shall have the meaning set forth in Section 4.1(g).

 

Registrable Securities” shall mean (i) any Common Shares issued to the Initial Holders or any Affiliate thereof pursuant to any of the Stock Purchase Agreements, (ii) any Common Shares otherwise or hereafter purchased or acquired by the Holders or their Affiliates and (iii) any other securities of the Company (or any successor or assign of the Company, whether by merger, consolidation, sale of assets or otherwise) which may be issued or issuable with respect to, in exchange for, or in substitution of, Registrable Securities referenced in clauses (i) and (ii) above by reason of any dividend or stock split, combination of shares, merger, consolidation, recapitalization, reclassification, reorganization, sale of assets or similar transaction. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (A) a registration statement with respect to the sale of such securities shall have been declared effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, (B) such securities are sold pursuant to Rule 144 (or any similar provisions then in force) under the Securities Act, (C) such securities have been otherwise transferred, a new certificate or other evidence of ownership for them not bearing the legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of them shall not require registration under the Securities Act, or (D) such securities shall have ceased to be outstanding.

 

Registration Expenses” shall mean any and all expenses incident to performance of or compliance with this Agreement by the Company and its subsidiaries, including, without limitation (i) all SEC, stock exchange, NASD and other registration, listing and filing fees, (ii) all fees and expenses incurred in connection with compliance with state securities or blue sky laws and compliance with the rules of any stock exchange (including fees and disbursements of counsel in connection with such compliance and the preparation of a blue sky memorandum and legal investment survey), (iii) all expenses of any Persons in preparing or assisting in preparing, word processing, printing, distributing, mailing and delivering any Registration Statement, any Prospectus, any underwriting agreements, transmittal letters, securities sales agreements, securities certificates and other documents relating to the performance of or compliance with this Agreement, (iv) the fees and disbursements of counsel for the Company, (v) the fees and disbursements of Holders’ Counsel, (vi) the fees and disbursements of all independent public accountants (including the expenses of any audit and/or “cold comfort” letters) and the fees and

 

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expenses of other Persons, including experts, retained by the Company, (vii) the expenses incurred in connection with making road show presentations and holding meetings with potential investors to facilitate the distribution and sale of Registrable Securities which are customarily borne by the issuer, (viii) any fees and disbursements of underwriters customarily paid by issuers or sellers of securities, and (ix) premiums and other costs of policies of insurance against liabilities arising out of the public offering of the Registrable Securities being registered; provided, however, Registration Expenses shall not include discounts and commissions payable to underwriters, selling brokers, dealer managers or other similar Persons engaged in the distribution of any of the Registrable Securities; and provided further, that in any case where Registration Expenses are not to be borne by the Company, such expenses shall not include salaries of Company personnel or general overhead expenses of the Company, auditing fees, premiums or other expenses relating to liability insurance required by underwriters of the Company or other expenses for the preparation of financial statements or other data normally prepared by the Company in the ordinary course of its business or which the Company would have incurred in any event; and provided, further, that in the event the Company shall, in accordance with Section 2.2 or Section 2.7 hereof, not register any securities with respect to which it had given written notice of its intention to register to Holders, notwithstanding anything to the contrary in the foregoing, all of the costs incurred by the Holders in connection with such registration shall be deemed to be Registration Expenses.

 

Registration Statement” shall mean any registration statement of the Company which covers any Registrable Securities and all amendments and supplements to any such Registration Statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference (or deemed to be incorporated by reference) therein.

 

Request” shall have the meaning set forth in Section 2.1(a).

 

S-3 Registration” shall mean a registration required to be effected by the Company pursuant to Section 2.3(a).

 

SEC” shall mean the Securities and Exchange Commission, or any successor agency having jurisdiction to enforce the Securities Act.

 

Securities Act” shall mean the Securities Act of 1933, as amended from time to time, and the rules and regulations thereunder, or any successor statute.

 

Shelf Registration” shall have the meaning set forth in Section 2.1(a).

 

Stock Purchase Agreements” shall have the meaning set forth in the recitals.

 

Underwriters” shall mean the underwriters, if any, of the offering being registered under the Securities Act.

 

Underwritten Offering” shall mean a sale of securities of the Company to an Underwriter or Underwriters for reoffering to the public.

 

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Withdrawn Demand Registration” shall have the meaning set forth in Section 2.1(a).

 

Withdrawn Request” shall have the meaning set forth in Section 2.1(a).

 

2.                                       REGISTRATION UNDER THE SECURITIES ACT.

 

2.1.                              Demand Registration.

 

(a)                                  Right to Demand Registration. (i)                 Subject to Section 2.1(c), at any time or from time to time the Majority Investor Holders shall have the right to request in writing that the Company register all or part of such Holders’ Registrable Securities (a “Request”) (which Request shall specify the amount of Registrable Securities intended to be disposed of by such Holders and the intended method of disposition thereof) by filing with the SEC a Demand Registration Statement. As promptly as practicable, but no later than 15 days after receipt of a Request, the Company shall give written notice of such requested registration to all Holders of Registrable Securities. Subject to Section 2.l(b), the Company shall include (A) in a Demand Registration, the Registrable Securities intended to be disposed of by the Initiating Holders and (B) in any Demand Registration other than an Initial Public Offering, the Registrable Securities intended to be disposed of by any other Holder which shall have made a written request (which request shall specify the amount of Registrable Securities to be registered and the intended method of disposition thereof) to the Company for inclusion thereof in such registration within 15 days after the receipt of such written notice from the Company. The Company shall, as expeditiously as possible following a Request, use its best efforts to cause to be filed with the SEC a Demand Registration Statement providing for the registration under the Securities Act of the Registrable Securities which the Company has been so requested to register by all such Holders, to the extent necessary to permit the disposition of such Registrable Securities so to be registered in accordance with the intended methods of disposition thereof specified in such Request or further requests (including, without limitation, by means of a shelf registration pursuant to Rule 415 under the Securities Act (a “Shelf Registration”) if so requested and if the Company is then eligible to use such a registration). The Company shall use its best efforts to have such Demand Registration Statement declared effective by the SEC as soon as practicable thereafter and to keep such Demand Registration Statement continuously effective for the period specified in Section 4. l(b).

 

(ii)                                  A Request may be withdrawn prior to the filing of the Demand Registration Statement by the Majority Investor Holders of the Registration (a “Withdrawn Request”) and a Demand Registration Statement may be withdrawn prior to the effectiveness thereof by the Majority Investor Holders of the Registration (a “Withdrawn Demand Registration”), and such withdrawals shall be treated as a Demand Registration which shall have been effected pursuant to this Section 2.1, unless the Investor Holders of Registrable Securities to be included in such Registration Statement reimburse the Company for its reasonable out-of-pocket Registration Expenses relating to the preparation and filing of such Demand Registration Statement (to the extent actually incurred); provided, however, that if a Withdrawn Request or Withdrawn Demand Registration is made (A) because of a material adverse change in the business, financial condition or prospects of the Company, or (B) because the sole or lead managing Underwriter advises that the amount of Registrable Securities to be

 

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sold in such offering be reduced pursuant to Section 2.1(b) by more than 15% of the Registrable Securities requested to be included in such Registration Statement, or (C) because of a postponement of such registration pursuant to Section 2.7, then such withdrawal shall not be treated as a Demand Registration effected pursuant to this Section 2.1 (and shall not be counted toward the number of Demand Registrations to which such Investor Holders are entitled), and the Company shall pay all Registration Expenses in connection therewith. Any Holder requesting inclusion in a Demand Registration may, at any time prior to the effective date of the Demand Registration Statement (and for any reason) revoke such request by delivering written notice to the Company revoking such requested inclusion.

 

(iii)                               The registration rights granted pursuant to the provisions of this Section 2.1 shall be in addition to the registration rights granted pursuant to the other provisions of Section 2 hereof.

 

(b)                                 Priority in Demand Registrations. If a Demand Registration involves an Underwritten Offering, and the sole or lead managing Underwriter, as the case may be, of such Underwritten Offering shall advise the Company in writing (with a copy to each Holder requesting registration) on or before the date five days prior to the date then scheduled for such offering that, in its opinion, the amount of Registrable Securities requested to be included in such Demand Registration exceeds the number which can be sold in such offering within a price range acceptable to the Majority Holders of the Registration (such writing to state the basis of such opinion and the approximate number of Registrable Securities which may be included in such offering), the Company shall include in such Demand Registration, to the extent of the number which the Company is so advised may be included in such offering without such effect, (A) first, the Registrable Securities requested to be included in the Demand Registration by Cerberus, and (ii) second, the Registrable Securities requested to be included in the Demand Registration by the other Holders allocated pro rata in proportion to the number of Registrable Securities requested to be included in such Demand Registration by each of them. In the event the Company shall not, by virtue of this Section 2.1(b), include in any Demand Registration all of the Registrable Securities of any Holder requesting to be included in such Demand Registration, such Holder may, upon written notice to the Company given within five days of the time such Holder first is notified of such matter, reduce the amount of Registrable Securities it desires to have included in such Demand Registration, whereupon only the Registrable Securities, if any, it desires to have included will be so included and the Holders not so reducing shall be entitled to a corresponding increase in the amount of Registrable Securities to be included in such Demand Registration.

 

(c)                                  Limitations on Registrations. The rights of the Majority Investor Holders to request Demand Registrations pursuant to Section 2.1(a) are subject to the limitation that in no event shall the Company be obligated to pay Registration Expenses of more than four Demand Registrations initiated by the Majority Investor Holders; provided, however, (x) that such number shall be increased to the extent the Company does not include in what would otherwise be the final Demand Registration to which the Investor Holders are entitled and for which the Company is required to pay Registration Expenses the number of Registrable Securities requested to be registered by the Investor Holders by reason of Section 2.1(b), and (y) the Investor Holders shall be deemed not to have expended a Demand Registration right to the

 

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extent the Company terminates a Shelf Registration pursuant to Section 2.3 prior to the time that all Registrable Securities covered by such Shelf Registration have been sold.

 

(d)                                 Underwriting; Selection of Underwriters. Notwithstanding anything to the contrary contained in Section 2.1(a), if the Initiating Holders holding a majority of the Registrable Securities for which registration was requested in the Request so elect, the offering of such Registrable Securities pursuant to such Demand Registration shall be in the form of a firm commitment Underwritten Offering; and such Initiating Holders may require that all Persons (including other Holders) participating in such registration sell their Registrable Securities to the Underwriters at the same price and on the same terms of underwriting applicable to the Initiating Holders. If any Demand Registration involves an Underwritten Offering, the sole or managing Underwriters and any additional investment bankers and managers to be used in connection with such registration shall be selected by the Initiating Holders holding a majority of the Registrable Securities for which registration was requested in the Request, subject to the approval of the Company (such approval not to be unreasonably withheld).

 

(e)                                  Registration of Other Securities. Whenever the Company shall effect a Demand Registration, no securities other than the Registrable Securities shall be covered by such registration unless the Majority Holders of the Registration shall have consented in writing to the inclusion of such other securities.

 

(f)                                    Effective Registration Statement; Suspension. A Demand Registration Statement shall not be deemed to have become effective (and the related registration will not be deemed to have been effected) (i) unless it has been declared effective by the SEC and remains effective in compliance with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such Demand Registration Statement for the time period specified in Section 4.1(b), (ii) if the offering of any Registrable Securities pursuant to such Demand Registration Statement is interfered with by any stop order, injunction or other order or requirement of the SEC or any other governmental agency or court, (iii) if the offering of Registrable Securities is not consummated for any reason, including, without limitation, if the Underwriters of an Underwritten Offering advise the Holders that the Registrable Securities cannot be sold at a net price per share equal to or above the net price disclosed in the preliminary prospectus, (iv) if, in the case of an Underwritten Offering, the conditions to closing specified in an underwriting agreement to which the Company is a party are not satisfied other than by the sole reason of any breach or failure by the Holders of Registrable Securities or are not otherwise waived or (v) if the Initiating Holders are cut back to fewer than fifty percent (50%) of the Registrable Securities requested to be registered.

 

(g)                                 Other Registrations. During the period (i) beginning on the date of a Request and (ii) ending on the date that is 90 days after the date that a Demand Registration Statement filed pursuant to such Request has been declared effective by the SEC or, if the Majority Investor Holders of the Registration shall withdraw such Request or such Demand Registration Statement, on the date of such Withdrawn Request or such Withdrawn Registration Statement, the Company shall not, without the consent of the Majority Investor Holders of the Registration, file a registration statement pertaining to any other securities of the Company.

 

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(h)                                 Registration Statement Form. Registrations under this Section 2.1 shall be on such appropriate registration form of the SEC (i) as shall be selected by the Initiating Holders holding a majority of the Registrable Securities for which registration was requested in the Request, and (ii) which shall be available for the sale of Registrable Securities in accordance with the intended method or methods of disposition specified in the requests for registration. The Company agrees to include in any such Registration Statement all information which any selling Investor Holder, upon advice of counsel, shall reasonably request.

 

2.2.                              Incidental Registration.

 

(a)                                  Right to Include Registrable Securities.  (i)   If the Company at any time or from time to time proposes to register any of its securities under the Securities Act (other than in a registration on Form S-4 or S-8 or any successor form to such forms and other than pursuant to Section 2.1 or 2.3) whether or not pursuant to registration rights granted to other holders of its securities and whether or not for sale for its own account, the Company shall deliver prompt written notice (which notice shall be given at least 30 days prior to such proposed registration) to all Holders of Registrable Securities of its intention to undertake such registration, describing in reasonable detail the proposed registration and distribution (including the anticipated range of the proposed offering price, the class and number of securities proposed to be registered and the distribution arrangements) and of such Holders’ right to participate in such registration under this Section 2.2 as hereinafter provided.  Subject to the other provisions of this paragraph (a) and Section 2.2(b), upon the written request of any Holder made within 20 days after the receipt of such written notice (which request shall specify the amount of Registrable Securities to be registered and the intended method of disposition thereof), the Company shall effect the registration under the Securities Act of all Registrable Securities requested by Holders to be so registered (an “Incidental Registration”), to the extent requisite to permit the disposition (in accordance with the intended methods thereof as aforesaid) of the Registrable Securities so to be registered, by inclusion of such Registrable Securities in the Registration Statement which covers the securities which the Company proposes to register and shall cause such Registration Statement to become and remain effective with respect to such Registrable Securities in accordance with the registration procedures set forth in Section 4. If an Incidental Registration involves an Underwritten Offering, immediately upon notification to the Company from the Underwriter of the price at which such securities are to be sold, the Company shall so advise each participating Holder. The Holders requesting inclusion in an Incidental Registration may, at any time prior to the effective date of the Incidental Registration Statement (and for any reason), revoke such request by delivering written notice to the Company revoking such requested inclusion.

 

(ii)                                  If at any time after giving written notice of its intention to register any securities and prior to the effective date of the Incidental Registration Statement filed in connection with such registration, the Company shall determine for any reason not to register or to delay registration of all of such securities, the Company may, at its election, give written notice of such determination to each Holder of Registrable Securities and, thereupon, (A) in the case of a determination not to register, the Company shall be relieved of its obligation to register any Registrable Securities in connection with such registration (but not from its obligation to pay the Registration Expenses incurred in connection therewith), without prejudice, however, to the rights of Holders to cause such registration to be effected as a

 

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registration under Section 2.1 or 2.3(a), and (B) in the case of a determination to delay such registration, the Company shall be permitted to delay the registration of such Registrable Securities for the same period as the delay in registering such other securities; provided, however, that if such delay shall extend beyond 120 days from the date the Company received a request to include Registrable Securities in such Incidental Registration, then the Company shall again give all Holders the opportunity to participate therein and shall follow the notification procedures set forth in the preceding paragraph. There is no limitation on the number of such Incidental Registrations pursuant to this Section 2.2 which the Company is obligated to effect.

 

(iii)                               The registration rights granted pursuant to the provisions of this Section 2.2 shall be in addition to the registration rights granted pursuant to the other provisions of Section 2 hereof, provided; however, that, in the event that the sole or lead managing Underwriter of an Initial Public Offering shall advise the Company in writing that the inclusion of shares of the Management Holders requested to be included in such registration would materially interfere with the successful marketing of the securities being offered, the registration rights granted pursuant to the provisions of this Section 2.2 shall not apply to the Management Holders in connection with such Initial Public Offering.

 

(b)                                 Priority in Incidental Registration. If an Incidental Registration involves an Underwritten Offering (on a firm commitment basis), and the sole or the lead managing Underwriter, as the case may be, of such Underwritten Offering shall advise the Company in writing (with a copy to each Holder requesting registration) on or before the date two days prior to the date then scheduled for such offering that, in its opinion, the amount of securities (including Registrable Securities) requested to be included in such registration exceeds the amount which can be sold in such offering without materially interfering with the successful marketing of the securities being offered (such writing to state the basis of such opinion and the approximate number of such securities which may be included in such offering without such effect), the Company shall include in such registration, to the extent of the number which the Company is so advised may be included in such offering without such effect, (i) in the case of a registration initiated by the Company, (A) first, the securities that the Company proposes to register for its own account, (B) second, the Registrable Securities requested to be included in such registration by Cerberus, (C) third, the Registrable Securities requested to be included in such registration by the Holders, allocated pro rata in proportion to the number of Registrable Securities requested to be included in such registration by each of them, and (D) fourth, other securities of the Company to be registered on behalf of any other Person, allocated pro rata in proportion to the number of Registrable Securities requested to be included in such registration by each of them, and (ii) in the case of a registration initiated by a Person other than the Company, (A) first, the Registrable Securities requested to be included in such registration by any Persons initiating such registration, allocated pro rata in proportion to the number of Registrable Securities requested to be included in such registration by each of them, (B) second, the Registrable Securities requested to be included in such registration by Cerberus, (C) third, the Registrable Securities requested to be included in such registration by the Holders, allocated pro rata in proportion to the number of securities requested to be included in such registration by each of them, (D) fourth, the securities that the Company proposes to register for its own account and (D) fifth, other securities of the Company to be registered on behalf of any other Person, allocated pro rata in proportion to the number of Registrable Securities requested to be included in such registration by each of them, provided, however, that in the event the Company will not,

 

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by virtue of this Section 2.2(b), include in any such registration all of the Registrable Securities of any Holder requested to be included in such registration, such Holder may, upon written notice to the Company given within five days of the time such Holder first is notified of such matter, reduce the amount of Registrable Securities it desires to have included in such registration, whereupon only the Registrable Securities, if any, it desires to have included will be so included and the Holders not so reducing shall be entitled to a corresponding increase in the amount of Registrable Securities to be included in such registration.

 

(c)                                  Selection of Underwriters. If any Incidental Registration involves an Underwritten Offering, the sole or managing Underwriter(s) and any additional investment bankers and managers to be used in connection with such registration shall be subject to the approval of the Majority Holders of the Registration (such approval not to be unreasonably withheld).

 

2.3.                              S-3 Registration; Shelf Registration.

 

(a)                                  S-3 Registration. If at any time (i) any Majority Investor Holder requests that the Company file a registration statement on Form S-3 or any successor form thereto for a public offering of all or any portion of the shares of Registrable Securities held by such Majority Investor Holder, and (ii) the Company is a registrant entitled to use Form S-3 or any successor form thereto to register such securities, then the Company shall, as expeditiously as possible following such Request, use its best efforts to register under the Securities Act on Form S-3 or any successor form thereto, for public sale in accordance with the intended methods of disposition specified in such Request or any subsequent requests (including, without limitation, by means of a Shelf Registration) the Registrable Securities specified in such Request and any subsequent requests; provided, that if such registration is for an Underwritten Offering, the terms of Sections 2.1(b) and 2.1(d) shall apply (and any reference to “Demand Registration” therein shall, for purposes of this Section 2.3, instead be deemed a reference to “S-3 Registration”). If the sole or lead managing Underwriter (if any) or the Majority Investor Holders of the Registration shall advise the Company in writing that in its opinion additional disclosure not required by Form S-3 is of material importance to the success of the offering, then such Registration Statement shall include such additional disclosure. Whenever the Company is required by this Section 2.3 to use its best efforts to effect the registration of Registrable Securities, each of the procedures and requirements of Section 2.1(a) and 2.1(e) (including but not limited to the requirements that the Company (A) notify all Holders of Registrable Securities from whom such Request for registration has not been received and provide them with the opportunity to participate in the offering and (B) use its best efforts to have such S-3 Registration Statement declared and remain effective for the time period specified herein) shall apply to such registration (and any reference in such Sections 2.1(a) and 2.1(e) to “Demand Registration” shall, for purposes of this Section 2.3, instead be deemed a reference to “S-3 Registration”). Notwithstanding anything to the contrary contained herein, no Request may be made under this Section 2.3 within 90 days after the effective date of a Registration Statement filed by the Company covering a firm commitment Underwritten Offering in which the Holders of Registrable Securities shall have been entitled to join pursuant to this Agreement and in which there shall have been effectively registered all shares of Registrable Securities as to which registration shall have been requested. Demands for S-3 Registrations will not be deemed to be Demand Registrations and there is no limitation on the number of S-3 Registrations that the

 

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Company is obligated to effect. The registration rights granted pursuant to the provisions of this Section 2.3(a) shall be in addition to the registration rights granted pursuant to the other provisions of this Section 2.

 

(b)                                 Shelf Registration. If a request made pursuant to Section 2.1 or 2.3(a) is for a Shelf Registration, the Company shall use its best efforts to keep the Shelf Registration continuously effective through the date on which all of the Registrable Securities covered by such Shelf Registration may be sold pursuant to Rule 144(k) under the Securities Act (or any successor provision having similar effect); provided, however, that prior to the termination of such Shelf Registration, the Company shall first furnish to each Holder of Registrable Securities participating in such Shelf Registration (i) an opinion, in form and substance satisfactory to the Majority Holders of the Registration, of counsel for the Company satisfactory to the Majority Holders of the Registration stating that such Registrable Securities are freely saleable pursuant to Rule 144(k) under the Securities Act (or any successor provision having similar effect) or (ii) a “No-Action Letter” from the staff of the SEC stating that the SEC would not recommend enforcement action if the Registrable Securities included in such Shelf Registration were sold in a public sale other than pursuant to an effective registration statement.

 

2.4.                              Expenses. The Company shall pay all Registration Expenses in connection with any Demand Registration, Incidental Registration, S-3 Registration or Shelf Registration, whether or not such registration shall become effective and whether or not all Registrable Securities originally requested to be included in such registration are withdrawn or otherwise ultimately not included in such registration, except as otherwise provided with respect to a Withdrawn Request and a Withdrawn Demand Registration in Section 2.1(a).

 

2.5.                              Underwritten Offerings.

 

(a)                                  Demand Underwritten Offerings. If requested by the sole or lead managing Underwriter for any Underwritten Offering effected pursuant to a Demand Registration or an S-3 Registration, the Company shall enter into a customary underwriting agreement with the Underwriters for such offering, such agreement to be reasonably satisfactory in substance and form to the Majority Investor Holders of the Registration and to contain such representations and warranties by the Company and such other terms as are generally prevailing in agreements of that type, including, without limitation, indemnification and contribution to the effect and to the extent provided in Section 5.

 

(b)                                 Holders of Registrable Securities to be Parties to Underwriting Agreement. The Holders of Registrable Securities to be distributed by Underwriters in an Underwritten Offering contemplated by Section 2 shall be parties to the underwriting agreement between the Company and such Underwriters and may, at such Holders’ option, require that any or all of the representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of such Underwriters shall also be made to and for the benefit of such Holders of Registrable Securities and that any or all of the conditions precedent to the obligations of such Underwriters under such underwriting agreement be conditions precedent to the obligations of such Holders of Registrable Securities; provided, however, that the Company shall not be required to make any representations or warranties with respect to written information specifically provided by a selling Holder for inclusion in the

 

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Registration Statement. No Holder shall be required to make any representations or warranties to, or agreements with, the Company or the Underwriters other than representations, warranties or agreements regarding such Holder, such Holder’s Registrable Securities and such Holder’s intended method of disposition.

 

(c)                                  Participation in Underwritten Registration. Notwithstanding anything herein to the contrary, no Person may participate in any underwritten registration hereunder unless such Person (i) agrees to sell its securities on the same terms and conditions provided in any underwritten arrangements approved by the Persons entitled hereunder to approve such arrangement and (ii) accurately completes and executes in a timely manner all questionnaires, powers of attorney, indemnities, custody agreements, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements.

 

2.6.                              Conversions; Exercises. Notwithstanding anything to the contrary herein, in order for any Registrable Securities that are issuable upon the exercise of conversion rights, options or warrants to be included in any registration pursuant to Section 2 hereof, the exercise of such conversion rights, options or warrants must be effected no later than immediately prior to the closing of any sales under the Registration Statement pursuant to which such Registrable Securities are to be sold.

 

2.7.                              Postponements. The Company shall be entitled to postpone a Demand Registration and an S-3 Registration and to require the Holders of Registrable Securities to discontinue the disposition of their securities covered by a Shelf Registration during any Blackout Period (as defined below) (i) if the Board of Directors of the Company determines in good faith that effecting such a registration or continuing such disposition at such time would have a material adverse effect upon a proposed sale of all (or substantially all) of the assets of the Company or a merger, reorganization, recapitalization or similar current transaction materially affecting the capital structure or equity ownership of the Company, or (ii) if the Company is in possession of material information which the Board of Directors of the Company determines in good faith it is not in the best interests of the Company to disclose in a registration statement at such time; provided, however, that the Company may only delay a Demand Registration or an S-3 Registration pursuant to this Section 2.7 by delivery of a Blackout Notice (as defined below) within 30 days of delivery of the request for such Registration under Section 2.1 or Section 2.3, as applicable, and may delay a Demand Registration or an S-3 Registration and require the Holders of Registrable Securities to discontinue the disposition of their securities covered by a Shelf Registration only for a reasonable period of time not to exceed 90 days (or such earlier time as such transaction is consummated or no longer proposed or the material information has been made public) (the “Blackout Period”). There shall not be more than two Blackout Periods in any 12 month period. The Company shall promptly notify the Holders in writing (a “Blackout Notice”) of any decision to postpone a Demand Registration or an S-3 Registration or to discontinue sales of Registrable Securities covered by a Shelf Registration pursuant to this Section 2.7 and shall include a general statement of the reason for such postponement, an approximation of the anticipated delay and an undertaking by the Company promptly to notify the Holders as soon as a Demand Registration or an S-3 Registration may be effected or sales of Registrable Securities covered by a Shelf Registration may resume. In making any such determination to initiate or terminate a Blackout Period, the Company shall not be required to

 

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consult with or obtain the consent of any Holder, and any such determination shall be the Company’s sole responsibility. Each Holder shall treat all notices received from the Company pursuant to this Section 2.7 in the strictest confidence and shall not disseminate such information. If the Company shall postpone the filing of a Demand Registration Statement or an S-3 Registration Statement, the Majority Investor Holders of the Registration shall have the right to withdraw the request for registration by giving written notice to the Company within 30 days after receipt of the Blackout Notice. Such withdrawn registration request shall not be treated as a Demand Registration effected pursuant to Section 2.1 (and shall not be counted towards the number of Demand Registrations effected by such Persons), and the Company shall pay all Registration Expenses in connection therewith.

 

3.                                       HOLDBACK ARRANGEMENTS.

 

3.1.                              Restrictions on Sale by Holders of Registrable Securities. Each Holder of Registrable Securities agrees, by acquisition of such Registrable Securities, if timely requested in writing by the sole or lead managing Underwriter in an Underwritten Offering of any Registrable Securities (other than in connection with an S-3 Registration), not to make any short sale of, loan, grant any option for the purchase of or effect any public sale or distribution, including a sale pursuant to Rule 144 (or any successor provision having similar effect) under the Securities Act of any Registrable Securities or any other equity security of the Company (or any security convertible into or exchangeable or exercisable for any equity security of the Company) (except as part of such underwritten registration), during the five business days (as such term is used in Regulation M under the Exchange Act) prior to, and during the time period reasonably requested by the sole or lead managing Underwriter not to exceed 90 days or, in the case of an Initial Public Offering, 180 days beginning on the effective date of the applicable Registration Statement, unless the sole or lead managing Underwriter in such Underwritten Offering otherwise agrees; provided, however, that to the extent the Company or the sole lead managing Underwriter releases any other Person from the foregoing or equivalent restrictions in whole or in part it shall, on the same day, notify the Holders of such release and such parties shall automatically be released to the same extent. Such restriction shall be subject to reasonable and customary exceptions, including, without limitation, the right of a Holder to make transfers to certain Affiliates and transfers related to Common Shares owned by Holders as a result of open market purchases made following the closing of the Initial Public Offering.

 

3.2.                              Restrictions on Sale by the Company and Others. The Company agrees that if timely requested in writing by the sole or lead managing Underwriter in an Underwritten Offering of any Registrable Securities (other than in connection with an S-3 Registration), not to make any short sale of, loan, grant any option for the purchase of or effect any public or private sale or distribution of any of the Company’s equity securities (or any security convertible into or exchangeable or exercisable for any of the Company’s equity securities) during the five business days (as such term is used in Regulation M under the Exchange Act) prior to, and during the time period reasonably requested by the sole or lead managing Underwriter not to exceed 90 days or, in the case of an Initial Public Offering, 180 days, beginning on the effective date of the applicable Registration Statement (except as part of such underwritten registration or pursuant to registrations on Forms S-4 or S-8 or any successor form to such forms), unless the sole or lead Managing Underwriter in such Underwritten Offering otherwise agrees. The Company will use its reasonable best efforts to cause each

 

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director and officer of the Company and each holder of 5% or more of the equity securities (or any security convertible into or exchangeable or exercisable for any of its equity securities) of the Company to so agree.

 

3.3.                              Confidentiality of Notices. Any Holder receiving any notice from the Company regarding the Company’s plans to file a registration statement shall treat such notice confidentially and shall not disclose such information to any person other than as necessary to exercise its rights under this Agreement.

