Document:

Exhibit 10.2

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS EXECUTIVE EMPLOYMENT
AGREEMENT (this “Agreement”), is made, entered into
and effective as of May     , 2005 (the “Effective Date”) by and among UNITED STATIONERS INC., a
Delaware corporation (hereinafter, together with its successors, referred to as
“Holding”), UNITED STATIONERS SUPPLY
CO., an Illinois corporation (hereinafter, together with its successors,
referred to as the “Company”, and,
together with Holding, the “Companies”),
and Stephen A. Schultz (hereinafter referred to as the “Executive”)
and specifically, supersedes the Executive Employment Agreement Executive
entered into with the Companies on July 1, 2002.

 

WHEREAS, the Companies have a need for executive
management services; and

 

WHEREAS, the Executive is qualified and willing to
render such services to the Companies;

 

NOW, THEREFORE, in consideration of the premises and
the mutual covenants and agreements contained herein, the parties agree as
follows:

 

Section 1.                                          Definitions.

 

(a)                          As used
in this Agreement, the following terms have the respective meanings set forth
below:

 

“Accrued Benefits” means (i) all
salary earned or accrued through the date the Executive’s employment is
terminated, (ii) reimbursement for any and all monies advanced in connection
with the Executive’s employment for reasonable and necessary expenses incurred
by the Executive through the date the Executive’s employment is terminated, (iii) all
accrued and unpaid annual incentive compensation awards for the year
immediately prior to the year in which the Executive’s employment is
terminated, and (iv) all other payments and benefits payable on or after
termination of employment to which the Executive is entitled at the date of
termination under the terms of any applicable compensation arrangement or
benefit plan or program of the Company.  “Accrued
Benefits” shall not include any entitlement to severance pay or severance
benefits under any Company severance policy or plan generally applicable to the
Company’s salaried employees.

 

“Affiliate” shall have the
meaning given such term in Rule 12b-2 of the Exchange Act.

 

“Board” shall mean, so long as
Holding owns all of the outstanding Voting Securities (as hereinafter defined
in the definition of Change of Control) of the Company, the board of directors
of Holding.  In all other cases, Board
means the board of directors of the Company.

 

 

“Cause” shall mean (i) conviction
of, or plea of nolo  contendere to, a felony (excluding motor
vehicle violations); (ii) theft or embezzlement, or attempted theft or
embezzlement, of money or property or assets of the Company or any of its
Affiliates; (iii) illegal use of drugs; (iv) material breach of this
Agreement or any employment-related undertakings provided in a writing signed by
the Executive prior to or concurrently with this Agreement; (v) commission
of any act or acts of moral turpitude; (vi) gross negligence or willful
misconduct in the performance of Executive’s duties; (vii) breach of any
fiduciary duty owed to the Company, including, without limitation, engaging in
competitive acts while employed by the Company; or (viii) the Executive’s
willful refusal to perform the assigned duties for which the Executive is
qualified as directed by the Executive’s Supervising Officer (as hereinafter defined)
or the Board; provided, that in the case of any event constituting Cause within
clauses (iv) through (viii) which is curable by the Executive, the
Executive has been given written notice by the Companies of such event said to
constitute Cause, describing such event in reasonable detail, and has not cured
such action within thirty (30) days of such written notice as reasonably
determined by the Chief Executive Officer. 
For purposes of this definition of Cause, action or inaction by the
Executive shall not be considered “willful” unless done or omitted by the
Executive (A) intentionally or not in good faith and (B) without
reasonable belief that the Executive’s action or inaction was in the best
interests of the Companies, and shall not include failure to act by reason of
total or partial incapacity due to physical or mental illness.

 

“Change of Control” shall mean (a) Any
“Person” (having the meaning ascribed to such term in Section 3(a)(9) of
the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a “group” within the meaning of Section 13(d)(3)) has or
acquires “Beneficial Ownership” (within the meaning of Rule 13d-3 under
the Exchange Act) of 30% or more of the combined voting power of Holding’s then
outstanding voting securities entitled to vote generally in the election of
directors (“Voting Securities”); provided,
however, that the acquisition or holding of Voting Securities by (i) Holding
of any of its subsidiaries, (ii) an employee benefit plan (or a trust
forming a part thereof) maintained by Holding or any of its subsidiaries, or (iii) any
Person in which the Executive has a substantial equity interest shall not
constitute a Change of Control. 
Notwithstanding the foregoing, a Change of Control shall not be deemed
to occur solely because any Person acquired Beneficial Ownership of more than
the permitted amount of Voting Securities as a result of the issuance of Voting
Securities by Holding in exchange for assets (including equity interests) or
funds with a fair value equal to the fair value of the Voting Securities so
issued; provided that if a Change of Control would occur (but for the operation
of this sentence) as a result of the issuance of Voting Securities by Holding,
and after such issuance of Voting Securities by Holding, such Person becomes
the Beneficial Owner of any additional Voting Securities which increases the
percentage of the Voting Securities Beneficially Owned by such Person to more
than 50% of the Voting Securities of Holding, then a Change of Control shall occur;
(b) At any time during a period of two consecutive years, the individuals 

 

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who at the beginning of
such period constituted the Board (the “Incumbent Board”)
cease for any reason to constitute more than 50% of the Board; provided,
however, that if the election, or nomination for election by Holding’s
stockholders, of any new director was approved by a vote of more than 50% of
the directors then comprising the Incumbent Board, such new director shall, for
purposes of this subsection (b), be considered as though such person were
a member of the Incumbent Board; provided, further, however, that no individual
shall be considered a member of the Incumbent Board if such individual
initially assumed office as a result of (i) either an actual “Election
Consent” (as described in Rule 14a-11 promulgated under the Exchange Act)
or other actual solicitation of proxies or consents by or on behalf of a Person
other than the Incumbent Board (a “Proxy Contest”),
or (ii) by reason of an agreement intended to avoid or settle any actual
or threatened Election Contest or Proxy Contest; (c) Consummation of a
merger, consolidation or reorganization or approval by Holding’s stockholders
of a liquidation or dissolution of Holding or the occurrence of a liquidation
or dissolution of Holding (“Business Combination”),
unless, following such Business Combination: (1) the Persons with
Beneficial Ownership of Holding, immediately before such Business Combination,
have Beneficial Ownership of more than 50% of the combined voting power of the
then outstanding voting securities entitled to vote generally in the election
of directors of the corporation (or in the election of a comparable governing
body of any other type of entity) resulting from such Business Combination
(including, without limitation, an entity which as a result of such transaction
owns Holding or all or substantially all of Holding’s assets either directly or
through one or more subsidiaries) (the “Surviving Company”)
in substantially the same proportions as their Beneficial Ownership of the
Voting Securities immediately before such Business Combination, (2) the
individuals who were members of the Incumbent Board immediately prior to the
execution of the initial agreement providing for such Business Combination
constitute more than 50% of the members of the board of directors (or
comparable governing body of a noncorporate entity) of the Surviving Company;
and (3) no Person (other than Holding, any of its subsidiaries or any
employee benefit plan (or any trust forming a part thereof) maintained by
Holding, the Surviving Company or any Person who immediately prior to such
Business Combination had Beneficial Ownership of 30% or more of the then Voting
Securities) has Beneficial Ownership of 30% or more of the then combined voting
power of the Surviving Company’s then outstanding voting securities; provided,
that notwithstanding this clause (3), a Change of Control shall not be deemed
to occur solely because any Person acquired Beneficial Ownership of more than
30% of Voting Securities as a result of the issuance of Voting Securities by
Holding in exchange for assets (including equity interests) or funds with a
fair value equal to the fair value of the Voting Securities so issued;
provided, however that a Business Combination with a Person in which the
Executive has a substantial equity interest shall not constitute a Change of
Control, or (d) Approval by Holding’s stockholders of an agreement for the
assignment, sale, conveyance, transfer, lease or other disposition of all or
substantially all of the assets of Holding to any Person (other than a Person
in

 

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which the Executive has a
substantial equity interest and other than a subsidiary of Holding or other
entity, the Persons with Beneficial Ownership of which are the same Persons
with Beneficial Ownership of Holding and such Beneficial Ownership is in
substantially the same proportions), or the occurrence of the same.  Notwithstanding the foregoing, a Change of
Control shall not be deemed to occur solely because any Person acquired
Beneficial Ownership of more than the permitted amount of Voting Securities as
a result of the acquisition of Voting Securities by the Company which, by
reducing the number of Voting Securities outstanding, increases the
proportional number of shares Beneficially Owned by such Person; provided that
if a Change of Control would occur (but for the operation of this sentence) as
a result of the acquisition of Voting Securities by the Company, and after such
acquisition of Voting Securities by the Company, such Person becomes the
Beneficial Owner of any additional Voting Securities which increases the
percentage of the Voting Securities Beneficially Owned by such Person, then a
Change of Control shall occur.

 

“Exchange Act” shall mean the
Securities Exchange Act of 1934, as amended.

 

“Good Reason” shall mean (i) any
material breach by the Companies of this Agreement, (ii) any material
reduction, without the Executive’s written consent, in the Executive’s title,
duties, responsibilities or authority; provided, however, that for purposes of
this clause (ii), neither (A) a change in the Executive’s Supervising
Officer or the number or identity of the Executive’s direct reports, nor (B) a
change in the Executive’s title, duties, responsibilities or authority as a
result of a realignment or restructuring of the Companies’ executive
organizational chart nor (C) a change in the Executive’s title, duties,
responsibilities or authority as a result of a realignment or restructuring of
the Companies shall necessarily be deemed by itself to materially reduce
Executive’s title, duties, responsibilities or authority, as long as, in the
case of either (A), (B) or (C), Executive continues to report to either
the Chief Executive Officer or Chief Operating Officer of the Companies or to
the Supervising Officer to whom he reported immediately prior to the Change of
Control or a Supervising Officer of equivalent responsibility and authority, or
(iii) without Executive’s written consent: 
(A) a reduction in the Executive’s Base Salary or a material
reduction determined on an aggregate basis in the level of executive benefits,
perquisites and incentive opportunities, (B) the relocation of the
Executive’s principal place of employment more than fifty (50) miles from its
location on the date of a Change in Control, or (C) the relocation of the
Company’s corporate headquarters office outside of the metropolitan area in
which it is located on the date of a Change in Control.  For purposes of this Agreement, a Change of
Control, alone, does not constitute Good Reason.  Furthermore, notwithstanding the above, the
occurrence of any of the events described above will not constitute Good Reason
unless the Executive gives the Companies written notice within thirty (30) days
after the occurrence of any of such events that the Executive believes that
such event constitutes Good Reason, and the Companies thereafter fail to cure
any such event within sixty (60) days after receipt of such notice.

 

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 “Person”
shall mean any natural person, firm, corporation, limited liability company,
trust, partnership, limited or limited liability partnership, business association,
joint venture or other entity and, for purposes of the definition of Change of
Control herein, shall comprise any “person”, within the meaning of Sections 13(d) and
14(d) of the Exchange Act, including a “group” as therein defined.

 

“Subsidiary” shall mean, with
respect to any Person, any other Person of which such first Person owns 20% or
more of the economic interest in such Person or owns or has the power to vote,
directly or indirectly, securities representing 20%or more of the votes ordinarily
entitled to be cast for the election of directors or other governing Persons.

 

(b)                         The
capitalized terms used in Section 5(j) have the respective meanings
assigned to them in such Section and the following additional terms have
the respective meanings assigned to them in the Sections hereof set forth
opposite them:

 

	
  “Annual Bonus”

  	
  Section 4(b)

  
	
  “Base Salary”

  	
  Section 4(b)

  
	
  “Bonus Plan”

  	
  Section 4(b)

  
	
  “Confidential information or proprietary
  data”

  	
  Section 6(a)(2)

  
	
  “Customer”

  	
  Section 6(d)(2)

  
	
  “Disability”

  	
  Section 5(c)

  
	
  “Employment Period”

  	
  Section 2

  
	
  “Retirement”

  	
  Section 5(f)

  
	
  “Supervising Officer”

  	
  Section 3(a)

  
	
  “Term” and “Termination Date”

  	
  Section 2

  

 

Section 2.                                          Term
and Employment Period.  Subject
to Section 19 hereof, the term of this Agreement (“Term”)
shall commence on the Effective Date of this Agreement and shall continue until
the effective date of termination of the Executive’s employment hereunder
pursuant to Section 5 of this Agreement. 
The period during which the Executive is employed by the Companies
pursuant to this Agreement is referred to herein as the “Employment
Period.”  The date on which
termination of the Executive’s employment hereunder shall become effective is
referred to herein as the “Termination Date.”

 

Section 3.                                          Duties.

 

(a)                          During
the Employment Period, the Executive (i) shall serve as Senior Vice
President & President, Lagasse, Inc., a subsidiary of the
Companies, (ii) shall report directly to an officer of the Companies (the “Supervising Officer”) who shall be selected by the Board or
the Chief Executive Officer in its or his or her sole discretion, (iii) shall,
subject to and in accordance with the authority and direction of the Board
and/or the Supervising Officer have such authority and perform in a diligent
and competent manner such duties as may be assigned to the Executive from time
to time by the Board and/or the Supervising Officer and (iv) shall devote
the Executive’s best efforts and such time, attention, knowledge and skill to
the operation of the business and

 

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affairs of the Companies as shall be necessary to
perform the Executive’s duties.  During
the Employment Period, the Executive’s place of performance for the Executive’s
duties and responsibilities shall be at the Companies’ corporate headquarters
office, unless another principal place of performance is agreed in writing
among the parties and except for required travel by the Executive on the
Companies’ business or as may be reasonably required by the Companies.

 

(b)                         Notwithstanding
the foregoing, it is understood during the Employment Period, subject to any
conflict of interest policies of the Companies, the Executive may (i) serve
in any capacity with any civic, charitable, educational or professional
organization provided that such service does not materially interfere with the
Executive’s duties and responsibilities hereunder, (ii) make and manage
personal investments of the Executive’s choice, and (iii) with the prior
consent of the Companies’ Chief Executive Officer, which shall not be
unreasonably withheld, serve on the board of directors of one (1) for-profit
business enterprise.

 

Section 4.                                          Compensation.  During the Employment Period, the Executive
shall be compensated as follows:

 

(a)                          the
Executive shall receive, at such intervals and in accordance with such Company
payroll policies as may be in effect from time to time, an annual salary (pro
rata for any partial year) equal to $280,000 (“Base Salary”).  The Base Salary shall be reviewed by the
Board from time to time and may, in the Board’s sole discretion, be increased
when deemed appropriate by the Board; if so increased, it shall not thereafter
be reduced (other than an across-the-board reduction applied in the same
percentage at the same time to all of the Companies’ senior executives at the
same grade level);

 

(b)                         during
the Employment Period, the Executive shall be eligible to earn an annual
incentive compensation award under the Companies’ management incentive or bonus
plan, or a successor plan thereto, as shall be in effect from time to time (the
“Bonus Plan”), subject to achievement of
performance goals determined in accordance with the terms of the Bonus Plan
(such annual incentive compensation award, the “Annual Bonus”),
with such Annual Bonus to be payable in a cash lump sum at such time as bonuses
are ordinarily paid to the Companies’ senior executives at the same grade
level;

 

(c)                          the
Executive shall be reimbursed, at such intervals and in accordance with such
Company policies as may be in effect from time to time, for any and all
reasonable and necessary business expenses incurred by the Executive for the
benefit of the Companies, subject to documentation in accordance with the
Companies’ policies;

 

(d)                         the
Executive shall be entitled to participate in all incentive, savings and
retirement plans, stock option plans, practices, policies and programs
applicable generally to other senior executives of the Companies at the same
grade level and as determined by the Board from time to time;

 

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(e)                          the
Executive and/or the Executive’s family, as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare benefit
plans, practices, policies and programs provided by the Company to senior
executives of the Companies at the same grade level (including, without
limitation, medical, prescription, dental, disability, salary continuance,
employee life, group life, and accidental death and travel accident insurance
plans and programs) to the extent applicable generally to other executives of
the Companies at the same grade level;

 

(f)                            the
Executive shall be provided with an automobile allowance or a Company-leased
automobile, in either case in accordance with the Companies’ then applicable
Executive Automobile Policy; the Executive shall be entitled to not less than
twenty (20) paid vacation days per calendar year (pro rata for any partial
year);

 

(g)                         the
Executive shall be entitled to participate in the Company’s other executive fringe
benefits and perquisites generally applicable to the Companies’ senior
executives at the same grade level in accordance with the terms and conditions
of such arrangements as are in effect from time to time; and

 

(h)                         appended
hereto as Appendix I and made a part of this Agreement is a description
of certain modifications and clarifications to Section 4 of this
Agreement.

 

Section 5.                                          Termination
of Employment.

 

(a)                          All
Accrued Benefits to which the Executive (or the Executive’s estate or
beneficiary) is entitled shall be payable within thirty (30) days following
termination of the Employment Period, except as otherwise specifically provided
herein or under the terms of any applicable policy, plan or program, in which
case the payment terms of such policy, plan or program shall be determinative.

 

(b)                         Any
termination by the Companies, or by the Executive, of the Employment Period
shall be communicated by written notice of such termination to the Executive,
if such notice is delivered by the Companies, and to the Companies, if such
notice is delivered by the Executive, each in compliance with the requirements
of Section 13 hereof.  Except in the
event of termination of the Employment Period by reason of Cause or the
Executive’s death, the Termination Date shall be no earlier than thirty (30)
days following the date on which notice of termination is delivered by one
party to the other in compliance with the requirements of Section 13
hereof.

 

(c)                          If the
Employment Period is terminated by the Companies for any reason other than
Cause or the Executive’s permanent disability, as defined in the Companies’
Board-approved disability plan or policy as in effect from time to time (“Disability”)
and other than within two (2) years following a Change of Control, then,
as the Executive’s exclusive right and remedy in respect of such termination:

 

(i)                                     the
Executive shall be entitled to receive from the Company the Executive’s Accrued
Benefits in accordance with Section 5(a);

 

7

 

(ii)                                  the
Executive shall be entitled to an amount equal to one and one-half (1-1/2)
times the Executive’s then existing Base Salary, to be paid in such intervals
and at such times in accordance with the Company’s payroll practices in effect
from time to time over the eighteen (18) month period following the Termination
Date;

 

(iii)                               the
Executive shall be entitled to a payment in an amount equal to one and one-half
(11⁄2) times the actual incentive compensation award which would otherwise be
payable for the calendar year during which the Termination Date occurs, to be
paid at such time as the incentive award would otherwise be paid in accordance
with the Company’s policies (for purposes of determining such award, any
discretionary individual performance component shall be deemed to be at the
same achievement level as in the year preceding the Termination Date or, if not
included in the such year’s incentive award components, at target);

 

(iv)                              the
Executive shall continue to be covered, upon the same terms and conditions
described in Section 4(e) hereof, by the same or equivalent medical,
dental, hospitalization, life and disability insurance plans, programs and/or
arrangements as in effect for the Executive immediately prior to the
Termination Date until the earlier of:  (A) the
eighteen (18) month anniversary following the date of the Executive’s
Termination Date, and (B) the date the Executive receives substantially
equivalent coverage under the plans, programs and/or arrangements of a
subsequent employer;

 

(v)                                 the
Executive shall be entitled to receive executive level career transition
assistance services provided by a career transition assistance firm selected by
the Executive and paid for by the Companies in an amount not to exceed ten percent
(10%) of the sum of the Executive’s then existing Base Salary.  The Executive shall not be eligible to
receive cash in lieu of executive level career transition assistance services.

 

(d)                         If during
the Employment Period, a Change of Control occurs and the Employment Period is
terminated by the Companies for any reason other than Cause or Disability or by
the Executive for Good Reason within two (2) years from the date of such
Change of Control, then:

 

(i)                                     the
Executive shall be entitled to receive from the Company the Executive’s Accrued
Benefits in accordance with Section 5(a);

 

(ii)                                  the
Executive shall be entitled to a lump-sum payment in an amount equal to two (2) times
the Executive’s then existing Base Salary, to be paid within thirty (30) days
following the Termination Date;

 

(iii)                               the
Executive shall be entitled to a lump-sum payment in an amount equal to two (2) times
the Executive’s target incentive compensation award for the calendar year
during which the Termination Date occurs, to be paid within thirty (30) days following
the Termination Date;

 

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(iv)                              the
Executive shall be entitled to a lump-sum payment to be paid within thirty (30)
days following the Termination Date in an amount equal to the pro-rata target
incentive compensation award for the calendar year during which the Termination
Date occurs.  Such pro-rata target
incentive compensation award shall be determined by multiplying the target
incentive compensation award amount by a fraction, the numerator of which is
the number of days in the calendar year of the Termination Date elapsed prior
to the Termination Date and the denominator of which is three hundred and
sixty-five (365).

 

(v)                                 the
Executive shall continue to be covered, upon the same terms and conditions
described in Section 4(e) hereof, by the same or equivalent medical,
dental, hospitalization, life and disability insurance plans, programs and/or
arrangements as in effect for the Executive immediately prior to the Change of
Control until the earlier of: (A) the second anniversary following the
date of the Executive’s Termination Date, and (B) the date the Executive
receives substantially equivalent coverage under the plans, programs and/or
arrangements of a subsequent employer;

 

(vi)                              the
Executive shall receive two (2) additional years of credit for purposes of
age, benefit service and vesting under the Company’s defined benefit retirement
plan;

 

(vii)                           if the
Executive’s outstanding stock options have not by then fully vested pursuant to
the terms of the Companies’ applicable stock option plan(s) and applicable
option agreement(s), then to the extent permitted in the Companies’ applicable
stock option plan(s) and as provided in the applicable stock option
agreement(s), the Executive shall continue to vest in the Executive’s unvested
stock options following the Termination Date;

 

(viii)                        the
Executive shall be entitled to receive executive level career transition
assistance services provided by a career transition assistance firm selected by
the Executive and paid for by the Companies in an amount not to exceed ten percent
(10%) of the sum of the Executive’s then existing Base Salary.  The Executive shall not be eligible to
receive cash in lieu of executive level career transition assistance services;
and

 

(ix)                                the
Executive shall be entitled to be reimbursed by the Companies on an as incurred
basis for the Executive’s reasonable attorneys’ fees, costs and expenses
incurred in conjunction with any dispute regarding Section 5(d).

 

(e)                          Any
amounts payable pursuant to Sections 5(c) and 5(d) above shall be
considered severance payments and, except for the Executive’s vested benefits
under the Companies’ employee benefit plans (other than severance plans), shall
be in full and complete satisfaction of the obligations of the Companies to the
Executive in connection with the termination of the Executive’s
employment.  The Company shall deliver a Form 1099
to the Executive reflecting such payments.

 

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(f)                            If the
Employment Period is terminated as a result of the Executive’s death,
Disability or retirement, as defined in the Companies’ Board-approved
retirement plan or policy, as in effect from time to time (“Retirement”), then
the Executive shall be entitled to (i) the Executive’s Accrued Benefits in
accordance with Section 5(a), (ii) any benefits that may be payable
to the Executive under any applicable Board-approved disability, life insurance
or retirement plan or policy in accordance with the terms of such plan or policy,
and (iii) a lump sum payment to be paid within thirty (30) days following
the Termination Date in an amount equal to the pro-rata target incentive
compensation award for the calendar year during which the Termination Date
occurs by reason of the Executive’s death, Disability or Retirement.  Such pro-rata target incentive compensation
award shall be determined by multiplying the target incentive compensation
award amount by a fraction, the numerator of which is the number of days in the
calendar year of the Termination Date elapsed prior to the Termination Date and
the denominator of which is three hundred and sixty-five (365).

 

(g)                         Notwithstanding
anything else contained herein, if the Executive terminates his employment for
any reason other than Disability or Retirement and, if after a Change of
Control, without Good Reason, or the Companies terminate the Executive’s
employment for Cause, all of the Executive’s rights to payment from the
Companies (including pursuant to any plan or policy of the Companies) shall
terminate immediately, except the right to payment for Accrued Benefits in
respect of periods prior to such termination.

 

(h)                         Notwithstanding
anything to the contrary contained in this Section 5, the Executive shall
be required to execute the Companies’ then current standard release agreement
as a condition to receiving any of the payments and benefits provided for in
Sections 5(c) and (d), excluding the Accrued Benefits in accordance with Section 5(a).  It is acknowledged and agreed that the then
current standard release agreement shall not diminish or terminate the
Executive’s rights under this Agreement.

 

(i)                             In
the event of a termination of the Executive’s employment entitling the
Executive to benefits under Section 5(c) above, the Executive shall
use reasonable efforts to obtain employment suitable to his education, training
and experience, and, upon obtaining any such other employment shall promptly
notify the Companies thereof.  The
remaining obligation of the Companies under Section 5(c) shall be
offset by any compensation earned by the Executive from such other employment
during the eighteenth month period commencing on his Termination Date.  Except as set forth in the first sentence of
this Section 5(i) and subject to the Executive’s affirmative
obligations pursuant to Section 6, the Executive shall be under no
obligation to seek other employment or otherwise mitigate the obligations of
the Companies under this Agreement.

 

(j)                             If it
shall be determined that any payment or distribution of any type to or in
respect of the Executive made directly or indirectly, by the Companies or by
any other party in connection with a Change of Control, whether paid or payable
or distributed or distributable pursuant to the terms of this Agreement or
otherwise (the “Total Payments”), is or will be
subject to the excise tax imposed by Section 4999 of

 

10

 

the Internal Code of 1986, as amended (the “Code”), or any interest or penalties with respect to such
excise tax (such excise tax, together with any such interest and penalties, are
collectively referred to as the “Excise Tax”),
then the Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by
the Executive of all taxes (including any interest or penalties imposed with
respect to such taxes) imposed upon the Gross-Up Payment, the Executive retains
an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Total Payments.

 

(i)                                     All
computations and determinations relevant to Section 5(j) and this subsection 5(j)(i) shall
be made by a national accounting firm selected and reimbursed by the Companies
from among the ten (10) largest accounting firms in the United States as
determined by gross revenues (the “Accounting Firm”),
subject to the Executive’s consent (not to be unreasonably withheld), which
firm may be the Companies’ accountants. 
Such determinations shall include whether any of the Total Payments are “parachute
payments” (within the meaning of Section 280G of the Code).  In making the initial determination hereunder
as to whether a Gross-Up Payment is required, the Accounting Firm shall
determine that no Gross-Up Payment is required if the Accounting Firm is able to
conclude that no “Change of Control” has occurred (within the meaning of Section 280G
of the Code).  If the Accounting Firm
determines that a Gross-Up Payment is required, the Accounting Firm shall
provide its determination (the “Determination”),
together with detailed supporting calculations regarding the amount of any
Gross-Up Payment and any other relevant matter both to the Companies and the
Executive by no later than thirty (30) days following the Termination Date, if
applicable, or such earlier time as is requested by the Companies or the
Executive (if the Executive reasonably believes that any of the Total Payments
may be subject to the Excise Tax).  If
the Accounting Firm determines that no Excise Tax is payable by the Executive,
it shall furnish the Executive and the Companies with a written statement that
such Accounting Firm has concluded that no Excise Tax is payable (including the
reasons therefor) and that the Executive has substantial authority not to
report any Excise Tax on Executive’s federal income tax return.

 

(ii)                                  If
a Gross-Up Payment is determined to be payable, it shall be paid to the
Executive within twenty (20) days after the Determination (and all accompanying
calculations and other material supporting the Determination) is delivered to
the Companies by the Accounting Firm. 
Any determination by the Accounting Firm shall be binding upon the
Companies and the Executive, absent manifest error.

 

(iii)                               As
a result of uncertainty in the application of Section 4999 of the Code at
the time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments not made by the Companies should have been made
(“Underpayment”), or that Gross-Up
Payments will have been made by the Companies which should not have been made (“Overpayments”).  In
either such event, the Accounting Firm shall determine the amount of the
Underpayment or

 

11

 

Overpayment that has occurred.  In the case of an Underpayment, the amount of
such Underpayment (together with an amount which after payment of all taxes
thereon is equal to any interest and penalties payable by the Executive as a
result of such Underpayment) shall be promptly paid by the Companies to or for
the benefit of the Executive.

 

(iv)                              In
the case of an Overpayment, the Executive shall, at the direction and expense
of the Companies, take such steps as are reasonably necessary (including the
filing of returns and claims for refund), follow reasonable instructions from,
and procedures established by, the Companies, and otherwise reasonably
cooperate with the Companies to correct such Overpayment, provided, however,
that the Executive shall not in any event be obligated to return to the
Companies an amount greater than the portion of the Overpayment that Executive
has retained after payment of all taxes thereon or has recovered as a refund
from the applicable taxing authorities.

 

(v)                                 The
Executive shall notify the Companies in writing of any claim by the Internal
Revenue Service relating to the possible application of the Excise Tax under Section 4999
of the Code to any of the payments and amounts referred to herein and shall
afford the Companies, at their expense, the opportunity to control the defense
of such claim (for the sake of clarity, if the Internal Revenue Service is
successful in any such claim or the Executive reaches a final settlement with
the Internal Revenue Service with respect to such claim (after having afforded
the Companies, at their expense, the opportunity to control the defense of such
claim), the amount of the Excise Tax resulting from such successful claim or
settlement shall be determinative as to whether or not there has been an
Underpayment or an Overpayment for purposes of subsection 5(j)(iii).

 

(vi)                              Without
limiting the intent of this Section 5(j) to make the Executive whole, on
an after-tax basis, from the application of the Excise Taxes, all
determinations by the Accounting Firm shall be made with a view to minimizing
the application of Sections 280G and 4999 of the Code of any of the Total
Payments, subject, however, to the following: 
the Accounting Firm shall make its determination on the basis of “substantial
authority” (within the meaning of Section 6230 of the Code) and shall
provide opinions to that effect to both the Companies and the Executive upon
the request of either of them.

 

Section 6.                                          Further
Obligations of the Executive.

 

(a)                          (1)                                  During
and following the Executive’s employment by the Companies, the Executive shall
not, directly or indirectly, disclose, disseminate, make available or use any
confidential information or proprietary data of the Companies or any of their
Subsidiaries, except as reasonably necessary or appropriate for the Executive
to perform the Executive’s duties for the Companies, or as authorized in
writing by the Board or as required by any court or administrative agency (and
then only after prompt notice to the Companies to permit the Companies to seek
a protective order).

 

12

 

(2)                                  For
purposes of this Agreement, “confidential information
or proprietary data” means information and data prepared, compiled,
or acquired by or for the Executive during or in connection with the Executive’s
employment by the Companies (including, without limitation, information
belonging to or provided in confidence by any Customer, Supplier, trading
partner or other Person to which the Executive had access by reason of
Executive’s employment with the Companies) which is not generally known to the
public or which could be harmful to the Companies or their Subsidiaries if
disclosed to Persons outside of the Companies. 
Such confidential information or proprietary data may exist in any form,
tangible or intangible, or media (including any information technology-related
or electronic media) and includes, but is not limited to, the following
information of or relating to the Companies or any of their Subsidiaries,
Customers or Suppliers:

 

(i)                                     Business,
financial and strategic information, such as sales and earnings information and
trends, material, overhead and other costs, profit margins, accounting
information, banking and financing information, pricing policies, capital
expenditure/investment plans and budgets, forecasts, strategies, plans and
prospects.

 

(ii)                                  Organizational
and operational information, such as personnel and salary data, information
concerning the utilization or capabilities of personnel, facilities or
equipment, logistics management techniques, methodologies and systems, methods
of operation data and facilities plans.

 

(iii)                               Advertising,
marketing and sales information, such as marketing and advertising data, plans,
programs, techniques, strategies, results and budgets, pricing and volume
strategies, catalog, licensing or other agreements or arrangements, and market
research and forecasts and marketing and sales training and development
courses, aids, techniques, instruction and materials.

 

(iv)                              Product
and merchandising information, such as information concerning offered or
proposed products or services and the sourcing of the same, product or services
specifications, data, drawings, designs, performance characteristics, features,
capabilities and plans and development and delivery schedules.

 

(v)                                 Information
about existing or prospective Customers or Suppliers, such as Customer and
Supplier lists and contact information, Customer preference data, purchasing
habits, authority levels and business methodologies, sales history, pricing and
rebate levels, credit information and contracts.

 

(vi)                              Technical
information, such as information regarding plant and equipment organization,
performance and design, information technology and logistics systems and
related designs, integration, capabilities, performance and plans, computer
hardware and software, research and development objectives, budgets and
results, intellectual property applications, and other design and performance
data.

 

13

 

(b)                         All
records, files, documents and materials, in whatever form and media, relating
to the Companies’ or any of their Subsidiaries’ business (including, but not
limited to, those containing or reflecting any confidential information or
proprietary data) which the Executive prepares, uses, or comes into contact
with, including the originals and all copies thereof and extracts and
derivatives therefrom, shall be and remain the sole property of the Companies
or their Subsidiaries.  Upon termination
of the Executive’s Employment Period for any reason, the Executive shall
immediately return all such records, files, documents, materials and other
property of the Companies and their Subsidiaries in the Executive’s possession,
custody or control, in good condition, to the Companies.

 

(c)                          The
Companies maintain, and Executive acknowledges and agrees, the Companies have
and will entrust Executive with proprietary information, strategies, knowledge,
customer relationships and know-how which would be detrimental to the Companies’
interest in protecting relationships with Customers and/or Suppliers if Executive
were to provide services or otherwise participate in the operation of a
competitor of the Company.  Therefore, during
(i) the Executive’s employment by the Companies and (ii) the eighteen
(18) month period following the end of the Executive’s Employment Period, the
Executive shall not in any capacity (whether as an owner, employee, consultant
or otherwise), at any time perform, manage, supervise, or be responsible or
accountable for anyone else who is performing services — which are the same as,
substantially similar or related to the services the Executive is providing, or
during the last two years of the Executive’s employment by the Companies has
provided, for the Companies or their Subsidiaries — for, or on behalf of, any
other Person who or which is (1) a wholesaler of office products,
including traditional office products, computer consumable products, office
furniture, janitorial and/or sanitation products, food service paper/non-food
products, audio/visual and business machines or such other products whether or
not related to the foregoing provided by the Companies or their Subsidiaries
during the last twelve (12) months of the Executive’s Employment Period, (2) a
provider of services the same as or substantially similar to those provided by
the Companies or their Subsidiaries during the last twelve (12) months of the
Executive’s Employment Period, or (3) engaged in a line of business other
than described in (1) or (2) hereinabove which is the same or
substantially similar to the lines of business engaged in by the Companies or
their Subsidiaries, or to any line of business which to the Executive’s
knowledge is under active consideration or planning by the Companies and their
Subsidiaries, during the last twelve (12) months of the Executive’s Employment
Period,.

 

(d)                         (1)                                  During
(i) the Executive’s employment by the Companies and (ii) the eighteen
(18) month period following the end of the Executive’s Employment Period, the
Executive shall not at any time, directly or indirectly, solicit any Customer for
or on behalf of any Person other than the Companies or any of their
Subsidiaries with respect to the purchase of (A) office products,
including traditional office products, computer consumable products, office
furniture, janitorial and/or sanitation products, food service paper/non-food
products, audio/visual and business machines, or such other products whether or
not related to the foregoing provided by the Companies or their Subsidiaries to
such Customer and/or Vendor during the last twelve (12) months of the

 

14

 

Executive’s Employment Period, (B) services the
same as or substantially similar to those provided by the Companies or their
Subsidiaries to such Customer during the last twelve (12) months of the
Executive’s Employment Period or (C) products or services from a line of
business other than as described in (A) or (B) herein which are the
same or substantially similar to the products and services provided to such
Customer from a line of business engaged in by the Companies or their
Subsidiaries during the last twelve (12) months of the Executive’s Employment
Period.  Without limiting the foregoing, (i) during
the Executive’s employment by the Companies and (ii) insofar as the
Executive may be employed by, or acting for or on behalf of, a Supplier at any
time within the eighteen (18) month period following the end of the Executive’s
Employment Period, the Executive shall not at any time, directly or indirectly,
solicit any Customer to switch the purchase of the products or services
described hereinabove from the Companies or their Subsidiaries to Supplier.

 

(2)                                  For
purposes of this Agreement, a “Customer” is
any Person who or which has ordered or purchased by or from the Companies or
any of their Subsidiaries (A) office products, including traditional
office products, computer consumable products, office furniture, janitorial
and/or sanitation products, food service paper/non-food products, audio/visual
and business machines or such other products whether or not related to the
foregoing, (B) services provided by or from the Companies or any of their
Subsidiaries or (C) products or services from a line of business other
than as described in (A) or (B) herein which are the same or
substantially similar to the products and services from a line of business
engaged in by the Companies or their Subsidiaries during the last twelve (12)
months of the Executive’s Employment Period. 
For purposes of this Agreement, a “Supplier” is
any Person who or which has furnished to the Companies or their Subsidiaries
for resale (A) office products, including traditional office products,
computer consumable products, office furniture, janitorial and/or sanitation
products, food service paper/non-food products, audio/visual and business
machines or such other products whether or nor related to the foregoing (B) services
provided by or from the Companies or any of their Subsidiaries or (C) products
or services from a line of business other than as described in (A) or (B) herein
which are the same or substantially similar to the products and services from a
line of business engaged in by the Companies or their Subsidiaries during the
last twelve (12) months of the Executive’s Employment Period.

 

(e)                          During
the Executive’s employment by the Companies and during the twenty-four (24)
month period following the end of the Executive’s Employment Period, the
Executive shall not at any time, directly or indirectly, induce or solicit any
employee of the Companies or any of their Subsidiaries for the purpose of
causing such employee to terminate his or her employment with the Companies or
such Subsidiary.

 

(f)                            The
Executive shall not, directly or indirectly, make or cause to be made (and
shall prohibit the officers, directors, employees, agents and representatives
of any Person controlled by Executive not to make or cause to be made) any
disparaging, derogatory, misleading or false statement, whether orally or in
writing, to any Person, including members of the investment community, press,
and customers, competitors and advisors to the Companies, about the Companies,
their respective parents, Subsidiaries or Affiliates, their respective officers
or members of their boards of directors, or the

 

15

 

business strategy or plans, policies, practices or
operations of the Companies, or of their respective parents, Subsidiaries or
Affiliates.

 

(g)                         If any
court determines that any portion of this Section 6 is invalid or
unenforceable, the remainder of this Section 6 shall not thereby be
affected and shall be given full effect without regard to the invalid
provision.  If any court construes any of
the provisions of Section 6(c), 6(d), 6(e) or 6(f) above, or any
part thereof, to be unreasonable because of the duration or scope of such
provision, such court shall have the power to reduce the duration or scope of
such provision and to enforce such provision as so reduced.

 

(h)                         During
the Executive’s Employment Period and during the eighteen (18) month period
following the end of Executive’s Employment Period, the Executive agrees that,
prior to accepting employment with a Customer or Supplier of the Companies, the
Executive will give notice to the Chief Executive Officer of the
Companies.  The Companies reserve the right
to make such Customer or Supplier aware of the Executive’s obligations under Section 6
of this Agreement.

 

(i)                             During
and following Executive’s Employment Period, the Executive shall furnish a copy
of this Section 6 in its entirety to any prospective employer prior to
accepting employment with such prospective employer.

 

(j)                             The
Executive hereby acknowledges and agrees that damages will not be an adequate
remedy for the Executive’s breach of any provision of this Section 6, and
further agrees that the Companies shall be entitled to obtain appropriate
injunctive and/or other equitable relief for any such breach, without the
posting of any bond or other security, in addition to all other legal remedies
to which the Companies may be entitled.

 

Section 7.                                          Successors.  The Companies may assign their rights under
this Agreement to any successor to all or substantially all the assets of the
Companies, by merger or otherwise, and may assign or encumber this Agreement
and its rights hereunder as security for indebtedness of the Companies.  Any such assignment by the Companies shall
remain subject to the Executive’s rights under Section 5 hereof.  The rights of the Executive under this
Agreement may not be assigned or encumbered by the Executive, voluntarily or involuntarily,
during the Executive’s lifetime, and any such purported assignment shall be
void ab initio.  Notwithstanding the foregoing, all rights of
the Executive under this Agreement shall inure to the benefit of and be
enforceable by the Executive’s personal or legal representatives, estates,
executors, administrators, heirs and beneficiaries.  All amounts payable to the Executive
hereunder shall be paid, in the event of the Executive’s death, to the
Executive’s estate, heirs or representatives.

 

Section 8.                                          Third
Parties.  Except for the rights
granted to the Companies and their Subsidiaries pursuant hereto (including,
without limitation, pursuant to Section 6 hereof) and except as expressly
set forth or referred to herein, nothing herein expressed or implied is
intended or shall be construed to confer upon or give any person other than the
parties hereto and

 

16

 

their successors
and permitted assigns any rights or remedies under or by reason of this Agreement.

 

Section 9.                                          Enforcement.  The provisions of this Agreement shall be
regarded as divisible and, if any of said provisions or any part or application
thereof is declared invalid or unenforceable by a court of competent
jurisdiction, the same shall not affect the other provisions hereof, other
parts or applications thereof or the whole of this Agreement, but such
provision shall be deemed modified to the extent necessary to render such
provision enforceable, and the rights and obligations of the parties shall be
construed and enforced accordingly, preserving to the fullest permissible
extent the intent and agreements of the parties herein set forth.

 

Section 10.                                   Amendment.  This Agreement may not be amended or modified
at any time except by a written instrument approved by the Board, and executed
by the Companies and the Executive; provided, however, that any
attempted amendment or modification without such approval and execution shall
be null and void ab initio and of no effect.

 

Section 11.                                   Payment
and Withholding.  The Company
shall be responsible as employer for payment of all cash compensation and
severance payments provided herein and Holding shall cause the Company to make
such payments.  The Executive shall not
be entitled to receive any additional compensation from either of the Companies
for any services the Executive provides to Holding or the Companies’
Subsidiaries.  The Company shall be
entitled to withhold from any amounts to be paid to the Executive hereunder any
federal, state, local, or foreign withholding or other taxes or charges which
it is from time to time required to withhold. 
The Company shall be entitled to rely on an opinion of counsel if any
question as to the amount or requirement of any such withholding shall arise.

 

Section 12.                                   Governing
Law.  This Agreement and the
rights and obligations hereunder shall be governed by and construed in
accordance with the laws of the State of Illinois, without regard to principles
of conflicts of law of Illinois or any other jurisdiction.

 

Section 13.                                   Notice.  Notices given pursuant to this Agreement
shall be in writing and shall be deemed given when received and, if mailed,
shall be mailed by United States registered or certified mail, return receipt
requested, addressee only, postage prepaid:

 

If to the
Companies:

 

United
Stationers Inc.

United
Stationers Supply Co.

2200
E. Golf Road

Des Plaines,
IL 60016-1267

Attention:  General Counsel

 

If to the
Executive:

 

Stephen A. Schultz

34 Kettering Court

North Barrington, IL 60010

 

17

 

or to such other address
as the party to be notified shall have given to the other in accordance with
the notice provisions set forth in this Section 13.

 

Section 14.                                   No
Waiver.  No waiver by either
party at any time of any breach by the other party of, or compliance with, any
condition or provision of this Agreement to be performed by the other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
any time.

 

Section 15.                                   Headings.  The headings contained herein are for
reference only and shall not affect the meaning or interpretation of any
provision of this Agreement.

 

Section 16.                                   Indemnification.  The provisions set forth in the
Indemnification Agreement appended hereto as Attachment A are hereby
incorporated into this Agreement and made a part hereof.  The parties shall execute the Indemnification
Agreement contemporaneously with the execution of this Agreement.

 

Section 17.                                   Execution
in Counterparts.  This Agreement,
including the Indemnification Agreement, may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

Section 18.                                   Arbitration.  Any dispute, controversy or question arising
under, out of, or relating to this Agreement (or the breach thereof), or, the
Executive’s employment with the Companies or termination thereof, shall be
referred for arbitration in Chicago, Illinois to a neutral arbitrator selected
by the Executive and the Companies (or if the parties are unable to agree on
selection of such an arbitrator, one selected by the American Arbitration
Association pursuant to its rules referred to below) and this shall be the
exclusive and sole means for resolving such dispute.  Such arbitration shall be conducted in
accordance with the National Rules for Resolution of Employment Disputes
of the American Arbitration Association. 
Except as provided in Section 5(d)(ix) above, the arbitrator
shall have the discretion to award reasonable attorneys’ fees, costs and
expenses to the prevailing party. 
Judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction thereof. 
Nothing in this Section 18 shall be construed so as to deny the
Companies the right and power to seek and obtain injunctive relief in a court
of equity for any breach or threatened breach by the Executive of any of the
Executive’s covenants in Section 6 hereof. 
Moreover, this Section 18 and Section 12 hereof shall not be
applicable to any dispute, controversy or question arising under, out of, or
relating to the Indemnification Agreement.

 

Section 19.                                   Survival.  Notwithstanding the stated Term of this
Agreement, the provisions of this Agreement necessary to carry out the
intention of the parties as expressed herein, including without limitation
those in Sections 5, 6, 7, 16 and 18, shall survive the termination or
expiration of this Agreement.

 

Section 20.                                   Construction.  The parties acknowledge that this Agreement
is the result of arm’s-length negotiations between sophisticated parties each
afforded representation by legal counsel. 
Each and every provision of this Agreement shall be construed as though
both parties participated equally in the drafting of same, and any rule of
construction that a document shall be construed against the drafting party
shall not be applicable to this Agreement.

 

18

 

Section 21.                                   Free
to Contract.  The Executive
represents and warrants to the Companies that the Executive is able freely to
accept employment by the Companies as described in this Agreement and that
there are no existing agreements, arrangements or understandings, written or
oral, that would prevent the Executive from entering into this Agreement, would
prevent or restrict the Executive in any way from rendering services to the
Companies as provided herein during the Employment Period or would be breached
by the future performance by the Executive of the Executive’s duties and
responsibilities hereunder.

