Conformed Copy
DISTRIBUTION AGREEMENT
dated as of
November 20, 1996
between
ALCO STANDARD CORPORATION
and
UNISOURCE WORLDWIDE, INC.
TABLE OF CONTENTS
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Page
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ARTICLE I
DEFINITIONS.....................................................................1
Section 1.01. Definitions........................................................................................1
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ARTICLE II
THE DISTRIBUTION..................................................................5
Section 2.01. Cooperation Prior to the Distribution..............................................................5
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Section 2.02. Alco Board Action; Conditions Precedent to the Distribution........................................6
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Section 2.03. The Distribution...................................................................................7
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Section 2.04. Fractional Shares..................................................................................7
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ARTICLE III
CONVEYANCE OF CERTAIN ASSETS; ASSUMPTION OF CERTAIN
LIABILITIES; CERTAIN PAYMENTS; AND TRANSITION ARRANGEMENTS.............................................7
Section 3.01. Conveyance of Assets; Discharge of Liabilities.....................................................7
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Section 3.02. Conduct of Unisource Pending Distribution..........................................................9
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Section 3.03. Revolving Credit Agreement.........................................................................9
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Section 3.04. Unisource Payment..................................................................................9
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Section 3.05. Cash Management System.............................................................................9
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Section 3.06. Unisource Foundation...............................................................................9
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Section 3.07. Insurance.........................................................................................10
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Section 3.08. Certain Intellectual Property Matters.............................................................10
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ARTICLE IV
INDEMNIFICATION.................................................................11
Section 4.01. Unisource Indemnification of the Alco Group.......................................................11
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Section 4.02. Alco Indemnification of Unisource Group...........................................................11
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Section 4.03. Insurance and Third Party Obligations.............................................................11
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ARTICLE V
INDEMNIFICATION PROCEDURES...........................................................12
Section 5.01. Notice and Payment of Claims......................................................................12
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Section 5.02. Notice and Defense of Third-Party Claims..........................................................12
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ARTICLE VI
INFORMATION SYSTEMS; TELECOMMUNICATIONS.....................................................13
Section 6.01 Ownership of Computer Systems......................................................................13
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Section 6.02 Separation of Data.................................................................................13
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Section 6.03 Access; Systems Support............................................................................14
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Section 6.04 IBM AS400..........................................................................................14
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Section 6.05 Telecommunications.................................................................................15
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ARTICLE VII
HEADQUARTERS FACILITY...............................................16
Section 7.01. Continued Occupation of Headquarters Facility.....................................................16
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Section 7.02. Proposed Sale.....................................................................................16
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Section 7.03. Occupation by Unisource...........................................................................16
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Section 7.04. Sharing of Costs of Operation.....................................................................16
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Section 7.05. Responsibility for Oversight; Services to be Provided.............................................17
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Section 7.06. Termination of Occupancy..........................................................................17
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Section 7.07. Insurance; Release; Waiver of Subrogation.........................................................18
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Section 7.08. General Cooperation...............................................................................18
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ARTICLE VIII
EMPLOYEE MATTERS................................................18
Section 8.01. Assignment of Employees...........................................................................18
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Section 8.02. Benefits Agreement................................................................................19
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ARTICLE IX
TAX MATTERS..................................................19
ARTICLE X
ACCOUNTING MATTERS...............................................19
Section 10.01. Allocation of Prepaid Items and Reserves.........................................................19
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Section 10.02. Accounting Treatment of Assets Transferred and Liabilities Assumed...............................19
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Section 10.03. Intercompany Accounts............................................................................19
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ARTICLE XI
INFORMATION..................................................20
Section 11.01. Provision of Corporate Records...................................................................20
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Section 11.02. Access to Information............................................................................20
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Section 11.03. Litigation Cooperation...........................................................................20
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Section 11.04. Reimbursement....................................................................................20
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Section 11.05. Retention of Records.............................................................................20
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Section 11.06. Confidentiality..................................................................................20
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ARTICLE XII
INTEREST ON PAYMENTS..............................................21
ARTICLE XIII
MISCELLANEOUS.................................................21
Section 13.01. Expenses.........................................................................................21
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Section 13.02. Notices..........................................................................................21
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Section 13.03. Amendment and Waiver.............................................................................22
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Section 13.04. Entire Agreement.................................................................................22
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Section 13.05. Parties in Interest..............................................................................22
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Section 13.06. Guaranteed Unisource Liabilities.................................................................23
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Section 13.07. Further Assurances and Consents............................23
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Section 13.08. Severability...............................................23
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Section 13.09. Governing Law..............................................23
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Section 13.10. Counterparts...............................................24
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Section 13.11. Disputes...................................................24
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Exhibit A - Sites Giving Rise to Environmental Site Liabilities
Exhibit B - Certain Guaranteed Unisource Liabilities
Exhibit C - Sold Businesses
Exhibit D - Other Unisource Assets
Exhibit E - Unisource Consolidated Balance Sheet
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DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT ("Agreement") dated as of November 20, 1996 by
and between Alco Standard Corporation, an Ohio corporation (together with its
successors and permitted assigns, "Alco"), and Unisource Worldwide, Inc, a
Delaware corporation (together with its successors and permitted assigns,
"Unisource").
RECITALS
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A. Unisource is presently a wholly-owned subsidiary of Alco.
B. The Board of Directors of Alco has determined that it is in
the best interest of Alco and the stockholders of Alco to make a distribution
(the "Distribution") to the holders of Alco Common Stock (as defined herein) of
all of the outstanding shares of Unisource Common Stock (as defined herein) at
the rate of one share of Unisource Common Stock for every two shares of Alco
Common Stock outstanding as of the Record Date (as defined herein).
C. It is the intention of the parties that the Distribution will
not be taxable to the stockholders of Alco pursuant to Section 355 of the Code
(as defined herein).
D. The parties have determined that it is necessary and
desirable to set forth the principal corporate transactions required to effect
the Distribution and to set forth other agreements that will govern certain
other matters following such Distribution.
E. In connection with the Distribution, Alco and Unisource
intend to enter into the Benefits Agreement and the Tax Agreement (as such terms
are defined herein).
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements and covenants contained in this Agreement, the parties hereby
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. As used herein, the following terms have
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the following meaning:
"Action" means any claim, suit, arbitration, inquiry, proceeding or
investigation by or before any court, governmental or other regulatory or
administrative agency or commission or any other tribunal.
"Alco Business" means the business now or formerly conducted by Alco
and its present and former subsidiaries, other than the Unisource Business.
"Alco Common Stock" means the outstanding shares of common stock, no
par value, of Alco.
"Alco Group" means Alco and its subsidiaries, excluding any member of
the Unisource Group.
"Alco Headquarters Computer Assets" has the meaning specified in
Section 6.01.
"Alco Liabilities" means (i) Liabilities of Alco under this Agreement
or any Ancillary Agreement, (ii) Liabilities, other than Unisource Liabilities,
incurred in connection with the operation of the Alco Business, whether arising
before, on or after the Distribution Date and (iii) Liabilities arising in
respect of the Waste Disposal Engineering Superfund Site involving the ▇▇▇▇▇ &
▇▇▇▇▇▇▇ Division of Saxon Industries, Inc.
"Ancillary Agreements" means all of the written agreements,
instruments, understandings, assignments and other arrangements entered into in
connection with the transactions contemplated hereby, including, without
limitation, the Benefits Agreement and the Tax Agreement.
"Assets" means all properties, rights, contracts, leases and claims,
of every kind and description, wherever located, whether tangible or intangible,
and whether real, personal or mixed.
"Benefits Agreement" means the Benefits Agreement entered into on or
prior to the Distribution Date between Alco and Unisource, as amended from time
to time.
"Cash Management System" means the consolidated cash management system
maintained by Alco for itself and its subsidiaries.
"Code" means the Internal Revenue Code of' 1986, as amended.
"Commission" means the Securities and Exchange Commission.
"Distribution" is defined in the recitals to this Agreement.
"Distribution Agent" means National City Bank, Cleveland, Ohio, in its
capacity as agent for Alco in connection with the Distribution.
"Distribution Date" means December 31, 1996 or such other business day
as of which the Distribution shall be effective, as determined by the Board of
Directors of Alco.