 

4.                                       REGISTRATION PROCEDURES.

 

4.1.                              Obligations of the Company. Whenever the Company is required to effect the registration of Registrable Securities under the Securities Act pursuant to Section 2 of this Agreement, the Company shall, as expeditiously as possible:

 

(a)                                  prepare and file with the SEC (promptly, and in any event within 60 days after receipt of a request to register Registrable Securities) the requisite Registration Statement to effect such registration, which Registration Statement shall comply as to form in all material respects with the requirements of the applicable form and include all financial statements required by the SEC to be filed therewith, and the Company shall use its best efforts to cause such Registration Statement to become effective (provided, that the Company may discontinue any registration of its securities that are not Registrable Securities, and, under the circumstances specified in Section 2.2, its securities that are Registrable Securities); provided, however, that before filing a Registration Statement or Prospectus or any amendments or supplements thereto, or comparable statements under securities or blue sky laws of any jurisdiction, the Company shall (i) provide Holders’ Counsel and any other Inspector with an adequate and appropriate opportunity to participate in the preparation of such Registration Statement and each Prospectus included therein (and each amendment or supplement thereto or comparable statement) to be filed with the SEC, which documents shall be subject to the review and comment of Holders’ Counsel, and (ii) not file any such Registration Statement or Prospectus (or amendment or supplement thereto or comparable statement) with the SEC to which Holder’s Counsel, any selling Holder or any other Inspector shall have reasonably objected on the grounds that such filing does not comply in all material respects with the requirements of the Securities Act or of the rules or regulations thereunder;

 

(b)                                 prepare and file with the SEC such amendments and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary (i) to keep such Registration Statement effective, and (ii) to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such Registration Statement, in each case until such time as all of such Registrable Securities have been disposed of in accordance with the intended methods of disposition by the seller(s) thereof set forth in such Registration Statement; provided, that except with respect to any Shelf Registration, such period need not extend beyond nine months after the effective date of the Registration Statement; and provided, further, that with respect to any Shelf Registration, such period need not extend beyond the time period provided in Section 2.3, and which periods, in any event, shall terminate when all Registrable Securities covered by such Registration

 

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Statement have been sold (but not before the expiration of the 90 day period referred to in Section 4(3) of the Securities Act and Rule 174 thereunder, if applicable);

 

(c)                                  furnish, without charge, to each selling Holder of such Registrable Securities and each Underwriter, if any, of the securities covered by such Registration Statement, such number of copies of such Registration Statement, each amendment and supplement thereto (in each case including all exhibits), and the Prospectus included in such Registration Statement (including each preliminary Prospectus) in conformity with the requirements of the Securities Act, and other documents, as such selling Holder and Underwriter may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities owned by such selling Holder (the Company hereby consenting to the use in accordance with applicable law of each such Registration Statement (or amendment or post-effective amendment thereto) and each such Prospectus (or preliminary prospectus or supplement thereto) by each such selling Holder of Registrable Securities and the Underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by such Registration Statement or Prospectus);

 

(d)                                 prior to any public offering of Registrable Securities, use its best efforts to register or qualify all Registrable Securities and other securities covered by such Registration Statement under such other securities or blue sky laws of such jurisdictions as any selling Holder of Registrable Securities covered by such Registration Statement or the sole or lead managing Underwriter, if any, may reasonably request to enable such selling Holder to consummate the disposition in such jurisdictions of the Registrable Securities owned by such selling Holder and to continue such registration or qualification in effect in each such jurisdiction for as long as such Registration Statement remains in effect (including through new filings or amendments or renewals), and do any and all other acts and things which may be necessary or advisable to enable any such selling Holder to consummate the disposition in such jurisdictions of the Registrable Securities owned by such selling Holder; provided, however, that the Company shall not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 4.1(d), (ii) subject itself to taxation in any such jurisdiction, or (iii) consent to general service of process in any such jurisdiction;

 

(e)                                  use its best efforts to obtain all other approvals, consents, exemptions or authorizations from such governmental agencies or authorities as may be necessary to enable the selling Holders of such Registrable Securities to consummate the disposition of such Registrable Securities;

 

(f)                                    promptly notify Holders’ Counsel, each Holder of Registrable Securities covered by such Registration Statement and the sole or lead managing Underwriter, if any: (i) when the Registration Statement, any pre-effective amendment, the Prospectus or any prospectus supplement related thereto or post-effective amendment to the Registration Statement has been filed and, with respect to the Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the SEC or any state securities or blue sky authority for amendments or supplements to the Registration Statement or the Prospectus related thereto or for additional information, (iii) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or the

 

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initiation or threat of any proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the securities or blue sky laws of any jurisdiction or the initiation of any proceeding for such purpose, (v) of the existence of any fact of which the Company becomes aware or the happening of any event which results in (A) the Registration Statement containing an untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make any statements therein not misleading or (B) the Prospectus included in such Registration Statement containing an untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make any statements therein, in the light of the circumstances under which they were made, not misleading, (vi) if at any time the representations and warranties contemplated by Section 2.5(b) cease to be true and correct in all material respects and (vii) of the Company’s reasonable determination that a post-effective amendment to a Registration Statement would be appropriate or that there exists circumstances not yet disclosed to the public which make further sales under such Registration Statement inadvisable pending such disclosure and post-effective amendment; and, if the notification relates to an event described in any of the clauses (ii) through (vii) of this Section 4.l(f), the Company shall promptly prepare a supplement or post-effective amendment to such Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that (1) such Registration Statement shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and (2) as thereafter delivered to the purchasers of the Registrable Securities being sold thereunder, such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein in the light of the circumstances under which they were made not misleading (and shall furnish to each such Holder and each Underwriter, if any, a reasonable number of copies of such Prospectus so supplemented or amended); and if the notification relates to an event described in clause (iii) of this Section 4.1(f), the Company shall take all reasonable action required to prevent the entry of such stop order or to remove it if entered;

 

(g)                                 make available for inspection by any selling Holder of Registrable Securities, any sole or lead managing Underwriter participating in any disposition pursuant to such Registration Statement, Holders’ Counsel and any attorney, accountant or other agent retained by any such seller or any Underwriter (each, an “Inspector” and, collectively, the “Inspectors”), all financial and other records, pertinent corporate documents and properties of the Company and any subsidiaries thereof as may be in existence at such time (collectively, the “Records”) as shall be necessary, in the opinion of such Holders’ and such Underwriters’ respective counsel, to enable them to exercise their due diligence responsibility and to conduct a reasonable investigation within the meaning of the Securities Act, and cause the Company’s and any subsidiaries’ officers, directors and employees, and the independent public accountants of the Company, to supply all information reasonably requested by any such Inspectors in connection with such Registration Statement; provided, however, that such inspection shall be limited to a reasonable period of time within which to review such material and information;

 

(h)                                 obtain an opinion from the Company’s counsel and a “cold comfort” letter from the Company’s independent public accountants who have certified the Company’s financial statements included or incorporated by reference in such Registration

 

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Statement, in each case dated the effective date of such Registration Statement (and if such registration involves an Underwritten Offering, dated the date of the closing under the underwriting agreement), in customary form and covering such matters as are customarily covered by such opinions and “cold comfort” letters delivered to underwriters in underwritten public offerings, which opinion and letter shall be reasonably satisfactory to the sole or lead managing Underwriter, if any, and to the Majority Holders of the Registration, and furnish to each Holder participating in the offering and to each Underwriter, if any, a copy of such opinion and letter addressed to such Holder (in the case of the opinion) and Underwriter (in the case of the opinion and the “cold comfort” letter);

 

(i)                                     provide a CUSIP number for all Registrable Securities and provide and cause to be maintained a transfer agent and registrar for all such Registrable Securities covered by such Registration Statement not later than the effectiveness of such Registration Statement;

 

(j)                                     otherwise use its best efforts to comply with all applicable rules and regulations of the SEC and any other governmental agency or authority having jurisdiction over the offering, and make available to its security holders, as soon as reasonably practicable but no later than 90 days after the end of any 12-month period, an earnings statement (i) commencing at the end of any month in which Registrable Securities are sold to Underwriters in an Underwritten Offering and (ii) commencing with the first day of the Company’s calendar month next succeeding each sale of Registrable Securities after the effective date of a Registration Statement, which statement shall cover such 12-month periods, in a manner which satisfies the provisions of Section 1l(a) of the Securities Act and Rule 158 thereunder;

 

(k)                                  if so requested by the Majority Holders of the Registration, use its best efforts to cause all such Registrable Securities to be listed (i) on each national securities exchange on which the Company’s securities are then listed or (ii) if securities of the Company are not at the time listed on any national securities exchange (or if the listing of Registrable Securities is not permitted under the rules of each national securities exchange on which the Company’s securities are then listed), on a national securities exchange designated by the Majority Holders of the Registration;

 

(1)                                  keep each selling Holder of Registrable Securities advised in writing as to the initiation and progress of any registration under Section 2 hereunder;

 

(m)                               enter into and perform customary agreements (including, if applicable, an underwriting agreement in customary form) and provide officers’ certificates and other customary closing documents;

 

(n)                                 cooperate with each selling Holder of Registrable Securities and each Underwriter participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with the NASD and make reasonably available its employees and personnel and otherwise provide reasonable assistance to the Underwriters (taking into account the needs of the Company’s businesses and the requirements of the marketing process) in the marketing of Registrable Securities in any Underwritten Offering;

 

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(o)                                 furnish to each Holder participating in the offering and the sole or lead managing Underwriter, if any, without charge, at least one manually-signed copy of the Registration Statement and any post-effective amendments thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those deemed to be incorporated by reference);

 

(p)                                 cooperate with the selling Holders of Registrable Securities and the sole or lead managing Underwriter, if any, to facilitate the timely preparation and delivery of certificates not bearing any restrictive legends representing the Registrable Securities to be sold, and cause such Registrable Securities to be issued in such denominations and registered in such names in accordance with the underwriting agreement prior to any sale of Registrable Securities to the Underwriters or, if not an Underwritten Offering, in accordance with the instructions of the selling Holders of Registrable Securities at least three business days prior to any sale of Registrable Securities;

 

(q)                                 if requested by the sole or lead managing Underwriter or any selling Holder of Registrable Securities, immediately incorporate in a prospectus supplement or post-effective amendment such information concerning such Holder of Registrable Securities, the Underwriters or the intended method of distribution as the sole or lead managing Underwriter or the selling Holder of Registrable Securities reasonably requests to be included therein and as is appropriate in the reasonable judgment of the Company, including, without limitation, information with respect to the number of shares of the Registrable Securities being sold to the Underwriters, the purchase price being paid therefor by such Underwriters and with respect to any other terms of the Underwritten Offering of the Registrable Securities to be sold in such offering; make all required filings of such Prospectus supplement or post-effective amendment as soon as notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment; and supplement or make amendments to any Registration Statement if requested by the sole or lead managing Underwriter of such Registrable Securities;

 

(r)                                    cause appropriate officers as are requested by a managing Underwriter to participate in a “road show” or similar marketing effort being conducted by such underwriter with respect to an Underwritten Offering; and

 

(s)                                  use its best efforts to take all other steps necessary to expedite or facilitate the registration and disposition of the Registrable Securities contemplated hereby.

 

4.2.                              Seller Information.  (a)  The Company may require each selling Holder of Registrable Securities as to which any registration is being effected to furnish to the Company such information regarding such Holder, such Holder’s Registrable Securities and such Holder’s intended method of disposition as the Company may from time to time reasonably request in writing; provided that such information shall be used only in connection with such registration.

 

(b)                                 If any Registration Statement or comparable statement under “blue sky” laws refers to any Holder by name or otherwise as the Holder of any securities of the Company, then such Holder shall have the right to require (i) the insertion therein of

 

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language, in form and substance satisfactory to such Holder and the Company, to the effect that the holding by such Holder of such securities is not to be construed as a recommendation by such Holder of the investment quality of the Company’s securities covered thereby and that such holding does not imply that such Holder will assist in meeting any future financial requirements of the Company, and (ii) in the event that such reference to such Holder by name or otherwise is not in the judgment of the Company, as advised by counsel, required by the Securities Act or any similar federal statute or any state “blue sky” or securities law then in force, the deletion of the reference to such Holder.

 

4.3.                              Notice to Discontinue. Each Holder of Registrable Securities agrees by acquisition of such Registrable Securities that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 4.1(f)(ii) through (vii), such Holder shall forthwith discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 4.1(f) and, if so directed by the Company, such Holder shall deliver to the Company (at the Company’s expense) all copies, other than permanent file copies, then in such Holder’s possession of the Prospectus covering such Registrable Securities which is current at the time of receipt of such notice. If the Company shall give any such notice, the Company shall extend the period during which such Registration Statement shall be maintained effective pursuant to this Agreement (including, without limitation, the period referred to in Section 4.1(b)) by the number of days during the period from and including the date of the giving of such notice pursuant to Section 4.1(f) to and including the date when the Holder shall have received the copies of the supplemented or amended prospectus contemplated by and meeting the requirements of Section 4.1(f).

 

5.                                       INDEMNIFICATION; CONTRIBUTION.

 

5.1.                              Indemnification by the Company. The Company agrees to indemnify and hold harmless, to the fullest extent permitted by law, each Holder of Registrable Securities, its officers, directors, partners, members, shareholders, employees, Affiliates and agents (collectively, “Agents”) and each Person who controls such Holder (within the meaning of the Securities Act) and its Agents with respect to each registration which has been effected pursuant to this Agreement, against any and all losses, claims, damages or liabilities, joint or several, actions or proceedings (whether commenced or threatened) in respect thereof, and expenses (as incurred or suffered and including, but not limited to, any and all expenses incurred in investigating, preparing or defending any litigation or proceeding, whether commenced or threatened, and the reasonable fees, disbursements and other charges of legal counsel) in respect thereof (collectively, “Claims”), insofar as such Claims arise out of or are based upon any untrue or alleged untrue statement of a material fact contained in any Registration Statement or Prospectus (including any preliminary, final or summary prospectus and any amendment or supplement thereto) related to any such registration or any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of the Securities Act or any rule or regulation thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, or any qualification or compliance incident thereto; provided, however, that the Company will not be liable in any such case to the extent that any such Claims arise out of or are based upon any untrue statement or alleged untrue statement of a

 

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material fact or omission or alleged omission of a material fact so made in reliance upon and in conformity with written information furnished to the Company in an instrument duly executed by such Holder specifically stating that it was expressly for use therein. The Company shall also indemnify any Underwriters of the Registrable Securities, their Agents and each Person who controls any such Underwriter (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the Holders of Registrable Securities. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of any Person who may be entitled to indemnification pursuant to this Section 5 and shall survive the transfer of securities by such Holder or Underwriter.

 

5.2.                              Indemnification by Holders. Each Holder, if Registrable Securities held by it are included in the securities as to which a registration is being effected, agrees to, severally and not jointly, indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors and officers, each other Person who participates as an Underwriter in the offering or sale of such securities and its Agents and each Person who controls the Company or any such Underwriter (within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act) and its Agents against any and all Claims, insofar as such Claims arise out of or are based upon any untrue or alleged untrue statement of a material fact contained in any Registration Statement or Prospectus (including any preliminary, final or summary prospectus and any amendment or supplement thereto) related to such registration, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company in an instrument duly executed by such Holder specifically stating that it was expressly for use therein; provided, however, that the aggregate amount which any such Holder shall be required to pay pursuant to this Section 5.2 shall in no event be greater than the amount of the net proceeds received by such Holder upon the sale of the Registrable Securities sold by such Holder pursuant to the Registration Statement giving rise to such Claims less all amounts previously paid by such Holder with respect to any such Claims. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified party and shall survive the transfer of such securities by such Holder or Underwriter.

 

5.3.                              Conduct of Indemnification Proceedings. Promptly after receipt by an indemnified party of notice of any Claim or the commencement of any action or proceeding involving a Claim under this Section 5, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party pursuant to Section 5, (i) notify the indemnifying party in writing of the Claim or the commencement of such action or proceeding; provided, that the failure of any indemnified party to provide such notice shall not relieve the indemnifying party of its obligations under this Section 5, except to the extent the indemnifying party is materially and actually prejudiced thereby and shall not relieve the indemnifying party from any liability which it may have to any indemnified party otherwise than under this Section 5, and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided, however, that any indemnified party shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (A) the indemnifying party has agreed in writing to pay such fees and expenses, (B) the

 

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indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such indemnified party within 10 days after receiving notice from such indemnified party that the indemnified party believes it has failed to do so, (C) in the reasonable judgment of any such indemnified party, based upon advice of counsel, a conflict of interest may exist between such indemnified party and the indemnifying party with respect to such claims (in which case, if the indemnified party notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such indemnified party) or (D) such indemnified party is a defendant in an action or proceeding which is also brought against the indemnifying party and reasonably shall have concluded that there may be one or more legal defenses available to such indemnified party which are not available to the indemnifying party. No indemnifying party shall be liable for any settlement of any such claim or action effected without its written consent, which consent shall not be unreasonably withheld. In addition, without the consent of the indemnified party (which consent shall not be unreasonably withheld), no indemnifying party shall be permitted to consent to entry of any judgment with respect to, or to effect the settlement or compromise of any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim), unless such settlement, compromise or judgment (1) includes an unconditional release of the indemnified party from all liability arising out of such action or claim, (2) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party, and (3) does not provide for any action on the part of any party other than the payment of money damages which is to be paid in full by the indemnifying party.

 

5.4.                              Contribution. If the indemnification provided for in Section 5.1 or 5.2 from the indemnifying party for any reason is unavailable to (other than by reason of exceptions provided therein), or is insufficient to hold harmless, an indemnified party hereunder in respect of any Claim, then the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such Claim in such proportion as is appropriate to reflect the relative fault of the indemnifying party, on the one hand, and the indemnified party, on the other hand, in connection with the actions which resulted in such Claim, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or indemnified party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action. If, however, the foregoing allocation is not permitted by applicable law, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative faults but also the relative benefits of the indemnifying party and the indemnified party as well as any other relevant equitable considerations.

 

The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5.4 were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by a party as a result of any

 

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Claim referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth in Section 5.3, any legal or other fees, costs or expenses reasonably incurred by such party in connection with any investigation or proceeding. Notwithstanding anything in this Section 5.4 to the contrary, no indemnifying party (other than the Company) shall be required pursuant to this Section 5.4 to contribute any amount in excess of the net proceeds received by such indemnifying party from the sale of the Registrable Securities sold by such indemnifying party pursuant to the Registration Statement giving rise to such Claims, less all amounts previously paid by such indemnifying party with respect to such Claims. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

 

5.5.                              Other Indemnification. Indemnification similar to that specified in the preceding Sections 5.1 and 5.2 (with appropriate modifications) shall be given by the Company and each selling Holder of Registrable Securities with respect to any required registration or other qualification of securities under any Federal or state law or regulation of any governmental authority, other than the Securities Act. The indemnity agreements contained herein shall be in addition to any other rights to indemnification or contribution which any indemnified party may have pursuant to law or contract.

 

5.6.                              Indemnification Payments. The indemnification and contribution required by this Section 5 shall be made by periodic payments of the amount thereof during the course of any investigation or defense, as and when bills are received or any expense, loss, damage or liability is incurred.

 

6.                                       GENERAL.

 

6.1.                              Adjustments Affecting Registrable Securities. The Company agrees that it shall not effect or permit to occur any combination or subdivision of shares which would adversely affect the ability of the Holder of any Registrable Securities to include such Registrable Securities in any registration contemplated by this Agreement or the marketability of such Registrable Securities in any such registration.

 

6.2.                              Registration Rights to Others. The Company has not previously entered into an agreement with respect to its securities granting any registration rights to any Person and agrees that from and after the date of this Agreement, it shall not, without the prior written consent of the Holders of at least 87% of the Registrable Securities then outstanding, enter into any agreement (or amendment or waiver of the provisions of any agreement) with any holder or prospective holder of any securities of the Company that would grant such holder registration rights that are more favorable or senior to those granted to the Investor Holders. If the Company shall at any time hereafter provide to any holder of any securities of the Company rights with respect to the registration of such securities under the Securities Act, (i) such rights shall not be in conflict with or adversely affect any of the rights provided in this Agreement to the Investor Holders and (ii) if such rights are provided on terms or conditions more favorable to such holder than the terms and conditions provided in this Agreement, the Company shall

 

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provide (by way of amendment to this Agreement or otherwise) such more favorable terms or conditions to the Investor Holders.

 

6.3.                              Availability of Information; Rule 144; Rule 144A; Other Exemptions. So long as the Company shall not have filed a registration statement pursuant to Section 12 of the Exchange Act or a registration statement pursuant to the requirements of the Securities Act, the Company shall, at any time and from time to time, upon the request of any Holder of Registrable Securities and upon the request of any Person designated by such Holder as a prospective purchaser of any Registrable Securities, furnish in writing to such Holder or such prospective purchaser, as the case may be, a statement as of a date not earlier than 12 months prior to the date of such request of the nature of the business of the Company and the products and services it offers and copies of the Company’s most recent balance sheet and profit and loss and retained earnings statements, together with similar financial statements for such part of the two preceding fiscal years as the Company shall have been in operation, all such financial statements to be audited to the extent audited statements are reasonably available, provided that, in any event the most recent financial statements so furnished shall include a balance sheet as of a date less than 16 months prior to the date of such request, statements of profit and loss and retained earnings for the 12 months preceding the date of such balance sheet, and, if such balance sheet is not as of a date less than 6 months prior to the date of such request, additional statements of profit and loss and retained earnings for the period from the date of such balance sheet to a date less than 6 months prior to the date of such request. If the Company shall have filed a registration statement pursuant to the requirements of Section 12 of the Exchange Act or a registration statement pursuant to the requirements of the Securities Act, the Company covenants that it shall timely file any reports required to be filed by it under the Securities Act or the Exchange Act (including, but not limited to, the reports under Sections 13 and 15(d) of the Exchange Act referred to in subparagraph (c) of Rule 144 under the Securities Act), and that it shall take such further action as any Holder of Registrable Securities may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 and Rule 144A under the Securities Act, as such rules may be amended from time to time, or (ii) any other rule or regulation now existing or hereafter adopted by the SEC. Upon the request of any Holder of Registrable Securities, the Company shall deliver to such Holder a written statement as to whether it has complied with such requirements.

 

6.4.                              Amendments and Waivers. The provisions of this Agreement may not be amended, modified, supplemented or terminated, and waivers or consents to departures from the provisions hereof may not be given, without the written consent of the Company, and the Holders of a majority of the Registrable Securities; provided, however, that no such amendment, modification, supplement, waiver or consent to departure shall reduce the aforesaid percentage of Registrable Securities required under this Section 6.4 without the written consent of all of the Holders of Registrable Securities; and provided, further, that nothing herein shall prohibit any amendment, modification, supplement, termination, waiver or consent to departure the effect of which is limited only to those Holders who have agreed to such amendment, modification, supplement, termination, waiver or consent to departure.

 

6.5.                              Notices. All notices and other communications provided for or permitted hereunder to any party shall deemed to be sufficient if contained in a written

 

24



 

instrument and shall be deemed to have been duly given when delivered in person, by telecopy, by facsimile, by nationally-recognized overnight courier, or by first class registered or certified mail, postage prepaid, addressed to such party at the address set forth below or such other address as may hereafter be designated in writing by the addressee as follows:

 

(i)

If to the Company, to:

 

 

 

BlueLinx Corporation

 

c/o Cerberus Capital Management, L.P.

 

299 Park Avenue

 

New York, New York 10171

 

Attention: Lenard Tessler

 

Fax No.: (212) 755-3009

 

 

 

With a copy to:

 

 

 

Schulte Roth & Zabel LLP

 

919 Third Avenue

 

New York, New York 10022

 

Attn: Stuart D. Freedman, Esq.

 

Fax No.: (212) 593-5955

 

 

(ii)

If to Cerberus:

 

 

 

Cerberus ABP Investor LLC

 

c/o Cerberus Capital Management, L.P.

 

299 Park Avenue

 

New York, New York 10171

 

Attention: Lenard Tessler

 

Fax No.: (212) 755-3009

 

 

 

With a copy to:

 

 

 

Schulte Roth & Zabel LLP

 

919 Third Avenue

 

New York, New York 10022

 

Attn: Stuart D. Freedman, Esq.

 

Fax No.: (212) 593-5955

 

 

(iii)

If to the Management Holders, to the address of such Management Holders set forth in the records of the Company.

 

 

(iv)

If to any subsequent Holder, to the address of such Person set forth in the records of the Company.

 

All such notices, requests, consents and other communications shall be deemed to have been delivered (a) in the case of personal delivery or delivery by telecopy or confirmed facsimile, on the date of such delivery, (b) in the case of nationally-recognized overnight courier,

 

25



 

on the next business day and (c) in the case of mailing, on the third business day following such mailing if sent by certified mail, return receipt requested.

 

6.6.                              Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, successors and permitted assigns (including any permitted transferee of Registrable Securities). Any Holder may assign to any transferee of its Registrable Securities (other than a transferee that acquires such Registrable Securities in a registered public offering or pursuant to a sale under Rule 144 of the Securities Act (or any successor rule)), its rights and obligations under this Agreement; provided, however, if any transferee shall take and hold Registrable Securities, such transferee shall promptly notify the Company and by taking and holding such Registrable Securities such transferee shall automatically be entitled to receive the benefits of and be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement as if it were a party hereto (and shall, for all purposes, be deemed a Holder under this Agreement). If the Company shall so request, any heir, successor or assign (including any transferee) shall agree in writing to acquire and hold the Registrable Securities subject to all of the terms hereof. For purposes of this Agreement, “successor” for any entity other than a natural person shall mean a successor to such entity as a result of such entity’s merger, consolidation, sale of substantially all of its assets, or similar transaction. Except as provided above or otherwise permitted by this Agreement, neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by any Holder or by the Company without the consent of the other parties hereto.

 

6.7.                              Counterparts. This Agreement may be executed in two or more counterparts, each of which, when so executed and delivered, shall be deemed to be an original, but all of which counterparts, taken together, shall constitute one and the same instrument.

 

6.8.                              Descriptive Headings, Etc. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning of terms contained herein. Unless the context of this Agreement otherwise requires: (i) words of any gender shall be deemed to include each other gender; (ii) words using the singular or plural number shall also include the plural or singular number, respectively; (iii) the words “hereof, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section and paragraph references are to the Sections and paragraphs of this Agreement unless otherwise specified; (iv) the word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless otherwise specified; (v) “or” is not exclusive; and (vi) provisions apply to successive events and transactions.

 

6.9.                              Severability. In the event that any one or more of the provisions, paragraphs, words, clauses, phrases or sentences contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision, paragraph, word, clause, phrase or sentence in every other respect and of the other remaining provisions, paragraphs, words, clauses, phrases or sentences hereof shall not be in any way impaired, it being intended that all rights, powers and privileges of the parties hereto shall be enforceable to the fullest extent permitted by law.

 

26



 

6.10.                        Governing Law. This Agreement will be governed by and construed in accordance with the domestic laws of the State of Georgia, without giving effect to any choice of law or conflicting provision or rule (whether of the State of Georgia, or any other jurisdiction) that would cause the laws of any jurisdiction other than the State of Georgia to be applied. In furtherance of the foregoing, the internal laws of the State of Georgia will control the interpretation and construction of this Agreement, even if under such jurisdiction’s choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily apply.

 

6.11.                        Consent to Jurisdiction. Each of the parties hereto irrevocably and unconditionally submits to the exclusive jurisdiction of (a) the State Court of Georgia, Fulton County and (b) the United States District Court for the Northern District of Georgia located in Atlanta, Georgia, for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby. Each of the parties hereto further agrees that service of any process, summons, notice or document by U.S. registered mail to such party’s respective address set forth in Section 6.5 shall be effective service of process for any action, suit or proceeding in Georgia with respect to any matters to which it has submitted to jurisdiction as set forth above in the immediately preceding sentence. Each of the parties hereto irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in (a) the State Court of Georgia, Fulton County, or (b) the United States District Court for the Northern District of Georgia located in Atlanta, Georgia, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

 

6.12.                        Waiver of Jury Trial. THE COMPANY AND EACH OF THE HOLDERS HEREBY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT OR THE VALIDITY, INTERPRETATION OR ENFORCEMENT HEREOF. THE COMPANY AND EACH OF THE HOLDERS AGREE THAT THIS SECTION IS A SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND WOULD NOT ENTER INTO THIS AGREEMENT IF THIS SECTION WERE NOT PART OF THIS AGREEMENT.

 

6.13.                        Remedies; Specific Performance. The parties hereto acknowledge that money damages would not be an adequate remedy at law if any party fails to perform in any material respect any of its obligations hereunder and accordingly agree that each party, in addition to any other remedy to which it may be entitled at law or in equity, shall be entitled to seek to compel specific performance of the obligations of any other party under this Agreement, without the posting of any bond, in accordance with the terms and conditions of this Agreement in any court of the United States or any State thereof having jurisdiction, and if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law. No remedy shall be exclusive of any other remedy. All available remedies shall be cumulative.

 

6.14.                        Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained

 

27



 

herein. There are no restrictions, promises, representations, warranties, covenants or undertakings relating to such subject matter, other than those set forth or referred to herein. This Agreement supersedes all prior agreements and understandings between the Company and the other parties to this Agreement with respect to such subject matter.

 

6.15.                        Nominees for Beneficial Owners. In the event that any Registrable Securities are held by a nominee for the beneficial owner thereof, the beneficial owner thereof may, at its election in writing delivered to the Company, be treated as the holder of such Registrable Securities for purposes of any request or other action by any holder or holders of Registrable Securities pursuant to this Agreement or any determination of any number or percentage of shares of Registrable Securities held by any holder or holders of Registrable Securities contemplated by this Agreement. If the beneficial owner of any Registrable Securities so elects, the Company may require assurances reasonably satisfactory to it of such owner’s beneficial ownership of such Registrable Securities.

 

6.16.                        Further Assurances. Each party hereto shall do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments and documents as any other party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

6.17.                        No Inconsistent Agreements. The Company will not hereafter enter into any agreement which is inconsistent with the rights granted to the Holders in this Agreement.

 

6.18.                        Construction. The Company and the Initial Holders acknowledge that each of them has had the benefit of legal counsel of its own choice and has been afforded an opportunity to review this Agreement with its legal counsel and that this Agreement shall be construed as if jointly drafted by the Company and the Initial Holders.

 

[Remainder of this page intentionally left blank. Signature page follows.]

 

28



 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first written above.

 

 

 

COMPANY:

 

 

 

ABP DISTRIBUTION HOLDINGS INC.

 

 

 

 

 

 

By:

/s/ David S. Morris

 

 

 

 

Name: David S. Morris

 

 

 

 

Title:   CFO & Treasurer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INVESTORS:

 

 

 

 

 

 

 

 

 

CERBERUS ABP INVESTOR LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Lenard Tessler

 

 

 

 

 

Name: Lenard Tessler

 

 

 

 

 

Title    Managing Director

 

 

 

 

 

 

 

 

 



 

 

MANAGEMENT HOLDERS:

 

 

 

 

 

/s/ Charles McElrea

 

 

Charles McElrea

 

 

 

 

 

/s/ George Judd

 

 

George Judd

 

 

 

 

 

/s/ David Morris

 

 

David Morris

 

 

 

 

 

/s/ James Herbig

 

 

James Herbig

 

 

 

 

 

/s/ Wayne Wiggleton

 

 

Wayne Wiggleton

 

 

 

 

 

/s/ Steven Hardin

 

 

Steven Hardin

 




Exhibit 4.3

 

BlueLinx Holdings Inc.

4300 Wildwood Parkway

Atlanta, Georgia 30339

 

August 30, 2004

 

To:                              Cerberus ABP Investors LLC

Charles H. McElrea

George R. Judd

David J. Morris

James C. Herbig

Wayne E. Wiggleton

Steven C. Hardin

 

Re:                               Equity-Related Agreements

 

Dear Sirs:

 

Herein we make reference to the following agreements:

 

1.                    the Executive Purchase Agreement, dated as of May 7, 2004, by and among ABP Distribution Holdings Inc., a Georgia corporation (“ABP Holdings”), Cerberus ABP Investor LLC, a Delaware limited liability company (“ABP Investor”) and Charles H. McElrea (“Mr. McElrea”) (such agreement, the “McElrea Purchase Agreement”);

 

2.                    the Executive Purchase Agreement, dated as of May 7, 2004, by and among ABP Holdings, ABP Investor, and David J. Morris (“Mr. Morris”) (such agreement, the “Morris Purchase Agreement”);

 

3.                    the Executive Purchase Agreement, dated as of May 7, 2004, by and among ABP Holdings, ABP Investor, and George R. Judd (“Mr. Judd”) (such agreement, the “Judd Purchase Agreement”);

 

4.                    the Executive Purchase Agreement, dated as of May 7, 2004, by and among ABP Holdings. ABP Investor, and Steven Hardin (“Mr. Hardin”) (such agreement, the “Hardin Purchase Agreement”);

 

5.                    the Executive Purchase Agreement, dated as of May 7, 2004, by and among ABP Holdings, ABP Investor, and James C. Herbig (“Mr. Herbig”) (such agreement, the “Herbig Purchase Agreement”);

 

6.                    the Executive Purchase Agreement, dated as of May 7, 2004, by and among ABP Holdings, ABP Investor, and Wayne E. Wiggleton (“Mr. Wiggleton”) (such agreement, the “Wiggleton Purchase Agreement” and together with the McElrea Purchase Agreement, the Morris Purchase Agree, the Judd Purchase Agreement, the Hardin Purchase Agreement and the Herbig Purchase Agreement, the “Purchase Agreements”);

 

7.                    the Registration Rights Agreement, dated as of May 7, 2004, by and among ABP Holdings, ABP Investor, Mr. McElrea, Mr. Morris, Mr. Judd, Mr. Herbig, Mr. Wiggleton and Mr. Hardin (the “Registration Rights Agreement”); and

 

8.                    the ABP Distribution Holdings Inc. Stockholders Agreement, dated as of May 7, 2004, by and among ABP Holdings, ABP Investor, Mr. McElrea, Mr. Morris, Mr. Judd,

 



 

Mr. Wiggleton, Mr. Herbig and Mr. Hardin (the “Stockholders Agreement” and together with the Purchase Agreements and the Registration Rights Agreement, the “Equity-Related Agreements”).

 

The reincorporation of ABP Holdings from Georgia to Delaware will be accomplished by the merger of ABP Holdings with and into BlueLinx Holdings Inc., a Delaware corporation and wholly-owned subsidiary (“BlueLinx Holdings”), with BlueLinx Holdings as the surviving corporation. The shares of stock of ABP Holdings held by you will be converted into shares of stock of BlueLinx Holdings (“BlueLinx Stock”) pursuant to an agreement and plan of merger by and between ABP Holdings and BlueLinx Holdings at the effective time of the merger.

 

By signing this letter agreement, you agree that, as of the effective time of the merger, (a) the Equity-Related Agreements (which shall continue in full force and effect) will control the terms and conditions of your ownership of and rights relating to the shares of BlueLinx Stock you will hold as a result of the merger, (b) references to the shares of stock of ABP Holdings made in the Equity-Related Agreements shall be read to apply also to shares of BlueLinx Stock, and (c) references to ABP Holdings made in the Equity-Related Agreements shall be read to apply also to BlueLinx Holdings.

 

[Remainder of page intentionally left blank]

 

2



 

Please indicate your acceptance of the terms of this letter agreement by executing the same. This letter agreement may be executed in multiple counterparts, each of which, when executed, shall be deemed to be an original and all of which, when taken together, shall constitute one and the same instrument.

 

 

BLUELINX HOLDINGS INC.

