EXHIBIT 99.3
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
IN RE: (S)
(S) CASE NO. 03-34762-HDH-11
DAISYTEK, INCORPORATED, et al., (S)
(S) (Chapter 11)
DEBTORS. (S) (Jointly Administered)
ORDER AUTHORIZING AND APPROVING SALE OF THE CAPITAL STOCK
OF DAISYTEK (CANADA) INC. OWNED BY INC. AND THE ASSIGNMENT
OF THE CANADIAN TRADMARKS FREE AND CLEAR OF
ALL LIENS, CLAIMS, ENCUMBRANCES AND OTHER INTERESTS
The debtors and debtors in possession in the above referenced cases filed
their (1) Expedited Motion for Order (A) Authorizing Certain Debtors to Sell
Assets and to Assume, Assign and Sell Certain Executory Contracts and Unexpired
Leases That Relate Thereto Free and Clear of All Liens, Claims, Encumbrances,
and Interests; and (B) Establishing Cure Amounts Related to Assumed and Assigned
Executory Contracts and Unexpired Leases (the "Sale Motion") [Docket No. 519]
and (2) Expedited Supplemental Motion to the Sale Motion (the "Supplemental
Motion") [Docket No. 650] (collectively, the "Subject Motion"). BASED UPON THE
PLEADINGS ON FILE WITH THE COURT AND THE RECORD MADE AT THE HEARINGS ON THE
SUBJECT MOTION, THE COURT MAKES THE FOLLOWING FINDINGS OF FACT AND CONCLUSIONS
OF LAW:
Jurisdiction
A. This Court has jurisdiction over the Subject Motion pursuant to 28
U.S.C. (S) 1334. This proceeding is a core proceeding pursuant to 28 U.S.C. (S)
157(b)(2)(A) and (N). Venue is proper in the Northern District of Texas pursuant
to 28 U.S.C. (S)(S) 1408 and 1409.
ORDER AUTHORIZING AND APPROVING SALE OF THE CAPITAL STOCK OF DAISYTEK (CANADA)
INC. OWNED BY INC. FREE AND CLEAR OF ALL LIENS, CLAIMS, ENCUMBRANCES AND OTHER
INTERESTS
PAGE 1 of 18
Procedural Background
B. On May 7, 2003 (the "Initial Petition Date"), Daisytek, Incorporated
(with its bankruptcy estate, "Inc."), Arlington Industries, Inc. ("Arlington");
B.A. Pargh Company ("BA Pargh"); Daisytek Latin America, Inc. ("DLA"); Digital
Storage, Inc. ("DSI"); Tapebargains.com, Inc. ("TB"); The Tape Company ("Tape");
and Virtual Demand, Inc. ("VDI") each filed a voluntary petition for relief
under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code")
Thereafter, on June 3, 2003, Daisytek International Corporation
("International") filed a voluntary petition for relief under chapter 11 of the
Bankruptcy Code. The Debtors continue to operate their businesses and manage
their properties as debtors-in-possession pursuant to Bankruptcy Code (S)(S)
1107 and 1108. Individually and collectively, each of Inc., Arlington, BA Pargh,
DLA, DSI, TB, Tape, VDI, and International, with their respective bankruptcy
estates, are referred to herein as the "Debtors".
C. On July 30, 2003 this Court entered its Order Establishing Procedures
for Sale of Substantially All the Assets of the Selling Debtors (the "Bid
Procedures Order") [Docket No. 538]. The Bid Procedures Order established, inter
alia, the procedure whereby Inc. and the other Debtors, as applicable, could
solicit competing bids for the purchase of all shares of issued and outstanding
capital stock of Daisytek (Canada) Inc. ("Canada").
Factual Background
D. International was founded in 1977 as a computer supplies reseller in
Richardson, Texas. International is a holding company that, by and through its
U.S. subsidiaries and certain direct and indirect foreign subsidiaries was a
leading global distributor of (a) computer supplies; and (b) professional tape
products.