 

Section 22.                                   Entire
Agreement.  This Agreement,
including the Indemnification Agreement and any other written undertakings by
the Executive referred to herein, supersedes all other agreements, arrangements
or understandings (whether written or oral) between the Companies and the
Executive with respect to the subject matter of this Agreement and the
Executive’s employment relationship with the Companies and any of their
Subsidiaries, including but not limited to the Executive Employment Agreement
between Executive and the Companies effective July 1, 2002, and this
Agreement contains the sole and entire agreement among the parties hereto with
respect to the subject matter hereof.

 

*     *     *

 

IN WITNESS WHEREOF, the parties have executed this
Agreement in one or more counterparts, each of which shall be deemed one and
the same instrument, as of the day and year first written above.

 

	
  EXECUTED ON :

  	
   

  	
  UNITED STATIONERS INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
                                              ,
  2005

  	
   

  	
   

  	
  Name: Richard W. Gochnauer

  
	
   

  	
   

  	
   

  	
  Title: President and Chief Executive
  Officer

  
	
   

  	
   

  	
   

  	
   

  
	
  EXECUTED ON:

  	
   

  	
  UNITED STATIONERS SUPPLY CO.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
                                              ,
  2005

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Richard W. Gochnauer

  
	
   

  	
   

  	
   

  	
  Title: President and Chief Executive
  Officer

  
	
   

  	
   

  	
   

  	
   

  
	
  EXECUTED ON:

  	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
                                              ,
  2005

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Stephen A.
  Schultz

  

 

19

 

APPENDIX
I

 

Stephen A. Schultz

 

1.               The Executive’s
target annual cash bonus for 2005 under the Company’s Management Incentive Plan
(“MIP”) will be 50% of his base salary for the year, prorated in accordance
with the MIP to reflect his proportionate employment period in his new position
during 2005.  Any amount earned under the
MIP in respect of 2005 will become payable in the first quarter of 2006,
provided that the Executive remains an employee in good standing at the time
such payment is made.

 

20Exhibit 10.3

 

EXECUTION COPY

 

PURCHASE
AND SALE AGREEMENT

 

by and among

 

LAGASSE,
INC.

(as “Purchaser”),

 

SCHECK
INVESTMENTS LIMITED PARTNERSHIP

(as
a “Shareholder”),

 

SCHECK
ALPHA LP

(as a “Shareholder”),

 

MICHAEL
SCHECK

(as a “Shareholder”),

 

RAQUEL
SCHECK

(as a “Shareholder”),

 

JEFFREY
SCHECK

(as a “Shareholder”),

 

MARTIN
SCHECK

(as a “Shareholder”),

 

ELISE
SCHECK

(as
a “Shareholder”),

 

STEVEN
SCHECK

(as
a “Shareholder”),

 

SWEET
PAPER SALES GROUP, INC.

(as an “Asset Seller”),

 

SWEET
PAPER SALES CORP. OF TEXAS, INC.

(as
an “Asset Seller”),

 

SWEET
PAPER SALES CORP. OF CALIFORNIA, INC.

(as an “Asset Seller”),

 

SWEET
PAPER SALES CORP. OF MASSACHUSETTS, INC.

(as
an “Asset Seller”)

 

and

 

DAMAR
DISTRIBUTORS WAREHOUSE

(as an “Asset Seller” and,

together with the Shareholders
and the other Asset Sellers, “Sellers”)

 

 

May 19, 2005

 

 

TABLE OF
CONTENTS

 

	
  ARTICLE 1.

  	
  DEFINITIONS

  	
   

  
	
   

  	
  1.1

  	
  Definitions

  	
   

  
	
   

  	
  1.2

  	
  Other Definitions

  	
   

  
	
   

  	
  1.3

  	
  Interpretation

  	
   

  
	
   

  	
  1.4

  	
  Provision and Delivery of Information

  	
   

  
	
   

  	
  1.5

  	
  GAAP and Consistency

  	
   

  
	
   

  	
  1.6

  	
  Balance Sheets

  	
   

  
	
   

  	
  1.7

  	
  Schedules

  	
   

  
	
  ARTICLE 2.

  	
  SALE AND PURCHASE
  OF SHARES

  	
   

  
	
   

  	
  2.1

  	
  Sale and Purchase of Shares

  	
   

  
	
  ARTICLE 3.

  	
  SALE AND PURCHASE
  OF ASSETS; ASSUMPTION OF ASSUMED OBLIGATIONS

  	
   

  
	
   

  	
  3.1

  	
  Purchased Assets

  	
   

  
	
   

  	
  3.2

  	
  Assignment of
  Contracts and Permits

  	
   

  
	
   

  	
  3.3

  	
  Excluded
  Assets

  	
   

  
	
   

  	
  3.4

  	
  Assumed
  Obligations

  	
   

  
	
   

  	
  3.5

  	
  No Other
  Liabilities Assumed

  	
   

  
	
   

  	
  3.6

  	
  Prorations

  	
   

  
	
  ARTICLE 4.

  	
  PURCHASE
  PRICE; OTHER PAYMENTS; ADJUSTMENT; ALLOCATION

  	
   

  
	
   

  	
  4.1

  	
  Payment of
  Purchase Price

  	
   

  
	
   

  	
  4.2

  	
  Payment of
  Closing Date Sweet Paper Debt Amount

  	
   

  
	
   

  	
  4.3

  	
  Payment of
  Non-Competition Payment

  	
   

  
	
   

  	
  4.4

  	
  Pre-Closing
  Purchase Price Adjustment

  	
   

  
	
   

  	
  4.5

  	
  Post-Closing
  Purchase Price Adjustment; Release of Purchase Price Adjustment Holdback
  Amount

  	
   

  
	
  ARTICLE 5.

  	
  REPRESENTATIONS
  AND WARRANTIES OF SELLERS

  	
   

  
	
   

  	
  5.1

  	
  Due
  Incorporation

  	
   

  
	
   

  	
  5.2

  	
  Due
  Authorization

  	
   

  
	
   

  	
  5.3

  	
  Consents and
  Approvals; Authority Relative to this Agreement

  	
   

  
	
   

  	
  5.4

  	
  Capitalization

  	
   

  
						

 

i

 

	
   

  	
  5.5

  	
  Financial
  Statements; Undisclosed Liabilities

  	
   

  
	
   

  	
  5.6

  	
  No Adverse
  Effects or Changes

  	
   

  
	
   

  	
  5.7

  	
  Title to
  Properties

  	
   

  
	
   

  	
  5.8

  	
  Condition and
  Sufficiency of Assets

  	
   

  
	
   

  	
  5.9

  	
  Real Property

  	
   

  
	
   

  	
  5.10

  	
  Personal
  Property

  	
   

  
	
   

  	
  5.11

  	
  Computer
  System

  	
   

  
	
   

  	
  5.12

  	
  Inventories

  	
   

  
	
   

  	
  5.13

  	
  Accounts
  Receivable; Advances and Warranties

  	
   

  
	
   

  	
  5.14

  	
  Intellectual
  Property

  	
   

  
	
   

  	
  5.15

  	
  Contracts

  	
   

  
	
   

  	
  5.16

  	
  Permits

  	
   

  
	
   

  	
  5.17

  	
  Insurance

  	
   

  
	
   

  	
  5.18

  	
  Employee
  Benefit Plans and Employment Agreements

  	
   

  
	
   

  	
  5.19

  	
  Employment
  and Labor Matters

  	
   

  
	
   

  	
  5.20

  	
  Capital
  Improvements and Significant Non-Capital Expenditures

  	
   

  
	
   

  	
  5.21

  	
  Taxes

  	
   

  
	
   

  	
  5.22

  	
  No Defaults
  or Violations

  	
   

  
	
   

  	
  5.23

  	
  Environmental
  Matters

  	
   

  
	
   

  	
  5.24

  	
  Litigation

  	
   

  
	
   

  	
  5.25

  	
  No Conflict
  of Interest

  	
   

  
	
   

  	
  5.26

  	
  Bank
  Accounts

  	
   

  
	
   

  	
  5.27

  	
  Customers
  and Suppliers

  	
   

  
	
   

  	
  5.28

  	
  Improper and
  Other Payments

  	
   

  
	
   

  	
  5.29

  	
  Brokers

  	
   

  
	
   

  	
  5.30

  	
  Accounting
  and Disclosure Controls

  	
   

  
	
   

  	
  5.31

  	
  Sweet
  Distribution Entities

  	
   

  
	
   

  	
  5.32

  	
  Sales in
  Puerto Rico

  	
   

  
	
   

  	
  5.33

  	
  Compliance
  with Facility Mortgage Loan Documents

  	
   

  
	
   

  	
  5.34

  	
  Sweet Paper
  Debt

  	
   

  

 

ii

 

	
   

  	
  5.35

  	
  Accuracy of
  Statements

  	
   

  
	
  ARTICLE 6.

  	
  REPRESENTATIONS
  AND WARRANTIES OF PURCHASER

  	
   

  
	
   

  	
  6.1

  	
  Due
  Incorporation

  	
   

  
	
   

  	
  6.2

  	
  Due
  Authorization

  	
   

  
	
   

  	
  6.3

  	
  Consents and
  Approvals; Authority Relative to this Agreement

  	
   

  
	
   

  	
  6.4

  	
  Litigation

  	
   

  
	
   

  	
  6.5

  	
  Brokers

  	
   

  
	
  ARTICLE 7.

  	
  COVENANTS

  	
   

  
	
   

  	
  7.1

  	
  Implementing
  Agreement

  	
   

  
	
   

  	
  7.2

  	
  Access to
  Information and Facilities

  	
   

  
	
   

  	
  7.3

  	
  Preservation
  of Business

  	
   

  
	
   

  	
  7.4

  	
  Consents and
  Approvals

  	
   

  
	
   

  	
  7.5

  	
  Transfer of
  Assets from Corporation and Corporation Subsidiaries

  	
   

  
	
   

  	
  7.6

  	
  Maintenance of
  Insurance

  	
   

  
	
   

  	
  7.7

  	
  Resignation of
  Officers and Directors

  	
   

  
	
   

  	
  7.8

  	
  Supplemental
  Information

  	
   

  
	
   

  	
  7.9

  	
  Confidentiality

  	
   

  
	
   

  	
  7.10

  	
  Exclusivity

  	
   

  
	
   

  	
  7.11

  	
  Use of Marks

  	
   

  
	
   

  	
  7.12

  	
  Termination
  of Certain Agreements

  	
   

  
	
   

  	
  7.13

  	
  Pay-Off
  Letters; Closing Date Sweet Paper Debt Amount

  	
   

  
	
   

  	
  7.14

  	
  [RESERVED]

  	
   

  
	
   

  	
  7.15

  	
  Initial
  Closing Date Balance Sheet

  	
   

  
	
   

  	
  7.16

  	
  Termination
  of Shareholders’ Agreement

  	
   

  
	
   

  	
  7.17

  	
  Employees

  	
   

  
	
   

  	
  7.18

  	
  Insurance

  	
   

  
	
   

  	
  7.19

  	
  Redistributors
  of America

  	
   

  
	
   

  	
  7.20

  	
  No
  Additional Representations or Warranties

  	
   

  
	
   

  	
  7.21

  	
  Disclaimer
  Regarding Estimates and Projections

  	
   

  
	
   

  	
  7.22

  	
  Assignment
  of Certain Accounts Receivable

  	
   

  
						

 

iii

 

	
   

  	
  7.23

  	
  Delivery of
  Accounting Materials

  	
   

  
	
   

  	
  7.24

  	
  Letter of
  Credit for Workers’ Compensation Policy

  	
   

  
	
   

  	
  7.25

  	
  Atlas Note

  	
   

  
	
   

  	
  7.26

  	
  Cash

  	
   

  
	
   

  	
  7.27

  	
  Defeasance
  of Facility Mortgage Loan

  	
   

  
	
   

  	
  7.28

  	
  New Scheck
  Real Property Lease

  	
   

  
	
  ARTICLE 8.

  	
  CONDITIONS
  PRECEDENT TO OBLIGATIONS OF PURCHASER

  	
   

  
	
   

  	
  8.1

  	
  Warranties
  True as of Both Present Date and Closing Date

  	
   

  
	
   

  	
  8.2

  	
  Compliance
  with Agreements and Covenants

  	
   

  
	
   

  	
  8.3

  	
  Consents and
  Approvals

  	
   

  
	
   

  	
  8.4

  	
  Pay-Off
  Letters

  	
   

  
	
   

  	
  8.5

  	
  Release of
  Liens

  	
   

  
	
   

  	
  8.6

  	
  Shareholders’
  Agreement

  	
   

  
	
   

  	
  8.7

  	
  Release of
  Guaranty and Environmental Indemnity

  	
   

  
	
   

  	
  8.8

  	
  Defeasance of
  Facility Mortgage Loan

  	
   

  
	
   

  	
  8.9

  	
  Termination of
  Current Scheck Real Property Lease

  	
   

  
	
   

  	
  8.10

  	
  New Scheck
  Real Property Lease

  	
   

  
	
   

  	
  8.11

  	
  Accounting
  Deliveries

  	
   

  
	
   

  	
  8.12

  	
  Documents

  	
   

  
	
   

  	
  8.13

  	
  No Material
  Adverse Effect

  	
   

  
	
   

  	
  8.14

  	
  Actions or
  Proceedings

  	
   

  
	
  ARTICLE 9.

  	
  CONDITIONS
  PRECEDENT TO OBLIGATIONS OF SELLERS

  	
   

  
	
   

  	
  9.1

  	
  Warranties
  True as of Both Present Date and Closing Date

  	
   

  
	
   

  	
  9.2

  	
  Compliance
  with Agreements and Covenants

  	
   

  
	
   

  	
  9.3

  	
  Consents and
  Approvals

  	
   

  
	
   

  	
  9.4

  	
  Documents

  	
   

  
	
   

  	
  9.5

  	
  Actions or
  Proceedings

  	
   

  
	
  ARTICLE 10.

  	
  CLOSING

  	
   

  
	
   

  	
  10.1

  	
  Closing

  	
   

  
	
   

  	
  10.2

  	
  Deliveries
  by Sellers

  	
   

  
					

 

iv

 

	
   

  	
  10.3

  	
  Deliveries
  by Purchaser

  	
   

  
	
  ARTICLE 11.

  	
  TERMINATION

  	
   

  
	
   

  	
  11.1

  	
  Termination

  	
   

  
	
   

  	
  11.2

  	
  Effect of
  Termination

  	
   

  
	
  ARTICLE 12.

  	
  INDEMNIFICATION

  	
   

  
	
   

  	
  12.1

  	
  Survival

  	
   

  
	
   

  	
  12.2

  	
  Indemnification
  by the Sellers

  	
   

  
	
   

  	
  12.3

  	
  Indemnification
  by Purchaser

  	
   

  
	
   

  	
  12.4

  	
  Limitations
  on Certain Claims for Indemnification

  	
   

  
	
   

  	
  12.5

  	
  Materiality

  	
   

  
	
   

  	
  12.6

  	
  Claims

  	
   

  
	
   

  	
  12.7

  	
  Notice of
  Third Party Claims; Assumption of Defense

  	
   

  
	
   

  	
  12.8

  	
  Settlement
  or Compromise

  	
   

  
	
   

  	
  12.9

  	
  Failure of
  Indemnitor to Act

  	
   

  
	
   

  	
  12.10

  	
  Irrevocable
  Standby Letters of Credit

  	
   

  
	
   

  	
  12.11

  	
  Purchase
  Price Adjustments

  	
   

  
	
   

  	
  12.12

  	
  Consequential
  Damages

  	
   

  
	
   

  	
  12.13

  	
  Exclusive
  Remedy

  	
   

  
	
  ARTICLE 13.

  	
  TAX
  MATTERS

  	
   

  
	
   

  	
  13.1

  	
  Filing of
  Tax Returns

  	
   

  
	
   

  	
  13.2

  	
  Proration of
  Taxes

  	
   

  
	
   

  	
  13.3

  	
  Transfer
  Taxes

  	
   

  
	
   

  	
  13.4

  	
  Tax
  Indemnification

  	
   

  
	
   

  	
  13.5

  	
  Cooperation/Retention
  of Records

  	
   

  
	
   

  	
  13.6

  	
  Procedures
  Relating to Tax Claims

  	
   

  
	
  ARTICLE 14.

  	
  NON-COMPETITION

  	
   

  
	
   

  	
  14.1

  	
  Non-Competition
  Agreement

  	
   

  
	
   

  	
  14.2

  	
  Reasonableness
  of Covenants

  	
   

  
	
   

  	
  14.3

  	
  Specific
  Performance

  	
   

  
	
   

  	
  14.4

  	
  Severability

  	
   

  
					

 

v

 

	
   

  	
  14.5

  	
  No
  Limitation of Other Provisions

  	
   

  
	
  ARTICLE 15.

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
  15.1

  	
  Expenses

  	
   

  
	
   

  	
  15.2

  	
  Amendment

  	
   

  
	
   

  	
  15.3

  	
  Notices

  	
   

  
	
   

  	
  15.4

  	
  Effect of
  Investigation

  	
   

  
	
   

  	
  15.5

  	
  Payments in
  Dollars

  	
   

  
	
   

  	
  15.6

  	
  Waivers

  	
   

  
	
   

  	
  15.7

  	
  Counterparts

  	
   

  
	
   

  	
  15.8

  	
  Assignment

  	
   

  
	
   

  	
  15.9

  	
  No Third
  Party Beneficiaries

  	
   

  
	
   

  	
  15.10

  	
  Publicity

  	
   

  
	
   

  	
  15.11

  	
  Further
  Assurances

  	
   

  
	
   

  	
  15.12

  	
  Severability

  	
   

  
	
   

  	
  15.13

  	
  Specific
  Performance

  	
   

  
	
   

  	
  15.14

  	
  Remedies
  Cumulative

  	
   

  
	
   

  	
  15.15

  	
  Entire Understanding

  	
   

  
	
   

  	
  15.16

  	
  Acknowledgment
  of each Seller

  	
   

  
	
   

  	
  15.17

  	
  Seller
  Representative

  	
   

  
	
   

  	
  15.18

  	
  Joint and
  Several Liability of Sellers

  	
   

  
	
   

  	
  15.19

  	
  Applicable
  Law

  	
   

  
	
   

  	
  15.20

  	
  Jurisdiction
  of Disputes; Waiver of Jury Trial

  	
   

  
					

 

vi

 

LIST OF EXHIBITS

 

	
  Exhibit 1.1(a)

  	
   

  	
  Assignment and Assumption Agreement

  
	
  Exhibit 1.1(b)

  	
   

  	
  Assignment and Assumption of Lease

  
	
  Exhibit 1.1(c)

  	
   

  	
  Bill of Sale

  
	
  Exhibit 1.1(d)

  	
   

  	
  Boston Real Property Lease

  
	
  Exhibit 1.1(e)

  	
   

  	
  Corporation Transfer Agreement

  
	
  Exhibit 1.1(f)

  	
   

  	
  $15 Million Letter of Credit

  
	
  Exhibit 1.1(g)

  	
   

  	
  $5 Million Letter of Credit

  
	
  Exhibit 1.1(h)

  	
   

  	
  Sweet Distribution Sublease

  
	
  Exhibit 7.28

  	
   

  	
  Certain Terms for New Scheck Real Property
  Lease

  
	
  Exhibit 10.2(a)

  	
   

  	
  Stock Powers

  
	
  Exhibit 10.2(s)

  	
   

  	
  Opinion of Counsel to Sellers – Akerman,
  Senterfitt & Eidson, P.A.

  

 

vii

 

LIST OF DISCLOSURE SCHEDULES

 

	
  Schedule 1.1(a)

  	
   

  	
  Purchaser’s Knowledge

  
	
  Schedule 1.1(b)

  	
   

  	
  Sellers’ Knowledge

  
	
  Schedule 1.1(c)

  	
   

  	
  Pro Forma Calculation Principles

  
	
  Schedule 1.1(d)

  	
   

  	
  Sweet Paper Creditors and Sweet Paper Debt

  
	
  Schedule 3.1(a)

  	
   

  	
  Transferred Group Inventory

  
	
  Schedule 3.1(b)

  	
   

  	
  Transferred Group Fixed Assets

  
	
  Schedule 3.1(g)

  	
   

  	
  Transferred Group Owned Intellectual Property

  
	
  Schedule 3.2(a)(i)

  	
   

  	
  Transferred Group Personal Property Leases

  
	
  Schedule 3.2(a)(v)

  	
   

  	
  Transferred Group Intellectual Property Licenses

  
	
  Schedule 3.2(a)(x)

  	
   

  	
  Transferred Group Other Contracts

  
	
  Schedule 3.3(f)

  	
   

  	
  Other Excluded Assets

  
	
  Schedule 3.3(g)

  	
   

  	
  Excluded Contracts

  
	
  Schedule 3.5

  	
   

  	
  Excluded Obligations

  
	
  Schedule 4.5(b)(i)

  	
   

  	
  Exceptions to GAAP for Final Closing Date Balance Sheet

  
	
  Schedule 4.5(c)

  	
   

  	
  Accounting Personnel

  
	
  Schedule 5.1(a)

  	
   

  	
  Jurisdictions of Incorporation and Foreign Qualification

  
	
  Schedule 5.1(b)

  	
   

  	
  Subsidiaries

  
	
  Schedule 5.3

  	
   

  	
  Seller Consents and Violations

  
	
  Schedule 5.4(b)

  	
   

  	
  Ownership of Shares of the Corporation

  
	
  Schedule 5.4(c)

  	
   

  	
  Ownership of Shares of the Corporation Subsidiaries

  
	
  Schedule 5.4(d)

  	
   

  	
  Ownership of Shares – Liens

  
	
  Schedule 5.5(a)

  	
   

  	
  Combined Financial Statements and Pro Forma Balance Sheets

  
	
  Schedule 5.5(a)(i)

  	
   

  	
  Exceptions to GAAP for Combined Financial Statements

  
	
  Schedule 5.5(b)

  	
   

  	
  Corporation Financial Statements

  
	
  Schedule 5.5(b)(i)

  	
   

  	
  Exceptions to GAAP for Corporation Financial Statements

  
	
  Schedule 5.5(c)

  	
   

  	
  2004 Group Financial Statements

  
	
  Schedule 5.5(c)(i)

  	
   

  	
  Exceptions to GAAP for 2004 Group Financial Statements

  
	
  Schedule 5.5(d)

  	
   

  	
  2003 Group Financial Statements

  
	
  Schedule 5.5(d)(i)

  	
   

  	
  Exceptions to GAAP for 2003 Group Financial Statements

  
	
  Schedule 5.5(e)

  	
   

  	
  Interim Corporation Financial Statements

  
	
  Schedule 5.5(f)

  	
   

  	
  Interim Group Financial Statements

  
	
  Schedule 5.5(g)

  	
   

  	
  Exceptions to Certain Representations Regarding the Financial
  Statements

  
	
  Schedule 5.5(h)

  	
   

  	
  Liabilities

  
	
  Schedule 5.6

  	
   

  	
  Adverse Effects or Changes

  
	
  Schedule 5.7(a)

  	
   

  	
  Title to Properties of the Corporation and Corporation Subsidiaries

  
	
  Schedule 5.7(b)

  	
   

  	
  Title to Properties of the Asset Sellers

  
	
  Schedule 5.8(a)

  	
   

  	
  Condition of Assets

  
	
  Schedule 5.9(b)

  	
   

  	
  Leased Real Property and Real Property Leases

  
	
  Schedule 5.9(c)

  	
   

  	
  Condition of Leased Real Property

  
	
  Schedule 5.9(d)

  	
   

  	
  Compliance with Zoning and Health Regulations – Current Scheck Real
  Property Lease

  
	
  Schedule 5.9(e)

  	
   

  	
  Compliance with Zoning and Health Regulations – Current Third Party
  Real Property Leases

  
	
  Schedule 5.10(a)

  	
   

  	
  Owned Personal Property

  
	
  Schedule 5.10(b)

  	
   

  	
  Leased Personal Property

  
	
  Schedule 5.11

  	
   

  	
  Computer System

  
	
  Schedule 5.12

  	
   

  	
  Aged Inventory Amount

  
	
  Schedule 5.13(a)

  	
   

  	
  Trade Accounts Receivable

  
	
  Schedule 5.13(c)

  	
   

  	
  Advances

  
	
  Schedule 5.14(a)(i)

  	
   

  	
  Owned Intellectual Property

  
	
  Schedule 5.14(a)(ii)

  	
   

  	
  Licensed Intellectual Property and IP Licenses

  
	
  Schedule 5.14(b)

  	
   

  	
  Representations regarding Intellectual Property

  
	
  Schedule 5.15

  	
   

  	
  Contracts

  
	
  Schedule 5.16

  	
   

  	
  Permits

  
	
  Schedule 5.17(a)

  	
   

  	
  Insurance

  

 

viii

 

	
  Schedule 5.17(b)

  	
   

  	
  Insurance Claims

  
	
  Schedule 5.18(a)

  	
   

  	
  Employee Benefit Plans and Employment Agreements

  
	
  Schedule 5.18(c)

  	
   

  	
  Employee Benefits Plans – Compliance with Laws

  
	
  Schedule 5.18(c)(xii)

  	
   

  	
  Specific Bonus Commitments

  
	
  Schedule 5.19(a)

  	
   

  	
  Employees

  
	
  Schedule 5.19(c)

  	
   

  	
  Employment Laws and Employment Claims

  
	
  Schedule 5.20(a)

  	
   

  	
  Capital Improvements

  
	
  Schedule 5.20(b)

  	
   

  	
  Significant Non-Capital Expenditures

  
	
  Schedule 5.21

  	
   

  	
  Taxes

  
	
  Schedule 5.22

  	
   

  	
  Defaults and Violations

  
	
  Schedule 5.23

  	
   

  	
  Environmental Matters

  
	
  Schedule 5.24

  	
   

  	
  Litigation

  
	
  Schedule 5.25

  	
   

  	
  Conflicts of Interest

  
	
  Schedule 5.26

  	
   

  	
  Bank Accounts

  
	
  Schedule 5.27(a)(i)

  	
   

  	
  Major Customers

  
	
  Schedule 5.27(a)(ii)

  	
   

  	
  Customer Economic Terms

  
	
  Schedule 5.27(a)(iii)

  	
   

  	
  Owned Private Labels

  
	
  Schedule 5.27(a)(iv)

  	
   

  	
  Non-Owned Private Labels

  
	
  Schedule 5.27(a)(v)

  	
   

  	
  Certain Customer Information

  
	
  Schedule 5.27(a)(vi)

  	
   

  	
  Adverse Changes in Customer Relationships

  
	
  Schedule 5.27(a)(vii)(A)

  	
   

  	
  Non-Reseller Customers

  
	
  Schedule 5.28(a)(vii)(B)

  	
   

  	
  Resale Exemption Certificates

  
	
  Schedule 5.27(b)(i)

  	
   

  	
  Suppliers

  
	
  Schedule 5.27(b)(ii)

  	
   

  	
  Supplier Economic Terms

  
	
  Schedule 5.27(b)(iii)

  	
   

  	
  Adverse Changes in Supplier Relationships

  
	
  Schedule 5.28

  	
   

  	
  Improper and Other Payments

  
	
  Schedule 5.29

  	
   

  	
  Seller Brokers

  
	
  Schedule 5.30

  	
   

  	
  Accounting and Disclosure Controls

  
	
  Schedule 5.31

  	
   

  	
  Sweet Distribution Entities

  
	
  Schedule 5.32

  	
   

  	
  Sales in Puerto Rico

  
	
  Schedule 6.3

  	
   

  	
  Purchaser Consents

  
	
  Schedule 6.5

  	
   

  	
  Purchaser Brokers

  
	
  Schedule 7.3

  	
   

  	
  Preservation of Business

  
	
  Schedule 7.5(a)

  	
   

  	
  Withdrawn Corporation Assets

  
	
  Schedule 7.5(b)

  	
   

  	
  Withdrawn Corporation Obligations

  
	
  Schedule 7.12

  	
   

  	
  Non-Terminated Contracts

  
	
  Schedule 7.15(b)(i)

  	
   

  	
  Requirements for Initial Closing Date Balance Sheet

  
	
  Schedule 7.17

  	
   

  	
  Employees

  
	
  Schedule 7.25

  	
   

  	
  Third-Party Note

  
	
  Schedule 12.2

  	
   

  	
  Certain Indemnification Matters

  
	
  Schedule 14.1(b)(v)

  	
   

  	
  Equity Interest of Affiliate in Designated Person

  
	
  Schedule 14.1(b)(vi)

  	
   

  	
  Non-Competition

  
	
  Schedule 15.3

  	
   

  	
  Seller Addresses

  

 

ix

 

PURCHASE AND SALE AGREEMENT

 

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”)
is made as of the 19th  day of
May, 2005, by and among Lagasse, Inc., a Louisiana corporation (“Purchaser”),
Scheck Investments Limited Partnership, a Delaware limited partnership (“Scheck
Investments”), Scheck Alpha LP, a Delaware limited partnership (“Scheck
Alpha”), Michael Scheck, an individual resident of the state of Florida (“Michael
Scheck”), Raquel Scheck, an individual resident of the state of Florida (“Raquel
Scheck”), Jeffrey Scheck, an individual resident of the state of Florida (“Jeffrey
Scheck”), Martin Scheck, an individual resident of the state of Florida (“Martin
Scheck”), Elise Scheck, an individual resident of the state of Florida (“Elise
Scheck”), Steven Scheck, an individual resident of the state of Florida (“Steven
Scheck”) (each of Scheck Investments, Scheck Alpha, Michael Scheck, Raquel
Scheck, Jeffrey Scheck, Martin Scheck, Elise Scheck and Steven Scheck are
sometimes individually referred to herein as a “Shareholder” and
collectively as the “Shareholders”), Sweet Paper Sales Group, Inc., a
Nevada corporation  (“Group”),
Sweet Paper Sales Corp. of Texas, Inc., a Texas corporation and a wholly owned
subsidiary of Group (“Sweet Paper Texas”), Sweet Paper Sales Corp. of
California, Inc., a Nevada corporation and a wholly owned subsidiary of Group (“Sweet
Paper California”), Sweet Paper Sales Corp. of Massachusetts, Inc., a
Nevada corporation and a wholly owned subsidiary of Group (“Sweet Paper
Massachusetts”), and Damar Distributors Warehouse, a California corporation
and a wholly owned subsidiary of Sweet Paper California (“Damar”) (each
of Group, Sweet Paper Texas, Sweet Paper California, Sweet Paper Massachusetts
and Damar are sometimes individually referred to herein as an “Asset Seller”
and collectively as the “Asset Sellers”).  Certain capitalized terms used herein are
defined in Article I.

 

W I T N E S S E T H:

 

WHEREAS, subject to the terms and conditions
of this Agreement, Purchaser wishes to purchase from the Shareholders, and the
Shareholders wish to sell to Purchaser, all of the Shares; and

 

WHEREAS, subject to the terms and conditions
of this Agreement, Purchaser wishes to purchase from the Asset Sellers, and the
Asset Sellers wish to sell to Purchaser, all of the Assets, and Purchaser is
willing to assume all of the Assumed Obligations.

 

NOW, THEREFORE, in consideration of the
foregoing and the mutual representations, warranties, covenants and agreements
herein contained, the parties agree as follows:

 

ARTICLE 1.

 

DEFINITIONS

 

1.1                                 Definitions.  The following terms shall have the following
meanings for the purposes of this Agreement:

 

“Adjusted Purchase Price” shall mean:

 

(a)                                  the
Base Purchase Price; plus

 

 

(b)                                 the
amount equal to (i) the Closing Date Net Asset Amount (as finalized pursuant to
Section 4.5) minus (ii) the Definitive September 30,
2004 Net Asset Amount; minus

 

(c)                                  the
amount, if any, by which the Closing Date Non-Exempt Inventory Amount (as
finalized pursuant to Section 4.5) exceeds $1,205,281; minus

 

(d)                                 the
amount, if any, by which the Closing Date Exempt Aged Inventory Amount (as
finalized pursuant to Section 4.5) exceeds the Exempt Aged
Inventory Threshold Amount; plus

 

(e)                                  the
adjustment amount determined in accordance with Section 4.4(d).

 

For the
avoidance of doubt, for purposes of calculating the “Adjusted Purchase Price”,
if the amount defined by clause (b) is a negative number, then the
absolute value of such negative number shall be subtracted from the amount
defined by clause (a).

 

“Affiliate” shall mean, with respect
to any specified Person, (a) any other Person that, directly or indirectly,
owns or controls, is under common ownership or control with, or is owned or
controlled by, such specified Person, (b) any other Person that is a director,
officer or partner, or is, directly or indirectly, the beneficial owner of ten
percent (10%) or more of any class of equity securities, of the specified
Person or a Person described in clause (a) of this paragraph, (c)
another Person of which the specified Person is a director, officer or partner
or is, directly or indirectly, the beneficial owner of ten percent (10%) or
more of any class of equity securities, or (d) any relative or spouse of the
specified Person or any of the foregoing Persons, any relative of any such
spouse or any spouse of any such relative; provided,
that at any time after the Closing Date, (i) neither the Corporation nor any
Corporation Subsidiary shall be deemed to be an Affiliate of any Seller or any
Affiliate of any Seller other than the Corporation and the Corporation
Subsidiaries and (ii) no Seller or any Affiliate of any Seller other than the
Corporation and the Corporation Subsidiaries shall be deemed to be an Affiliate
of the Corporation or any Corporation Subsidiary.

 

“Affiliate Party” shall mean Scheck
Family LLC, JEMS of Miami, Inc., SFH Beta Realty Trust, Sweet Distribution, the
Corporation, Sweet Paper Georgia and Sweet Paper North Carolina.

 

“Aged Inventory” shall mean, as of any
given date and for any given stock keeping unit, (a) any inventory of such stock
keeping unit owned by any Sweet Paper Entity, and included in the inventory of
such Sweet Paper Entity, for which there have been no bona fide sales in the
ordinary course to third parties during the six (6) month period prior to April 21,
2005 and (b)
any inventory of such stock keeping unit owned by any Sweet Paper Entity, and
included in the inventory of such Sweet Paper Entity, that is in excess of the
amount of sales (net of returns) of such stock keeping unit by the Sweet Paper
Entities pursuant to bona fide sales in the ordinary course to third parties
during the six (6) month period prior to April 21, 2005; provided, however,
that solely with respect to the determination of “Aged Inventory” for
any given Exempt Stock Keeping Unit as of the close of business on the Closing
Date, “Aged Inventory” shall mean (a) any inventory of such Exempt Stock
Keeping Unit owned by any Sweet Paper Entity, and included in the inventory of
such Sweet Paper Entity, for which there have been no bona fide

 

2

 

sales in the ordinary course to
third parties during the six (6) month period prior to the Closing Date and (b) any inventory of such Exempt Stock Keeping Unit owned
by any Sweet Paper Entity, and included in the inventory of such Sweet Paper
Entity, that is in excess of the amount of sales (net of returns) of such
Exempt Stock Keeping Unit by the Sweet Paper Entities pursuant to bona fide
sales in the ordinary course to third parties during the six (6) month period prior
to the Closing Date.

 

“Aged Inventory Amount” shall mean, as
of any given date and for any given stock keeping unit, the product of (a) the
quantity of such stock keeping unit that is Aged Inventory as of such date multiplied
by (b) the “inventory cost per unit” for such stock keeping unit.  Notwithstanding anything to the contrary set
forth herein, for the avoidance of doubt, with respect to the calculation of
the Aged Inventory Amount on an aggregate basis and for each applicable stock
keeping unit included in the inventory of any Sweet Paper Entity, any inventory
that satisfies the criteria of both of the two components of the definition of “Aged
Inventory” shall be counted only once.

 

 “Agreement”
shall mean this Purchase and Sale Agreement, including all exhibits and
schedules hereto, as it may be amended from time to time in accordance with its
terms.

 

“Asset Seller Real Property Leases”
shall mean the Current Third Party Real Property Leases under which any Asset
Seller is the lessee.

 

“Assignment and Assumption Agreement”
shall mean the assignment and assumption agreement, to be entered by and among
each Asset Seller and Purchaser, substantially in the form attached hereto as Exhibit
1.1(a).

 

“Assignment and Assumption of Lease”
shall mean the assignment and assumption agreement, to be entered into with
respect to each Asset Seller Real Property Lease, by and between Purchaser and
the applicable Asset Seller, substantially in the form attached hereto as Exhibit
1.1(b).

 

“Bill of Sale” shall mean the bill of
sale, to be executed by each Asset Seller in favor of Purchaser, substantially
in the form attached hereto as Exhibit 1.1(c).

 

“Boston Real Property Lease” shall
mean the lease, to be executed by SFH Beta Realty Trust and Purchaser,
substantially in the form attached hereto as Exhibit 1.1(d).

 

“Business” shall mean the business, as
previously and currently conducted by the Sweet Paper Entities, of (a)
purchasing, selling and distributing food service wares, small wares,
industrial supplies, personal healthcare supplies, office supplies, food
products, janitorial supplies and sanitation supplies (including paper,
plastics and other related products), and (b) related marketing and logistics
services to or on behalf of customers or suppliers, in the case of each of clauses
(a) and (b), in North America, Central America, South America and
the Caribbean (including Puerto Rico).

 

“Business Day” shall mean any day of
the year other than (a) any Saturday or Sunday or (b) any other day on which
banks located in Illinois or Florida generally are closed for business.

 

3

 

“Cash” shall mean all cash,
certificates of deposits, bank deposits and other cash equivalents, together
with all accrued but unpaid interest thereon.

 

“CERCLA” shall mean the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended.

 

“Closing” shall mean the consummation
of the transactions contemplated herein in accordance with Article 10.

 

“Closing Date” shall mean the date on
which the Closing occurs or is to occur.

 

“Code” shall mean the United States
Internal Revenue Code of 1986, as amended.

 

“Combined Balance Sheets” shall mean
the compiled, combined, consolidating balance sheets of the Sweet Paper
Entities as of September 30, 2004 (as derived from the audited
consolidated balance sheets included in the Corporation Financial Statements
and the 2004 Group Financial Statements), that are included in the Combined
Financial Statements.

 

“Combined Financial Statements” shall
mean the compiled, combined, consolidating financial statements of the Sweet
Paper Entities as of and for the twelve (12) months ended September 30,
2004 (as derived from the Corporation Financial Statements and the 2004 Group
Financial Statements), consisting of (a) the combined balance sheets as of September 30,
2004, (b) the related combined statement of operations and retained earnings
(deficit) for the twelve (12) months ended September 30, 2004 and (c) the
related combined statement of cash flows for the twelve (12) months ended September 30,
2004.

 

“Confidential Information” of any
Person shall mean all of such Person’s (a) Information and Records and (b) to
the extent applicable, personal information.

 

“Contract” shall mean any contract, lease,
sales order, purchase order, agreement, warranty, indenture, mortgage, note,
bond, right, warrant or instrument, whether written or verbal (and any and all
amendments thereto).

 

“Corporation” shall mean Sweet Paper
Sales Corp., a Florida corporation.

 

“Corporation Financial Statements”
shall mean the audited consolidated financial statements of the Corporation and
the Corporation Subsidiaries as of and for the twelve (12) months ended September 30,
2004, consisting of (a) the consolidated balance sheet as of September 30,
2004, (b) the related consolidated statement of operations and retained
earnings (deficit) for the twelve (12) months ended September 30, 2004 and
(c) the related consolidated statement of cash flows for the twelve (12) months
ended September 30, 2004 (in each case, including the notes thereto).

 

“Corporation Subsidiaries” shall mean
Sweet Paper Georgia and Sweet Paper North Carolina.

 

4

 

“Corporation Transfer Agreement” shall
mean the assignment and assumption agreement, to be entered into by and among
the Corporation, the Corporation Subsidiaries and Scheck Alpha, substantially
in the form attached hereto as Exhibit 1.1(e).

 

“Current Scheck Real Property Lease”
shall mean the Master Warehouse Lease, dated as of June 10, 1999, between
Scheck Family LLC, JEMS of Miami, Inc. and the Corporation.

 

“Current Third Party Real Property Leases”
shall mean the Real Property Leases other than the Current Scheck Real Property
Lease.

 

“Definitive September 30, 2004 Net
Asset Amount” shall mean $50,879,447; provided, however, if a
Revised September 30, 2004 Net Asset Amount is finalized pursuant to Section 4.5,
then the “Definitive September 30, 2004 Net Asset Amount” shall be the
Revised September 30, 2004 Net Asset Amount (as finalized pursuant to Section 4.5).

 

“Dollars” or numbers preceded by the
symbol “$” shall mean amounts in United States Dollars.

 

“Employees” shall mean all individuals
employed by the Asset Sellers primarily in connection with the operation of the
Business and all individuals employed by the Corporation or any Corporation
Subsidiary (including, in each case, those who are actively employed or on
leave, disability or other absence from employment) immediately prior to
Closing.

 

“Environment”
shall mean ambient air, indoor air, soil, surface water, ground water, drinking
water, land or subsurface strata and natural resources such as wetlands, flora
and fauna.

 

“Environmental
Claim” shall mean, with respect to any Person, any written notice,
claim,  demand or request for information
by any other Person alleging such Person’s liability for any costs, cleanup
costs, response, corrective action or other costs, damages to natural resources
or other property, personal injuries, fines or penalties arising out of or
resulting from (a) the presence, Release or threatened Release into the
Environment, of any Hazardous Material at any location, whether or not owned by
such Person, or (b) any violation of any Environmental Law.  The term “Environmental Claim” shall include
any written notice, claim, demand or other communication by any Person seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from the known or suspected presence of Hazardous Materials
or arising from alleged injury or threat of injury to health, safety or the Environment.

 

“Environmental Law” shall mean any Law
that imposes liability or standards of conduct concerning, or otherwise relates
to, discharges, emissions, Releases or threatened Releases of noises, odors or
any pollutants, contaminants or hazardous or toxic wastes, substances or
materials, whether as matter or energy, into ambient air, water or land, or
otherwise relating to the manufacture, processing, generation, distribution,
use, treatment, storage, disposal, cleanup, transport or handling of
pollutants, contaminants or hazardous or toxic wastes, substances or materials,
including CERCLA, the Superfund Amendments and Reauthorization Act of 1986, as
amended, the Resource Conservation and Recovery Act of 1976, as amended, the
Toxic Substances Control Act of 1976, as amended, the Federal Water Pollution
Control Act Amendments of 1972, as amended, the Clean Water Act of 1977, as
amended, any so-called

 

5

 

“Superfund” or “Superlien” Law
(including those already referenced in this definition) and any other Law
having a similar subject matter.

 

“Environmental Permit” shall mean any
Permit required by or pursuant to any applicable Environmental Law.

 

“ERISA” shall mean the Employee
Retirement Income Security Act of 1974, as amended.

 

“ERISA Affiliate” shall mean, with
respect to any Person, any corporation, trade or business that, together with
such Person, is a member of a controlled group of corporations or a group of
trades or businesses under common control within the meaning of sections 414(b)
or (c) of the Code.

 

“Exempt Aged Inventory Threshold Amount”
shall mean (a) $1,600,650 or (b) if Purchaser, in its sole discretion, designates
an amount that is greater than $1,600,650 pursuant to Section 4.5(d),
such greater amount designated by Purchaser.

 

“Exempt Stock Keeping Units” shall
mean (a) those stock keeping units identified with a “Y” in the column labeled
as “agree Y/N” on Schedule 5.12 and (b) those stock keeping units
that are included in the Closing Date Aged Inventory Report but are not set
forth on Schedule 5.12.

 

“Facility Mortgage Loan” shall mean
that certain mortgage loan made by GMAC to Scheck Family LLC and Jems of Miami,
Inc. evidenced by a Promissory Note in the amount of $17,420,000 dated June 10,
1999.

 

“Facility Mortgage Loan Environmental
Indemnity” shall mean that certain Environmental Indemnity Agreement, dated
as of June 10, 1999, issued by the Corporation and Michael Scheck in favor
of GMAC with respect to the Facility Mortgage Loan.

 

“Facility Mortgage Loan Guaranty”
shall mean that certain Guaranty, dated as of June 10, 1999, issued by the
Corporation and Michael Scheck in favor of GMAC with respect to the Facility
Mortgage Loan.

 

“Financial Statements” shall mean (a)
the Combined Financial Statements, (b) the Pro Forma Balance Sheets, (c) the
Corporation Financial Statements, (d) the 2004 Group Financial Statements, (e)
the 2003 Group Financial Statements, (f) the Interim Corporation Financial
Statements and (g) the Interim Group Financial Statements.

 

“$15 Million Letter of Credit” shall
mean the irrevocable, standby letter of credit to be issued by Wachovia Bank,
N.A. in favor of Purchaser in the stated amount of $15,000,000, in the form
attached hereto as Exhibit 1.1(f).

 

“$5 Million Letter of Credit” shall
mean the irrevocable, standby letter of credit to be issued by Wachovia Bank,
N.A. in favor of Purchaser in the stated amount of $5,000,000, in the form
attached hereto as Exhibit 1.1(g).

 

6

 

“GAAP” shall mean United States
generally accepted accounting principles as in effect on any applicable date.

 

“GMAC” shall mean GMAC Commercial
Mortgage Corporation.

 

“Governmental Authority” shall mean
the government of the United States or any foreign country or any state or
political subdivision thereof and any entity, body or authority exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including any court, tribunal, grand jury, arbitrator
or any other quasi-governmental entity established to perform such functions.

 

“Hazardous Substance” shall mean any
material, substance, constituent, waste, compound or other matter that (a)
constitutes a hazardous substance, toxic substance or pollutant (as such terms
are defined by, pursuant to, or result in liability under, any Environmental
Law) or (b) is regulated or controlled as a hazardous substance, toxic
substance, pollutant or other regulated or controlled material, substance or
matter pursuant to any Environmental Law.

 

“HSR Act” shall mean the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

 

“Indemnitee” shall mean the Person or
Persons entitled to, or claiming a right to, indemnification under Article 12.

 

“Indemnitor” shall mean the Person or
Persons claimed by the Indemnitee to be obligated to provide indemnification
under Article 12.