 

 

 

 

 

By:

/s/ Charles H. McElrea

 

 

 

Name: Charles H. McElrea

 

 

Title:   CEO

 

Accepted and agreed as of August 30, 2004:

 

 

CERBERUS ABP INVESTOR LLC

 

 

 

 

 

By:

/s/ Lenard B. Tessler

 

 

Name:

Lenard B. Tessler

 

 

Title:

Managing Director

 

 

 

 

 

/s/ Charles H. McElrea

 

Charles H. McElrea

 

 

 

 

 

/s/ George R. Judd

 

George R. Judd

 

 

 

 

 

/s/ David J.  Morris

 

David J.  Morris

 

 

 

 

 

/s/ James C. Herbig

 

James C. Herbig

 

 

 

 

 

/s/ Wayne E. Wiggleton

 

Wayne E. Wiggleton

 

 

 

 

 

/s/ Steven C. Hardin

 

Steven C. Hardin

 

 

3




Exhibit 10.1

 

 

ASSET PURCHASE AGREEMENT

by and among

GEORGIA-PACIFIC CORPORATION,

GEORGIA-PACIFIC BUILDING MATERIALS SALES, LTD.

and

ABP DISTRIBUTION INC.

March 12, 2004

 

 

 

 



 

Table of Contents

ARTICLE I Purchase and Sale of Acquired Assets; Assumption of Assumed Liabilities

1

 

 

 

SECTION 1.1

Purchase and Sale

1

 

SECTION 1.2

Acquired and Excluded Assets

1

 

SECTION 1.3

Assumed and Excluded Liabilities

7

 

SECTION 1.4

Purchase Price

11

 

 

 

 

ARTICLE II The Closing; Purchase Price Adjustments

 

11

 

 

 

 

SECTION 2.1

Closing Date

11

 

SECTION 2.2

Transactions to be Effected at the Closing

11

 

SECTION 2.3

Working Capital Adjustment

12

 

SECTION 2.4

Intercompany Trade Payable

14

 

 

 

 

ARTICLE III Representations and Warranties of Sellers

14

 

 

 

SECTION 3.1

Organization, Standing and Power

14

 

SECTION 3.2

Authority

14

 

SECTION 3.3

No Conflicts.

15

 

SECTION 3.4

Compliance with Applicable Laws

15

 

SECTION 3.5

Financial Statements

16

 

SECTION 3.6

Absence of Certain Changes

17

 

SECTION 3.7

Litigation; Decrees

18

 

SECTION 3.8

Title to Acquired Assets

18

 

SECTION 3.9

Leased Real Property

19

 

SECTION 3.10

Personal Property

19

 

SECTION 3.11

Inventory

19

 

SECTION 3.12

Accounts Receivable

19

 

SECTION 3.13

Intellectual Property and Specified Brands

20

 

SECTION 3.14

Insurance

21

 

SECTION 3.15

Contracts

21

 

SECTION 3.16

Sufficiency of Acquired Assets

23

 

SECTION 3.17

Employee Benefits

23

 

SECTION 3.18

Environmental Matters

25

 

SECTION 3.19

Taxes

26

 

SECTION 3.20

Labor Matters

26

 

SECTION 3.21

Suppliers and Customers

27

 

SECTION 3.22

Affiliate Transactions

27

 

SECTION 3.23

Brokers

28

 

SECTION 3.24

Computer Hardware; Computer Software; Data

28

 

SECTION 3.25

Capital Expenditures

29

 

 

 

 

ARTICLE IV Representations and Warranties of Purchaser

29

 

 

 

 

SECTION 4.1

Organization, Standing and Power

29

 

SECTION 4.2

Authority

29

 

SECTION 4.3

Available Funds

31

 



 

 

SECTION 4.4

Litigation

31

 

SECTION 4.5

Brokers

31

 

 

 

 

ARTICLE V Covenants

31

 

 

 

 

 

SECTION 5.1

Conduct of Business

31

 

SECTION 5.2

Access to Information

32

 

SECTION 5.3

Governmental Approval, Etc.

32

 

SECTION 5.4

Third Party Consents

33

 

SECTION 5.5

Expenses

35

 

SECTION 5.6

Brokers or Finders

35

 

SECTION 5.7

No Additional Representations

35

 

SECTION 5.8

Certain Information

36

 

SECTION 5.9

Bulk Transfer Laws

38

 

SECTION 5.10

Cooperation of the Parties

38

 

SECTION 5.11

Allocation; Tax Matters

38

 

SECTION 5.12

Computer Software

41

 

SECTION 5.13

Ancillary Documents

43

 

SECTION 5.14

Prorated Charges

43

 

SECTION 5.15

Schedules

43

 

SECTION 5.16

Inconsistencies

43

 

SECTION 5.17

Additional Intellectual Property Provisions

44

 

SECTION 5.18

Insurance

45

 

SECTION 5.19

Guarantees of Sellers

45

 

SECTION 5.20

Intentionally left blank

45

 

SECTION 5.21

UST Financial Assurance

45

 

SECTION 5.22

Compliance with Environmental Transfer Statutes

46

 

SECTION 5.23

Intentionally left blank

46

 

SECTION 5.24

Financial Statements

46

 

SECTION 5.25

Items Purchased

47

 

SECTION 5.26

Share Use Arrangements

47

 

 

 

 

ARTICLE VI Conditions Precedent

47

 

 

 

 

 

SECTION 6.1

Conditions to Each Party’s Obligation

47

 

SECTION 6.2

Conditions to Obligation of Purchaser

47

 

SECTION 6.3

Conditions to Obligation of Sellers

48

 

 

 

 

ARTICLE VII Termination, Amendment and Waiver

49

 

 

 

 

 

SECTION 7.1

Termination

49

 

SECTION 7.2

Amendments and Waivers

50

 

 

 

 

ARTICLE VIII Indemnification

50

 

 

 

 

 

SECTION 8.1

Indemnification by Sellers

50

 

SECTION 8.2

Indemnification by Purchaser

52

 

SECTION 8.3

Procedures Relating to Third Party Claims (other than Pre-Closing Environmental Liabilities and Product Liability Claims)

52

 

ii



 

 

 

 

 

 

SECTION 8.4

Environmental Liabilities

53

 

SECTION 8.5

Product Liability Claim Procedures

55

 

SECTION 8.6

Procedures Relating to Non-Third Party Claims (other than Pre-Closing Environmental Liabilities and Product Liability Claims).

58

 

SECTION 8.7

Losses Net of Insurance; No Consequential Damages; Mitigation of Damages; Etc

58

 

SECTION 8.8

Termination of Indemnification

58

 

SECTION 8.9

Acknowledgment

59

 

SECTION 8.10 

Setoff

59

 

SECTION 8.11

Further Assurances

59

 

 

 

 

ARTICLE IX General Provisions

60

 

 

 

 

SECTION 9.1

Notices

60

 

SECTION 9.2

Severability

61

 

SECTION 9.3

Counterparts

61

 

SECTION 9.4

Entire Agreement; No Third Party Beneficiaries

61

 

SECTION 9.5

Attachments

61

 

SECTION 9.6

Governing Law

61

 

SECTION 9.7

Consent to Jurisdiction

62

 

SECTION 9.8

Publicity

62

 

SECTION 9.9

Assignment

62

 

SECTION 9.10

Designated Affiliates

62

 

SECTION 9.11

Remedies; Specific Performance

63

 

 

 

 

ARTICLE X Definitions

63

 

 

 

 

 

SECTION 10.1

Definitions

63

 

SECTION 10.2

Construction and Interpretation of Certain Terms and Phrases

74

 

 

 

 

EXHIBITS

 

 

 

 

 

 

Exhibit A

Human Resources Agreement

 

Exhibit B

Real Property Purchase and Sale Agreement

 

Exhibit C

Form of Transition Services Agreement

 

Exhibit D

Form of IT Support Services Agreement

 

Exhibit E

Form of Master Purchase, Supply and Distribution Agreement

 

Exhibit F

Form of Agreement Concerning Private Label Agreements

 

 

iii



 

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this “Agreement”) is made and entered into as of March 12, 2004, by and among Georgia-Pacific Corporation, a Georgia corporation (“GP” or a “Seller”), Georgia-Pacific Building Materials Sales, Ltd., a New Brunswick corporation and a wholly owned subsidiary of GP (“GPBMS” or a “Seller” and, together with GP, “Sellers”), and ABP Distribution Inc., a Georgia corporation (“Purchaser”).

PRELIMINARY STATEMENT

Sellers and Purchaser wish to provide for the sale to Purchaser of the Acquired Assets and the assumption by Purchaser of the Assumed Liabilities, upon the terms and subject to the conditions set forth in this Agreement.

Sellers and Purchaser desire to enter into the Ancillary Documents.

This Agreement has been approved and adopted by the respective boards of directors of each Seller and Purchaser.

NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, agree as follows:

ARTICLE I

Purchase and Sale of Acquired Assets; Assumption of Assumed Liabilities

SECTION 1.1                 Purchase and Sale.  Upon the terms and subject to the conditions of this Agreement, at the Closing and for the consideration specified in this Article I, each Seller agrees to, or to cause its affiliates to, sell, assign, transfer, convey and deliver to Purchaser, or one or more of its affiliates designated by it, free and clear of all Liens (other than Permitted Liens), all of its legal and beneficial right, title and interest in, to and under the Acquired Assets and the Assumed Liabilities, and Purchaser agrees to, or to cause one or more affiliates designated by it to, purchase, acquire and accept from each Seller or its affiliates all such legal and beneficial right, title and interest in, to and under the Acquired Assets and to assume, be responsible for and perform all the Assumed Liabilities.

SECTION 1.2                 Acquired and Excluded Assets.

(a)           Except as set forth below or in Section 1.2(b), the term “Acquired Assets” shall mean all legal and beneficial right, title and interest of each Seller and, if applicable, its affiliates on the Closing Date in, to and under all of Sellers’ or such affiliates’ assets, privileges, claims, rights, properties and Contracts of whatever kind or nature, real and personal, tangible and intangible, absolute or contingent, owned, held or leased by Sellers or such affiliates primarily related to or primarily used in the operation of the Business, including, but not limited to, the following assets:

 



 

(i)            the real property leases, subleases, leaseholds and other interests in leased real property listed on Schedule 1.2(a)(i), together with the right, title and interest of the Business in and to all buildings, improvements, structures, facilities, fixtures and all other appurtenances thereto (each, a “Lease”), and all such Leases entered into after the date of this Agreement and prior to the Closing Date in accordance with Section 5.1;

(ii)           all inventories or raw materials, work-in-process, finished goods, parts, office and other supplies, packaging materials and other inventories of the Business to the extent reflected in Target Working Capital, as the same may be adjusted in the Final Working Capital Statement (the “Inventory”);

(iii)          all accounts receivable of the Business to the extent reflected in Target Working Capital, as the same may be adjusted in the Final Working Capital Statement (the “Accounts Receivable”);

(iv)          all furniture, fixtures, tools, machinery, equipment, parts, office and other supplies and other items of tangible personal property of each Seller primarily related to or primarily used in the operation of the Business, whether located on site at the Real Property or off site, to the extent such personal property is stored or used off site in the ordinary course of the operation of the Business (excluding the items listed on Schedule 1.2(a)(iv)) (the “Personal Property”);

(v)           the Trademarks specifically identified on Schedule 1.2(a)(v) (the “Specified Brands”);

(vi)          the Owned Business Intellectual Property (other than the Specified Brands) including, without limitation, the Patents and Copyrights specifically listed on Schedule 1.2(a)(vi);

(vii)         the Computer Hardware owned by each Seller or its affiliates and relating primarily to and used in the operation of the Business (the “Acquired Computer Hardware”), including, without limitation, the Computer Hardware specifically listed on Schedule 1.2(a)(vii) and all such Acquired Computer Hardware acquired after the date hereof and prior to the Closing Date in accordance with Section 5.1;

(viii)        all rights of each Seller and its affiliates under all Contracts relating solely to the Acquired Computer Hardware (the “Acquired Computer Hardware Contracts”), including, without limitation, the Acquired Computer Hardware Contracts specifically listed on Schedule 1.2(a)(viii), and all Acquired Computer Hardware Contracts entered into after the date hereof and prior to the Closing Date in accordance with Section 5.1;

(ix)           subject to Section 5.12(c), all GP Owned Computer Software relating solely to and used solely in the operation of the Business (the “Acquired GP Owned Computer Software”), including, without limitation, the Contracts specifically listed as set forth on Schedule 1.2(a)(ix); and all such Acquired GP

 

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Owned Computer Software acquired after the date hereof and prior to the Closing Date in accordance with Section 5.1;

(x)            all rights of each Seller and its affiliates under all Contracts for Licensed Computer Software relating solely to and used solely in the operation of the Business (the “Acquired GP Licensed Computer Software”), including, without limitation, the Contracts specifically listed on Schedule 1.2(a)(x), and all such Acquired GP Licensed Computer Software licensed after the date hereof and prior to the Closing Date in accordance with Section 5.1; provided, however, that the parties hereunder acknowledge that obtaining Necessary Consents may be required;

(xi)           except to the extent the transfer of the following information is prohibited or restricted by applicable law, all electronically stored information and data, in the standard extracted data format, whether contained in a database or otherwise (collectively, “Data”), that is used solely in the operation of the Business or, subject to Section 5.12(d), is necessary to operate the Business as the Business was operated as of the Closing Date (other than any information or data related to affirmative action plans or related books and records) (collectively, “Necessary Data”), including, without limitation, any Data required to be delivered pursuant to any Ancillary Documents, which Data is a part of the Acquired Assets, and including, without limitation, for the purposes of clarity, environmental Necessary Data and MSDS Necessary Data;

(xii)          all cellular telephone numbers that are as of the Closing Date (A) exclusively used by Business Employees; (B) held in the name of Seller by each applicable third party cellular service provider (and not in the name of Business Employees); and (C) in the case of either clause (A) or (B), assignable or transferable to Purchaser; provided, however, that any consent, transfer or assignment fees in connection therewith shall be borne by Purchaser;

(xiii)         to the extent their transfer is permitted under applicable laws, (A) the permits, licenses, approvals and authorizations by or from Governmental Entities relating solely to and used in the operation of the Business and held in the name of either Seller or its affiliates, as specifically listed on Schedule 1.2(a)(xiii) (the “Permits”) and (B) all such Permits obtained after the date hereof and prior to the Closing Date in accordance with Section 5.1;

(xiv)        except as set forth in this Section 1.2, all rights of each Seller or its affiliates under executory contracts, leases, indentures, joint venture and other agreements, commitments and all other legally binding arrangements, whether oral or written (including, without limitation, rights of each Seller and its affiliates under all manufacturer and/or supplier warranties applicable to Inventory acquired by Purchaser on the Closing Date as set forth in Section 1.2(a)(xxv)) (“Contracts”), relating solely to and used in the operation of the Business, and all such Contracts entered into after the date hereof and prior to the Closing Date in accordance with Section 5.1 (excluding (A) all Contracts relating to benefit plans

 

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and arrangements referred to in Section 3.17 that are not expressly required to be assumed by Purchaser under the Human Resources Agreement, (B) all Contracts relating to Computer Hardware or Computer Software, (C) such other excluded Contracts set forth elsewhere in this Section 1.2(a), and (D) the Contracts specifically listed on Schedule 1.2(a)(xiv));

(xv)         all books of account, financial and accounting records, files (including personnel files, workers’ compensation claim files and other employee books and records pertaining to Transferring Employees except as set forth in Section 1.2(b)(xiii)), invoices and supplier and customer lists relating solely to and used in the operation of the Business and owned by either Seller on the Closing Date, except to the extent used in connection with the businesses of either Seller or any of its affiliates other than the Business (and in such case copies are to be made available to Purchaser) or required by applicable law to be retained by either Seller;

(xvi)        any cash and cash equivalents in the form of legal currency of the United States or Canada on hand at any of the locations of the Business that is used as petty cash in the ordinary course of the operation of the Business (“Petty Cash”);

(xvii)       any current prepaid expenses and other current assets of the Business to the extent reflected in Target Working Capital, as the same may be adjusted in the Final Working Capital Statement;

(xviii)      all rights, claims, causes of action, recoveries and rights of reimbursement arising out of, relating to or otherwise in any way in respect of, the Acquired Assets or, except as set forth in Section 1.3(b), the Assumed Liabilities;

(xix)         all confidentiality and/or nondisclosure agreements entered into within the nine (9) months prior to the date of this Agreement by either Seller or its representatives in connection with GP’s consideration of strategic alternatives with respect to the Business (excluding such agreements between either Seller or its affiliates with any of its financial advisors or other representatives);

(xx)          to the extent their transfer is permitted by applicable service providers, all right, title and interest of the Sellers or their affiliates in and to the operating telephone numbers for the Real Property and all other telephone numbers relating solely to the Business; provided, however, that any consent, transfer or assignment fees in connection herewith shall be borne by Purchaser;

(xxi)         all vehicles (including cars, trucks, tractors, trailers, vans and other transportation rolling stock) owned by either Seller or its affiliates and used primarily in the Business including, without limitation, those set forth on Schedule 1.2(a)(xxi), and all such vehicles acquired by either Seller or its affiliates after the date hereof and prior to the Closing Date in accordance with Section 5.1;

 

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(xxii)        all rights of each Seller under collective bargaining agreements listed on Schedule 1.2(a)(xxii) and all collective bargaining agreements entered into after the date hereof and prior to the Closing Date in accordance with Section 5.1;

(xxiii)       all rights of each Seller and its affiliates under vehicle lease agreements to which either Seller or its affiliates is a party primarily related to or primarily used in the operation of the Business and listed on Schedule 1.2(a)(xxiii), and all such vehicle lease agreements entered into after the date hereof and prior to the Closing Date in accordance with Section 5.1;

(xxiv)       all rights of each Seller under operating leases relating to tangible personal property (other than vehicles) of each Seller primarily related to or primarily used in the operation of the Business, whether located on site at the Real Property or off site, to the extent such personal property is stored or used off site in the ordinary course of the operation of the Business;

(xxv)        all rights of each Seller and its affiliates under all manufacturer and/or supplier warranties applicable to Inventory acquired by Purchaser on the Closing Date; and

(xxvi)       all other assets, properties, rights and claims of either Seller or its affiliates of any kind and nature primarily related to or primarily used in the operation of the Business (other than the Excluded Assets and Owned Real Property) not otherwise described above.

 (b)          Notwithstanding anything in this Agreement to the contrary, all assets, properties and rights of either Seller or any of its affiliates not primarily related to or primarily used in the operation of the Business or specifically identified as an Acquired Asset pursuant to Section 1.2(a), including, but not limited to, the following assets, properties and rights of each Seller or any of its affiliates (collectively, the “Excluded Assets”), shall be excluded from and shall not constitute any part of the Acquired Assets:

(i)            other than Petty Cash, all cash and cash equivalents on hand, all cash in banks, all bank accounts, all lock boxes and lock box receipts and all certificates of deposit and other bank deposits owned or held by either Seller or any of its affiliates;

(ii)           any noncurrent prepaid expenses, prepaid assets and deposits relating solely to the Business, including prepaid charges related to GP’s headquarters building;

(iii)          all rights of either Seller or any of its affiliates under this Agreement and the agreements, instruments and certificates delivered in connection with this Agreement, qualifications to conduct business, taxpayer and other identification numbers, corporate seals, minute books, stock transfer records, and any other document relating to the organization, maintenance or

 

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existence of either Seller or any of its affiliates as a corporation, and all corporate, financial and other records of either Seller or any of its affiliates;

(iv)          (A) all records prepared in connection with the sale of the Acquired Assets, including bids received from third persons and analyses relating to the Acquired Assets (but excluding the confidentiality and/or nondisclosure agreements referenced in Section 1.2(a)(xix)), and (B) any confidential information of third parties that is contained within records relating to the Business, or otherwise held under an obligation of confidentiality that is not assumed by Purchaser or its affiliates pursuant to this Agreement;

(v)           all rights, claims, causes of action, recoveries and rights of reimbursement arising out of, relating to or otherwise in any way in respect of the Excluded Liabilities or the Excluded Assets, including rights, claims, causes of action and recoveries under insurance policies relating thereto or to the Business, the Acquired Assets or the Assumed Liabilities (other than as set forth in Section 1.3(c));

(vi)          all rights to claims available to or being pursued by either Seller or any of its affiliates for refunds of or credits against Taxes attributable to either Seller or any of its affiliates arising out of, relating to or otherwise in any way in respect of Pre-Closing Tax Periods (determined as if such taxable period ended as of the close of business on the Closing Date);

(vii)         any consolidated, combined, unitary or separate company Tax Return arising out of, relating to or otherwise in any way in respect of Income Taxes that includes either Seller or any of its affiliates and records and work papers used in preparation thereof;

(viii)        all rights of either Seller, any of its affiliates or the Business arising out of, relating to or otherwise in any way in respect of any Intercompany Accounts;

(ix)           all rights of either Seller or any of its affiliates arising out of, relating to or otherwise in any way in respect of any Intercompany Trade Payables;

(x)            all rights of either Seller or any of its affiliates arising out of, relating to or otherwise in any way in respect of any reimbursements from any Governmental Entity of amounts paid by either Seller or any of its affiliates for environmental remediation or condemnation relating to any period prior to the Closing Date;

(xi)           except as otherwise set forth in the Human Resources Agreement, any asset arising out of, relating to or otherwise in any way in respect of any Seller Benefit Plan, including, but not limited to, the right to receive assets of any such plan upon termination thereof;

 

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(xii)          all Intellectual Property not relating solely to and used exclusively in the operation of the Business as of the Closing Date (including, without limitation, the Patents, Copyrights, Trade Secrets and other intellectual property that will be licensed to the Purchaser as contemplated by Section 5.17(b); all Trademarks not defined as part of the Specified Brands (including, without limitation, all GP Trademarks); all GP Owned Computer Software other than the Acquired GP Owned Computer Software; all Licensed Computer Software; and all Data other than the Necessary Data (subject to the rights of co-ownership as set forth in Section 5.12(d)); and all Internet Protocol addresses as assigned to GP and registered with the American Registry of Internet Numbers;

(xiii)         all affirmative action plans and related books and records pertaining to the Business Employees and any other employee books and records the transfer of which is prohibited or restricted by applicable law;

(xiv)        all assets, properties and rights arising out of, relating to or otherwise in any way in respect of GP relating to GP’s GPTV satellite network installations and equipment;

(xv)         all policies of insurance of either Seller or any of its affiliates and all of the rights of either Seller or any of its affiliates thereunder (other than as set forth in Section 1.3(c));

(xvi)        all rights of each Seller and its affiliates under all manufacturer and/or supplier warranties applicable to products or items purchased, sold, consigned, marketed, stored, delivered, distributed or transported by the Business,  by either Seller or any of its affiliates prior to the Closing Date (other than with respect to Inventory acquired by Purchaser on the Closing Date);

(xvii)       all rights of each Seller and its affiliates under the private label contracts described on Schedule 1.2(b)(xvii), subject to the provisions of the Agreement Concerning Private Label Agreements; and

(xviii)      all assets, properties and rights of either Seller or any of its affiliates identified on Schedule 1.2(b)(xviii).

SECTION 1.3                 Assumed and Excluded Liabilities.

(a)           Upon the terms and subject to the conditions of this Agreement, Purchaser hereby agrees to, or to cause one or more of its affiliates designated by Purchaser to, assume, effective as of the Closing, and agrees at all times thereafter to be responsible for, pay, perform and discharge when due only the following obligations and liabilities (whether contingent or otherwise) (collectively, the “Assumed Liabilities”):

(i)            the liabilities (including accounts payable, bank overdrafts and other current liabilities) of the Business to the extent reflected, or to the extent amounts are expressly reserved therefor, in the Target Working Capital Statement, as the same may be adjusted in the Final Working Capital Statement;

 

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(ii)           all Intercompany Trade Payables to the extent reflected in Target Working Capital, as the same may be adjusted in the Final Working Capital Statement;

(iii)          (A) all obligations and liabilities of either Seller or any of its affiliates arising out of, relating to or otherwise in any way in respect of Contracts included in the Acquired Assets to the extent such obligations or liabilities (1) arise out of events or conditions occurring on or after the Closing Date or arise out of the operation of the Business on or after the Closing Date or (2) are assumed pursuant to the Human Resources Agreement, and (B) all performance obligations of either Seller or any of its affiliates arising out of, relating to or otherwise in any respect of Contracts included in the Acquired Assets to the extent such performance obligations (1) arise out of events or conditions occurring on or after the Closing Date or arise out of the operation of the Business on or after the Closing Date, (2) arise, mature or become due on or after the Closing Date or (3) are reflected in Target Working Capital, as the same may be adjusted in the Final Working Capital Statement;

(iv)          all obligations and liabilities (whether or not arising from acts or omissions) of either Seller arising out of, relating to or otherwise in any way in respect of claims for personal injury, wrongful death or property damage resulting from exposure to, or any other warranty claims, refunds, rebates, property damage, product recalls, defective material claims, merchandise returns and/or any similar claims with respect to, Inventory acquired by Purchaser on the Closing Date, including products, or items purchased, sold, consigned, marketed, stored, delivered, distributed or transported by Purchaser or its affiliates on or after the Closing Date;

(v)           all obligations and liabilities arising out of, relating to or otherwise in any way in respect of the Real Property Leases to the extent such obligations or liabilities arise out of events or conditions occurring on or after the Closing Date or arise out of the operation of the Business on or after the Closing Date;

(vi)          all obligations and liabilities arising out of, relating to or otherwise in any way in respect of any Transferring Employee (as defined in the Human Resources Agreement) but only to the extent provided in the Human Resources Agreement;

(vii)         all obligations and liabilities arising out of, relating to or otherwise in any way in respect of Taxes (other than as contemplated in Section 5.11 and other than Income Taxes described in Section 1.3(b)(ii)) attributable to the Business or the Acquired Assets for all taxable periods commencing after the Closing Date including the portion after the Closing Date of any taxable period that includes, but does not end on, the Closing Date;

(viii)        all obligations and liabilities of either Seller arising out of, relating to or otherwise in any way in respect of Permits to the extent such obligations or

 

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liabilities arise out of events or conditions occurring on or after the Closing Date or arise out of the operation of the Business on or after the Closing Date;

(ix)           all obligations and liabilities identified on Schedule 1.3(a)(ix); and

(x)            all obligations and liabilities arising out of, relating to or otherwise in any respect of Permitted Liens to the extent such obligations or liabilities arise out of events or conditions occurring on or after the Closing Date or arise out the operation of the Business on or after the Closing Date.

(b)           Purchaser and its affiliates are not assuming and shall not be responsible or liable for, and Sellers shall retain and shall indemnify, defend and hold harmless Purchaser and its affiliates from, all obligations or liabilities (whether contingent or otherwise) of either Seller or any of its affiliates, other than the Assumed Liabilities (all such liabilities that are not being assumed by Purchaser or its affiliates, the “Excluded Liabilities”), including, but not limited to, the following obligations and liabilities:

(i)            all obligations and liabilities of either Seller or any of its affiliates to the extent arising out of, relating to or otherwise in any way in respect of the Excluded Assets (other than Intercompany Trade Payables);

(ii)           all obligations and liabilities of either Seller or any of its affiliates arising out of, relating to or otherwise in any way in respect of Income Taxes, including (A) Income Taxes of GP’s Federal consolidated Income Tax group (and any other Income Tax group under any Treasury Regulation under Section 1502 of the Code or any comparable provisions of foreign, state or local law), and (B) Income Taxes resulting from the sale and transfer from Sellers to Purchaser of the Acquired Assets but excluding any Transfer Taxes;

(iii)          all obligations and liabilities of either Seller, any of its affiliates or the Business arising out of, relating to or otherwise in any way in respect of any Intercompany Accounts;

(iv)          all obligations and liabilities of either Seller or any of its affiliates arising out of, relating to or otherwise in any way in respect of Contracts included in the Acquired Assets to the extent such obligations or liabilities arose prior to the Closing Date, except to the extent such obligations or liabilities are assumed by Purchaser pursuant to Section 1.3(a)(iii);

(v)           all obligations and liabilities of either Seller or any of its affiliates arising out of, relating to or otherwise in any way in respect of this Agreement, the Human Resources Agreement and any other Ancillary Document, or the agreements delivered or to be delivered by Sellers or their affiliates in connection with the transactions contemplated hereby;

(vi)          all obligations and liabilities (whether or not arising from acts or omissions) of either Seller or any of its affiliates arising out of, relating to or otherwise in any way in respect of any Product Liability Claims with respect to

 

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products purchased, sold, marketed, stored, delivered, distributed or transported by Sellers, their respective affiliates and/or the Business prior to the Closing Date, including, without limitation, claims, obligations or liabilities relating to the presence or alleged presence of ACM, formaldehyde-containing materials, other Hazardous Materials or CCA in any product or item purchased, sold, marketed, stored, delivered, distributed or transported by Sellers, their affiliates or the Business prior to the Closing Date;

(vii)         all Pre-Closing Environmental Liabilities arising out of or relating to the Business and/or the Acquired Assets including, but not limited to, Real Property currently or formerly owned or operated in connection with the Business, either Seller or any of its affiliates; and

(viii)        except as set forth in the Human Resources Agreement, all obligations and liabilities in respect of lawsuits, actions and proceedings arising out of, relating to or otherwise in any way in respect of the Business or the operation or use of the Acquired Assets prior to the Closing Date.

(c)           Insurance Proceeds.  If between the date of this Agreement and the Closing, (i) any loss or damage to any Acquired Asset shall occur from fire, casualty or any other occurrence, (ii) Sellers do not at their discretion replace or restore such Acquired Asset prior to the Closing Date and (iii) the Closing occurs, then all insurance proceeds received by Sellers (whether before or after Closing) as a result of such loss or damage plus any additional sums necessary to replace any such Acquired Asset will be delivered by Sellers to Purchaser.  For the avoidance of doubt, Sellers shall not otherwise have any obligation to replace or restore any such property if such monies are assigned and delivered to Purchaser.  Sellers shall have the sole right and authority to provide notices and claims to the applicable insurance carrier and otherwise to communicate and negotiate with such carrier, but shall use its commercially reasonable efforts to obtain any such proceeds payable to Sellers.  Notwithstanding the foregoing, the benefit of any insurance proceeds in relation to “business interruption” damages based upon lost profits or business opportunities in respect of the period prior to the Closing Date, and insurance proceeds in relation to such loss or damage to the extent attributable to any such property replaced or restored before the Closing Date or otherwise used for such purposes, will inure to the benefit of and be payable to Sellers, as applicable, and Purchaser will not be entitled to receive or retain such proceeds.

(d)           Notwithstanding anything to the contrary contained herein, but subject to the provisions of Section 5.4 and the Ancillary Documents, this Agreement shall not operate to assign any Acquired Asset or any claim, right or benefit arising thereunder or resulting therefrom if an attempted assignment thereof, without the consent of any Governmental Entity or any other Person, would constitute a breach, default or other contravention thereof or a violation of applicable law.  GP and Purchaser shall each use reasonable efforts to obtain the consent of such Persons for the assignment thereof to Purchaser or its affiliates prior to the Closing (it being understood that the failure to obtain such consents shall not relieve any party from its obligation to consummate at the

 

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Closing the transactions contemplated by this Agreement) and shall otherwise comply with the provisions of Section 5.4.

SECTION 1.4                 Purchase Price.  The aggregate purchase price for the Acquired Assets is set forth on Schedule 1.4 (such amount is hereinafter referred to as the “Purchase Price”).

ARTICLE II

The Closing; Purchase Price Adjustments

SECTION 2.1                 Closing Date.  The closing of the sale and transfer of the Acquired Assets and the assumption of the Assumed Liabilities (the “Closing”) shall take place at the offices of Schulte Roth & Zabel LLP, 919 3rd Avenue, New York, New York  10022, at 11:00 a.m., local time, on (a) the last Business Day of GP’s fiscal month in which the last of the conditions set forth in Article VI to be fulfilled or waived are fulfilled or waived, or (b) such other time, date or place as GP and Purchaser may agree in writing.  The date on which the Closing shall occur is herein referred to as the “Closing Date.”

SECTION 2.2                 Transactions to be Effected at the Closing.

(a)           GP shall deliver or cause to be delivered to Purchaser the following:

(i)            such appropriately executed bills of sale, assignments and other instruments of transfer as shall be necessary for the sale, assignment, transfer, conveyance and delivery as contemplated by this Agreement of the Acquired Assets (it being understood that any such bill of sale, assignment or other instrument shall not provide for any representations or warranties, obligations, liabilities or indemnification obligations or that are not otherwise expressly provided for in this Agreement);

(ii)           a duly executed copy of each of the Ancillary Documents to be executed at the Closing to which either Seller or any of its affiliates is a party;

(iii)          the certificates contemplated by Section 6.2(a) and Section 6.2(b); and

(iv)          such other instruments or documents, the delivery of which is a condition to Closing, as may be necessary to effect the Closing in accordance with this Agreement (it being understood that any such other instrument or document shall not provide for any representations or warranties, obligations, liabilities or indemnification obligations that are not otherwise expressly provided for in this Agreement).