2
"Environmental Site Liabilities" means all Liabilities of the Alco
Group or the Unisource Group arising under any environmental law (including
common law claims) or regulation with respect to the sites listed on Exhibit A
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attached hereto and made a part hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Form 10" means the registration statement on Form 10 filed by
Unisource with the Commission to effect the registration of the Unisource Common
Stock pursuant to the Exchange Act, as such registration statement may be
amended from time to time.
"Group" means the Alco Group or the Unisource Group.
"Guaranteed Unisource Liabilities" means the IRB Debt and all other
Unisource Liabilities on which any member of the Alco Group is an obligor by
reason of any guarantee or contractual commitment, including, without
limitation, those Unisource Liabilities set forth on Exhibit B attached hereto
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and made a part hereof.
"Headquarters Facility" means the land, buildings and improvements
owned by Alco located at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇.
"Information Statement" means the information statement to be sent
to each holder of Alco Common Stock in connection with the Distribution.
"IRB Debt" means the outstanding industrial development revenue bonds
issued to finance facilities of the Unisource Group reflected on the Unisource
Balance Sheet.
"Liabilities" means any and all claims, debts, liabilities and
obligations, absolute or contingent, matured or not matured, liquidated or
unliquidated, accrued or unaccrued, known or unknown, whenever arising,
including all costs and expenses relating thereto, and including, without
limitation, those debts, liabilities and obligations arising under this
Agreement, any law, rule, regulation, action, order or consent decree of any
governmental entity or any award of any arbitrator of any kind, and those
arising under any contract, commitment or undertaking.
"Record Date" means December 13, 1996 or such other date as is
designated by Alco's Board of Directors as the record date for determining the
stockholders of Alco entitled to receive the Distribution.
"Revolving Credit Agreement" shall have the meaning set forth in
Section 3.03
"Securities Act" means the Securities Act of 1933, as amended.
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"Sold Business" means any of the assets or businesses described on
Exhibit C attached hereto and made a part hereof formerly owned, directly or
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indirectly, by Alco or Unisource and heretofore sold.
"Tax" shall have the meaning given to such term in the Tax Agreement.
"Tax Agreement" means the Tax Sharing and Indemnification Agreement
entered into on or before the Distribution Date between Alco and Unisource, as
amended from time to time.
"Tradenames" shall have the meaning set forth in Section 3.06.
"Unisource Assets" means all Assets that are (i) owned of record or
held in the name of a member of the Unisource Group, (ii) treated for internal
financial reporting purposes of Alco prior to the Distribution or on the
Unisource Balance Sheet as owned by a member of the Unisource Group, subject to
acquisitions, dispositions and adjustments in the operation of the Unisource
Business after September 30, 1996, (iii) on the Distribution Date used
exclusively by one or more members of the Unisource Group or (iv) described on
Exhibit D attached hereto and made a part hereof. Notwithstanding the
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foregoing, Unisource Assets shall not include any life insurance policies owned
by Alco on the lives of any persons who are or will be employees of the
Unisource Group or any amounts receivable from any person or entity by way of
contribution or otherwise in respect of the Waste Disposal Engineering Superfund
Site involving the ▇▇▇▇▇ & ▇▇▇▇▇▇▇ Division of Saxon Industries, Inc., all of
which shall remain Assets of the Alco Group.
"Unisource Balance Sheet" means the consolidated balance sheet of
Unisource as of September 30, 1996 set forth on Exhibit E attached hereto and
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made a part hereof.
"Unisource Business" means the business now or formerly conducted by
the Unisource and its present or former subsidiaries or any other member of the
Unisource Group.
"Unisource By-laws" means the By-laws of Unisource in the form filed
as an exhibit to the Form 10 at the time it becomes effective.
"Unisource Certificate" means the certificate of incorporation of
Unisource in the form filed as an exhibit to the Form 10 at the time it becomes
effective.
"Unisource Common Stock" means the outstanding shares of common stock,
no par value, of Unisource.
"Unisource Group" shall mean Unisource, its subsidiaries and any
subsidiary or division of any member of the Alco Group that is operated under
the control of Unisource and is included in the results of Unisource for
internal financial reporting purposes.
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"Unisource Headquarters Computer Assets" has the meaning specified in
Section 6.01.
"Unisource Liabilities" means (i) Liabilities of Unisource under this
Agreement or any Ancillary Agreement, (ii) except as otherwise expressly
provided in this Agreement or any Ancillary Agreement, Liabilities incurred in
connection with the conduct or operation of the Unisource Business or the
ownership or use of the Unisource Assets, whether arising before, on or after
the Distribution Date, (iii) Liabilities arising under or in connection with the
Form 10, (iv) except as otherwise expressly provided in this Agreement or any
Ancillary Agreement, Liabilities set forth on the Unisource Balance Sheet as
increased or reduced in the operation of the Unisource Business after
September 30, 1996, (v) except as otherwise provided in this Agreement or any
Ancillary Agreement, Liabilities of the Alco Group or the Unisource Group
relating to a Sold Business or arising out of the sale thereof and (vi)
Environmental Site Liabilities. Notwithstanding the foregoing, the Unisource
Liabilities shall not include (x) any debt of the Alco Group for money borrowed
or evidenced by a note, debenture or other instrument, except the IRB Debt and
other long-term debt and notes payable set forth in the Unisource Balance Sheet,
(y) Liabilities arising in respect of (1) any workmen's compensation claim if
(or to the extent that, in the case of injuries or conditions that relate to
periods both before and after September 30, 1996) the injury or condition giving
rise to the claim was incurred on or before September 30, 1996 and (2) any
automobile and general liability claim covered by insurance maintained by Alco
(or that would be covered but for any self-insured retention or deductible
maintained by Alco) if the occurrence giving rise to the claim occurred on or
before September 30, 1996 or (z) any Liabilities expressly assumed or retained
by Alco in this Agreement or any Ancillary Agreement.
"Unisource Payment" means a cash payment in an amount equal to, and to
be applied against, the amount of the Notes and Advances Payable to Alco and
Affiliates set forth on the Unisource Balance Sheet plus interest thereon
accrued from September 30, 1996 to the date of payment at the rate of 6.75% per
annum.
ARTICLE II
THE DISTRIBUTION
Section 2.01. Cooperation Prior to the Distribution.
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(a) Alco and Unisource shall prepare, and Alco shall mail to the
holders of Alco Common Stock as of the Record Date, the Information Statement,
which shall set forth appropriate disclosure concerning Unisource, the
Distribution and any other appropriate matters. Alco and Unisource shall also
prepare, and Unisource shall file with the Commission, the Form 10, which shall
include the Information Statement. Alco and Unisource shall use all reasonable
efforts to cause the Form 10 to become effective under the Exchange Act.
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(b) Alco and Unisource shall cooperate in preparing, filing with the
Commission under the Securities Act and causing to become effective any
registration statements or amendments thereto that are appropriate to reflect
the establishment of or amendments to any employee benefit plan contemplated by
the Benefits Agreement.
(c) Alco and Unisource shall by means of a stock split or stock
distribution cause the number of outstanding shares of Unisource Common Stock
held by Alco to be equal to the number of shares to be distributed in the
Distribution.
(d) Alco and Unisource shall take all such action as may be necessary
or appropriate under the securities or blue sky laws of states or other
political subdivisions of the United States in connection with the transactions
contemplated by this Agreement or any Ancillary Agreement.
(e) Unisource shall prepare, file and pursue an application to permit
listing of the Unisource Common Stock on the New York Stock Exchange.
Section 2.02. Alco Board Action; Conditions Precedent to the
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Distribution. Alco's Board of Directors shall, in its discretion, establish the
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Record Date and the Distribution Date and any appropriate procedures in
connection with the Distribution. In no event shall the Distribution occur
unless the following conditions shall have been satisfied:
(a) any necessary regulatory approvals shall have been received;
(b) the Form 10 shall have become effective under the Exchange Act;
(c) a favorable response shall have been received from the staff of
the Commission with respect to Alco's no-action request concerning, among other
things, whether the Distribution may be effected without registration of the
Unisource Common Stock under the Securities Act;
(d) Unisource shall have made the Unisource Payment;
(e) Unisource's Board of Directors, as named in the Form 10, shall
have been elected by Alco, as sole stockholder of Unisource, and the Unisource
Certificate and Unisource By-laws shall be in effect;
(f) the Unisource Common Stock shall have been approved for listing on
the New York Stock Exchange, subject to official notice of issuance; and
(g) Alco shall have received a favorable ruling from the Internal
Revenue Service that the Distribution will not be taxable to the stockholders of
Alco pursuant to Section 355 of the Code.