 

“Information and Records” of any
Person shall mean all books and records (other than minute books and corporate
records and including accounting and other financial books and records), files,
databases, plans, specifications, technical information, confidential
information, price lists, promotional materials, advertising copy and data,
marketing research and information, competitive analyses, customer impact
analyses, sales records, service records, Tax records, customer lists and files
(including customer credit, collection, deposit and complaint information),
customer profiles and other customer information, vendor lists and files, and
all other proprietary information of such Person.

 

“Intellectual Property” shall mean all
United States and foreign patents (including continuations, continuations-in-part,
reissues and re-examinations thereof) and patent applications; Marks;
copyrights and copyright registrations (and applications for registration of
the same); trade secrets; computer data (including formulations and analyses),
computer programs and software (in source code and object code form) and
firmware and all related programming, user and systems documentation;
inventions, processes and designs (whether or not patentable or reduced to
practice); know-how and formulae; and all other intellectual property rights
and assets.

 

“Interim Corporation Financial Statements”
shall mean the unaudited consolidated financial statements of the Corporation
and the Corporation Subsidiaries as of and for the three (3) months ended December 31,
2004 and the four (4) months ended January 31, 2005, consisting of (a) the
consolidated balance sheets as of December 31, 2004 and January 31,
2005, and (b) the related consolidated statements of operations and retained
earnings (deficit) for the three (3) months ended December 31, 2004 and
the four (4) months ended January 31, 2005.

 

“Interim Group Financial Statements”
shall mean the unaudited consolidated financial statements of the Asset Sellers
as of and for the three (3) months ended December 31, 2004 and the four
(4) months ended January 31, 2005, consisting of (a) the consolidated
balance sheets as of December 31, 2004 and January 31, 2005,

 

7

 

and (b) the related
consolidated statements of operations and retained earnings (deficit) for the
three (3) months ended December 31, 2004 and the four (4) months ended January 31,
2005.

 

“Inventory Amount” shall mean, as of
any given date and for any given stock keeping unit, the product of (a) the
quantity of such stock keeping unit owned by any Sweet Paper Entity, and
included in the inventory of such Sweet Paper Entity, as of such date multiplied
by (b) the “inventory cost per unit” for such stock keeping unit.

 

“IRS” shall mean the United States
Internal Revenue Service.

 

“knowledge of Purchaser,” or any
similar expression with regard to the knowledge or awareness of or receipt of
notice by Purchaser, shall mean all facts actually known, as of the date
hereof, by any Person set forth on Schedule 1.1(a).

 

“knowledge of Sellers,” or any similar
expression with regard to the knowledge or awareness of or receipt of notice by
Sellers, shall mean all facts actually known by any Shareholder that is a
natural person or any Person set forth on Schedule 1.1(b).

 

“Law” shall mean any law, statute,
regulation, ordinance, rule, order, decree, judgment, injunction, common law,
consent decree, settlement agreement or governmental requirement enacted,
promulgated, entered into, agreed or imposed by any Governmental Authority.

 

“Lien” shall mean any lien (except for
any lien for Taxes not yet due and payable), mortgage, charge, restriction,
pledge, security interest, option, lease, sublease or right of any third party.

 

“Loss” or “Losses” shall mean
any and all losses, liabilities, costs, claims, damages, penalties and expenses
(including reasonable attorneys’ fees and expenses and costs of investigation
and litigation).  In the event any of the
foregoing are indemnifiable hereunder, the terms “Loss” and “Losses” shall
include any and all reasonable attorneys’ fees and expenses and costs of
investigation and litigation incurred by the Indemnitee in enforcing such
indemnity.

 

“Marks” shall mean registered and
unregistered trade names, trademarks, service names, service marks and logos
(and applications for registration of the same) and all goodwill associated
therewith.

 

“Material Adverse Effect” shall mean
an effect (or circumstance involving a prospective effect) on the business,
operations, assets, liabilities, results of operations, cash flows or condition
(financial or otherwise) of the Sweet Paper Entities, the Assets and the
Business, taken as a whole, that is materially adverse; provided, that
in each case a “Material Adverse Effect” will not be deemed to include effects
or circumstances resulting from (a) general economic,

 

8

 

business, political, industry,
legal, regulatory or financial conditions that do not have a material
disproportionate effect on the Sweet Paper Entities or the Assets or the Business,
(b) the announcement of the transactions contemplated by this Agreement, (c)
changes in GAAP or statutory accounting principles, or (d) any action taken or
omitted to be taken pursuant to the terms of this Agreement.

 

“Non-Exempt Stock Keeping Units” shall
mean those stock keeping units identified with an “N” in the column labeled as “agree
Y/N” on Schedule 5.12.

 

“Parent” shall mean United Stationers
Inc., a Delaware corporation and the indirect parent of Purchaser.

 

“Pay-Off Letter”
shall mean a letter from a Sweet Paper Creditor addressed to Purchaser, the
Corporation and Group, and in a form satisfactory to Purchaser, covering all of
the following:  (a) identifying the
documents pursuant to which any Sweet Paper Entity is obligated to such Sweet
Paper Creditor with respect to Sweet Paper Debt and all documents related to,
or entered into in connection with the incurrence of, the Sweet Paper Debt (the
“Debt Instruments”), (b) if applicable, providing the Sweet Paper
Creditor’s consent to (and waiving any default or other effect under the Debt
Instruments in respect of) the transactions contemplated by this Agreement and
the Related Agreements, (c) stating the amount that would constitute payment in
full under such Debt Instruments as of the Closing Date, (d) acknowledging
that, upon receipt of such payment in full, (i) all obligations under the Debt
Instruments shall be fully discharged, (ii) any and all covenants and
restrictions on the activities of any Sweet Paper Entity under such Debt
Instruments shall be terminated and (iii) any and all Liens held by such Sweet
Paper Creditor or its Affiliates in connection with such Debt Instruments on
the Shares, the assets and properties of the Corporation and the Corporation
Subsidiaries, and the Assets shall be terminated and released and (e)
containing any other information reasonably requested by Purchaser.

 

“Permit” shall mean any permit,
license, approval, consent or other authorization required or granted by any
Governmental Authority.

 

“Person” shall mean any individual,
corporation, proprietorship, firm, partnership, limited partnership, limited
liability company, trust, association or other entity.

 

“Pre-Closing Tax Period” shall mean
(a) any Tax period ending on or before the close of business on the Closing
Date and (b) in the case of any Tax period that includes, but does not end on,
the Closing Date, the portion of such period up to and including the Closing
Date.

 

“Pro Forma Balance Sheets” shall mean
the Combined Balance Sheets as adjusted in accordance with the Pro Forma
Calculation Principles.

 

“Pro Forma Calculation Principles”
shall mean the principles set forth on Schedule 1.1(c).

 

“Purchase Price Adjustment Holdback Amount”
shall mean an amount equal to the greater of (a) $2,000,000 and (b) the
remainder of (i) the Estimated Net Asset Amount minus (ii) $50,879,447
(which amount the parties hereto agree and acknowledge represents an estimate
of the Net Asset Amount as of September 30, 2004), minus (iii)
$5,000,000 (in the case of each of

 

9

 

clauses (a)
and (b), as such amount may be reduced by any amounts from time to time
paid or retained therefrom).

 

“Purchaser Indemnified Parties” shall
mean Purchaser and each of its Affiliates (including, after the Closing, the
Corporation and the Corporation Subsidiaries), and their respective officers,
directors, employees, agents and representatives; provided, that in no event shall any Seller be deemed a Purchaser
Indemnified Party.

 

“Related Agreement” shall mean any
Contract that is or is to be entered into at the Closing or otherwise pursuant
to this Agreement.  The Related
Agreements executed by a specified Person shall be referred to as “such Person’s
Related Agreements,” “its Related Agreements” or another similar expression.

 

“Release”
shall mean (a) any release, spill, emission, incorporation, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the Environment or (b) the act of releasing, spilling, emitting, incorporating,
leaking, pumping, injecting, depositing, disposing, discharging, dispersing,
leaching or migrating into the Environment.

 

“Representatives” shall mean, with
respect to any Person, such Person’s Affiliates and its officers, directors,
managers, advisors and other representatives; provided, however,
that for purposes of this Agreement, the Person set forth on Schedule 14.1(b)(v)
shall not be deemed to be a Representative of any Person.

 

“Restricted Business” shall mean the
business of any or all of the following: (a) purchasing, selling and
distributing food service wares, small wares, industrial supplies, personal
healthcare supplies, office supplies, food products, janitorial supplies and
sanitation supplies (including paper, plastics and other related products), and
(b) related marketing and logistics services to or on behalf of customers or
suppliers, in the case of each of clauses (a) and (b), in North
America, Central America, South America or the Caribbean (including Puerto
Rico).

 

“Scheck Charitable Lead Trust” shall
mean the Trust Agreement, dated July 31, 2004, by and between Scheck Alpha
LP (as Settlor) and Jeffrey Scheck and Gil Bonwitt (as Trustees), as amended.

 

“Scheck Real Property” shall mean the
Leased Real Property that is leased, as of the date hereof, pursuant to the
Current Scheck Real Property Lease.

 

“Sellers” shall mean the Shareholders
and the Asset Sellers.

 

“Shares” shall mean, collectively, (a)
the 100 shares of Class A Voting Common Stock, $.001 par value per share, of
the Corporation, held of record by the Shareholders and (b) the 9,900 shares of
Class B Non-Voting Common Stock, $.001 par value per share, of the Corporation,
held of record by the Shareholders.

 

“Shareholders’ Agreement” shall mean
the Shareholders’ Agreement, dated as of December 30, 1992, by and among
the Corporation, Michael Scheck, Raquel Scheck, Jeffrey Scheck, Martin Scheck,
Elise Scheck, Steven Scheck and Scheck Investments.

 

10

 

“SOX” shall
mean the Sarbanes-Oxley Act of 2002, including all rules and regulations
relating thereto.

 

“Sweet Distribution” shall mean Sweet
Distribution, LLC, a Delaware limited liability company.

 

“Sweet Distribution Business” shall
mean the wholesale distribution of pre-sold, consumer branded retail products
to resellers for distribution to retailers, generally in the manner currently
conducted by Sweet Distribution (which business, as currently conducted, is
believed by Sellers and Purchaser (a) to generally sell stock keeping units
that are different from those stock keeping units that Purchaser or any Sweet
Paper Entity sells and (b) to generally sell to customers that are different
from those customers to which Purchaser or any Sweet Paper Entity sells).

 

“Sweet Distribution Sublease” shall
mean the sublease, to be entered into by and between the Corporation and Sweet
Distribution, substantially in the form attached hereto as Exhibit 1.1(h).

 

“Sweet Paper Creditors” shall mean
those Persons (including all Persons set forth on Schedules 1.1(d)(i), (ii)
and (iii)) (a) to which any Sweet Paper Debt is owed or (b) that possess
a Lien on any Shares, any assets or properties of the Corporation or any
Corporation Subsidiary, or any Assets securing any Sweet Paper Debt.

 

“Sweet Paper Debt” shall mean any (a)
indebtedness for borrowed money or any obligations evidenced by bonds,
debentures, notes or other similar instruments, any bank overdrafts or any
capitalized lease obligations (including all such indebtedness for borrowed money,
obligations and bank overdrafts set forth on Schedule 1.1(d)(i),
but excluding the  Facility Mortgage Loan
Guaranty, the Facility Mortgage Loan, the Facility Mortgage Loan Environmental
Indemnity and the Current Scheck Real Property Lease), and all interest thereon
and fees and other expenses related thereto, (b) obligations issued or assumed
as the deferred purchase price of property or services (including all such
obligations set forth on Schedule 1.1(d)(ii), but excluding
obligations to any vendor of any Sweet Paper Entity for raw materials,
inventory, services and supplies incurred in the ordinary and usual course of
business), and all interest thereon and fees and other expenses related
thereto, and (c) severance amounts payable at or prior to the Closing to any
current or former employee of any Sweet Paper Entity (including all such
severance amounts set forth on Schedule 1.1(d)(iii)) and all
interest thereon and fees and other expenses related thereto, in the case of
each of clauses (a), (b) and (c), that (i) is owed to any
Person by any Sweet Paper Entity or (ii) is secured by a Lien on any Shares,
any assets or properties of the Corporation or any Corporation Subsidiary, or
any Assets (excluding any Lien arising in favor of any lessor with respect to
an operating lease).

 

“Sweet Paper Entities” shall mean,
collectively, the Corporation, the Corporation Subsidiaries and the Asset
Sellers.

 

“Sweet Paper Georgia” shall mean Sweet
Paper Sales Corp. of Georgia, a Georgia corporation.

 

11

 

“Sweet Paper North Carolina” shall
mean Sweet Paper Sales Corp. of North Carolina, a North Carolina corporation.

 

“Taxes” shall mean all taxes, charges,
fees, duties, levies or other assessments, including income, gross receipts,
net proceeds, ad valorem, turnover, real and personal property (tangible and
intangible), sales, use, franchise, excise, value added, license, payroll,
unemployment, environmental, customs duties, capital stock, disability, stamp,
leasing, lease, user, transfer, fuel, excess profits, occupational and interest
equalization, windfall profits, severance and employees’ income withholding and
Social Security taxes imposed by any Governmental Authority, and such term
shall include all applicable interest, penalties or additions to tax including
any penalties and additions to taxes relating to the failure to comply with tax
reporting obligations including the reporting obligations described in Treasury
Regulation Section 1.6011-4.

 

“Tax Return” shall mean any report,
return, registration, document, declaration, payee statement or other
information or filing required to be filed or provided to any Governmental
Authority or any Person with respect to Taxes.

 

“Tax Statute of Limitations Date”
shall mean the close of business on the 60th day after the expiration of the
applicable statute of limitations with respect to Taxes, including any
extensions thereof (or if such date is not a Business Day, the next Business
Day).

 

“Tax Warranty” shall mean a
representation or warranty in Section 5.18 or 5.21.

 

“Third Party Real Property” shall mean
the Leased Real Property that is leased pursuant to the Current Third Party
Real Property Leases.

 

“Title and Authorization Warranty”
shall mean a representation or warranty in Section 5.1, 5.2, 5.3, 5.4, 5.7, 5.29,
6.1, 6.2,
6.3 or 6.5.

 

“Transferred Employees” shall mean all
Employees who, at or immediately after the Closing, are employed by Purchaser,
by the Corporation or by any Corporation Subsidiary.

 

“2003 Group Financial Statements”
shall mean the audited consolidated financial statements of the Asset Sellers
as of and for the twelve (12) months ended December 31, 2003, consisting
of (a) the consolidated balance sheet as of December 31, 2003, (b) the
related consolidated statement of operations and retained earnings (deficit)
for the twelve (12) months ended December 31, 2003 and (c) the related
consolidated statement of cash flows for the twelve (12) months ended December 31,
2003 (in each case, including the notes thereto).

 

“2004 Group Financial Statements”
shall mean the audited consolidated financial statements of the Asset Sellers
as of and for the twelve (12) months ended September 30, 2004, consisting
of (a) the consolidated balance sheet as of September 30, 2004, (b) the
related consolidated statement of operations and retained earnings (deficit)
for the twelve (12) months ended September 30, 2004 and (c) the related
consolidated statement of cash flows for the twelve (12) months ended September 30,
2004 (in each case, including the notes thereto).

 

“Wachovia Facility” shall mean that
certain revolving credit facility extended by Wachovia Bank, N.A. to the
Corporation pursuant to the Amended and Restated Loan and

 

12

 

Security Agreement, dated as of
April 28, 1995, between the Corporation and Wachovia Bank, N.A. (as
amended) and all documents executed in connection therewith.

 

1.2                                 Other
Definitions.  In addition to the
terms defined in Section 1.1, certain other terms are defined elsewhere in
this Agreement, and, whenever such terms are used in this Agreement, they shall
have their respective defined meanings, unless the context expressly or by
necessary implication otherwise requires. 
The definitions of terms of general applicability are set forth in the
sections listed below.

 

	
  Term

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  
	
  Accounting Firm

  	
   

  	
  4.5(e)

  
	
  Advances

  	
   

  	
  5.13(c)

  
	
  Arrangements

  	
   

  	
  5.18(a)

  
	
  Asset Allocation Schedule

  	
   

  	
  4.6(c)

  
	
  Assets

  	
   

  	
  3.1

  
	
  Asset Sellers

  	
   

  	
  Preamble

  
	
  Assumed Contracts

  	
   

  	
  3.2(a)

  
	
  Assumed Obligations

  	
   

  	
  3.4

  
	
  Assumed Permits

  	
   

  	
  3.2(b)

  
	
  Base Purchase Price

  	
   

  	
  4.1(a)

  
	
  Basket Amount

  	
   

  	
  12.4(a)

  
	
  Benefit Plans

  	
   

  	
  5.18(b)

  
	
  Closing Date Adjustment Materials

  	
   

  	
  4.5(a)(iii)

  
	
  Closing Date Aged Inventory Report

  	
   

  	
  4.5(a)(iii)

  
	
  Closing Date Exempt Aged Inventory Amount

  	
   

  	
  4.5(a)(iii)

  
	
  Closing Date Net Asset Amount

  	
   

  	
  4.5(a)(i)

  
	
  Closing Date Non-Exempt Inventory Amount

  	
   

  	
  4.5(a)(iii)

  
	
  Closing Date Payment

  	
   

  	
  4.1(c)

  
	
  Closing Date Seller Payment

  	
   

  	
  4.1(d)

  
	
  Closing Date Sweet Paper Debt Amount

  	
   

  	
  7.13

  
	
  Computer System

  	
   

  	
  5.11

  
	
  Damar

  	
   

  	
  Preamble

  
	
  Defeasance

  	
   

  	
  7.27(a)

  
	
  Defeasance Deposit Amount

  	
   

  	
  7.27(a)

  
	
  Defeasance Escrow Account

  	
   

  	
  7.27(a)

  
	
  Disclosing Party

  	
   

  	
  7.9(a)

  
	
  Elise Scheck

  	
   

  	
  Preamble

  
	
  Employment Agreements

  	
   

  	
  5.18(a)

  
	
  Estimated Closing Date Balance Sheet

  	
   

  	
  4.4(a)

  
	
  Estimated Net Asset Amount

  	
   

  	
  4.4(a)

  
	
  Estimated Purchase Price

  	
   

  	
  4.1(b)

  
	
  Excluded Assets

  	
   

  	
  3.3

  
	
  Excluded Contracts

  	
   

  	
  3.3(g)

  
	
  Excluded Obligations

  	
   

  	
  3.5

  
	
  Facility Mortgage Loan Instruments

  	
   

  	
  7.27(a)

  
	
  Final Closing Date Balance Sheet

  	
   

  	
  4.5(a)(i)

  
	
  $15 Million LC Expiration Date

  	
   

  	
  12.10(b)(iii)

  
	
  $5 Million LC Expiration Date

  	
   

  	
  12.10(a)(iii)

  

 

13

 

	
  Term

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  
	
  401(k) Plan

  	
   

  	
  7.17(f)

  
	
  Group

  	
   

  	
  Preamble

  
	
  Initial Closing Date Balance Sheet

  	
   

  	
  7.15(a)

  
	
  Intellectual Property Licenses

  	
   

  	
  5.14(a)

  
	
  Jeffrey Scheck

  	
   

  	
  Preamble

  
	
  Leased Real Property

  	
   

  	
  5.9(b)

  
	
  Licensed Intellectual Property

  	
   

  	
  5.14(a)

  
	
  Lundy Shacter

  	
   

  	
  4.4(f)

  
	
  Major Customer

  	
   

  	
  5.27(a)

  
	
  Martin Scheck

  	
   

  	
  Preamble

  
	
  Michael Scheck

  	
   

  	
  Preamble

  
	
  Net Asset Amount

  	
   

  	
  4.4(a)

  
	
  New Scheck Real Property Lease

  	
   

  	
  7.27(c)

  
	
  Non-Competition Covenant

  	
   

  	
  14.2

  
	
  Non-Competition Payment

  	
   

  	
  4.3

  
	
  Non-Competition Period

  	
   

  	
  14.1(a)

  
	
  Non-Required Consents

  	
   

  	
  7.4(a)

  
	
  Notice of Acceptance

  	
   

  	
  4.5(d)(i)

  
	
  Notice of Objections

  	
   

  	
  4.5(d)(ii)

  
	
  Other Tax Claim

  	
   

  	
  13.6(b)

  
	
  Owned Intellectual Property

  	
   

  	
  5.14(a)

  
	
  Plans

  	
   

  	
  5.18(a)

  
	
  Pre-Closing Certificate

  	
   

  	
  4.4(f)

  
	
  Pre-Closing Exempt Aged Inventory Amount

  	
   

  	
  5.12(b)

  
	
  Pre-Closing Non-Exempt Aged Inventory
  Amount

  	
   

  	
  5.12(b)

  
	
  Property Taxes

  	
   

  	
  13.2

  
	
  Purchase Price Increase Amount

  	
   

  	
  4.5(h)(i)

  
	
  Purchase Price Reduction Amount

  	
   

  	
  4.5(h)(ii)

  
	
  Purchaser

  	
   

  	
  Preamble

  
	
  Raquel Scheck

  	
   

  	
  Preamble

  
	
  Real Property Leases

  	
   

  	
  5.9(b)

  
	
  Receiving Party

  	
   

  	
  7.9(a)

  
	
  Recipient

  	
   

  	
  13.6(a)

  
	
  Revised Pro Forma Balance Sheets

  	
   

  	
  4.5(a)(ii)

  
	
  Revised September 30, 2004 Net Asset
  Amount

  	
   

  	
  4.5(a)(ii)

  
	
  Scheck Alpha

  	
   

  	
  Preamble

  
	
  Scheck Investments

  	
   

  	
  Preamble

  
	
  Section 13.1(b) Return

  	
   

  	
  13.1(b)

  
	
  Seller Representative

  	
   

  	
  15.17

  
	
  Shareholders

  	
   

  	
  Preamble

  
	
  Steven Scheck

  	
   

  	
  Preamble

  
	
  Straddle Period

  	
   

  	
  13.2

  
	
  Straddle Return

  	
   

  	
  13.1(a)

  
	
  Supplier

  	
   

  	
  5.27(b)(i)

  
	
  Supplier Economic Terms

  	
   

  	
  5.27(b)(ii)

  
	
  Sweet Distribution Entities

  	
   

  	
  5.31

  
	
  Sweet Paper Assets

  	
   

  	
  5.8(b)

  

 

14

 

	
  Term

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  
	
  Sweet Paper California

  	
   

  	
  Preamble

  
	
  Sweet Paper Massachusetts

  	
   

  	
  Preamble

  
	
  Sweet Paper Texas

  	
   

  	
  Preamble

  
	
  Tax Claim

  	
   

  	
  13.6(a)

  
	
  3-Party Mutual Nondisclosure Agreement

  	
   

  	
  15.15

  
	
  Transaction Consents

  	
   

  	
  7.4(d)

  
	
  Transferee

  	
   

  	
  7.5

  
	
  Transferred Group Customer Contracts

  	
   

  	
  3.2(a)(ii)

  
	
  Transferred Group Fixed Assets

  	
   

  	
  3.1(b)

  
	
  Transferred Group Information and Records

  	
   

  	
  3.1(f)

  
	
  Transferred Group Intellectual Property
  Licenses

  	
   

  	
  3.2(a)(v)

  
	
  Transferred Group Inventory

  	
   

  	
  3.1(a)

  
	
  Transferred Group Other Receivables

  	
   

  	
  3.1(e)

  
	
  Transferred Group Owned Intellectual
  Property

  	
   

  	
  3.1(g)

  
	
  Transferred Group Personal Property Leases

  	
   

  	
  3.2(a)(i)

  
	
  Transferred Group Trade Receivables

  	
   

  	
  3.1(d)

  
	
  Transferred Group Vehicles

  	
   

  	
  3.1(c)

  
	
  Transferred Group Vendor Contracts

  	
   

  	
  3.2(a)(iii)

  
	
  Transferred Group Warehouse Contracts

  	
   

  	
  3.2(a)(iv)

  
	
  Travelers

  	
   

  	
  7.24

  
	
  Undeserved Portion

  	
   

  	
  12.10(a)(ii)

  
	
  Unresolved Adjustments

  	
   

  	
  4.5(e)

  
	
  Unresolved Claims

  	
   

  	
  12.10(b)(iii)

  
	
  Unresolved Claims Amount

  	
   

  	
  12.10(b)(iii)

  
	
  Wachovia Letter of Credit

  	
   

  	
  7.24

  
	
  WARN Act

  	
   

  	
  5.19(f)

  
	
  Withdrawn Corporation Assets

  	
   

  	
  7.5

  
	
  Withdrawn Corporation Obligations

  	
   

  	
  7.5

  

 

1.3                                 Interpretation.  The headings preceding the text of Articles
and Sections included in this Agreement and the headings to Schedules attached
to this Agreement are for convenience only and shall not be deemed part of this
Agreement or be given any effect in interpreting this Agreement.  The use of the masculine, feminine or neuter
gender or the singular or plural form of words herein shall not limit any
provision of this Agreement.  The use of
the terms “including” or “include” shall in all cases herein mean “including,
without limitation” or “include, without limitation,” respectively.  Reference to any Person includes such Person’s
successors and assigns to the extent such successors and assigns are permitted
by the terms of any applicable agreement, and reference to a Person in a
particular capacity excludes such Person in any other capacity or
individually.  Reference to any agreement
(including this Agreement), document or instrument means such agreement,
document or instrument as amended or modified and in effect at the time that is
applicable to such reference in accordance with the terms thereof and, if
applicable, the terms hereof.  Reference
to any Law means such Law as amended, modified, codified, replaced or
re-enacted, in whole or in part, at the time that is applicable to such reference,
including rules, regulations, enforcement procedures and any interpretations
promulgated thereunder.  Underscored
references to Articles, Sections,

 

15

 

Subsections
or Schedules shall refer to those portions of this Agreement.  The use of the terms “hereunder,” “hereof,” “hereto”
and words of similar import shall refer to this Agreement as a whole and not to
any particular Article, Section or clause of or Exhibit or Schedule to
this Agreement.  No specific
representation, warranty or covenant contained herein shall limit the
generality or applicability of a more general representation, warranty or
covenant contained herein.  A breach of
or inaccuracy in any representation, warranty or covenant shall not be affected
by the fact that any more general or less general representation, warranty or
covenant was not also breached or inaccurate.

 

1.4                                 Provision
and Delivery of Information.  Any
reference in this Agreement to the fact that any information has been provided
or delivered by Sellers to Purchaser shall mean that such information was
either (a) directly provided or delivered by Sellers to one of Purchaser’s
directors, officers, employees or other Representatives or (b) made available
by Sellers to Purchaser through the “Project Springfield” online virtual data
room web site provided by IntraLinks, Inc.

 

1.5                                 GAAP
and Consistency.  For the avoidance
of doubt, with respect to those provisions herein relating to the GAAP
compliant version of the Estimated Closing Date Balance Sheet, the Final
Closing Date Balance Sheet and the Initial Closing Date Balance Sheet, if there
is any conflict between GAAP (on the one hand) and the practices used to
prepare the Combined Balance Sheets (on the other hand), GAAP shall
prevail.  For the avoidance of doubt, “consistently
applied” shall mean consistent with the application of accounting principles
and policies (and methods to determine estimates and judgments) utilized in the
construct of the Combined Financial Statements.

 

1.6                                 Balance
Sheets.

 

(a)                                  GAAP
Version of Balance Sheets.  Any
reference herein to the “GAAP version” of the Estimated Closing Date Balance
Sheet, the Final Closing Date Balance Sheet or the Initial Closing Date Balance
Sheet shall mean such balance sheet prior to any adjustments being implemented in
accordance with the Pro Forma Calculation Principles.

 

(b)                                 Pro
Forma Versions of Balance Sheets. 
Any reference herein to the “pro forma version” of the Estimated Closing
Date Balance Sheet, the Final Closing Date Balance Sheet or the Initial Closing
Date Balance Sheet shall mean such balance sheet as adjusted in accordance with
the Pro Forma Calculation Principles.

 

1.7                                 Schedules.

 

(a)                                  To
the extent applicable, the information set forth on each Schedule to this
Agreement shall be organized and categorized by reference to the particular
Sweet Paper Entity or Sweet Paper Entities to which such scheduled information
pertains.

 

(b)                                 The
inclusion of information in any Schedule shall not be construed as an
admission that such information is material to any Sweet Paper Entity.  In addition, matters reflected in any Schedule are
not necessarily limited to matters required by this Agreement to be reflected
in such Schedule.  Such additional
matters are set forth for

 

16

 

informational
purposes only and do not necessarily include other matters of a similar
nature.  Any item set forth on one Schedule shall
not be deemed to have been set forth on any other Schedule unless such
item is relevant to such other Schedule and such relevance is reasonably
apparent.

 

ARTICLE 2.

 

SALE
AND PURCHASE OF SHARES

 

2.1                                 Sale
and Purchase of Shares.  Subject to
the terms and conditions of this Agreement, at and as of the Closing, each
Shareholder shall sell to Purchaser the number of Shares set forth next to the
name of such Shareholder on Schedule 5.4(b), free and clear of all
Liens, and Purchaser shall purchase all of the Shares.

 

ARTICLE 3.

 

SALE
AND PURCHASE OF ASSETS;

ASSUMPTION OF ASSUMED OBLIGATIONS

 

3.1                                 Purchased
Assets.  Except as provided in Section 3.3,
and subject to the terms and conditions of this Agreement, at and as of the
Closing, the Asset Sellers shall sell, assign, convey, transfer and deliver to
Purchaser, and Purchaser shall purchase, acquire and take assignment and delivery
of, all of the Asset Sellers’ title, right and interest in and to all of the
assets, properties and rights (wherever located) that are used or held for use
in, primarily related to or necessary for the Business, including the
following:

 

(a)                                  Inventory.  All supplies, materials and other inventories
held for resale,  packaging materials and
marketing materials that are used or held for use in, primarily related to or
necessary for the Business (collectively, the “Transferred Group Inventory”),
including the Transferred Group Inventory as of April 30, 2005 set forth
on Schedule 3.1(a) (other than such Transferred Group Inventory set
forth on such Schedule that is sold prior to the Closing not in violation
of any provisions of this Agreement);

 

(b)                                 Fixed
Assets.  All machinery, equipment,
storage racking, fixed assets, furniture, tools, spare and replacement parts,
maintenance equipment, materials, computers, printers, servers and other items
of personal property of every kind and description that are used or held for
use in, primarily related to or necessary for the Business, other than the
Transferred Group Vehicles and the Transferred Group Inventory (collectively,
the “Transferred Group Fixed Assets”), including the Transferred Group
Fixed Assets as of September 30, 2004 set forth on Schedule 3.1(b)
(other than such Transferred Group Fixed Assets set forth on such Schedule that
are sold prior to the Closing not in violation of any provisions of this
Agreement);

 

(c)                                  Vehicles.  All automobiles, service trucks, delivery
trucks, tractors, trailers and other vehicles that are used or held for use in,
primarily related to or necessary for the Business (collectively, the “Transferred
Group Vehicles”);

 

17

 

(d)                                 Trade
Receivables.  All trade receivables
to the extent arising out of or from the operation of the Business (the “Transferred
Group Trade Receivables”);

 

(e)                                  Other
Receivables.  All receivables other
than trade receivables to the extent arising out of or from the operation of
the Business, including rebates, allowances and other receivables from
suppliers (“Transferred Group Other Receivables”);

 

(f)                                    Information
and Records.  All Information and
Records that are used or held for use in, primarily related to or necessary for
the Business, other than the Transferred Group Owned Intellectual Property
(collectively, the “Transferred Group Information and Records”);

 

(g)                                 Owned
Intellectual Property.  All
Intellectual Property used or held for use in, primarily related to or
necessary for the Business, including all rights to sue and recover for past
infringement or misappropriation thereof and to receive all income, royalties,
damages and payments for past and future infringements thereof (the “Transferred
Group Owned Intellectual Property”), including the Transferred Group Owned
Intellectual Property set forth on Schedule 3.1(g);

 

(h)                                 Customer
Goodwill.  All of the goodwill
relating to customer relationships  to
the extent resulting from the conduct of the Business by any Asset Seller;

 

(i)                                     Prepaid
Expenses.  All prepaid expenses,
including ad valorem Taxes and lease and rental payments;

 

(j)                                     Rights
of Set-Off, etc.  All claims, causes
of action, rights of recovery and rights of set-off of any kind relating to or
arising out of the Assets or the Business, including any claims against
insurance companies;

 

(k)                                  Cash.  All Cash; and

 

(l)                                     Other
Assets.  All other assets and rights
of every kind and description not of a type specifically identified in this Section 3.1,
wherever located, personal or mixed, tangible or intangible, known or unknown,
that are used or held for use in, primarily related to or necessary for the
Business, including (i) all assets of any Asset Seller reflected on the Pro
Forma Balance Sheets, other than those assets so reflected that have been sold
or otherwise disposed of not in violation of any provisions of this Agreement
during the period from the date of the Combined Balance Sheets until the
Closing Date and (ii) all assets acquired after the date of the Combined
Balance Sheets by any Asset Seller primarily in connection with the Business,
but excluding, in any case, (A) any Contract or Permit (it being understood
that the only Contracts or Permits to be transferred to Purchaser shall be the
Assumed Contracts and Assumed Permits) and (B) the Excluded Assets.

 

All of the
foregoing assets described in this Section 3.1, together with the
Assumed Contracts and the Assumed Permits, are referred to herein collectively
as the “Assets”.

 

18

 

3.2                                 Assignment
of Contracts and Permits.

 

(a)                                  Assignment
of Contracts.  Except as provided in Section 3.3,
and subject to the terms and conditions of this Agreement, at and as of the
Closing, the Asset Sellers shall assign and transfer to Purchaser, and
Purchaser shall take assignment of, all of the Asset Sellers’ title, right and
interest in and to all of the Contracts to which the Asset Sellers are a party
and that relate to, in whole or in part, other Assets or that are used or held
for use in, primarily related to or necessary for the Business (all such
Contracts are referred to herein collectively as the “Assumed Contracts”),
including the following:

 

(i)                                     Personal
Property Leases.  All leases to or by
any Asset Seller of personal property, which leases or leased personal property
relate to, in whole or in part, other Assets or are used or held for use in,
primarily related to or necessary for the Business (collectively, the “Transferred
Group Personal Property Leases”), including the Transferred Group Personal
Property Leases set forth on Schedule 3.2(a)(i);

 

(ii)                                  Customer
Contracts.  All customer Contracts,
sales orders and other Contracts for the sale or provision by any Asset Seller
of goods and/or services, which Contracts or goods and/or services relate to,
in whole or in part, other Assets or are used or held for use in, primarily
related to or necessary for the Business (collectively, the “Transferred
Group Customer Contracts”);

 

(iii)                               Vendor
Contracts.  All purchase orders and
other Contracts for the purchase by any Asset Seller of goods and/or services,
which Contracts or goods and/or services relate to, in whole or in part, other
Assets or are used or held for use in, primarily related to or necessary for
the Business (collectively, the “Transferred Group Vendor Contracts”);

 

(iv)                              Warehouse
Contracts.  All Contracts for the
consignment, bailment or warehousing of any property with or by any Asset
Seller, which Contracts or property relate to, in whole or in part, other
Assets or are used or held for use in, primarily related to or necessary for
the Business (collectively, the “Transferred Group Warehouse Contracts”);

 

(v)                                 Intellectual
Property Licenses.  All agreements
for the license to or by any Asset Seller of any Intellectual Property, which
agreements or Intellectual Property relate to, in whole or in part, other
Assets or are used or held for use in, primarily related to or necessary for
the Business (collectively, the “Transferred Group Intellectual Property
Licenses”), including the Transferred Group Intellectual Property Licenses
set forth on Schedule 3.2(a)(v);

 

(vi)                              Asset
Seller Real Property Leases.  The
Asset Seller Real Property Leases;

 

(vii)                           Non-Disclosure
Obligations.  All non-disclosure,
confidentiality and similar obligations owed to any Asset Seller to the extent
related to the Assets or used or held for use in, primarily related to or
necessary for the Business, including all rights with respect to any obligation
of any current or former

 

19

 

employee of the
Business owed to any Asset Seller to maintain the confidentiality of
proprietary information of the Business;

 

(viii)                        Claims.  All warranties, indemnities, claims and
rights against third parties given to, assigned to or benefiting any Asset
Seller in connection with the Assets or the Business;

 

(ix)                                Employee
Non-Compete Obligations.  All rights
with respect to any obligation of any current employee or former employee of
the Business owed to any Asset Seller to refrain from competing with the
Business; and

 

(x)                                   Other
Contracts.  All other Contracts set
forth on Schedule 3.2(a)(x).

 

(b)                                 Assignment
of Permits.  Except as provided in Section 3.3,
and subject to the terms and conditions of this Agreement, at and as of the
Closing, the Asset Sellers shall assign and transfer to Purchaser, and
Purchaser shall take assignment of, all of the Asset Sellers’ title, right and
interest in and to all of the Permits that relate to, in whole or in part,
other Assets or are used or held for use in, primarily related to or necessary
for the Business (collectively, the “Assumed Permits”).

 

Notwithstanding
anything contained herein or otherwise to the contrary, this Agreement shall
not constitute an agreement to assign any Contract or Permit or any claim or
right or any benefit or obligation thereunder or resulting therefrom if an
assignment thereof, without the consent of a third party thereto, would
constitute a breach or violation thereof and if such a consent is not obtained
at or prior to the Closing, in which case the provisions of Section 7.4(b)
shall apply, provided that this sentence shall not limit or otherwise
affect the terms of Sections 5.3, 6.3, 7.4, 8.3 or 9.3.

 

3.3                                 Excluded
Assets.  Notwithstanding the terms of
Sections 3.1 and 3.2 or anything else contained herein or
otherwise to the contrary, the following assets of the Asset Sellers shall be
retained by the Asset Sellers, are not being sold or assigned to Purchaser
hereunder and do not constitute Assets, Assumed Contracts or Assumed Permits
(all of the following are referred to herein collectively as the “Excluded
Assets”):

 

(a)                                  [RESERVED];

 

(b)                                 Financing
Agreements.  All Contracts relating
to the borrowing of funds by, or extension of credit or financing to, any Asset
Seller;

 

(c)                                  Corporate
Records.  All minute books and
corporate records of the Asset Sellers;

 

(d)                                 Intercompany
Agreements.  All Contracts between
any Asset Seller (on the one hand) and any other Asset Seller or any Affiliate
of any other Asset Seller (on the other hand) (other than those Contracts
explicitly set forth on Schedule 3.2(a)(x));

 

20

 

(e)                                  Intercompany
Accounts Receivables.  All accounts
receivable owed to any Asset Seller by any other Asset Seller or any Affiliate
of any other Asset Seller, other than those accounts receivable incurred in the
ordinary course of business;

 

(f)                                    Other
Excluded Assets.  All assets of the
Asset Sellers set forth on Schedule 3.3(f);

 

(g)                                 Excluded
Contracts.  All Contracts of the
Asset Sellers set forth on Schedule 3.3(g) (the “Excluded
Contracts”);

 

(h)                                 Contracts
Not Conforming to this Agreement. 
Unless Purchaser elects otherwise by notice to Seller, (i) any Contracts
not disclosed pursuant to Section 5.14 or Section 5.15
that should have been disclosed pursuant thereto, and (ii) any Contracts
entered into in violation of Section 7.3(b);

 

(i)                                     Leasehold
Improvements.  All improvements to any real property leased by
any Asset Seller pursuant to any Asset Seller Real Property Lease made by or
for the benefit of the tenant (other than storage racking); and

 

(j)                                     Certain
Contract Rights.  All rights under
the Assumed Contracts to the extent related to any Excluded Obligations.

 

3.4                                 Assumed
Obligations.  At and as of the
Closing, subject to the terms and conditions of this Agreement (including Section 3.5),
Purchaser shall assume, and agree to pay, perform, fulfill and discharge, the
following obligations of the Asset Sellers (the “Assumed Obligations”):

 

(a)                                  Assumed
Contracts.  The obligations of the
Asset Sellers that are required to be performed, or that accrue, after the
Closing Date under the Assumed Contracts and Assumed Permits (but excluding any
liabilities of the Asset Sellers in respect of a breach by any Asset Seller of
or default by any Asset Seller under such Assumed Contracts or Assumed
Permits), to the extent such Assumed Contracts and Assumed Permits, and all
rights of the Asset Sellers thereunder, are effectively assigned to Purchaser
at the Closing pursuant to Section 3.2;

 

(b)                                 Accounts
Payable.  All obligations with
respect to accounts payable of the Asset Sellers arising in the ordinary course
of business and relating to the Business as of the Closing to the extent set
forth on the pro forma version of the Final Closing Date Balance Sheet (as
finalized pursuant to Section 4.5) (other than accounts payable
relating to Excluded Assets, accounts payable that are payable to any other
Asset Seller, or any Affiliate of any other Asset Seller, and accounts payable
relating to any funded debt or notes payable, including any Sweet Paper Debt);
and

 

(c)                                  Other
Assumed Liabilities.  All obligations
with respect to accrued liabilities of the Asset Sellers arising in the
ordinary course of business and relating to the Business as of the Closing to
the extent set forth on the pro forma version of the Final Closing Date Balance
Sheet (as finalized pursuant to Section 4.5) (other than accrued
liabilities relating to Excluded Assets, accrued liabilities that are payable
to any other

 

21

 

Asset Seller, or
any Affiliate of any other Asset Seller, and accrued liabilities relating to
any funded debt or notes payable, including any Sweet Paper Debt).

 

3.5                                 No
Other Liabilities Assumed. 
Notwithstanding anything contained herein or otherwise to the contrary,
except as specifically set forth in Section 3.4, neither Purchaser
nor any of its Affiliates shall assume or otherwise be liable in respect of, or
be deemed to have assumed or otherwise be liable in respect of, any debt,
claim, obligation or liability of the Asset Sellers or any of their Affiliates
whatsoever (the “Excluded Obligations”), including the Excluded
Obligations set forth on Schedule 3.5.

 

3.6                                 Prorations.

 

(a)                                  The
Asset Sellers and Purchaser agree that all of the items set forth in this Section 3.6
relating to the Assets will be prorated as of the Closing Date, with the Asset
Sellers liable or entitled to receive payment to the extent such items relate
to any time period up to and including the Closing Date and Purchaser liable or
entitled to receive payment to the extent such items relate to periods
subsequent to the Closing Date:  rents,
royalties, maintenance fees, charges and other amounts that in any case are
payable periodically by or to any Asset Seller or Purchaser under any of the
Assumed Contracts or Assumed Permits.

 

(b)                                 The
Asset Sellers agree to provide Purchaser with such documents and other records
as Purchaser reasonably requests in order to confirm all adjustment and
proration calculations made pursuant to this Section 3.6.  Final payments with respect to prorations
contemplated by this Section 3.6 that are not ascertainable on or
before the Closing Date shall be settled between the parties as soon as
practicable after they are ascertainable.

 

(c)                                  The
parties hereto agree that any and all prorations of Taxes among the parties
shall be effected pursuant to Section 13.2.

 

ARTICLE 4.

 

PURCHASE
PRICE; OTHER PAYMENTS; ADJUSTMENT; ALLOCATION

 

4.1                                 Payment
of Purchase Price.  In consideration
for the transfer of the Shares and the Assets to Purchaser at and as of the
Closing, Purchaser shall assume the Assumed Obligations and pay the Seller
Representative an amount equal to:

 

(a)                                  $124,500,000
(the “Base Purchase Price”); plus or minus (as applicable)

 

(b)                                 the
adjustment amounts determined in accordance with Sections 4.4(b), 4.4(c)
and 4.4(d) (the Base Purchase Price, as so adjusted, is hereinafter
referred to as the “Estimated Purchase Price”); minus

 

(c)                                  the
Purchase Price Adjustment Holdback Amount (the Estimated Purchase Price, as so
reduced, is hereinafter referred to as the “Closing Date Payment”); minus

 

22

 

(d)                                 the
sum of (i) the Closing Date Sweet Paper Debt Amount, (ii) the  Defeasance Deposit Amount and (iii) the
Non-Competition Payment (the Closing Date Payment, as so reduced, is
hereinafter referred to as the “Closing Date Seller Payment”).

 

4.2                                 Payment
of Closing Date Sweet Paper Debt Amount. 
At and as of the Closing, Purchaser shall pay to each Sweet Paper
Creditor (on behalf of the applicable Sweet Paper Entity) that portion of the
Closing Date Sweet Paper Debt Amount owed to such Sweet Paper Creditor
according to the statement provided by Sellers to Purchaser in accordance with Section 7.13.

 

4.3                                 Payment
of Non-Competition Payment.  In
consideration for Sellers’ agreement to be bound by the Non-Competition
Covenants in accordance with Article 14, at and as of the Closing,
Purchaser shall pay the Seller Representative an amount equal to $1,500,000
(the “Non-Competition Payment”).

 

4.4                                 Pre-Closing
Purchase Price Adjustment.

 

(a)                                  At
least five (5) days prior to the Closing Date, Sellers shall prepare and
deliver to Purchaser a certificate setting forth (i) a draft of (A) the
projected combined, consolidating balance sheets of the Sweet Paper Entities as
of the close of business on the Closing Date prepared by Sellers in good faith
to be, to the greatest extent practicable, in accordance with GAAP consistently applied and (B) an adjusted version of
such projected combined, consolidating balance sheets, prepared by Sellers in
good faith to be, to the greatest extent practicable, in accordance with the
Pro Forma Calculation Principles (collectively, the “Estimated Closing Date
Balance Sheet”), and (ii) a
calculation of the estimated Net Asset Amount (as hereinafter defined),
estimated as of the close of business on the Closing Date, based on the
Estimated Closing Date Balance Sheet (the “Estimated Net Asset Amount”).  “Net Asset Amount” means the amount
equal to (A) the assets of the Sweet Paper Entities on the date specified,
calculated in accordance with the Pro Forma Calculation Principles, minus
(B) the liabilities of the Sweet Paper Entities on the date specified,
calculated in accordance with the Pro Forma Calculation Principles.