(b)           Purchaser shall deliver to GP the following:

 

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(i)            by wire transfer to an account designated in writing by GP not less than two (2) Business Days prior to the Closing, immediately available U.S. funds in an amount equal to the Initial Purchase Price (as defined in Schedule 1.4);

(ii)           such appropriately executed assumption agreements and other instruments of assumption providing the assumption by Purchaser or its affiliates of, and indemnification of Sellers and their respective affiliates from and against, the Assumed Liabilities as contemplated by this Agreement (it being understood that any such agreement or instrument shall not provide for any representations or warranties, obligations, liabilities or indemnification obligations that are not otherwise expressly provided for in this Agreement);

(iii)          a duly executed copy of each of the Ancillary Documents to be executed at the Closing to which Purchaser or any of its affiliates is a party;

(iv)          the certificates contemplated by Section 6.3(a) and 6.3(b); and

(v)           such other instruments or documents, the delivery of which is a condition to Closing, as may be necessary to effect the Closing in accordance with this Agreement (it being understood that any such other instrument or document shall not provide for any representations or warranties, obligations, liabilities or indemnification obligations that are not otherwise expressly provided for in this Agreement).

SECTION 2.3                 Working Capital Adjustment.

(a)           “Target Working Capital” shall mean an amount equal to the target Working Capital of the Business set forth for GP’s fiscal month end on which the Closing occurs as set forth on Schedule 2.3(a) attached hereto.

(b)           Within sixty (60) days following the Closing Date, Purchaser shall prepare, at Purchaser’s cost and expense, a closing working capital statement of the Business  (the “Closing Working Capital Statement”) which shall set forth an itemized calculation of Working Capital as of the Closing Date (“Closing Working Capital”), determined on the basis as set forth on Schedule 2.3.  The items constituting “Working Capital” are set forth on Schedule 2.3.  If Ernst & Young LLP shall so agree, the Closing Working Capital Statement shall be accompanied by an agreed upon procedures letter as to the consistency of the Closing Working Capital Statement with Schedule 2.3.

(c)           GP and its accountants shall have thirty (30) days after the delivery of the Closing Working Capital Statement to review the Closing Working Capital Statement.  If GP determines in good faith that the Closing Working Capital has not been determined on the basis set forth on Schedule 2.3, GP shall inform Purchaser in writing (an “Objection”), setting forth a specific description of the basis of the Objection and the adjustments to the amount of the Closing Working Capital which GP believes should be made, which Objection must be delivered to Purchaser on or before the last day of such thirty (30) day period.  Purchaser shall then have thirty (30) days to review and respond to the Objection.  The parties shall attempt in good faith to reach an agreement with

 

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respect to any matters in dispute.  If the parties are unable to resolve all of their disagreements with respect to the determination of the foregoing items within forty-five (45) days following the delivery of Purchaser’s response to the Objection by GP, they shall refer their remaining differences to KPMG LLP, or such other independent public accounting firm as mutually agreed to by the parties (the “CPA Firm”), which shall, acting as experts and not as arbitrators, determine in accordance with this Agreement, and only with respect to the remaining differences so submitted, whether and to what extent, if any, the Closing Working Capital requires adjustment.  The parties shall direct the CPA Firm to use its best efforts to render its determination within thirty (30) days after such submission.  The CPA Firm’s determination shall be conclusive and binding upon Purchaser and GP.  The reasonable fees and disbursements of the CPA Firm shall be paid one-half by Purchaser and one-half by GP.  Purchaser and GP shall make readily available to the CPA Firm all relevant books and records and any work papers (including those of the parties’ respective accountants) relating to the Closing Working Capital Statement and all other items reasonably requested by the CPA Firm.  The “Final Working Capital Statement” shall be deemed to be (i) the Closing Working Capital Statement if no Objection is delivered by GP during the thirty (30) day period specified above, or (ii) if an Objection is delivered by GP, the Closing Working Capital Statement, as adjusted by either (A) the agreement of the parties or (B) the CPA Firm.  The amount set forth on the Final Working Capital Statement is hereinafter referred to as the “Final Closing Working Capital”.

(d)           GP shall have the opportunity to participate in the preparation of the Closing Working Capital Statement by (i) meeting with and discussing procedures with Purchaser and its accountants, and (ii) otherwise having access to the work papers of Purchaser and its accountants used in preparing the Closing Working Capital Statement (subject to the reviewing party executing any necessary waivers or indemnifications required by Purchaser’s accountants).  GP and Purchaser shall each have the opportunity to observe the physical inventory taken in connection with the preparation of the Closing Working Capital Statement (which may begin prior to the Closing Date).

(e)           In reviewing any Objection, Purchaser and its accountants shall have access to the work papers of GP and its accountants (subject to the reviewing party executing any necessary waivers or indemnifications required by GP’s accountants).

(f)            If the Final Closing Working Capital is less than the Target Working Capital, then, within ten (10) Business Days following the issuance of the Final Working Capital Statement, GP shall make a payment in immediately available funds to Purchaser equal to the difference between the Target Working Capital and the Final Closing Working Capital, plus interest at the prime rate (as set forth in the “Money Rates” section of The Wall Street Journal on the Closing Date) on such amount from the Closing Date through the date of payment calculated on the basis of a 365 day year.  If the Final Closing Working Capital is greater than the Target Working Capital, then within ten (10) Business Days following issuance of the Final Working Capital Statement, Purchaser shall refund such excess by making a payment to GP, in immediately available funds, equal to the difference between the Final Closing Working Capital and Target Working Capital, plus interest at the prime rate (as set forth in the “Money Rates” section of The

 

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Wall Street Journal on the Closing Date) on such amount from the Closing Date through the date of payment calculated on the basis of a 365 day year.

SECTION 2.4                 Intercompany Trade Payables.  An amount equal to the Intercompany Trade Payables set forth in Target Working Capital by wire transfer on the forty-fifth (45th) day following the Closing Date (or if such day is not a  Business Day, the next succeeding Business Day) to an account designated by GP not less than two (2) Business Days prior to such date.

 

ARTICLE III

Representations and Warranties of Sellers

Sellers hereby represent and warrant to Purchaser, jointly and severally, subject to such qualifications and exceptions as are disclosed in writing in the applicable parts of the Schedules, in accordance with Section 5.15 and Section 9.5, as follows:

SECTION 3.1                 Organization, Standing and Power.  Each Seller is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation.  Each Seller has the requisite corporate power and authority to execute and deliver this Agreement and each of the Ancillary Documents to which it is or will be a party, to perform fully its obligations under this Agreement and the Ancillary Documents and to consummate the transactions contemplated hereby and thereby.  Each Seller is qualified to conduct business as a foreign corporation in each jurisdiction in which the conduct by it of the Business or ownership of the Acquired Assets makes such qualification necessary, except where the failure to be so qualified would not, individually or in the aggregate, have a Material Adverse Effect.

SECTION 3.2                 Authority.  Each Seller has the requisite corporate power and authority to own or lease, as applicable, the Acquired Assets and to operate the Business as currently operated.  The execution and delivery of this Agreement and the Ancillary Documents executed as of the date hereof and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate and shareholder action on the part of each Seller, and the execution and delivery of the Ancillary Documents to be executed by either Seller at the Closing and the consummation of the transactions contemplated thereby will be duly and validly authorized by all necessary corporate action on the part of such Seller prior to the Closing.  Each of this Agreement and the Ancillary Documents executed as of the date hereof has been duly executed and delivered by each Seller that is a party hereto or thereto and constitutes, and each Ancillary Document to be entered into by either Seller at the Closing will be duly and validly executed and delivered by such Seller at the Closing and when so executed and delivered will constitute, the legal, valid and binding obligation of such Seller enforceable against it in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors’ rights generally, and except that the availability of the remedy of specific performance or other equitable relief is subject to the discretion of the court before which any proceeding therefor may be brought.

 

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SECTION 3.3                 No Conflicts.

(a)           The execution and delivery of this Agreement and the Ancillary Documents executed as of the date hereof by each Seller that is a party hereto or thereto does not, and the execution and delivery by each Seller of the Ancillary Documents to be executed by such Seller at the Closing, the consummation by Sellers of the transactions contemplated hereby and thereby and the compliance by each Seller with the terms of this Agreement and the Ancillary Documents to which such Seller is or will be a party will not, conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or loss of a material benefit under, or result in the creation of any Lien (other than a Permitted Lien) upon any of the Acquired Assets under any provision of (i) the articles of incorporation or bylaws (or comparable organizational documents) of either Seller, (ii) subject to the filings and other matters referred to in the following paragraph (b), any law, judgment, order, decree, permit, statute, ordinance, rule or regulation applicable to either Seller, the Acquired Assets, the Assumed Liabilities or the Business, or (iii) any Listed Contract, except, in the case of clause (ii), for any such conflicts, violations, defaults, rights or Liens that would not, individually or in the aggregate, have a Material Adverse Effect.

(b)           No consent, approval, license, permit, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required to be obtained or made by either Seller with respect to the Acquired Assets, the Assumed Liabilities or the Business in connection with the execution and delivery of this Agreement or the Ancillary Documents or the consummation of the transactions contemplated hereby and thereby, except for (i) compliance with and filings under the HSR Act or (ii) consents or novations that may be required for the assignment of any Intellectual Property, Computer Hardware, Acquired Computer Hardware Contract, Acquired GP Licensed Computer Software or Permit, as contemplated in Section 5.4 and the Ancillary Documents.

SECTION 3.4                 Compliance with Applicable Laws.

(a)           Sellers have complied with all laws, regulations, rules and orders of all Governmental Entities applicable to them that relate to the Business, the Acquired Assets or the Assumed Liabilities, and all Permits except where the failure to so comply or possess would not, individually or in the aggregate, have a Material Adverse Effect.  During the past twelve (12) months, no material investigation or review by any Governmental Entity with respect to the Business, the Acquired Assets or the Assumed Liabilities is or was pending or, to the Knowledge of GP, threatened.  During the past twelve (12) months, neither Seller has received any written notice from a Governmental Entity alleging any material non-compliance in a material respect with any such laws, regulations, rules or orders.  This Section 3.4 does not apply to employee benefits matters (for which Section 3.17 is applicable), environmental matters (for which Section 3.18 is applicable), Tax matters (for which Section 3.19 is applicable) or labor matters (for which Section 3.20 is applicable).

 

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(b)           Schedule 3.4(b) sets forth a list of the material permits, licenses, franchises, privileges, immunities, approvals and authorizations from Governmental Entities that are necessary to carry on and conduct the Business substantially as currently conducted and held in the name of either Seller or its affiliates (the “Material Business Permits”).  Except as set forth on Schedule 3.4(b), the Material Business Permits are in full force and effect, except where the failure to be in full force and effect would not have a Material Adverse Effect.

SECTION 3.5                 Financial Statements.

                (a)                                   GP has delivered to Purchaser (x) the special purpose audited Statements of Certain Assets and Liabilities of the Business as of December 30, 2000 and December 29, 2001 and December 28, 2002 and the related statements of revenues and direct expenses, direct cash flows and parent’s investment for each of the two (2) years ended December 28, 2002, together with the notes to such audited financial statements, attached hereto on Schedule 3.5(a) and (y) the unaudited Statement of Certain Assets and Liabilities of the Business as of January 3, 2004, and the related unaudited statement of revenues and direct expenses and parent’s investment for the year ended January 3, 2004, attached hereto on Schedule 3.5(b).  The financial statements set forth on Schedule 3.5(a) and Schedule 3.5(b) are hereinafter collectively referred to as the “Special Purpose Historical Financial Statements”.  The Special Purpose Historical Financial Statements fairly present, in all material respects, the financial position of the Business as of such dates and the combined revenues and direct expenses and changes in parent’s investment for the period or as of the date set forth therein, in each case in conformity with the accounting principles set forth on Schedule 3.5(c).  When delivered, the unaudited statement of direct cash flows delivered by Sellers pursuant to Section 5.24(c) will have been derived from the unaudited Statement of Certain Assets and Liabilities as of January 3, 2004 and the related unaudited statement of revenues and direct expenses for the period then ended attached hereto as Schedule 3.5(b), and will have been prepared consistently with the Special Purpose Historical Statements for the year ended December 28, 2002 and the accounting principles set forth on Schedule 3.5(c).

                (b) Schedule 3.5(d) sets forth, on a line item basis, the material estimated reconciliations between the Special Purpose Historical Financial Statements prepared in accordance with the accounting principles set forth on Schedule 3.5(c) and the Special Purpose Historical Financial Statements as if such financial statements had been prepared in accordance with GAAP in all material respects (excluding notes thereto) consistently applied.  When delivered pursuant to Section 5.24, to the Knowledge of GP, the Historical GAAP Financial Statements will contain, as to the balance sheet and results of operations contained therein, no materially adverse discrepancies on a line item between the reconciliations shown on Schedule 3.5(d) and the corresponding line item reflected on the Historical GAAP Financial Statements, and, as to the statement of cash flows contained therein, will contain no materially adverse discrepancies in the aggregate (excluding any discrepancies occurring from the adjustments resulting from the items set forth in columns (d), (e), (f) and (g) under the heading “Working Capital Reconciliation” set forth on Schedule 2.3(c)) from the audited statements of cash flows contained in the

 

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Special Purpose Historical Financial Statements or in the unaudited statement of cash flows delivered by Sellers pursuant to Section 5.24(c).

                (c)           Sellers have not, except as disclosed in the notes to the Special Purpose Historical Financial Statements, changed, in any material respect, any of their accounting principles, practices, methodologies or policies (including any reserving and depreciation methodologies, practices and policies) used by them in connection with the Business, the Acquired Assets and Assumed Liabilities.  Except as otherwise in accordance with GAAP, Sellers have not released any material non-cash reserves.

SECTION 3.6                 Absence of Certain Changes.  Except as disclosed herein or on the Schedules, since January 3, 2004: (i) Sellers and their affiliates have conducted the Business in the ordinary course consistent with past practices; (ii) no Material Adverse Effect has occurred; and (iii) there has been no material damage (whether or not physical), destruction or loss (after taking in account any insurance or other recoveries payable in respect thereof, including other monies payable pursuant to Section 1.3(c)) that has occurred to material tangible property, software or electronic systems included as an Acquired Asset or any asset that would have been, if not damaged, destroyed or  lost, an Acquired Asset.  Without limiting the foregoing, since January 3, 2004:

(a)           Neither Seller has sold, transferred, leased, subleased, licensed, sublicensed, disposed of, surrendered or subjected to any Lien, or agreed to sell, transfer, lease, sublease, license, sublicense, dispose of, surrender or subject to any Lien, in any material respect, any of the Acquired Assets or any asset that would have been, if not sold, an Acquired Asset (including, without limitation, any Owned Business Intellectual Property) other than in the ordinary course of the operation of the Business consistent with past practice;

(b)           Neither Seller has made any increase in the salary, other compensation or fringe benefits of any officer of the Business or any material increase in the salary, other compensation or fringe benefits of any Business Employee or made any change in any benefit plan other than in the ordinary course of the operation of the Business consistent with past practice or entered into, terminated or amended any employment, severance, change of control or termination agreement (except as may be required under existing agreements, benefit plans or applicable collective bargaining agreements with respect to a Business Employee);

(c)           Neither Seller has delayed or postponed, in any material respect, the payment of any accounts payable with respect to the Business other than in the ordinary course of the operation of the Business consistent with past practice;

(d)           Neither Seller has entered into any written Contract with respect to any Intellectual Property included in the Acquired Assets or Specified Brands or with respect to the type of Contract set forth on Schedule 1.2(b)(xvii), other than in the ordinary course of the operation of the Business consistent with past practice;

 

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(e)           Other than changes made in the ordinary course of the operation of the Business consistent with past practice or as set forth in the Human Resources Agreement, neither Seller, with respect to any Business Employee, has terminated, amended, modified or approved any Seller Benefit Plan;

(f)            Neither Seller has entered into any new collective bargaining agreements relating to Business Employees or amended or modified any existing collective bargaining agreements relating to Business Employees;

(g)           Neither Seller nor any of its affiliates, with respect to the Business, has waived in writing any material claims, rights or benefits of, or agreed in writing to modify in any material respect, any standstill or non-solicitation agreement to which either Seller or any of affiliates is a party;

(h)           Sellers have not made any material change to the risk (credit) policies used in the Business;

(i)            Neither Seller has caused to change, in any material respect, any of the accounting principles, practices, methodologies or policies (including any methodologies, practices and policies related to reserves and depreciation) used by it in connection with the Business, the Acquired Assets or the Assumed Liabilities or except as otherwise in accordance with GAAP, released any material non-cash reserve; and

(j)            Neither Seller has agreed to take any action described above, except as contemplated by this Agreement and/or the Ancillary Documents.

SECTION 3.7                 Litigation; Decrees.  Except for any lawsuit, action or proceeding brought after the date of this Agreement by any Person seeking to delay or prevent, or otherwise challenging, the transactions contemplated hereby, there is no lawsuit, action, claim, suit or judicial, legal, administrative, arbitral or other proceeding pending, or, to the Knowledge of GP, threatened, against either Seller primarily related to the Business or the Acquired Assets, except for any such matter that, if resolved in a manner adverse to such Seller, would not, individually or in the aggregate, have a Material Adverse Effect.  As of the date hereof, except as set forth on Schedule 3.7, there is no material lawsuit, action, claim, suit or judicial, legal, administrative, arbitral or other proceeding pending, or the Knowledge of GP, threatened primarily related to the Business or the Acquired Assets.  Neither Seller is in default under any material judgment, order, injunction or decree of any Governmental Entity or arbitrator entered against either Seller and primarily related to the Business or the Acquired Assets.

SECTION 3.8                 Title to Acquired Assets.  Sellers have, or at the Closing will have, good and valid title to, or valid leasehold interests in, all of the Acquired Assets free and clear of all Liens, except for Permitted Liens.  Subject to Section 5.4, at the Closing, Sellers will convey to Purchaser good and valid title (free and clear of any Liens subject to Permitted Liens) to the Acquired Assets.  This Section 3.8 does not apply to Real Property (which is exclusively the subject of Section 3.9 or the Real Property Agreement, as applicable), Intellectual Property and Specified Brands (which are

 

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exclusively the subject of Section 3.13) or Contracts (which are exclusively the subject of Section 3.15).

SECTION 3.9                 Leased Real Property.

(a)           Schedule 1.2(a)(i) sets forth a list of each Lease for real property leased to either Seller or its affiliates and primarily used in the operation of the Business (the “Leased Real Property”).  Sellers have made available to Purchaser complete copies of all written Leases for the Leased Real Property.  The applicable Seller indicated on Schedule 1.2(a)(i) as a lessee of a particular Leased Real Property is the lessee of the Leased Real Property indicated therein and is in possession and occupancy of the Leased Real Property purported to be leased (other than as provided in the subleases identified on Schedule 1.2(a)(i)), and each such Lease is in full force and effect as the valid obligation of the applicable lessee and, to the Knowledge of GP, the applicable lessor, without any material default (or event which, with the giving of notice or passage of time, could mature into a material default) by such lessee existing thereunder, or, to the Knowledge of GP, by the applicable lessor.

(b)           Except as set forth on Schedule 1.2(a)(i) or Schedule 3.9(b), no Lease has been assigned by Seller, no portion of any Leased Real Property has been subleased, no Seller has created any Liens (other than Permitted Liens) on its Leasehold interest in any Leased Real Property, no Seller is subject to any contractual requirement to purchase or acquire any Leased Real Property, and no provision of any Lease or of any note, bond, mortgage, indenture, deed of trust or other Listed Contract affecting any Leased Real Property requires the consent or approval of any person or entity for the transactions contemplated hereby.

SECTION 3.10               Personal Property.  All material Personal Property is in good working order and repair, has been maintained in accordance with GP’s standard practice and is suitable for the purposes for which it is presently being used (taking into account ordinary wear and tear and the need for ordinary, routine maintenance and repairs).  Section 3.10 shall not apply to Computer Hardware or Computer Software which are the subject of Section 3.24.

SECTION 3.11               Inventory.  All Inventory reflected in Target Working Capital, as the same may be adjusted by the Final Working Capital Statement, will be of a quality and quantity usable or salable in the ordinary course of the operation of the Business.  The valuation for the Inventory used on the Special Purpose Historical Financial Statements and Final Closing Working Capital Statement is the lower of moving average cost or market value.

SECTION 3.12               Accounts Receivable.  All of the Accounts Receivable reflected in the financial statements set forth on Schedule 3.5(b) has arisen, and in the case of Accounts Receivable reflected in Target Working Capital, as the same may be adjusted by the Final Working Capital Statement will have arisen, from bona fide transactions entered into in the ordinary course of the operation of the Business.

 

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SECTION 3.13               Intellectual Property and Specified Brands.

                (a)           Schedule 1.2(a)(v) sets forth a true and complete list of all Registered Trademarks of Sellers which (i) pertain solely or primarily to the services provided by the Business (other than GP Trademarks) or (ii) are used by the Business in connection with products not manufactured by the Sellers.  Schedule 1.2(a)(vi) sets forth a true and complete list of all Registered Patents and Registered Copyrights which are owned by either Seller and relate solely to and are used solely in the operation of the Business.  Schedule 3.15(a) sets forth a list of all material Business Intellectual Property Contracts.

                (b)           To the Knowledge of GP, all Business Intellectual Property is valid, subsisting and enforceable, and no Owned Business Intellectual Property or Licensed Business Intellectual Property has been abandoned, canceled or adjudicated invalid (excepting any expirations in the ordinary course).  No Owned Business Intellectual Property (and to the Knowledge of GP, no Licensed Business Intellectual Property) is subject to any outstanding order, judgment or decree restricting its use or adversely affecting or reflecting either Seller’s rights thereto.

                (c)           Schedule 3.13(c) and/or Schedule 3.7 set forth a complete list of all actions, suits or proceedings (“Suits”) pending or, to the Knowledge of GP, threatened by or against either Seller that involve claims concerning the infringement or other violation, validity, enforceability or ownership of the Owned Business Intellectual Property.  No such Suits or claims have been decided or settled, and to the Knowledge of GP, no valid basis for any such Suits or claims exists.

                (d)           To the Knowledge of GP, the Business Intellectual Property and the use thereof by Sellers does not infringe or violate the Intellectual Property rights of any third parties.  There is no Suit pending, decided or settled or, to the Knowledge of GP, threatened against either Seller with respect thereto.

                (e)           Each Seller owns or otherwise holds valid rights to use all Intellectual Property primarily related to or primarily used in the operation of the Business.  There exists no Lien (except for Permitted Liens) in favor of any third party specific to any of the Owned Business Intellectual Property, and neither Seller has mortgaged, pledged, licensed, transferred or assigned to any third party any right, title or interest in or to the Owned Business Intellectual Property.  Except as set forth on Schedule 3.13(e), each Seller’s rights in the Owned Business Intellectual Property are fully assignable to any Person, without payment, consent of any Person or other condition or restriction.

                (f)            Sellers have timely made all filings and payments with the appropriate agencies in the United States and Canada required to maintain in subsistence all Specified Brands and Patents comprising Registered Owned Business Intellectual Property.  All documentation necessary to confirm and effect each Seller’s ownership of Specified Brands and Patents comprising Registered Owned Business Intellectual Property, if acquired from other Persons, has been recorded in the United States Patent and Trademark Office, and corresponding offices in Canada.

 

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                (g)           Each Seller has taken reasonable measures to protect the secrecy and confidentiality of all material Trade Secrets that are included in the Acquired Assets.  To the Knowledge of GP, no such Trade Secrets have been disclosed to any Person other than to employees, agents or Representatives of either Seller for use in connection with the Business or pursuant to a confidentiality or non-disclosure agreement that reasonably protects the interest of Sellers in and to such matters.

                (h)           The provisions of this Section 3.13 shall not apply to Computer Hardware, Computer Software or Data which are the subject of Section 3.24.

SECTION 3.14               Insurance.  All the material assets constituting any part of the Acquired Assets are insured for the benefit of a Seller, and will be so insured until immediately prior to the Closing, in amounts and against risks consistent with the corporate practices of GP.  Set forth on Schedule 3.14 is a list of those Listed Contracts that require insurance to be maintained by Sellers or their affiliates.  No Listed Contract that is a customer Contract requires insurance coverage to be maintained by the Business in an amount greater than the amounts of insurance coverage that will be required to be maintained by Purchaser in the Master Supply Agreement.

SECTION 3.15               Contracts.

(a)           Except for Contracts listed on Schedules 3.9, 3.15(a) or those Contracts described in or attached to the Human Resources Agreement or those Contracts entered into after the date hereof and prior to the Closing Date in accordance with Section 5.1, neither Seller nor any of its affiliates is a party to or bound by any Contract included in the Acquired Assets or the Assumed Liabilities that is:

(i)            a Contract not terminable by the applicable Seller or its affiliates upon notice to the other party or parties thereto of six (6) months or less;

(ii)           a Contract for the employment of any Person (A) with an annual base salary in excess of $200,000 or any consulting agreement with any Person involving payments by such Seller or its affiliates in excess of $200,000; (B) that contains an obligation to pay severance upon termination of employment; or (C) that contains a requirement to make any payment or provide any benefit or contractual right as a result of a sale of the Acquired Assets or the Business or the termination of employment following a sale of the Acquired Assets or the Business;

(iii)          a collective bargaining agreement or any other material Contract with any labor union;

(iv)          a Contract with any director, officer, subsidiary or affiliate of such Seller that will not be terminated at or prior to the Closing at no cost to Purchaser;

(v)           a letter of credit, an indenture, note, loan or credit agreement or other Contract relating to the borrowing of money by either Seller or its affiliates or the Business or to the direct or indirect guarantee or assumption by such Seller

 

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or its affiliates or the Business of the obligations of any other Person for borrowed money, including any arrangement which has the economic effect although not the legal form of such a guarantee;

(vi)          a covenant not to compete or a non-solicitation, no hire, standstill or similar obligation (other than those (a) of which such Seller or any of its affiliates is the beneficiary of the covenant or (b) that are terminable upon no more than thirty (30) days’ notice (except for exclusive supply obligations which are terminable upon no more than ninety (90) days’ notice));

(vii)         a lease or similar agreement under which such Seller or its affiliates (A) is lessee of, or holds or uses, any machinery, equipment, vehicle or other tangible personal property owned by any third Person for an annual rent in excess of $200,000 or (B) is lessor of, or makes available for use by any third Person, any tangible personal property owned (including ownership for Tax purposes) by such Seller or its affiliates having a fair market value in excess of $200,000;

(viii)        other than the Intercompany Accounts and the Intercompany Trade Payables, a Contract (including purchase orders) involving the obligation of such Seller relating solely to the Business to purchase or sell products or services for payment or receipt by such Seller of more than $15 million annually (unless terminable by such Seller (A) without payment or penalty of not more than $250,000 or (B) upon no more than ninety (90) days’ notice);

(ix)           a mortgage, pledge, security agreement, deed of trust or other document granting a material Lien upon any Acquired Asset (including Liens upon properties acquired under conditional sales, capital lease or other title retention or security devices), other than Permitted Liens;

(x)            a joint venture, partnership or other arrangement involving a sharing of profits, revenues or expenses (other than rebate programs, gain sharing plans, expense programs and similar arrangements entered into in the ordinary course of the operation of the Business consistent with past practice); or

(xi)           Business Intellectual Property Contracts.

(b)           The agreements, leases, instruments and commitments set forth on Schedules 3.15(a) and 3.21 (together with any such agreements, leases, instruments and commitments entered into after the date hereof and prior to the Closing Date that are, or are required to be, set forth on any updates to Schedules 3.15(a) and 3.21) are collectively referred to as the “Listed Contracts”.  Subject to Section 5.4, neither Seller nor its affiliates is (with or without the lapse of time or the giving of notice, or both) in breach or default in any material respect under any Listed Contract nor has any event occurred which with notice or lapse of time would constitute a breach or default in any material respect under any Listed Contract.  Subject to Section 5.4, as of the date of this Agreement, to the Knowledge of GP, none of the other parties to any Listed Contract is

 

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(with or without the lapse of time or the giving of notice, or both) in breach or default in any material respect thereunder, nor has any event occurred that with notice or lapse of time would constitute a material breach or default or permit termination or acceleration thereof; and, as of the Closing Date, to the Knowledge of GP, none of the other parties to any Listed Contracts, or other Contracts is (with or without the lapse of time or the giving of notice, or both) in breach or default in any material respect thereunder nor has any event occurred which with notice or lapse of time would constitute a material breach or default or permit termination or acceleration through which, individually or in the aggregate, would have a Material Adverse Effect.  As of the date of this Agreement, neither Seller has received any written notice of the intention of any party to terminate any Listed Contract, whether as a termination for convenience or for default of a Seller thereunder.  Sellers have made available to Purchaser true, complete and correct copies of each of the Listed Contracts (to the extent such Listed Contract is in writing), including any amendments thereto, as of the date of this Agreement.

SECTION 3.16               Sufficiency of Acquired Assets.  The Acquired Assets (together with the services to be provided pursuant to, and the actions contemplated by, the Ancillary Documents, the Included GP Owned Computer Software, the Included Licensed Computer Software and the Computer Hardware used to provide the Support Services, and the assets covered by the Real Property Agreement) comprise the assets necessary, in all material respects, to operate the Business as currently operated.

SECTION 3.17               Employee Benefits.

(a)           Schedule 3.17 contains a list of (i) each “employee pension benefit plan” (as defined in Section 3(2) of ERISA), “employee welfare benefit plan” (as defined in Section 3(1) of ERISA), each other plan relating to stock options, incentive compensation, deferred compensation, medical, life insurance, retiree medical, bonus or severance benefits and each benefit plan providing benefits to Business Employees located outside of the United States, in each case limited to benefit plans currently maintained, contributed to or required to be contributed to by either Seller or any of its affiliates on behalf of Business Employees (all the foregoing being herein called “Seller Benefit Plans”) and (ii) each “multiemployer plan” as defined in Section 4001(a)(3) of ERISA currently contributed to or required to be contributed to or to which any Seller has liability (contingent or otherwise) during the six (6) years preceding the date of this Agreement by either Seller or any of its affiliates on behalf of Business Employees (“Seller Multiemployer Plans”).  GP has made available to Purchaser copies of (A) each Seller Benefit Plan, (B) the most recent summary plan description (or similar document) for each Seller Benefit Plan, or (C) all amendments to each Seller Benefit Plan.  Each of the Seller Benefit Plans has been maintained, funded and administered in material compliance with its terms, the terms of any applicable collective bargaining agreement and the applicable provisions of ERISA, the Code and other applicable laws, rules and regulations whether foreign or domestic.  Each Seller Benefit Plan that is intended to meet the requirements of a “qualified plan” under Section 401(a) of the Code has received a favorable determination letter from the IRS.  Schedule 3.17 separately sets forth each Seller Benefit Plan which Purchaser or its affiliates will assume pursuant to this Agreement, the Human Resources Agreement or by operation of law (each an

 

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Assumed Benefit Plan”).  With respect to each Assumed Benefit Plan (i) no suit, action or other litigation (excluding claims for benefits) has been brought against, or to the Knowledge of GP, is threatened; (ii) no audits, inquiries or proceedings are pending, or to the Knowledge of GP, are threatened by the IRS, U.S. Department of Labor Pension Benefit Guaranty Corporation or other Governmental Entity; (iii) all material required reports and descriptions (including, but not limited to, any required independent audit, Forms 1099-R, summary annual reports, Forms PBGC-1 and summary plan descriptions) have been made; (iv) to the extent due and payable on or prior to the Closing Date, all contributions, reserves or premium payments have been made or accrued; and (v) to the extent applicable, GP has made available to Purchaser the most recent annual report (Form 5500) and schedules thereto, the most recent determination letter, copies of any trust, insurance or annuity contracts maintained in connection therewith, and the most recent retirement plan actuarial valuation.

(b)           No proceeding has been commenced by the Pension Benefit Guaranty Corporation to terminate any Seller Benefit Plan and no “reportable event” as defined in Section 4043(c) of ERISA has occurred.  To the Knowledge of GP, Sellers have not engaged in a transaction in connection with an Assumed Benefit Plan that would be subject to either a civil penalty pursuant to Section 502(i) of ERISA or tax pursuant to Section 4975 of the Code.

(c)           With respect to the Seller Multiemployer Plans, Sellers have paid all current contributions required under each Seller Multiemployer Plan or any applicable collective bargaining or participation agreement and Sellers have no outstanding withdrawal liabilities with respect to such Seller Multiemployer Plans.

(d)           Except as set forth in Schedule 3.17 or in the Human Resources Agreement, the consummation of the transactions contemplated by this Agreement shall not (i) entitle any current or former employee, director or consultant of the Business to any payment, (ii) increase the amount of any compensation to any such person, (iii) accelerate the vesting of any compensation, stock incentive or other benefit to such person or (iv) result in any parachute payment under Section 280G of the Code whether or not such compensation is considered to be reasonable.

(e)           Except as set forth in Schedule 3.17, or except as required by Section 4980B of the Code or Part 6 of Title I of ERISA, neither Seller nor any affiliate has any obligation to provide medical, disability or death benefits (whether or not insured) with respect to their respective current or former employees beyond their retirement or other termination of employment.  Any “group health plan” within the meaning of Section 5001(b)(1) of the Code has been administered in material compliance with Section 4980B of the Code or the applicable requirements of Part 6 of Title I of ERISA.