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Section 2.03. The Distribution. On or before the Distribution Date,
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subject to satisfaction or waiver of the conditions set forth in this Agreement,
Alco shall deliver to the Distribution Agent a certificate or certificates
representing all of the then outstanding shares of Unisource Common Stock held
by the Alco Group, endorsed in blank, and shall instruct the Distribution Agent,
except as otherwise provided in Section 2.04, to distribute to each holder of
record of Alco Common Stock on the Record Date a certificate or certificates
representing one share of Unisource Common Stock for each two shares of Alco
Common Stock so held. Unisource agrees to provide all certificates for shares of
Unisource Common Stock that the Distribution Agent shall require in order to
effect the Distribution.
Section 2.04. Fractional Shares. The Distribution Agent shall not
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distribute any fractional share of Unisource Common Stock to any holder. The
Distribution Agent shall aggregate all such fractional shares and sell them in
an orderly manner after the Distribution Date in the open market and, after
completion of such sales, distribute a pro rata portion of the proceeds from
such sales, based upon the average gross selling price of all such Unisource
Common Stock, less a pro rata portion of the aggregate brokerage commissions
payable in connection with such sales, to each holder of Alco Common Stock who
would otherwise have received a fractional share of Unisource Common Stock.
ARTICLE III
CONVEYANCE OF CERTAIN ASSETS; ASSUMPTION OF CERTAIN
LIABILITIES; CERTAIN PAYMENTS; AND TRANSITION ARRANGEMENTS
Section 3.01. Conveyance of Assets; Discharge of Liabilities.
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(a) Except as otherwise expressly provided herein or in any of the
Ancillary Agreements, on the Distribution Date (i) all Unisource Assets are
intended to be and shall become Assets of the Unisource Group, (ii) all
Unisource Liabilities are intended to be and shall become exclusively the
Liabilities of the Unisource Group and (iii) all other Assets and Liabilities of
Alco and its subsidiaries are intended to be and shall remain exclusively the
Assets or Liabilities of the Alco Group.
(b) On or before the Distribution Date, Alco agrees to transfer or
cause to be transferred to Unisource or to such other members of the Unisource
Group as Unisource may designate, free and clear of all liens, mortgages, deeds
of trust, security interests, charges, claims or encumbrances of any kind other
than (i) easements, rights of way, zoning restrictions and other similar
encumbrances affecting real property and (ii) those constituting or securing
Unisource Liabilities, all right, title and interest of the Alco Group in and to
any of the Unisource Assets.
(c) On or before the Distribution Date, Unisource agrees to transfer
or cause to be transferred to Alco or to such other member of the Alco Group as
Alco may designate, free
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and clear of all liens, mortgages, deeds of trust, security interests, charges,
claims or encumbrances of any kind other than (i) easements, rights of way,
zoning restrictions and other similar encumbrances affecting real property and
(ii) those constituting or securing Alco Liabilities, all right, title and
interest of the Unisource Group in and to any Assets that are not Unisource
Assets.
(d) Unisource agrees that on and after the Distribution Date it will
pay, perform and discharge, or cause to be paid, performed or discharged, all of
the Unisource Liabilities.
(e) Alco agrees that on and after the Distribution Date it will pay,
perform and discharge, or cause to be paid, performed and discharged, all of the
Alco Liabilities. In connection therewith, without limiting the duties of the
parties specified in Article XI of this Agreement, Unisource agrees that it will
provide at its own expense all reasonable cooperation and assistance to Alco in
connection with the investigation and resolution of claims specified in clause
(y) of the last sentence of the definition of Unisource Liabilities (including
facilitating a return to work of personnel capable of doing so in the case of
workmen's compensation claims).
(f) In the event that any conveyance of an Asset required hereby is
not effected on or before the Distribution Date, the obligation to transfer such
Asset shall continue past the Distribution Date and shall be accomplished as
soon thereafter as practicable.
(g) If any Asset may not be transferred by reason of the requirement
to obtain the consent of any third party and such consent has not been obtained
by the Distribution Date, then such Asset shall not be transferred until such
consent has been obtained, and Alco or Unisource, as the case may be, shall
cause the owner of such Asset to use all reasonable efforts to provide to the
appropriate member of the other Group all the rights and benefits under such
Asset and cause such owner to enforce such Asset for the benefit of such member.
Both parties shall otherwise cooperate and use all reasonable efforts to provide
the economic and operational equivalent of an assignment or transfer of the
Asset.
(h) From and after the Distribution Date, each party shall promptly
transfer or cause the members of its Group promptly to transfer to the other
party or the appropriate member of the other party's Group, from time to time,
any property received that is an Asset of the other party or a member of its
Group. Without limiting the foregoing, funds received by a member of one Group
upon the payment of accounts receivable that belongs to a member of the other
Group shall be transferred to the other Group by wire transfer not more than
five business days after receipt of such payment.
Section 3.02. Conduct of Unisource Pending Distribution.
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(a) Prior to the Distribution Date, Unisource shall not, without the
prior consent in writing of Alco, make any public announcement concerning the
Distribution and shall use its best efforts not to take any action which may
prejudice or delay the consummation of the Distribution.
(b) Prior to the Distribution Date, the business of Unisource shall be
operated for the sole benefit of Alco as its sole stockholder.
Section 3.03. Revolving Credit Agreement. Unisource shall use all
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reasonable efforts promptly to obtain, and to satisfy all conditions for
borrowing under, a revolving credit agreement with one or more lenders (the
"Revolving Credit Agreement") in an amount sufficient to allow Unisource to make
the Unisource Payment and to conduct the business of Unisource after the
Distribution Date.
Section 3.04. Unisource Payment. Upon satisfying the conditions to
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the first borrowing under the Revolving Credit Agreement, and in no event later
than the Distribution Date, Unisource shall pay to Alco the Unisource Payment.
Section 3.05. Cash Management System.
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(a) Until Unisource obtains, and satisfies the conditions to the first
borrowing under, the Revolving Credit Agreement, the Unisource Group shall
continue to participate in the Cash Management System, which shall be operated
in accordance with past practice.
(b) As soon as reasonably practicable after Unisource satisfies the
conditions to the first borrowing under the Revolving Credit Agreement, but in
no event later than 30 days after the Distribution Date, Unisource shall cease
using the Cash Management Systems and Alco and Unisource shall calculate the
balance owed to or by the Unisource Group in order to bring to zero the
intercompany account arising from participation by the Unisource Group in the
Cash Management System after September 30, 1996. In making such calculation,
(i) intercompany balances shall earn or accrue interest at the rate of 6.75% per
annum and (ii) on or before the Distribution Date the Unisource Group shall be
entitled to a $4,000,000 credit in lieu of any interest in the Headquarters
Facility.
(c) Promptly after completing the calculation described in Section
3.05(b), Alco or Unisource, as the case may be, shall pay the amount due to the
other.
Section 3.06. Unisource Foundation. On or before the Distribution
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Date, Unisource shall establish a charitable foundation and shall apply for its
tax-exempt status under Section 501(c)(3) of the Internal Revenue Code of 1986,
as amended. Subject to Unisource complying with the preceding sentence, on the
Distribution Date Alco shall cause the Alco Standard Foundation to make a
contribution to such charitable foundation in the amount of $1,000,000. If,
however, for any reason the contribution cannot be made on the Distribution
9
Date, it shall be made as soon as practicable thereafter. Pending the making of
such contribution, Alco shall cooperate with Unisource to assure that matching
contributions in respect of charitable donations by employees of the Unisource
Group are made in accordance with the past practice of the Alco Standard
Foundation. When the contribution by the Alco Standard Foundation to the
foundation established by Unisource is made, such contribution shall include a
pro rata share of the income and expenses of the Alco Standard Foundation since
the Distribution Date and be net of any matching contributions made on behalf of
Unisource Group employees after the Distribution Date.