 

(b)                                 The
Base Purchase Price shall be increased or decreased on a dollar-for-dollar
basis to the extent the Estimated Net Asset Amount is greater than or less than
$50,879,447.

 

(c)                                  The
Base Purchase Price shall be decreased on a dollar-for-dollar basis by the
Pre-Closing Non-Exempt Aged Inventory Amount.

 

(d)                                 The
Base Purchase Price shall be increased by $5,500,000, which amount the parties
hereto agree and acknowledge (i) represents the excess working capital that is
reflected on the Combined Balance Sheets and (ii) shall not be subject to
adjustment pursuant to any provision of this Agreement, including Section 4.4(b).

 

(e)                                  The
certificate described in Section 4.4(a) shall be referred to herein
as the “Pre-Closing Certificate.” 
After Sellers deliver the Pre-Closing Certificate to Purchaser in
accordance with Section 4.4(a), promptly upon Purchaser’s request,
(i) Sellers shall

 

23

 

make available to
Purchaser and Purchaser’s Representatives copies of the work papers and back-up
materials used by Sellers in preparing the Pre-Closing Certificate, and such
other documents as Purchaser may reasonably request in connection with its review
of the Pre-Closing Certificate and (ii) Sellers shall cause Sellers’
independent accountants, Lundy & Shacter, P.A. – Certified Public
Accountants (“Lundy Shacter”) and any other Representative of Sellers
(as applicable), to make available to Purchaser and Purchaser’s Representatives
any work papers used or prepared by Lundy Shacter or
such other Representative in its preparation of the Pre-Closing Certificate.

 

4.5                                 Post-Closing
Purchase Price Adjustment; Release of Purchase Price Adjustment Holdback Amount.

 

(a)                                  Sellers
shall prepare and deliver to Purchaser, no later than ninety (90) days after
the Closing Date:

 

(i)                                     (A)
compiled, combined, consolidating balance sheets of the Sweet Paper Entities as
of the close of business on the Closing Date (as derived from audited
consolidated balance sheets of the Corporation and the Corporation Subsidiaries
as of the close of business on the Closing Date and the audited consolidated
balance sheets of the Asset Sellers as of the close of business on the Closing
Date) prepared in accordance with GAAP consistently applied and (B) an adjusted
version of such compiled, combined, consolidating balance sheets, so adjusted
in accordance with the Pro Forma Calculation Principles (collectively, the “Final
Closing Date Balance Sheet”), and a calculation of the Net Asset Amount as
of the close of business on the Closing Date, based on the Final Closing Date
Balance Sheet and calculated in accordance with the Pro Forma Calculation
Principles (the “Closing Date Net Asset Amount”);

 

(ii)                                  if,
in the course of preparing the Final Closing Date Balance Sheet, Sellers
conclude that the Net Asset Amount as of September 30, 2004 was greater
than or less than $50,879,447, a revised version of the Pro Forma Balance
Sheets and a revised calculation of the Net Asset Amount as of September 30,
2004 (the “Revised Pro Forma Balance Sheets” and the “Revised September 30,
2004 Net Asset Amount,” respectively) and a reasonably detailed explanation
for such revisions;

 

(iii)                               A
true, correct and complete list of the Aged Inventory as of the close of
business on the Closing Date (the “Closing Date Aged Inventory Report”
and, together with the Final Closing Date Balance Sheet, the calculation of the
Closing Date Net Asset Amount, and the calculation of the Revised September 30,
2004 Net Asset Amount (if applicable), the “Closing Date Adjustment
Materials”).  Sellers shall include
the following information in the Closing Date Aged Inventory Report:  (A) for each stock keeping unit included in
such report, (i) the total quantity of such stock keeping unit in the Sweet
Paper Entities’ inventory as of the close of business on the Closing Date, (ii)
the quantity of such stock keeping unit that constitutes Aged Inventory as of
the close of business on the Closing Date, (iii) the “inventory cost per unit”
of such stock keeping unit,

 

24

 

(iv) a designation
of such stock keeping unit as “branded” or “unbranded,” (v) a code identifying
such stock keeping unit as new, dormant, overstock, private label or commodity,
and (vi) a designation of Y for each Exempt Stock Keeping Unit and a
designation of N for each Non-Exempt Stock Keeping Unit, (B) a true, correct
and complete calculation of the aggregate Aged Inventory Amount with respect to
the Exempt Stock Keeping Units as of the close of business on the Closing Date
(the “Closing Date Exempt Aged Inventory Amount”), and (C) a true,
correct and complete calculation of the aggregate Inventory Amount with respect
to the Non-Exempt Stock Keeping Units as of the close of business on the
Closing Date (the “Closing Date Non-Exempt Inventory Amount”); and

 

(iv)                              Notwithstanding
anything to the contrary set forth herein, for the avoidance of doubt, no
adjustment shall be made with respect to the Pre-Closing Exempt Aged Inventory
Amount, the Pre-Closing Non-Exempt Aged Inventory Amount, the Closing Date
Exempt Aged Inventory Amount or the Closing Date Non-Exempt Inventory Amount to
the extent such adjustment is duplicative of any adjustment made in connection
with the Estimated Closing Date Balance Sheet and the Estimated Net Asset
Amount (including any writedown of inventory relating thereto) or the Final
Closing Date Balance Sheet and the Closing Date Net Asset Amount (including any
writedown of inventory relating thereto).

 

(b)                                 Sellers
agree that:

 

(i)                                     except
as set forth on Schedule 4.5(b)(i), Sellers shall prepare the GAAP
version of the Final Closing Date Balance Sheet so as to present fairly in all
material respects the combined financial position, assets and liabilities of
the Sweet Paper Entities as of the close of business on the Closing Date;

 

(ii)                                  Sellers
shall prepare the GAAP version of the Final Closing Date Balance Sheet so as to
(A) be in accordance with the books and records of the Sweet Paper Entities,
(B) not reflect any material transactions that are not bona fide transactions
and (C) not contain any untrue information or disclosures of a material nature
or omit any fact necessary to make the information and disclosures contained
therein, in light of the circumstances in which they were made, not materially
misleading; and

 

(iii)                               Sellers
shall prepare the pro forma version of the Final Closing Date Balance Sheet so
as to accurately reflect all adjustments to the GAAP version of the Final
Closing Date Balance Sheet that are required by (A) items 1, 3, 4, 5, 6, 18 and
19 of the Pro Forma Calculation Principles and (B) item 21 of the Pro Forma
Calculation Principles as item 21 applies to items 3, 4, 5, 6 and 18 thereof.  Sellers shall prepare the pro forma version
of the Final Closing Date Balance Sheet in good faith so as to accurately
reflect, to the greatest extent practicable, all adjustments to the GAAP
version of the Final Closing Date Balance Sheet that are required by all other
Pro Forma Calculation Principles.

 

25

 

(c)                                  In
order to facilitate Sellers’ preparation of the Closing Date Adjustment
Materials, Purchaser shall make available to Sellers, Lundy Shacter and any other
Representative of Sellers (as applicable), without unreasonable disruption of
the normal business activities of Purchaser, the Corporation, the Corporation
Subsidiaries or the Business, (i) the appropriate personnel and books and
records of Purchaser relating to the Business and (ii) the appropriate
personnel and books and records of the Corporation and the Corporation
Subsidiaries.  In furtherance of the
preceding sentence, until Sellers have delivered the Closing Date Adjustment
Materials in accordance with Section 4.5(a), Purchaser shall use
commercially reasonable efforts to maintain the employment of those persons set
forth on Schedule 4.5(c), subject to the provisions of Section 7.17.  All fees and
expenses of Lundy Shacter and any other Representative of Sellers relating to
the audit or certification, as applicable, of the Closing Date Adjustment
Materials shall be borne solely by Sellers. 
Any Confidential Information supplied to Sellers by Purchaser to enable
Sellers to prepare or review the Closing Date Adjustment Materials shall be
maintained by Sellers in strict confidence and shall not be disclosed to any
Person (other than their accountants and other representatives who need to know
such information) or used by Sellers for any purpose, except in each case in
connection with the matters specifically covered by this Section 4.5;
provided, however, that such restrictions shall not apply to (i)
any information that becomes generally available to the public after the
Closing Date through no fault of any Seller or any of its Representatives, (ii)
any information that after the Closing is legitimately received by any Seller
or any of its Affiliates from a third party (provided such third party is not
known by any Seller or any of its Affiliates to be bound by an obligation of
confidentiality) or (iii) any disclosure required by Law or any Governmental
Authority, so long as notice of such disclosure is given to Purchaser prior to
making such disclosure and Sellers cooperate with Purchaser as Purchaser may
reasonably request to resist such disclosure.

 

(d)                                 At
the time Purchaser delivers the Notice of Acceptance or the Notice of
Objections, as applicable, Purchaser shall notify the Seller Representative of
its designations with respect to the Exempt Aged Inventory Threshold
Amount.  Within thirty (30) days after
receipt of the Closing Date Adjustment Materials from Sellers (but in no event,
at Purchaser’s option, prior to September 15, 2005), Purchaser shall
either:

 

(i)                                     deliver
to the Seller Representative a written statement confirming that no adjustments
are proposed by Purchaser to the Closing Date Adjustment Materials (a “Notice
of Acceptance”); or

 

(ii)                                  deliver
to the Seller Representative a written statement to the effect that Purchaser
objects to the Closing Date Adjustment Materials (a “Notice of Objections”),
specifying the nature of such disagreement and the adjustments that Purchaser
seeks to the Closing Date Adjustment Materials.

 

For the avoidance of doubt, if Sellers do not deliver a proposed Revised
September 30, 2004 Net Asset Amount pursuant to Section 4.5(a)(ii),
Purchaser shall be entitled to propose, in its Notice of Objections, Revised
Pro Forma Balance Sheets and a Revised September 30, 2004  Net Asset Amount if, in the course of reviewing
the Closing Date Adjustment Materials,

 

26

 

Purchaser
concludes that the Net Asset Amount as of September 30, 2004 was greater
than or less  than $50,879,447.

 

(e)                                  If
Purchaser delivers to the Seller Representative a Notice of Objections, and the
parties cannot resolve any objections set forth in the Notice of Objections
(the “Unresolved Adjustments”) within thirty (30) days after the receipt
by the Seller Representative of the Notice of Objections, such Unresolved
Adjustments shall be submitted for resolution to KPMG LLP (which firm Purchaser
represents and warrants has not been retained by Purchaser or any of its
Affiliates, and Sellers represent and warrant has not been retained by Sellers
or any of their Affiliates, in each case, during the two (2) years preceding
the date of this Agreement) or another nationally recognized independent
accounting firm that is mutually agreeable to Purchaser and the Seller
Representative and was not retained by Purchaser or any of its Affiliates or
Sellers or any of their Affiliates during the two (2) years preceding the date
of this Agreement (the “Accounting Firm”).  The Accounting Firm shall be instructed to
resolve such Unresolved Adjustments within thirty (30) days after its
appointment.  The scope of the review by
the Accounting Firm shall be limited to a determination of (i) whether the
portions of the Final Closing Date Balance Sheet, the calculation of the
Closing Date Net Asset Amount, the calculation of the Revised September 30,
2004 Net Asset Amount (if applicable), the Closing Date Aged Inventory Report,
the calculation of the Closing Date Exempt Aged Inventory Amount and the
calculation of the Closing Date Non-Exempt Inventory Amount related to the
Unresolved Adjustments were prepared in accordance with this Agreement and (ii)
based on its determinations of the matters described in clause (i), a
final calculation of the Closing Date Net Asset Amount, the Revised September 30
Net Asset Amount (if applicable), the Closing Date Exempt Aged Inventory Amount
and the Closing Date Non-Exempt Inventory Amount.  The Accounting Firm is not to make or be
asked to make any determination other than as set forth in the previous
sentence.  The resolution of such
Unresolved Adjustments by the Accounting Firm shall be set forth in a writing
clearly labeled “Unresolved Adjustments Decision under the Purchase Agreement”
and shall be conclusive and binding upon all parties.  The fees and expenses of the Accounting Firm
shall be apportioned between the parties by the Accounting Firm based on the
degree to which each party’s claims were unsuccessful and shall be paid by the
parties in accordance with such determination. 
For example, if pursuant to this Section 4.5,
Purchaser submitted a Notice of Objections relating to an Unresolved Adjustment
of the Purchase Price in the amount of $100,000 and prevailed as to $55,000 of
such amount, then (A) Purchaser would bear forty-five percent (45%) of the fees
and expenses of the Accounting Firm and (B) Sellers would bear fifty-five
percent (55%) of the fees and expenses of the Accounting Firm.  Notwithstanding anything else contained
herein to the contrary, any review by the Accounting Firm shall be a de novo
review of the Unresolved Adjustments; to the extent any Closing Date Adjustment
Materials that are relevant to the Unresolved Adjustments were to have been
prepared “in good faith,” the Accounting Firm will determine the final
adjustments to such Closing Date Adjustment Materials in accordance with GAAP
consistently applied and, where applicable, in accordance with the Pro Forma
Calculation Principles (as opposed to determining simply whether such materials
were made in good faith).

 

27

 

(f)                                    The
Closing Date Adjustment Materials shall become final and binding on all parties
upon the earliest of (i) the date that a Notice of Acceptance is delivered to
the Seller Representative pursuant to Section 4.5(d)(i) (in which
case the final Closing Date Net Asset Amount, the final Revised September 30,
2004 Net Asset Amount (if applicable), the Closing Date Aged Inventory Report,
the final Closing Date Exempt Aged Inventory Amount and the final Closing Date
Non-Exempt Inventory Amount shall be as set forth in the Closing Date
Adjustment Materials delivered pursuant to Section 4.5(a)), (ii)
the date that is one (1) day after the thirty (30) day review period specified
in Section 4.5(d) has ended if no Notice of Objections has been
delivered by Purchaser to the Seller Representative pursuant to Section 4.5(d)(ii)
during such thirty (30) day period (in which case the final Closing Date Net
Asset Amount, the final Revised September 30, 2004 Net Asset Amount (if
applicable),  the Closing Date Aged
Inventory Report, the final Closing Date Exempt Aged Inventory Amount and the
final Closing Date Non-Exempt Inventory Amount shall be as set forth in the
Closing Date Adjustment Materials delivered pursuant to Section 4.5(a)),
(iii) the date of an agreement in writing by Purchaser and the Seller
Representative that the Closing Date Adjustment Materials, together with any
modifications thereto agreed by Purchaser and the Seller Representative, are
final and binding (in which case the final Closing Date Net Asset Amount, the final
Revised September 30, 2004 Net Asset Amount (if applicable), the Closing
Date Aged Inventory Report, the final Closing Date Exempt Aged Inventory Amount
and the final Closing Date Non-Exempt Inventory Amount shall be as so agreed
upon by the parties) and (iv) the date on which the Accounting Firm finally
resolves in writing any Unresolved Adjustments (in which case the final Closing
Date Net Asset Amount, the final Revised September 30, 2004 Net Asset
Amount (if applicable), the Closing Date Aged Inventory Report, the final
Closing Date Exempt Aged Inventory Amount and/or the final Closing Date
Non-Exempt Inventory Amount, as applicable, shall be as determined by the
Accounting Firm pursuant to Section 4.5(e)).

 

(g)                                 During
the period between the date of Purchaser’s receipt of the Closing Date
Adjustment Materials and the date upon which the Closing Date Adjustment
Materials become final and binding in accordance with this Section 4.5:

 

(i)                                     promptly
upon Purchaser’s request, (A) Sellers shall make available to Purchaser and its
Representatives copies of the work papers and back-up materials used by Sellers
in preparing the initial draft of the Closing Date Adjustment Materials, and
such other documents as Purchaser may reasonably request in connection with its
review of the Closing Date Adjustment Materials, and (B) Sellers shall cause
Lundy Shacter and any other Representative of Sellers (as applicable) to make
available to Purchaser and its Representatives any work papers used or prepared
by Lundy Shacter or such other Representative in its preparation and audit or
certification, as applicable, of the Closing Date Adjustment Materials; and

 

(ii)                                  if
Purchaser delivers a Notice of Objections pursuant to Section 4.5(d)(ii),
promptly upon the Seller Representative’s request, (A) Purchaser shall make
available to Sellers, Lundy Shacter and any other Representative of Sellers (as
applicable), copies of the work papers and back-up materials used by

 

28

 

Purchaser in identifying
and quantifying the objections set forth in the Notice of Objections, and such
other documents as the Seller Representative may reasonably request in
connection with its review of the Notice of Objections, and (B) Purchaser shall
cause its Representatives to make available to Sellers, Lundy Shacter and any
other Representatives of Sellers (as applicable) any work papers used or
prepared by Purchaser’s Representatives in identifying and quantifying the
objections set forth in the Notice of Objections.

 

(h)                                 Within
three (3) Business Days after the date on which the Closing Date Adjustment
Materials become final and binding in accordance with this Section 4.5:

 

(i)                                     if
the Adjusted Purchase Price is greater than the Estimated Purchase Price (such
difference being hereinafter referred to as the “Purchase Price Increase
Amount”), then Purchaser shall pay to the Seller Representative the sum of
(A) the Purchase Price Adjustment Holdback Amount plus (B) the Purchase
Price Increase Amount; or

 

(ii)                                  if
the Adjusted Purchase Price is less than the Estimated Purchase Price (such
difference being hereinafter referred to as the “Purchase Price Reduction
Amount”), then:

 

(A)                              if
the Purchase Price Reduction Amount is less than the Purchase Price Adjustment
Holdback Amount, then Purchaser shall (1) retain for its own account from the
Purchase Price Adjustment Holdback Amount the Purchase Price Reduction Amount
and (2) pay to the Seller Representative the amount of the difference between
the Purchase Price Adjustment Holdback Amount and the Purchase Price Reduction
Amount; and

 

(B)                                if
the Purchase Price Reduction Amount is greater than the Purchase Price
Adjustment Holdback Amount, then (1) Purchaser shall retain for its own account
the entirety of the Purchase Price Adjustment Holdback Amount and (2) Sellers
shall pay to Purchaser the amount of the difference between the Purchase Price
Reduction Amount and the Purchase Price Adjustment Holdback Amount.

 

(i)                                     Each
Seller jointly and severally agrees to pay to Purchaser any and all amounts
payable to Purchaser by Sellers pursuant to this Section 4.5.

 

(j)                                     All
payments made hereunder shall be made in accordance with Section 15.5 and to such account or accounts as the receiving
party shall designate in writing to the paying party.

 

(k)                                  The
parties hereto expressly agree that Sellers shall have no liability under or
otherwise in connection with this Agreement for any Loss to the extent that
such Loss is accrued, provided for or reserved for in, or otherwise taken into
account in, the Pre-Closing Certificate or the Closing Date Adjustment
Materials (as finalized pursuant to this Section 4.5).  Notwithstanding anything else contained
herein to the contrary, for the

 

29

 

avoidance of
doubt, the Purchaser Indemnified Parties shall not be prohibited from seeking
recovery from Sellers for any Losses to which the Purchaser Indemnified Parties
are otherwise entitled pursuant to the provisions of this Agreement (including
any Losses relating to, arising out of or resulting from any breach of or any
inaccuracy in any representation or warranty set forth in Section 5.5)
to the extent such Losses are not accrued, provided for or reserved for in, or
otherwise taken into account in, the Pre-Closing Certificate or the Closing
Date Adjustment Materials (as finalized pursuant to this Section 4.5).

 

ARTICLE 5.

 

REPRESENTATIONS
AND WARRANTIES OF SELLERS

 

Each Seller
jointly and severally represents and warrants to Purchaser, as of the date of
this Agreement and as of the Closing Date (as if such representations and
warranties were remade on the Closing Date), as follows:

 

5.1                                 Due
Incorporation.

 

(a)                                  Each
Sweet Paper Entity is duly organized, validly existing and in good standing
under the laws of its respective jurisdiction of organization, with all
requisite power and authority to own, lease and operate its properties and to
carry on its business as they are now being owned, leased, operated and
conducted.  Except as set forth on Schedule 5.1(a),
each Sweet Paper Entity is licensed or qualified to do business and is in good
standing as a foreign corporation in each jurisdiction where the nature of the
properties owned, leased or operated by it or the business transacted by it
require such licensing or qualification. 
The jurisdictions in which each Sweet Paper Entity is incorporated and
licensed or qualified to do business as a foreign corporation are set forth on Schedule 5.1(a).

 

(b)                                 Except
as set forth on Schedule 5.1(b), no Sweet Paper Entity has any direct
or indirect subsidiaries, either wholly or partially owned, and no Sweet Paper
Entity holds any direct or indirect economic, voting or management interest in
any Person or directly or indirectly owns any security issued by any Person.

 

(c)                                  True,
correct and complete copies of the Articles of Incorporation and by-laws (or
similar organizational instruments), and all minutes of all meetings (or
written consents in lieu of meetings) of the Board of Directors (and all
committees thereof) and shareholders, of each Sweet Paper Entity have been
provided to Purchaser.  All action taken
by the Boards of Directors (and all committees thereof) and shareholders of
each Sweet Paper Entity is reflected in such minutes and written consents.

 

5.2                                 Due
Authorization.

 

(a)                                  Each
Seller has full power and authority to execute, deliver and perform this
Agreement and its Related Agreements and to consummate the transactions
contemplated hereby and thereby.  The
execution, delivery and performance by each of Scheck Investments, Scheck Alpha
and each Asset Seller of this Agreement and its

 

30

 

Related
Agreements, and the consummation by such Seller of the transactions
contemplated hereby and thereby, have been duly and validly approved by such
Seller’s board of directors or general partner (as applicable) and, to the
extent required by applicable Law, by all shareholders or partners (as
applicable) of such Seller entitled to vote thereon, and no other actions or
proceedings on the part of such Seller are necessary to authorize the
execution, delivery and performance by such Seller of this Agreement, its
Related Agreements or the transactions contemplated hereby and thereby.  Each Seller has duly and validly executed and
delivered this Agreement and has duly and validly executed and delivered (or
prior to or at the Closing will duly and validly execute and deliver) its
Related Agreements.  This Agreement
constitutes a legal, valid and binding obligation of each Seller, and such
Seller’s Related Agreements upon execution and delivery by such Seller will
constitute legal, valid and binding obligations of such Seller, in each case,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws in effect that 
affect the enforcement of creditors’ rights generally, and by equitable
limitations on the availability of specific remedies and by principles of
equity.

 

(b)                                 Each
Affiliate Party has full power and authority to execute, deliver and perform
its Related Agreements and to consummate the transactions contemplated  thereby. 
The execution, delivery and performance by each Affiliate Party of its
Related Agreements, and the consummation by such Affiliate Party of the
transactions contemplated thereby, have been duly and validly approved by such
Affiliate Party’s  board of directors or
general partner (as applicable) and, to the extent required by applicable Law,
by all shareholders or partners (as applicable) of such Affiliate Party
entitled to vote thereon, and no other actions or proceedings on the part of
such Affiliate Party are necessary to authorize the execution, delivery and
performance by such Affiliate Party of its Related Agreements or the
transactions contemplated thereby.  Each
Affiliate Party, prior to or at the Closing, will duly and validly execute and
deliver its Related Agreements.  Each
Affiliate Party’s Related Agreements upon execution and delivery by such Affiliate
Party will constitute legal, valid and binding obligations of such Affiliate
Party, in each case, enforceable in accordance with their respective terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws in effect that affect
the enforcement of creditors’ rights generally, and by equitable limitations on
the availability of specific remedies and by principles of equity.

 

5.3                                 Consents
and Approvals; Authority Relative to this Agreement.

 

(a)                                  Except
as set forth on Schedule 5.3, no consent, authorization or approval
of, filing or registration with, or cooperation from, any Governmental
Authority or any other Person not a party to this Agreement is necessary in
connection with the execution, delivery and performance by each Seller of this
Agreement and the execution, delivery and performance by each Seller of its
respective Related Agreements or the consummation by each Seller of the
transactions contemplated hereby or thereby.

 

31

 

(b)                                 Except
as set forth on Schedule 5.3, the execution, delivery and
performance by each Seller of this Agreement and the execution, delivery and
performance by each Seller of its respective Related Agreements, and the
consummation by each Seller of the transactions contemplated hereby and
thereby, do not and will not (i) violate any Law applicable to or binding on
any Seller, the Corporation, any Corporation Subsidiary or any of their
respective assets or properties; (ii) violate or conflict with, result in a
breach or termination of, constitute a default or give any third party any
additional right (including a termination right) under, permit cancellation of,
result in the creation of any Lien upon any of the assets or properties of any
Seller, the Corporation or any Corporation Subsidiary under, or result in or
constitute a circumstance that, with or without notice or lapse of time or
both, would constitute any of the foregoing under, any Contract to which any
Seller, the Corporation or any Corporation Subsidiary is a party or by which
any Seller, the Corporation, any Corporation Subsidiary or any of their
respective assets or properties are bound; (iii) permit the acceleration of the
maturity of any indebtedness of any Seller, the Corporation or any Corporation
Subsidiary or indebtedness secured by their respective assets or properties; or
(iv) violate or conflict with any provision of any of the Articles of
Incorporation, by-laws or similar organizational instruments of any Asset
Seller, Scheck Investments, the Corporation or any Corporation Subsidiary.

 

5.4                                 Capitalization.

 

(a)                                  The
authorized capital stock of the Corporation consists of (i) 1,000 shares of
Class A Voting Common Stock, $.001 par value per share, of which 100 are
currently issued and outstanding, and (ii) 99,000 shares of Class B Non-Voting
Common Stock $.001 par value per
share, of which 9,900 are currently
issued and outstanding.  The Shares
constitute all of the issued and outstanding shares of capital stock of the
Corporation.

 

(b)                                 All
of the Shares (i) are validly issued, fully paid and nonassessable and (ii)
are, and when issued were, free of preemptive rights.  The Shares are owned beneficially and of
record by the Shareholders, free and clear of any and all Liens (except for
those Liens set forth on Schedule 5.4(d)), in the amounts set forth
on Schedule 5.4(b).  There
are no shares of capital stock of the Corporation held in the treasury of the
Corporation and no shares of capital stock of the Corporation are currently
reserved for issuance for any purpose or upon the occurrence of any event or
condition.

 

(c)                                  The
authorized capital stock of each Corporation Subsidiary, the outstanding shares
of capital stock of each Corporation Subsidiary and the legal and beneficial
ownership thereof are accurately set forth on Schedule 5.4(c).  All of the outstanding shares of capital
stock of each Corporation Subsidiary (i) are validly issued, fully paid and
nonassessable, (ii) are, and when issued were, free of preemptive rights and
(iii) are free and clear of any and all Liens. 
There are no shares of capital stock of any Corporation Subsidiary held
in the treasury of such Corporation Subsidiary and no shares of capital stock
of any Corporation Subsidiary are currently reserved for issuance for any
purpose or upon the occurrence of any event or condition.

 

32

 

(d)                                 Except
as set forth on Schedule 5.4(d), (i) there are no shares of capital
stock or other securities (whether or not such securities have voting rights)
of the Corporation or any Corporation Subsidiary issued or outstanding or any
subscriptions, options, warrants, calls, rights, convertible securities or
other agreements or commitments of any character obligating any Shareholder,
the Corporation or any Corporation Subsidiary, or obligating any Shareholder or
any of its Affiliates to cause the Corporation or any Corporation Subsidiary,
to issue, transfer or sell, or cause the issuance, transfer or sale of, any
shares of capital stock or other securities (whether or not such securities
have voting rights) of the Corporation or any Corporation Subsidiary, (ii)
there are no outstanding contractual obligations of any Shareholder, the
Corporation or any Corporation Subsidiary that relate to the purchase, sale,
issuance, repurchase, redemption, acquisition, transfer, disposition, holding
or voting of any shares of capital stock or other securities of the Corporation
or any Corporation Subsidiary or the management or operation of the Corporation
or any Corporation Subsidiary and (iii) except for each Shareholder’s rights as
holder of Shares, no Person has any right to participate in, or receive any
payment based on any amount relating to, the revenue, income, value or net
worth of the Corporation or any Corporation Subsidiary or any component or
portion thereof, or any increase or decrease in any of the foregoing.

 

(e)                                  The
assignments, endorsements, stock powers and other instruments of transfer
delivered by the Shareholders to Purchaser at the Closing will be sufficient to
transfer to Purchaser the entire interest, legal and beneficial, in the
Shares.  Each Shareholder has full power
and authority to convey good and marketable title to all of the Shares identified
as owned by such Shareholder on Schedule 5.4(b), and upon transfer
by the Shareholders to Purchaser of the certificates representing such Shares,
Purchaser will receive good and marketable title to such Shares, free and clear
of any and all Liens.

 

5.5                                 Financial
Statements; Undisclosed Liabilities.

 

(a)                                  A
true, correct and complete copy of the Combined Financial Statements and the
Pro Forma Balance Sheets is set forth on Schedule 5.5(a).

 

(i)                                     Except
as set forth on Schedule 5.5(a)(i), the Combined Financial
Statements (A) have been prepared in accordance with GAAP consistently applied
and (B) present fairly in all material respects the combined financial
position, assets and liabilities of the Sweet Paper Entities as of the date
thereof and the combined results of operations, revenues, expenses and cash
flows of the Sweet Paper Entities for the period covered thereby.

 

(ii)                                  The
Pro Forma Balance Sheets accurately reflect all adjustments to the Combined
Balance Sheets that are required by (A) items 1, 2, 3, 4, 5, 6, 18 and 19 of
the Pro Forma Calculation Principles and (B) item 21 of the Pro Forma
Calculation Principles, as item 21 applies to items 3, 4, 5, 6 and 18
thereof.  Sellers prepared the Pro Forma
Balance Sheets in good faith so as to accurately reflect, to the greatest
extent practicable, all adjustments to the Combined Balance Sheets  that are required by all other Pro Forma
Calculation Principles.

 

33

 

(b)                                 A
true, correct and complete copy of the Corporation Financial Statements is set
forth on Schedule 5.5(b). 
Except as set forth on Schedule 5.5(b)(i), the Corporation
Financial Statements (i) have been prepared in accordance with GAAP
consistently applied and (ii) present fairly in all material respects the
consolidated financial position, assets and liabilities of the Corporation and
the Corporation Subsidiaries as of the date thereof and the consolidated
results of operations, revenues, expenses and cash flows of the Corporation and
the Corporation Subsidiaries for the period covered thereby.

 

(c)                                  A
true, correct and complete copy of the 2004 Group Financial Statements  is set forth on Schedule 5.5(c).  Except as set forth on Schedule 5.5(c)(i),
the 2004 Group Financial Statements (i) have been prepared in accordance with
GAAP consistently applied and (ii) present fairly in all material respects the
consolidated financial position, assets and liabilities of the Asset Sellers as
of the date thereof and the consolidated results of operations, revenues,
expenses and cash flows of the Asset Sellers for the period covered thereby.

 

(d)                                 A
true, correct and complete copy of the 2003 Group Financial Statements is set
forth on Schedule 5.5(d). 
Except as set forth on Schedule 5.5(d)(i), the 2003 Group Financial
Statements (i) have been prepared in accordance with GAAP consistently applied
and (ii) present fairly in all material respects the consolidated financial
position, assets and liabilities of the Asset Sellers as of the date thereof
and the consolidated results of operations, revenues, expenses and cash flows
of the Asset Sellers for the period covered thereby.

 

(e)                                  A
true, correct and complete copy of the Interim Corporation Financial Statements
is set forth on Schedule 5.5(e). 
The Interim Corporation Financial Statements (i) have been prepared in
accordance with internal financial reporting policies of the Corporation and
the Corporation Subsidiaries consistent with past practice and (ii) present
consistently in all material respects the consolidated financial position,
assets and liabilities of the Corporation and the Corporation Subsidiaries as
of the dates thereof and the consolidated results of operations, revenues and
expenses of the Corporation and the Corporation Subsidiaries for the periods covered
thereby (it being understood that the Interim Corporation Financial Statements
have not been prepared in accordance with GAAP).

 

(f)                                    A
true, correct and complete copy of the Interim Group Financial Statements is
set forth on Schedule 5.5(f). 
The Interim Group Financial Statements (i) have been prepared in
accordance with internal financial reporting policies of the Asset Sellers
consistent with past practice and (ii) present consistently in all material
respects the consolidated financial position, assets and liabilities of the
Asset Sellers as of the dates thereof and the consolidated results of
operations, revenues and expenses of the Asset Sellers for the periods covered
thereby (it being understood that the Interim Group Financial Statements have
not been prepared in accordance with GAAP).

 

(g)                                 Except
as set forth on Schedule 5.5(g), the Combined Financial Statements,
the Corporation Financial Statements, the 2004 Group Financial Statements and
the 2003 Group Financial Statements are in accordance with the books and
records of

 

34

 

the Sweet Paper
Entities, do not reflect any material transactions that are not bona fide
transactions and do not contain any untrue information or disclosures of a
material nature or omit any fact necessary to make the information and
disclosures contained therein, in light of the circumstances in which they were
made, not materially misleading.

 

(h)                                 Except
as set forth on Schedule 5.5(h) or in the audited, consolidated balance
sheets included in the Corporation Financial Statements and the 2004 Group
Financial Statements, and except for trade payables and accrued expenses
incurred in the ordinary course of business and consistent with past practice
since September 30, 2004, the Sweet Paper Entities have no liabilities,
debts, claims or obligations, whether accrued, absolute, contingent or
otherwise, whether due or to become due, that are, individually in excess of
$25,000, or in the aggregate in excess of $200,000.

 

5.6                                 No
Adverse Effects or Changes.

 

(a)                                  Except
as set forth on Schedule 5.6, since September 30, 2004, the
Sweet Paper Entities have conducted their businesses only in the ordinary
course and consistent with past practices.

 

(b)                                 Without
limiting the generality of Section 5.6(a), except as set forth on Schedule 5.6,
since September 30, 2004, no Sweet Paper Entity has:

 

(i)                                     suffered
any Material Adverse Effect;

 

(ii)                                  suffered
any damage, destruction or Loss (other than ordinary wear and tear) to any of
its assets or properties (whether or not covered by insurance), individually in
excess of $50,000, or in the aggregate in excess of $100,000;

 

(iii)                               entered
into or authorized any Contract or transaction other than in the ordinary
course of business and consistent with past practice;

 

(iv)                              sold,
transferred, conveyed, assigned or otherwise disposed of any of its assets or
properties, except sales of inventory in the ordinary course of business and
consistent with past practice;

 

(v)                                 waived,
released, settled or canceled any claims against third parties or debts owing
to it, or any rights that have any value, individually in excess of $25,000, or
in the aggregate in excess of $1,000,000;

 

(vi)                              waived,
released, settled or canceled any claims against third parties or debts owing
to it, or any rights that have any value, outside of the ordinary course of
business;

 

(vii)                           made
any changes in its accounting systems, policies, principles, practices or
methods;

 

(viii)                        except for
purchases and sales of merchandise, collection and servicing of receivables,
servicing of payroll and funding transfers in connection

 

35

 

with intercompany
loans and payments or reimbursements for ordinary course expenses, in each case
in the ordinary course of business consistent with past practice, entered into,
authorized or permitted any transaction with any other Sweet Paper Entity;

 

(ix)                                entered
into, authorized or permitted any transaction, whether or not in the ordinary
course of business, with any Affiliate of any Sweet Paper Entity or any
Affiliate of any Shareholder (in each case, except for any other Sweet Paper
Entity) or any Shareholder;

 

(x)                                   except
for Liens set forth on Schedules 5.7(a) and 5.7(b), suffered or
permitted the creation of any Lien over any of its assets (including, with
respect to the Asset Sellers, any of the Assets);

 

(xi)                                made
any borrowings (other than under the Wachovia Facility), incurred any debt
(other than trade payables in the ordinary course of business and consistent with
past practice or under the Wachovia Facility), or assumed, guaranteed, endorsed
(except for the negotiation or collection of negotiable instruments in
transactions in the ordinary course of business and consistent with past
practice) or otherwise become liable (whether directly, contingently or
otherwise) for the obligations of any other Person, or made any payment or
repayment in respect of any indebtedness (other than trade payables and accrued
expenses in the ordinary course of business and consistent with past practice
or under the Wachovia Facility);

 

(xii)                             made
any loans, advances or capital contributions to, or investments in, any other
Person, except for advances to individual Employees that are in the amount of
$1,000 or less;

 

(xiii)                          entered
into, adopted, amended or terminated any bonus, profit sharing, compensation,
termination, stock option, stock appreciation right, restricted stock,
performance unit, pension, retirement, deferred compensation, employment,
severance or other employee benefit agreement, trust, plan, fund or other
arrangement for the benefit or welfare of any director, officer or employee, or
increased in any manner the compensation or fringe benefits of any director,
officer or employee (except for increases of the annual base salary for such
director, officer or employee that were made in the ordinary course of business
consistent with past practice and were less than five percent (5%) of the
annual base salary of such director, officer or employee) or paid any benefit
not required by any existing plan and arrangement or entered into any Contract,
agreement, commitment or arrangement to do any of the foregoing;

 

(xiv)                         acquired
or leased any assets outside the ordinary course of business;

 

(xv)                            acquired,
leased or encumbered any assets that are material to any Sweet Paper Entity
whether or not such acquisition, lease or encumbrance was in

 

36

 

the ordinary
course of business (other than acquisitions of inventory in the ordinary course
of business consistent with past practice);

 

(xvi)                         filed any
amended Tax Return or any claim for refund of Taxes, amended any payment of
Taxes paid by or on behalf of any Sweet Paper Entity, waived or extended the
statute of limitations in respect of any Taxes, made, revoked, or amended any
Tax election, changed any method of Tax accounting or Tax procedure or
practice, or settled or compromised any claim relating to Taxes;

 

(xvii)                      paid any
amount, performed any obligation or agreed to pay any amount or perform any
obligation, in settlement or compromise of any suit or claim of liability
against any directors, officers, employees or agents of any Sweet Paper Entity;

 

(xviii)                   paid any
amount, performed any obligation or agreed to pay any amount or perform any
obligation, in settlement or compromise of any suit or claim of liability for
breach of Contract, breach of warranty, tort or violation of any Law against
any Sweet Paper Entity, individually or in the aggregate in excess of $25,000;

 

(xix)                           terminated,
modified, amended or otherwise altered or changed any of the terms or
provisions of any Contract, or paid any amount not required by Law or by any
Contract; or

 

(xx)                              agreed,
whether in writing or otherwise, to do any of the foregoing.

 

(c)                                  Without
limiting the generality of Section 5.6(a), except as set forth on Schedule 5.6,
since September 30, 2004, no Corporation or Corporation Subsidiary has:

 

(i)                                     authorized
for issuance, issued, sold, delivered or agreed or committed to issue, sell or
deliver (whether through the issuance or granting of options, warrants,
convertible or exchangeable securities, commitments, subscriptions, rights to
purchase or otherwise) any shares of its capital stock or any other securities
of the Corporation or any Corporation Subsidiary, or amended any of the terms
of any such capital stock or other securities;

 

(ii)                                  split,
combined or reclassified any shares of its capital stock, declared, set aside
or paid any dividend or other distribution (whether in cash, stock or property
or any combination thereof) in respect of its capital stock, or redeemed or
otherwise acquired any capital stock or other securities of the Corporation or
any Corporation Subsidiary; or

 

(iii)                               agreed,
whether in writing or otherwise, to do any of the foregoing.

 

5.7                                 Title
to Properties.

 

(a)                                  Except
as set forth on Schedule 5.7(a), the Corporation and the
Corporation Subsidiaries have good and marketable title to, and are the lawful
owners of,

 

37

 

all of the tangible
and intangible assets, properties and rights used or held for use in connection
with their respective businesses and all of the tangible and intangible assets,
properties and rights reflected in the Corporation Financial Statements or on Schedule 5.10
or 5.12 (other than  assets leased
or licensed under the leases or licenses set forth on Schedule 5.9(b),
5.10(b) or 5.14(a)(ii) and assets disposed of in the ordinary
course of business since the date of such Corporation Financial Statements),
free and clear of any and all Liens.

 

(b)                                 Except
as set forth on Schedule 5.7(b), the Asset Sellers have good and
marketable title to, and are the lawful owners of, all of the Assets, free and
clear of any and all Liens.  Each Asset
Seller has the full right to sell, convey, transfer, assign and deliver the
Assets to Purchaser, subject to obtaining all consents set forth on Schedule 5.3,
and, at and as of the Closing, each Asset Seller will, except as provided in
the last sentence of Section 3.2, convey the Assets to Purchaser by
deeds, bills of sale, certificates of title and instruments of assignment and
transfer effective to vest in Purchaser, and Purchaser shall have, good and
marketable and valid title to all of the Assets, free and clear of any and all
Liens.

 

5.8                                 Condition
and Sufficiency of Assets.

 

(a)                                  Except
as set forth on Schedule 5.8(a),

 

(i)                                     each
of the tangible assets and properties of the Corporation and the Corporation
Subsidiaries (other than rolling stock and the Computer System), and each of
the tangible Assets (other than rolling stock and the Computer System), whether
real or personal, owned or leased, is in adequate condition for its intended
use in connection with the operation of the Business; and

 

(ii)                                  the
rolling stock of the Corporation and the Corporation Subsidiaries, and the
rolling stock included in the Assets, taken as a whole at each Leased Real
Property facility used in the Business, is in adequate condition for its
intended use in connection with the operation of the Business.

 

(b)                                 The
Assets, together with all of the assets, properties and rights of the
Corporation and the Corporation Subsidiaries and all assets that are leased or
licensed by any Sweet Paper Entity, other than the Withdrawn Corporation Assets
(collectively, the “Sweet Paper Assets”), constitute all of the assets,
properties and rights that are required for or currently used in connection
with the conduct of the businesses of the Sweet Paper Entities as they are
presently conducted and have been conducted since September 30, 2004.

 

5.9                                 Real
Property.

 

(a)                                  No
Sweet Paper Entity owns fee title to any real property.

 

(b)                                 Schedule 5.9(b)
sets forth a true, correct and complete list of all real estate held by any
Sweet Paper Entity under real property leases (the “Leased Real Property”)
and all leases covering the Leased Real Property, including all amendments
thereto (the

 

38

 

“Real Property
Leases”).  The Leased Real Property
constitutes all of the real property interests held by the Sweet Paper Entities
and required for or currently used in connection with the operation of their
respective businesses as they are presently conducted and have been conducted
since September 30, 2004.  Sellers
have provided to Purchaser true, correct and complete copies of all Real
Property Leases together with copies of all reports (if any) of any engineers,
environmental consultants or other consultants in their possession or under
their control or in the possession or control of the Corporation or any
Corporation Subsidiary relating to any of the Leased Real Property.

 

(c)                                  Except
as set forth on Schedule 5.9(c):

 

(i)                                     the
Scheck Real Property has at all times been constructed, managed, operated,
maintained and repaired by the Sweet Paper Entities as required under the
Current Scheck Real Property Lease, there are no defects or deficiencies in the
design, construction, fabrication, manufacture or installation of the Scheck
Real Property or any part thereof or any system, element or component thereof that
would materially interfere with the operation of the Business, and all systems,
elements and components of the Scheck Real Property (including all machinery,
fixtures and equipment, the roof, foundation and structural elements, and the
elevator, mechanical, electrical and life safety systems) are in adequate
condition for the operation of the Business; and

 

(ii)                                  to
the knowledge of Sellers, the Third Party Real Property has at all times been
constructed, managed, operated, maintained and repaired by the Sweet Paper
Entities as required under the Current Third Party Real Property Leases, there
are no defects or deficiencies in the design, construction, fabrication,
manufacture or installation of the Third Party Real Property or any part
thereof or any system, element or component thereof that would materially
interfere with the operation of the Business, and all systems, elements and
components of the Third Party Real Property (including all machinery, fixtures
and equipment, the roof, foundation and structural elements, and the elevator,
mechanical, electrical and life safety systems) are in adequate condition for
the operation of the Business.

 

(d)                                 Except
as set forth on Schedule 5.9(d), the activities carried on in all
buildings, warehouses, plants, facilities, installations, fixtures and other
structures or improvements included as part of, or located on or at, the Scheck
Real Property, and such buildings, warehouses, plants, facilities,
installations, fixtures and other structures or improvements themselves, are
not in violation of, or in conflict with, any applicable zoning or health
regulations or ordinance or any other similar Law applicable to or binding on
any Sweet Paper Entity or any of its respective assets or properties.

 

(e)                                  Except
as set forth on Schedule 5.9(e), to the knowledge of Sellers, the
activities carried on in all buildings, warehouses, plants, facilities,
installations, fixtures and other structures or improvements included as part
of, or located on or at, the Third Party Real Property, and such buildings,
warehouses, plants, facilities, installations, fixtures and other structures or
improvements themselves, are not in violation of, or in

 

39

 

conflict with, any
applicable zoning or health regulations or ordinance or any other similar Law
applicable to or binding on any Sweet Paper Entity or any of its respective
assets or properties.

 

(f)                                    No
parcel of land included in the Scheck Real Property relies on or regularly
makes use of access to the nearest public road or right-of-way over land owned
by others, except where such access is by means of one or more valid recorded
easements not subject to divestiture, the terms of which have been disclosed in
writing to Purchaser prior to the date hereof. 
All covenants or other restrictions (if any) to which any of the Scheck
Real Property is subject are being in all respects properly performed and
observed and, except for covenants contained in the Current Scheck Real
Property Lease, do not provide for forfeiture or reversion of title if
violated, and no Sweet Paper Entity has received any notice of violation (or
claimed violation) thereof.

 

(g)                                 To
the knowledge of Sellers, no parcel of land included in the Third Party Real
Property relies on or regularly makes use of access to the nearest public road
or right-of-way over land owned by others, except where such access is by means
of one or more valid recorded easements not subject to divestiture, the terms
of which have been disclosed in writing to Purchaser prior to the date
hereof.  To the knowledge of Sellers, all
covenants or other restrictions (if any) to which any of the Third Party Real
Property  is subject are being in all
respects properly performed and observed and do not provide for forfeiture or
reversion of title if violated.  To the
knowledge of Sellers, no Sweet Paper Entity has received any notice of
violation (or claimed violation) of any covenant or other restriction that is
referenced in the preceding sentence.