(f)            Sellers have not used the services or workers provided by third party contract labor suppliers, temporary employees, “leased employees” (as that term is defined in Section 414(n) of the Code), or persons who have provided services as independent contractors, to an extent that could reasonably be expected to result in the disqualification of any Assumed Benefit Plan under applicable law.

 

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(g)           Sellers are not engaging in the transactions contemplated by this Agreement for the purposes of evasion of liability under Section 4069 of ERISA and Sellers have never had any liability under Section 4069 of ERISA.

SECTION 3.18               Environmental Matters.  Except as set forth on Schedule 3.18:

(a)           each Seller and its affiliates, with respect to the Acquired Assets, the Real Property and the Business, has complied and is in compliance with, in all material respects, all Environmental Laws;

(b)           the Business and the Acquired Assets have obtained and are in material compliance with all necessary Permits required under Environmental Laws to operate the Business and the Acquired Assets;

(c)           there has been no Release of Hazardous Materials at any of the Real Property owned or operated by the Business or each Seller or, to the Knowledge of GP, a predecessor in interest, or to the Knowledge of GP, at any disposal or treatment facility which received Hazardous Materials generated by the Business, the Acquired Assets or any predecessor in interest which is reasonably likely to result in Environmental Liabilities that individually or in the aggregate would have a Material Adverse Effect; and Seller has not received notice that it is a potentially responsible party under any Environmental Laws with regard to any of the Real Property owned or operated by the Business or any off-site location that constitute a violation of Environmental Laws or may legally require Remedial Action;

(d)           no Environmental Claims have been asserted in writing against the Business or the Acquired Assets or, to the Knowledge of GP, any predecessor in interest nor does GP have written notice of any threatened or pending Environmental Claim against the Business or the Acquired Assets or any predecessor in interest which is reasonably likely to result in Environmental Liabilities that would, individually or in the aggregate, have a Material Adverse Effect;

(e)           to the Knowledge of GP, no Environmental Claims have been asserted in writing against any facilities that received Hazardous Materials generated by the Business or Acquired Assets or any predecessor in interest which is reasonably likely to result in Environmental Liabilities that would, individually or in the aggregate, have a Material Adverse Effect;

(f)            neither Seller nor any of its affiliates has entered into any consent order or other similar agreement with any Governmental Entity that will result in Environmental Liabilities affecting the Acquired Assets, the Business or the Real Property on either Seller or its affiliates which would, individually or in the aggregate, have a Material Adverse Effect; and

(g)           GP has furnished or made available to Purchaser all material environmental reports, studies, investigations or correspondence regarding any Environmental Liabilities of the Acquired Assets, the Business or the Real Property that are in either Seller’s possession or under its reasonable control.

 

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SECTION 3.19               Taxes.  Except as set forth on Schedule 3.19,

(a)           (i) None of the Acquired Assets is “tax exempt use property” within the meaning of Section 168(h) of the Code, and (ii) no Liens for material Taxes have been filed with respect to the Acquired Assets or the Business (other than for Taxes not yet due and payable).

(b)           There have been properly completed and filed on a timely basis all material Tax Returns that include the operations of, or otherwise relate to, the Acquired Assets or the Business required to be filed on or prior to the date hereof and all such Tax Returns are true and correct in all material respects.  None of the Seller’s Tax Returns are currently being audited by any applicable taxing authority where such audit relates to the Acquired Assets or the operation of the Business and neither Seller has received, nor has any knowledge of, any notice of audit, deficiency or assessment or proposed audit from any taxing authority where such audit relates to the Acquired Assets or the operation of the Business.

(c)           All material Taxes imposed with respect to the Acquired Assets or the Business for all Pre-Closing Tax Periods that were due and payable have been paid or reserved for, and all applicable material Tax laws have been complied with prior to the date hereof, including with respect to the payment and withholding of Taxes.

SECTION 3.20               Labor Matters.

(a)           There are no strikes or lockouts or work stoppages or slowdowns pending or, to the Knowledge of GP, threatened against the Business.

(b)           There are no complaints, charges, claims or grievances against either Seller pending or, to the Knowledge of GP, threatened to be brought or filed with any Governmental Entity, arbitrator or court based on or arising out of the employment by either Seller of any Business Employee, except for those that would not, individually or in the aggregate, have a Material Adverse Effect.

(c)           Each Seller is in compliance with respect to the Business with all laws, regulations, rules and orders of all Governmental Entities relating to the employment of labor, including all such laws, regulations, rules and orders relating to wages, hours, collective bargaining, discrimination, civil rights, safety and health, immigration, workers’ compensation and layoffs, except where the failure to be in compliance would not, individually or in the aggregate, have a Material Adverse Effect.

(d)           Except as set forth in Schedule 3.15, (i) as of the date hereof, none of the employment terms of the employees of the Business are subject to the terms of a collective bargaining agreement under current negotiation and no labor organization or group of Business Employees has made a demand for recognition or certification.

(e)           Within the six (6) months preceding the date of this Agreement, there has been no event that has caused or required Sellers to issue a notice under the Worker

 

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Adjustment and Retraining Notification Act or any similar law with respect to the Business Employees.

(f)            Except as otherwise set forth on Schedule 3.15, there are no written employment, consulting or severance agreements for Business Employees.

(g)           Sellers have previously furnished to Purchaser a complete, true and correct written list (the “Employee List”) of all current Business Employees, their respective locations, the date their employment commenced, base compensation and bonus opportunity.  There are no employees of Sellers or their affiliates who devote substantially all of their work time to the Business other than as set forth on the Employee List.

SECTION 3.21               Suppliers and Customers.

(a)           Schedule 3.21 sets forth a list of the Contracts (other than purchase orders entered into in the ordinary course of the operation of the Business consistent with past practices) in effect on the date of this Agreement with the 20 largest suppliers of the Business (each, a “Top 20 Supplier”), the 20 largest customers of the Business (each, a “Top 20 Customer”) and the 10 largest distribution services customers (each a “Top 10 Distribution Customer”), in each case measured by purchases, sales and service revenues, respectively, during the fiscal year ended January 3, 2004.

(b)           Since January 3, 2004, no Top 20 Supplier, Top 20 Customer or Top 10 Distribution Customer has cancelled or terminated or not renewed or, to the Knowledge of GP, threatened to cancel or terminate or not renew, its relationship with the Business or has materially altered the terms thereof, or reduced its supply or purchase of products to or from the Business.

(c)           Since January 3, 2004, none of the suppliers, customers and distribution services customers of the Business has cancelled or terminated or not renewed or, to the Knowledge of GP, threatened to cancel or terminate or not renew, its relationship with the Business or materially altered the terms of, or reduced its purchase or supply of products from or to the Business, except for any such cancellations, terminations or non-renewals that would not, individually or in the aggregate, have a Material Adverse Effect.

SECTION 3.22               Affiliate Transactions.

(a)           Except for this Agreement, the Ancillary Documents or as set forth on Schedule 3.22(a), (i) the Acquired Assets do not include any Contract, commitment or transaction with GP or any of its affiliates and (ii) after the Closing neither GP nor any of its affiliates will provide any services or products to the Business.

(b)           Schedule 3.22(b) sets forth the components (other than described in the next sentence) of all allocations of corporate overhead from GP and its affiliates to the Business set forth on the Special Purpose Historical Financial

 

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Statements for the fiscal years ended January 3, 2004 and December 28, 2002.  Additional allocations and/or assignment of costs necessary to prepare the Special Purpose Historical Financial Statements for the fiscal year ending December 28, 2002 are disclosed in the notes to such financial statements.

(c)           The financial terms contained in the Master Supply Agreement are no less favorable, in the aggregate and on a category-by-category of products and category-by-category of services basis, with past practice and the transactions between GP and the Business reflected in the Special Purpose Historical Financial Statements for the fiscal years ended January 3, 2004, and December 28, 2002.

SECTION 3.23               Brokers.  Except for Goldman, Sachs & Co., the fees and expenses of which will be paid by Sellers, no broker, finder or investment banker acting on behalf of Sellers is entitled to any fee, commission or other payment in connection with this Agreement or the transactions contemplated hereby.

SECTION 3.24               Computer Hardware; Computer Software; Data.

(a)           As of the Closing Date and other than the Excluded Assets, Seller is not aware of (i) any item(s) of Computer Hardware material to the operation of the Business as it was conducted as of the Closing Date, which are (A) not contained on Schedule 1.2(a)(vii) and (B) not used by GP to provide services to the Business prior to the Closing, including without limitation the Support Services to be provided pursuant to the IT Support Services Agreement; and (ii) any Computer Hardware Contracts solely related to Computer Hardware that are not set forth on Schedule 1.2(a)(viii)Schedule 1.2(a)(ix) sets forth a true and complete list of all Acquired GP Owned Computer Software.  Schedule 1.2(a)(x) sets forth a true and complete list of all Acquired GP Licensed Computer Software.

(b)           The Acquired Computer Hardware in use in the Business as of the Closing Date is in good working condition (normal wear and tear excepted).  Other than those errors and defects inherent in Computer Hardware that are generally known within the information technology industry, there has not been any material and recurring malfunction with respect to the Acquired Computer Hardware since January 1, 2002 that has not been remedied or replaced in all material respects.

(c)           To the Knowledge of GP, Sellers are the sole and exclusive owners of the Acquired GP Owned Computer Software free and clear of all Liens, except for Permitted Liens, and Sellers are the sole and exclusive owners of the Included GP Owned Computer Software.  There are no Suits decided, pending or, to the Knowledge of GP, threatened by or against either Seller concerning (i) the Acquired GP Owned Computer Software, including any Suit claiming that the Acquired GP Owned Computer Software is not owned, or is not owned exclusively, by either Seller or contesting the right of either Seller to use the Acquired GP Owned Computer Software, or (ii) the Included GP Owned Computer Software, including any Suit claiming that the Included GP Owned Computer Software is not owned, or is not owned exclusively, by either Seller or contesting the right of either Seller to use the Included GP Owned Computer Software.  To the Knowledge of GP, there is no valid basis for any such Suits or claims.

 

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(d)           All of the Acquired GP Licensed Computer Software and the Included Licensed Computer Software is used by or on behalf of each Seller in the Business pursuant to a Contract.  No Suit has been decided or is pending by or against either Seller concerning any Acquired GP Licensed Computer Software or any Included Licensed Computer Software, including any Suit concerning a claim or position that either Seller or another party thereto has breached any Contract relating thereto.  To the Knowledge of GP, no such claim has been threatened or asserted.  Subject to obtaining the applicable Necessary Consents, there exists no event, condition or occurrence which, with the giving of notice or lapse of time, or both would constitute a breach or default by either Seller or another party under any such Contract.  To the Knowledge of GP, no party to any such Contract has given either Seller notice of its intention to cancel, terminate or fail to renew any such Contract.

(e)           All Acquired GP Owned Computer Software, Acquired GP Licensed Computer Software, Included GP Owned Computer Software and Included Licensed Computer Software (collectively, “Business Computer Software”), is in machine readable form.  To the Knowledge of GP, the Acquired GP Owned Computer Software, the Included GP Owned Computer Software and, to the Knowledge of GP, the Acquired GP Licensed Computer Software and the Included Licensed Computer Software (i) shall perform in substantially the same manner as it did as of the Closing Date, (ii) contain no Disabling Devices, and (iii) other than those errors and defects inherent in Computer Software that are generally known within the information technology industry, has not suffered from any material and recurring malfunctions since January 1, 2002, that have not been remedied or replaced in all material respects.

(f)            To the Knowledge of GP, the use of the Necessary Data by each Seller prior to the Closing Date does not infringe or violate the rights of any Person, which rights are enforceable under the laws of the United States, or otherwise violate any United States law or regulation.

SECTION 3.25               Capital Expenditures.  With respect to the Business, since January 2, 2004 through the date of this Agreement, GP has made the capital expenditures set forth on Schedule 3.25.

ARTICLE IV

Representations and Warranties of Purchaser

Purchaser hereby represents and warrants to Sellers as follows:

SECTION 4.1                 Organization, Standing and Power.  Purchaser is duly organized, validly existing and in good standing under the laws of its state of organization and has the requisite entity power and authority to carry on its business as currently conducted.

SECTION 4.2                 Authority.

(a)           The execution and delivery of this Agreement and the Ancillary Documents executed as of the date hereof and the consummation of the transactions

 

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contemplated hereby and thereby by Purchaser have been duly and validly authorized by all necessary corporate action on the part of Purchaser, and the execution and delivery of the Ancillary Documents to be executed by Purchaser or its affiliates at the Closing and the consummation of the transactions contemplated thereby will be duly and validly authorized by all necessary action on the part of Purchaser or its affiliates prior to the Closing and no other proceedings in the part of Purchaser or its affiliates is necessary to authorize such execution, delivery and performance.  Each of this Agreement and the Ancillary Documents executed as of the date hereof has been duly and validly executed and delivered by Purchaser and constitutes, and each Ancillary Document to be entered into by Purchaser or its affiliates will be duly and validly executed and delivered at or prior to the Closing and when so executed and delivered will constitute, its legal, valid and binding obligation enforceable against it in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors’ rights generally, and except that the availability of the remedy of specific performance or other equitable relief is subject to the discretion of the court before which any proceeding therefor may be brought.

(b)           The execution and delivery of this Agreement and the Ancillary Documents executed as of the date hereof by Purchaser or its affiliates does not, and the execution and delivery by Purchaser or its affiliates of the Ancillary Documents to be executed by Purchaser or its affiliates at the Closing, the consummation by Purchaser or its affiliates of the transactions contemplated hereby and thereby and the compliance by Purchaser or its affiliates with the terms of this Agreement and the Ancillary Documents to which Purchaser or its affiliates is or will be a party will not, conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, or result in the creation of any Lien upon any of the assets of Purchaser or its affiliates under any provision of (i) the articles of incorporation or bylaws (or comparable organizational documents) of Purchaser or such affiliates; (ii) subject to the filings and other matters referred to in the following paragraph (c), any law, judgment, order, decree, statute, ordinance, rule or regulation applicable to Purchaser or such affiliates; or (iii) any of the terms, conditions, or provisions of any note, lien, bond, mortgage, indenture, license, lease, contract, commitment, agreement, understanding, restriction or other instrument or obligation, except in the case of clause (ii) and (iii), any such conflicts, violations, defaults, rights or Liens that, individually or in the aggregate, would not materially impair the ability of Purchaser or such affiliates to perform its obligations under this Agreement.

(c)           No consent, approval, license, permit, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required to be obtained or made by Purchaser or its affiliates in connection with the execution and delivery of this Agreement or the Ancillary Documents or the consummation of the transactions contemplated hereby and thereby, except for (i) compliance with and filings under the HSR Act and (ii) those the failure of which to obtain or make, individually or in the aggregate, would not materially impair the ability of Purchaser or its affiliates to perform their respective obligations under this Agreement or the Ancillary Documents.

 

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SECTION 4.3                 Available Funds.  Purchaser has obtained a commitment letter from Cerberus Capital Management, L.P. with respect to the provision by Cerberus Capital Management, L.P. of debt or equity capital to Purchaser, a copy of which has been provided to Sellers.

SECTION 4.4                 Litigation.  As of the date hereof, there is no claim, action, suit proceeding or governmental investigation pending or, to the Knowledge of Purchaser, threatened against Purchaser or any of its affiliates, by or before any Governmental Entity that would materially impair the ability of Purchaser or any of its affiliates to perform Purchaser’s obligations under this Agreement.

SECTION 4.5                 Brokers.  No broker or investment banker acting on behalf of Purchaser or its affiliates is entitled to any fee, commission or other payment in connection with this Agreement or the transactions contemplated hereby.

ARTICLE V

Covenants

SECTION 5.1                 Conduct of Business.  During the period from the date of this Agreement and continuing until the earlier of the Closing or the termination of this Agreement pursuant to Article VII, GP shall, and shall cause its affiliates to (except as expressly provided in this Section 5.1 or to the extent that Purchaser shall otherwise consent in writing, which consent shall not be unreasonably withheld or delayed) operate the Business in the ordinary course consistent with past practice and maintain the Acquired Assets in working order consistent with past practices, in substantially the same condition as of the date of this Agreement, and shall use all commercially reasonable efforts consistent with past practices to preserve intact the Business and the Acquired Assets and to preserve and maintain the Business’ goodwill and relationships with its customers, suppliers, vendors and dealers.  Except as set forth in Schedule 5.1 and solely with respect to the Business, the Acquired Assets and the Assumed Liabilities:

(a)           GP and its affiliates shall not engage in any intercompany transaction, other than in the ordinary course of the operation of the Business consistent with past practice;

(b)           GP and its affiliates shall not acquire any company or business (whether by asset purchase, stock purchase or merger) that competes with or would become a part of the Business or be included in the Acquired Assets or Assumed Liabilities;

(c)           GP and its affiliates shall not take any action that would cause any of the representations and warranties set forth in clauses (a) through (h) of Section 3.6 to be inaccurate in any material respect as of the Closing;

(d)           GP and its affiliates shall use commercially reasonable efforts to obtain and renew all Material Business Permits;

(e)           GP and its affiliates shall not enter into any settlement or release of any lawsuit, action, claim, suit or judicial, legal, administrative, arbitral or other proceeding

 

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related to the Business or the Acquired Assets (other than relating to the Excluded Liabilities) (i) in which a party seeks an order, injunction or other equitable relief or relief other than money damages which may adversely impact the operation of the Business or the Acquired Assets after Closing or (ii) that involves the payment of money damages in excess of $750,000;

(f)            GP and its affiliates shall not hire any employee or consultant for the Business with an annual compensation in excess of $200,000; and

(g)           GP and its affiliates shall not enter into any agreement to take any action described above.

SECTION 5.2                   Access to Information.

(a)           GP shall afford to Purchaser and its Representatives (a) reasonable access during normal business hours and upon reasonable prior notice during the period prior to the Closing to all senior management of the Business and to customers, vendors, suppliers and dealers of the Business and (b) full access during normal business hours to the properties, books, Contracts, commitments and records primarily related to the Business and during such period shall furnish promptly to Purchaser and its Representatives any information concerning the Business, the Acquired Assets or the Assumed Liabilities as Purchaser may reasonably request; provided, however, that GP is under no obligation to disclose to Purchaser or its Representatives (i) any information the disclosure of which is restricted by Contract or applicable law except in strict compliance with the applicable Contract or law, it being agreed that GP shall use its commercially reasonable efforts to obtain the consent of any third party to any Contract to the disclosure to Purchaser of any confidential information relating to such Contract, and (ii) affirmative action plans and related books and records, in each case with respect to either Seller.  Purchaser acknowledges that any information being provided to it or its Representatives by GP or any of its affiliates or Representatives pursuant to or in connection with this Agreement is subject to Section 5.8(b) of this Agreement and the terms of the Confidentiality Agreement, the terms of which are incorporated herein by reference.

(b)           During the period from the date hereof through the Closing Date, GP shall deliver to Purchaser copies of monthly financial information with respect to the Business that GP prepares for its own internal use in the ordinary course of Business consistent with past practice.  Purchaser acknowledges and agrees that such financial information will not represent the Business’ financial position as if it were accounted for as a stand alone entity and will not be prepared in accordance with GAAP or as otherwise set forth in Section 2.3 or Section 3.5 of this Agreement.

SECTION 5.3                 Governmental Approval, Etc.

(a)           Each of Purchaser and GP shall as promptly as practicable, but in no event later than ten (10) Business Days following the execution and delivery of this Agreement, file with the United States Federal Trade Commission and the United States Department

 

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of Justice, the notification and report form under the HSR Act required for the transactions contemplated hereby and any supplemental information requested in connection therewith pursuant to the HSR Act.  Each party will bear its own costs for the preparation of any such filing and responding to any inquiries or information requests, and Purchaser shall be responsible for the payment of any applicable filing fees.  Each of Purchaser and Sellers shall as promptly as practicable comply with any other laws of any country which are applicable to any of the transactions contemplated hereby and pursuant to which any consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity or any other Person in connection with such transactions is necessary.  Each of Purchaser and GP shall furnish to the other such necessary information and reasonable assistance as the other may request in connection with its preparation of any filing, registration or declaration which is necessary under the HSR Act or any other such laws.  Purchaser and GP shall keep each other apprised of the status of any communications with, and any inquiries or requests for additional information from, any Governmental Entity, and shall comply promptly with any such inquiry or request.  Purchaser and GP shall use all reasonable efforts to obtain any clearance under the HSR Act or any other consent, approval, order or authorization of any Governmental Entity, necessary in connection with the transactions contemplated hereby or to resolve any objections which may be asserted by any Governmental Entity with respect to the transactions contemplated hereby; provided that neither party shall be required to execute agreements and submit to judicial or administrative orders to hold separate and/or divest any of the Acquired Assets or the businesses or assets of Purchaser or any of its affiliates.

(b)           Subject to the terms and conditions of this Agreement, the Ancillary Documents and all applicable laws and regulations, each party shall use its reasonable efforts to fulfill or obtain the fulfillment of the conditions to the Closing and to do or cause to be done all things necessary to cause the Closing to occur and to consummate and make effective the transactions contemplated by this Agreement on or prior to the Closing Deadline, including, without limitation, (i) the execution and delivery of all agreements required hereunder and (ii) defending against any lawsuits, actions or proceedings, judicial or administrative, challenging this Agreement or the consummation of the transactions contemplated hereby, including seeking to have any preliminary injunction, temporary restraining order, stay or other legal restraint or prohibition entered or imposed by any court or other Governmental Entity that is not yet final and non-appealable vacated or reversed; provided, however, that neither party nor any of its affiliates shall be required to make any material monetary expenditure, commence or be a plaintiff in any litigation or offer or grant any material accommodation (financial or otherwise) to any third Person, including, without limitation, the offer for sale of any part of the Acquired Assets or other business or assets to any Person.

SECTION 5.4                 Third Party Consents.

(a)           Other than with respect to matters contemplated in the Ancillary Documents, if any novations, transfer or other agreements, consents, approvals or waivers necessary for the assignment, assumption, transfer or novation of any Contract or Intellectual Property to the extent included in the Acquired Assets, or any claim, right or

 

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benefit or obligation or liability arising thereunder or resulting therefrom, shall not have been obtained on or prior to the Closing Date, then as of the Closing, to the extent permitted by law and necessary to give effect to the terms hereof, this Agreement shall constitute full and equitable assignment by each Seller and any of its affiliates to Purchaser or its affiliates of all of its right, title and interest in and to, and assumption by Purchaser or its affiliates of all of the respective obligations and liabilities of each Seller and any of its affiliates under, such Intellectual Property and Contracts, and, in the case of Contracts, Purchaser or its affiliates shall be deemed the agent of each Seller and its affiliates for purposes of completing, fulfilling and discharging all of the liabilities of such Seller and any of its affiliates under any such Contract.  The parties shall take all actions reasonably necessary to provide Purchaser or its affiliates with the economic benefits of such Intellectual Property and Contracts to the extent included in the Acquired Assets, and, in the case of such Contracts, to relieve each Seller and its affiliates of the burdens of performance and other obligations thereunder, including entry into subcontracts for the performance thereof.  Purchaser agrees to pay, perform and discharge, and indemnify each Seller and its affiliates against and hold each Seller and its affiliates harmless from, all of their respective obligations and liabilities relating to such performance or failure to perform under such Contracts relating to performance required to be made after the Closing Date.

(b)           If either Seller or any of its affiliates shall be unable to make the assignment described in Section 5.4(a), or if such attempted assignment would give rise to any right of termination or would otherwise adversely affect the rights of either Seller or any of its affiliates or Purchaser or any of its affiliates under such Intellectual Property or Contract, or would not assign all of the rights or transfer all of the obligations and liabilities of such Seller and its affiliates thereunder at the Closing, GP and Purchaser shall continue to cooperate and use reasonable efforts to provide Purchaser or its affiliates with all such rights and to relieve Sellers and their respective affiliates of all such obligations and liabilities.  To the extent that any such consents and waivers are not obtained, or until the impediments to such assignment are resolved, GP shall use reasonable efforts (without the expenditure, in the aggregate, of any material sum) to (i) provide to Purchaser or its affiliates, at the request of Purchaser, the benefits of any such Intellectual Property or Contract to the extent included in the Acquired Assets, (ii) cooperate in any lawful arrangement designed to provide such economic benefits to Purchaser or its affiliates, and (iii) enforce, at the request of and for the account of Purchaser or its affiliates, any rights of Sellers and their respective affiliates arising from any such Intellectual Property or Contract against any third Person (including any Governmental Entity) including the right to elect to terminate in accordance with the terms thereof upon the advice of Purchaser.  To the extent that Purchaser or its affiliates is provided the benefits of any Intellectual Property or Contract referred to in this Section 5.4 (whether from either Seller or any of its affiliates or otherwise), Purchaser shall perform at the direction of GP and for the benefit of any third Person (including any Governmental Entity) the obligations of Sellers and their respective affiliates arising thereunder following the Closing Date, and Purchaser agrees to pay, perform and discharge, and indemnify Sellers and their respective affiliates against and hold them harmless from, all of their obligations and liabilities relating to such performance or failure to perform relating to performance required to be made after the Closing Date, and

 

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in the event of a failure of such indemnity, Sellers shall cease to be obligated under this Agreement in respect of the Intellectual Property or Contract which is the subject of such failure (without limiting any other rights available to Sellers at law, in equity or under this Agreement in respect of such failure).

(c)           In connection with obtaining the consents contemplated by this Section 5.4, neither Seller shall consent to any modification of any Contract to the extent included in the Acquired Assets without the prior written consent of Purchaser.

SECTION 5.5                 Expenses.  Whether or not the Closing takes place, and except as otherwise specifically provided in this Agreement or any Ancillary Document, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs or expenses.

SECTION 5.6                 Brokers or Finders.  Purchaser agrees to indemnify and hold each Seller and its affiliates harmless from and against any and all claims, liabilities or obligations with respect to the fees of any Person listed in Section 4.5 and any other fees, commissions or expenses asserted by any other Representative of Purchaser or any of its affiliates on the basis of the transactions contemplated by this Agreement.  GP agrees to indemnify and hold Purchaser and its affiliates harmless from and against any and all claims, liabilities or obligations with respect to the fees of any Person listed in Section 3.23 and any other fees, commissions or expenses asserted by any other Representative of either Seller or any of its affiliates on the basis of the transactions contemplated by this Agreement.

SECTION 5.7                 No Additional Representations.  Purchaser acknowledges and agrees that it and its accountants, counsel, and other representatives (collectively, “Representatives”) are fully satisfied with (i) the access to the books and records, facilities, equipment, Contracts and other properties and assets included in or related to the Business and the Acquired Assets and Assumed Liabilities that it and its Representatives have been provided prior to the date of this Agreement, and (ii) the opportunity to meet prior to the date of this Agreement with the officers and employees of each Seller to discuss the Business and the Acquired Assets and Assumed Liabilities that it and its Representatives have been provided.  Purchaser also acknowledges that it has conducted its own independent review and analysis of the Business and the Acquired Assets and Assumed Liabilities.  Purchaser further acknowledges and agrees that none of Sellers or their affiliates or any of their respective Representatives or any other Person has made any representation or warranty, express or implied, with respect to the Business or the Acquired Assets or Assumed Liabilities or the accuracy or completeness of any information regarding the Business or the Acquired Assets or Assumed Liabilities furnished or made available to Purchaser and its Representatives, except as expressly set forth in this Agreement and the Ancillary Documents.  Purchaser further acknowledges and agrees that none of Sellers or their affiliates or any of their respective Representatives or any other Person shall have or be subject to any liability to Purchaser or any other Person resulting from the distribution to Purchaser, or Purchaser’s use of, any such information, including the Confidential Memorandum dated September 2003 prepared by GP and any information, documents or material made available in any “data rooms” or

 

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management presentations or in any other form in expectation of the transactions contemplated hereby, except to the extent such information is expressly addressed in the representations and warranties contained in this Agreement or the Ancillary Documents.  PURCHASER HEREBY ACKNOWLEDGES AND AGREES THAT, SHOULD ANY CLOSING OCCUR, PURCHASER SHALL ACQUIRE THE ACQUIRED ASSETS WITHOUT ANY REPRESENTATION OR WARRANTY AS TO THE DESIGN, CONDITION, QUALITY, SAFETY, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, IN AN “AS IS” CONDITION AND ON A “WHERE IS” BASIS AND WITHOUT ANY OTHER REPRESENTATION OR WARRANTY, EXCEPT AS OTHERWISE EXPRESSLY REPRESENTED OR WARRANTED IN THIS AGREEMENT.  This Section 5.7 shall not apply to any manufacturer and/or supplier warranties applicable to Inventory acquired by Purchaser on the Closing Date.

SECTION 5.8                 Certain Information.

(a)           After the Closing, upon reasonable written notice, Purchaser and GP shall furnish or cause to be furnished to each other and their respective accountants, counsel and other Representatives reasonable access, during normal business hours and upon reasonable prior notice, to such information (including records pertinent to the Business, the Acquired Assets, the Excluded Assets, the Assumed Liabilities or the Excluded Liabilities), personnel and properties together with assistance relating to the Business, the Acquired Assets, the Excluded Assets, the Assumed Liabilities and the Excluded Liabilities as is reasonably necessary for financial reporting purposes, the preparation and filing of any returns, reports or forms (including returns, reports or forms related to Taxes) or the defense of, or response required under, or pursuant to, any lawsuit, action proceeding, audit or investigation (including any proceeding involving either Seller and any litigation or environmental matters related to the Acquired Assets, the Excluded Assets, the Assumed Liabilities or the Excluded Liabilities).  After the Closing, each of Purchaser and GP agrees to deliver promptly to the other all mail and other documents received by such party which relate to any business conducted by such other party or its affiliates after the Closing.  Purchaser and GP shall also furnish or cause to be furnished to each other and their respective accountants, counsel and other Representatives access, during normal business hours and upon reasonable prior notice, to such information, personnel and properties for any other reasonable business purpose.  Purchaser and GP shall, and shall cause their affiliates to, retain after the Closing Date all such records (other than retention of tax records) pertinent to the Acquired Assets, the Excluded Assets, the Assumed Liabilities and the Excluded Liabilities that are owned by such Person immediately after the Closing until the later to occur of (i) the expiration of the applicable statute of limitations with respect to the subject matter described in such records or (ii) the final resolution of any outstanding claim or proceeding with respect to the subject matter described in such records.  After the end of such period, before disposing of any such records, the applicable party shall give notice to such effect to the other, and shall give the other, at the other’s cost and expense, a reasonable opportunity to remove and retain all or any part of such records as the other may select.  Cooperation with respect to Tax matters shall be governed by Section 5.11.

 

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                (b)           For a period ending upon the later to occur of five (5) years after the Closing Date or one (1) year after the termination of the Master Supply Agreement, each Seller covenants and agrees that (i) it shall and shall cause its Representatives and affiliates to, keep all Purchaser Confidential Information (as defined below) confidential, (ii) without the prior written consent of Purchaser, it shall not, and shall cause its Representatives and affiliates not, to disclose any Purchaser Confidential Information to any Person other than Purchaser or its affiliates or Representatives of Purchaser or its affiliates and (iii) without the prior written consent of Purchaser, it shall not, and shall cause its Representatives and affiliates not, to use any Purchaser Confidential Information for purposes of competing with Purchaser in the Business.  Notwithstanding the foregoing, Sellers and their Representatives and affiliates may disclose such Purchaser Confidential Information to the extent disclosure thereof (x) is required by law or legal process, (y) is reasonably necessary to the defense of any Excluded Liability or the pursuit of any claim with respect to the Excluded Assets, or (z) is necessary for purposes of performing under this Agreement or any Ancillary Document or enforcing any rights under this Agreement or any Ancillary Document; provided, however, that in the event disclosure is required by law or legal process or is otherwise disclosed for purposes set forth in clauses (y) or (z), Sellers shall (A) provide Purchaser with prompt notice of such requirement prior to making any disclosure so that Purchaser may seek an appropriate protective order, (B) limit the disclosure of Purchaser Confidential Information to the extent required by law or legal process or to the extent necessary for the purposes set forth in clauses (y) and (z) and (C) take reasonable steps to protect the confidentiality of the Purchaser Confidential Information required to be disclosed.  For purposes of this Section 5.8(b), “Purchaser Confidential Information” shall mean any confidential information primarily relating to the Acquired Assets, the Assumed Liabilities or the Business.  “Purchaser Confidential Information” does not include, and there shall be no obligation hereunder with respect to, information that (i) is Seller Confidential Information (as defined below), (ii) is generally available to the public or is otherwise in the public domain on the Closing Date, (iii) becomes either generally available to the public or is otherwise in the public domain or is known by the recipient, in any such case other than as a result of a disclosure by a Person not otherwise permissible under any confidentiality agreement with Purchaser or its affiliates, (iv) is independently developed by or for Sellers after the Closing Date without the use of or reliance on (directly or indirectly) any Purchaser Confidential Information, or (v) is subject to Article 11 of the Master Supply Agreement.