Section 3.07. Insurance.
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(a) Prior to the Distribution Date, Alco and Unisource will cooperate
in obtaining insurance (or binders therefor) providing coverage to the Unisource
Group similar to the coverage provided by insurance in place prior to the
Distribution Date.
(b) Alco will use all reasonable efforts to maintain directors' and
officers' liability insurance at substantially the level of Alco's current
directors' and officers' liability insurance policy for a period of five years
with respect to the directors and officers of Alco who will become directors and
officers of Unisource as of the Distribution Date for acts as directors and
officers of members of the Alco Group during periods prior to the Distribution
Date.
(c) Alco will pay or reimburse the Unisource Group for the amount of
any deductible or self-insured retention maintained by Alco in respect of any
loss or damage in excess of normal intercompany deductibles to any Unisource
Assets incurred on or before September 30, 1996 that would be covered by
insurance maintained by Alco but for such deductible or self-insured retention.
Unisource shall submit to Alco such evidence of the loss as Alco may reasonably
require.
Section 3.08. Certain Intellectual Property Matters.
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(a) Except as otherwise set forth herein, after the Distribution
Date neither party shall, directly or indirectly, use any name or any other
trademark or tradename (collectively, the "Tradenames") (e.g., as to Alco, "Alco
Standard" or "Ikon" and, as to Unisource, "Unisource") of the other party or its
Group or any tradename or trademark likely to cause confusion with the
Tradenames of the other party or its Group; provided, however, that either party
shall be entitled to use the term "the corporate partnership."
(b) After the Distribution Date, each party shall have the right to
sell existing inventory and to use existing brochures, packaging, labeling,
containers, supplies, advertising materials, technical data sheets and any
similar materials bearing any Tradenames until the earlier of (i) one year after
the Distribution Date and (ii) the date existing stocks are exhausted.
Each party shall comply with all applicable laws or regulations in any use of
packaging or labeling containing the Tradenames.
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(c) Neither party shall be obligated to change the Tradenames on
finished goods in inventory and other materials in the hands of dealers,
distributors and customers at the time of expiration of a time period set forth
in (b) above.
(d) Each party agrees to use reasonable efforts to cease using the
Tradenames of the other party on buildings, cars, trucks and other fixed assets
as soon as possible but in any event within a period not to exceed one year
after the Distribution Date.
ARTICLE IV
INDEMNIFICATION
Section 4.01. Unisource Indemnification of the Alco Group. On and
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after the Distribution Date, Unisource shall indemnify, defend and hold harmless
each member of the Alco Group, and each of their respective directors, officers,
employees and agents (the "Alco Indemnitees") from and against any and all
damage, loss, liability and expense (including, without limitation, reasonable
expenses of investigation and reasonable attorneys, fees and expenses in
connection with any and all Actions or threatened Actions) (collectively,
"Indemnifiable Losses") incurred or suffered by any of the Alco Indemnitees and
arising out of, or due to the failure of Unisource or any member of the
Unisource Group to pay, perform or otherwise discharge, any of the Unisource
Liabilities.
Section 4.02. Alco Indemnification of Unisource Group. On and after
---------------------------------------
the Distribution Date, Alco shall indemnify, defend and hold harmless each
member of the Unisource Group and each of their respective directors, officers,
employees and agents (the "Unisource Indemnitees") from and against any and all
Indemnifiable Losses incurred or suffered by any of the Unisource Indemnitees
and arising out of, or due to the failure of Alco or any member of the Alco
Group to pay, perform or otherwise discharge, any of the Alco Liabilities.
Section 4.03. Insurance and Third Party Obligations. No insurer or
-------------------------------------
any other third party shall be (a) entitled to a benefit it would not be
entitled to receive in the absence of the foregoing indemnification provisions,
(b) relieved of the responsibility to pay any claims to which it is obligated or
(c) entitled to any subrogation rights with respect to any obligation hereunder.
ARTICLE V
INDEMNIFICATION PROCEDURES
Section 5.01. Notice and Payment of Claims. If any Alco or Unisource
----------------------------
Indemnitee (the "Indemnified Party") determines that it is or may be entitled to
indemnification
11
by a party (the "Indemnifying Party") under Article IV (other than in connection
with any Action or claim subject to Section 5.02), the Indemnified Party shall
deliver to the Indemnifying Party a written notice specifying, to the extent
reasonably practicable, the basis for its claim for indemnification and the
amount for which the Indemnified Party reasonably believes it is entitled to be
indemnified. After the Indemnifying Party shall have been notified of the amount
for which the Indemnified Party seeks indemnification, the Indemnifying Party
shall, within 90 days after receipt of such notice, pay the Indemnified Party
such amount in cash or other immediately available funds (or reach agreement
with the Indemnified Party as to a mutually agreeable alternative payment
schedule) unless the Indemnifying Party objects to the claim for indemnification
or the amount thereof. If the Indemnifying Party does not give the Indemnified
Party written notice objecting to such claim and setting forth the grounds
therefor within the same 90 day period, the Indemnifying Party shall be deemed
to have acknowledged its liability for such claim and the Indemnified Party may
exercise any and all of its rights under applicable law to collect such amount.
Section 5.02. Notice and Defense of Third-Party Claims. Promptly
----------------------------------------
following the earlier of (a) receipt of notice of the commencement by a third
party of any Action against or otherwise involving any Indemnified Party or (b)
receipt of information from a third party alleging the existence of a claim
against an Indemnified Party, in either case, with respect to which
indemnification may be sought pursuant to this Agreement (a "Third-Party
Claim"), the Indemnified Party shall give the Indemnifying Party written notice
thereof. The failure of the Indemnified Party to give notice as provided in
this Section 5.02 shall not relieve the Indemnifying Party of its obligations
under this Agreement, except to the extent that the Indemnifying Party is
prejudiced by such failure to give notice. Within 90 days after receipt of such
notice, the Indemnifying Party may by giving written notice thereof to the
Indemnified Party, (a) acknowledge, as between the parties hereto, liability for
and at its option elect to assume the defense of such Third-Party Claim at its
sole cost and expense or (b) object to the claim of indemnification set forth in
the notice delivered by the Indemnified Party pursuant to the first sentence of
this Section 5.02; provided that if the Indemnifying Party does not within the
--------
same 90 day period give the Indemnified Party written notice objecting to such
claim and setting forth the grounds therefor or electing to assume the defense,
the Indemnifying Party shall be deemed to have acknowledged, as between the
parties hereto, its liability for such Third-Party Claim. Any contest of a
Third Party Claim as to which the Indemnifying Party has elected to assume the
defense shall be conducted by attorneys employed by the Indemnifying Party and
reasonably satisfactory to the Indemnified Party; provided that the Indemnified
--------
Party shall have the right to participate in such proceedings and to be
represented by attorneys of its own choosing at the Indemnified Party's sole
cost and expense. If the Indemnifying Party assumes the defense of a Third-Party
Claim, the Indemnifying Party may settle or compromise the claim without the
prior written consent of the Indemnified Party; provided that the Indemnifying
--------
Party may not agree to any such settlement pursuant to which any such remedy or
relief, other than monetary damages for which the Indemnifying Party shall be
responsible hereunder, shall be applied to or against the Indemnified Party,
without the prior written consent of the Indemnified Party, which consent shall
not be unreasonably withheld. If the Indemnifying Party does not assume the
12
defense of a Third-Party Claim for which it has acknowledged liability for
indemnification under Article IV, the Indemnified Party may require the
Indemnifying Party to reimburse it on a current basis for its reasonable
expenses of investigation, reasonable attorney's fees and reasonable out-of-
pocket expenses incurred in defending against such Third-Party Claim and the
Indemnifying Party shall be bound by the result obtained with respect thereto by
the Indemnified Party; provided that the Indemnifying Party shall not be liable
--------
for any settlement effected without its consent, which consent shall not be
unreasonably withheld. The Indemnifying Party shall pay to the Indemnified Party
in cash the amount for which the Indemnified Party is entitled to be indemnified
(if any) within 15 days after the final resolution of such Third-Party Claim
(whether by the final nonappealable judgment of a court of competent
jurisdiction or otherwise) or, in the case of any Third-Party Claim as to which
the Indemnifying Party has not acknowledged liability, within 15 days after such
Indemnifying Party's objection has been resolved by settlement, compromise or
the final nonappealable judgment of a court of competent jurisdiction.