 

(h)                                 None
of the Leased Real Property is subject to any Lien, easement, right-of-way,
building or use restriction, exception, variance, reservation or limitation
that could reasonably be expected to interfere with or impair the present and
continued use thereof in the usual and normal conduct of the business and
operations of any Sweet Paper Entity.

 

(i)                                     Each
separate parcel included in the Leased Real Property has adequate water supply,
storm and sanitary sewer facilities, access to telephone, gas and electrical
connections, fire protection, drainage and other public utilities, and has
adequate parking facilities that meet all requirements imposed by Laws
applicable to or binding on any Sweet Paper Entity or any of its respective
assets or properties.

 

(j)                                     There
is no pending or, to the knowledge of Sellers, threatened or proposed
proceeding or governmental action to modify the zoning classification of, or to
condemn or take by the power of eminent domain (or to purchase in lieu
thereof), or to classify as a landmark, or to impose special assessments on, or
otherwise to take or restrict in any way the right to use, develop or alter,
all or any part of the Leased Real Property.

 

(k)                                  All
the Real Property Leases are in full force and effect, valid and enforceable in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, moratorium, reorganization or
similar

 

40

 

laws in effect
that affect the enforcement of creditors’ rights generally and by equitable
limitations on the availability of specific remedies.  No Sweet Paper Entity has  received any notice of any, and there exists
no, dispute, claim, event of default or event that constitutes or would
constitute (with notice or lapse of time or both) a default under any Real
Property Lease.  All rent and other
amounts due and payable with respect to the Real Property Leases have been
paid.

 

(l)                                     There
are no variances, use restrictions or special permits applicable to the Scheck
Real Property.  There are no agreements,
documents or other writings, and there is no oral arrangement, pertaining to
any such variance, use restriction or special permit.

 

(m)                               To
the knowledge of Sellers, no portion of the Leased Real Property is located in
whole or in part within an area identified by any Governmental Authority as a
flood hazard area or subject to the jurisdiction of the Army Corps of
Engineers.

 

(n)                                 No
work has been performed or is in progress at, and no materials have been
furnished to any Sweet Paper Entity for use at, any of the Leased Real Property
that may give rise to any mechanic’s, materialmen’s or other Lien against any
of the Leased Real Property.

 

5.10                           Personal
Property.

 

(a)                                  Schedule 5.10(a)
sets forth a true, correct and complete list as of September 30, 2004 of
(i) all of the tangible personal property owned by the Corporation or any
Corporation Subsidiary and (ii) all of the tangible personal property owned by
any Asset Seller and included in the Assets (excluding, in the case of each of clauses
(i) and (ii),  tangible
personal property set forth on Schedule 5.12 and items that have
been expensed or otherwise not recorded in accordance with the Sweet Paper
Entities’ accounting principles, which expensing principles are set forth on Schedule 5.10(a)).  All of such owned tangible personal property
is utilized by the Sweet Paper Entities in the ordinary course of business.

 

(b)                                 Schedule 5.10(b)
sets forth a true, correct and complete list of all leases of tangible personal
property (including the Transferred Group Personal Property Leases) binding
upon any Sweet Paper Entity or any of its respective assets or properties.  All of such leased
tangible personal property is utilized by the Sweet Paper Entities in the
ordinary course of business.  Sellers
have provided to Purchaser true, correct and complete copies of all such
personal property leases.

 

5.11                           Computer
System.  Except as set forth on Schedule 5.11,
all computer hardware and software and related materials used by the Sweet
Paper Entities in their business, including all such computer hardware,
software and related materials included in the Assets (herein collectively
referred to as the “Computer System”) are, taken as a whole, in adequate
working order and condition for their intended use in connection with the
Business.  Except as set forth on Schedule 5.11,
no Sweet Paper Entity has experienced any significant defect in design,
workmanship or material of the Computer System, and the Computer System has the
performance capabilities, processing capacity, resources, characteristics and
functions necessary

 

41

 

to the
conduct of the business and operations of the Sweet Paper Entities as currently
conducted.  The use of the Computer
System by the Sweet Paper Entities (including any software modifications) (a)
has not violated or infringed upon the rights of any third parties and (b) has
not resulted in the termination of any maintenance, service or support
agreement relating to any part of the Computer System (including any Assumed
Contract) or any reduction in the services provided to any Sweet Paper Entity,
warranties available to any Sweet Paper Entity or rights of any Sweet Paper
Entity.  The continued use of the
Computer System by Purchaser and its Affiliates, the Corporation and the
Corporation Subsidiaries (including any software modifications) from and after
the Closing, either consistent with past practice of the Sweet Paper Entities
or otherwise as not expressly prohibited by the terms and conditions of those
fully executed Intellectual Property Licenses provided by Sellers to Purchaser,
(i) will not violate or infringe upon the rights of any third parties and (ii)
will not result in the termination of any maintenance, service or support
agreement relating to any part of the Computer System (including any Assumed
Contract) or any reduction in the services provided to Purchaser or any of its
Affiliates, the Corporation or any Corporation Subsidiary, warranties available
to  Purchaser or any of its Affiliates,
the Corporation or any Corporation Subsidiary or rights of Purchaser or any of
its Affiliates, the Corporation or any Corporation Subsidiary.  The Sweet Paper Assets include full and
adequate user and service documentation for the Computer System.  Schedule 5.11 sets forth a true,
correct and complete description of the Computer System back-up and recovery
systems and processes followed by each Sweet Paper Entity.  Except as set forth on Schedule 5.11, the software used by
any Sweet Paper Entity does not include any open source software or source code
that is subject to any public license (e.g., the “GNU General Public License”).

 

5.12                           Inventories.

 

(a)                                  Sellers
have delivered to Purchaser a true, correct and complete list of all
inventories (including the Transferred Group Inventory) of the Sweet Paper
Entities as of April 30, 2005, except that such list does not include
packaging materials or marketing materials. 
Each item of inventory owned by any Sweet Paper Entity has been acquired
for sale in the ordinary course of business, and none of such items are held on
assignment or consignment.  Except as set
forth at item 3 of Schedule 5.5(a)(i), such inventories are fairly
reflected in all material respects in the inventory accounts on the balance
sheet included in the Combined Financial Statements, in accordance with GAAP,
including all appropriate reserves.

 

(b)                                 Schedule 5.12
contains a true, correct and complete list of the Aged Inventory as of the
close of business on April 21, 2005, including, for each stock keeping
unit included on such list, (i) the total quantity of such stock keeping unit
in the Sweet Paper Entities’ inventory as of such date, (ii) the quantity of
such stock keeping unit that constitutes Aged Inventory, (iii) the “inventory
cost per unit” of such stock keeping unit, (iv) a designation of such stock
keeping unit as “branded” or “unbranded,” and (v) a code identifying such stock
keeping unit as new, dormant, overstock, private label or commodity.  A true, correct and correct calculation of
the aggregate Aged Inventory Amount with respect to the Exempt Stock Keeping
Units as of the close of business on April, 21, 2005 (the “Pre-Closing
Exempt Aged Inventory Amount”) is set forth on Schedule 5.12.  A true, correct  and correct calculation of the aggregate Aged
Inventory

 

42

 

Amount with
respect to the Non-Exempt Stock Keeping Units as of the close of business on April 21, 2005 (the “Pre-Closing Non-Exempt Aged Inventory Amount”)
is set forth on Schedule 5.12.

 

5.13                           Accounts
Receivable; Advances and Warranties.

 

(a)                                  Sellers
have provided to Purchaser a true, correct and complete aging schedule of
all trade accounts receivable (including the Transferred Group Trade Receivables)
of any Sweet Paper Entity, as of February 28, 2005 and as of April 30,
2005.  Except as set forth on Schedule 5.13(a),
(i) each such account receivable represents a sale made in the ordinary course
of business and arose pursuant to an enforceable Contract for a bona fide sale
of goods or for services performed, (ii) the Sweet Paper Entities have
performed all of their obligations to deliver the goods or perform the services
to which such account receivable relates, and (iii) the Sweet Paper Entities
can provide documentation substantiating such performance.  Purchaser shall not make any claim against
Sellers for any breach of or inaccuracy in the representations and warranties
contained in clause (iii) of the preceding sentence except to the extent
the failure to provide documentation substantiating performance impairs the
ability of a Sweet Paper Entity or Purchaser (as applicable) to collect such
account receivable.  Except as reserved
against in the Final Closing Date Balance Sheet (as finalized pursuant to Section 4.5),
all such accounts receivable arising from sales to or through Redistributors of
America and recorded on the Final Closing Date Balance Sheet (as finalized
pursuant to Section 4.5) will be collectible in full, subject to
normal discounts and allowances consistent with past practice, within six (6) months of their origination.

 

(b)                                 Sellers
have provided to Purchaser a good faith estimated schedule of all accounts
receivables from suppliers, including rebates and allowances of any Sweet Paper
Entity, as of March 31, 2005 (which schedule categorizes each such
receivable by supplier and type of receivable). 
Except as reserved against in the Final Closing Date Balance Sheet (as
finalized pursuant to Section 4.5), all such accounts receivable
from Redistributors of America recorded on the Final Closing Date Balance Sheet
(as finalized pursuant to Section 4.5) will be collectible in full
within one hundred eighty (180) days of the end of the applicable measurement
period for purposes of such accounts receivable (e.g., within one hundred
eighty (180) days of December 31, 2005 in the case of any vendor rebate
that is based on volume of purchases during the 2004 calendar year).

 

(c)                                  Set
forth on Schedule 5.13(c) is a good faith estimated schedule of
all accounts receivable of any Sweet Paper Entity other than those receivables
referenced at Sections 5.13(a) and 5.13(b) above (including all
loans and advances made by any Sweet Paper Entity to third parties, other than
loans and advances that are included in the Excluded Assets or the Withdrawn
Corporation Assets (collectively, the “Advances”))
as of April 30, 2005.

 

5.14                           Intellectual
Property.

 

(a)                                  Schedule 5.14(a)(i)
sets forth a true, correct and complete list of all of the Marks, patents, copyrights
(including any registrations of or pending applications for any

 

43

 

of the foregoing)
and other Intellectual Property (including the Transferred Group Owned
Intellectual Property) owned by any Sweet Paper Entity (the “Owned
Intellectual Property”).  Schedule 5.14(a)(ii)
sets forth a true, correct and complete list of all (A) Intellectual Property
licensed to any Sweet Paper Entity, including the Intellectual Property
licensed to any Asset Seller pursuant to any Transferred Group Intellectual
Property License (the “Licensed Intellectual Property”) and (B) all
Contracts to which a Sweet Paper Entity is or was a party or by which a Sweet
Paper Entity is or was bound providing for the license of Owned Intellectual
Property or Licensed Intellectual Property or otherwise relating to Owned
Intellectual Property or Licensed Intellectual Property (such Contracts are
hereinafter referred to as “Intellectual Property Licenses”).

 

(b)                                 Except
as set forth on Schedule 5.14(b):

 

(i)                                     all
of the Owned Intellectual Property is owned by a Sweet Paper Entity free and
clear of any and all Liens, and is not subject to any license, royalty or other
agreement (except as set forth on Schedule 5.14(a)(ii));

 

(ii)                                  on
the Closing Date, all of the Transferred Group Owned Intellectual Property will
be owned by Purchaser free and clear of any and all Liens, and will not be
subject to any license, royalty or other agreement (except as set forth on Schedule 5.14(a)(ii));

 

(iii)                               none
of the Owned Intellectual Property has been or is the subject of any pending,
or to the knowledge of Sellers, threatened litigation or claim of infringement,
and to the knowledge of Sellers, there is no basis for making any such claim,
and to the knowledge of Sellers, none of the Licensed Intellectual Property has
been or is the subject of any pending or threatened litigation or claim of
infringement;

 

(iv)                              no
Sweet Paper Entity has breached any provision of, or is in default under the
terms of, any Intellectual Property License to which it is a party or under
which it has any rights or by which it is bound, no condition exists or event
has occurred that, with or without notice or the passage of time or both, would
constitute a breach of, or a default under, any such Intellectual Property
License by any Sweet Paper Entity and, to the knowledge of Sellers, no other
party to any such Intellectual Property License has breached any provision of,
or is in default under the terms of, any such Intellectual Property License;

 

(v)                                 each
product or service sold or provided by any Sweet Paper Entity under a Mark
owned by any Sweet Paper Entity, each process, method, design or other Owned
Intellectual Property employed by any Sweet Paper Entity, and the marketing,
performance and use by any Sweet Paper Entity of any product, service or other
Owned Intellectual Property, does not, to the knowledge of Sellers, infringe or
misappropriate any Intellectual Property or confidential or proprietary rights
of any other Person, and no Shareholder or any Person set forth on Schedule 1.1(b),
on behalf of any Sweet Paper Entity, has received any notice making or
threatening to make any claim of infringement or misappropriation of

 

44

 

any Intellectual
Property of another Person or contesting any Sweet Paper Entity’s right to
market or use any such product, service, process, method, design or other
Intellectual Property, and, to the knowledge of Sellers, there is no basis for
making such a claim;

 

(vi)                              no
Sweet Paper Entity has made or threatened to make any, and there exists no,
claim that any product or service sold or provided by any Person, or any
process, method, design or other Intellectual Property employed by any Person,
or any marketing or use by any Person of any such product or service, infringes
or misappropriates any Owned Intellectual Property or Licensed Intellectual
Property; and

 

(vii)                           each
Sweet Paper Entity owns adequate rights in perpetuity in and to all Owned
Intellectual Property currently used to conduct its respective business as
presently conducted.  Each Sweet Paper
Entity possesses adequate rights in perpetuity in and to all Licensed
Intellectual Property currently used to conduct its respective business as
presently conducted except to the extent a term that is shorter than perpetuity
is expressly provided by the terms and conditions of those fully executed
Intellectual Property Licenses provided by Sellers to Purchaser.  The Sweet Paper Assets include ownership or
adequate rights in all Intellectual Property currently used in connection with
the conduct of the businesses of the Sweet Paper Entities as they are presently
conducted and have been conducted since September 30, 2004.

 

5.15                           Contracts.  Schedule 5.15 sets forth a true,
correct and complete list of all the Contracts (including the Assumed
Contracts) of the following types to which any Sweet Paper Entity is a party or
by which any Sweet Paper Entity is bound, or to which any Sweet Paper Entity’s
assets or properties is subject:

 

(a)                                  any
Contract that either (i) requires a payment by any party in excess of, or a
series of payments that in the aggregate exceed, $50,000, or (ii) has a term
of, or requires the performance of any obligations by any party over a period
in excess of, six (6) months (excluding, in
the case of clause (i), purchase orders that are received from customers
or issued to suppliers in the ordinary course of business);

 

(b)                                 any
Contract (including any purchase order received from a customer in the ordinary
course) pursuant to which any Sweet Paper Entity is committed to deliver goods
or perform services, or provide any combination thereof, to or for any
customer, having a value in excess of $50,000;

 

(c)                                  any
Contract (including any purchase order issued to a supplier in the ordinary
course) pursuant to which any Sweet Paper Entity is committed to purchase goods
or services, or any combination thereof, from any supplier, having a value in
excess of $50,000;

 

45

 

(d)                                 any
blanket purchase orders that provide for the purchase or sale of goods or
services pursuant to a fixed price formula or a designated schedule of
prices for a minimum period of three (3) months or more;

 

(e)                                  any
Contract containing a “most favored nation” provision pursuant to which any
Sweet Paper Entity is obligated to provide any customer with pricing terms that
are equal to or more favorable than (but in no event less favorable than) the
pricing terms offered by such Sweet Paper Entity to any or all of the other
customers of any Sweet Paper Entity;

 

(f)                                    any
Contract pursuant to which any third party agrees to perform any services for
any Sweet Paper Entity that are required to be performed by any Sweet Paper
Entity under any other Contract;

 

(g)                                 any
collective bargaining agreement;

 

(h)                                 any
Contract of any kind with any employee, officer or director of any Sweet Paper
Entity, or any Affiliate of any such individual;

 

(i)                                     any
Contract of any kind with any Affiliate of any Sweet Paper Entity, or with any
Shareholder or any Affiliate of any Shareholder;

 

(j)                                     any
Contract with a sales representative, manufacturer’s representative,
distributor, dealer, broker, sales agency, advertising agency or other Person
engaged in sales, distributing or promotional activities, or any Contract to
act as one of the foregoing on behalf of any Person (excluding purchase orders
that are entered into with customers or suppliers in the ordinary course of
business);

 

(k)                                  any
Contract pursuant to which any Sweet Paper Entity has made or will make loans
or advances, or has or will have incurred debts or become a guarantor or surety
or pledged its credit on or otherwise become responsible with respect to any
undertaking of another (except for the negotiation or collection of negotiable
instruments in transactions in the ordinary course of business);

 

(l)                                     any
indenture, credit agreement, loan agreement, note, mortgage, security
agreement, lease, loan commitment or other Contract relating to the borrowing
of funds, an extension of credit or financing;

 

(m)                               any
Contract involving any marketing or purchasing groups or associations in which
any Sweet Paper Entity is a member;

 

(n)                                 any
Contract involving a partnership or joint venture;

 

(o)                                 any
Contract involving any restrictions with respect to the geographical area of
operations or scope or type of business of any Sweet Paper Entity;

 

(p)                                 any
power of attorney or agency agreement or arrangement with any Person pursuant
to which such Person is granted the authority to act for or on behalf of

 

46

 

any Sweet Paper
Entity or any Sweet Paper Entity is granted the authority to act for or on
behalf of any Person;

 

(q)                                 any
Contract relating to the Computer System;

 

(r)                                    any
Contract, whether or not fully performed, relating to any acquisition or
disposition of any capital stock or other security of any Sweet Paper Entity or
any predecessor in interest of any Sweet Paper Entity, or any acquisition or
disposition of any subsidiary, division, line of business, material assets or
real property;

 

(s)                                  any
Contract not made in the ordinary course of business and consistent with past
practice that is to be performed in whole or in part at or after the date of
this Agreement; and

 

(t)                                    any
Contract not specified above that is material to any Sweet Paper Entity.

 

Sellers have
delivered to Purchaser true, correct and complete copies of each document set
forth on Schedules 5.14(a) and 5.15 and a true, correct and
complete written description of each oral arrangement so listed, including all
rights, obligations and other material terms. 
Sellers have provided to Purchaser true, correct and complete copies of
the following forms commonly used by the Sweet Paper Entities in the conduct of
their respective businesses:  (i) with
respect to customers, (A) invoice, (B) credit memo, (C) bill of
lading, (D) pricing correction voucher, (E) statement of amounts owed
and (F) terms and conditions of sale, and (ii) with respect to
suppliers, (A) purchase order and (B) vendor credit form.

 

5.16                           Permits.  Schedule 5.16 sets forth a true,
correct and complete list of all Permits held by any Sweet Paper Entity
(including the Assumed Permits).  All the
Permits so listed are in full force and effect and no Sweet Paper Entity has received
any notice that any such Permit may be revoked or canceled.  None of the Permits have been modified in any
way that could reasonably be expected to have a Material Adverse Effect.  Except for the Permits set forth on Schedule 5.16,
there are no Permits, whether federal, state, local or foreign, that are
necessary for the lawful operation of the respective businesses of the Sweet
Paper Entities.

 

5.17                           Insurance.

 

(a)                                  Schedule 5.17(a) sets
forth a true, correct and complete list of all policies of fire, liability,
medical, workers’ compensation, title and other forms of insurance owned, held
by or applicable to any Sweet Paper Entity or any of its respective assets or
businesses, and Sellers have heretofore provided to Purchaser true, correct and
complete copies of all such policies, including all occurrence-based policies
applicable to any Sweet Paper Entity or its respective assets or businesses for
all periods prior to the Closing Date. 
All such policies are valid, in full force and effect and enforceable,
all premiums with respect thereto covering all periods up to and including the
Closing Date have been paid, and no notice of cancellation or termination has
been received with respect to any such policy. 
Such policies are sufficient for compliance with (i) all
requirements of Law and (ii) all Contracts to which any Sweet Paper Entity
is a party.  Except as set forth on Schedule 5.17(a),
no Sweet Paper Entity has been refused any

 

47

 

insurance with respect
to its assets or operations during the three (3) years preceding the date
of this Agreement, and its coverage has not been limited by any insurance
carrier to which it has applied for any such insurance or with which it has
carried insurance.

 

(b)                                 Schedule 5.17(b) sets
forth a true, correct and complete list of all claims that have been made by
any Sweet Paper Entity since December 31, 2001 under any workers’
compensation, general liability, property or other insurance policy applicable
to any Sweet Paper Entity or any of its respective assets or businesses.  Except as set forth on such list, there are
no pending or, to the knowledge of Sellers, threatened claims under any
insurance policy.  Such claim information
includes the following information with respect to each accident, loss or other
event: (i) the identity of the claimant; (ii) the date of the
occurrence; (iii) the status as of the report date; and (iv) the
amounts paid or expected to be paid or recovered.

 

5.18                           Employee
Benefit Plans and Employment Agreements.

 

(a)                                  General.  Except as set forth on Schedule 5.18(a), none
of the Sweet Paper Entities or any of their ERISA Affiliates maintains,
sponsors, is a party to, participates in, has a commitment to create or has any
liability or contingent liability with respect to:

 

(i)                                     any
“employee welfare benefit plan” or “employee pension benefit plan” as those
terms are respectively defined in sections 3(1) and 3(2) of ERISA,
other than a “multiemployer plan” (as defined in section 3(37) of ERISA)
(referred to collectively herein as “Plans”);

 

(ii)                                  any
retirement or deferred compensation plan, incentive compensation plan, stock
plan, retention plan or agreement, unemployment compensation plan, vacation
pay, severance pay, bonus or benefit arrangement, insurance (including health,
life or disability insurance) or hospitalization program or any other fringe
benefit arrangement for any current or former employee, director, consultant or
agent, whether pursuant to a Contract, arrangement, custom or informal understanding,
whether written or unwritten, that does not constitute an “employee benefit
plan” (as defined in section 3(3) of ERISA) (referred to collectively
herein as “Arrangements”); or

 

(iii)                               any
employment agreement or consulting agreement of any type, including any
noncompete or severance agreements (referred to collectively herein as “Employment
Agreements”).

 

(b)                                 Plan
Documents and Reports.  A true,
correct and complete copy of each of the Plans, Arrangements and Employment
Agreements set forth on Schedule 5.18(a) (collectively, the “Benefit
Plans”), and all Contracts relating thereto, or to the funding thereof,
including all trust agreements, insurance contracts, administration contracts,
investment management agreements, subscription and participation agreements and
record keeping agreements, each as currently in effect, has been provided to
Purchaser.  In the case of any Benefit
Plan that is not in written form, Purchaser has been supplied with a true,
correct and complete description of such Benefit Plan as currently in effect,

 

48

 

including all material terms of such Benefit
Plan.  A true, correct and complete copy
of the most recent annual report, actuarial report, accountant’s opinion of the
plan’s financial statements, summary plan description and IRS determination
letter with respect to each Benefit Plan, to the extent applicable, and a
current schedule of assets (and the fair market value thereof assuming
liquidation of any asset that is not readily tradable) held with respect to any
funded Benefit Plan has been supplied to Purchaser, and there have been no
material changes in the financial condition in the respective Benefit Plans
from that stated in the annual reports and actuarial reports supplied.

 

(c)                                  Compliance
With Laws; Liabilities.  As to all
Benefit Plans, except as set forth on Schedule 5.18(c):

 

(i)                                     each
Benefit Plan complies and has been administered in form and in operation in all
material respects in accordance with its terms and with all requirements of Law
applicable thereto (including, in the case of any Benefit Plan that is an
employee pension benefit plan, the requirements of sections 401(a) and 501(a) of
the Code), and no event has occurred that will or could cause any such Benefit
Plan to fail to comply with such requirements and no notice has been issued by
any Governmental Authority questioning or challenging such compliance;

 

(ii)                                  each
Benefit Plan that is an employee pension benefit plan (as defined in section 3(2) of
ERISA) is the subject of a favorable determination letter issued by the IRS
with respect to the qualified status of such plan under section 401(a) of
the Code and the tax-exempt status of any trust that forms a part of such plan
under section 501(a) of the Code; all amendments to any such plan for
which the remedial amendment period (within the meaning of section 401(b) of
the Code and applicable regulations) has expired are covered by a favorable IRS
determination letter; and no event has occurred that will or could give rise to
disqualification of any such plan under such sections or to a Tax under section 511
of the Code;

 

(iii)                               none
of the assets of any Benefit Plan are invested in employer securities or
employer real property;

 

(iv)                              there
have been no “prohibited transactions” (as described in section 406 of
ERISA or section 4975 of the Code) with respect to any Benefit Plan and
none of the Sweet Paper Entities or any of their ERISA Affiliates has engaged
in any prohibited transaction;

 

(v)                                 there
have been no acts or omissions by any of the Sweet Paper Entities or any of
their ERISA affiliates that have given rise to or may give rise to fines,
penalties, taxes or related charges under section 502 of ERISA or Chapters
43, 47, 68 or 100 of the Code for which any of the Sweet Paper Entities or any
of their ERISA Affiliates may be liable;

 

49

 

(vi)                              none
of the payments to any individual contemplated by the Benefit Plans (in the
aggregate and together with all other compensation to be received by such
individual) would, in the aggregate, constitute excess parachute payments as
defined in section 280G of the Code (without regard to subsection (b)(4) thereof)
or would exceed $1,000,000 in any twelve (12) month period;

 

(vii)                           there
are no actions, suits or claims (other than routine claims for benefits)
pending or, to the knowledge of Sellers, threatened involving any Benefit Plan
or the assets thereof, and no facts exist that could give rise to any such
actions, suits or claims (other than routine claims for benefits);

 

(viii)                        no Benefit
Plan is subject to Title IV of ERISA, or the minimum funding rules of section 302
of ERISA or section 412 of the Code;

 

(ix)                                each
Benefit Plan that constitutes a “group health plan” (as defined in section 607(1) of
ERISA or section 4980B(g)(2) of the Code), including any plans of
current and former Affiliates that must be taken into account under section 4980B
and 414(t) of the Code or sections 601-608 of ERISA, have been operated
in compliance with applicable Laws, including the continuation coverage
requirements of section 4980B of the Code and section 601 of ERISA
and the portability and nondiscrimination requirements of sections 9801 and
9802 of the Code and sections 701-707 of ERISA, to the extent such
requirements are applicable;

 

(x)                                   actuarially
adequate accruals for all obligations under the Benefit Plans are reflected in
all of the Financial Statements other than the Pro Forma Balance Sheets, the
Interim Corporation Financial Statements and the Interim Group Financial
Statements;

 

(xi)                                none
of the Sweet Paper Entities or any of their ERISA Affiliates has any liability
or contingent liability, under any Benefit Plan or otherwise, for providing any
post-retirement medical or life insurance benefits, other than statutory
liability for providing group health plan continuation coverage under Part 6
of Title I of ERISA and section 4980B (or any predecessor section thereto)
of the Code or applicable state law;

 

(xii)                             the
Sweet Paper Entities and all of their ERISA Affiliates (and all successors
thereto) have the right or ability to terminate unilaterally any Benefit Plan,
and upon such termination shall have no further liability under or with respect
to such Benefit Plan except for (i) in the case of a qualified plan the
ordinary administrative costs of winding up such a plan, including obtaining a
final determination letter, and (ii) the specific bonus commitments listed
at Schedule 5.18(c)(xii); and

 

(xiii)                          Sellers
have satisfied all of the reporting and disclosure requirements of Title I of
ERISA with respect to each Benefit Plan.

 

50

 

(d)                                 Multiemployer
Plans.  None of the Sweet Paper
Entities or any of their ERISA Affiliates is a party to, participates in,
contributes to, has contributed to or has any liability or contingent liability
with respect to any multiemployer plan (as defined in section 3(37) of
ERISA).

 

5.19                           Employment
and Labor Matters.

 

(a)                                  Schedule 5.19(a) sets
forth a true, correct and complete list of the names, titles or job
descriptions, employer, full-time or part time status, leave status (including
short term and long term), annual compensation or hourly rate schedule and
all bonuses and similar payments made with respect to each such individual for
the preceding fiscal year for all directors, officers and employees of any
Sweet Paper Entity.

 

(b)                                 All
Employees are employed by a Sweet Paper Entity.

 

(c)                                  Each
Sweet Paper Entity has conducted since December 31, 1998 and currently is
conducting its respective business in compliance with all Laws relating to
labor, employment and employment practices, terms and conditions of employment,
wages and hours and nondiscrimination in employment.  Except as set forth on Schedule 5.19(c),
there is no claim, action, suit, proceeding, investigation or other litigation
pending (including any action involving a Governmental Authority) or, to the
knowledge of Sellers, threatened against or affecting any Sweet Paper Entity or
any of its respective officers, directors, employees or agents, any Affiliate
of any Sweet Paper Entity, any Shareholder or any Affiliate of any Shareholder,
related to labor, employment or employment practices, wage and hour,
discrimination, retaliation, workers’ compensation or safety matters.

 

(d)                                 There
is, and since December 31, 2001 there has been, no labor strike, dispute
(excluding isolated, unrelated matters with individual Employees), slow-down,
work stoppage or other labor difficulty pending, or to the knowledge of
Sellers, threatened against or involving any Sweet Paper Entity.

 

(e)                                  No
employee of any Sweet Paper Entity is covered by any collective bargaining
agreement, no collective bargaining agreement is currently being negotiated and
no attempt is currently being made or since December 31, 2001 has been
made to organize any employees of any Sweet Paper Entity to form or enter a
labor union or similar organization.

 

(f)                                    No
employees of any Sweet Paper Entity have experienced an “employment loss” (as
defined in the Worker Adjustment and Retraining Notification (WARN) Act, 29
U.S.C. § 2101 et seq. as
amended (the “WARN Act”)) during the ninety (90) calendar-day period
immediately preceding the date hereof.

 

5.20                           Capital
Improvements and Significant Non-Capital Expenditures.

 

(a)                                  Set
forth on Schedule 5.20(a) is a true, correct and complete list
of all of the capital improvements or purchases or other capital expenditures
that any Sweet Paper Entity has committed to or contracted for and that have
not been completed prior to the

 

51

 

date hereof and
the cost and expense reasonably estimated to complete such work and purchases.

 

(b)                                 Set
forth on Schedule 5.20(b) is a true, correct and complete list
of each  non-capital expenditure or
purchase in excess of $20,000 (excluding non-capital expenditures that are for
inventory or are otherwise in the ordinary course) that any Sweet Paper Entity
has committed to or contracted for and that has not been completed prior to the
date hereof and the cost and expense reasonably estimated to complete such work
and purchases.

 

5.21                           Taxes.

 

(a)                                  Each
Sweet Paper Entity has timely filed all Tax Returns that it is required to
file, and each such Tax Return was true and correct when filed.  All Taxes due and payable have been timely
paid or shall be timely paid by each Sweet Paper Entity or, if not yet payable,
such Taxes have been or will be adequately accrued and reflected in all of the
Financial Statements (other than the Pro Forma Balance Sheets, the Interim
Corporation Financial Statements and the Interim Group Financial Statements)
and the Estimated Closing Date Balance Sheet, the Initial Closing Date Balance
Sheet and the Final Closing Date Balance Sheet.

 

(b)                                 Except
as set forth on Schedule 5.21:

 

(i)                                     there
is no action, suit, proceeding, investigation, audit, claim or assessment
presently pending or, to the knowledge of Sellers, threatened, with regard to
any Taxes that relate to any Sweet Paper Entity;

 

(ii)                                  no
issue has arisen in any examination of any Sweet Paper Entity by any
Governmental Authority that if raised with respect to any other period not so
examined would result in a material deficiency for any other period, if upheld;

 

(iii)                               no
position has been taken on any Tax Return (for a taxable period for which the
statute of limitations for the assessment of tax has not expired) of any Sweet
Paper Entity that is contrary to any publicly announced position of a
Governmental Authority;

 

(iv)                              all
Taxes that any Sweet Paper Entity is required by Law to withhold or collect,
including sales and use Taxes, and amounts required to be withheld for Taxes of
employees, have been duly withheld or collected and, to the extent required,
have been paid over to the proper Governmental Authorities or are held in
separate bank accounts for such purpose;

 

(v)                                 no
Sweet Paper Entity is a party to any Tax sharing agreement, nor is any Sweet
Paper Entity subject to any joint venture, cooperative, partnership or other
arrangement or contract that is treated as an entity (including a partnership)
for Federal income tax purposes; and

 

52

 

(vi)                              Sellers
and the Corporation have taken no steps that would cause any Employee to be
subject to taxes or penalties under Section 409A.

 

(c)                                  None
of the assets of the Sweet Paper Entities constitute tax-exempt bond financed
property or tax-exempt use property within the meaning of Section 168 of
the Code, and none of the assets reflected on any of the Financial Statements
(other than the Pro Forma Balance Sheets, the Interim Corporation Financial
Statements and the Interim Group Financial Statements) is subject to a lease,
safe harbor lease or other arrangement as a result of which an entity other
than a Sweet Paper Entity is treated as the owner of the asset for Federal
income tax purposes.

 

(d)                                 No
Seller is a “foreign person” as defined in Section 1445(f)(3) of the
Code.

 

(e)                                  Neither
the Corporation nor any Corporation Subsidiary is required to include in income
any adjustment pursuant to Section 481(a) of the Code by reason of a
voluntary change in accounting method initiated by the Corporation or any
Corporation Subsidiary, and to the knowledge of Sellers, the IRS has not
proposed any such adjustment or change in accounting method.

 

(f)                                    Neither
the Corporation nor any Corporation Subsidiary has or could have any liability
for Taxes of any Person other than itself under Treasury Regulation Section 1.1502-6
(or any similar provision of state, local or foreign law).

 

(g)                                 All
transactions between any Sweet Paper Entity and any Affiliate of any Sweet
Paper Entity have been conducted on an arm’s length basis.

 

(h)                                 Neither
the Corporation nor any Corporation Subsidiary has requested or received a
ruling related to Tax from any Governmental Authority or signed a closing or
other agreement related to Tax with any Governmental Authority that would
affect any taxable period after the Closing Date.

 

(i)                                     No
Sweet Paper Entity has engaged in, or is a party to, (i) any “reportable
transaction” within the meaning of Treasury Regulation Section 1.6011-4,
or a transaction substantially similar to a reportable transaction or (ii) any
“tax shelter” within the meaning of Section 6662 of the Code.

 

(j)                                     No
Sweet Paper Entity has any obligations or commitments with respect to the
Scheck Charitable Lead Trust, Scheck Alpha LP or Scheck Investments.

 

(k)                                  Sellers
have provided true, correct and complete copies of all Tax Returns and audit
reports for all Taxes of the Corporation and the Corporation Subsidiaries for
the last three (3) Tax years.  To
the extent Sellers provided Purchaser with Tax Returns that were unsigned, such
Tax Returns are otherwise exact copies of the Tax Returns that were actually
signed and filed.

 

53

 

(l)                                     The
Corporation and each Corporation Subsidiary and each Asset Seller have obtained
appropriate exemption certificates for all transactions treated as nontaxable
for sales Tax purposes.

 

(m)                               Neither
the Corporation nor any Corporation Subsidiary has entered into any transaction
or arrangement outside the normal course of business that would have the effect
of deferring recognition of income for Tax purposes to periods ending after the
Closing Date or accelerating deductions to periods ending on or prior to the
Closing Date.

 

5.22                           No
Defaults or Violations.  Except as
set forth on Schedule 5.22:

 

(a)                                  no
Sweet Paper Entity has breached any provision of, or is in default under the
terms of, any Contract or Permit to which it is a party or by which it is bound
(including the Assumed Contracts and Assumed Permits), no condition exists or
event has occurred that, with or without notice or the passage of time or both,
would constitute a breach of, or a default under, any such Contract or Permit
by any Sweet Paper Entity (other than as set forth on Schedule 5.3)
and, to the knowledge of Sellers, no other party to any such Contract or Permit
has breached any provision of, or is in default under the terms of, any such
Contract or Permit;

 

(b)                                 each
Sweet Paper Entity is in compliance with all Laws applicable to or binding on
such Sweet Paper Entity or any of its respective assets or properties
(including, as applicable, the Assets), and no condition exists or event has
occurred that, with or without notice or the passage of time or both, would
constitute a violation under any such Law; and

 

(c)                                  during
the three (3) years preceding the date of this Agreement, no notice from
any Governmental Authority has been received by any Sweet Paper Entity claiming
any violation of any Law (including any building, zoning or other ordinance) or
requiring any work, construction or expenditure, or asserting any Tax,
assessment or penalty (and any and all such notices received by any Sweet Paper
Entity prior to the three (3) year period preceding the date of this
Agreement have been fully resolved with no continuing obligations of any Sweet
Paper Entity).

 

5.23                           Environmental
Matters.  Except as set forth on Schedule 5.23:

 

(a)                                  each
Sweet Paper Entity is in compliance with, and during the two (2) year
period preceding the date of this Agreement has been in compliance with, all
Environmental Laws, and no condition exists or event has occurred that would
constitute a violation of or give rise to any liability, obligation, material
expenditure or Lien under any Environmental Law;

 

(b)                                 each
Sweet Paper Entity is in possession of all Environmental Permits, if any,
required for the conduct or operation of its respective business (or any part
thereof), and is in compliance with all of the requirements and limitations
included in such Environmental Permits;

 

54

 

(c)                                  there
are no, and no Sweet Paper Entity or predecessor of any Sweet Paper Entity has
used, generated, treated, handled, transported, stored or disposed of, or
arranged for disposal or treatment of, any Hazardous Substances in, on, or at
any of the Leased Real Property, or any real property formerly owned, leased or
operated by any Sweet Paper Entity or any predecessor of any Sweet Paper
Entity, and no Hazardous Substances have been used in the construction or
repair of, or any alterations or additions to, any of the Leased Real Property,
except for inventories of substances which (i) are set forth on Schedule 5.23,
(ii) are used or are to be used in the ordinary course of business and (iii) have
been stored and used in accordance with all applicable Environmental Laws and
Environmental Permits, including all so-called “Right To Know Laws”;

 

(d)                                 no
Sweet Paper Entity or any predecessor of any Sweet Paper Entity has Released
any Hazardous Substances at, into, on, from, under, beneath, adjacent to or
affecting any real property;

 

(e)                                  no
Environmental Claim from any Governmental Authority or any other Person has
been received by any Sweet Paper Entity or any predecessor of any Sweet Paper
Entity claiming that (i) any aspect of the business, operations or
facilities of such Sweet Paper Entity or predecessor thereof is or has been in
violation of or has any liability under any Environmental Law or Environmental
Permit, or (ii) any Sweet Paper Entity or any predecessor thereof is
responsible (or potentially responsible) for the cleanup or remediation of any
substances at any location, nor have any Environmental Claims been threatened
against any Sweet Paper Entity or any predecessor of any Sweet Paper Entity;

 

(f)                                    no
Sweet Paper Entity is the subject of any pending or threatened litigation or
proceedings in any forum, judicial or administrative, involving a demand for
damages, injunctive relief, penalties or other potential liability with respect
to violations of or liability under any Environmental Law;

 

(g)                                 no
properties now or formerly owned, leased or operated by any Sweet Paper Entity
or any predecessor of any Sweet Paper Entity are (i) listed or proposed
for listing on the National Priorities List under CERCLA or (ii) listed on
the Comprehensive Environmental Response, Compensation and Liability
Information System List promulgated pursuant to CERCLA or (iii) included
on any similar lists maintained by any Governmental Authority;

 

(h)                                 each
Sweet Paper Entity has timely filed all reports and notifications required to
be filed with respect to all of its respective properties and facilities and
has generated and maintained all required records and data under all applicable
Environmental Laws;

 

(i)                                     no
past or present condition, event, activity, practice or action, or agreement,
judgment, decree or order by which any Sweet Paper Entity is bound exists that
could reasonably be expected to prevent any Sweet Paper Entity from complying
with any Environmental Law, or that could reasonably be expected to give rise
to any liability of any Sweet Paper Entity under any Environmental Law with
respect to (i) any

 

55

 

property that was
at any time owned or leased, or any direct or indirect subsidiary that was at
any time owned, by any Sweet Paper Entity, any predecessor of any Sweet Paper
Entity or any Person that is or was an Affiliate of any Sweet Paper Entity, which
property or subsidiary has been sold, transferred or disposed or for which any
lease has terminated or (ii) any predecessor of any Sweet Paper Entity;
and

 

(j)                                     all
environmental investigations, studies, audits, assessments and data that are in
the possession, custody or control of any Sweet Paper Entity relating (i) to
the current or prior business, operations, facilities or real property of any
Sweet Paper Entity or any predecessor of any Sweet Paper Entity or (ii) to
any facility, real property or other asset now or previously owned, operated,
leased or used by any Sweet Paper Entity or any predecessor of any Sweet Paper
Entity have been provided to Purchaser.

 

5.24                           Litigation.

 

(a)                                  Except
as set forth on Schedule 5.24, there are no claims, actions, suits,
proceedings, arbitrations, investigations or other litigation pending or, to
the knowledge of Sellers, threatened against or affecting any Sweet Paper
Entity or any of its respective officers, directors, employees, agents or
shareholders in their capacity as such, or any of its respective properties
(including the Assets) or businesses, and no Shareholder or Person set forth on
Schedule 1.1(b) is aware of any facts or circumstances that
could reasonably be expected to give rise to any of the foregoing.  Except as set forth on Schedule 5.24,
all of the proceedings, pending or, to the knowledge of Sellers, threatened,
against any Sweet Paper Entity are fully covered by insurance policies (or
other indemnification agreements with third parties) and are being defended by
the insurers (or such third parties), subject to such deductibles as are set
forth on such Schedule.  Except as set
forth on Schedule 5.24, no Sweet Paper Entity is subject to any
order, judgment, decree, injunction, stipulation or consent order of or with
any court or other Governmental Authority. 
No Sweet Paper Entity has entered into any agreement to settle or
compromise any proceeding pending or threatened against it, which agreement  has involved any obligation other than the
payment of money or for which any Sweet Paper Entity has any continuing
obligation.

 

(b)                                 There
are no claims, actions, suits, proceedings, arbitrations, investigations or
other litigation pending or, to the knowledge of Sellers, threatened by or
against any Seller, the Corporation or any Corporation Subsidiary or any of its
respective Affiliates with respect to this Agreement or the Related Agreements,
or in connection with the transactions contemplated hereby or thereby, and no
Seller has any reason to believe that there is a valid basis for any such
claim, action, suit, proceeding, arbitration, 
investigation or other litigation.

 

5.25                           No
Conflict of Interest.  Except as set
forth on Schedule 5.25, no Seller nor any of its or his Affiliates
has or claims to have any direct or indirect interest in any tangible or
intangible property used in the business of any Sweet Paper Entity, except for
each Shareholder as a holder of Shares or each Asset Seller as an owner of
Assets.  Except as set forth on Schedule 5.25,
no Seller nor any of its Affiliates has any direct or indirect interest in any
other Person that conducts a business similar to, has any Contract or
arrangement with, or does business or is

 

56

 

involved
in any way with, any Sweet Paper Entity, except for the ownership of less than
one percent (1%) of the outstanding shares of any class of capital stock of any
Person listed on a national securities exchange or quoted on the National
Association of Securities Dealers Automated Quotation System or
over-the-counter.  Schedule 5.25
sets forth a true, correct and complete description of all such Persons,
interests, Contracts, arrangements and other matters.

 

5.26                           Bank
Accounts.  Schedule 5.26
sets forth a true, correct and complete list of the names and locations of each
bank or other financial institution at which the Corporation or any  Corporation Subsidiary has an account (giving
the account numbers) or safe deposit box and the names of all Persons
authorized to draw thereon or have access thereto, and the names of all
Persons, if any, now holding powers of attorney or comparable delegation of
authority from the Corporation or any Corporation Subsidiary and a summary
statement thereof.

 

5.27                           Customers
and Suppliers.

 

(a)                                  Customers.

 

(i)                                     Schedule 5.27(a)(i) sets
forth a true, correct and complete list of the one hundred (100) largest
customers of the Sweet Paper Entities taken as a whole, in terms of revenue
during each of the 2003 and 2004 calendar years (collectively, the “Major
Customers”), showing the total revenue received in each such period from
each such customer.

 

(ii)                                  Except
as set forth on Schedule 5.27(a)(ii), (A) all sales to
Major  Customers are being made, and
since September 30, 2003 have been made, in the ordinary course of
business consistent with past practices, and (B) to the knowledge of
Sellers, no Major Customer has a right to receive any rebate, allowance, cash
incentive payment or other back-end payment or to receive any discount for
early payment or otherwise to receive any payment terms other than “net 30” and
(C) the applicable Sweet Paper Entity has the right to revise the payment,
rebate and other material economic terms for each Major Customer of such Sweet
Paper Entity upon not more than thirty (30) days notice.

 

(iii)                               Schedule 5.27(a)(iii) sets
forth a true, correct and complete list of each private label owned by any Sweet Paper Entity. 
Schedule 5.27(a)(iii) also sets forth, for each private
label set forth therein, a true, correct and complete list of (A) each
manufacturer that supplies stock keeping units under such private label and (B) each
stock keeping unit that is supplied by such manufacturer under such private
label.

 

(iv)                              Schedule 5.27(a)(iv) sets
forth a true, correct and complete list of each private label sold (but not
owned) by any Sweet Paper Entity.  Schedule 5.27(a)(iv) also
sets forth, for each private label set forth therein, a true, correct and
complete list of (A) each manufacturer that supplies stock keeping units
under such private label and (B) each stock keeping unit that is supplied
by such manufacturer under such private label.