(c)           For a period ending upon the later to occur of five (5) years after the Closing Date or one (1) year after termination of the Master Supply Agreement, Purchaser covenants and agrees that: (i) it shall, and shall cause its Representatives and affiliates to, keep all Seller Confidential Information (as defined below) confidential, (ii) without the prior written consent of GP, it shall not, and shall cause its Representatives and affiliates not, to disclose any Seller Confidential Information to any Person other than Sellers or their respective affiliates or Representatives of Sellers or respective affiliates and (iii) without the prior written consent of GP, it shall not, and shall cause its Representatives and affiliates not, to use any Seller Confidential Information for its own benefit or for the benefit of anyone other than Sellers or their affiliates.  Notwithstanding the foregoing, Purchaser and its Representatives and its affiliates may disclose Seller

 

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Confidential Information to the extent disclosure thereof (x) is required by law or legal process, (y) is reasonably necessary to the defense of any Assumed Liability or the pursuit of any claim with respect to the Acquired Assets, or (z)  is necessary for purposes of performing under this Agreement or any Ancillary Document or enforcing any rights under this Agreement or any Ancillary Document; provided, however, that in the event disclosure is required by law or legal process or is otherwise disclosed for the purposes set forth in clauses (y) or (z), Purchaser shall (A) provide Sellers with prompt notice of such requirement prior to making any disclosure so that Sellers may seek an appropriate protective order, (B) limit the disclosure of Seller Confidential Information to the extent required by law or legal process or to the extent necessary for the purposes set forth in clauses (y) and (z) and (C) take reasonable steps to protect the confidentiality of the Seller Confidential Information required to be disclosed.  For purposes of this Section 5.8(c), “Seller Confidential Information” shall mean any confidential information relating to the Excluded Assets, the Excluded Liabilities, and any business or operation of GP or its affiliates other than the Business.  “Seller Confidential Information” does not include, and there shall be no obligation hereunder with respect to, information that (i) is Purchaser Confidential Information, (ii) is generally available to the public or is otherwise in the public domain on the Closing Date, (iii) becomes either generally available to the public or is otherwise in the public domain or is known by the recipient, in any such case other than as a result of a disclosure by a Person not otherwise permissible under any confidentiality agreement with Seller or its Affiliates or (iv) is independently developed by or for Purchaser after the Closing Date without the use of or reliance on (directly or indirectly) any Seller Confidential Information.

SECTION 5.9                 Bulk Transfer Laws.  Purchaser hereby waives compliance by Sellers with the provisions of any so-called “bulk transfer law” of any jurisdiction in connection with the sale of the Acquired Assets to Purchaser or its affiliates.

SECTION 5.10               Cooperation of the Parties.  The parties shall cooperate with each other and with their respective Representatives in connection with any acts or actions required to be taken as part of or as a condition to their respective obligations under this Agreement.

SECTION 5.11               Allocation; Tax Matters.

(a)           Purchaser shall deliver to Seller within 60 days after Closing a proposed allocation of the Purchase Price among the Acquired Assets (the “Proposed Allocation”).  If Seller does not deliver a written notice to Purchaser within 30 days of receipt of the Proposed Allocation specifying in reasonable detail the nature of any objection it may have to the Proposed Allocation (an “Objection Notice”), the Proposed Allocation shall be the final allocation of the Purchase Price among the Acquired Assets (the “Final Allocation”).  If Seller does deliver an Objection Notice, Purchaser and Seller shall attempt to resolve any differences identified in the Objection Notice within the succeeding 20 days and, if they are able to resolve all such differences, the allocation agreed to shall be the Final Allocation.  If they are unable to resolve all such differences, any remaining disagreed items shall be submitted to the CPA Firm for resolution in the next 20 days.  The CPA Firm shall be instructed to determine whether the position

 

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maintained by Seller or by Purchaser is the more reasonable allocation of the Purchase Price in respect of any item in dispute and shall select one of the two positions.  The allocation resulting from the CPA Firm’s decision shall be the Final Allocation.  Any allocation that becomes the Final Allocation pursuant to the preceding provisions of this Section 5.11(a) shall be final and binding as between Seller, Purchaser and their respective affiliates and neither Seller, Purchaser nor any affiliate of either thereof shall take any position on any Tax Return, including, without limitation, Internal Revenue Service Form 8023, that is inconsistent with the Final Allocation.  Purchaser and GP shall agree upon revisions to the Final Allocation to reflect any adjustments to the Purchase Price pursuant to Section 2.3 herein.

(b)           Purchaser and GP shall file and cause to be filed all Tax Returns and execute such other documents as may be required by any taxing authority, in a manner consistent with the Allocation Statement, as it may be revised from time to time.  Purchaser shall prepare Internal Revenue Service Form 8594 pursuant to Section 1060 of the Code relating to the transactions contemplated by this Agreement based on the Allocation Statement, as it may be revised from time to time, and deliver such form, and any similar purchase price allocation form that exists for Canada, to GP no later than thirty (30) days prior to the due date of any of GP’s Tax Returns which require the inclusion of such form.  Purchaser and GP shall file, or cause the filing of, such form with each relevant taxing authority.

(c)           Purchaser shall bear all transfer, documentary, sales, use, registration, stamp, value-added and other similar Taxes (including all applicable real estate transfer Taxes and real property gains Taxes and sales Taxes on vehicles), including any penalties, interest and additions to Tax, incurred in connection with the transactions contemplated hereby and any Taxes or other costs relating to a transfer, or that would not otherwise be payable in the absence of such transfer (including as a result of the transactions contemplated by this Agreement and including the use of a Tax attribute to reduce Taxes) (collectively, “Transfer Taxes”), and Purchaser shall reimburse GP for any Transfer Taxes paid by either Seller within five (5) Business Days of either Seller’s written request accompanied by reasonably appropriate documentation and evidence of payment.  Sellers and Purchaser shall cooperate in timely making and filing all Tax Returns as may be required to comply with the provisions of any Transfer Tax laws and in making arrangements that lawfully minimize Transfer Taxes without increasing other Taxes above the amount that would otherwise be payable in the absence of such arrangements.  To the extent legally able to do so, Purchaser shall deliver to Sellers exemption certificates satisfactory in form and substance to Sellers with respect to Transfer Taxes if such delivery would reduce the amount of Transfer Taxes that would otherwise be imposed.

(d)           At the Closing, each of the Sellers shall deliver to Purchaser duly executed certificates certifying that the transactions contemplated hereby are exempt from withholding under Section 1445 of the Code.

(e)           GP shall cause to be prepared and duly filed all Tax Returns with respect to the Acquired Assets or the Business for taxable periods ending on or before the

 

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Closing Date.  GP shall cause all Tax Returns addressed in this Section 5.11(e) to be prepared in accordance with the methodology used in prior taxable years.

(f)            Sellers and Purchaser shall each provide the other with such assistance as may be reasonably requested (including making employees reasonably available to provide information or testimony) in connection with the preparation of any Tax Return or the determination of liability for Taxes with respect to the Acquired Assets or the Business, including the completion of GP’s standard Tax packages relating to Tax Returns that GP is responsible for filing pursuant to Section 5.11(e) and delivery of them to GP within ninety (90) days of Purchaser’s receipt from GP.  Each of the Sellers and Purchaser shall, and shall cause their affiliates to, cooperate with each other in preparing and pursuing any claims for refunds or credits of Taxes.  Sellers and Purchaser each shall, and shall cause their affiliates to, retain until seven (7) years after the Closing Date all Tax Returns, schedules, work papers, accounting records and other records that are owned by such Person immediately after the Closing Date and that relate to the Acquired Assets or the Business.  After the end of such period, before disposing of any such Tax Returns, schedules, work papers or other records, each party shall give notice to such effect to the other party, and shall give the other party, at the other party’s cost and expense, a reasonable opportunity to remove and retain all or any part of such Tax Returns, schedules, work papers or other records as the other party may select.

(g)           GP shall cooperate with Purchaser in determining prior to the Closing Date the extent to which any payments that may be required to be made by Purchaser after the Closing Date to Business Employees would constitute excess parachute payments within the meaning of Section 280G of the Code.

(h)           GP and Purchaser hereby agree to utilize the “Standard Procedure” set forth in Revenue Procedure 96-60, 1996-2 C.B. 399, or a corresponding future revenue procedure or other administrative pronouncement with regard to the reporting requirements attributable to wages paid or to be paid to Business Employees.

(i)            If any Tax authority informs GP or Purchaser of any notice of a proposed audit, claim, assessment or other dispute concerning an amount of Taxes with respect to which the other party may incur liability hereunder, the party so informed shall promptly notify the other party of such matter.  Such notice shall contain factual information (to the extent known) describing any asserted Tax liability in reasonable detail and shall be accompanied by copies of any notice or other documents received from any Tax authority with respect to such matter.  If an Indemnified Party has knowledge of an asserted Tax liability with respect to a matter for which it is to be indemnified hereunder and such party fails to provide the Indemnifying Party prompt notice of such asserted Tax liability, (i) if the Indemnifying Party is precluded from contesting the asserted Tax liability in any forum as a result of the failure to give prompt notice, the Indemnifying Party shall have no obligation to indemnify the Indemnified Party for Taxes arising out of such asserted Tax liability, and (ii) if the Indemnifying Party is not precluded from contesting the asserted Tax liability in any forum, but such failure to provide prompt notice results in a monetary detriment to the Indemnifying Party, then any amount which the Indemnifying

 

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Party is otherwise required to pay pursuant to this Agreement shall be reduced by the amount of such detriment.

(j)            The party responsible for filing any Tax Return under this Section 5.11 shall control any audits, disputes, administrative, judicial or other proceedings related to such Tax Return with respect to which either party may incur liability hereunder.  Subject to the preceding sentence, if an adverse determination may result in each party having responsibility for an amount of Taxes under this Section 5.11, each party shall be entitled to fully participate in that portion of the proceedings relating to the Taxes with respect to which it may incur liability hereunder.  For purposes of this Section 5.11 the term “participation” shall include (i) participation in conferences, meetings or proceedings with any Tax authority, the subject matter of which includes an item for which such party may have liability hereunder, (ii) participation in appearances before any court or tribunal, the subject matter of which includes an item for which a party may have liability hereunder, and (iii) with respect to the matters described in the preceding clauses (i) and (ii), participation in the submission and determination of the content of the documentation, protests, memorandum of fact and law, briefs, and the conduct of oral arguments and presentations.

SECTION 5.12               Computer Software.

(a)           Included GP Owned Computer Software.  GP hereby conveys to Purchaser or its affiliates, effective as of the Closing, a perpetual, royalty-free, non-exclusive, non-transferable, non-assignable (except as set forth below), license (the “License”) to use and modify (other than during the applicable service periods in the IT Support Services Agreement), for the internal operations of the Business (as constituted and conducted from time to time), the GP Owned Computer Software specifically set forth on Schedule 5.12(a) (the “Included GP Owned Computer Software”).  The License shall not permit Purchaser or its affiliates (i) to use the Included GP Owned Computer Software, other than in and for the Business (as constituted and conducted from time to time), or (ii) to sell, sublicense or otherwise assign any such Included GP Owned Computer Software except as set forth in this subsection.  Notwithstanding the foregoing, Purchaser or its affiliates may assign the License to a purchaser of all or substantially all of the assets of the Business after the Closing Date; provided, however, that the assignment contains a license executed by an authorized representative of the assignee that contains terms and conditions of use and license that are at least as strict as those contained in this Agreement concerning (i) the License and (ii) the warranty disclaimers and indemnification sections applicable to the Included GP Owned Computer Software.  Additionally, the documents memorializing such assignment must specifically name GP as the owner of all right, title and interest in the Included GP Owned Computer Software and the intended third party beneficiary of such terms and conditions.

(b)           Included Licensed Computer Software.  GP hereby agrees to provide commercially reasonable assistance to Purchaser and its affiliates, at Purchaser’s sole cost and expense, in obtaining for the Business the continuing right to operate the Licensed Computer Software specifically set forth on Schedule 5.12(b) (the “Included Licensed Computer Software”) as it was operated by or for the benefit of the Business prior to the

 

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Closing, and to permit GP to provide the Support Services pursuant to the IT Support Services Agreement (collectively, the “Necessary Consents”); provided, however, that in each case (i) Purchaser shall not be responsible for GP’s internal expenses in providing such assistance; (ii) GP shall not be obligated to sublicense, partially assign or otherwise partition any of its existing licenses for any item of Included Licensed Computer Software unless GP cannot, using commercially reasonable efforts, otherwise obtain for the Business (e.g. by purchase of a new license or by exercise of its rights under existing Computer Software license agreements) the continuing right to operate the Licensed Computer Software as it was operated by or for the benefit of the Business prior to the Closing; (iii) because obtaining the Necessary Consents will likely involve GP’s Contracts, and the relationships between GP and its vendors and licensors, Purchaser agrees to refrain from contacting, negotiating or otherwise seeking to obtain the Necessary Consents without GP’s participation, unless GP is notified in writing in advance in each case and consents to not being involved in obtaining one or more Necessary Consents (failure to provide consent by GP within five (5) Business Days after receipt by the designated GP Information Technology Department and Law Department representatives set forth in Schedule 5.12(b) shall constitute implicit consent); and (iv) Purchaser understands and agrees that the Necessary Consents may not be obtained prior to the Closing.  In addition, GP shall not be obligated to provide Purchaser with copies of any Computer Software Contract other than those relating to the Acquired Computer Hardware or Acquired GP Licensed Computer Software; provided that GP will provide relevant Contract provisions relating to GP fulfilling its obligations under 5.12(b), subject to applicable confidentiality provisions thereunder.

(c)           Co-Ownership of Acquired GP Owned Computer Software.  GP and Purchaser shall be co-owners without any rights or obligations of accounting, of the components of the Acquired GP Owned Computer Software, including without limitation, algorithms, sub-routines, application program interfaces, separately identifiable modules, and any and all other programming code portions of general utility (collectively, “Acquired GP Owned Computer Software Components”) but GP shall not be a co-owner of the entirety of any program listed on Schedule 1.2(a)(ix).  GP agrees not to (and to cause its affiliates, agents, employees, vendors and contractors not to):  (i) use any such entire program for any purpose or reason, (ii) provide any such entire program to any other Person by license, sale or other transfer or to operate any such entire program for the benefit or on behalf of any such other Person, and (iii) for the period from the Closing Date to the date which is five (5) years after the Closing Date, (A) use any of the Acquired GP Owned Computer Software Components (either separately or as a part of any Computer Software) in the business of distributing building products, or (B) provide any of the Acquired GP Owned Computer Software Components (either separately or as a part of any Computer Software) to any other Person by license, sale or other transfer for use in the business of distributing building products, or to operate any such Computer Software for the benefit of or on behalf of any such other Person for such purpose.

(d)           Co-Ownership of Necessary Data.  GP and Purchaser shall be co-owners, without any rights or obligations of accounting, of any and all Necessary Data that was used by GP, and not solely used by the Business, prior to the Closing Date.

 

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SECTION 5.13               Ancillary Documents.  GP and Purchaser are, simultaneously with the execution and delivery of this Agreement, executing and delivering to each other that certain Human Resources Agreement of even date herewith, a copy of which is attached hereto as Exhibit A (the “Human Resources Agreement”) and that certain Real Property Purchase and Sale Agreement of even date herewith, a copy of which is attached hereto as Exhibit B (the “Real Property Agreement”).  Each Seller and Purchaser further agree to execute and deliver at Closing each of the following documents to which it is to be a party (a) that certain Transition Services Agreement, substantially in the form of Exhibit C (the “Transition Services Agreement”), (b) that certain IT Support Services Agreement, substantially in the form of Exhibit D (the “IT Support Services Agreement”), (c) that certain Master Purchase, Supply and Distribution Agreement, substantially in the form of Exhibit E (the “Master Supply Agreement”) and (d) that certain Agreement Concerning Private Label Agreements, substantially in the form of Exhibit F (the “Agreement Concerning Private Label Agreements”).

SECTION 5.14               Prorated Charges.  The following charges shall be prorated on a per diem basis and apportioned between Sellers, on the one hand, and Purchaser, on the other, as of the Closing Date:  property Taxes, utility charges, license and permit fees, and similar charges imposed with respect to the Acquired Assets (collectively, the “Prorated Charges”), but only to the extent that prepaid assets related thereto are not reflected in Target Working Capital, as the same may be adjusted in the Final Working Capital Statement.  GP shall be liable for (and shall reimburse Purchaser to the extent Purchaser shall have paid) that portion of the Prorated Charges relating to, or arising in respect of, periods ending on or prior to the Closing Date, and Purchaser shall be liable for (and shall reimburse GP to the extent either Seller shall have paid) that portion of the Prorated Charges relating to, or arising in respect of, all periods after the Closing Date but only to the extent that prepaid assets related thereto are not reflected in Target Working Capital, as same may be adjusted in the Final Working Capital Statement.

SECTION 5.15               Schedules.  GP shall promptly notify Purchaser upon becoming aware of any facts or circumstances that cause any of either Seller’s representations and warranties contained herein or relating to any matters required to be set forth in the Schedules to be untrue in any material respect.  It is recognized and understood by Purchaser that changes to the Schedules may become necessary as a result of the conduct of Business in the normal course; provided, however, that no such change to any Schedule shall be deemed to cure any breach of representation, warranty or covenant set forth in this Agreement.

SECTION 5.16               Inconsistencies.  If at any time on or before the date of this Agreement any Representative of Sellers has disclosed to Lenard Tessler or Dev Kapadia in writing any material fact that would represent a material breach of any of the representations or warranties of either Seller contained herein, and Purchaser has not informed GP of such fact, such failure will constitute a waiver and release by Purchaser of any right it may have to delay the Closing, terminate this Agreement, or seek indemnification from either Seller solely as a result of such representation or warranty being untrue or inaccurate; provided, that nothing in this Section 5.16 shall limit Purchaser’s rights to indemnification from either Seller with respect to any Excluded

 

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Liabilities; and provided, further, that for the avoidance of doubt, the burden of proof with respect to such disclosure and failure to disclose shall be on Sellers.

                SECTION 5.17               Additional Intellectual Property Provisions.

                (a)           GP Trademarks.  It is expressly agreed that Purchaser is not acquiring any right, title or interest in Trademarks of GP or its affiliates (other than the Specified Brands) or in any Trademark incorporating the words “Georgia-Pacific”, “G-P”, “GP”, “GP & Design”, or GP’s corporate signature or logo, or any part, variation or derivative thereof (collectively, “GP Trademarks”).  As promptly as practicable, but in no event later than 180 days following the Closing Date, Purchaser shall remove, strike over or otherwise obliterate all GP Trademarks from all items and materials constituting or included in the Acquired Assets (other than Inventory existing as of the Closing Date) or otherwise owned or held by Purchaser, including any facility signs, equipment, vehicles, Internet sites, business cards, schedules, purchase orders, invoices, stationery, displays, signs, promotional materials, manuals, forms and other materials, if such items and materials are routinely visible to, or distributed or made available or proposed to be distributed or made available to, third parties or the public (other than sales materials for Inventory existing as of the Closing Date), and Purchaser shall cease using invoices, purchase orders, stationery and business cards containing GP Trademarks no later than 180 days after the Closing Date.  Nothing contained herein shall require or be construed to require Purchaser to cause customers of the Business to take any action with respect to property in the possession of any such customers.  Neither Purchaser nor any of its affiliates shall, from and after the expiration of 180 days after the Closing Date, except as permitted under any of the Ancillary Documents or otherwise agreed upon by GP, make any direct or indirect use of any GP Trademarks or make any reference to GP or its subsidiaries in any advertisements, promotional materials, Internet addresses, information telephone numbers or any other contact information of Purchaser or any of its affiliates.

                (b)           LicenseSellers hereby grant to Purchaser an irrevocable, worldwide, perpetual, royalty-free, non-exclusive license to make, use, sell, lease, license, reproduce, distribute and modify Copyrights, Patents and Trade Secrets owned by either Seller to the extent (i) necessary to perform the services provided by and the processes performed in the Business as of the Closing Date and not part of the Owned Business Intellectual Property, (ii) not otherwise excluded from the definition of Intellectual Property and (iii) not expressly excluded from possession or use by Purchaser under other provisions of this Agreement or Ancillary Documents.  Such license does not include the right to use GP Trademarks (such use being governed entirely by Section 5.17(a), the Master Supply Agreement and the Agreement Concerning Private Label Agreements).  Such license is transferable in connection with sale or transfer of the Business, but not otherwise transferable.  Such license does not require Purchaser to account for or share revenues resulting from use.  Sellers make no representations or warranties in connection with such license, and expressly exclude all representations and warranties with respect thereto and the Intellectual Property which is the subject thereof; provided, however, that nothing in this Section 5.17(b) shall alter, amend, modify or limit the express Intellectual Property representations and warranties set forth in this Agreement.

 

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SECTION 5.18               Insurance.  Purchaser acknowledges and agrees that effective upon the Closing, all insurance policies carried by or for the benefit of either Seller or any of its affiliates with respect to the Acquired Assets and the operation, activities and liabilities of the Business (the “GP Insurance Policies”) may be terminated or modified by GP to exclude coverage of the Acquired Assets and the activities, liabilities and operations of the Business, and, Purchaser shall, at or before Closing, obtain at its sole cost and expense adequate replacement insurance coverage for the Acquired Assets and the activities, operations and liabilities of the Business, including insurance required by any Contract to be so maintained, with respect to such risks, in such amounts, and from such financially sound and reputable insurers as are prudent and customary in the Industry generally.  Following the Closing, Purchaser shall cooperate with GP, at GP’s sole cost and expense, in submitting any claims on behalf of GP or any of its affiliates under any of the GP Insurance Policies arising out of occurrences prior to the Closing.  Purchaser acknowledges that neither Seller shall have any responsibility for obtaining or maintaining any insurance or bearing any liability with respect to the Acquired Assets or the operations, liabilities or activities of the Business relating to or arising out of occurrences subsequent to the Closing.  Notwithstanding any of the provisions of this Section 5.18, except as otherwise expressly set forth in this Agreement, Purchaser shall have no right to make any claim directly against either Seller or against any insurance carrier under any of the GP Insurance Policies for any claim, loss, liability, lien, damage or expense applicable to the Acquired Assets or the activities, liabilities or operations of the Business.

SECTION 5.19               Guarantees of Sellers.  The parties shall cooperate and use their respective best efforts in order that, effective as of the Closing Date, any and all deposits, guarantees, letters of credit, assurances or similar obligations of either Seller or any of its affiliates in respect of any obligations or liabilities of or otherwise primarily related to the Business or the Acquired Assets as set forth on Schedule 5.19 (collectively, the “GP Guarantees”), shall be released.  Purchaser or its affiliates shall execute any substitute guarantees and make any other arrangements on the part of Purchaser or its affiliates necessary to obtain the release of any such GP Guarantees as of the Closing Date.  If the parties are unable to cause any of the GP Guarantees to be released prior to the Closing, Purchaser shall indemnify and hold harmless GP, GPBMS and their respective affiliates from and against any and all amounts becoming payable under or with respect to any such GP Guarantees following the Closing.

SECTION 5.20               Intentionally left blank.

SECTION 5.21               UST Financial Assurance.  Notwithstanding Section 5.19, within sixty (60) days after the Closing Date, Purchaser shall have in place the appropriate financial assurance mechanisms with respect to underground and aboveground storage tanks located on the Real Property (the “Tanks”) in substitution of those maintained by Seller, in such amounts and on such terms as required under Environmental Law.  Purchaser shall notify Seller in writing when such financial assurance mechanisms are completed and submitted to the appropriate Governmental Entities.  Purchaser shall also notify Seller in writing when such financial assurance mechanisms are approved and accepted by the appropriate Governmental Entities.  If

 

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Purchaser, after utilizing reasonable efforts, is unable to make any such substitution, Purchaser shall continue to make such efforts, but Seller’s financial assurance mechanisms shall remain in place; provided, however, that Purchaser shall reimburse Seller for the cost of such financial assurance mechanisms.  In no event shall Seller be required to maintain such financial assurance mechanisms for more than one (1) year after Closing Date.  Schedule 5.21 sets forth all Tanks (including registered and unregistered Tanks) located at the Real Property, their size, year of installation, contents and last date of integrity testing to the extent available.

SECTION 5.22               Compliance with Environmental Transfer Statutes.  Sellers shall at their own cost and expense, be responsible for complying with the requirements of any Environmental Laws regulating the sale, transfer or closure of certain facilities, including, but not limited to, in each case, to the extent possible, prior to the Closing Date:

(a)           Making all required submissions to the New Jersey Department of Environmental Protection and, in connection therewith, Sellers shall obtain either a (v) Non-Applicability Letter (as defined in ISRA), (w) No Further Action Letter (as defined in ISRA), (x) Remediation Agreement (as defined in ISRA, (y) UST Deferral (as defined in ISRA), or (z) Negative Declaration (as defined in ISRA); and

(b)           Submitting the appropriate CTA Form and agreeing to be the Certifying Party (as defined in CTA) for any remediation that may be required.

SECTION 5.23               Intentionally left blank.

SECTION 5.24               Financial Statements.

(a)           GP shall prepare and deliver to Purchaser as promptly as practicable after the date of this Agreement a balance sheet of the Business as of January 3, 2004 and December 28, 2002 and the related statements of income, cash flows and parent’s investment for the three (3) years in the period ended January 3, 2004, audited by Ernst & Young LLP and, to the Knowledge of GP’s controller and assistant controller, satisfying in all material respects the requirements of Regulation S-X promulgated by the Securities and Exchange Commission (the “Historical GAAP Financial Statements”).

(b)           To the extent the Closing has not occurred on or prior to April 30, 2004, GP shall use its commercially reasonable efforts to prepare and deliver to Purchaser, as promptly as practicable, an unaudited balance sheet of the Business for the periods ending March 31, 2004 and 2003, and related statements of income, cash flows and parent’s investment for the three (3) months ended March 31, 2004 and 2003, and to the Knowledge of GP’s controller and assistant controller, satisfying in all material respects the requirements of Regulation S-X promulgated by the Securities Exchange Commission.

(c)           GP shall deliver to Purchaser not later than March 22, 2004, an unaudited statement of cash flows of the Business for the fiscal year ended January 3, 2004.

 

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SECTION 5.25               Items Purchased.  Purchaser and Sellers acknowledge and agree that between the date of this Agreement and the Closing Date Sellers may purchase the items set forth in Schedule 5.25 for the Business.  In the event such items are purchased on or before the Closing Date, Purchaser hereby agrees to reimburse Sellers at Closing the purchase price of the items described on Schedule 5.25.

SECTION 5.26               Shared Use Arrangements.  On or before the Closing Date, Sellers shall enter into such written agreements reasonably necessary in order to memorialize the terms of the existing, oral “shared use” arrangement with respect to the Whiteville, North Carolina facility.

ARTICLE VI

Conditions Precedent

SECTION 6.1                 Conditions to Each Party’s Obligation.  The obligation of Purchaser to purchase the Acquired Assets and to complete the other actions contemplated by this Agreement to occur at the Closing, and the obligation of each Seller to sell, assign, transfer, convey and deliver the Acquired Assets to Purchaser and to complete the other actions contemplated by this Agreement to occur at the Closing, shall be subject to the satisfaction at or prior to the Closing of the following conditions, any of which may be waived by a party in its sole discretion:

(a)           Certain Waiting Periods.  (i) Any waiting period under the HSR Act applicable to any of the transactions contemplated hereby shall have expired or been earlier terminated, and (ii) no antitrust authority shall have required either Seller or any of its affiliates to continue to own any of the Acquired Assets or to divest, separate or offer for sale any of the Excluded Assets.

(b)           No Injunctions or Restraints.  No temporary restraining order, preliminary or permanent injunction or other legal restraint or prohibition preventing the consummation of the transactions contemplated by this Agreement shall be in effect; provided, however, that subject to the proviso in Section 5.3(b), each of Purchaser and Sellers shall have used their respective best efforts to prevent the entry of any such order, injunction or other restraint or prohibition and to appeal as promptly as possible any such order, injunction or other restraint or prohibition that may be entered.

(c)           Real Estate Purchase.  The transactions contemplated by the Real Property Agreement shall have been (or shall simultaneously be) consummated.

SECTION 6.2                 Conditions to Obligation of Purchaser.  The obligation of Purchaser to purchase the Acquired Assets and to complete the other actions contemplated by this Agreement to occur at the Closing, is subject to the satisfaction at and as of the Closing of each of the following conditions, any of which may be waived by Purchaser in its sole discretion:

(a)           Representations and Warranties.  The representations and warranties of GP set forth in this Agreement shall be true and correct in all material respects (except for such representations and warranties that are qualified by their terms by a reference to

 

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materiality or to Material Adverse Effect, which representations and warranties as so qualified shall be true and correct in all respects) as of the date of this Agreement and (as though such representations and warranties were made on and as of the Closing) as of the Closing Date, except for (i) those representations and warranties that address matters only as of a particular date, which representations and warranties shall be true and correct in all material respects (except for such representations and warranties that are qualified by their terms by a reference to materiality or to Material Adverse Effect, which representations and warranties as so qualified shall be true and correct in all respects) only as of such date, and (ii) such inaccuracies as shall have not resulted in a Material Adverse Effect, and Purchaser shall have received a certificate from GP signed by an authorized officer of GP to such effect.

(b)           Performance of Obligations of Sellers.  Sellers shall have performed or complied in all material respects with all obligations, conditions and covenants required to be performed or complied with by them under this Agreement at or prior to the Closing, and Purchaser shall have received a certificate from GP signed by an authorized officer of GP to such effect.

(c)           Financial Statements.  Sellers shall have delivered to Purchaser the Historical GAAP Financial Statements.

(d)           Accounts Receivable Lien Release.  Sellers shall have delivered to Purchaser all applicable Lien releases for the Accounts Receivable.

SECTION 6.3                 Conditions to Obligation of Sellers.  The obligation of Sellers to sell, assign, transfer, convey, and deliver the Acquired Assets and to complete the other actions contemplated by this Agreement to occur at the Closing is subject to the satisfaction at and as of the Closing of each of the following conditions, any of which may be waived by Sellers in their sole discretion:

(a)           Representations and Warranties.  The representations and warranties of Purchaser set forth in this Agreement shall be true and correct in all material respects  (except for such representations and warranties that are qualified by their terms by a reference to materiality, which representations and warranties as so qualified shall be true and correct in all respects) as of the date of this Agreement and (as though such representations and warranties were made on and as of the Closing) as of the Closing Date, except for those representations and warranties that address matters only as of a particular date, which representations and warranties shall be true and correct in all material respects (except for such representations and warranties that are qualified by their terms by a reference to materiality, which representations and warranties as so qualified shall be true and correct in all respects) only as of such date, and GP shall have received a certificate from Purchaser signed by an authorized officer of Purchaser to such effect.

(b)           Performance of Obligations of Purchaser.  Purchaser shall have performed or complied (or caused its affiliates to perform or comply) in all material respects with all obligations, conditions and covenants required to be performed or complied with by it

 

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under this Agreement at or prior to the Closing, and GP shall have received a certificate signed by an authorized officer of Purchaser to such effect.

ARTICLE VII

Termination, Amendment and Waiver

SECTION 7.1                 Termination.

(a)           Notwithstanding anything to the contrary in this Agreement, this Agreement may be terminated and the transactions contemplated hereby abandoned at any time prior to the Closing:

(i)            by mutual written consent of GP and Purchaser;

(ii)           by GP, if any of the conditions set forth in Sections 6.1 or 6.3(b) shall have become incapable of fulfillment by July 2, 2004 (the “Closing Deadline”), and shall not have been waived by GP;

(iii)          by Purchaser, if any of the conditions set forth in Sections 6.1 or 6.2(b) shall have become incapable of fulfillment by the Closing Deadline, and shall not have been waived by Purchaser;

(iv)          by GP, if any of Purchaser’s representations or warranties set forth herein shall be or have become inaccurate such that the condition set forth in Section 6.3(a) would not be satisfied, and, if such inaccuracy is capable of being cured, Purchaser fails to cure such inaccuracy within thirty (30) days following written notification thereof from GP to Purchaser;

(v)           by Purchaser, if any of GP’s representations or warranties set forth herein shall be or have become inaccurate such that the condition set forth in Section 6.2(a) would not be satisfied, and, if such inaccuracy is capable of being cured, GP fails to cure such inaccuracy within thirty (30) days following written notification thereof from Purchaser to GP;

(vi)          by Purchaser, in the event that GP supplements or amends the Schedules in accordance with Section 5.15 and the matter giving rise to such supplement or amendment shall have resulted, individually, or in the aggregate with all other such matters, in a Material Adverse Effect; or

(vii)         by GP or Purchaser if the Closing shall not have occurred on or prior to the Closing Deadline;

provided, however, that the right to terminate this Agreement pursuant to clause (ii), (iii), (iv), (v), (vi) or (vii) above shall not be available to a party (A) whose failure to fulfill an obligation, or (B) whose breach of a representation, warranty, covenant or agreement set forth in this Agreement, and/or (C) whose delay or non-performance shall have been the cause of, or shall have resulted in, the right to terminate this Agreement pursuant to this Section 7.1(a).