ARTICLE VI
INFORMATION SYSTEMS; TELECOMMUNICATIONS
Section 6.01 Ownership of Computer Systems. On or before the
-----------------------------
Distribution Date, Alco shall transfer to Unisource ownership of the computer
hardware and software identified on Exhibit D attached hereto and made a part
---------
hereof (the "Unisource Headquarters Computer Assets"). Alco shall retain
ownership of all other computer hardware and software at the Headquarters
Facility used in common by each Group (the "Alco Headquarters Computer Assets"),
except that any hardware or software not appropriate for use in Alco's new
headquarters facility or otherwise intended to be discarded by Alco shall be
transferred without charge to Unisource and become Unisource Headquarters
Computer Assets. Alco shall also retain all hardware and software licenses in
effect prior to the Distribution Date that relate to management information
systems ("MIS") functions performed by Alco corporate departments, including
Tax, Treasury, Accounting and Personnel. Unisource shall be responsible for
obtaining such duplicate or alternative licenses as it may require, and Alco
shall reimburse Unisource up to an aggregate maximum of $200,000 to obtain such
licenses.
Section 6.02 Separation of Data. As of the Distribution Date, or as
------------------
soon thereafter as reasonably possible, Alco and Unisource shall create and
maintain separate management information data systems for all functions
heretofore supported by the Alco corporate MIS personnel.
Section 6.03 Access; Systems Support. For so long as the Alco Group
-----------------------
and the Unisource Group both occupy the Headquarters Facility, MIS employees of
each Group shall have such access to the equipment and systems of the other
Group as may be reasonably required. Alco and Unisource shall each cause the
former corporate MIS personnel, whether employed by the Alco Group or the
Unisource Group after the Distribution Date, to continue to
13
support both the Alco Headquarters Computer Equipment and the Unisource
Headquarters Computer Equipment for so long as both Groups remain at the
Headquarters Facility. After the Distribution Date, however, Alco and Unisource
shall use all reasonable efforts to effect the transition of support of the Alco
Headquarters Computer Assets to employees of the Alco Group and support of the
Unisource Headquarters Computer Assets to employees of the Unisource Group. At
the time that the first of Alco or Unisource terminates its occupancy of the
Headquarters Facility, support by employees of one Group for all systems of the
other Group shall cease, except as provided in Section 6.04 and except where the
failure to provide support by one Group will cause a material adverse impact on
the business of the other Group. In no event, however, shall such computer
system support extend beyond December 31, 1997.
Section 6.04 IBM AS400.
---------
(a) Alco shall retain ownership of the existing IBM AS400 ("AS400")
after the Distribution Date. Unisource will have access to the AS400 and may
continue to process those systems currently running on the AS400 on the terms
provided in this Section 6.04.
(b) For so long as Alco and Unisource both utilize the AS400, Alco
will dedicate one support person to the AS400 and will in general use all
reasonable efforts to provide the same level of support as existed prior to the
date of this Agreement. Alco and Unisource shall share all normal operating
costs associated with the AS400 on an equal basis. Such costs include, but are
not limited to: salary and benefits of the dedicated Alco support person,
annual maintenance fees paid to ▇.▇. ▇▇▇▇▇▇▇ and IBM, service fees paid to IBM
for requested maintenance to the AS400 and software upgrade fees necessary to
maintain support for the AS400 and/or the ▇.▇. ▇▇▇▇▇▇▇ software. Each of Alco
and Unisource shall be responsible for its own costs associated with
telecommunications and hardware and software modifications required by the move
of its Group to a new site, as well as for all costs of programming changes that
apply only to its Group.
(c) Any exceptions required by Unisource to normal processing hours
and support must be approved by Alco. Every reasonable effort shall be made by
Alco in accordance with past practice to honor reasonable requests by Unisource.
(d) Any software changes requested by Unisource shall be submitted in
writing to Alco for approval. Expenses related to the programming changes
required by Unisource only shall be billed to Unisource at Alco's AS400
programmer's actual hourly rate and completed by Alco at agreed upon costs and
time. Every reasonable effort shall be made by Unisource to limit the scope and
amount of requested changes to the AS400.
(e) For so long as Alco and Unisource both use the AS400, all hardware
and software problems relating to the AS400 shall be handled by Alco with the
respective vendors. Unisource shall not contact these vendors directly. Alco
shall use all reasonable efforts to cause
14
the vendors to address hardware and software problems brought to Alco's
attention by Unisource.
(f) Either Alco or Unisource may terminate its use and support of the
AS400 upon at least 90 days' prior written notice to the other. In the event
that Alco gives such a notice, Unisource shall have the option exercisable by
notice to Alco on or before the date of termination to purchase the AS400, with
or without any related software license (to the extent assignable), at a price
payable in cash equal to the remaining book value on the date of termination.
Such sale will be without any warranty by Alco as to the condition of the goods
transferred. Unisource shall be solely responsible for the removal of the
equipment and payment of the costs thereof. If Unisource fails to exercise its
option to purchase the AS400, its right of access thereto shall terminate.
(f) Alco may remove the AS400 at Alco's sole expense when Alco
terminates its occupancy of the Headquarters Facility. Access by Unisource to
the AS400 shall continue after Alco or Unisource ceases to occupy the
Headquarters Facility, but Unisource shall be responsible for the installation,
cost and maintenance of necessary communication lines and any corresponding
hardware or software changes required to the AS400 to support Unisource as a
remote user.
(g) Unless earlier terminated as herein provided, access by Unisource
to the AS400 will terminate on December 31, 1998.
Section 6.05 Telecommunications. Alco shall retain ownership of the
------------------
telephone system at the Headquarters Facility. Alco and Unisource shall
continue to share the telephone system while both Groups continue to occupy the
Headquarters Facility. As of October 1, 1996, Alco shall pay 60% of the ongoing
costs of the telephone system and Unisource shall pay the remaining 40%. Such
percentages shall be adjusted in accordance with any adjustments of the
percentages under Section 7.04. The costs include but are not limited to:
annual maintenance fees, service calls to ▇▇▇▇ Atlantic, Rolm and AT&T, trunk
usage charges and phone mail software charges. After Alco terminates its
occupancy of the Headquarters Facility, and, for so long as Unisource occupies
the Headquarters Facility, Unisource shall have the option to continue using the
telephone system but shall pay for 100% of such costs. At such time Unisource
shall also have the option to purchase the telephone system from Alco at its
book value on that date. Such a sale will be without any warranty by Alco as to
the condition of the goods transferred.
15
ARTICLE VII
HEADQUARTERS FACILITY
Section 7.01. Continued Occupation of Headquarters Facility. On and
---------------------------------------------
after the Distribution Date, the Alco Group and the Unisource Group shall
continue to occupy and use the Headquarters Facility in substantially the same
manner as prior to the Distribution Date, subject to the provisions of this
Article VII.
Section 7.02. Proposed Sale. The parties acknowledge that the
-------------
Headquarters Facility is being held by Alco for sale. Unisource shall make
portions of the Headquarters Facility used or occupied by the Unisource Group
available for inspection by prospective buyers and shall cooperate with Alco in
all other respects in connection with the proposed sale of the Headquarters
Facility.
Section 7.03. Occupation by Unisource. The Unisource Group shall
-----------------------
have the right for a period ending not later than December 31, 1997 to use and
occupy, in accordance with past practice, those portions of the Headquarters
Facility as are occupied by the Unisource Group on the Distribution Date and to
continue to use in common with members of the Alco Group those portions of the
Headquarters Facility as are used in common by the Alco Group and the Unisource
Group. Each of Alco and Unisource shall cause the members of its Group to
comply with all applicable laws and regulations relating to its use and
occupancy of the Headquarters Facility.