ORDER AUTHORIZING AND APPROVING SALE OF THE CAPITAL STOCK OF DAISYTEK (CANADA)
INC. OWNED BY INC. FREE AND CLEAR OF ALL LIENS, CLAIMS, ENCUMBRANCES AND OTHER
INTERESTS
PAGE 2 of 18
E. The Debtors are borrowers under a working capital credit facility (the
"BOA Credit Facility") with Bank of America, N.A., as agent and as a lender
("BOA"), and certain other lenders that are parties thereto (the "Lenders"/1/).
F. The applicable Debtors, in the exercise of their business judgment, have
decided to sell the assets of Arlington, Tape, and the stock of certain
non-debtor subsidiaries including Canada, and to assign certain intellectual
property rights of International to Canada in connection therewith. The Debtors
have taken steps, subject to necessary Bankruptcy Court approvals and as set
forth in the Bid Procedures Order, as is reasonably necessary to maximize the
value of the Debtors' assets.
G. The Debtors' marketing efforts were, reasonable, adequate and
appropriate under the circumstances and have maximized the value of the estates.
Terms of the Proposed Sale to the Buyer
H. Inc. engaged in extensive and vigorous, arm's length negotiations with
Buyer (defined below) with respect to the terms and conditions for the sale of
the Transferred Stock (defined below) of Canada to Buyer. The specific terms and
conditions of the proposed purchase are set out in a Stock Purchase Agreement
among EMJ Data Systems Ltd. (the "Buyer"), Canada and Inc. dated August 21, 2003
(collectively, with each exhibit, attachment, schedule, amendments, escrow,
release, and related agreement attached thereto or contemplated or referenced
therein, the "Stock Purchase Agreement"), a copy of which is attached as Exhibit
"A" to and made a part of this Order./2/
- ----------
/1/ The Lenders include, without limitation, Bank Of America, N.A., as agent and
as lender, and JP Morgan Chase Bank, Bank One, N.A., The CIT Group/Business
Credit, Inc., Comerica Bank, Siemens Financial Services, Inc., UBS Capital
Corporation, Fleet Capital Corporation, Foothill Capital Corporation, and PNC
Bank, National Association.
/2/ Capitalized terms used herein that are not otherwise defined herein shall
have the meaning set forth in the Stock Purchase Agreement.
ORDER AUTHORIZING AND APPROVING SALE OF THE CAPITAL STOCK OF DAISYTEK (CANADA)
INC. OWNED BY INC. FREE AND CLEAR OF ALL LIENS, CLAIMS, ENCUMBRANCES AND OTHER
INTERESTS
PAGE 3 of 18
I. In addition, and to facilitate the sale of the Transferred Stock and
meet certain representations and warranties in the Stock Purchase Agreement,
International will assign the Canadian trademark "DAISYTEK CANADA" and its
applicable design having Trademark Application No.: 1,163,429, the Canadian
trademark "DAISYTEK INTERNATIONAL" and its applicable design having Trademark
Application No.: 1,163,430, and all common law rights and related rights to such
trademarks (collectively, the "Canadian Trademarks"). The Canadian Trademarks
and related rights transferred to Canada will encompass and include any right
that International may have in and to the registration and use by Canada of the
internet domain names www.daisytek.ca and www.daisytek.canada.ca and related
subdomain names (the "Domain Names") and the irrevocable consent by
International and Inc. to the registration and use by Canada of such Domain
Names. A trademark assignment between Canada and International regarding the
assignment of the Canadian Trademarks and a written irrevocable consent between
Canada and International and Inc. with respect to registration and use of the
Domain Names (collectively, the "Trademark Assignment") will be executed at
Closing of the sale and is attached as Exhibit "B" and made a part of this
Order.
J. Pursuant to the Stock Purchase Agreement, the Buyer will, inter alia,
purchase all shares of issued and outstanding capital stock of Canada (the
"Transferred Stock"), including as described in the Stock Purchase Agreement.
The Buyer has made the highest and best offer to purchase the Transferred Stock,
subject to approval of this Court.
K. Pursuant to the Stock Purchase Agreement, the Buyer proposes to close on
the transaction as soon as possible after the entry of this Order, subject to
satisfaction of all conditions precedent to the Closing of the sale under the
Stock Purchase Agreement.