 

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(b)           In the event of termination by GP or Purchaser pursuant to Section 7.1(a), written notice thereof shall promptly be given to the other party and the transactions contemplated by this Agreement shall be terminated, without further action by any party.  If the transactions contemplated by this Agreement are terminated as provided herein:

(i)            each party shall return all documents and other material received from the other party or parties relating to the transactions contemplated hereby, whether so obtained before or after the execution hereof; and

(ii)           all confidential information received by any party with respect to any other party’s business or that of any of its affiliates shall be treated in accordance with the Confidentiality Agreement, which shall remain in full force and effect notwithstanding the termination of this Agreement.

(c)           If this Agreement is terminated and the transactions contemplated hereby are abandoned as described in this Section 7.1, this Agreement shall become null and void and of no further force and effect, without any further obligation or liability of Sellers or Purchaser hereunder (except for any liability of a party for its breach of this Agreement), except for (i) the provisions of Section 5.2 relating to the obligation of Purchaser to keep confidential certain information and data obtained by it from Sellers or their respective affiliates, (ii) the provisions of this Agreement relating to expenses (including Sections 5.5 and 5.11(c)), (iii) the provisions of Section 5.6 relating to brokers’ or finders’ fees, (iv) the provisions of this Section 7.1 and (v) the provisions of Article IX.  Nothing in this Section 7.1 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement or to impair the right of any party to compel specific performance by any other party of its obligations under this Agreement.

SECTION 7.2                 Amendments and Waivers.  This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto.  By an instrument in writing, Purchaser, on the one hand, or Sellers, on the other, may waive compliance by the other party or parties with any term or provision of this Agreement that such other party or parties was or is obligated to comply with or perform.

ARTICLE VIII

Indemnification

SECTION 8.1                 Indemnification by Sellers.

                (a)                                   Except with respect to Pre-Closing Environmental Liabilities (which are exclusively the subject of Section 8.4) and Product Liability Claims (which are exclusively the subject of Section 8.5), and subject to all applicable terms and conditions of this Article VIII, Sellers hereby agree to indemnify Purchaser and its affiliates and their respective officers, directors, employees, stockholders, partners, members, agents, and Representatives (collectively, the “Purchaser Group”) against, and agrees to hold them harmless from, any loss, liability, claim, damage or reasonable expense (collectively, “Losses”) as incurred to the extent arising from, relating to or

 

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otherwise in respect of (i) any breach of any representation or warranty of Sellers contained in this Agreement (determined for purposes of only this Article VIII without reference to any qualification in such representation or warranty of materiality or Material Adverse Effect), (ii) any breach of any covenant of Sellers contained in this Agreement, (iii) any Excluded Liabilities (other than Pre-Closing Environmental Liabilities and Product Liability Claims, which are exclusively the subject of Sections 8.4 and 8.5, respectively) or (iv) any claim or Suit alleging that a Person other than the Purchaser Group is the owner of the Acquired GP Owned Computer Software or that a Person other than Sellers is the owner of the Included GP Owned Computer Software (or any part or portion thereof) or otherwise challenging or contesting the Purchaser’s Group sole and exclusive ownership of the Acquired GP Owned Computer Software or the right of the Purchaser Group to use the Included GP Owned Computer Software (or any part or portion thereof); provided, however, that Sellers shall not have any liability under clause (i) of this Section 8.1 unless the aggregate of all Losses relating thereto for which Sellers would, but for this proviso, be liable exceed, on a cumulative basis, an amount equal to $7 million (the “Deductible”), in which case Sellers shall only be liable under clause (i) of this Section 8.1 for the amount of such excess over such Deductible, up to a maximum total liability of Sellers under clause (i) of this Section 8.1 of fifteen percent (15%) of the Purchase Price (not including any amounts excluded under the Deductible) (the “Cap”); provided, however, that no claim for Losses may be made, and no Losses shall be applied against the Deductible, for any claim that is not in excess of $80,000; and provided, further, that the Deductible and the Cap shall not limit the Purchaser Group’s right to indemnification for any breach of any covenant in the Agreement, for any claim or Suit described in clause (iii) of this Section 8.1 or for Excluded Liabilities (including, without limitation, Pre-Closing Environmental Liabilities and Product Liability Claims).  Notwithstanding the foregoing, neither Purchaser nor any other Person shall be entitled to indemnification under this Section 8.1 for any Losses to the extent such Losses are reflected as a liability in the calculation of Closing Working Capital on the Final Working Capital Statement.

                (b)           Purchaser acknowledges and agrees that, if the Closing occurs, the sole and exclusive remedy of the Purchaser Group with respect to any and all claims for any breach of any representation, warranty, covenant or agreement set forth in this Agreement or otherwise relating to the subject matter of this Agreement, shall be pursuant to the indemnification provisions set forth in this Article VIII; provided, that Purchaser shall be entitled to seek an injunction or other equitable relief with respect to any claims for breach of Section 5.8(b).  In furtherance of the foregoing, Purchaser hereby waives, on behalf of itself and the other members of the Purchaser Group, effective upon and subject to the occurrence of the Closing, to the fullest extent permitted under applicable law, any and all rights, claims and causes of action for any breach of any representation, warranty, covenant or agreement set forth in this Agreement or otherwise relating to the subject matter of this Agreement it may have against Sellers and their respective affiliates, and each of their respective officers, directors, employees, stockholders, agents and Representatives arising under or based upon any Federal, state, local or foreign statute, law, ordinance, rule or regulation, except pursuant to the indemnification provisions set forth in this Article VIII.

 

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                SECTION 8.2                 Indemnification by Purchaser.  Subject to all applicable terms and conditions of this Article VIII, Purchaser hereby agrees to indemnify Sellers and their respective affiliates and each of their respective officers, directors, employees, stockholders, agents and Representatives against, and agrees to hold them harmless from, any Losses as incurred to the extent arising from, relating to or otherwise in connection with (i) any breach of any representation or warranty of Purchaser contained in this Agreement, (ii) any breach of any covenant of Purchaser contained in this Agreement, including but not limited to, any failure by Purchaser to pay Transfer Taxes as set forth in Section 5.11(c), (iii) any Assumed Liabilities (including Intercompany Trade Payables) or (iv) subject to Section 8.3, the operation or use of the Acquired Assets or the Business, or any actions or omissions in connection therewith on or after the Closing.

                SECTION 8.3                 Procedures Relating to Third Party Claims (other than Pre-Closing Environmental Liabilities and Product Liability Claims).

                (a)                                   In order for a party hereto to be entitled to any indemnification provided for under this Agreement (the “Indemnified Party”) in respect of, arising out of or involving a claim made by any Person (other than a party hereto) against the Indemnified Party (a “Third Party Claim”), such Indemnified Party must notify the party required to provide indemnification under this Agreement (the “Indemnifying Party”) in writing, and in reasonable detail, of the Third Party Claim within ten (10) Business Days after receipt by such Indemnified Party of written notice of the Third Party Claim; provided, however, that failure to give such notification shall not affect the indemnification provided hereunder except to the extent the Indemnifying Party shall have been actually prejudiced as a result of such failure.  Thereafter, the Indemnified Party shall deliver to the Indemnifying Party, promptly after the Indemnified Party’s receipt thereof, copies of all notices and documents (including court papers) received by the Indemnified Party relating to the Third Party Claim.

                (b)           If a Third Party Claim is made against an Indemnified Party, the Indemnifying Party will be entitled to participate in the defense thereof and, if it so chooses, to assume the defense thereof with counsel selected by the Indemnifying Party (which counsel shall be reasonably satisfactory to the Indemnified Party) so long as the Indemnifying Party notifies the Indemnified Party that it has agreed to indemnify the Indemnified Party (subject to the limitations, if any, on indemnification set forth in this Article VIII) for any and all Losses arising out of or resulting from the Third Party Claim that it is assuming the right to conduct and control the defense within fifteen (15) Business Days of its receipt of the initial notice of the Third Party Claim, and shall do so diligently and in good faith.  If the Indemnifying Party elects to assume the defense of a Third Party Claim, the Indemnifying Party will not be liable to the Indemnified Party for any legal expenses subsequently incurred by the Indemnified Party in connection with the defense thereof except as otherwise provided below.  If the Indemnifying Party assumes such defense, the Indemnified Party shall have the right to participate in the defense thereof and to employ counsel, at its own expense, separate from the counsel employed by the Indemnifying Party, it being understood that the Indemnifying Party shall control such defense.  The Indemnifying Party shall be liable for the reasonable fees and expenses of counsel employed by the Indemnified Party for any period during which the

 

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Indemnifying Party has not assumed the defense.  Notwithstanding the foregoing, in connection with any Third Party Claim as to which (i) there is a material conflict of interest between the Indemnifying Party and the Indemnified Party in the conduct of the defense of such Third Party Claim, (ii) there are specific defenses available to the Indemnified Party which are different from or additional to those available to the Indemnifying Party and which could be adverse to the Indemnifying Party, (iii) the Third Party Claim is for an amount greater than the Cap (either individually or together with all other claims for indemnification subject to the Cap) or less than the Deductible (either individually or together with all other claims for indemnification subject to the Deductible) or (iv) the Third Party Claims seeks an order, injunction or other equitable relief or relief for other than money damages against the Indemnified Party, then the Indemnified Party shall have the right, at the expense of the Indemnifying Party (subject to the Cap), to conduct and control, through counsel of its choosing (which counsel shall be reasonably satisfactory to the Indemnifying Party), the defense of such Third Party Claim and shall do so in good faith; provided, however, that in each of the foregoing cases the Indemnified Party shall have assumed the defense of the Third Party Claim, not admit any liability with respect to, or settle, compromise or discharge, such Third Party Claim without the Indemnifying party’s prior written consent (not to be unreasonably withheld or delayed) and the Indemnifying Party shall have the same right to participate in such defense, subject to the control of the Indemnified Party, at its own expense.  The Indemnified Party shall in any event defend any such matters vigorously and in good faith.

                (c)           Notwithstanding anything to the contrary herein, (i) where the provisions of Section 5.11 conflict with this Section 8.3, Section 5.11 shall control, and (ii) the provisions of Sections 8.4 and 8.5 shall govern the procedures for Third Party Claims relating to Pre-Closing Environmental Liabilities and Product Liability Claims, respectively.

                SECTION 8.4                 Environmental Liabilities.

                (a)           GP hereby agrees to indemnify the members of the Purchaser Group against, and agrees to hold each of them harmless from, all Pre-Closing Environmental Liabilities.  For the purpose of clarification, any Product Liability Claims arising from the presence of Hazardous Materials in any products or items purchased, sold, consigned, marketed, stored, delivered, distributed or transported by the Business, either Seller or any of its affiliates prior to the Closing Date are specifically excluded from this Section 8.4 and is the subject of Section 8.5; provided, that such product or item is not defined as a waste under Environmental Laws.

                (b)           Within ten (10) days of receipt of an Environmental Claim with respect to a Pre-Closing Environmental Liability or the discovery of a Pre-Closing Environmental Liability, Purchaser shall provide GP with written notice of the Environmental Claim (“Indemnified Environmental Matter”) and any supporting documentation reasonably establishing the existence of such Indemnified Environmental Matter (the “Environmental Indemnification Demand”); provided, however, that failure to give such

 

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notice shall not affect the indemnification provided hereunder except to the extent Sellers have been actually and materially prejudiced as a result of such failure.

                (c)           GP shall be responsible for managing all Indemnified Environmental Matters, shall have the right to select counsel and consultants reasonably acceptable to Purchaser, and to challenge the underlying merits of Environmental Claims asserted against a member of the Purchaser Group for which such member seeks indemnification hereunder, including, without limitation, by initiating legal proceedings. GP shall provide Purchaser or its designees with the opportunity to review draft documents prepared in connection with each Indemnified Environmental Matter and shall reasonably consider Purchaser’s or its designees’ comments, including theories of liability or defenses.  GP shall provide all plans, reports, pleadings or other litigation-related documents in draft form to Purchaser or its designees for review in a reasonable time prior to delivering such documents to a Government Entity or claimant, and GP shall reasonably consider any of Purchaser’s or its designees’ comments.  Where Remedial Action is required, GP may choose the option that is most financially and technologically feasible; provided, that GP may not choose an option that would impose restrictive covenants or deed restrictions upon any Real Property without the consent of Purchaser or its designees, which consent shall not be unreasonably withheld taking into consideration the reasonably anticipated land use of the Real Property, minimization of disruption to operations of the Business and any potential reduction in value.

                (d)           GP shall promptly acknowledge or dispute in writing its obligation to indemnify any member of the Purchaser Group for an Indemnified Environmental Matter, but in no event later than fifteen (15) Business Days after receipt of the Environmental Indemnification Demand; provided, that any such written dispute of GP’s obligation to indemnify a member of the Purchaser Group shall set forth in reasonable detail the basis for such dispute.  If after good faith efforts, GP and the affected members of the Purchaser Group are unable to resolve their dispute, the parties shall have the opportunity to present the dispute to a committee consisting of one environmental specialist and one member of senior management from each Party with authority to bind GP or such member of the Purchaser Group, as the case may be, which persons shall endeavor to use a good faith efforts to resolve the dispute on a fair and equitable basis.  If these efforts are not successful, the dispute shall be resolved by an independent arbitrator. The independent arbitrator shall be selected from a list of three (3) persons, one (1) selected by each party and the third person (who shall be the independent arbitrator) shall be selected by the two (2) previously selected persons.  None of the persons shall have a conflict of interest with either Party unless waived in writing by both parties.  If GP and the affected member of the Purchaser Group are unable to mutually agree on procedures to conduct the arbitration, the arbitrator shall specify the arbitration procedures. The arbitrator shall be jointly retained by GP and the Purchaser, and GP and Purchaser will equally share the arbitrator’s fees and expenses.

                (e)           GP and its representatives will exercise their commercially reasonable efforts to avoid unreasonable interference with the use of the Real Property and the operation of the Business when managing a Remedial Action.

 

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                (f)            Purchaser, on behalf of the Purchaser Group, acknowledges and agrees that the sole and exclusive remedy of the Purchaser Group with respect to any and all claims relating to any Pre-Closing Environmental Liabilities shall be pursuant to the indemnification provisions set forth in this Section 8.4.  In furtherance of the foregoing, Purchaser hereby waives, to the fullest extent permitted under applicable law, any and all rights, claims and causes of action it may have against either Seller or its affiliates and any of their respective officers, directors, employees, stockholders, agents and Representatives arising in connection with any Environmental Liabilities, except pursuant to the indemnification provisions set forth in this Section 8.4.

                SECTION 8.5         Product Liability Claim Procedures.

 

                                (a)           Each Seller hereby jointly and severally agrees to indemnify the members of the Purchaser Group against, and to hold them harmless from, all Losses arising from, relating to or otherwise with respect to Product Liability Claims.

 

                                (b)           Within thirty (30) days of receipt in writing of any asserted Product Liability Claim, Purchaser shall provide GP with written notice of such claim and any supporting documentation or other information reasonably available to Purchaser.  Such written notice shall include contact information for the Purchaser representative delivering such written notice.  Failure to give such notice shall not affect the indemnification provided under this Section 8.5, except to the extent any of Sellers has been actually and materially prejudiced as a result of such failure.  Purchaser shall promptly forward to GP any additional written materials subsequently received by Purchaser regarding the Product Liability Claim.

 

                                (c)           Without waiving any Seller’s right to contest its obligation to defend and indemnify the members of the Purchaser Group for any asserted Products Liability Claims pursuant to Section 8.5(h), GP shall promptly assume control and be responsible for the defense of all such Product Liability Claims for which any member of the Purchaser Group seeks indemnification under this Section 8.5, including selection and retention of counsel that shall be reasonably satisfactory to Purchaser.  Any Seller’s right to dispute its obligation to indemnify Purchaser for an asserted Product Liability Claim shall not stay, delay or otherwise relieve GP of its obligation to promptly assume the control of and responsibility for the defense of such Product Liability Claim.  GP shall in any event diligently and in good faith defend any asserted Products Liability Claims for which any member of the Purchaser Group seeks indemnification.  If a Product Liability Claim is asserted against any member of the Purchaser Group, such member may participate, subject to the control of GP pursuant to Section 8.5(e), in GP’s defense of the Product Liability Claim, at Purchaser’s own cost and expense.  Notwithstanding the foregoing, in connection with any Products Liability Claim as to which (A) GP fails to defend diligently and in good faith or (B) Purchaser (i) shall reasonably conclude that there is a material conflict of interest between it and any Seller in the conduct of the defense of such Product Liability Claim, (ii) shall reasonably conclude that there are specific defenses available to such member of the Purchaser Group that are different from or additional to those available to Sellers and which could be adverse to such member of the Purchaser Group, or (C) the Product Liability Claim seeks an order, injunction or

 

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other equitable relief or relief for other than money damages against any member of the Purchaser Group, then such member of the Purchaser Group shall have the right, at the expense of Sellers, to defend the claims against such member of the Purchaser Group, through counsel of its choosing (which counsel shall be reasonably satisfactory to GP) and shall do so diligently and in good faith; provided, however, that in each of the foregoing cases where such member of the Purchaser Group shall have assumed its own defense, such member of the Purchaser Group shall not admit any liability with respect to, or settle, compromise or discharge, such Product Liability Claim without Sellers’ prior written consent, which consent shall not be unreasonably withheld or delayed.  Subject to the control of a member of the Purchaser Group, Sellers shall have the same right to participate in the defense as a member of the Purchaser Group has to participate in GP’s defense pursuant to Section 8.5(e).  Any amounts billed and properly payable in accordance with this Section 8.5 that are not paid within thirty (30) days of receipt by GP of such invoice shall bear interest at the rate equal to the prime rate (as set forth in the “Money Rates” section of The Wall Street Journal as of such date) through the date of payment calculated on the basis of a 365 day year, plus 2.5%

 

                                (d)           To the extent Purchaser performs administrative services related to asserted Product Liability Claims (e.g., processing customer returns through its help desk, reloads, etc.), Purchaser shall, on a monthly basis, submit to GP for payment a billing invoice setting forth in reasonable detail the administrative services performed during such period and the corresponding amounts owed for such services.  Payment of all such amounts owed, which shall not exceed $50,000 per month, shall be remitted within thirty (30) days after the date in which GP receives Purchaser’s invoices.

 

                                (e)           GP shall cooperate with any member of the Purchaser Group in the defense of all asserted Product Liability Claims (subject to the execution of a suitable joint defense agreement where appropriate) by:  (i) providing Purchaser or its designees with an opportunity to review, reasonably in advance of filing, research memoranda, pleadings, motions and other documentation prepared to defend such Product Liability Claims; (ii) incorporating relevant legal arguments, points, authorities and comments provided to GP by the members of the Purchaser Group including, but not limited to, specific legal defenses that the members of the Purchaser Group seek to assert, such as defenses based on the absence of successor liability; (iii) providing reasonable advance notice to Purchaser or its designees of all calendar dates, court appearances, depositions, and witness interviews; (iv) affording Purchaser or its Representatives the opportunity to participate in litigation strategy conferences or meetings; and (v) providing status reports on all such Product Liability Claims on a quarterly basis containing sufficient information so that the Purchaser Group will be fully informed of the progress of the litigation and as otherwise may reasonably be requested in writing by the Purchaser Group.

 

                                (f)            The members of the Purchaser Group shall cooperate with GP in the defense of all asserted Product Liability Claims.  Such cooperation shall include the regular retention and the providing of records, data, correspondence and other information that are reasonably relevant to the defense of said Product Liability Claim and making available to GP and its retained counsel and experts involved in the defense,

 

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upon reasonable advance notice, without unreasonable interference with the operation of the Business, knowledgeable employees of Purchaser to provide information and explanation reasonably relevant to the defense of said Product Liability Claims.  At GP’s request, Purchaser shall cooperate and reasonably assist GP, at GP’s sole cost and expense, and take any reasonable steps GP may determine in its discretion to seek contribution or indemnity from a product supplier or manufacturer, with whom GP or Purchaser has or has had a relationship.

 

                                (g)           GP may settle any asserted Product Liability Claim made against any member of the Purchaser Group so long as such settlement involves solely the payment of money damages, there is no finding of liability on the part of any member of the Purchaser Group and such settlement includes the full release with prejudice of all members of the Purchaser Group for the Product Liability Claim.

 

                                (h)           In the event a Seller disputes that it has an indemnification obligation for any asserted Product Liability Claim tendered by Purchaser pursuant to Section 8.5(a), it shall promptly (but in any event within thirty (30) days after receipt of written notice of such Product Liability Claim from Purchaser) notify Purchaser in writing.  Any such notice shall set forth in reasonable detail the basis for such dispute, and, unless Purchaser otherwise agrees in writing, Sellers shall be deemed to have waived their right to dispute their obligation to indemnify for such Products Liability Claim if they shall fail to so notify Purchaser within such thirty (30) day period.

                Promptly upon receipt of such notice:

 

                                                (i)            The parties shall attempt in good faith to resolve promptly any controversy or claim arising out of or relating to an asserted Product Liability Claim.

 

                                                (ii)           If a controversy or claim should arise among the parties regarding an asserted Product Liability Claim, appropriate representatives of each party (collectively, the “Managers”) will meet at least once and will attempt to resolve the matter.  The Managers will make every effort to meet as soon as reasonably possible at a mutually agreed time and place.

 

                                                (iii)          If the matter has not been resolved within 20 days of their first meeting, the Managers shall refer the matter to senior executives of the parties who are not directly responsible for the administration of the relationship between the parties (collectively, the “Senior Executives”).  Thereupon, the Managers shall promptly prepare and exchange memoranda stating (i) the issues in dispute and their respective position, summarizing the evidence and arguments supporting their positions, and the negotiations which have taken place, and attaching relevant documents, and (ii) the name and title of the Senior Executive who will represent that party.  The Senior Executives shall meet for negotiations at a mutually agreed time and place within 14 days after the end of the 20-day period referred to above and thereafter as often as they deem reasonably necessary to exchange relevant information and to attempt to resolve the dispute.

 

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                                                (iv)          If the matter has not been resolved within 30 days of the first meeting of the Senior Executives, or if either party will not meet within 30 days after the end of the 20-day period referred to in the preceding paragraph, either party may pursue any and all rights and remedies.

 

                                (i)            If it is determined, upon a final judgment not subject to appeal, that GP did not have an indemnification obligation with respect to any portion of an asserted Product Liability Claim, then Purchaser shall promptly pay GP any and all amounts expended on behalf of Purchaser in connection with GP’s defense obligations undertaken pursuant to Section 8.5(c).

 

                SECTION 8.6                 Procedures Relating to Non-Third Party Claims (other than Pre-Closing Environmental Liabilities and Product Liability Claims).  In order for an Indemnified Party to be entitled to any indemnification provided for under this Agreement in respect of a claim that does not involve a Third Party Claim, a Pre-Closing Environmental Liability or a Product Liability Claim, the Indemnified Party shall deliver notice of such claim with reasonable promptness to the Indemnifying Party.  The failure by any Indemnified Party to so notify the Indemnifying Party shall not relieve the Indemnifying Party from any liability which it may have to such Indemnified Party under this Agreement, except to the extent that the Indemnifying Party shall have been actually materially prejudiced by such failure (except that the Indemnifying Party shall not be liable for any expenses incurred during the period in which the Indemnified Party failed to give such notice).  If the Indemnifying Party has timely disputed its liability with respect to such claim, the Indemnifying Party and the Indemnified Party shall proceed in good faith to negotiate a resolution of such dispute and, if not resolved through negotiations, such dispute shall be resolved by litigation in an appropriate court of competent jurisdiction in accordance with this Agreement.

                SECTION 8.7                 Losses Net of Insurance; No Consequential Damages; Mitigation of Damages; Etc.  The amount of any Losses for which indemnification is provided under Article VIII shall be net of any amounts recovered (net of expense of recovery) by the Indemnified Party under insurance policies with respect to such Losses.  Notwithstanding anything to the contrary contained herein, no indemnification shall be provided for under Article VIII in respect of any punitive, special, exemplary or similar damages or lost profits.  In addition, no indemnification shall be provided to any party under Article VIII to the extent that any such damages for which such party is claiming indemnification could have been avoided or mitigated through the use of commercially reasonable efforts to avoid or mitigate such damages by such party; provided, that the foregoing mitigation requirement shall not be applicable to Product Liability Claims.

                SECTION 8.8                 Termination of Indemnification.  The obligation of GP to indemnify and hold harmless Purchaser or any other Person for breaches of GP’s representations and warranties shall terminate 24 months after the Closing Date except that (x) the representations and warranties made in Sections 3.8, 3.17 and 3.20 shall terminate 6 years after the Closing Date and (y) the representations set forth in Section 3.19 shall survive until termination of the applicable statute of limitations.  The obligation of Purchaser to indemnify and hold harmless Sellers or any other Person for

 

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breaches of Purchaser’s representations and warranties shall terminate 24 months after the Closing Date.  The obligations of each of GP and Purchaser, as the case may be, to indemnify the other party or parties hereto or any other Person for breaches of the covenants and agreements of either of Sellers or Purchaser, as the case may be and for indemnification with respect to Assumed Liabilities, Excluded Liabilities, Pre-Closing Environmental Liabilities and Product Liability Claims, shall survive the Closing without limitation as to time.  Notwithstanding the foregoing, the obligation of each of GP and Purchaser, as the case may be, to indemnify and hold harmless the other party or parties hereto or any other Person pursuant to this Article VIII shall not terminate with respect to any item as to which GP or Purchaser, as the case may be, shall have, before the expiration of the applicable period, previously made a claim by delivering a notice pursuant to this Article VIII (stating in reasonable detail the basis of such claim) to the other party hereto.

                SECTION 8.9                 Acknowledgment.  The indemnities provided for in this Article VIII shall not be construed as an admission or conclusion, express or implied, as to liability or damages in respect of the subject-matter of such indemnities.

                SECTION 8.10               Setoff.  The Purchaser Group may from time to time reduce any amounts owed by any of them to either Seller or their affiliates under this Agreement or any Ancillary Document by all Eligible Claim Amounts but only to the extent the aggregate of such Eligible Claim Amounts exceeds $10 million, at which point the Purchaser Group shall be entitled to reduce the amounts owed by them to Sellers and/or their respective affiliates back to the first dollar thereof.  The rights of the Purchaser Group provided for in this Section 8.10 are in addition to but without duplication of, and not in limitation of, any other right or remedy available to the members of the Purchaser Group under this Article VIII or otherwise, whether arising under this Agreement, any Ancillary Document, under applicable law, in equity, or otherwise.

 

                SECTION 8.11               Further Assurances.  GP will not, in a single transaction or series of related transactions, consolidate or merge with or into any Person, or sell, assign, transfer, spin off, lease or otherwise dispose of  (or permit any affiliate of GP to sell, assign, transfer, spin-off, lease or otherwise dispose of) all or substantially all of GP’s assets (determined on a consolidated basis for GP and its subsidiaries) unless the Person formed by such merger or consolidation or the Person who acquires, by assignment, transfer, lease or other disposition, or that is the subject of the spin-off, assumes the indemnification obligations of GP hereunder.

 

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ARTICLE IX

General Provisions

SECTION 9.1                 Notices.  All notices and other communications hereunder shall be in writing (including facsimile or similar writing) and shall be sent, delivered or mailed, addressed or faxed:

 

(a)  if to Purchaser, to:

 

ABP Distribution Inc.

c/o Cerberus Capital Management, L.P.

299 Park Avenue

New York, New York 10171

Attn:  Lenard Tessler

Facsimile No.:  (212) 755-3009

 

 

 

with a copy (which shall not constitute notice) to:

 

Schulte Roth & Zabel LLP

919 Third Avenue

New York, New York 10022

Attn:  Stuart D. Freedman

Facsimile No.:  (212) 593-5955

 

(b)  if to Sellers, to:

 

Georgia-Pacific Corporation

133 Peachtree Street, N.E.

Atlanta, Georgia 30303

Attn:  James F. Kelley

Facsimile No.:  (404) 487-4223

 

 

 

with a copy (which shall not constitute notice) to:

 

Troutman Sanders LLP

600 Peachtree Street, N.E.

Suite 5200

Atlanta, Georgia  30308

Attn:  Cal Smith

Facsimile No. (404) 962-6756

 

Each such notice or other communication shall be given (i) by hand delivery, (ii) by nationally recognized courier service, or (iii) by facsimile, receipt confirmed.  Each such notice or communication shall be effective (x) if delivered by hand or by nationally recognized courier service, when delivered at the address specified in this Section 9.1 (or in accordance with the latest unrevoked direction from such party); provided, that the delivery is made prior to 5:00 p.m. Eastern Standard Time on a Business Day, and if made after such time or in a non-Business Day, then such delivery shall be effective as of the next succeeding Business Day, and (y) if given by facsimile, when such facsimile is transmitted to the facsimile number specified in this Section 9.1 (or in accordance with the latest unrevoked direction from such party), and confirmation is received; provided that, the transmission of all pages is complete prior to 5:00 p.m. Eastern Standard Time on a Business Day, and if complete after such time or on a non-Business Day, then such transmission shall be effective as of the next succeeding Business Day.

 

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SECTION 9.2                 Severability.  If any provision of this Agreement (or any portion thereof) or the application of any such provision (or any portion thereof) to any Person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, the remainder of this Agreement will continue in full force and effect and the application of such provision will be interpreted so as reasonably to effect the intent of the parties hereto.  The parties further agree to replace such invalid, illegal or unenforceable provision with a valid, legal and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid, illegal or unenforceable provision.

SECTION 9.3                 Counterparts.  This Agreement may be executed in two (2) or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered (including by facsimile) to the other parties.

SECTION 9.4                 Entire Agreement; No Third Party Beneficiaries.  This Agreement (including the Schedules and Exhibits hereto), the Ancillary Documents, the Confidentiality Agreement and any side letters entered into by GP and Cerberus Capital Management, L.P. or its affiliates in connection with this Agreement (a) constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof or thereof and (b) are not intended to confer upon any Person (other than the parties identified herein, the parties entitled to indemnification under Article VIII and their respective successors and permitted assigns) any rights or remedies hereunder.

SECTION 9.5                 Attachments.  Every Schedule and Exhibit referred to in this Agreement is incorporated into this Agreement by reference.  Sellers and Purchaser acknowledge and agree that (i) the Schedules that are arranged in sections corresponding to the sections and paragraphs of Article III shall qualify the corresponding representations and warranties of Sellers contained in Article III; (ii) inclusion of information in the Schedules shall not be construed as an admission that such information is material to the operation and use of the Acquired Assets or the Business or the results of operations or financial condition of any of Sellers or Purchaser or any of their respective affiliates; (iii) any matter disclosed pursuant to one provision, subprovision, section or subsection of the Schedules shall be deemed disclosed for all purposes of the Schedules to the extent the Agreement requires such disclosure but only to the extent that the relevance of such information to such other Schedule is reasonably apparent in the Schedule on which such information is disclosed; and (iv) Schedule titles inserted on the Schedules are for convenience of reference only and shall to no extent have the effect of amending or changing the express description of such Schedules as set forth in the Agreement.

SECTION 9.6                 Governing Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts made and to be performed entirely in the State of New York, regardless of the laws that might otherwise govern under applicable principles of conflicts of law.

 

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SECTION 9.7                 Consent to Jurisdiction.  Each of Purchaser and Sellers irrevocably submits to the exclusive jurisdiction of (a) the State Court of Georgia, Fulton County and (b) the United States District Court for the Northern District of Georgia located in Atlanta, Georgia, for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby.  Each of Purchaser and Sellers further agrees that service of any process, summons, notice or document by U.S. registered mail to such party’s respective address set forth in Section 9.1 shall be effective service of process for any action, suit or proceeding in Georgia with respect to any matters to which it has submitted to jurisdiction as set forth above in the immediately preceding sentence.  Each of Purchaser and Sellers irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in (a) the State Court of Georgia, Fulton County, or (b) the United States District Court for the Northern District of Georgia, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

SECTION 9.8                 Publicity.  From the date of this Agreement through the Closing, neither Sellers nor Purchaser shall issue or cause the publication of any press release or other public announcement with respect to the transactions contemplated by this Agreement without the consent of the other party or parties hereto, which consent shall not be unreasonably withheld, except as such release or announcement may be required by law or the rules or regulations of a national securities exchange in the United States, in which case the party required to make the release or announcement shall allow the other party or parties reasonable time to comment on such release or announcement in advance of its issuance.

SECTION 9.9                 Assignment.  Neither this Agreement nor any of the rights, interests or obligations hereunder (including any rights, interests or obligations under Article VIII) shall be assigned by any party hereto without the prior written consent of the other party or parties hereto; provided, that Purchaser, its subsidiaries or affiliates may assign its rights hereunder (including any rights hereunder (including any rights under Article VIII)) (i) as collateral security for any financing of Purchaser, subsidiary or affiliate or (ii) the purchaser of all or substantially all of the assets of Purchaser, such subsidiary or affiliate.  Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns.