Section 7.04. Sharing of Costs of Operation. Subject to Section
-----------------------------
7.06, from October 1, 1996 until the earlier of April 1, 1997 or the date that
the Alco Group ceases to occupy the Headquarters Facility, Unisource shall pay
40% of the costs of operation and maintenance of the Headquarters Facility, and
Alco shall pay the remaining 60%. Such percentages are based upon the
approximate numbers of employees of the Unisource Group and the Alco Group,
respectively, expected to occupy the Headquarters Facility as of the
Distribution Date. As of April 1, 1997 and at the beginning of each month
thereafter for so long as the Alco Group and the Unisource Group both occupy the
Headquarters Facility, the parties will adjust the foregoing percentages to
reflect the relative numbers of employees at that time. Subject to Section
7.06, after the Alco Group ceases to occupy the Headquarters Facility, Unisource
shall pay 100% of the costs of operation and maintenance. "Costs of operation
and maintenance" shall include the following costs relating to the Headquarters
Facility attributable to such period: rent payable to any new owner, real
estate taxes and assessments, utilities, lawn care, snow and trash removal,
janitorial services, the cost of salaries and benefits of employees engaged in
operation or maintenance, such as receptionists, cafeteria personnel and
maintenance staff members, cost of casualty insurance and costs of repairs not
exceeding $5,000 for any individual items. The cost of all capital expenditures
and all repairs exceeding $5,000 for any individual item shall be the sole
responsibility of Alco.
16
Section 7.05. Responsibility for Oversight; Services to be Provided.
-----------------------------------------------------
For so long as the Alco Group occupies the Headquarters Facility, Alco shall be
responsible for supervision of the operation and maintenance of the premises,
including operation and maintenance of the cafeteria, and shall use all
reasonable efforts to keep and maintain the Headquarters Facility clean and
neat, reasonably free of accumulations of ice and snow and in good working
order. Personnel heretofore engaged in such activities but assigned to the
Unisource Group in accordance with Article VIII hereof shall be made available
to Alco to continue such activities for so long as both the Alco Group and the
Unisource Group occupy the Headquarters Facility. Hours of access and provision
of utilities shall be in accordance with the past practice of the parties.
Section 7.04 and this Section 7.05 are subject to the following limitations:
(a) Alco shall provide cafeteria services at the Headquarters Facility
in accordance with past practice until such time as substantially all of the
Alco employees vacate the Headquarters Facility. At that time Unisource shall
have the right to continue operations of the cafeteria at its sole cost and
expense and using its own personnel or an outside contractor. If Unisource
elects to continue to provide cafeteria service, Alco shall make available its
cafeteria equipment and furniture without cost for so long as the Unisource
Group occupies the Headquarters Facility.
(b) The full-time building-service employees of Alco shall provide
building services at the Headquarters Facility until such time as other Alco
employees leave the Headquarters Facility. At that time Unisource shall be
solely responsible for the costs of its own employees engaged in building
services (including cleaning).
(c) After Alco ceases to occupy the Headquarters Facility, if
Unisource so requests Alco will make Alco's cleaning staff available to perform
cleaning services for Unisource at its sole cost and expense.
(d) Alco shall provide main lobby receptionist service until such time
as the Alco Group terminates its occupancy of the Headquarters Facility.
Unisource shall have the option at that time to assume responsibility for this
function using its own employees and at its sole cost and expense. Alco shall
provide training to designated Unisource employees if requested by Unisource.
Section 7.06. Termination of Occupancy. Prior to December 31, 1997
------------------------
Unisource may terminate its occupancy of the Headquarters Facility at any time
and may terminate its obligation to pay its share of the cost of operation and
maintenance as provided in Section 7.04 upon at least 30 days' prior written
notice to Alco. Upon the effective date of termination specified in such notice,
both all rights of occupancy of the Headquarters Facility by any member of the
Unisource Group and Unisource's obligation to pay any share of the cost of
operations and maintenance of the Headquarters Facility shall cease.
17
Section 7.07. Insurance; Release; Waiver of Subrogation.
-----------------------------------------
(a) Casualty insurance on the Headquarters Facility shall be the sole
responsibility of Alco, and, in the event of any fire or other casualty, Alco
shall be entitled to receive and retain all insurance proceeds and shall have no
obligation to rebuild or repair any damaged parts of the Headquarters Facility.
In the event of such a fire or other casualty, the obligation of Unisource to
contribute to the cost of operation and maintenance of the Headquarters Facility
shall terminate (in the case of a fire or other casualty that effectively
prevents occupancy by the Unisource Group) or equitably adjusted (in the event
of a fire or other casualty that interferes with or effectively prevents
occupancy by the Unisource Group in part only).
(b) Alco hereby waives any and all right of recovery which it might
otherwise have against any member of the Unisource Group and their agents and
employees for loss or damage occurring to the Headquarters Facility
notwithstanding that such loss or damage may result from the negligence or fault
of a member of the Unisource Group or its agent or employees.
(c) Alco shall cause its insurance companies to waive all rights of
subrogation against any member of the Unisource Group with respect to losses
under such policies.
Section 7.08. General Cooperation. For so long as both the Alco
-------------------
Group and the Unisource Group occupy the Headquarters Facility, Alco and
Unisource shall each cause its respective Group to provide to the other Group
such access to libraries and similar formerly-common facilities as may
reasonably be requested. Each of Alco and Unisource shall generally cooperate
in all reasonable respects in the operation, maintenance and occupancy of the
Headquarters Facility.
ARTICLE VIII
EMPLOYEE MATTERS
Section 8.01. Assignment of Employees. Employees of either party who
-----------------------
have previously provided services for both the Alco Group and the Unisource
Group have been assigned as of October 1, 1996 to the Alco Group or the
Unisource Group in the manner heretofore mutually agreed by the parties. The
cost of salaries and benefits for the Alco Group employees assigned to the
Unisource Group will be assumed by Unisource beginning on October 1, 1996.
Section 8.02. Benefits Agreement. All matters relating to or arising
------------------
out of any employee benefit, compensation or welfare arrangement in respect of
any present and former
18
employee of the Alco Group or the Unisource Group shall be governed by the
Benefits Agreement.
ARTICLE IX
TAX MATTERS
All matters relating to Taxes shall be governed exclusively by the Tax
Agreement, except as may be expressly stated herein. In the event of any
inconsistency between the Tax Agreement and this Agreement, the Tax Agreement
shall govern.
ARTICLE X
ACCOUNTING MATTERS
Section 10.01. Allocation of Prepaid Items and Reserves. All prepaid
----------------------------------------
items and reserves that have been maintained by Alco on a consolidated basis but
that relate in part to assets or liabilities of the Unisource Group shall be
allocated between Alco and Unisource in such reasonable manner as they shall
mutually agree.
Section 10.02. Accounting Treatment of Assets Transferred and
----------------------------------------------
Liabilities Assumed. All transfers of Assets of the Alco Group to the Unisource
-------------------
Group pursuant to this Agreement shall constitute contributions by Alco to the
capital of Unisource. All transfers of Assets of the Unisource Group to the
Alco Group, and the assumption by the Unisource Group of Liabilities of the Alco
Group, net of Assets received, shall be treated as a distribution by Unisource
to Alco.
Section 10.03. Intercompany Accounts. All intercompany accounts
---------------------
between members of the Alco Group and members of the Unisource Group existing as
of September 30, 1996, other than the Notes and Advances Payable to Alco and its
Affiliates set forth on the Unisource Balance Sheet, shall be canceled as of
September 30, 1996. Intercompany accounts arising in the ordinary course of
business on or after October 1, 1996 (other than those customarily included as
part of the Cash Management System and treated in accordance with Section 3.05)
shall be paid in accordance with their respective terms.
19
ARTICLE XI
INFORMATION
Section 11.01. Provision of Corporate Records. Alco and Unisource
------------------------------
shall each arrange as soon as practicable following the Distribution Date for
the provision to the other of existing corporate documents (e.g. minute books,
stock registers, stock certificates, documents of title, contracts, etc.) in its
possession relating to the other or its business and affairs.
Section 11.02. Access to Information. From and after the
---------------------
Distribution Date, Alco and Unisource shall each afford the other and its
accountants, counsel and other designated representatives reasonable access
(including using reasonable efforts to give access to persons or firms
possessing information) and duplicating rights during normal business hours to
all records, books, contacts, instruments, computer data and other data and
information in its possession relating to the business and affairs of the other
(other than data and information subject to an attorney/client or other
privilege), insofar as such access is reasonably required by the other
including, without limitation, for audit, accounting and litigation purposes.