 

57

 

(v)                                 Schedule 5.27(a)(v) sets
forth certain information regarding certain customers of the Sweet Paper
Entities, which information is true, correct and complete and fully responsive
to each of the information requirements set forth at the beginning of such
Schedule.

 

(vi)                              Except
as set forth on Schedule 5.27(a)(vi), since December 31, 2003,
there has been no material adverse change in the business relationship, and
there has been no material dispute, between any Sweet Paper Entity (on the one
hand) and any Major Customer (on the other hand), and no Shareholder or Person
set forth on Schedule 1.1(b) has any indications or reasons
that could reasonably be expected to cause him to believe that (A) there
will be any such material adverse change or dispute or (B) any Major
Customer intends to materially reduce its purchases from any Sweet Paper Entity
or the Business.

 

(vii)                           Except
as set forth on Schedule 5.27(a)(vii)(A), each customer of each
Sweet Paper Entity is, for Tax purposes, a “reseller” and not a “consumer”.  Except as set forth on Schedule 5.27(a)(vii)(B),
and except for those customers from whom sales Taxes have been collected, each
customer of each Sweet Paper Entity has provided a signed valid resale
exemption certificate covering all purchases in accordance with applicable
state Tax Law.  During the twelve (12)
month period ended December 31, 2004, the sales of the Sweet Paper
Entities, taken as a whole, to customers that are not, for Tax purposes, “resellers”
did not exceed $3,000,000.

 

(b)                                 Suppliers.

 

(i)                                     Schedule 5.27(b)(i) sets
forth a true, correct and complete list of all of the suppliers of inventory to
the Sweet Paper Entities (collectively, the “Suppliers”), showing the
total purchases made by the Sweet Paper Entities taken as a whole from each
such Supplier during each of the 2003 and 2004 calendar years.

 

(ii)                                  Schedule 5.27(b)(ii) sets
forth, for each current supplier to any Sweet Paper Entity, a true, correct and
complete description of the payment, rebate, allowance, cash incentive,
discount and other material economic terms between such Sweet Paper Entity and
such supplier (the “Supplier Economic Terms”).

 

(iii)                               Except
as set forth on Schedule 5.27(b)(iii), since December 31,
2003, there has been no material adverse change in the business relationship,
and there has been no material dispute, between any Sweet Paper Entity (on the
one hand) and any Supplier (on the other hand), and no Shareholder and no
Person set forth on Schedule 1.1(b) has any indications or
reasons that could reasonably be expected to cause him to believe that (A) there
will be any such material adverse change or dispute or (ii) any Supplier
intends to reduce its sales to any Sweet Paper Entity or the Business.

 

58

 

5.28                           Improper
and Other Payments.  Except as set
forth on Schedule 5.28, (a) no Sweet Paper Entity, or
director, officer, employee, agent or representative of any Sweet Paper Entity,
or  Person acting on behalf of any of
them, has made, paid or received any bribes, kickbacks or other similar
payments to or from any Person, whether lawful or unlawful, (b) no
contributions have been made by any Sweet Paper Entity, directly or indirectly,
to a domestic or foreign political party or candidate and (c) no improper
foreign payment (as defined in the Foreign Corrupt Practices Act) has been made
by any Sweet Paper Entity or any director, officer, employee, agent or
representative of any Sweet Paper Entity, or any Person acting on behalf of any
of them.

 

5.29                           Brokers.  Except as set forth on Schedule 5.29,
none of the Shareholders, the Corporation, the Corporation Subsidiaries or the
Asset Sellers has used any broker or finder in connection with the transactions
contemplated hereby, and neither Purchaser nor any Affiliate of Purchaser
(including, from and after the Closing, the Corporation and any Corporation
Subsidiary) has or shall have any liability or otherwise suffer or incur any
Loss as a result of or in connection with any brokerage or finder’s fee or
other commission of any Person retained by any Shareholder, the Corporation,
any Corporation Subsidiary or any Asset Seller or any of its respective
Affiliates in connection with any of the transactions contemplated by this
Agreement or the Related Agreements.

 

5.30                           Accounting
and Disclosure Controls.  Except as
set forth on Schedule 5.30, each Sweet Paper Entity maintains and
complies with a system of controls sufficient to provide reasonable assurances
that, except where the failure of same would not have a Material Adverse
Effect: (a) transactions are executed in accordance with management’s
general or specific authorization; (b) transactions are recorded as
necessary to permit preparation of the consolidated financial statements of the
Corporation and the Corporation Subsidiaries or the consolidated financial
statements of the Asset Sellers, as applicable, in each case, in conformity
with GAAP and to maintain accountability for assets; (c) access to assets
is permitted only in accordance with management’s general or specific
authorization; (d) the reporting of assets is compared with existing
assets at regular intervals and appropriate action is taken with respect to any
differences; (e) material information relating to such Sweet Paper Entity
is promptly made known to the officers responsible for establishing and
maintaining the system of internal control over financial reporting; and (f) any
significant deficiencies or material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to
materially and adversely affect the ability to record, process, summarize and
report financial information, and any fraud whether or not material that
involves management or other employees who have a significant role in respect
of internal control over financial reporting, are adequately and promptly
disclosed to the independent accountants and management of such Sweet Paper
Entity.

 

5.31                           Sweet
Distribution Entities.  Set forth on Schedule 5.31
is a true, correct and complete list of each Affiliate of any Seller, the
Corporation or any Corporation Subsidiary that is currently engaged, or was
previously engaged, in the conduct of the Sweet Distribution Business (the “Sweet
Distribution Entities”).  The
authorized equity interests of each Sweet Distribution Entity, the outstanding
equity interests of each Sweet Distribution Entity and the legal and beneficial
ownership thereof are accurately set forth on Schedule 5.31.  True, correct and complete copies of the
Articles of Incorporation and by-laws (or similar organizational instruments)
of each Sweet Distribution Entity have been provided to Purchaser.

 

59

 

5.32                           Sales
in Puerto Rico.  Set forth on Schedule 5.32
is a true, correct and complete list of the amount of revenues recognized by
the Sweet Paper Entities, taken as a whole, based on sales of products and
services of the Business in Puerto Rico during the twelve (12) month period
ended September 30 in each of 2003 and 2004.  Except as set forth on Schedule 5.32,
all of the aforementioned sales of products and services of the Business in
Puerto Rico during the twelve (12) month period ended September 30 in each
of 2003 and 2004 were made to retailers and not end-users.

 

5.33                           Compliance
with Facility Mortgage Loan Documents. 
Each of Scheck Family LLC, JEMS of Miami, Inc., the Corporation,
and all of their applicable Affiliates are in compliance with all of the
provisions of all of the agreements and instruments relating to the  Facility Mortgage Loan, including (a) the
Required Repair Reserve Agreement, dated as of June 10, 1999, by and
between Scheck Family LLC, JEMS of Miami, Inc. and GMAC, (b) the
Replacement Reserve Agreement, dated as of June 10, 1999, by and between
Scheck Family LLC, JEMS of Miami, Inc. and GMAC and (c) the Tenant
Improvement and Leasing Commission Reserve Agreement, dated as of June 10,
1999, by and between Scheck Family LLC, JEMS of Miami, Inc. and GMAC.  No “event of default” (as such term is
defined in each agreement and instrument relating to the Facility Mortgage
Loan) or event that, with or without notice or the passage of time would (if
not cured) become an “event of default” has occurred under any agreement or
instrument relating to the Facility Mortgage Loan.

 

5.34                           Sweet
Paper Debt.  Set forth on Schedule 1.1(d) is
the true and correct aggregate amount of Sweet Paper Debt outstanding as of the
date of this Agreement.

 

5.35                           Accuracy
of Statements.  Neither this
Agreement nor any schedule or certificate provided or to be provided by or
on behalf of any Seller or any Sweet Paper Entity to Purchaser or any representative
or Affiliate of Purchaser in connection with this Agreement, any Related
Agreement to which any Sweet Paper Entity or any of its Affiliates is a party
or any of the transactions contemplated hereby or thereby contains or will
contain any untrue statement of a material fact or omits or will omit to state
a material fact necessary to make the statements contained herein or therein,
in light of the circumstances in which they are made, not misleading.

 

ARTICLE 6.

REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

Purchaser
represents and warrants to each Seller, as of the date of this Agreement and as
of the Closing Date (as if such representations and warranties were remade on
the Closing Date), as follows:

 

6.1                                 Due
Incorporation.  Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Louisiana, with all requisite power and authority to own,
lease and operate its properties and to carry on its business as they are now
being owned, leased, operated and conducted.

 

6.2                                 Due
Authorization.  Purchaser has full
power and authority to enter into this Agreement and its Related Agreements and
to consummate the transactions contemplated hereby

 

60

 

and
thereby.  The execution, delivery and
performance by Purchaser of this Agreement and its Related Agreements, and the
consummation by Purchaser of the transactions contemplated hereby and thereby,
have been duly and validly approved by the board of directors of Purchaser, and
no other actions or proceedings on the part of Purchaser are necessary to
authorize this Agreement, its Related Agreements and the transactions
contemplated hereby and thereby. 
Purchaser has duly and validly executed and delivered this Agreement and
has duly and validly executed and delivered (or prior to or at the Closing will
duly and validly execute and deliver) its Related Agreements.  This Agreement constitutes legal, valid and
binding obligations of Purchaser, and Purchaser’s Related Agreements upon
execution and delivery by Purchaser will constitute legal, valid and binding
obligations of Purchaser, in each case, enforceable in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws in effect
that affect the enforcement of creditors’ rights generally, and by equitable
limitations on the availability of specific remedies.

 

6.3                                 Consents
and Approvals; Authority Relative to this Agreement.

 

(a)                                  Except
as set forth on Schedule 6.3, no consent, authorization or approval
of, filing or registration with, or cooperation from, any Governmental
Authority or any other Person not a party to this Agreement is necessary in
connection with the execution, delivery and performance by Purchaser of this
Agreement and its Related Agreements and the consummation by Purchaser of the
transactions contemplated hereby and thereby.

 

(b)                                 Except
as set forth on Schedule 6.3, the execution, delivery and performance
by Purchaser of this Agreement and its Related Agreements, and the consummation
by Purchaser of the transactions contemplated hereby and thereby, do not and
will not (i) violate any Law applicable to or binding on Purchaser or any
of its assets or properties; (ii) violate or conflict with, result in a
breach or termination of, constitute a default or give any third party any
additional right (including a termination right) under, permit cancellation of,
result in the creation of any Lien upon any of the assets or properties of
Purchaser under, or result in or constitute a circumstance that, with or
without notice or lapse of time or both, would constitute any of the foregoing
under, any Contract to which Purchaser is a party or by which Purchaser or any
of its assets or properties are bound; (iii) permit the acceleration of
the maturity of any indebtedness of Purchaser or indebtedness secured by its
assets or properties; or (iv) violate or conflict with any provision of
Purchaser’s Articles of Incorporation or by-laws.

 

6.4                                 Litigation.  There are no claims,
actions, suits, proceedings, arbitrations, investigations or other litigation
pending or, to the knowledge of Purchaser, threatened by or against Purchaser
or any of its Affiliates with respect to this Agreement or the Related
Agreements, or in connection with the transactions contemplated hereby or
thereby, and Purchaser has no reason to believe that there is a valid basis for
any such claim, action, suit, proceeding, arbitration, investigation or other litigation.

 

6.5                                 Brokers.  Except as set forth on Schedule 6.5,
Purchaser has used no broker or finder in connection with the transactions
contemplated hereby, and no Seller or any of its respective Affiliates has or
shall have any liability or otherwise suffer or incur any Loss as a

 

61

 

result
of or in connection with any brokerage or finder’s fee or other commission of
any Person retained by Purchaser or any of its Affiliates in connection with
any of the transactions contemplated by this Agreement or the Related
Agreements.

 

ARTICLE 7.

 

COVENANTS

 

7.1                                 Implementing
Agreement.  Subject to the terms and
conditions hereof, each party hereto shall take all action required of it to
fulfill its obligations under the terms of this Agreement and shall otherwise
use all commercially reasonable efforts to facilitate the consummation of the
transactions contemplated hereby. 
Sellers agree that unless this Agreement is terminated in accordance
with the provisions of Section 11.1, Sellers will not take any
action that would have the effect of preventing or impairing the performance by
any Seller of its respective obligations under this Agreement.

 

7.2                                 Access
to Information and Facilities.

 

(a)                                  From
and after the date of this Agreement until the Closing Date, the Asset Sellers
shall, and the Shareholders shall cause the Corporation and the Corporation
Subsidiaries to, (i) upon reasonable notice to the Seller Representative,
give Purchaser and Purchaser’s representatives reasonable access to all of the
facilities, properties, books, records and Contracts of the Asset Sellers, the
Corporation and the Corporation Subsidiaries, (ii) upon reasonable notice
to the Seller Representative, make the directors, officers and employees of the
Asset Sellers, the Corporation and the Corporation Subsidiaries available to
Purchaser and its representatives as Purchaser and its representatives shall
from time to time reasonably request and (iii) provide Purchaser and its
representatives with any and all information concerning the Asset Sellers, the
Corporation and the Corporation Subsidiaries that Purchaser or its
representatives reasonably request.

 

(b)                                 Without
limiting the generality of Section 7.2(a), from and after the date
of this Agreement until the Closing Date, the Asset Sellers shall, and the
Shareholders shall cause the Corporation and the Corporation Subsidiaries to,
permit (upon reasonable notice and at reasonable times) officers, executives
and other Representatives of Parent or any of its Affiliates to meet with the
officers, executives and other Representatives of any Sweet Paper Entity
responsible for (i) the consolidated financial statements of the Asset
Sellers or the consolidated financial statements of the Corporation and the Corporation
Subsidiaries (including, in each case, any notes thereto) or (ii) the
internal controls of any Sweet Paper Entity and the disclosure controls and
procedures of any Sweet Paper Entity for the purpose of discussing such matters
as Parent or any of its Affiliates may deem reasonably necessary or appropriate
for Parent or any of its Affiliates to satisfy obligations under Sections 302,
404 and 906 of SOX.

 

(c)                                  Without
limiting the generality of Section 7.2(a), from and after the date
of this Agreement until the Closing Date, upon reasonable notice to the Seller
Representative, the Asset Sellers shall, and the Shareholders shall cause the
Corporation

 

62

 

and the
Corporation Subsidiaries to, permit Purchaser’s Representatives to have
reasonable access upon reasonable notice to any of the facilities of any Asset
Seller, the Corporation or any Corporation Subsidiary or any remote location
where any information and records of any such Person are maintained or processed
for the purposes of training personnel, gathering information about the
Business and preparing for the consummation of the transactions contemplated by
this Agreement.  Purchaser agrees that
the Asset Sellers shall not be required, and the Shareholders shall not be
required to cause the Corporation and the Corporation Subsidiaries to, permit
any actions by Purchaser under this Section 7.2(c) that would
unduly or materially disrupt the operations of any Asset Seller, the
Corporation or any Corporation Subsidiary.

 

7.3                                 Preservation
of Business.

 

(a)                                  From
the date of this Agreement until the Closing Date, the Asset Sellers shall, and
the Shareholders shall cause the Corporation and the Corporation Subsidiaries
to:  (i) operate only in the
ordinary and usual course of business and consistent with past practice, and (ii) use
commercially reasonable efforts to (A) preserve intact the present
business organization and personnel of the Asset Sellers, the Corporation and
the Corporation Subsidiaries, (B) preserve the goodwill and advantageous
relationships of the Asset Sellers, the Corporation and the Corporation
Subsidiaries with customers, suppliers, employees, independent contractors and
other Persons material to the operation of their respective businesses, (C) prevent
any event that could reasonably be expected to have a Material Adverse Effect
and (D) not permit any action or omission that would cause any of the
representations or warranties of any Seller contained herein or in any of its
Related Agreements to become inaccurate or any of the covenants of any Seller
contained herein or in any of its Related Agreements to be breached.

 

(b)                                 Without
limiting the generality of Section 7.3(a), except as set forth on Schedule 7.3,
prior to the Closing, no Asset Seller shall, and no Shareholder shall permit
the Corporation or any Corporation Subsidiary to, without the prior written
consent of Purchaser:

 

(i)                                     enter
into any Contract that would be required to be disclosed on Schedule 5.14
or Schedule 5.15;

 

(ii)                                  take
any action or enter into or authorize any Contract or transaction, other than
in the ordinary course of business and consistent with past practice;

 

(iii)                               sell,
transfer, convey, assign or otherwise dispose of any of its assets or
properties, except sales of inventory in the ordinary course of business and
consistent with past practice;

 

(iv)                              waive,
release, settle or cancel any claims against third parties or debts owing to
it, or any rights that have any value, individually in excess of $25,000, or in
the aggregate in excess of $200,000;

 

63

 

(v)                                 waive,
release, settle or cancel any claims against third parties or debts owing to
it, or any rights that have any value, outside of the ordinary course of business;

 

(vi)                              make
any changes in its accounting systems, policies, principles, practices or
methods;

 

(vii)                           except
for purchases and sales of merchandise, collection and servicing of
receivables, servicing of payroll and funding transfers in connection with intercompany
loans and payments or reimbursements for ordinary course expenses, in each
case, in the ordinary course of business consistent with past practice, enter
into, authorize or permit any transaction with any other Sweet Paper Entity,

 

(viii)                        enter into,
authorize or permit any transaction, whether or not in the ordinary course of
business, with any Affiliate of any Sweet Paper Entity or any Affiliate of any
Shareholder (in each case, except for any other Sweet Paper Entity) or any
Shareholder, except for any satisfaction and discharge of any indebtedness owed
to any Affiliate of any Sweet Paper Entity, any Affiliate of any Shareholder or
any Shareholder that constitutes Sweet Paper Debt or Withdrawn Corporation
Assets;

 

(ix)                                except
for any Liens arising in favor of any lienor set forth on Schedule 5.7(a) or
Schedule 5.7(b) (pursuant to security agreements or similar
instruments granted by any Sweet Paper Entity in favor of such lienors prior to
or as of the date of this Agreement) with respect to any assets acquired by any
Sweet Paper Entity after the date of this Agreement, suffer or permit the
creation of any Lien over any assets of any Asset Seller, the Corporation or
any Corporation Subsidiary (including, with respect to the Asset Sellers, any
of the Assets);

 

(x)                                   make
any borrowings (other than under the Wachovia Facility), incur any debt (other
than trade payables in the ordinary course of business and consistent with past
practice or under the Wachovia Facility), or assume, guarantee, endorse (except
for the negotiation or collection of negotiable instruments in the ordinary
course of business and consistent with past practice) or otherwise become
liable (whether directly, contingently or otherwise) for the obligations of any
other Person, or make any payment or repayment in respect of any indebtedness
(other than trade payables and accrued expenses in the ordinary course of
business and consistent with past practice or under the Wachovia Facility);

 

(xi)                                make
any loans, advances or capital contributions to, or investments in, any other
Person, except for advances to individual Employees that are in the amount of
$1,000 or less;

 

(xii)                             terminate,
other than for cause, any employee or hire any individual to be employed by any
Asset Seller, the Corporation or any

 

64

 

Corporation
Subsidiary (other than hourly workers hired in the ordinary course of business
consistent with past practice at the standard compensation and benefits
provided by the Sweet Paper Entities);

 

(xiii)                          enter
into, adopt, amend or terminate any bonus, profit sharing, compensation,
termination, stock option, stock appreciation right, restricted stock,
performance unit, pension, retirement, deferred compensation, employment,
severance or other employee benefit agreement, trust, plan, fund or other
arrangement for the benefit or welfare of any director, officer or employee, or
increase in any manner the compensation or fringe benefits of any director,
officer or employee or pay any benefit not required by any existing plan and
arrangement or enter into any Contract, agreement, commitment or arrangement to
do any of the foregoing;

 

(xiv)                         acquire
or lease any assets outside the ordinary course of business;

 

(xv)                            except
for capital expenditures contemplated by clause (xv) below, acquire,
lease or encumber any assets that are material to any Asset Seller, the
Corporation or any Corporation Subsidiary whether or not such acquisition,
lease or encumbrance is in the ordinary course of business (other than
acquisitions of inventory in the ordinary course of business consistent with
past practice);

 

(xvi)                         authorize
or make any capital expenditures that individually or in the aggregate are in
excess of $10,000;

 

(xvii)                      file any
amended Tax Return or any claim for refund of Taxes, amend any payment of Taxes
paid by or on behalf of any Sweet Paper Entity, waive or extended the statute
of limitations in respect of any Taxes, make, revoke, or amend any Tax
election, change any method of Tax accounting or Tax procedure or practice, or
settle or compromise any claim relating to Taxes;

 

(xviii)                   pay any amount,
perform any obligation or agree to pay any amount or perform any obligation, in
settlement or compromise of any suit or claim of liability against any directors,
officers, employees or agents of any Asset Seller, the Corporation or any
Corporation Subsidiary;

 

(xix)                           pay any
amount, perform any obligation or agree to pay any amount or perform any
obligation, in settlement or compromise of any suit or claim of liability for
breach of Contract, breach of warranty, tort or violation of any Law against
any Asset Seller, the Corporation or any Corporation Subsidiary, individually
or in the aggregate in excess of $25,000;

 

(xx)                              terminate,
modify, amend or otherwise alter or change any of the terms or provisions of
any Real Property Lease, any Benefit Plan, any Debt Instrument relating to any
Sweet Paper Debt or any Intellectual Property License, or pay any amount not
required by Law or by any Contract;

 

65

 

(xxi)                           except
in the ordinary course of business, terminate, modify, amend or otherwise alter
or change any of the terms or provisions of any Contract of a type not
expressly set forth in Section 7.3(b)(xx); or

 

(xxii)                        agree,
whether in writing or otherwise, to do any of the foregoing.

 

(c)                                  Without
limiting the generality of Section 7.3(a), except as set forth on Schedule 7.3,
prior to the Closing, no Shareholder shall permit the Corporation or any
Corporation Subsidiary to, without the prior written consent of Purchaser:

 

(i)                                     authorize
for issuance, issue, sell, deliver or agree or commit to issue, sell or deliver
(whether through the issuance or granting of options, warrants, convertible or
exchangeable securities, commitments, subscriptions, rights to purchase or
otherwise) any shares of its capital stock or any other securities of the
Corporation or any Corporation Subsidiary, or amend any of the terms of any
such capital stock or other securities;

 

(ii)                                  split,
combine or reclassify any shares of its capital stock, declare, set aside or
pay any dividend or other distribution (whether in cash, stock or property or
any combination thereof) in respect of its capital stock, or redeem or
otherwise acquire any capital stock or other securities of the Corporation or
any Corporation Subsidiary;

 

(iii)                               merge
into or with or consolidate with any other Person;

 

(iv)                              make
any change in the Articles of Incorporation, by-laws or similar organizational
instruments of the Corporation or any Corporation Subsidiary; or

 

(v)                                 agree,
whether in writing or otherwise, to do any of the foregoing.

 

7.4                                 Consents
and Approvals.

 

(a)                                  Each
Seller shall use all commercially reasonable efforts to obtain all consents,
approvals, certificates and other documents required in connection with the
performance of this Agreement and its Related Agreements and the consummation
of the transactions contemplated hereby and thereby, including all consents and
approvals set forth on Schedule 5.3 (and Purchaser shall cooperate
with Sellers in obtaining all such consents, approvals, certificates and other
documents); provided, that no contact will
be made by any Seller or Sweet Paper Entity (or any representative thereof)
with any third party to obtain any such consent or approval without the prior
written consent of Purchaser as to the form of such third party consent or
approval; and provided, further, that Sellers shall not be
obligated to use any efforts to obtain any consents relating to items 2, 10,
11, 12, 13, 14, 15, 16, 17 or 18 of Schedule 5.3 (the “Non-Required
Consents”).  Each Seller shall
promptly make or cause to be made all filings, applications, statements and
reports to all Governmental Authorities and other Persons that are required to
be made prior to the Closing Date by or on behalf of any Seller, the
Corporation, any Corporation Subsidiary, or any of their respective Affiliates
pursuant to

 

66

 

any applicable
Law, Permit or Contract in connection with this Agreement, its Related Agreements
and the transactions contemplated hereby and thereby, including all filings,
applications, statements and reports set forth on Schedule 5.3 (and
Purchaser shall cooperate with Sellers in making all such filings,
applications, statements and reports).  Furthermore,
each Seller shall use all commercially reasonable efforts to assist Purchaser
in making all filings, applications, statements and reports to all Governmental
Authorities and other Persons that Purchaser must make in order to obtain a
Permit due to the fact that any Permit held by any Asset Seller is not
assignable or transferable to Purchaser.

 

(b)                                 Without
limiting the generality of Section 7.4(a), if a consent or approval
is required by any party under any Contract or Permit in connection with the
performance of this Agreement and the Related Agreements and the consummation
of the transactions contemplated hereby and thereby and is not obtained on or
before the Closing or if an attempted assignment of any Contract or Permit is
ineffective, Sellers shall cooperate with Purchaser at Sellers’ expense in any
commercially reasonable arrangement requested by Purchaser to provide for the
Corporation, any Corporation Subsidiary or Purchaser (as applicable) the
benefits under any such Contract or Permit; provided, however,
that the provisions of this Section 7.4(b) shall not apply to
any Contract or Permit relating to any Non-Required Consent.  

 

(c)                                  Purchaser
shall use all commercially reasonable efforts to obtain all consents,
approvals, certificates and other documents required to be obtained by
Purchaser in connection with the performance of this Agreement and the Related
Agreements and the consummation of the transactions contemplated hereby and
thereby, including all consents and approvals set forth on Schedule 6.3
(and each Seller shall cooperate with Purchaser in obtaining all such consents,
approvals, certificates and other documents). 
Purchaser shall promptly make all filings, applications, statements and
reports to all Governmental Authorities and other Persons that are required to
be made by Purchaser prior to the Closing Date by or on behalf of Purchaser or
any of its Affiliates pursuant to any applicable Law, Permit or Contract in
connection with this Agreement, the Related Agreements and the transactions
contemplated hereby and thereby (and Sellers shall cooperate, and shall cause
the Corporation and the Corporation Subsidiaries to cooperate, with Purchaser
in making all such filings, applications, statements and reports).

 

(d)                                 Sellers
shall be obligated to pay any and all fees and other payments that are required
in order to obtain or make (i) all consents, approvals, certificates and
other documents referenced at Sections 7.4(a) (other than the
Non-Required Consents) and 7.4(c) and (ii) all filings,
applications, statements and reports referenced at Sections 7.4(a) and
7.4(c) (collectively, the “Transaction Consents”); provided,
however, notwithstanding anything else contained herein to the contrary,
Sellers shall be obligated to pay fees and other payments with respect to any
Transaction Consents that are not obtained or made prior to the Closing only to
the extent that the amount of all such fees and other payments relating to such
Transaction Consents, in the aggregate, is in excess of $10,000.  Notwithstanding the foregoing, the parties
hereto agree and acknowledge that Purchaser is responsible for payment of, and
has paid, the filing fee required by the HSR Act in connection with the filings
made by Purchaser and Sellers thereunder.

 

67

 

7.5                                 Transfer
of Assets from Corporation and Corporation Subsidiaries.  Prior to the Closing, (a) the
Shareholders shall cause the Corporation and the Corporation Subsidiaries to
sell, assign, convey, transfer and deliver to Scheck Alpha, and Scheck Alpha
shall purchase, acquire and take assignment and delivery of, all of the title,
right and interest of the Corporation and the Corporation Subsidiaries in and
to all of those assets and Contracts set forth on Schedule 7.5(a) (the
“Withdrawn Corporation Assets”) and (b) Scheck Alpha shall assume,
and agree to pay, perform, fulfill and discharge, all of those obligations of
the Corporation and the Corporation Subsidiaries set forth on Schedule 7.5(b) (the
“Withdrawn Corporation Obligations”), in the case of each of clauses (a) and
(b), pursuant to the terms and conditions of the Corporation Transfer
Agreement.  

 

7.6                                 Maintenance
of Insurance.  From the date of this
Agreement until the Closing Date, the Asset Sellers shall, and the Shareholders
shall cause the Corporation and the Corporation Subsidiaries to (a) continue
to carry its existing insurance through the Closing Date, and (b) not
allow any breach or default under, and use commercially reasonable efforts to
not allow any termination or cancellation of, such insurance policies or
agreements.

 

7.7                                 Resignation
of Officers and Directors.  The
Shareholders shall cause each officer and member of the Board of Directors of,
and each non-corporate trustee or fiduciary of any plan or arrangement
involving employee benefits of, the Corporation and each Corporation Subsidiary
to tender his resignation from such position effective as of the Closing.

 

7.8                                 Supplemental
Information.  From time to time prior
to the Closing Date, Sellers shall disclose in writing to Purchaser any matter
hereafter arising or discovered by any Shareholder or any Person set forth on Schedule 1.1(b) that,
if existing, occurring or known at the date of this Agreement would have been
required to be disclosed to Purchaser in connection with any of the
representations or warranties of Sellers set forth in this Agreement.  No information provided to a party pursuant
to this Section 7.8 shall be deemed to cure any breach of any
representation, warranty or covenant made in this Agreement.  Notwithstanding the foregoing, any update to Schedule 5.15
with respect to any Contract that is entered into by any Sweet Paper Entity
after the date of this Agreement and prior to the Closing Date not in violation
of any provisions of this Agreement shall be deemed to cure any breach of any
representation or warranty set forth in Section 5.15 arising from
the fact that such Contract was not originally set forth on Schedule 5.15
as of the date of this Agreement.

 

7.9                                 Confidentiality.

 

(a)                                  Prior
to the Closing, Purchaser, on the one hand, and Sellers, on the other hand
(each such Person, together with its respective Affiliates, shall hereinafter
be referred to, as applicable, as the “Receiving Party”) shall, and
shall cause each of their respective Affiliates to, maintain all Confidential
Information of Sellers and Purchaser, respectively (each such Person shall
hereinafter be referred to, as applicable, as the “Disclosing Party”),
in strict confidence and not disclose, divulge or distribute, in whole or in
part, any such information to any Person, other than to the Receiving Party’s
Representatives on a need-to-know basis for the purpose of advising the
Receiving Party with respect to the transactions contemplated by this Agreement,
or use any such information for any purpose other than as expressly provided by
this Agreement,

 

68

 

including any
purpose that would be competitively disadvantageous to the Disclosing
Party.  Furthermore, the Receiving Party
shall cause each of its Representatives to maintain all Confidential
Information of the Disclosing Party in strict confidence and not disclose,
divulge or distribute, in whole or in part, any such information to any Person
or use any such information for any purpose other than as expressly provided by
this Agreement, including any purpose that would be competitively
disadvantageous to the Disclosing Party. 
The Receiving Party shall provide the Disclosing Party with written
notification of any breach of any obligation of the Receiving Party set forth
in the preceding two sentences promptly after the Receiving Party receives
knowledge of such breach.  The
obligations set forth in the three preceding sentences shall not apply to (i) any
information that becomes generally available to the public prior to the Closing
Date through no fault of any Receiving Party or any of its Affiliates, (ii) any
information that prior to the Closing Date is legitimately received by any
Receiving Party or any of its Affiliates from a third party (provided such
third party is not known by any Receiving Party or any of its Affiliates to be
bound by an obligation of secrecy) or (iii) any disclosure required by Law
or any Governmental Authority, so long as notice of such disclosure is given to
the Disclosing Party prior to making such disclosure and the Receiving Party
cooperates with the Disclosing Party as the Disclosing Party may reasonably
request to resist such disclosure.  If
this Agreement is terminated on or prior to the Closing Date in accordance with
the provisions of this Agreement, then the Receiving Party shall, not later
than twenty (20) Business Days from the date of such termination, (A) return
all Confidential Information of the Disclosing Party (and copies thereof) to
the Disclosing Party, (B) destroy all notes, summaries, analyses,
compilations, studies, interpretations or other materials prepared by the
Receiving Party or any of its Representatives which contain, reflect or are
based upon any Confidential Information of the Disclosing Party and (C) certify
to the Disclosing Party in writing that the Receiving Party has fully complied
with all of the obligations contained in clauses (A) and (B) of
this sentence.  Notwithstanding anything
else contained herein to the contrary, from and after the Closing, neither
Purchaser nor any of its Affiliates shall be obligated to comply with any of
the provisions of this Section 7.9(a)  with respect to any
information relating to the Assets, the Business, the Corporation or any
Corporation Subsidiary or its respective operations.

 

(b)                                 After
the Closing, each Seller shall, and shall cause each of its Affiliates to,
maintain all Confidential Information, relating to any period of time before,
at or after the Closing, with respect to Purchaser, any Asset Seller (in
connection with the Assets or the Business), the Corporation or any Corporation
Subsidiary or its  respective operations
(including any information obtained by any Seller in connection with his
employment by Purchaser, the Corporation or any of their respective Affiliates
after the Closing) in strict confidence and not disclose any such information
to any Person or use any such information for any purpose (other than in
connection with such Seller’s employment by Purchaser, the Corporation or any
of their respective Affiliates after the Closing); provided, however, that such restrictions shall not apply to (i) any
information that becomes generally available to the public after the Closing
Date through no fault of any Seller or any of its Affiliates, (ii) any
information that after the Closing Date is legitimately received by any Seller
or any of its Affiliates from a third party (provided such third party is not
known by any Seller or any of its Affiliates to be bound by an

 

69

 

obligation of
secrecy) or (iii) any disclosure required by Law or any Governmental
Authority, so long as notice of such disclosure is given to Purchaser prior to
making such disclosure and Sellers cooperate with Purchaser as Purchaser may
reasonably request to resist such disclosure. 
Sellers shall provide Purchaser with written notification of any breach
of any obligation of Sellers set forth in the preceding sentence promptly after
any Seller receives knowledge of such breach. 

 

7.10                           Exclusivity.  During the period from the date of this
Agreement to the earlier of the Closing Date or the date this Agreement is
terminated pursuant to Article 11, no Asset Seller or Shareholder
shall (and no Asset Seller or Shareholder shall permit any of its Affiliates,
directors, employees, officers, agents or representatives to), and no
Shareholder shall permit the Corporation or any Corporation Subsidiary (or any
of its respective Affiliates, directors, employees, officers, agents or
representatives) to, directly or indirectly, solicit, initiate, condone,
knowingly encourage or respond to any inquiries, proposals or offers from, or
participate in any discussions or negotiations with, or provide any of their
Confidential Information to, or otherwise cooperate in any way with, any Person
(other than Purchaser and its directors, officers, employees, representatives
and agents) regarding (a) any merger, consolidation or sale or other
disposition of any capital stock of any Asset Seller, the Corporation or any
Corporation Subsidiary or any of its respective Affiliates (including any sale
of any of the Shares) or (b) any sale or other disposition of all or any
substantial portion of the assets or properties of any Asset Seller, the
Corporation or any Corporation Subsidiary or any of its respective Affiliates
(or any unit or division thereof) (including any sale of any Assets but
excluding the sale of any inventory of any Asset Seller, the Corporation or any
Corporation Subsidiary in the ordinary course of business).  Sellers 
shall promptly notify Purchaser in writing of each instance in which
Sellers receive any such inquiry, proposal or offer; provided, that
Sellers shall not be obligated to 
communicate to Purchaser the terms and conditions of (or the identity of
the Person making), any such inquiry, proposal or offer received.

 

7.11                           Use
of Marks.

 

(a)                                  No
later than ten (10) Business Days after the Closing Date, each Asset
Seller shall, and Sellers shall cause each Sweet Distribution Entity to, take
all necessary action (including filing an amendment to its articles of
incorporation or similar organizational documents with the secretary of state
of its respective state of incorporation) to change its formal name so as to
remove the word “Sweet”.  Furthermore,
subject to Section 7.11(b), from and after the Closing Date, no
Seller or any of its respective Affiliates shall, and Sellers shall cause each
Sweet Distribution Entity not to, directly or indirectly use in any manner any
Mark included in the Sweet Paper Assets, or any word or logo that is similar in
sound, spelling or appearance to such Mark.

 

(b)                                 Asset
Sellers shall, and Sellers shall cause each Sweet Distribution Entity to:

 

(i)                                     from
and after the Closing Date, not include in its formal or any assumed or other
name any word or logo that is similar in sound, spelling or appearance to the
word “Sweet”; provided, however, that for not more than six (6) months
after the Closing Date, any Asset Seller can, and Sellers shall be permitted

 

70

 

to cause any Sweet
Distribution Entity to, identify itself as “formerly known as Sweet
Distribution”; and

 

(ii)                                  as
promptly as possible after the Closing Date, but in any event, no later than
six (6) months after the Closing Date:

 

(A)                              not
refer to itself as being formerly known as any name that includes the word “Sweet”
or includes any word or logo that is similar in sound, spelling or appearance
to the word “Sweet”;

 

(B)                                either
(1) not use any letterhead, stationery, purchase order, invoice, receipt
or other similar document containing any reference to the “Sweet” name or any
word or logo that is similar in sound, spelling or appearance to the word “Sweet”
or (2) only use such letterhead, stationery, purchase order, invoice,
receipt or other similar document after having deleted, pasted over or placed a
sticker over such references;

 

(C)                                remove
from all premises, signs and vehicles owned or used by any Asset Seller or
Sweet Distribution Entity, and not use on any such premises, signs or vehicles,
any reference to the “Sweet” name or any word or logo that is similar in sound,
spelling or appearance to the word “Sweet”;

 

(D)                               either
(1) not use any brochures, leaflets or similar documents or packaging
containing any reference to the “Sweet” name or any word or logo that is
similar in sound, spelling or appearance to the word “Sweet” or (2) only
use such brochures, leaflets or similar documents or packaging after having
deleted, pasted over or placed a sticker over such references; and

 

(E)                                 ensure
that no stocks, goods, products, services or software are manufactured,
produced, provided or distributed by or on behalf of any Asset Seller or any
Sweet Distribution Entity showing, having marked thereon or using the “Sweet”
name or any word or logo that is similar in sound, spelling or appearance to
the “Sweet” name.

 

7.12                           Termination
of Certain Agreements.  Each Asset
Seller shall (and shall cause its respective Affiliates to), and the Shareholders
shall cause the Corporation and the Corporation Subsidiaries to (and shall
cause their respective Affiliates to), effective as of the Closing, without any
cost to, payment by or liability of any Asset Seller, the Corporation or any
Corporation Subsidiary, terminate, rescind, cancel and render void and of no
effect any and all Contracts between any Asset Seller, the Corporation or any
Corporation Subsidiary (on the one hand) and any such Person or any Affiliate
of any such Person (on the other hand); provided,
however, that this Section 7.12 shall not apply to this
Agreement or any Related Agreement, the Current Scheck Real Property Lease (as
amended by the Scheck Lease Amendment), any Contract of an Asset Seller that is
not an Assumed Contract, or any Contract set forth on Schedule 7.12.

 

71

 

7.13                           Pay-Off
Letters; Closing Date Sweet Paper Debt Amount.  Sellers shall (a) no earlier than
fifteen (15) days, and no later than five (5) days, prior to the Closing
Date, provide Purchaser with (i) a Pay-Off Letter from each Sweet Paper
Creditor other than Wachovia Bank, N.A. and a form of a Pay-Off Letter from
Wachovia Bank, N.A., which form will not need to include the amount of Sweet
Paper Debt that will be owed to Wachovia Bank, N.A. on the Closing Date and (ii) a
statement setting forth the aggregate amount of Sweet Paper Debt that will be
owed to the Sweet Paper Creditors (other than Wachovia Bank, N.A.) on the
Closing Date and (b) no later than 10:00 a.m. (Central Standard Time)
on the Closing Date, provide Purchaser with a statement setting forth the
aggregate amount of Sweet Paper Debt that will be owed to Wachovia Bank, N.A.
on the Closing Date (the sum of such amounts referred to in clauses (a)(ii) and
(b) is referred to herein as the “Closing Date Sweet Paper Debt
Amount”).  At and as of the Closing,
Purchaser shall pay to each Sweet Paper Creditor that portion of the Closing
Date Sweet Paper Debt Amount owed to such Sweet Paper Creditor according to the
statement provided by Sellers to Purchaser in accordance with the previous
sentence.  Notwithstanding the foregoing,
no Pay-Off Letter shall be required for any Sweet Paper Creditor set forth on Schedule 1.1(d)(ii) or
Schedule 1.1(d)(iii).

 

7.14                           [RESERVED] 

 

7.15                           Initial
Closing Date Balance Sheet.

 

(a)                                  Sellers
shall use their best efforts to prepare and deliver to Purchaser, no later than
July 7, 2005, (i) compiled, combined, consolidating balance sheets of
the Sweet Paper Entities as of the close of business on the Closing Date, as
derived from consolidated balance sheets of the Corporation and the Corporation
Subsidiaries as of the close of business on the Closing Date and the
consolidated balance sheets of the Asset Sellers as of the close of business on
the Closing Date, and prepared in accordance with GAAP consistently applied and
(ii) an adjusted version of such compiled, combined, consolidating balance
sheets, so adjusted in accordance with the Pro Forma Calculation Principles
(collectively, the “Initial Closing Date Balance Sheet”).

 

(b)                                 Sellers
agree that:

 

(i)                                     Except
as set forth on Schedule 7.15(b)(i), Sellers shall use their best
efforts to prepare the GAAP version of the Initial Closing Date Balance Sheet
so as to present fairly in all material respects the combined financial
position, assets and liabilities of the Sweet Paper Entities as of the close of
business on the Closing Date;

 

(ii)                                  Sellers
shall use their best efforts to prepare each of the GAAP version of the Initial
Closing Date Balance Sheet so as to (A) be in accordance with the books
and records of the Sweet Paper Entities, (B) not reflect any transactions
that are not bona fide transactions and (C) not contain any untrue
information or disclosures of a material nature or omit any material fact
necessary to make the information and disclosures contained therein, in light
of the circumstances in which they were made, not misleading; and

 

72

 

(iii)                               Sellers
shall prepare the pro forma version of the Initial Closing Date Balance Sheet
so as to accurately reflect all adjustments to the GAAP version of the Initial
Closing Date Balance Sheet that are required by (A) items 1, 3, 4, 5, 6,
18 and 19 of the Pro Forma Calculation Principles and (B) item 21 of the
Pro Forma Calculation Principles as item 21 applies to items 3, 4, 5, 6 and 18
thereof.  Sellers shall prepare the pro
forma version of the Initial Closing Date Balance Sheet in good faith so as to
accurately reflect, to the greatest extent practicable, all adjustments to the
GAAP version of the Initial Closing Date Balance Sheet that are required by all
other Pro Forma Calculation Principles.  

 

(c)                                  In
order to facilitate Sellers’ preparation of the Initial Closing Date Balance
Sheet, (i) until Sellers have delivered the Final Closing Date Balance
Sheet, Purchaser shall use commercially reasonable efforts to maintain the
employment of those Persons set forth on Schedule 4.5(c), subject
to the provisions of Section 7.17, and (ii) Purchaser shall make
available to Sellers, Lundy Shacter and any other Representative of Sellers (as
applicable), without unreasonable disruption of the normal business activities
of Purchaser, the Corporation, the Corporation Subsidiaries or the Business, (A) the
appropriate personnel and books and records of Purchaser relating to the
Business, (B) the appropriate personnel and books and records of the
Corporation and the Corporation Subsidiaries and (C) such additional
internal accounting personnel of Purchaser as Sellers reasonably request and
Purchaser can reasonably provide.  All
fees and expenses of Lundy Shacter and any other Representative of Sellers
relating to the preparation of the Initial Closing Date Balance Sheet shall be
borne solely by Sellers.  Any information
supplied to Sellers by Purchaser to enable Sellers to prepare the Initial
Closing Date Balance Sheet shall be maintained by Sellers in strict confidence
and shall not be disclosed to any Person (other than their accountants and
other representatives who need to know such information) or used by Sellers for
any purpose, except in each case in connection with the matters specifically
covered by this Section 7.15.

 

(d)                                 The
parties hereto agree that, at Purchaser’s sole discretion, Purchaser shall have
the right to, and to cause Purchaser’s Representatives to, assist Sellers in
the preparation of the Initial Closing Date Balance Sheet.  In furtherance of the preceding sentence,
promptly upon Purchaser’s request, (i) Sellers shall make available to
Purchaser and its Representatives, upon Purchaser’s request, copies of the work
papers and back-up materials used by Sellers in preparing the Initial Closing
Date Balance Sheet and such other documents as Purchaser may reasonably request
in connection with the preparation of the Initial Closing Date Balance Sheet, (ii) Sellers
shall cause Lundy Shacter and any other Representative of Sellers (as
applicable) to make available to Purchaser and its Representatives any work
papers used or prepared by Lundy Shacter or such other Representative in its
preparation of the Initial Closing Date Balance Sheet and (iii) Sellers
shall, and shall cause Lundy Shacter and any other Representative of Seller (as
applicable) to, cooperate fully with Purchaser and Purchaser’s Representatives
to facilitate the timely preparation and delivery of the Initial Closing Date
Balance Sheet; provided, however, that any such assistance by
Purchaser and/or Purchaser’s Representatives shall not affect Sellers’
obligations set forth in Section 7.15(a).

 

73

 

(e)                                  From
and after Purchaser’s receipt of the Initial Closing Date Balance Sheet in
accordance with Section 7.15(a), promptly upon Purchaser’s request,
(i) Sellers shall make available to Purchaser and Purchaser’s
Representatives, upon Purchaser’s request, copies of the work papers and
back-up materials used by Sellers in preparing the Initial Closing Date Balance
Sheet, and such other documents as Purchaser may reasonably request in
connection with its review of the Initial Closing Date Balance Sheet, (ii) Sellers
shall cause Lundy Shacter and any other Representative of Sellers (as
applicable) to make available to Purchaser and Purchaser’s Representatives any
work papers used or prepared by Lundy Shacter or such other Representative in
its preparation of the Initial Closing Date Balance Sheet and (iii) Sellers
shall, and shall cause Lundy Shacter and any other Representatives of Seller
(as applicable) to, cooperate fully with Purchaser and Purchaser’s Representatives
to facilitate the review of the Initial Closing Balance Sheet by Purchaser and
Purchaser’s Representatives.