SECTION 9.10               Designated Affiliates.  Purchaser may, at any time prior to the Closing at its sole discretion but upon prior notice, assign its rights to purchase any or all of the Acquired Assets or any other rights under this Agreement to one or more of its subsidiaries or other affiliates; provided, however, that such Person assumes and agrees to perform, discharge and satisfy all of Purchaser’s liabilities, duties and obligations hereunder; and provided, further, that Purchaser shall not be released and shall remain primarily liable for and obligated to perform, discharge and satisfy all of the liabilities, duties and obligations of the purchasing entities hereunder.  For purposes of this

 

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Agreement, Purchaser and its subsidiaries or affiliates to whom it assigns such rights, if applicable, shall collectively be referred to herein as “Purchaser.”

SECTION 9.11 Remedies; Specific Performance.  The parties hereto acknowledge that money damages would not be an adequate remedy at law if any party fails to perform in any material respect any of its obligations hereunder and accordingly agree that each party, in addition to any other remedy to which it may be entitled at law, in equity or, after the Closing, as provided in Article IX, shall be entitled to seek to compel specific performance of the obligations of any other party under this Agreement, without the posting of any bond, in accordance with the terms and conditions of this Agreement, and if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law.  No remedy shall be exclusive of any other remedy.  All available remedies shall be cumulative.

ARTICLE X

Definitions

SECTION 10.1               Definitions.  The following terms shall have the respective meanings set forth below throughout this Agreement:

Accounts Receivable” has the meaning set forth in Section 1.2(a)(iii).

ACM” means, collectively, asbestos and asbestos containing materials.

Acquired Assets” has the meaning set forth in Section 1.2(a).

Acquired Computer Hardware” has the meaning set forth in Section 1.2(a)(vii).

Acquired Computer Hardware Contracts” has the meaning set forth in Section 1.2(a)(viii).

Acquired GP Licensed Computer Software” has the meaning set forth in Section 1.2(a)(x).

Acquired GP Owned Computer Software” has the meaning set forth in Section 1.2(a)(ix).

Acquired GP Owned Computer Software Components” has the meaning set forth in Section 5.12(c).

Agreement” means this Asset Purchase Agreement, made and entered into as of the date hereof, by and among Sellers and Purchaser.

Agreement Concerning Private Label Agreements” has the meaning set forth in Section 5.13.

 

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Ancillary Documents” means, collectively, all agreements between either or both of Sellers, on the one hand, and Purchaser, on the other hand, including the Transition Services Agreement, IT Support Services Agreement, Human Resources Agreement, Master Supply Agreement, the Real Property Agreement and Agreement Concerning Private Label Agreements.

Assumed Benefit Plan” has the meaning set forth in Section 3.17(a).

Assumed Liabilities” has the meaning set forth in Section 1.3(a).

Business” means the building products distribution business as presently conducted by Sellers through GP’s building products distribution operating segment.

Business Computer Software” has the meaning set forth in Section 3.24(e).

Business Day” means any day other than a Saturday, a Sunday or a day on which banks in New York, New York are authorized or obligated by law or executive order to close.

Business Employee” means any current or former employee of either Seller whose duties primarily relate to the Business.

Business Intellectual Property” means, collectively, the Owned Business Intellectual Property and the Licensed Business Intellectual Property.

Business Intellectual Property Contracts” shall mean all agreements concerning the Business Intellectual Property, including, without limitation, (i) agreements granting either Seller rights to use the Licensed Business Intellectual Property, (ii) agreements granting rights to use Owned Business Intellectual Property and (iii) Trademark coexistence agreements, Trademark consent agreements and nonassertion agreements.

CCA” means, collectively, chromated copper arsenate and chromated copper arsenate containing materials.

Cap” has the meaning set forth in Section 8.1(a).

Closing” has the meaning set forth in Section 2.1.

Closing Date” has the meaning set forth in Section 2.1.

Closing Deadline” has the meaning set forth in Section 7.1(a)(ii).

Closing Working Capital” has the meaning set forth in Section 2.3(b).

Closing Working Capital Statement” has the meaning set forth in Section 2.3(b).

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

 

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Computer Hardware” means any computer hardware, equipment and peripherals of any kind and of any platform, including desktop and laptop personal computers, handheld computerized devices, mid-range and mainframe computers, process control and distributed control systems, and network telecommunications equipment.

Computer Software” means any and all computer programs, including operating system and applications software, implementations of algorithms, and program interfaces, whether in source code or object code and all documentation, including user manuals relating to the foregoing.

Confidentiality Agreement” means that certain confidentiality letter agreement by and between Cerberus Capital Management, L.P. and GP, dated October 24, 2003.

Contracts” has the meaning set forth in Section 1.2(a)(xiv).

Copyrights” shall mean published and unpublished works of authorship, whether copyrightable or not, copyrights therein and thereto, and registrations and applications therefore, and all renewals, extensions, restorations and reversions thereof, and any and all claims or causes of action arising out of or related to any infringement, misappropriation or other violation of any of the foregoing, including without limitation rights to recover for past, present and future violations thereof.

CPA Firm” has the meaning set forth in Section 2.3(c).

CTA” means the Connecticut Transfer Act, G.C.S. § 229-134 et seq.

Data” has the meaning set forth in Section 1.2(a)(xi).

Deductible” has the meaning set forth in Section 8.1(a).

Disabling Devices” shall mean Computer Software viruses, time bombs, logic bombs, Trojan horses, trap doors, back doors, or other computer instructions, intentional devices or techniques that are designed to threaten, infect, assault, vandalize, defraud, disrupt, damage, disable, maliciously encumber, hack into, incapacitate, infiltrate or slow or shut down a computer system or any component of such computer system, including any such device affecting system security or compromising or disclosing user data.

Eligible Claim Amount” means (i) prior to a Rating Threshold Occurrence Date, the aggregate amount of all Losses incurred by the Purchaser Group in respect of Third Party Claims relating to Pre-Closing Environmental Liabilities and Product Liability Claims remaining unpaid for more than 30 days after the effective date of either (a) a final nonappealable order of a court of competent jurisdiction or (b) a written settlement agreement signed by either Seller, and (ii) after a Rating Threshold Occurrence Date, (x) the aggregate amount of all Losses incurred by the Purchaser Group in respect of Third Party Claims relating to Pre-Closing Environmental Liabilities and Product Liability Claims remaining unpaid for more than 30 days after the effective date of an order of a court of competent jurisdiction (even if still appealable) or written settlement agreement and (y) the aggregate of all Third Party Claims actually filed against the Purchaser Group

 

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relating to Pre-Closing Environmental Liabilities or Product Liability Claims, the Losses with respect to which have not been reduced to a court order or written settlement agreement, in the maximum amount of such Third Party Claims, or, if the maximum amount of any such Third Party Claim is not specified in the filing, the Eligible Claim Amount with respect to such Third Party Claim shall be the amount of Losses with respect to such Third Party Claim estimated by Purchaser, acting in a commercially reasonable manner; provided, however, that to the extent any setoff is made by any member of the Purchaser Group pursuant to clause (ii) above, and it is ultimately determined by a final nonappealable order of a court of competent jurisdiction, or a written settlement agreement signed or consented to in writing by Purchaser, that Sellers did not have an indemnification obligation with respect to all or any portion of the amount set off by such member of the Purchaser Group, such member of the Purchaser Group shall pay to GP any amount so set off for which it was determined that GP did not have an indemnification obligation.

Employee List” has the meaning set forth in Section 3.20(g).

Environmental Claims” refers to any complaint, summons, citation, notice, directive, order, claim, litigation, investigation, notice of violation, judicial or administrative proceeding, judgment, letter or other communication from any governmental agency, department, bureau, office or other authority, or any third party involving violations of Environmental Laws or Releases of Hazardous Materials or Environmental Conditions.

Environmental Conditions” mean violations of Environmental Laws or the presence of Hazardous Materials in soil, subsurface, surface water or groundwater on, in, under or from the Real Property that legally require Remedial Action.

Environmental Indemnification Demand” has the meaning set forth in Section 8.4(b).

Environmental Laws” means any Federal, state, interstate or local statute, law, regulation, rule or ordinance now or hereafter in effect (except as applied to the representations and warranties contained in Section 3.18 which will be those Environmental Laws in effect on the Closing Date) and which is applicable to the Acquired Assets imposing liability including but not limited to the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), 42 U.S.C. 9601 et seq., as amended; the Resource Conservation and Recovery Act (“RCRA”), 42 U.S.C. 6901 et seq., as amended; the Clean Air Act (“CAA”), 42 U.S.C. 7401 et seq., as amended; the Clean Water Act (“CWA”), 33 U.S.C. 1251 et seq., as amended; the Toxic Substance Control Act (“TSCA”) 15 U.S.C. 2601 et seq.; the Federal Insecticide, Fungicide, and Rodenticide Act (“FIFRA”), 7. U.S.C. 136 et seq.; and the Occupational Safety and Health Act (“OSHA”), 29 U.S.C. 655 et seq., as amended.

Environmental Liability” means any monetary obligations, losses, liability (including strict liability), damages, treble damages, costs and expenses (including all reasonable out-of-pocket

 

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fees, disbursements and expenses of counsel, out-of-pocket expert and consulting fees and out-of-pocket costs for environmental site assessments, remedial investigation and feasibility studies), fines, penalties, sanctions and interest incurred as a result of any Environmental Claim filed by any Governmental Entity or any third party which relate to any violations of Environmental Laws, Remedial Actions, Releases or threatened Releases of Hazardous Materials, or Environmental Conditions in connection with (i) the operation of the Business, Acquired Assets, any Real Property presently or formerly owned by any Seller or a predecessor in interest, and (ii) any facility which received Hazardous Materials generated by the Business or Acquired Assets or a predecessor in interest..

ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

Excluded Assets” has the meaning set forth in Section 1.2(b).

Excluded Liabilities” has the meaning set forth in Section 1.3(b).

Exhibits” means the exhibits listed in the table of contents of this Agreement as attached hereto.

Final Allocation” has the meaning set forth in Section 5.11(a).

Final Closing Working Capital” has the meaning set forth in Section 2.3(c).

Final Working Capital Statement” has the meaning set forth in Section 2.3(c).

Governmental Entity” means any court, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign.

GP” means Georgia-Pacific Corporation, a Georgia corporation.

GPBMS” means Georgia-Pacific Building Materials Sales, Ltd., a New Brunswick corporation.

GP Guarantees” has the meaning set forth in Section 5.19.

GP Insurance Policies” has the meaning set forth in Section 5.18.

GP Owned Computer Software” means the Computer Software created by or on behalf of GP or any of its affiliates and owned by GP or any of its affiliates.

GP Trademarks” has the meaning set forth in Section 5.17(a).

Hazardous Material” means any substance or material that has been defined as a “hazardous material,” “hazardous substance,” hazardous waste” or words of similar import, under any Environmental Law and any other waste substance or material that is regulated under any Environmental Law, including petroleum, petroleum products, waste ACM, polychlorinated biphenyls and waste CCA.

 

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Historical GAAP Financial Statements” has the meaning set forth in Section 5.24.

HSR Act” means the Hart-Scott-Rodino Antitrust Improvements act of 1976, as amended.

Human Resources Agreement” has the meaning set forth in Section 5.13.

Income Tax” means any Tax on or determined by reference to net income, revenue or equity.

Included GP Owned Computer Software” has the meaning set forth in Section 5.12(a).

Included Licensed Computer Software” has the meaning set forth in Section 5.12(b).

Indemnified Environmental Matter” has the meaning set forth in Section 8.4(b).

Indemnified Party” has the meaning set forth in Section 8.3(a).

Indemnifying Party” has the meaning set forth in Section 8.3(a).

Industry” means the building products and the building products distribution industries, collectively.

Intellectual Property” shall mean Trademarks, Patents, Copyrights and Trade Secrets.

Intercompany Accounts” means intercompany payables, receivables, accounts, indebtedness and other liabilities between either of Sellers or its affiliates, on the one hand, and the Business, on the other hand; provided, however, that for purposes of clarity, the term, “Intercompany Accounts” shall not include Intercompany Trade Payables.

Intercompany Trade Payables” means those certain intercompany accounts payable of the Business as set forth in the line item “Accounts Payable - GP” on Schedule 2.3(a).

Inventory” has the meaning set forth in Section 1.2(a)(ii).

ISRA” means New Jersey Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et. seq.

IT Support Services Agreement” has the meaning set forth in Section 5.13.

Knowledge” means, with respect to GP or Sellers, the actual (as opposed to constructive, implied or imputed) knowledge, after reasonable inquiry, of the Persons listed on Schedule 10.1(a), and, with respect to Purchaser, the actual (as opposed to

 

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constructive, implied or imputed) knowledge, after reasonable inquiry, of the Persons listed on Schedule 10.1(b).

Lease” has the meaning set forth in Section 1.2(a)(i).

Leased Real Property” has the meaning set forth in Section 3.9(a).

License” has the meaning set forth in Section 5.12(a).

Licensed Business Intellectual Property” means Intellectual Property owned by Persons other than Sellers and used under license or other permission that is primarily related to or primarily used in the operation of the Business.

Licensed Computer Software” means the Computer Software licensed by GP or any of its affiliates from a third party.

Lien” means mortgages, liens, claims, security interests, easements, rights of way, pledges, restrictions or encumbrances of any nature whatsoever.

Listed Contract” has the meaning set forth in Section 3.15(b).

Losses” has the meaning set forth in Section 8.1(a).

Master Supply Agreement” has the meaning set forth in Section 5.13.

Material Adverse Effect” means a material and adverse effect on the business, assets, properties, operations, financial condition or results of operations of the Acquired Assets or the Business taken as a whole; provided, however, that the following shall not be taken into account in determining whether there has been or would be a “Material Adverse Effect”: (i) any adverse changes or developments resulting from conditions affecting the United States or any foreign economy generally; (ii) any adverse changes or developments that are primarily caused by conditions affecting the Industry generally unless such changes or developments disproportionately affect the Acquired Assets or the Business; (iii) any adverse changes or developments in the laws, regulations, rules or orders of any Governmental Entity; (iv) any adverse changes or developments that are attributable to seasonal fluctuations in the Industry; (v) any acts of war, insurrection, sabotage or terrorism unless such changes or developments disproportionately affect the Acquired Assets or the Business; and (vi) any adverse changes or developments arising primarily out of, or resulting primarily from, actions taken by any party in connection with (but not in breach of) this Agreement and the transactions contemplated hereunder, or which are primarily attributable to the announcement of this Agreement and the transactions contemplated hereby or the identity of Purchaser (including, to the extent so attributable, any litigation, employee attrition, any loss or postponement of business resulting from the termination or modification of any vendor, customer or other business relationships, any delay of customer orders or otherwise, as well as any corresponding change in the margins, profitability or financial condition of such party); provided, further, that the failure by either Seller or its affiliates to meet their respective internal revenue or earnings predictions or expectations with respect to the Business for any

 

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period ending or for which earnings are released on or after the date of this Agreement shall not in and of itself be deemed to constitute a Material Adverse Effect.

Material Business Permits’ has the meaning set forth in Section 3.4(b).

Necessary Consents” has the meaning set forth in Section 5.12(b).

Necessary Data” has the meaning set forth in Section 1.2(a)(xi).

Objection” has the meaning set forth in Section 2.3(c).

Objection Notice” has the meaning set forth in Section 5.11(a).

Owned Business Intellectual Property” means (i) the Specified Brands and (ii) the Patents, Copyrights and Trade Secrets owned by either Seller or its affiliates and relating solely to and used solely in the operation of the Business; provided, however, that the term “Owned Business Intellectual Property” shall not include Computer Hardware, Computer Software or Data, the parties intending that such items be governed exclusively by the provisions of this Agreement addressing information technology, it being understood however that, notwithstanding anything to the contrary herein, any transfer, assignment or license of Computer Software, Computer Hardware or Data hereunder or under any Ancillary Document shall automatically include (subject to the co-ownership provisions of Section 5.12(c) and (d), as applicable) the transfer, assignment or license, as applicable, of any Patents, Copyrights, Trade Secrets and other intellectual property rights appurtenant thereto that are owned by either Seller or its affiliates, without further action required on the part of Sellers or Purchaser or their respective affiliates, and without further obligation on the part of Purchaser or its affiliates except as may be specified in the provisions of this Agreement addressing information technology.

Owned Real Property” means all real property and other interests in real property of each Seller as described in the Real Property Agreement.

Patents” shall mean all inventions, improvements and discoveries and all unexpired patents, letters, and applications therefor, including without limitation division, continuation, and continuations-in-part, applications, and including without limitation renewals, extensions and reissues thereof, and any and all claims or causes of action arising out of or related to any infringement, misappropriation or other violation of any of the foregoing, including without limitation rights to recover for past, present and future violations thereof.

Permits” has the meaning set forth in Section 1.2(a)(xiii).

Permitted Liens” means (i) Liens disclosed on Schedule 10.1(c), (ii) mechanics’, carriers’, workmen’s, repairmen’s and other like Liens arising or incurred in the ordinary course of business, (iii) Liens for Taxes, assessments and other governmental charges that are not yet due and payable or that may thereafter be paid without penalty or that are being contested in good faith by appropriate proceedings, (iv) Liens reflected in the

 

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financial statements set forth on Schedule 3.5(a) and/or Schedule 3.5(b) and the notes thereto (other than Liens securing Excluded Liabilities), (v) Liens arising under conditional sales contracts or as purchase money security interests for the purchase or lease of personal property, and (vi) imperfections of title and other Liens that do not materially and adversely affect the value or use of any such underlying asset.

Person” means any individual, corporation, partnership, limited liability company, joint venture, trust, business association or other entity, including any Governmental Entity.

Personal Property” has the meaning set forth in Section 1.2(a)(iv).

Petty Cash” has the meaning set forth in Section 1.2(a)(xvi).

Pre-Closing Environmental Liabilities” means any Environmental Liabilities arising from Environmental Conditions prior to the Closing Date whether known or unknown, or asserted or unasserted.

Pre-Closing Tax Periods” means taxable periods ending on or before the Closing Date and for the portion ending on the Closing Date of any taxable period that includes but does not end on the Closing Date.

Product Liability Claims” means any Third Party Claim for Losses arising out of, relating to or otherwise in any way in respect of claims for personal injury, wrongful death or property damage resulting from exposure to, or any other warranty claims, refunds, rebates, property damage, product recalls, defective material claims, merchandise returns and/or any similar claims with respect to, products or items purchased, sold, consigned, marketed, stored, delivered, distributed or transported by the Business, either Seller or any of its affiliates prior to the Closing Date, whether such claims are known or unknown or asserted or unasserted at the Closing Date including, without limitation, claims, obligations or liabilities relating to the presence of alleged presence of ACM, formaldehyde containing materials, Hazardous Materials or CCA in any product or item purchased, sold, marketed, stored, delivered, distributed or transported by Sellers, their affiliates or the Business prior to the Closing Date; provided that, for purposes of clarity the definition of “Product Liability Claims” shall not apply to Inventory acquired by Purchaser on the Closing Date.

Prorated Charges” has the meaning set forth in Section 5.14.

Proposed Allocation” has the meaning set forth in Section 5.11(a).

Purchase Price” has the meaning set forth in Section 1.4.

Purchaser” means ABP Distribution Inc., a Georgia corporation.

Purchaser Confidential Information” has the meaning set forth in Section 5.8(b).

Purchaser Group” has the meaning set forth in Section 8.1(a).

 

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Rating Threshold Occurrence Date” means the date on which the senior unsecured debt rating of GP shall cease to be equal to or greater than either “B-” from Standard & Poors’ Corporation or “B3” from Moody’s Investors Service Inc.

Real Property” means, collectively, Owned Real Property and Leased Real Property.

 

Real Property Agreement” has the meaning set forth in Section 5.13.

Release” means any spilling, leaking, pumping, emitting, emptying, discharging, injecting, escaping, leaching, migrating, dumping, or disposing of Hazardous Materials (including the abandonment or discarding of barrels, containers or other closed receptacles containing Hazardous Materials) into the environment.

Registered” with respect to Intellectual Property means currently issued, registered, renewed with a governmental authority, or the subject of a pending application therefor.

Remedial Action” means any response action, removal action, remedial action, corrective action, monitoring program, sampling program, investigation or other actions taken to (i) clean up, remove, remediate, contain, treat, monitor, assess, or evaluate Hazardous Materials in the environment; (ii) prevent or minimize a Release or threatened Release of Hazardous Materials so they do not migrate or endanger or threaten to endanger public health or welfare or the environment; or (iii) perform pre-remedial studies and investigations and post-remedial operation and maintenance activities; or (iv) any other actions defined in 42 U.S.C. 9601.

Representatives” has the meaning set forth in Section 5.7.

Schedules” means the schedules referred to in this Agreement as attached hereto.

Seller Benefit Plans” has the meaning set forth in Section 3.17.

Seller Confidential Information” has the meaning set forth in Section 5.8(c).

Seller Multiemployer Plans” has the meaning set forth in Section 3.17(a).

Sellers” means, collectively, Georgia-Pacific Corporation, a Georgia corporation, and Georgia-Pacific Building Materials Sales, Ltd., a New Brunswick corporation.

Special Purpose Historical Financial Statements” has the meaning set forth in Section 3.5(a).

Specified Brands” has the meaning set forth in Section 1.2(a)(v).

Suits” has the meaning set forth in Section 3.13(c).

 

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Support Services” has the meaning set forth in the IT Support Services Agreement.

Tanks” has the meaning set forth in Section 5.21.

Target Working Capital” has the meaning set forth in Section 2.3(a).

Tax” means all Federal, state, foreign or other governmental taxes, assessments, duties, fees, levies or similar charges of any kind, including all income, profit, franchise, excise, property, use, intangibles, sales, payroll, employment, withholding and other taxes, and including all interest and penalties imposed with respect to such amounts.

Tax Return” means any return, report, form or other information filed with any taxing authority with respect to Taxes.

Third Party Claim” has the meaning set forth in Section 8.3(a).

Top 10 Distribution Customer” has the meaning set forth in Section 3.21(a).

Top 20 Customer” has the meaning set forth in Section 3.21(a).

Top 20 Supplier” has the meaning set forth in Section 3.21(a).

Trade Secrets” shall mean trade secrets and confidential and proprietary information and know-how, including without limitation confidential processes, procedures, schematics, formulae, drawings, prototypes, models, designs and customer lists, and any and all claims or causes of action arising out of or related to any infringement, misappropriation or other violation of any of the foregoing, including without limitation rights to recover for past, present and future violations thereof.

Trademarks” shall mean trademarks, service marks, brand names, certification marks, collective marks, Internet domain names, logos, symbols, trade dress, assumed names, fictitious names, trade names, and other indicia of origin, all applications and registrations for the foregoing, all goodwill associated therewith and symbolized thereby, including without limitation all extensions, modifications and renewals of same, and any and all claims or causes of action arising out of or related to any infringement, misappropriation, dilution or other violation of any of the foregoing, including without limitation rights to recover for past, present and future violations thereof.

Transfer Taxes” has the meaning set forth in Section 5.11(c).

Transferring Employees” has the meaning set forth in the Human Resources Agreement.

Transition Services Agreement” has the meaning set forth in Section 5.13.

Working Capital” has the meaning set forth on Schedule 2.3.

 

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SECTION 10.2               Construction and Interpretation of Certain Terms and Phrases.  Unless the context of this Agreement otherwise requires: (i) words of any gender include each other gender; (ii) words using the singular or plural number also include the plural or singular number, respectively; (iii) the terms “hereof,” “herein,” “hereby” and derivative or similar words refer to this entire Agreement; (iv) the terms “Article” or “Section” refer to the specified Article or Section of this Agreement; and (v) the phrases “ordinary course of the operation of the Business” and “ordinary course of the operation of the Business consistent with past practice” refer to the ordinary course of business and practice of Sellers in connection with the Business and the Acquired Assets in a consistent manner.  Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified.  The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  For purposes of any indemnification provision in this Agreement, the word “expenses” shall mean out-of-pocket expenses, and shall not include any allocations of internal salaries and other expenses.  Whenever the words “included,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by their respective officers thereunto duly authorized, all as of the date first written above.

 

GEORGIA-PACIFIC CORPORATION

 

 

 

 

 

 

 

 

 

By:

/s/ David J. Paterson

 

 

Name:

David J. Paterson

 

 

Title:

Executive Vice President-Building Products

 

 

 

 

 

 

 

 

 

GEORGIA-PACIFIC BUILDING MATERIALS SALES, LTD.

 

 

 

 

 

 

 

 

 

By:

/s/ David J. Paterson

 

 

Name:

David J. Paterson

 

 

Title:

Executive Vice President-Building Products

 

 

 

 

 

 

 

 

 

ABP DISTRIBUTION INC.

 

 

 

 

 

 

 

 

 

By:

/s/ Lenard Tessler

 

 

Name:

Lenard Tessler

 

 

Title:

President

 

 

 

 

 




Exhibit 10.2

 

FIRST AMENDMENT TO

ASSET PURCHASE AGREEMENT

 

This First Amendment, dated as of May 6, 2004 (this “Amendment”), to the Asset Purchase Agreement (the “Agreement”), dated as of March 12, 2003, by and among Georgia-Pacific Corporation, a Georgia corporation (“GP” or a “Seller”), Georgia-Pacific Building Materials Sales, Ltd., a New Brunswick corporation and a wholly owned subsidiary of GP (“GPBMS” or a “Seller” and, together with GP, “Sellers”), and BlueLinx Corporation (f/k/a ABP Distribution Inc.), a Georgia corporation (“Purchaser”).

 

WHEREAS, the parties to the Agreement desire to enter into this Amendment to amend certain provisions and Schedules of the Agreement upon the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the foregoing and the respective agreements herein contained, the parties, intending to be legally bound, agree as follows:

 

Section 1.        Capitalized Terms.  All capitalized terms used in this Amendment and not otherwise defined herein shall have their respective meanings set forth in the Agreement.

 

Section 2.        Amendments.

 

Section 2.1      Purchase and Sale of Acquired Assets; Assumption of Assumed Liabilities.

 

(a)    Section 1.2(a)(iv) of the Agreement is hereby deleted and replaced in it entirety to read as follows:

 

“(iv) all Tanks listed on Schedule 1.2(a)(iv)(A) and all tools, machinery, equipment, parts, office and other supplies and other items of tangible personal property of each Seller primarily related to or primarily used in the operation of the Business, whether located on site at the Real Property or off site, to the extent such personal property is stored or used off site in the ordinary course of the operation of the Business (excluding the items listed on Schedule 1.2(a)(iv)(B)) (the “Personal Property”);”

 

(b)    Section 1.2(b)(i) of the Agreement is hereby deleted and replaced in it entirety to read as follows:

 

“(i) other than Petty Cash, all cash and cash equivalents on hand, all cash in banks, all bank accounts, all lock box receipts received prior to the Closing Date and all certificates of deposit and other bank deposits owned or held by either Seller or any of its affiliates;”

 



 

Section 2.2      The Closing; Purchase Price Adjustment.  Section 2.1 of the Agreement is hereby deleted and replaced in it entirety to read as follows:

 

“SECTION 2.1       Closing Date.  The closing of the sale and transfer of the Acquired Assets and the assumption of the Assumed Liabilities (the “Closing”) shall take place at the offices of Schulte Roth & Zabel LLP, 919 3rd Avenue, New York, New York 10022, at 11:00 a.m., local time, on May 7, 2004.”

 

Section 2.3      Product Liability Claim Procedures.  Section 8.5(d) of the Agreement is hereby deleted and replaced in it entirety to read as follows:

 

“(d)    Purchaser shall perform administrative services related to asserted Product Liability Claims (e.g., processing customer returns and customer complaints) as may be reasonably requested by GP from time to time.  Purchaser shall submit a complaint/claim form in a form mutually acceptable to Purchaser and GP and, as may be reasonably requested by GP, supporting documentation for each asserted Product Liability Claim, including, but not limited to, documentation that establishes the date of sale for the product(s) that is (are) the subject of the Product Liability Claim.  Purchaser and GP each shall designate a single point of contact for routine Product Liability Claims.

 

Purchaser shall, on a monthly basis, submit to GP for payment a billing invoice setting forth the number of Product Liability Claims for which administrative services were performed during such period.  The amount for such services shall be $50.00 per Product Liability Claim.  Payment of all such amounts owed, which shall not exceed $50,000 per month, shall be remitted within thirty (30) days after the date in which GP receives Purchaser’s invoices.”

 

Section 2.4      Personal Property.  Section 3.10 is hereby amended by deleting the last sentence of such section and replacing it in its entirety to read as follows:

 

“Section 3.10 shall not apply to Computer Hardware or Computer Software, which are the subject of Section 3.24, or Tanks, which are the subject of Section 3.18.”

 

Section 2.5      Construction and Interpretation of Certain Terms and Phrases.  Section 10.2 of the Agreement is hereby amended by adding the following sentences at the end of such Section:

 

“The parties have participated jointly in the negotiation and drafting of this Agreement.  Consequently, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.”

 

Section 2.6      Schedule 1.2(b)(xvii) of the Agreement is hereby amended by deleting such Schedule in its entirety and replacing the same with Annex A attached hereto.

 



 

Section 3.        Miscellaneous.

 

Section 3.1.     Governing Law.  This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts made and to be performed entirely in the State of New York, regardless of the laws that might otherwise govern under applicable principles of conflicts of law.

 

Section 3.2.     Severability.  If any provision of this Amendment (or any portion thereof) or the application of any such provision (or any portion thereof) to any Person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, the remainder of this Amendment will continue in full force and effect and the application of such provision will be interpreted so as reasonably to effect the intent of the parties hereto.  The parties further agree to replace such invalid, illegal or unenforceable provision with a valid, legal and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid, illegal or unenforceable provision.

 

Section 3.3.     Headings.  The section and paragraph headings contained in this Amendment are for reference purposes only and shall not in any way affect the meaning or interpretation of this Amendment.

 

Section 3.4.     Counterparts.  This Amendment may be executed in two (2) or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered (including by facsimile) to the other parties.

 

Section 3.5.     Full Force and Effect.  Except as expressly amended hereby, the Agreement remains in full force and effect in accordance with its terms and the parties shall prepare a composite of the Agreement and this Amendment.  Notwithstanding the foregoing, to the extent that there is any inconsistency between the provisions of the Agreement and this Amendment, the provisions of this Amendment shall control.

 

Section 3.6      Entire Agreement; No Third Party Beneficiaries.  The Agreement (including the Schedules and Exhibits hereto), this Amendment, the Ancillary Documents, the Confidentiality Agreement and any side letters entered into by GP and Cerberus Capital Management, L.P.  or its affiliates in connection with the Agreement (a) constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof or thereof and (b) are not intended to confer upon any Person (other than the parties identified herein or in the Agreement, the parties entitled to indemnification under Article VIII of the Agreement and their respective successors and permitted assigns) any rights or remedies under the Agreement or this Amendment.

 

Section 3.7      Assignment.  Neither this Amendment nor any of the rights, interests or obligations thereunder or hereunder shall be assigned by any party hereto without the prior written consent of the other party or parties hereto; provided, that Purchaser, its subsidiaries or affiliates may assign its rights hereunder (i) as collateral security for any financing of Purchaser, subsidiary or affiliate or (ii) to the purchaser of all or substantially all of the assets of

 



 

Purchaser, such subsidiary or affiliate.  Subject to the preceding sentence, this Amendment will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns.

 

Section 3.8      Consent to Jurisdiction.  Each of Purchaser and Sellers irrevocably submits to the exclusive jurisdiction of (a) the State Court of Georgia, Fulton County and (b) the United States District Court for the Northern District of Georgia located in Atlanta, Georgia, for the purposes of any suit, action or other proceeding arising out of this Amendment or any transaction contemplated hereby.  Each of Purchaser and Sellers further agrees that service of any process, summons, notice or document by U.S.  registered mail to such party’s respective address set forth in Section 9.1 shall be effective service of process for any action, suit or proceeding in Georgia with respect to any matters to which it has submitted to jurisdiction as set forth above in the immediately preceding sentence.  Each of Purchaser and Sellers irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Amendment or the transactions contemplated hereby in (a) the State Court of Georgia, Fulton County, or (b) the United States District Court for the Northern District of Georgia, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

 

[Remainder of page intentionally left blank.  Signature page follows.]

 



 

IN WITNESS WHEREOF, each party has caused this Amendment to be duly executed on its behalf by its duly authorized officer as of the date first written above.

 

 

PURCHASER:

 

 

 

BLUELINX CORPORATION

 

 

 

 

 

By:

/s/ Steven C.  Hardin

 

 

Name:  Steven C.  Hardin

 

Title:    Vice President – West

 

 

 

 

 

 

SELLERS:

 

 

 

GEORGIA-PACIFIC CORPORATION

 

 

 

 

 

By:

/s/ David J.  Paterson

 

 

Name:  David J.  Paterson

 

Title:    Executive Vice President – Building Products

 

 

 

 

 

 

 

 

GEORGIA-PACIFIC BUILDING
MATERIALS SALES, LTD.

 

 

 

 

 

By:

/s/ David J.  Paterson

 

 

Name:  David J.  Paterson

 

Title:    Executive Vice President – Building Products