Section 11.03. Litigation Cooperation. Alco and Unisource shall each
----------------------
use reasonable efforts to make available to the other, upon written request, its
officers, directors, employees and agents as witnesses to the extent that such
persons may reasonably be required in connection with any legal, administrative
or other proceedings arising out of the business of the other prior to the
Distribution Date in which the requesting party may from time to time be
involved.
Section 11.04. Reimbursement. Alco and Unisource, each providing
-------------
information or witnesses under Sections 11.01, 11.02 or 11.03 to the other,
shall be entitled to receive from the recipient, upon the presentation of
invoices therefor, payment for all out-of-pocket costs and expenses as may be
reasonably incurred in providing such information or witnesses.
Section 11.05. Retention of Records. Except as otherwise required by
--------------------
law or agreed to in writing, each party shall, and shall cause the members of
its Group to, retain all information relating to the other's business in
accordance with the past practice of such party. Notwithstanding the foregoing,
except as otherwise provided in Section VII of the Tax Agreement, either party
may destroy or otherwise dispose of any information at any time in accordance
with the corporate record retention policy maintained by such party with respect
to its own records.
Section 11.06. Confidentiality. Each party shall, and shall cause
---------------
each member of its Group to, hold and cause its directors, officers, employees,
agents, consultants and advisors to hold, in strict confidence, unless compelled
to disclose by judicial or administrative process or, in the opinion of its
counsel, by other requirements of law, all information concerning the other
party (except to the extent that such information can be shown to have been (a)
in the public
20
domain through no fault of such party or (b) later lawfully acquired after the
Distribution on a non-confidential basis from other sources by the party to
which it was furnished), and neither party shall release or disclose such
information to any other person, except its auditors, attorneys, financial
advisors, bankers and other consultants and advisors who shall be advised of and
agree in writing to comply with the provisions of this Section 11.06. Each party
shall be deemed to have satisfied its obligation to hold confidential
information concerning or supplied by the other party if it exercises the same
care as it takes to preserve confidentiality for its own similar information.
ARTICLE XII
INTEREST ON PAYMENTS
Except as otherwise expressly provided in this Agreement, all payments
by one party to the other under this Agreement or any Ancillary Agreement shall
be paid, by wire transfer of immediately available funds to an account in the
United States designated by the recipient, within 30 days after receipt of an
invoice or other written request for payment setting forth the specific amount
due and a description of the basis therefor in reasonable detail. Any amount
remaining unpaid beyond its due date, including disputed amounts that are
ultimately determined to be payable, shall bear interest at a floating rate of
interest equal to the prime commercial lending rate publicly announced by
CoreStates Bank, N.A. or any successor thereto at its principal office (or any
alternative rate substituted therefor by such Bank).
ARTICLE XIII
MISCELLANEOUS
Section 13.01. Expenses. Except as specifically provided in this
--------
Agreement or any Ancillary Agreement, all costs and expenses incurred in
connection with the preparation, execution, delivery and implementation of this
Agreement and the Ancillary Agreements and with the consummation of the
transactions contemplated by this Agreement (including transfer taxes and the
fees and expenses of the Distribution Agent and of all counsel, accountants and
financial and other advisors) shall be paid by Alco. Without limiting the
foregoing, Alco shall pay the legal, filing, accounting, printing and other
expenses in connection with the preparation, printing and filing of the Form 10.
Section 13.02. Notices. All notices and communications under this
-------
Agreement shall be in writing and any communication or delivery hereunder shall
be deemed to have been duly given when received addressed as follows:
21
If to Alco, to:
Alco Standard Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
If to Unisource, to:
Unisource Worldwide, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
Either party may, by written notice so delivered to the other party, change the
address to which delivery of any notice shall thereafter be made.
Section 13.03. Amendment and Waiver. This Agreement may not be
--------------------
altered or amended, nor may rights hereunder be waived, except by an instrument
in writing executed by the party or parties to be charged with such amendment or
waiver. No waiver of any terms, provision or condition of or failure to
exercise or delay in exercising any rights or remedies under this Agreement, in
any one or more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such term, provision, condition, right or remedy or as
a waiver of any other term, provision or condition of this Agreement.
Section 13.04. Entire Agreement. This Agreement, together with the
----------------
Ancillary Agreements, constitutes the entire understanding of the parties hereto
with respect to the subject matter hereof, superseding all negotiations, prior
discussions and prior agreements and understandings relating to such subject
matter. To the extent that the provisions of this Agreement are inconsistent
with the provisions of any Ancillary Agreement, the provisions of such Ancillary
Agreement shall prevail.
Section 13.05. Parties in Interest. Neither of the parties hereto
-------------------
may assign its rights or delegate any of its duties under this Agreement without
the prior written consent of each other party. This Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto and their respective
successors and permitted assigns. Nothing contained in this Agreement, express
or implied, is intended to confer any benefits, rights or remedies upon any
person or entity other than members of the Alco Group and the Unisource Group
and the Alco Indemnitees and Unisource Indemnitees under Articles IV and V
hereof.
22
Section 13.06. Guaranteed Unisource Liabilities.
--------------------------------
(a) Unisource shall use all reasonable efforts (excluding payment of
money or other significant consideration) to obtain as promptly as practicable
after the Distribution Date the release of Alco from its obligations with
respect to Guaranteed Unisource Liabilities identified on Exhibit B attached
---------
hereto and made a part hereof. In no event shall any member of the Unisource
Group extend the term of any Guaranteed Unisource Liabilities (such as by
exercising an option to renew a lease) unless the guarantee of Alco is released
as to any future obligations under such Guaranteed Unisource Liabilities or Alco
otherwise consents in writing.
(b) In the event that Alco is required to pay any Guaranteed Unisource
Liabilities, without limiting any of Alco's rights and remedies against
Unisource under this Agreement or otherwise, in order to secure Unisource's
indemnity obligations to Alco hereunder in respect of such Guaranteed Unisource
Liabilities, Alco shall be entitled to all the rights of the payee in any
property of any member of the Unisource Group pledged as security for such
Guaranteed Unisource Liabilities.
Section 13.07. Further Assurances and Consents. In addition to the
-------------------------------
actions specifically provided for elsewhere in this Agreement, each of the
parties hereto will use its reasonable efforts to (i) execute and deliver such
further instruments and documents and take such other actions as any other party
may reasonably request in order to effectuate the purposes of this Agreement and
to carry out the terms hereof and (ii) take, or cause to be taken, all actions,
and to do, or cause to be done, all things, reasonably necessary, proper or
advisable under applicable laws, regulations and agreements or otherwise to
consummate and make effective the transactions contemplated by this Agreement,
including, without limitation, using its reasonable efforts to obtain any
consents and approvals and to make any filings and applications necessary or
desirable in order to consummate the transactions contemplated by this
Agreement; provided that no party hereto shall be obligated to pay any
--------
consideration therefor (except for filing fees and other similar charges) to any
third party from whom such consents, approvals and amendments are requested or
to take any action or omit to take any action if the taking of or the omission
to take such action would be unreasonably burdensome to the party or its Group
or the business thereof.
Section 13.08. Severability. The provisions of this Agreement are
------------
severable and should any provision hereof be void, voidable or unenforceable
under any applicable law, such provision shall not affect or invalidate any
other provision of this Agreement, which shall continue to govern the relative
rights and duties of the parties as though such void, voidable or unenforceable
provision were not a part hereof.
Section 13.09. Governing Law. This Agreement shall be construed in
-------------
accordance with, and governed by, the laws of the Commonwealth of Pennsylvania,
without regard to the conflicts of law rules of such state.
23
Section 13.10. Counterparts. This Agreement may be executed in one
------------
or more counterparts each of which shall be deemed an original instrument, but
all of which together shall constitute but one and the same Agreement.
Section 13.11. Disputes.
--------
(a) Resolution of any and all disputes arising from or in connection
with this Agreement, whether based on contract, tort, statute or otherwise,
including, but not limited to, disputes in connection with claims by third
parties (collectively, "Disputes"), shall be subject to the provisions of this
Section 13.11; provided, however, that nothing contained herein shall preclude
either party from seeking or obtaining (i) injunctive relief or (ii) equitable
or other judicial relief to enforce the provisions hereof or to preserve the
status quo pending resolution of Disputes hereunder.