 

7.16                           Termination
of Shareholders’ Agreement.  The
Shareholders shall cause the Shareholders’ Agreement to be terminated prior to
the Closing.

 

7.17                           Employees.

 

(a)                                  With
respect to Employees other than those employed by the Corporation or any
Corporation Subsidiary immediately prior to the Closing, Purchaser intends
to  make offers of employment to such
individuals, subject to Purchaser’s hiring policies and practices.  Sellers shall be jointly and severally liable
for (and hereby expressly assume all liability of the Business and the
Corporation and the Corporation Subsidiaries for):  (i) any severance benefits or other
payments to Employees that became payable prior to the Closing or that become
payable as a result of the transactions contemplated by this Agreement,
including any payments that may become due to any Employee on account of the
sale of the Corporation or the Business, or on account of the Employee’s
termination of employment with a Sweet Paper Entity at Closing, or on account
of the fact that an Employee does not receive an offer from Purchaser (except
if such Employee does not receive an offer from Purchaser due to an unlawful
act of Purchaser), or receives, but does not accept, an offer of employment
from Purchaser, and (ii) any severance benefits or other payments that
become due (on account of an Employee’s termination of employment with the
Corporation, any Corporation Subsidiary or Purchaser on or after the Closing
Date) under any plan, program, arrangement, agreement or understanding, or
pursuant to any statement, formal or informal, written or unwritten, of any
Sweet Paper Entity, in existence (or made) at any time prior to Closing.  Purchaser agrees to: (A) provide any
notice required by or otherwise comply with the WARN Act, and any similar
applicable state or local Law addressing “plant closings” or “mass layoffs;”
and (B) indemnify and hold Sellers harmless with respect to any liability,
damages, fines, or costs (including reasonable attorneys’ fees), with respect
to any “plant closing” or “mass layoff” or similar event affecting Employees
and occurring in its entirety on or after the Closing Date.  

 

(b)                                 To
the extent that Transferred Employees become eligible to participate in Benefit
Plans maintained by Purchaser or one of its Affiliates, and to the extent
permitted by applicable Laws and as agreed by insurers and any other third
parties providing

 

74

 

benefits under such Benefit Plans, Purchaser will use
reasonable efforts to (i) cause its Benefit Plans (other than any
severance plan) to recognize all previous continuous service of Transferred
Employees with Sweet Paper Entities for the purpose of determining eligibility
for and vesting of benefits (but not for purposes of benefit accruals under
defined benefit plans), (ii) provide credit for amounts paid toward
deductibles, out-of-pocket limits and co-payments during the calendar year
2005, (iii) cause such Benefit Plans to recognize continuous service of
Transferred Employees with Sweet Paper Entities for purposes of satisfying any
waiting periods or pre-existing condition limitations, and (iv) provide,
or cause an Affiliate to provide, only in the calendar year in which the Closing occurs, no less vacation and no
less paid personal time off for each Transferred Employee than he or she had a
right, immediately before the Closing Date, to receive during such calendar year,
reduced by any vacation and personal time previously incurred by the
Transferred Employee during such calendar year. 
Purchaser shall cause its severance plans to provide that if a
Transferred Employee becomes eligible to participate in such a plan, then upon
the third anniversary of the Closing Date, if such Transferred Employee has
been an active employee, continuously from the Closing Date through such third
anniversary thereof, the plan shall recognize the Transferred Employee’s
previous service with the Sweet Paper Entities for purposes of calculating any
severance benefits that may thereafter become payable.

 

(c)                                  The
Employees set forth on Schedule 7.17 shall be eligible for the
incentives and other benefits or other compensation set forth on Schedule 7.17.

 

(d)                                 Purchaser
shall either (i) maintain, through December 31, 2005, for the benefit
of the Transferred Employees, health, life and disability programs identical or
substantially similar to the health, life and disability programs under which
such employees are covered immediately prior to the Closing Date, or (ii) provide
the Transferred Employees with the opportunity to participate in health, life
and disability programs which Purchaser or one of its affiliates maintains,
subject to the ordinary terms and conditions of those programs.  Sellers shall remain responsible for, and
hereby expressly assume liability for (and the Business and Corporation shall
have no liability for) all costs and liabilities under any health, life and
disability programs maintained for all periods prior to the Closing Date
(including claims incurred prior to Closing and premiums for all periods prior
to Closing) and shall provide Purchaser with all documents, records and
information necessary for the administration of such health, life and
disability programs as Purchaser shall maintain, including all such materials
and information needed for compliance with the continuation coverage
requirements of section 4980B of the Code and section 601 of ERISA
and the portability and nondiscrimination requirements of sections 9801 and
9802 of the Code and sections 701-707 of ERISA.  Notwithstanding anything to the contrary
contained in this Section 7.17(d), the parties hereto agree that
Purchaser shall be liable for any workers’ compensation claims relating to
events that occurred prior to the Closing if such claims are adequately accrued
on the Final Closing Date Balance Sheet.

 

(e)                                  Within
two weeks after entering into this Agreement, Sellers shall provide Purchaser
with certain files relating to Employees, including personnel files, files
maintained by Employees’ managers or supervisors, benefits information (but
without

 

75

 

private information regarding Employees), drug testing
results information, and I-9 information (without attachments containing
private or personal information), except as prohibited by Law.  After the Closing, Sellers shall cause all
other files pertaining to all Employees, including all medical files and all
workers’ compensation files, to be delivered to Purchaser as the new employer
of the Employees.  The parties hereto
agree that Purchaser (i) shall be solely responsible for any claims that
may arise as a result of it obtaining any files (and the information contained
therein) of Employees prior to the Closing, and (ii) shall indemnify and
hold Sellers harmless for any liability or damages that may arise as a result
of Purchaser’s obtaining of or use of such files or information prior to the
Closing.

 

(f)                                    Prior
to the Closing Date, (i) Sellers shall take all steps necessary to ensure
that a lump sum cash distribution is made to all participants in the Sweet
Paper Sales Corp. 401(k) Profit Sharing Plan, as amended (the “401(k) Plan”)
whose employment has terminated and whose account balances are below $1,000; (ii) Sellers
shall take all steps necessary to ensure that all contributions for all periods
prior to Closing, including any Matching Contributions attributable to employee
pre-tax or after-tax contributions for periods prior to Closing, are made to
the 401(k) Plan; and (iii) any entities other than the Corporation that
are currently participating employers in the 401(k) Plan shall withdraw from
the 401(k) Plan at Closing.

 

(g)                                 Prior
to the Closing Date, Sellers shall enter into a binding Contract with a third
party vendor to file Forms 5500 through the Department of Labor’s Delinquent
Filer Voluntary Compliance Program for each year for each plan with respect to
which a Form 5500 should have been filed, but was not, to prepare any plan
documentation that Sellers together with such vendor determines to be necessary
to ensure that all plan documentation is consistent with the Forms 5500 filed,
and if necessary to negotiate with the Department of Labor regarding any
penalties or late fees associated with such filing in the Delinquent Filer VCP
or associated with the original failure to file such Forms 5500.  Sellers shall take all steps necessary to
provide such third party vendor with all information it requires to fulfill its
obligations under such Contract.  The
costs and fees under such Contract and any other costs (including attorneys
fees), liabilities, penalties and excise taxes, associated with rectifying such
failure to file, shall be paid by Sellers and it shall be a Withdrawn
Corporation Obligation or an Excluded Obligation (as applicable).  Further, Sellers shall remain responsible
for, and hereby expressly assume liability for (and the Business and
Corporation shall have no liability for) any and all costs, liabilities,
penalties and excise taxes arising in connection with the failure to file, or
the late filing of, any Form 5500 for any Benefit Plan, and all such
assumed costs, liabilities, penalties and excise taxes shall be Withdrawn
Corporation Obligations or Excluded Obligations (as applicable).

 

(h)                                 Sellers
shall take all steps to ensure that no employees of any Sweet Paper Entity will
have experienced an “employment loss” (as defined in the WARN Act) during the
ninety (90) calendar-day period immediately preceding the Closing Date. 

 

76

 

(i)                                     For
the avoidance of doubt, no Employee shall be deemed to be a third party
beneficiary of, or have any rights with respect to, any provision set forth in
this Section 7.17.  

 

7.18                           Insurance.  At Purchaser’s request, Sellers shall use
commercially reasonable efforts to obtain certificates of insurance from any
supplier that has supplied products or services to any Sweet Paper Entity at
any time during the five (5) years preceding the date of this Agreement.

 

7.19                           Redistributors
of America.  Sellers shall request
that Redistributors of America  extend an
offer to Purchaser providing for Purchaser, the Corporation and the Corporation
Subsidiaries, taken as a whole, to be a member of Redistributors of America
from and after the Closing on substantially the same terms and conditions of
membership (including all rights and privileges of membership) as other members
of Redistributors of America.  For the
avoidance of doubt, none of Purchaser, the Corporation or any Corporation
Subsidiary shall be obligated to accept any such membership offer.

 

7.20                           No
Additional Representations or Warranties. 
Purchaser acknowledges that no Seller has made any representation,
warranty or covenant, express or implied, as to the accuracy or completeness of
any information regarding the Sweet Paper Entities, except as expressly set
forth in this Agreement or any of its Related Agreements, and Purchaser further
agrees that no Seller 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 information that is not included in this Agreement or any of its
Related Agreements.  EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT, SELLERS
MAKE NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW, IN EQUITY OR
OTHERWISE, IN RESPECT OF THE SWEET PAPER ENTITIES OR ANY OF THEIR RESPECTIVE
ASSETS, LIABILITIES OR OPERATIONS, INCLUDING ANY IMPLIED REPRESENTATION OR
WARRANTY AS TO THE CONDITION, MERCHANTABILITY, SUITABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, AND SELLERS EXPRESSLY DISCLAIM ANY SUCH REPRESENTATION OR
WARRANTY.

 

7.21                           Disclaimer
Regarding Estimates and Projections. 
In connection with Purchaser’s investigation of the Sweet Paper
Entities, Purchaser may have received from Sellers and the Sweet Paper Entities
certain estimates, forecasts, plans and financial projections of the Sweet
Paper Entities.  Purchaser acknowledges
that there are uncertainties inherent in attempting to make such estimates,
forecasts, plans and projections, that Purchaser is familiar with such
uncertainties, that Purchaser is taking full responsibility for making its own
evaluation of the adequacy and accuracy of all estimates, forecasts, plans and
projections so furnished to it (including the reasonableness of assumptions
underlying such estimates, forecasts, plans and projections), and that
Purchaser shall have no claim against Sellers with respect thereto.  Accordingly, no Seller makes any
representation or warranty with respect to such estimates, forecasts, plans and
projections (including any such underlying assumptions).  The parties hereto agree and acknowledge that
this Section 7.21 shall not apply to any estimates that are
included  in any representations or
warranties contained in this Agreement or in any Disclosure Schedules hereto
(including any estimates that are included in any representations or warranties
contained in Section 5.5 or in any Schedule thereto.  

 

77

 

7.22                           Assignment
of Certain Accounts Receivable.  In
the event Purchaser makes any claim hereunder with respect to a breach of those
representations and warranties set forth in Section 5.13 expressly
relating to the collectibility of accounts receivables, and Purchaser is
compensated by Sellers with respect to such claim (pursuant to an
indemnification claim or otherwise), Purchaser shall assign to a designee of
the Seller Representative any and all rights to the uncollected account in
respect of which such compensation is provided, and Sellers or such designee
shall have all rights to pursue collection of such account, including rights to
institute litigation to recover such account.

 

7.23                           Delivery
of Accounting Materials.  Sellers
shall cause Lundy Shacter to deliver to Purchaser, at and as of the
Closing:  (a) all records relating
to the fixed asset schedules of each Sweet Paper Entity; (b) all records
relating to the prepaid insurance coverage of each Sweet Paper Entity, and (c) all
work product produced by Lundy Shacter in connection with the preparation of (i) the
audited consolidated financial statements of the Corporation and the
Corporation Subsidiaries for the fiscal years ended September 30 in each
of 2002, 2003 and 2004 and (ii) the audited consolidated financial
statements of the Asset Sellers for the fiscal years ended December 31 in
each of 2002, 2003 and 2004.  Sellers
shall use commercially reasonable efforts to cause Lundy Shacter to deliver to
Purchaser, at and as of the Closing, any other records at Purchaser’s request.

 

7.24                           Letter
of Credit for Workers’ Compensation Policy. 
Purchaser shall cause a financial institution acceptable to The
Travelers Indemnity Company (“Travelers”) to issue a letter of credit in
the amount of $1,100,000 in form and substance acceptable to Travelers to
substitute for the Irrevocable Standby Letter of Credit numbered SM203974 (the “Wachovia
Letter of Credit”) issued in favor of Travelers by Wachovia Bank, National
Association immediately prior to the Closing. 
Prior to and following the Closing, Purchaser shall use commercially
reasonable efforts to cooperate with Sellers to cause Travelers to return the
Wachovia Letter of Credit to Wachovia Bank, National Association.  

 

7.25                           Third-Party
Note.  Purchaser shall comply with
the covenants set forth on Schedule 7.25, subject to the terms and
conditions set forth thereon.  

 

7.26                           Cash.  From the date of this Agreement until the
Closing Date, the Asset Sellers shall, and the Shareholders shall cause the
Corporation and the Corporation Subsidiaries to, use all commercially
reasonable efforts to use all Cash that is “available” (as such term is
generally used by banks) to pay off in full as much Sweet Paper Debt as is
practicable.  

 

7.27                           Defeasance
of Facility Mortgage Loan.  

 

(a)                                  From the date of this
Agreement until the Closing Date, Sellers and Purchaser shall use all
commercially reasonable efforts, at Sellers’ expense (except for Purchaser’s
legal expenses in connection with documenting and negotiating the matters
described in this Section 7.27), to effectuate a defeasance of the
Facility Mortgage Loan contemporaneous with the Closing (the “Defeasance”),
such that, among other things, the Scheck Real Property shall be released from
the terms and conditions of the security instruments relating to the Facility
Mortgage Loan.  Without limiting the
generality of the foregoing, no later than three (3) Business Days prior
to the Closing Date, Purchaser shall

 

78

 

deposit an amount
required to effectuate the Defeasance, up to a maximum of $20,500,000 in an
escrow account (the “Defeasance Escrow Account”) maintained by an escrow
agent or other third party acceptable to Purchaser pursuant to escrow
arrangements acceptable to Purchaser (such amount, together with all interest
earned thereon in the Defeasance Escrow Account, shall be referred to herein as
the “Defeasance Deposit Amount”) and pursuant to Defeasance terms,
conditions and procedures acceptable to Purchaser, including (i) assurances
that the Defeasance Deposit Amount (less any amounts payable therefrom in
accordance with the terms of the escrow agreement, which amounts Sellers agree
to indemnify each Purchaser Indemnified Party against) will be returned to
Purchaser promptly if the Defeasance does not occur, (ii) assurances that
all documents pursuant to which Scheck Family LLC, JEMS
of Miami, Inc. or any Sweet Paper Entity is obligated to GMAC with respect
to the Facility Mortgage Loan and all documents related to, or entered into in
connection with the Facility Mortgage Loan (the “Facility Mortgage Loan
Instruments”) have been identified to Purchaser, (iii) assurances
that, upon the consummation of the Defeasance, any and all Liens held by GMAC
or its Affiliates in connection with the Facility Mortgage Loan on the Scheck
Real Property shall be terminated and released, and (iv) such other
terms, conditions and procedures as Purchaser reasonably determines are
necessary.  The parties hereto agree that
any amounts remaining in the Defeasance Escrow Account after the Defeasance
shall be disbursed to the Seller Representative.  Sellers shall indemnify and hold harmless
each Purchaser Indemnified Party for any Losses incurred by any Purchaser
Indemnified Party arising from fees and expenses charged by Newman &
Associates, GMAC or any other Person due to the fact that the consummation of
the Defeasance did not occur.  If the
consummation of the Defeasance does not occur, and Purchaser receives an amount
from the Defeasance Escrow Account that is greater than the Defeasance Deposit
Amount, then Purchaser shall remit the amount of such difference to the Seller
Representative.  If the Defeasance requires funds to be deposited
in the Defeasance Escrow Account in excess of $20,500,000, Sellers and
Purchaser shall endeavor to do what is necessary to accomplish the Defeasance; provided
that in no event shall Purchaser be obligated to deposit more than $20,500,000
into the Defeasance  Escrow Account or
otherwise take any action adverse to Purchaser.  

 

(b)                                 Prior
to the Closing Date, Sellers shall use reasonable best efforts to cause the
Corporation to be fully and irrevocably released from the Facility Mortgage
Loan Guaranty and the Facility Mortgage Loan Environmental Indemnity, including
by agreeing to enter into a replacement guaranty and indemnity in favor of
GMAC; provided, however, this covenant shall not apply to the extent that the
Facility Mortgage Loan Guaranty and the Facility Mortgage Loan Environmental
Indemnity will be terminated in accordance with the Facility Mortgage Loan
Instruments as a result of the Defeasance.

 

7.28                           New
Scheck Real Property Lease.  From the
date of this Agreement until the Closing Date, Purchaser shall, and the Sellers
shall cause Scheck Family LLC and JEMS of Miami, Inc. to, document a lease
agreement (the “New Scheck Real Property Lease”) pursuant to which the
Corporation will lease the Scheck Real Property from Scheck Family LLC and JEMS
of Miami pursuant to the terms and conditions of the Current Scheck Real
Property Lease, as modified by the terms and conditions set forth on Exhibit 7.28,
which lease shall be executed and

 

79

 

delivered
by Scheck Family LLC, JEMS of Miami, Inc. and the Corporation at and as of
the Closing.  In connection with the
foregoing, Sellers shall cause Scheck Family LLC, JEMS of Miami, Inc. and
the Corporation to terminate the Current Scheck Real Property Lease effective
as of the Closing, and the parties hereto agree that the New Scheck Real
Property Lease shall amend, restate and supersede in its entirety the Current
Scheck Real Property Lease.  

 

ARTICLE 8.

CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER

 

The obligations
of Purchaser under Articles 2, 3 and 4 are subject to the
satisfaction or waiver by Purchaser of the following conditions precedent on or
before the Closing Date:

 

8.1                                 Warranties
True as of Both Present Date and Closing Date.  Except as set forth in the following
sentence, the representations and warranties of each Seller contained herein
and in its Related Agreements shall be accurate, true and correct in all
material respects (except that those representations and warranties that are
limited by materiality shall be true and correct in all respects) (a) on
and as of the date of this Agreement and of the Related Agreements,
respectively, and (b) on and as of the Closing Date with the same force
and effect as though made by each Seller on and as of the Closing Date.  The representations and warranties of each
Seller contained in Sections 5.9(a), 5.9(e), 5.9(f), 5.9(g),
5.9(h), 5.9(i), 5.9(j), 5.9(k), 5.9(l), 5.9(m),
5.9(n), 5.10, 5.12, 5.13, 5.14, 5.16,
5.17, 5.18, 5.19, 5.20, 5.22, 5.23, 5.24,
5.25, 5.26, 5.28, 5.29, 5.30 and 5.34
shall be accurate, true and correct (a) on and as of the date of this
Agreement and of the Related Agreements, respectively, and (b) on and as
of the Closing Date with the same force and effect as though made by each
Seller on and as of the Closing Date, except where the failure to be accurate
and correct could not reasonably be expected to have a Material Adverse Effect.

 

8.2                                 Compliance
with Agreements and Covenants. 
Except as set forth in the following sentence, each Seller shall have
performed and complied with all of its respective covenants and obligations
contained in this Agreement and in its Related Agreements to be performed and
complied with by it on or prior to the Closing Date.  Each Seller shall have performed and complied
in all material respects with its respective covenants and obligations
contained in Sections 7.1, 7.2, 7.3(a)(i), 7.6, 7.8, 7.9, 7.10, 7.15 and 7.17 to be
performed and complied with by it on or prior to the Closing Date.

 

8.3                                 Consents
and Approvals.  Purchaser shall have
received written evidence satisfactory to Purchaser that all consents and
approvals set forth on Schedule 5.3 and marked with an asterisk (*)
have been obtained.

 

8.4                                 Pay-Off
Letters.  To the extent required by Section 7.13,
Purchaser shall have received from each Sweet Paper Creditor a duly executed
Pay-Off Letter. 

 

8.5                                 Release
of Liens.  Any and all Liens on the
Shares shall have been terminated and released pursuant to documentation
satisfactory to Purchaser, and any and all Liens (other than (a) Liens for
Taxes that are not yet delinquent or that are being contested in good faith by
appropriate proceedings for which adequate reserves have been established in
accordance with

 

80

 

GAAP
and (b) workers’, mechanics’, materialmen’s, repairmen’s, suppliers’,
carriers’ or similar Liens arising in the ordinary course of business with
respect to obligations that are not yet delinquent or that are being contested
in good faith by appropriate proceedings and (c) Liens in respect of
operating leases) on the assets and properties of the Corporation and the
Corporation Subsidiaries, and the Assets, shall have been terminated and
released pursuant to documentation satisfactory to Purchaser (it being
understood that filings publicly evidencing the termination and release of such
Liens shall be made as soon as practicable after the Closing).

 

8.6                                 Shareholders’
Agreement.  Purchaser shall have
received evidence satisfactory to Purchaser that the Shareholders’ Agreement
has been terminated, as contemplated by Section 7.17.

 

8.7                                 Release
of Guaranty and Environmental Indemnity. 
As contemplated by Section 7.27(b), the Corporation shall
have been released from the Facility Mortgage Loan Guaranty and the Facility
Mortgage Loan Environmental Indemnity pursuant to documentation satisfactory to
Purchaser.

 

8.8                                 Defeasance
of Facility Mortgage Loan.  As
contemplated by Section 7.27, Purchaser shall have received (a) the
Facility Mortgage Loan Defeasance Letter duly executed by GMAC and (b) evidence
satisfactory to Purchaser that the Defeasance has been consummated.

 

8.9                                 Termination
of Current Scheck Real Property Lease. 
As contemplated by Section 7.28, Purchaser shall have
received evidence satisfactory to Purchaser that the Current Scheck Real
Property Lease has been terminated.

 

8.10                           New
Scheck Real Property Lease.  As
contemplated by Section 7.28, Scheck Family LLC, JEMS of Miami, Inc.
and the Corporation shall have executed and delivered the New Scheck Real Property
Lease, effective as of the Closing in a form reasonably satisfactory to
Purchaser.

 

8.11                           Accounting
Deliveries.  Purchaser shall have
received all of the materials that Purchaser is entitled to receive pursuant to
Section 7.23.

 

8.12                           Documents.  Purchaser shall have received all of the
agreements, documents and items set forth in Section 10.2.

 

8.13                           No
Material Adverse Effect.  No event
shall have occurred or circumstance shall have come into effect that has had or
could reasonably be expected to have (a) a Material Adverse Effect or (b) a
materially adverse effect on the ability of Sellers to perform their
obligations under this Agreement and their Related Agreements or the ability of
Sellers to consummate the transactions required to be effected by them as
contemplated hereby and thereby.

 

8.14                           Actions
or Proceedings.  No action or
proceeding by any Governmental Authority or other Person (other than Purchaser
or any of its Affiliates) shall have been instituted or threatened that (a) causes
or could reasonably be expected to cause a Material Adverse Effect or (b) enjoins,
restrains, prohibits or results in substantial damages in respect of, or could

 

81

 

reasonably
be expected to enjoin, restrain, prohibit or result in substantial damages in
respect of, any provision of this Agreement or any Related Agreement or the
consummation of the transactions contemplated hereby or thereby or any
integration of any operations of any Asset Seller, the Corporation or any
Corporation Subsidiary with those of Purchaser and its Affiliates.

 

ARTICLE 9.

CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS

 

The
obligations of Sellers under Articles 2, 3 and 4 are
subject to the satisfaction or waiver by Sellers of the following conditions
precedent on or before the Closing Date:

 

9.1                                 Warranties
True as of Both Present Date and Closing Date.  The representations and warranties of
Purchaser contained herein and in its Related Agreements shall be accurate,
true and correct in all material respects (except that those representations
and warranties that are limited by materiality shall be true and correct in all
respects) (a) on and as of the date of this Agreement and of the Related
Agreements, respectively, and (b) on and as of the Closing Date with the
same force and effect as though made by Purchaser on and as of the Closing
Date.

 

9.2                                 Compliance
with Agreements and Covenants. 
Purchaser shall have performed and complied with all of its covenants
and obligations contained in this Agreement and in its Related Agreements to be
performed and complied with by it on or prior to the Closing Date.

 

9.3                                 Consents
and Approvals.  The Seller
Representative shall have received written evidence satisfactory to the Seller
Representative that all consents and approvals set forth on Schedule 6.3
and marked with an asterisk (*) have been obtained.

 

9.4                                 Documents.  Sellers shall have received all of the
agreements, documents and items set forth in Section 10.3.

 

9.5                                 Actions
or Proceedings.  No action or
proceeding by any Governmental Authority or other Person (other than any
Seller, the Corporation, any Corporation Subsidiary or any of their respective
Affiliates) shall have been instituted or threatened that enjoins, restrains,
prohibits or results in substantial damages in respect of, or could reasonably
be expected to enjoin, restrain, prohibit or result in substantial damages in
respect of, any provision of this Agreement or any Related Agreement or the
consummation of the transactions contemplated hereby or thereby.

 

ARTICLE 10.

CLOSING

 

10.1                           Closing.  The Closing shall take place at the offices
of Mayer, Brown, Rowe & Maw LLP, at 190 South LaSalle Street, Chicago,
Illinois 60603, at 10:00 a.m. (Central Standard Time) on the third
Business Day following the day upon which all of the conditions to closing set
forth in Articles 8 and 9 have been satisfied or waived (other
than those conditions that by their terms cannot be satisfied until the Closing
but subject to the satisfaction of such conditions), or such other date as is
mutually agreed upon in writing by Purchaser and the Seller

 

82

 

Representative;
provided, however, that if the Closing does not take place by June 1,
2005, then (a) in no event shall the Closing take place prior to July 1,
2005 and (b) the Closing shall take place at the offices of Mayer, Brown,
Rowe & Maw LLP, at 71 South Wacker Drive, Chicago, Illinois  60603. 
The Closing, and all transactions to occur at the Closing, shall be deemed
to have taken place at, and shall be effective as of, 11:59 p.m. (Eastern
Standard Time) on the Closing Date.

 

10.2                           Deliveries
by Sellers.  At the Closing, in
addition to any other documents or agreements required under this Agreement,
Sellers shall deliver to Purchaser the following:

 

(a)                                  certificates
evidencing all of the Shares, which certificates shall be duly endorsed in
blank or accompanied by stock powers duly executed by the Shareholders  substantially in the form attached hereto as Exhibit 10.2(a);

 

(b)                                 the
resignations of all directors and officers of, and each non-corporate trustee
or fiduciary of any plan or arrangement involving employee benefits of, the
Corporation and each Corporation Subsidiary;

 

(c)                                  the
Bill of Sale, duly executed by each Asset Seller;

 

(d)                                 the
Assignment and Assumption Agreement, duly executed by each Asset Seller;

 

(e)                                  a
certificate duly executed by an authorized officer of Scheck Investments, by an
authorized officer of Scheck Alpha, by each other Shareholder and by an
authorized officer of each Asset Seller, certifying as to compliance with Section 8.1
and Section 8.2;

 

(f)                                    the
New Scheck Real Property Lease, duly executed by Scheck Family LLC, JEMS of
Miami, Inc. and the Corporation;

 

(g)                                 the
Sweet Distribution Sublease, duly executed by each Sweet Distribution Entity
and the Corporation;

 

(h)                                 the
Boston Real Property Lease, duly executed by SFH Beta Realty Trust;

 

(i)                                     an
Assignment and Assumption of Leases with respect to the Asset Seller Real
Property Leases, duly executed by each Asset Seller that is a lessee under such
Asset Seller Real Property Leases;

 

(j)                                     the
Corporation Transfer Agreement, duly executed by the Corporation, the
Corporation Subsidiaries and Scheck Alpha;

 

(k)                                  a
certificate of the general partner of Scheck Investments certifying the written
consent of the partners of Scheck Investments approving and authorizing the
execution, delivery and performance of this Agreement and the Related
Agreements of Scheck Investments and the consummation of the transactions
contemplated hereby and

 

83

 

thereby (together
with an incumbency and signature certificate regarding the officer(s) signing
on behalf of Scheck Investments);

 

(l)                                     a
certificate of the general partner of Scheck Alpha certifying the written
consent of the partners of Scheck Alpha approving and authorizing the
execution, delivery and performance of this Agreement and the Related
Agreements of Scheck Alpha and the consummation of the transactions contemplated
hereby and thereby (together with an incumbency and signature certificate
regarding the officer(s) signing on behalf of Scheck Alpha);

 

(m)                               a
certificate of the secretary or assistant secretary of each Asset Seller
certifying resolutions of the Board of Directors of such Asset Seller, and the
shareholders of such Asset Seller, approving and authorizing the execution,
delivery and performance of this Agreement and such Asset Seller’s Related
Agreements and the consummation of the transactions contemplated hereby and
thereby (together with an incumbency and signature certificate regarding the
officer(s) signing on behalf of such Asset Seller);

 

(n)                                 the
Articles of Incorporation of the Corporation and each Corporation Subsidiary,
certified by the Secretary of State or equivalent Person of its jurisdiction of
incorporation, and the by-laws or similar instrument of the Corporation and
each Corporation Subsidiary, certified by its Secretary;

 

(o)                                 certificates
of good standing for the Corporation from the secretary of state or analogous
Governmental Authority of Florida and Puerto Rico;

 

(p)                                 certificates
of good standing for Sweet Paper Georgia from the secretary of state of
Georgia;

 

(q)                                 certificates
of good standing for Sweet Paper North Carolina from the secretary of state of
North Carolina;

 

(r)                                    a
certificate of good standing for each Asset Seller from the jurisdiction of
incorporation of such Asset Seller; 

 

(s)                                  an
opinion of Akerman, Senterfitt &
Eidson, P.A., counsel to Sellers, substantially in form attached hereto
as Exhibit 10.2(s);

 

(t)                                    a
certificate of non-foreign status from each Seller that complies with Treasury
Regulation §1.1445-2(b)(2); 

 

(u)                                 the
$5 Million Letter of Credit;

 

(v)                                 the
$15 Million Letter of Credit; and

 

(w)                               such
other documents and instruments as may be required by any other provision of
this Agreement or any Related Agreement or as Purchaser may reasonably require
to consummate the transactions contemplated by this Agreement and the Related
Agreements.

 

84

 

10.3                           Deliveries
by Purchaser.  At the Closing,
Purchaser shall deliver to Sellers (or, in the case of clause (b) below,
to the Sweet Paper Creditors) the following:

 

(a)                                  the
Closing Date Seller Payment payable to the Seller Representative at and as of
the Closing pursuant to Section 4.1;

 

(b)                                 the
Closing Date Sweet Paper Debt Amount payable to the Sweet Paper Creditors at
and as of the Closing pursuant to Section 4.2;

 

(c)                                  the
Non-Competition Payment payable to the Seller Representative at and as of the
Closing pursuant to Section 4.3;

 

(d)                                 the
Assignment and Assumption Agreement, duly executed by Purchaser;

 

(e)                                  a
certificate duly executed by an authorized officer of Purchaser, certifying as
to compliance with Section 9.1 and Section 9.2;

 

(f)                                    the
Boston Real Property Lease, duly executed by Purchaser;

 

(g)                                 an
Assignment and Assumption of Leases with respect to the Asset Seller Real
Property Leases, duly executed by Purchaser;

 

(h)                                 a
valid resale certificate (solely with respect to inventory acquired for resale)
stating Purchaser’s sales tax identification number for each jurisdiction in
which the Asset Sellers conduct the Business;

 

(i)                                     a
certificate of the secretary or assistant secretary of Purchaser certifying
resolutions of the Board of Directors of Purchaser approving this Agreement and
its Related Agreements and the transactions contemplated hereby and thereby
(together with an incumbency and signature certificate regarding the officer(s)
signing on behalf of Purchaser); and

 

(j)                                     such
other documents and instruments as may be required by any other provision of
this Agreement or any Related Agreement or as may reasonably be required to
consummate the transactions contemplated by this Agreement and the Related
Agreements.

 

ARTICLE 11.

 

TERMINATION

 

11.1                           Termination.  This Agreement may be terminated at any time
on or prior to the Closing Date:

 

(a)                                  with
the mutual consent of the Seller Representative and Purchaser;

 

(b)                                 by
the Seller Representative or Purchaser, if the Closing shall not have taken
place on or before July 8, 2005; provided,
that the right to terminate this Agreement

 

85

 

under this Section 11.1(b) shall
not be available to (i) the Seller Representative if the failure of any
Seller to fulfill any of its obligations under this Agreement or if the breach
by any Seller of any of its representations, warranties or covenants under this
Agreement has been the cause of or resulted in the failure of the Closing to
occur on or before such date or (ii) Purchaser if the failure of Purchaser
to fulfill any of its obligations under this Agreement or if the breach by
Purchaser of any of its representations, warranties or covenants under this
Agreement has been the cause of or resulted in the failure of the Closing to
occur on or before such date;

 

(c)                                  by
Purchaser, if:

 

(i)                                     except
as set forth in Section 11.1(c)(ii), there shall have been a breach
of any covenant or obligation of any Seller hereunder, and such breach shall
not have been remedied within ten (10) Business Days after receipt by the
Seller Representative of a notice in writing from Purchaser specifying the
breach and requesting such breach be remedied;

 

(ii)                                  there
shall have been a material breach of any covenant or obligation of any Seller
contained in Sections 7.1, 7.2, 7.3(a)(i), 7.6, 7.8,
7.9, 7.10, 7.15 or 7.17, and such breach shall not
have been remedied within ten (10) Business Days after receipt by the
Seller Representative of a notice in writing from Purchaser specifying the
breach and requesting such breach be remedied;

 

(iii)                               except
as set forth in Section 11.1(c)(iv), there shall have been a
material breach of any representation or warranty of any Seller hereunder (or
any breach of any representation or warranty of any Seller hereunder that is
limited by materiality), and such breach shall not have been remedied within
ten (10) Business Days after receipt by the Seller Representative of a
notice in writing from Purchaser specifying the breach and requesting such breach
be remedied;

 

(iv)                              there
shall have been a breach of any representation or warranty of any Seller
contained in Sections 5.9(a), 5.9(e), 5.9(f), 5.9(g),
5.9(h), 5.9(i), 5.9(j), 5.9(k), 5.9(l), 5.9(m),
5.9(n), 5.10, 5.12, 5.13, 5.14, 5.16,
5.17, 5.18, 5.19, 5.20, 5.22, 5.23, 5.24,
5.25, 5.26, 5.28, 5.29, 5.30 or 5.34
(other than such breach that could not reasonably be expected to have a
Material Adverse Effect), and such breach shall not have been remedied within
ten (10) Business Days after receipt by the Seller Representative of a
notice in writing from Purchaser specifying the breach and requesting such
breach be remedied; or

 

(v)                                 an
event shall have occurred or circumstance shall have come into effect that has
had or could reasonably be expected to have (A) a Material Adverse Effect
or (B) a materially adverse effect on the ability of Sellers to perform
their obligations under this Agreement and their Related Agreements or the
ability of Sellers to consummate the transactions required to be effected by them
as contemplated hereby and thereby.

 

86

 

 

(d)                                 by
the Seller Representative, if there shall have been a breach of any covenant or
obligation of Purchaser hereunder or a material breach of any representation or
warranty of Purchaser hereunder, and such breach shall not have been remedied
within ten (10) Business Days after receipt by Purchaser of notice in writing
from the Seller Representative specifying the breach and requesting such breach
be remedied.

 

11.2                           Effect
of Termination.  If this Agreement is
terminated pursuant to Section 11.1, all obligations of the parties
hereunder shall terminate, except for the obligations set forth in Sections
5.29 (brokers), 6.5 (brokers), 7.9(a) (confidentiality), 15.1
(expenses) and 15.10 (publicity), which shall survive the termination of
this Agreement, and except that no such termination shall relieve any party
from liability for any prior breach of this Agreement.

 

ARTICLE 12.

 

INDEMNIFICATION

 

12.1                           Survival.  The representations and warranties of the
parties hereto contained herein shall survive the Closing for a period of two
(2) years, except that Tax Warranties shall survive until the Tax Statute of
Limitations Date and Title and Authorization Warranties shall survive forever.

 

12.2                           Indemnification
by the Sellers.  Upon the terms and
subject to the conditions set forth herein, each Seller jointly and severally
agrees to indemnify each of the Purchaser Indemnified Parties against, and
agrees to hold each of them harmless from, any and all Losses incurred or
suffered by them to the extent relating to, arising out of or resulting from
any of the following:

 

(a)                                  any
breach of or any inaccuracy in any representation or warranty made by any
Seller in this Agreement or any Related Agreement or any document delivered by
any Seller at the Closing; provided, that
(i) in the case of all representations and warranties, except for Title and
Authorization Warranties and Tax Warranties, a notice of the Purchaser
Indemnified Party’s claim shall have been given to the Seller Representative
not later than the close of business on the second anniversary of the Closing
Date and (ii) in the case of Tax Warranties, a notice of the Purchaser
Indemnified Party’s claim shall have been given to the Seller Representative
not later than the close of business on the Tax Statute of Limitations Date;

 

(b)                                 any
breach by any Seller of or failure by any Seller to perform any covenant,
obligation or agreement of any Seller set forth or contemplated in this
Agreement or any Related Agreement or any document delivered by any Seller at
the Closing;

 

(c)                                  the
Withdrawn Corporation Assets, the Withdrawn Corporation Obligations, the
Excluded Assets, the Excluded Obligations or, other than the Assumed
Obligations, any other obligations or liabilities relating to or arising out of
the ownership or operation of the Assets on or prior to the Closing Date;

 

87

 

(d)                                 any
obligations or liabilities relating to or arising from any Sweet Paper Debt;

 

(e)                                  any
obligations or liabilities relating to or arising from any product liability or
warranty claims based on products or services sold by any Sweet Paper Entity on
or prior to the Closing Date (except to the extent that any Purchaser
Indemnified Party collects reimbursements for such Losses from insurance proceeds
or from indemnification payments received from one or more third parties);

 

(f)                                    any
obligations or liabilities relating to or arising from the matters set forth on
Schedule 12.2(f);

 

(g)                                 any
obligations or liabilities relating to or arising from AMJEMS, Inc. or Mira
Corp.;

 

(h)                                 any
obligations or liabilities relating to or arising from the failure of the
Corporation to obtain the consent of GMAC to the sublease by the Corporation to
Seaboard Warehouse Terminal Ltd. of a portion of the Leased Real Property that
is leased by the Corporation pursuant to the Current Scheck Real Property
Lease;

 

(i)                                     any
obligations or liabilities relating to or arising from any breach of or default
under any Current Third Party Real Property Lease by any Sweet Paper Entity
prior to the Closing if Sellers fail to deliver to Purchaser an estoppel
certificate reasonably satisfactory to Purchaser duly executed by the lessor
under such Current Third Party Real Property Lease effective as of the Closing;

 

(j)                                     any
obligations or liabilities relating to or arising from the matters set forth on
Schedule 12.2(j);

 

(k)                                  any
obligations or liabilities relating to or arising from any third party claim
that any Sweet Paper Entity violated the Americans With Disabilities Act, or
any rules, regulations and guidelines promulgated thereunder, or any similar
state Law, prior to the Closing; provided, however, that a notice
of the Purchaser Indemnified Party’s claim with respect to this Section 12.2(k)
shall have been given to the Seller Representative not later than the close of
business on the second anniversary of the Closing Date;

 

(l)                                     any
obligations or liabilities relating to or arising from the failure of any Sweet
Paper Entity to be licensed or qualified to do business and be in good standing
as a foreign corporation in each jurisdiction where the nature of the
properties owned, leased or operated by such Sweet Paper Entity or the business
transacted by such Sweet Paper Entity require such licensing or qualification
(notwithstanding the disclosure of any information on Schedule 5.1(a)
or any other Schedule hereto);

 

(m)                               any
obligations or liabilities relating to or arising from any motor vehicle lease
agreements relating to any vehicles used by any Shareholder;

 

(n)                                 any
obligations or liabilities relating to or arising from the matter set forth on Schedule 12.2(n);
and

 

88

 

(o)                                 any
obligations or liabilities relating to or arising from any breach by Scheck
Family LLC or JEMS of Miami, Inc. of any obligation (to be set forth in the New
Scheck Real Property Lease) that is described in the “Maintenance and Repair” section of
Exhibit 7.28.

 

12.3                           Indemnification
by Purchaser.  Upon the terms and
subject to the conditions set forth herein, Purchaser agrees to indemnify each
Seller against, and agrees to hold each of them harmless from, any and all
Losses incurred or suffered by them to the extent relating to, arising out of
or resulting from any of the following:

 

(a)                                  any
breach of or any inaccuracy in any representation or warranty made by Purchaser
in this Agreement or any Related Agreement or any document delivered by
Purchaser at the Closing; provided, that in
the case of all representations and warranties, except for Title and
Authorization Warranties, a notice of the Seller’s claim shall have been given
to Purchaser not later than the close of business on the second anniversary of
the Closing Date;

 

(b)                                 any
breach by Purchaser of or failure by Purchaser to perform any covenant or
obligation of Purchaser set out or contemplated in this Agreement or any
Related Agreement or any document delivered by Purchaser at the Closing;

 

(c)                                  the
Assumed Liabilities; and

 

(d)                                 (i)
any reimbursement obligations of any Seller or any of its Affiliates or (ii)
any reduction in the amount of any collateral posted by any Seller or any of
its Affiliates in respect of the Wachovia Letter of Credit, in the case of each
of clauses (i) and (ii), arising following the Closing as a
result of any draw to fund workers’ compensation claim amounts or any accrued
workers’ compensation expenses by Travelers under the Wachovia Letter of
Credit; provided, however, that any Loss arising from both of clauses
(i) and (ii) shall be counted only once.

 

12.4                           Limitations
on Certain Claims for Indemnification.

 

(a)                                  Basket.  Sellers shall not have any liability pursuant
to Section 12.2(a) or Section 12.2(k) (other than with
respect to any breach of or inaccuracy in any of the Title and Authorization
Warranties and the Tax Warranties made by any Seller) unless and until the
aggregate amount of all Losses incurred or suffered by the Purchaser
Indemnified Parties exceeds $1,000,000 (the “Basket
Amount”), but in the event such Losses exceed the Basket Amount, Sellers
shall be liable and responsible to the Purchaser Indemnified Parties for the
full amount of such Losses (subject to Section 12.4(b)), without
reduction for the Basket Amount.

 

(b)                                 Maximum.  In no event shall Sellers’ aggregate
liability pursuant to Sections 12.2(a) and 12.2(k) for Losses
incurred or suffered by the Purchaser Indemnified Parties (other than with
respect to any breach of or inaccuracy in any of the Title and Authorization
Warranties and the Tax Warranties made by any Seller) exceed the sum of
$40,000,000.  In no event shall Purchaser’s
aggregate liability pursuant to Section 12.3(a) for Losses incurred
or suffered by Sellers (other than with respect to any breach of or

 

89

 

inaccuracy in any
of the Title and Authorization Warranties made by Purchaser) exceed the sum of
$40,000,000.

 

(c)                                  Claims
Based on Fraud or Misrepresentation that is Knowing and Intentional.  Notwithstanding anything contained herein or
otherwise to the contrary, including Sections 12.4(a) and 12.4(b),
nothing herein shall be deemed to limit any party’s rights to recover any or
all Losses incurred or suffered by it relating to, arising out of or resulting
from fraud or  a misrepresentation that
is knowing and intentional, it being understood and agreed that the right to
recover such Losses shall survive forever.

 

(d)                                 Purchaser’s
Knowledge.  Sellers shall not have
any liability pursuant to Section 12.2(a) with respect to any
specific breach of or inaccuracy in any representation or warranty contained in
Sections 5.9(c), 5.9(d), 5.9(e), 5.9(f), 5.9(g),
5.9(h), 5.9(i), 5.9(j) or 5.9(l) to the extent
Purchaser, as of the date hereof, had knowledge of such specific breach of or
inaccuracy in such representation or warranty and of the implication of such
breach or inaccuracy.

 

12.5                           Materiality.  For purposes of Sections 12.2 and 12.4,
the representations and warranties contained in Sections 5.5(a)(i), 5.5(b),
5.5(c), 5.5(d), 5.5(e), 5.5(f), 5.5(g) and 5.12(a)
shall be deemed to have been made without any qualifications as to materiality
and, accordingly, for such purposes, all references therein to “material”, “in
all material respects” and similar qualifications as to materiality shall be
deemed to be deleted therefrom (except where any such provision requires
disclosure of lists of items of a material nature or above a specified
threshold).  Notwithstanding the
foregoing, Sellers shall not have any liability pursuant to Section 12.2(a)
with respect to any representation or warranty contained in Sections
5.5(a)(i), 5.5(b), 5.5(c), 5.5(d), 5.5(e), 5.5(f),
5.5(g), 5.12(a), 5.18(b) or 5.18(c)(i) unless and
until (a) for each individual claim or series of related claims, the amount of
all Losses incurred or suffered by the Purchaser Indemnified Parties with
respect to such individual claim or series of related claims exceeds $50,000
(but in the event such Losses exceed $50,000, Sellers shall be liable and
responsible to the Purchaser Indemnified Parties for the full amount of such
Losses) or (b) for all claims, the amount of all Losses in the aggregate
incurred or suffered by the Purchaser Indemnified Parties with respect to all
such claims exceeds $350,000 (but in the event such Losses exceed $350,000,
Sellers shall be liable and responsible to the Purchaser Indemnified Parties
for the full amount of such Losses); provided, however, that even
if a Loss threshold set forth in clause (a) or (b) of this
sentence is satisfied, Sellers’ obligation to indemnify the Purchaser
Indemnified Parties for any such Losses shall still be subject to the
limitations set forth in Section 12.4.