ORDER AUTHORIZING AND APPROVING SALE OF THE CAPITAL STOCK OF DAISYTEK (CANADA)
INC. OWNED BY INC. FREE AND CLEAR OF ALL LIENS, CLAIMS, ENCUMBRANCES AND OTHER
INTERESTS
PAGE 4 of 18
L. The Transferred Stock represents 100 percent of all issued and
outstanding shares of capital stock of Canada. All of the Transferred Stock is
owned by Inc. No creditor or holder of a claim against any of the Debtors
asserts a lien, security interest, claim or interest in or against the
Transferred Stock or the Canadian Trademarks. No objection was filed to the sale
of the Transferred Stock or the assignment of the Canadian Trademarks. The
Transferred Stock and the Canadian Trademarks shall be sold and assigned free
and clear of any and all liens, claims, security interests, encumbrances and
other interests pursuant to Bankruptcy Code (S) 363(f). Any such liens, claims,
security interests, encumbrances and other interests which have been asserted
against all or any portion of the Transferred Stock and the Canadian Trademarks
shall attach to the net sale proceeds. If a dispute arises over the priority or
validity of a particular lien asserted against the Transferred Stock and the
Canadian Trademarks, this Court retains jurisdiction to adjudicate such
disputes.
M. The Buyer is not assuming or undertaking to satisfy any "claims" (as
that term is defined in Bankruptcy Code (S) 101(5)) against any of the Debtors.
The Stock Purchase Agreement provides for, among other things, Inc. and the
other Debtors to have certain ongoing obligations to Buyer and Canada and for
Buyer and Canada to have certain ongoing rights with respect to Inc., including
without limitation, the following: (i) Inc. to pay for and provide ongoing
transition services to Canada, (ii) a release in favor of Canada and its
property and existing employees of all claims by Inc. and the other Debtors,
including avoidance claims and chapter 5 causes of action, and (iii) the
agreement to certain escrows, indemnifications and purchase price offsets,
holdbacks and adjustments. The release by Debtors of Canada, the execution of
the Trademark Assignment, and the creation of such ongoing rights and
obligations under the Stock Purchase Agreement, is a reasonable, appropriate and
necessary part of the sale and is in the best interests of the Debtors, their
estates and the holders of claims.
ORDER AUTHORIZING AND APPROVING SALE OF THE CAPITAL STOCK OF DAISYTEK (CANADA)
INC. OWNED BY INC. FREE AND CLEAR OF ALL LIENS, CLAIMS, ENCUMBRANCES AND OTHER
INTERESTS
PAGE 5 of 18
Notice of Sale to Creditors
N. Under the circumstances, notice of the Sale Motion, and the Supplemental
Motion, the terms of the Stock Purchase Agreement, the sale of the Transferred
Stock free and clear of all Liens and Claims (defined below) and the Trademark
Assignment was due, proper and sufficient. Notice of the Sale Motion and the
hearing on the Sale Motion was provided on or about August 1, 2003: via first
class United States mail, postage prepaid, upon (i) each person or entity known
to the Debtors to assert a Lien and Claim against the Transferred Stock; (ii)
the Office of the United States Trustee for the Northern District of Texas;
(iii) counsel for the Committee; (iv) counsel for the Lenders; (v) each entity
that has filed a notice of appearance in the Cases; (vi) upon every holder of a
claim against Inc. that is known to the Debtors; and (vii) all other persons and
entities upon whom the Debtors were otherwise to provide service as required by
the Bid Procedures Order. Notice of the Supplemental Motion and hearing on the
Supplemental Motion was provided on or about September 4 and 5, 2003: via first
class United States mail, postage prepaid, upon (i) the Office of the United
States Trustee for the Northern District of Texas; (ii) counsel for the
Committee; (iii) counsel for the Lenders; and (iv) all other parties on the
Master Service List.
Justification for Sale
O. The Debtors have exercised sound business judgment in connection with
the proposed sale to the Buyer. After considering the circumstances relating to
the sale of the Transferred Stock and the related assignments, the Court has
determined that the Buyer's offer presents the best opportunity for Inc. and its
bankruptcy estate, as well as the bankruptcy estates of the other Debtors, to
realize the highest distribution possible to their respective creditors and
holders of claims.