(b) Either party may give the other party written notice of any
Dispute not resolved in the normal course of business. The parties shall
thereupon attempt in good faith to resolve any Dispute promptly by negotiation
between executives who have authority to settle the controversy and who are at a
higher level of management than the persons with direct responsibility for
administration of this Agreement. Within 20 days after delivery of the notice,
the receiving party shall submit to the other a written response. The notice
and the response shall include a statement of such party's position and a
summary of arguments supporting that position and the name and title of the
executive who will represent that party and of any other person who will
accompany such executive. Within 45 days after delivery of the first notice,
the executives of both parties shall meet at a mutually acceptable time and
place, and thereafter as often as they reasonably deem necessary, to attempt to
resolve the Dispute. All reasonable requests for information made by one party
to the other will be honored.
(c) If the Dispute has not been resolved by negotiation within 60 days
of the first party's notice, or if the parties failed to meet within 45 days,
the parties shall endeavor to settle the Dispute by mediation under the then
current Commercial Mediation Rules of the American Arbitration Association.
(d) If the Dispute has not been resolved within 180 days after
delivery of the first notice under Section 13.11(b), either party may commence
any litigation or other procedure allowed by law.
24
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and year first above written.
ALCO STANDARD CORPORATION
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman and Chief Executive Officer
UNISOURCE WORLDWIDE, INC.
By /s/ ▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
▇▇▇ ▇. ▇▇▇▇▇
Chairman and Chief Executive Officer
25
EXHIBIT A
---------
Sites Giving Rise to Environmental Site Liabilities
---------------------------------------------------
Any site or facility owned or utilized before, on, or after the Distribution
Date by any member of the Unisource Group including, without limitation,
businesses or companies formerly part of the Unisource Group as listed on
Exhibit C, excluding, however, sites or facilities primarily utilized by any
---------
member of the Alco Group.
The following is a current list describing known environmental claims in process
relating to the Unisource Group:
1. Granville, OH Site - Copco Papers
---------------------------------
2. ▇▇▇▇▇▇▇▇ St., Milwaukee, WIS -- ▇▇▇▇▇▇
--------------------------------------
3. Hansrob Road, Orlando, FLA -- Unijax
------------------------------------
4. Livonia, MI -- ▇▇▇▇▇▇
---------------------
5. Glen Burnie, MD -- ▇▇▇▇▇▇
-------------------------
6. St. Louis, MO -- ▇▇▇▇▇▇
-----------------------
7. Union Chemical Superfund Site, South Hope, ME (▇▇▇▇▇) Saxon Bankruptcy
----------------------------------------------------------------------
8. Berks Landfill, PA Site - Wyomissing Corp.
------------------------------------------
9. Elkton, MD Spectron Superfund Site - Wyomissing Corp.
-----------------------------------------------------
EXHIBIT B
---------
Certain Guaranteed Unisource Liabilities
----------------------------------------
A. Customer Financing Programs
---------------------------
Bank: Maximum Liability - 9/30/96
1. Bank One, Columbus, N.A. $4,215,500
2. SunTrust Banks, Inc. 1,600,000
3. Toronto Dominion Bank 2,340,300
B. Asset Securitization Program
----------------------------
Bank of Montreal - $95,000,000 CDN
C. Industrial Revenue Bond Financings
----------------------------------
Location:
1. ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇
2. ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇
D. LIBOR Leases
------------
Location: Landlord: Expiration Date:
▇▇▇▇-▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇/▇▇/▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ Pitcairn Properties 10/31/00
St. Louis, MO
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Pitcairn Properties 10/31/00
Houston, TX
E. Other Real Estate Leases
------------------------
Location: Landlord: Expiration Date:
6650 Top Gun Street Western Devcon 10/31/02
San Diego, CA
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ Pitcairn Properties 1/31/14
Brighton, CO
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ L.P. 4/30/98
161 Avenue of the
Americas ▇▇▇▇ ▇▇▇▇▇ Associates 12/31/07
New York, NY
EXHIBIT C
---------
Sold Businesses
---------------
Business Buyer Date of Sale
-------- ----- ------------
▇▇▇▇▇▇▇ Paper ▇▇▇▇▇ River Corp. 4/29/81
▇.▇. ▇▇▇▇▇▇▇ & Co. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ & Co., Inc. 5/13/83
▇▇▇▇▇▇ Paper Company ▇▇▇▇▇▇▇▇ Food Co. 6/13/83
Narrow Fabric Division of assets to management group 9/30/85
Wyomissing Corp.
Wyomissing Corp. ▇▇▇▇▇ River Corp. 3/31/89
Coastal Plastics BBC Acquisitions Corp. 6/30/89
American Warehouses, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 2/13/91
American Warehouses, Inc.
Central Products, Inc. Spinnaker Industries, Inc. 9/29/95
Former units of Saxon Industries, Inc.*
▇▇▇▇▇ & ▇▇▇▇▇▇▇ Division B&B Communications 1983
Chuckerman Company, a Division Swarz Paper Company 1982
▇▇▇▇▇ Cup and Container Division DMS Acquisition Company 1984
Missisquoi Division Boise Cascade Corporation 1983
National Metallizing Division NMD, Inc. 1982
Saxon Business Products Division Copystatics, Inc. 1982
Saxon Export Corporation Saxport International, Inc. 1982
------------------
* Alco has disclosed to Unisource all claims known to Alco relating to these
former units of Saxon Industries, Inc.
EXHIBIT D
---------
Other Unisource Assets
----------------------
1. Real Estate
-----------
Properties still in the name of Alco to be transferred to Unisource:
▇▇▇▇▇▇▇▇▇ Paper Company of Nebraska
5220 "F" Street
Omaha, NE
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
Jessup, MD
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Company (IRB)
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Company (IRB)
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇-▇▇▇ Company
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇
2. Equipment, Furniture and Other Personal Property
------------------------------------------------
A. Computer Equipment and Software
-------------------------------
50 personal computers with standard software
4 network servers
4 Netware 4.1
1 DiscPort
1 Shiva Rover
B. Other. Certain other equipment, furniture, libraries and other
-----
personal property located in the Headquarters Facility (to be identified by
representatives of the parties) that may not presently be used exclusively by
Unisource but are intended to be transferred to Unisource. Additionally, all
furniture and equipment at the Headquarters Facility currently used on an
individual basis by employees assigned to the Unisource Group will be
transferred to Unisource.
EXHIBIT E
---------
UNISOURCE WORLDWIDE, INC.
CONSOLIDATED BALANCE SHEET
(dollars in thousands)
September 30,
1996
--------------
Assets
Current Assets
Cash $ 14,596
Accounts receivable, less allowance for
doubtful accounts of $19,927 790,818
Inventories 470,217
Prepaid expenses and deferred taxes 54,853
----------
Total current assets 1,330,484
----------
Long-Term Receivables 21,890
Property and Equipment, net 224,168
Goodwill 509,850
Deferred Costs and Other Assets 105,322
----------
Total Assets $2,191,714
==========
Liabilities and Stockholder's Equity
Current Liabilities
Current portion of long-term debt $ 840
Notes payable 38,367
Trade accounts payable 438,899
Accrued salaries, wages and commissions 27,011
Restructuring costs 15,575
Other accrued expenses 59,000
----------
Total current liabilities 579,692
----------
Long-Term Debt 21,097
Notes and Advances Payable to Alco and Affiliates 553,700
Deferred Taxes and Other Liabilities
Deferred taxes 54,462
Restructuring costs 13,896
Other long-term liabilities 33,366
----------
101,724
----------
Stockholder's Equity
Series A Preferred Stock, par value $.01, authorized
200,000 shares; issued and outstanding 122,884 shares
at $1 stated face value
(liquidation preference $122,884) -
Common Stock, $.01 par value, authorized 200,000 shares,
issued and outstanding 100,000 shares 1
Additional paid-in capital 778,444
Retained earnings 181,458
Foreign currency translation adjustments (24,402)
----------
Total stockholder's equity 935,501
----------
Total Liabilities and Stockholder's Equity $2,191,714
==========