 

12.6                           Claims.  As soon as is reasonably practicable after
becoming aware of a claim for indemnification under this Agreement not
involving a claim (or the commencement of any suit, action or proceeding) of
the type described in Section 12.7 or 13.6, the Indemnitee shall give notice to the Indemnitor of such
claim; provided, that the failure of the
Indemnitee to give notice shall not relieve the Indemnitor of its obligations
under this Article 12 except to the extent (if any) that the
Indemnitor shall have been prejudiced thereby. 
Subject to Section 12.4, if the Indemnitor does not object
in writing to such indemnification claim within thirty (30) calendar days of
receiving notice thereof, the Indemnitee shall be entitled to recover promptly
from the Indemnitor and the Indemnitor shall promptly pay to the Indemnitee the
amount of such claim (but such recovery shall not limit the amount of any
additional indemnification to which the

 

90

 

Indemnitee
may be entitled pursuant to Section 12.2 or 12.3), and no later objection by the Indemnitor shall be
permitted.  If within such thirty (30)
day period the Indemnitor agrees that it has an indemnification obligation but
objects that it is obligated to pay only a lesser amount, the Indemnitee shall
nevertheless be entitled to recover from the Indemnitor and the Indemnitor
shall promptly pay to the Indemnitee the lesser amount, without prejudice to
the Indemnitee’s claim for the difference.

 

12.7                           Notice
of Third Party Claims; Assumption of Defense.  The Indemnitee shall give notice as promptly
as is reasonably practicable to the Indemnitor of the assertion of any claim
(or the commencement of any suit, action or proceeding, by any Person not a
party hereto) (other than by a Governmental Authority with respect to Taxes,
which shall be governed by Section 13.6) in respect of which
indemnity may be sought under this Agreement; provided,
that the failure of the Indemnitee to give notice shall not relieve the
Indemnitor of its obligations under this Article 12 except to the
extent (if any) that the Indemnitor shall have been prejudiced thereby.  The Indemnitor may, at its own expense, (a)
participate in the defense of any such claim, suit, action or proceeding and
(b) upon notice to the Indemnitee and the Indemnitor’s delivering to the
Indemnitee a written agreement that the Indemnitee is entitled to
indemnification pursuant to Section 12.2 or 12.3 for all Losses arising out of such claim, suit, action or
proceeding and that the Indemnitor shall be liable for the entire amount of any
Loss resulting therefrom, at any time during the course of any such claim,
suit, action or proceeding, assume the defense thereof; provided, that (i) the Indemnitor shall provide written evidence
reasonably satisfactory to the Indemnitee demonstrating that the Indemnitor has
a sufficient amount of assets for purposes of such assumption of defense and
payment of Losses arising out of such claim, suit, action or proceeding, (ii)
the Indemnitor’s counsel is reasonably satisfactory to the Indemnitee and (iii)
the Indemnitor shall thereafter consult with the Indemnitee upon the Indemnitee’s
reasonable request for such consultation from time to time with respect to such
claim, suit, action or proceeding.  If
the Indemnitor assumes such defense, the Indemnitee shall have the right (but
not the duty) to participate in the defense thereof and to employ counsel, at
its own expense, separate from the counsel employed by the Indemnitor.  If, however, the Indemnitee reasonably
determines in its judgment that representation by the Indemnitor’s counsel of
both the Indemnitor and the Indemnitee would present such counsel with a
conflict of interest, then such Indemnitee may employ separate counsel to
represent or defend it in any such claim, action, suit or proceeding and the
Indemnitor shall pay the fees and disbursements of such separate counsel.  Whether or not the Indemnitor chooses to defend
or prosecute any such claim, suit, action or proceeding, all of the parties
hereto shall cooperate in the defense or prosecution thereof, subject to the
provisions of the following sentence.  In
the event and for so long as any party hereto is actively contesting or
defending against any third-party action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand in connection with (a) any
transaction contemplated under this Agreement or (b) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction prior to the Closing Date
involving the Sweet Paper Entities, each of the other parties hereto shall
cooperate with such party or its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to their books
and records as shall be reasonably necessary in connection with the contest or
defense, all at the sole cost and expense of the contesting or defending party;
provided, however, that (i) no such other party shall be required
to take any action that would unduly disrupt the operations of such other party
and (ii) notwithstanding the foregoing, the contesting or defending party shall
be permitted to recover

 

91

 

from
the other parties any costs and expenses that it incurs in connection with the
contest or defense to the extent such costs and expenses constitute Losses that
are indemnifiable in accordance with the provisions of this Article 12.

 

12.8                           Settlement
or Compromise.  Any settlement or
compromise made or caused to be made by the Indemnitee or the Indemnitor, as
the case may be, of any such claim, suit, action or proceeding of the kind
referred to in Section 12.7 shall also be binding upon the Indemnitor
or the Indemnitee, as the case may be, in the same manner as if a final
judgment or decree had been entered by a court of competent jurisdiction in the
amount of such settlement or compromise; provided, that (a) no
obligation, restriction or Loss shall be imposed on the Indemnitee as a result
of such settlement without its prior written consent, and (b) the Indemnitee
shall not compromise or settle any claim, suit, action or proceeding without
the prior written consent of the Indemnitor, which consent shall not be
unreasonably withheld.

 

12.9                           Failure
of Indemnitor to Act.  In the event
that the Indemnitor does not elect to assume the defense of any claim, suit,
action or proceeding, then any failure of the Indemnitee to defend or to
participate in the defense of any such claim, suit, action or proceeding or to
cause the same to be done, shall not relieve the Indemnitor of its obligations
hereunder.

 

12.10                     Irrevocable
Standby Letters of Credit.  To secure
Sellers’ obligations under this Agreement, including any obligation to make any
indemnification payment to any Purchaser Indemnified Party under this
Agreement, Sellers shall obtain from Wachovia Bank, N.A., for Purchaser’s
benefit and at Sellers’ expense and for the account of Scheck Investments, each
of  the $5 Million Letter of Credit and
the $15 Million Letter of Credit.

 

(a)                                  $5
Million Letter of Credit.

 

(i)                                     If
any Purchaser Indemnified Party submits in good faith a notice to the Seller
Representative claiming that such Purchaser Indemnified Party is entitled to
receive any amount from any Seller under this Agreement, including any
indemnification payment under this Agreement, without limiting such Purchaser
Indemnified Party’s rights to seek recovery through the $15 Million Letter of
Credit or against any Seller directly, if Sellers fail to pay to the Purchaser
Indemnified Party the amount of such Purchaser Indemnified Party’s claim within
ten (10) days after the Seller Representative receives the Purchaser
Indemnified Party’s claim (or, if sooner, on or after the third Business Day
prior to the second anniversary of the Closing Date), Purchaser shall be
entitled to draw upon the $5 Million Letter of Credit in the amount of such
claim (or such lesser amount as is then remaining under the $5 Million Letter
of Credit).

 

(ii)                                  If,
in connection with the resolution of any claim (pursuant to the terms of this
Agreement or as otherwise agreed by the parties hereto) with respect to which
Purchaser drew any amount upon the $5 Million Letter of Credit, it is determined
that the Purchaser Indemnified Party is not entitled to any portion of such
amount (the “Undeserved Portion”), Purchaser shall pay to the Seller
Representative, promptly upon the resolution of such claim, an amount
equivalent to the Undeserved Portion.

 

92

 

(iii)                               The
$5 Million Letter of Credit shall be maintained by Sellers for a period of two
(2) years from the Closing Date.  If (A)
Wachovia Bank, N.A. notifies Scheck Investments or Purchaser that the $5
Million Letter of Credit will expire on a date (the “$5 Million LC
Expiration Date”) that is prior to the end of such two (2) year period and
(B) Sellers have not either (1) obtained and delivered to Purchaser a
replacement letter of credit with terms no less favorable to Purchaser than the
$5 Million Letter of Credit from another issuing bank reasonably acceptable to
Purchaser on or before the fifth Business Day prior to the $5 Million LC
Expiration Date or (2) arranged for the amount remaining under the $5 Million
Letter of Credit to be placed in an escrow account at a financial institution
reasonably acceptable to Purchaser pursuant to escrow arrangements reasonably
acceptable to Purchaser, then Purchaser, as beneficiary of the $5 Million
Letter of Credit, may at any time thereafter through the $5 Million LC
Expiration Date unilaterally draw the entirety of the remaining amount of the
$5 Million Letter of Credit.

 

(b)                                 $15
Million Letter of Credit.

 

(i)                                     Without
limiting any Purchaser Indemnified Party’s rights to seek recovery through the
$5 Million Letter of Credit or against any Seller directly, Purchaser shall be
entitled to draw upon the $15 Million Letter of Credit to collect such amounts
owed to such Purchaser Indemnified Party under this Agreement, including any
indemnification payment under this Agreement (or such lesser amount as is then
remaining under the $15 Million Letter of Credit), if Sellers fail to pay to
the Purchaser Indemnified Party the amount of such Purchaser Indemnified Party’s
claim within ten (10) days after any of the following conditions is satisfied:
(A) the claim of the Purchaser Indemnified Party is resolved by Purchaser and
the Seller Representative pursuant to a written agreement executed and
delivered by Purchaser and the Seller Representative, (B) the claim of the
Purchaser Indemnified Party is resolved by a judgment (whether appealable or
non-appealable) of any state or federal court located within the County of New
York, in the State of New York or (C) the claim of the Purchaser Indemnified
Party with respect to an Unresolved Adjustment is resolved by a written
decision of the Accounting Firm pursuant to Section 4.5(e); provided,
however, that the condition set forth in clause (C) shall be
deemed to be satisfied only if Sellers are obligated to pay any amount to
Purchaser pursuant to Section 4.5(h)(ii)(B).  If Sellers fail to pay to the Purchaser
Indemnified Party the amount of the Purchaser Indemnified Party’s claim within
ten (10) days after any of the conditions set forth in clauses (A), (B)
or (C) are satisfied, then promptly after such ten (10) day period,
Scheck Investments shall execute the certificate, in the form of Attachment B
to the $15 Million Letter of Credit, for the drawing of amounts under the $15
Million Letter of Credit.

 

(ii)                                  On
the date that is one (1) year after the Closing Date, the stated amount of the
$15 Million Letter of Credit shall be reduced by an amount equivalent to (A)
$5,000,000 minus (B) any amounts theretofore drawn upon the $5 Million
Letter of Credit by Purchaser minus (C) any amounts theretofore

 

93

 

drawn upon the $15
Million Letter of Credit by Purchaser minus (D) any amounts necessary to
satisfy any unresolved claims theretofore asserted by any Purchaser Indemnified
Party pursuant to Article 12, including for any breach of Section 4.5(h)(ii)
(it being understood that there shall be no reduction of the stated amount of
the $15 Million Letter of Credit if the amount set forth in the preceding
sentence is zero or a negative number).

 

(iii)                               Subject
to the provisions of Section 12.10(b)(ii), the $15 Million Letter
of Credit shall be maintained by Sellers for a period of two (2) years from the
Closing Date; provided, however, if during such two (2) year
period any Purchaser Indemnified Party asserts a claim pursuant to Article 12,
including for any breach of Section 4.5(h)(ii), that is not
resolved at the time the $15 Million Letter of Credit would otherwise expire
(such claims are collectively referred to hereinafter as the “Unresolved
Claims”), then the term of the $15 Million Letter of Credit shall be
extended for additional one (1) year periods with respect to an amount that is
necessary to satisfy the Unresolved Claims (the “Unresolved Claims Amount”)
until such Unresolved Claims are resolved pursuant to one of clauses (A),
(B) or (C) of Section 12.10(b)(i).  In order for the term of the $15 Million
Letter of Credit to be extended with respect to the Unresolved Claims Amount
beyond the initial two (2) year period or beyond any additional one (1) year
period thereafter, Purchaser shall submit to Wachovia Bank, N.A. a certificate
requesting that the term of the $15 Million Letter of Credit be extended with
respect to the Unresolved Claims Amount (in accordance with the terms of the
$15 Million Letter of Credit).  If, after
Purchaser submits to Wachovia Bank, N.A. such a certificate, (A) Wachovia Bank,
N.A. does not provide any response to Purchaser within ten (10) days of
receiving Purchaser’s certificate or Wachovia Bank, N.A. notifies Purchaser
within ten (10) days of receiving Purchaser’s certificate that Wachovia Bank,
N.A. will not extend the $15 Million Letter of Credit with respect to the
Unresolved Claims Amount such that the $15 Million Letter of Credit would
expire on a date (the “$15 Million LC Expiration Date”) that is prior to
the date on which the $15 Million Letter of Credit would otherwise expire
pursuant to this Section 12.10(b)(iii) and (B) Sellers have not
either (1) obtained and delivered to Purchaser a replacement letter of credit
with respect to the Unresolved Claims Amount with terms no less favorable to
Purchaser than the $15 Million Letter of Credit from another issuing bank
reasonably acceptable to Purchaser on or before the fifth Business Day prior to
$15 Million LC Expiration Date or (2) arranged for a portion of the remaining
amount of the $15 Million Letter of Credit equivalent to the Unresolved Claims
Amount to be placed in an escrow account at a financial institution reasonably
acceptable to Purchaser pursuant to escrow arrangements reasonably acceptable
to Purchaser on or before the fifth Business Day prior to $15 Million LC
Expiration Date, then Purchaser, as beneficiary of the $15 Million Letter of
Credit, may at any time thereafter through such expiration date unilaterally
draw that portion of the remaining amount of the $15 Million Letter of Credit
equivalent to the Unresolved Claims Amount.

 

94

 

(iv)                              The
parties hereto agree that if Wachovia Bank, N.A. requires that any provisions
of the $15 Million Letter of Credit (as attached hereto at Exhibit 1.1(f))
be revised in order for Wachovia Bank, N.A. to issue such letter of credit,
then the parties hereto shall cooperate in good faith to agree with Wachovia
Bank, N.A. upon such revisions that (A) are not materially different from the
provisions of Exhibit 1.1(f) and (B) do not adversely affect Purchaser.

 

12.11                     Purchase
Price Adjustments.  Any amounts
payable under Section 12.2 or Section 12.3 shall be
treated by Purchaser and Sellers as an adjustment to the Adjusted Purchase
Price.

 

12.12                     Consequential
Damages.  In no event shall any party
hereto be liable hereunder for any special, incidental, punitive, exemplary or consequential
damages, other than any such damages payable by Purchaser or any Seller to an
unaffiliated third party.

 

12.13                     Exclusive
Remedy.  Except as provided by Section 11.2
or Article 13, the indemnification rights provided in this Article 12
shall be the sole and exclusive remedy of the parties hereto arising out of or
relating to this Agreement and the transactions contemplated hereby; provided,
however, that the foregoing shall not (a) prohibit any party hereto from
seeking specific performance or other equitable relief with respect to its
rights under this Agreement (including those rights of Purchaser pursuant to Sections
7.9, 7.11, 14.3 and 15.13) or (b) apply with respect
to the Boston Real Property Lease, the Current Scheck Real Property Lease, the
Scheck Lease Amendment, the Side Letter or the Sweet Distribution
Sublease.  Notwithstanding the foregoing
and anything else set forth in this Agreement to the contrary, this Agreement
shall in no way preclude any party hereto from bringing, and exercising all
other rights associated with, a claim of fraud or misrepresentation  that is knowing and intentional against any
other party hereto or any other Person.

 

ARTICLE 13.

 

TAX
MATTERS

 

13.1                           Filing
of Tax Returns.

 

(a)                                  Purchaser
shall prepare or cause to be prepared and file or cause to be filed all Tax
Returns for the Corporation and the Corporation Subsidiaries for all (i)
taxable years beginning prior to the Closing Date and ending after the Closing
Date and (ii) taxable years beginning after the Closing Date.  Purchaser shall provide to the Seller
Representative for review and comment each Tax Return described in clause
(i) of this Section 13.1(a) (a “Straddle Return”) at
least fifteen (15) days prior to the due date for filing such return (or, if
required to be filed within fifteen (15) days of the Closing Date, as soon as
reasonably practicable following the Closing). 
Prior to the due date for filing a Straddle Return, Sellers shall pay to
Purchaser an amount of cash equal to the amount of Taxes shown as due on the
Straddle Return to the extent of Sellers’ liability for such Taxes pursuant to Section 13.4.

 

(b)                                 Sellers
shall prepare or cause to be prepared all Tax Returns for the Corporation and
the Corporation Subsidiaries for all taxable years ending on or prior to

 

95

 

the Closing Date
that are to be filed by the Corporation or a Corporation Subsidiary after the
Closing Date.  Sellers shall provide to
Purchaser for review and comment each Tax Return described in this Section 13.1(b)
(a “Section 13.1(b) Return”) at least fifteen (15) days prior to
the due date for filing such return (or, if required to be filed within fifteen
(15) days of the Closing Date, as soon as reasonably practicable following the Closing).  Prior to the due date for filing a Section 13.1(b)
Return, Sellers shall pay to Purchaser an amount of cash equal to the amount of
Taxes shown as due on the Section 13.1(b) Return to the extent of Sellers’
liability for such Taxes pursuant to Section 13.4.

 

13.2                           Proration
of Taxes.  For purposes of allocating
liability for Taxes under Section 13.4, in the case of any taxable
period that includes (but does not end on) the Closing Date (a “Straddle
Period”), (a) real, personal and intangible property Taxes (“Property
Taxes”) of the Corporation and the Corporation Subsidiaries allocable to
the Pre-Closing Tax Period shall be equal to the amount of such Property Taxes
for the entire Straddle Period multiplied by a fraction, the numerator of which
is the number of days during the Straddle Period that are in the Pre-Closing
Tax Period and the denominator of which is the number of days in the Straddle
Period; and  (b) Taxes (other than
Property Taxes) of the Corporation and the Corporation Subsidiaries allocable
to the Pre-Closing Tax Period shall be computed as if such taxable period ended
as of the close of business on the Closing Date, provided that exemptions,
allowances or deductions that are calculated on an annual basis (including
depreciation and amortization deductions) shall be allocated between the period
ending on the Closing Date and the period after the Closing Date in proportion
to the number of days in each period.

 

13.3                           Transfer
Taxes.  Sellers shall be responsible
for all sales, use and transfer Taxes, including any value added, stock
transfer, gross receipts, stamp duty and real, personal, or intangible property
transfer Taxes, arising from the transactions contemplated hereby or in the
Related Agreements, including any interest or penalties in respect thereof.

 

13.4                           Tax
Indemnification.  Except to the
extent any such Taxes were taken into account in computing the adjustments
pursuant to Article 4, from and after the Closing Date, Sellers,
jointly and severally, shall protect, defend, indemnify and hold harmless
Purchaser, the Corporation and the Corporation Subsidiaries from and against
(a) any and all Taxes of the Corporation or the Corporation Subsidiaries
attributable to any Pre-Closing Tax Period (other than Taxes relating to the
Withdrawn Corporation Assets); (b) all Taxes of any Person for which the
Corporation or a Corporation Subsidiary may be liable under Treasury Regulation
§1.1502-6 (or any similar provision of state, local or foreign law), as a
transferee or successor, by Contract, or otherwise;  (c) all Transfer Taxes allocated to Sellers
under Section 13.3; (d) all Taxes relating to or arising from the
Withdrawn Corporation Assets; and (e) any and all amounts payable (including
interest, penalties and/or additional payments relating to any failure to
comply) under any unclaimed property or escheat Laws for the Corporation or the
Corporation Subsidiaries  relating to any
property that was held at any point by, or otherwise attributable to, the
Corporation or a Corporation Subsidiary in a Pre-Closing Tax Period.  If
Purchaser or any of its Affiliates (including the Corporation or any
Corporation Subsidiary) receives after the Closing Date any net overpayments or
net refunds of Taxes of the Corporation or any Corporation Subsidiary with
respect to a Pre-Closing Tax Period, Purchaser shall pay or cause to be paid to
Sellers the amount of such net overpayments or net refunds so received by
Purchaser or its

 

96

 

Affiliates, except to the extent any such net
overpayments or net refunds were taken into account in computing the
adjustments pursuant to Article 4.

 

13.5                           Cooperation/Retention
of Records.  After the Closing, upon
reasonable written notice, Purchaser and Sellers shall furnish or cause to be
furnished to each other, as promptly as practicable, such information and
assistance (to the extent within the control of such party) relating to the
Corporation and the Corporation Subsidiaries (including access to books and
records) as is reasonably requested for the filing of all Tax Returns, and
making of an election related to Taxes, the preparation for any audit by any
Governmental Authority, and the prosecution or defense of any claim, suit or
proceeding related to any Tax Return. 
For a period of seven (7) years after the Closing Date, (a) Purchaser
shall retain (i) all Tax records relating to the Corporation or any Corporation
Subsidiary that are in the possession of the Corporation or any Corporation
Subsidiary as of the Closing and (ii) all Tax records relating to any Asset
Seller that are included in the Transferred Group Information and Records and
are in the possession of Purchaser immediately after the Closing, and (b)
Purchaser shall promptly make available to Sellers the aforementioned materials
upon the reasonable request of Sellers.

 

13.6                           Procedures
Relating to Tax Claims.

 

(a)                                  After
the Closing, each of Purchaser, on the one hand, and the Seller  Representative, on the other hand (the “Recipient”),
shall promptly notify the other party in writing upon receipt by the Recipient
or any of its Affiliates  (including in
the case of the Seller Representative, Sellers) of any written notice of any
pending or threatened audit or assessment, suit, proposed adjustment,
deficiency, dispute, administrative 
judicial proceeding or other similar Claim (“Tax Claim”) received
by the Recipient from any Governmental Authority or any other party with
respect to Losses for which any of 
Sellers may be liable under this Agreement; provided, however,
that a failure by the Recipient to give such notice shall not affect the rights
of the Recipient or any of its Affiliates to indemnification under Article 12
or Article 13 unless Purchaser or Sellers (as applicable) is or are
materially adversely prejudiced as a consequence of such failure.

 

(b)                                 The
Seller Representative shall be responsible for the conduct and control of any
federal income and California sales Tax Claim relating to a taxable year of the
Corporation or any Corporation Subsidiary ending on or before the Closing
Date.  The Seller Representative may
elect to control any other Tax Claim involving any asserted liability with
respect to any Pre-Closing Tax Period of the Corporation or any Corporation
Subsidiary (“Other Tax Claim”). 
If the Seller Representative desires to elect to control any Other Tax
Claim, the Seller Representative shall within ten (10) calendar days of receipt
of notice of such Other Tax Claim notify Purchaser in writing of its intent to
do so.

 

(c)                                  To
the extent the Seller Representative controls a Tax Claim (including an Other
Tax Claim), the Seller Representative may control the conduct of the Tax Claim
through counsel of the Sellers’ own choosing and at Sellers’ sole expense and
shall have all rights to settle, compromise 
and/or concede such asserted liability and Purchaser shall reasonably
cooperate and shall cause the Corporation and the Corporation Subsidiaries to
reasonably cooperate; provided, however, that the Seller
Representative shall not settle,

 

97

 

compromise and/or
concede such asserted liability without the written consent of Purchaser (whose
consent shall not be unreasonably withheld) if such settlement, compromise or
concession could increase the Tax liability of any of Purchaser (or any of its
Affiliates), the Corporation or any Corporation Subsidiary for any other
taxable period; provided, further, the Seller Representative
shall permit Purchaser, if Purchaser so elects, to participate in the conduct
of any such Tax Claim and shall otherwise keep Purchaser reasonably informed of
any material developments and events relating to such Tax Claim.  If the Seller Representative does not elect
to control an Other Tax Claim pursuant to this Section 13.6(b) or,
after assuming control of any Tax Claim, the Seller Representative fails to
reasonably defend against such Tax Claim, Purchaser, or its Affiliates may,
without affecting Purchaser’s or any other Indemnitee’s rights to
indemnification under Article 12 and Article 13, assume
sole control of the defense of  such Tax
Claim (at Sellers’ expense).

 

(d)                                 With
respect to any Tax Claim that involves any Straddle Period,  Purchaser shall notify the Seller
Representative of such Tax Claim and Purchaser shall control the conduct of any
such Tax Claim, through counsel of Purchaser’s own choosing with participation
by the Seller Representative (at Sellers’ expense) and Purchaser shall have all
rights to settle, compromise and/or concede such Tax Claim with the consent of
Sellers (which shall not be unreasonably withheld or delayed).

 

ARTICLE 14.

 

NON-COMPETITION

 

14.1                           Non-Competition
Agreement.

 

(a)                                  Each
Seller agrees that from and after the Closing Date until the later of (i)  five (5) years after
the Closing Date or (ii) if applicable, the date that is five (5) years after the termination of such Seller’s service as an
officer or employee of or consultant to Purchaser, the Corporation any
Corporation Subsidiary or any other Affiliate of Purchaser from and after the
Closing (the “Non-Competition Period”), neither it nor any of its
Affiliates shall, directly or indirectly:

 

(i)                                     engage
in, or own any interest in, control, advise, manage, operate, serve as a
director, officer or employee of, act as a lender or consultant to, render
services for, receive any economic benefit from or exert any influence upon any
Person that engages wholly or partly in, the Restricted Business;

 

(ii)                                  in
connection with the Restricted Business, solicit, divert or attempt to solicit
or divert any Person who is, was or was solicited to become, a customer
(including Redistributors of America) or supplier of any Sweet Paper Entity in
connection with the Business at any time prior to the Closing Date;

 

(iii)                               impair,
or attempt to impair, any business relationship or potential business
relationship between any third party and Purchaser or any of its

 

98

 

Affiliates
(including the Corporation or any Corporation Subsidiary) in connection with
the Restricted Business;

 

(iv)                              make
any statement to the press or media that is likely to result in adverse
publicity for Purchaser or any of its Affiliates (including the Corporation or
any Corporation Subsidiary) in connection with the Restricted Business;

 

(v)                                 make
any untrue statement to any third party regarding Purchaser or any of its
Affiliates (including the Corporation or any Corporation Subsidiary) in
connection with the Restricted Business; or

 

(vi)                              employ,
solicit for employment or encourage to leave his or her employment, on its
behalf or on behalf of any other Person, any individual who was during the two
(2) year period prior to such employment, solicitation or encouragement or is
an officer or employee of Purchaser or any of its Affiliates (including the
Corporation or any Corporation Subsidiary) involved in the Restricted Business
as conducted by Purchaser and its Affiliates after the Closing Date.

 

(b)                                 Notwithstanding
anything contained herein or otherwise to the contrary:

 

(i)                                     each
Seller shall be permitted to, either directly or indirectly, own up to an
aggregate of one percent (1%) of the outstanding shares of any class of capital
stock of any Person listed on a national securities exchange or quoted on the
National Association of Securities Dealers Automated Quotation System or
over-the-counter;

 

(ii)                                  each
of Michael Scheck, Raquel Scheck, Jeffrey Scheck, Steven Scheck, Elise Scheck
and Martin Sheck shall be permitted to serve as an officer or employee of, act
as a consultant to, and render services for Purchaser or any of its Affiliates
in connection with the Restricted Business;

 

(iii)                               each
Seller shall be permitted to, either directly or indirectly, own an interest in
Sweet Distribution so long as Sweet Distribution continues to engage solely in
the Sweet Distribution Business and does not expand into other aspects of the
Restricted Business;

 

(iv)                              each
Shareholder shall be permitted to serve as a manager or director of Sweet
Distribution so long as Sweet Distribution continues to engage  solely in the Sweet Distribution Business and
does not expand into other aspects of the Restricted Business; provided,
however, that, (A) during any time that any Shareholder is serving for
compensation as an officer or employee of, is acting as a consultant to, or is
rendering services for Purchaser or any of its Affiliates in connection with
the Restricted Business, such Shareholder shall not participate, either
directly or indirectly, in the day-to-day operations of Sweet Distribution
(which day-to-day operations shall include making decisions regarding which
stock keeping units will be sold, to which customers such stock keeping units
will be sold, and from which suppliers such stock keeping units will be
purchased),

 

99

 

and (B) in any event,
each Shareholder shall at all times adhere to the provisions of Section 7.9;

 

(v)                                 each
Affiliate of a Shareholder that is set forth on Schedule 14.1(b)(v)
shall be permitted to own the equity interest in the Person set forth on Schedule 14.1(b)(v);
and

 

(vi)                              each
Shareholder shall comply with the provisions set forth in Schedule 14.1(b)(vi).

 

14.2                           Reasonableness
of Covenants.  Purchaser
and Sellers have independently consulted with their respective counsel and
after such consultation agree that the covenants set forth in Section 14.1
and in Schedule 14.1(b)(vi) (each a “Non-Competition Covenant” and collectively the “Non-Competition Covenants”),
including the time limitation, geographic area and scope of activity of such
Non-Competition Covenants, are appropriate and reasonable when considered in
light of the nature and extent of the transactions contemplated by this
Agreement and the Related Agreements. 
Each Seller further agrees and acknowledges that (a) the Non-Competition
Covenants are of the essence of this Agreement, (b) Purchaser is relying upon
each Seller’s agreements in this Article 14 and, but for the
agreement of each Seller to comply with the Non-Competition Covenants,
Purchaser would not have entered into this Agreement or any of the Related
Agreements, and (c) each Non-Competition Covenant is reasonable and necessary
to protect and preserve the interests and properties of Purchaser.

 

14.3                           Specific
Performance.  Each Seller recognizes
and affirms that in the event of breach by it of any of the provisions of this Article 14,
money damages would be inadequate and Purchaser would have no adequate remedy
at law.  Accordingly, each Seller agrees
that Purchaser shall have the right, in addition to any other rights and
remedies existing in its favor, to enforce its rights and each Seller’s
obligations under this Article 14 not only by an action or actions
for damages, but also by an action or actions for specific performance,
injunction and/or other equitable relief in order to enforce or prevent any
violations (whether anticipatory, continuing or future) of the provisions of
this Article 14.  In the
event of a breach or violation by any Seller of any of the provisions of this Article 14,
the Non-Competition Period shall be extended as to such individual by a period
equal to (a) the length of the breach or violation of this Article 14
plus (b) the length of any court proceedings necessary to stop such breach or
violation.  If a bond is required to be
posted in order for Purchaser to secure an injunction, the parties agree that
such bond need not exceed the sum of $1,000.

 

14.4                           Severability.  If at any time any of the provisions of this Article 14
shall be determined to be invalid or unenforceable by reason of being vague or
unreasonable as to duration, area or scope of activity, or otherwise, then this
Article 14 shall be considered divisible (with the other provisions
to remain in full force and effect) and the invalid or unenforceable provisions
shall become and be deemed to be immediately amended to include only such
maximum time limitation, geographic area, scope of activity and other
restrictions, as shall be determined to be reasonable and enforceable by the
court or other body having jurisdiction over the matter, and each Seller
expressly agrees that this Agreement, as so amended, shall be valid and binding
as though any invalid or unenforceable provision had not been included herein.

 

100

 

14.5                           No
Limitation of Other Provisions.  The
provisions of this Article 14 shall be in addition to, and not in
limitation of, any other provisions contained in any other agreement
restricting competition by any Seller.

 

ARTICLE 15.

 

MISCELLANEOUS

 

15.1                           Expenses.  Except as provided in Sections 7.4(a)
and 13.3, each party hereto shall bear its own fees and expenses with
respect to the transactions contemplated hereby.

 

15.2                           Amendment.  This Agreement may be amended, modified or
supplemented but only in writing signed by Purchaser and each Seller.

 

15.3                           Notices.  Any notice, request, instruction or other
document to be given hereunder by a party hereto shall be in writing and shall
be deemed to have been given, (a) when received if given in person or by
courier or a courier service, (b) one (1) Business Day after being retrieved
from the party providing notice by an overnight delivery service (including
United Parcel Service or Federal Express) or (c) three (3) Business Days after
being deposited in the U.S. mail, certified or registered mail, postage
prepaid:

 

(i)                                     If
to any Seller, addressed as set forth on Schedule 15.3, with a copy
to:

 

Akerman,
Senterfitt & Eidson, P.A.

One Southeast
Third Avenue

28th
Floor

Miami,
Florida  33131-1714

Attention:
Carl D. Roston, Esq.

Scott A.
Wasserman, Esq.

H. Allan
Shore, Esq.

Michael I.
Goldberg, Esq.

 

(ii)                                  If
to Purchaser, addressed as follows:

 

Lagasse, Inc.

c/o United
Stationers Inc.

2200 E. Golf
Road

Des Plaines,
IL 60016-1267

Attention:  Chief Financial Officer

 

with copies
to:

 

United
Stationers Inc.

2200 E. Golf
Road

Des Plaines,
IL 60016-1267

Attention:  General Counsel

 

101

 

Mayer, Brown,
Rowe & Maw LLP

190 South
LaSalle Street

Chicago,
Illinois  60603-3441

Attention:  Frederick B. Thomas, Esq.

  Angela R. Lang, Esq.

(before June 1,
2005)

 

Mayer, Brown,
Rowe & Maw LLP

71 South
Wacker Drive

Chicago,
Illinois  60603-3441

Attention:  Frederick B. Thomas, Esq.

  Angela R. Lang, Esq.

(after June 1,
2005)

 

or to such
other individual or address as a party hereto may designate for itself by
notice given as herein provided.

 

15.4                           Effect
of Investigation.  Any due diligence
review, audit or other investigation or inquiry undertaken or performed by or
on behalf of Purchaser shall not limit, qualify, modify or amend the
representations, warranties, covenants or obligations of (including indemnities
by) any Seller made or undertaken pursuant to this Agreement or any of their
Related Agreements, irrespective of the knowledge and information received (or
that should have been received) therefrom by Purchaser.

 

15.5                           Payments
in Dollars.  Except as otherwise
provided herein or in a Related Agreement, all payments pursuant hereto shall
be made by wire transfer in U.S. Dollars in same day or immediately available
funds.

 

15.6                           Waivers.  The failure of a party hereto at any time or
times to require performance of any provision hereof shall in no manner affect
its right at a later time to enforce the same. 
No waiver by a party of any condition or of any breach of any term,
covenant, representation or warranty contained in this Agreement shall be
effective unless in writing, and no waiver in any one or more instances shall
be deemed to be a further or continuing waiver of any such condition or breach
in other instances or a waiver of any other condition or breach of any other
term, covenant, representation or warranty.

 

15.7                           Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

15.8                           Assignment.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
assigns, heirs and legal representatives; provided,
that no assignment of any rights or obligations hereunder shall be made by any
Seller to any Person without the written consent of Purchaser and no assignment
of any rights or obligations hereunder shall be made by Purchaser to any Person
without the written consent of the Seller Representative.  Notwithstanding the foregoing, Purchaser
shall, without the obligation to obtain the written consent of any other party
hereto (including the Seller Representative), be entitled to assign this
Agreement or all or any part of its rights or obligations hereunder to any
direct or

 

102

 

indirect
wholly owned subsidiary of Parent; provided, that such assignment shall
not relieve Purchaser of any of its obligations hereunder.  If any party hereto assigns any of its rights
or obligations under this Agreement pursuant to this Section 15.8,
the parties hereto shall, as appropriate, modify the exhibits and other
documents to be delivered at or prior to the Closing to either add the assignee
as a party to such document or substitute the assignee for the assignor as the
party to such document.

 

15.9                           No
Third Party Beneficiaries.  Except
where expressly provided otherwise in this Agreement, this Agreement is solely
for the benefit of the parties hereto and, to the extent provided herein, their
respective Affiliates, directors, officers, employees, agents and
representatives, and no provision of this Agreement shall be deemed to confer
upon other third parties any remedy, claim, liability, reimbursement, cause of
action or other right.

 

15.10                     Publicity.  Prior to the Closing Date, no public
announcement or other publicity regarding the existence of this Agreement or
its contents or the transactions contemplated hereby shall be made by
Purchaser, any Seller or any of its respective Affiliates, officers, directors,
employees, representatives or agents, without the prior written agreement of
Purchaser and the Seller Representative, in any case, as to form, content,
timing and manner of distribution or publication; provided, that nothing in this Section 15.10 shall
prevent (a) Parent from filing a Form 8-K with the U.S. Securities and Exchange
Commission or publicly issuing a press release, in each case, with respect to
this Agreement or its contents or the transactions contemplated hereby (the
contents of which Form 8-K and press release shall be determined by Parent and
its Affiliates in their sole discretion) or (b) any party from (i) making any
public announcement required by Law or the rules of any stock exchange, (ii)
discussing this Agreement or its contents or the transactions contemplated
hereby with those Persons whose approval, agreement or opinion, as the case may
be, is required for consummation of such particular transaction or transactions
or (iii) enforcing its rights hereunder.

 

15.11                     Further
Assurances.  Upon the reasonable
request of Purchaser, each Seller shall on and after the Closing Date execute
and deliver to Purchaser such other documents, releases, assignments and other
instruments as may be required to effectuate completely the transfer and assignment
to Purchaser of, and to vest fully in Purchaser title to, the Shares or the
Assets, and to otherwise carry out the purposes of this Agreement.

 

15.12                     Severability.  If any provision of this Agreement shall be
held invalid, illegal or unenforceable, the validity, legality or
enforceability of the other provisions hereof shall not be affected thereby,
and there shall be deemed substituted for the provision at issue a valid, legal
and enforceable provision as similar as possible to the provision at issue.

 

15.13                     Specific
Performance.  Each party recognizes
and affirms that in the event of breach by him or it of any of the provisions
of Section 7.9 or Section 7.11 money damages would be
inadequate and the other parties would have no adequate remedy at law.  Accordingly, each party agrees that the other
parties shall have the right, in addition to any other rights and remedies
existing in their favor, to enforce their respective rights and the breaching
party’s obligations under Section 7.9 and Section 7.11
not only by an action or actions for damages, but also by an action or actions
for specific performance, injunction and/or other equitable relief in order to
enforce or prevent any violations (whether anticipatory, continuing or future)
of the

 

103

 

provisions
of Section 7.9 or Section 7.11.  If a bond is required to be posted in order
for any party to secure an injunction, the parties agree that such bond need
not exceed the sum of $1,000.

 

15.14                     Remedies
Cumulative.  The remedies provided in
this Agreement shall be cumulative and shall not preclude the assertion or
exercise of any other rights or remedies available by Law, in equity or
otherwise.

 

15.15                     Entire
Understanding.  This Agreement and
the Related Agreements set forth the entire agreement and understanding of the
parties hereto with respect to the transactions contemplated hereby and
supersede any and all prior agreements, arrangements and understandings among
the parties relating to the subject matter hereof, including, (a) the letter
agreement, dated January 7, 2005, between Lagasse, Inc., Group and the
Shareholders and (b) the Non-Disclosure and Confidentiality Agreement, dated as
of January 19, 2004, between Purchaser and the Corporation, but excluding
the 3-Party Mutual Nondisclosure Agreement, dated as of October 7, 2004,
among Purchaser, the Corporation and Bearing Point Inc. (the “3-Party Mutual
Nondisclosure Agreement”), which agreement remains in full force and
effect.  Notwithstanding the foregoing,
the parties hereto agree and acknowledge that, pursuant to the provisions of
the 3-Party Mutual Nondisclosure Agreement, from and after the Closing,
Purchaser shall be released from its obligations under the 3-Party Mutual
Nondisclosure Agreement.

 

15.16                     Acknowledgment
of each Seller.  Each Seller
represents to Purchaser that it is knowledgeable and sophisticated as to
business matters, including the subject matter of this Agreement, that such
Seller has read this Agreement and that it understands its terms.  Each Seller acknowledges that, prior to
assenting to the terms of this Agreement, it has been given a reasonable time
to review it, to consult with counsel of his or its choice and to negotiate at
arm’s-length with Purchaser as to its contents. 
Each Seller and Purchaser agree that the language used in this Agreement
is the language chosen by the parties to express their mutual intent, and that
no rule of strict construction is to be applied against any Seller or
Purchaser.

 

15.17                     Seller
Representative.

 

(a)                                  Appointment.  Each Seller hereby irrevocably authorizes and
appoints Jeffrey Scheck as its true and lawful attorney and representative (the
“Seller Representative”) with full power and authority to take any and
all actions and execute any and all documents specified in this Agreement or
any Related Agreement as being within the authority of the Seller
Representative.  Jeffrey Scheck hereby
accepts his  appointment as the Seller
Representative and agrees to perform all of the duties of the Seller
Representative hereunder.  If the Seller
Representative shall die or become incapacitated, Sellers shall promptly
appoint a successor Person to act as the Seller Representative.

 

(b)                                 Authority and Duties.  Each Seller, by its execution of this Agreement,
hereby authorizes and instructs the Seller Representative, and constitutes the
Seller Representative as agent for and on behalf of such Seller, (i) to give
and receive any and all notices required to be given under this Agreement to or
by the Seller Representative, (ii)  to
take any and all action in connection with the defense, payment or settlement
of

 

104

 

any claims to
indemnify, hold harmless or reimburse any Purchaser Indemnified Parties
pursuant to Article 12 or Article 13 (including any
claims by Purchaser to retain any or all of the Purchase Price Adjustment
Holdback Amount) (iii) to take any and all additional action as is contemplated
to be taken by the Seller Representative by the terms of this Agreement, and
(iv) to take any and all actions reasonably necessary or appropriate in the
judgment of the Seller Representative for the accomplishment of any of the
foregoing.  Any decision or action by the
Seller Representative hereunder, shall constitute a decision or action of all
Sellers and shall be final, binding and conclusive upon each Seller.  No Seller shall have the right to object to,
dissent from, protest or otherwise contest the same.

 

(c)                                  Reliance.  Each Purchaser Indemnified Party shall be
entitled to conclusively rely on (i) the Seller Representative as the sole
representative of Sellers with respect to the duties set forth in Section 15.17(b)
and (ii) any decision or act of the Seller Representative required, permitted
or contemplated to be taken by the Seller Representative hereunder.  Each Purchaser Indemnified Party is hereby
relieved from any liability to any Person for any acts done by any of them in
accordance with any instructions, decisions or acts of the Seller
Representative.  Purchaser shall be
entitled to treat as genuine, and as the document it purports to be, any
letter, paper or other document provided to it by or on behalf of the Seller
Representative, and reasonably believed by Purchaser to be genuine and to have
been signed and presented by the proper Person or Persons.

 

15.18                     Joint and
Several Liability of Sellers.  Each
Seller hereby agrees that it shall be jointly and severally liable with the
other Sellers for any and all representations, warranties, covenants and other
obligations of any Seller set forth in this Agreement.

 

15.19                     Applicable
Law.  This Agreement shall be
governed by and construed and enforced in accordance with the internal Laws of
the State of New York without giving effect to the principles of conflicts of
law thereof.

 

15.20                     Jurisdiction
of Disputes; Waiver of Jury Trial. 
In the event any party to this Agreement commences any litigation,
proceeding or other legal action in connection with or relating to this
Agreement or any matters described or contemplated herein, the parties to this
Agreement hereby (a) agree that any such litigation, proceeding or other legal
action shall be brought exclusively in a court of competent jurisdiction
located within the County of New York, in the State of New York, whether a
state or federal court; (b) agree that in connection with any such litigation,
proceeding or action, such parties will consent and submit to personal
jurisdiction in any such court described in clause (a) of this Section 15.20
and to service of process upon them in accordance with the rules and statutes
governing service of process; (c) agree to waive to the full extent permitted
by law any objection that they may now or hereafter have to the venue of any
such litigation, proceeding or action in any such court or that any such
litigation, proceeding or action was brought in an inconvenient forum; (d)
designate, appoint and direct CT Corporation System as their authorized agent
to receive on their behalf service of any and all process and documents in any
legal proceeding in the State of New

 

105

 

York;
(e) agree to notify the other parties to this Agreement immediately if such
agent shall refuse to act, or be prevented from acting, as agent and, in such event,
promptly to designate another agent in the State of New York to serve in place
of such agent and deliver to the other parties written evidence of such
substitute agent’s acceptance of such designation; (f) agree as an alternative
method of service to service of process in any litigation, proceeding or action
by mailing of copies thereof to the parties at their addresses set forth in Section 15.3;
(g) agree that any service made as provided herein shall be effective and
binding service in every respect; and (h) agree that nothing herein shall
affect the rights of any party to effect service of process in any other manner
permitted by Law.  EACH PARTY HERETO
WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY DISPUTE IN CONNECTION WITH OR
RELATING TO THIS AGREEMENT OR ANY MATTERS DESCRIBED OR CONTEMPLATED HEREIN, AND
AGREES TO TAKE ANY AND ALL ACTION NECESSARY OR APPROPRIATE TO EFFECT SUCH
WAIVER.  The provisions of this Section 15.20
shall be deemed to apply to each Related Agreement except to the extent
otherwise stated in such Related Agreement.

 

106

 

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

 

	
   

  	
  LAGASSE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Brian S. Cooper

  
	
   

  	
   

  	
  Title:

  	
  Vice President and Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Shareholders:

  
	
   

  	
   

  
	
   

  	
  SCHECK INVESTMENTS LIMITED

  PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Scheck Investments, Inc., as General Partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Michael Scheck

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
   

  	
  SCHECK ALPHA LP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Scheck Investments, Inc., as General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Michael Scheck

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Michael Scheck

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Raquel Scheck

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Jeffrey Scheck

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Martin Scheck

  
								

 

107

 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Elise Scheck

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Steven Scheck

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Asset
  Sellers:

  
	
   

  	
   

  
	
   

  	
  SWEET PAPER
  SALES GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Michael
  Scheck

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
   

  	
  SWEET PAPER
  SALES CORP. OF TEXAS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Michael
  Scheck

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
  f

  	
   

  
	
   

  	
  SWEET PAPER
  SALES CORP. OF CALIFORNIA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Michael
  Scheck

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
   

  	
  SWEET PAPER
  SALES CORP. OF

  MASSACHUSETTS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Michael
  Scheck

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
   

  	
  DAMAR
  DISTRIBUTORS WAREHOUSE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Michael
  Scheck

  
	
   

  	
   

  	
  Title:

  	
  President

  

 

108

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