Document:

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

  	
   

  

 

3Exhibit
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

 

2

 

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

 

3

 

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;

 

4

 

(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

 

5

 

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;

 

6

 

(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;

 

7

 

(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

 

8

 

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

 

9

 

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

 

10

 

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:

 

11

 

(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

 

12

 

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

 

13

 

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.

 

14

 

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).

 

15

 

(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

 

16

 

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;

 

17

 

(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

 

18

 

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.

 

19

 

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.

 

20

 

                (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

 

21

 

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

 

22

 

(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

 

23

 

“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.

 

24

 

(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.

 

25

 

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

 

26

 

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

 

27

 

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.

 

28

 

(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

 

29

 

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.

 

30

 

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

 

31

 

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

 

32

 

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

 

33

 

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

 

34

 

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

 

35

 

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.

 

36

 

                (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

 

37

 

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

 

38

 

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

 

39

 

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

 

40

 

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

 

41

 

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.

 

42

 

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

 

43

 

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)           License.  Sellers 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.

 

44

 

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

 

45

 

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.

 

46

 

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

 

47

 

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

 

48

 

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).

 

49

 

(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

 

50

 

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.

 

51

 

                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

 

52

 

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

 

53

 

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.

 

54

 

                (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

 

55

 

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,

 

56

 

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.

 

57

 

                                                (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

 

58

 

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.

 

59

 

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.

 

60

 

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.

 

61

 

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

 

62

 

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.

 

63

 

“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.

 

64

 

“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

 

65

 

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

 

66

 

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.

 

67

 

“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

 

68

 

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

 

69

 

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

 

70

 

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).

 

71

 

“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).

 

72

 

“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.

 

73

 

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

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