ORDER AUTHORIZING AND APPROVING SALE OF THE CAPITAL STOCK OF DAISYTEK (CANADA)
INC. OWNED BY INC. FREE AND CLEAR OF ALL LIENS, CLAIMS, ENCUMBRANCES AND OTHER
INTERESTS
PAGE 6 of 18
P. Inc. and International, and as applicable, the other Debtors have
carried the burden of demonstrating that the proposed sale on the terms and
conditions of the Stock Purchase Agreement and the Trademark Assignment are in
the best interest of these estates, and the Court further finds that Inc., and
as applicable the other Debtors, have met the standards set out in In re Lionel
Corp., 722 F.2d 1063, 1071 (2d Cir. 1983) to approve the expedited sale of a
substantial percentage of its property. Moreover, the sale to the Buyer on the
terms and conditions of the Stock Purchase Agreement and the Trademark
Assignment does not constitute a sub rosa plan of reorganization or violate any
provision of the Bankruptcy Code or Bankruptcy Rules.
Q. The transactions contemplated in the Subject Motion, the Stock Purchase
Agreement and the Trademark Assignment as approved and implemented herein, are
in compliance with and satisfy all applicable provisions of the Bankruptcy Code,
including but not limited to Bankruptcy Code (S) 363(b), (f) and (o) and 365.
The terms and conditions of the sale of the Transferred Stock to the Buyer, as
set out in the Stock Purchase Agreement and the assignment of the Canadian
Trademarks, as set out in the Trademark Assignment, together with any other
transactions described herein and in the Stock Purchase Agreement and the
Trademark Assignment, are approved by this Order as fair and reasonable.
R. The Buyer's offer, as approved herein, is the highest and best offer for
the Transferred Stock and the Canadian Trademarks. The aggregate purchase price
offered by the Buyer constitutes full and adequate consideration and reasonably
equivalent value for the Transferred Stock and the Canadian Trademarks.
S. The transfer of the Transferred Stock to the Buyer and the assignment of
the Canadian Trademarks to Canada on the Closing Date, for the consideration set
forth in the Stock
ORDER AUTHORIZING AND APPROVING SALE OF THE CAPITAL STOCK OF DAISYTEK (CANADA)
INC. OWNED BY INC. FREE AND CLEAR OF ALL LIENS, CLAIMS, ENCUMBRANCES AND OTHER
INTERESTS
PAGE 7 of 18
Purchase Agreement and the Trademark Assignment, is in the best interest of Inc.
and International and their respective bankruptcy estates, as well as the other
Debtors' estates, and their respective creditors and all parties-in-interest.
Good Faith
T. The transfer of the Transferred Stock to the Buyer and the assignment of
the Canadian Trademarks to Canada, represents arm's length transactions and have
been negotiated in good faith between the parties. The Buyer and Canada are each
good faith purchasers under Bankruptcy Code (S) 363(m) and, as such, is entitled
to the full protection of Bankruptcy Code (S) 363(m).
Sale Free and Clear of Liens, Claims and Encumbrances
U. Inc., International and as applicable the other Debtors, may sell the
Transferred Stock and the Canadian Trademarks free and clear of all Liens and
Claims, liens, security interests, claims, encumbrances and other interests
pursuant to Bankruptcy Code (S) 363(f).
BASED UPON THE FOREGOING, IT IS HEREBY ORDERED, ADJUDGED AND DECREED:
1. The Subject Motion is hereby granted as set forth herein. The sale of
the Transferred Stock to the Buyer, on the terms and subject to the conditions
set forth in the Stock Purchase Agreement, by Inc. and as applicable the other
Debtors, the assignment of the Canadian Trademarks, the Stock Purchase Agreement
(together with each exhibit, attachment, escrow, release, schedule and related
agreement attached thereto or contemplated or referenced therein), the Trademark
Assignment and all transactions, obligations, transfers, and deliveries
contemplated or required by the Stock Purchase Agreement, the Trademark
Assignment and this
ORDER AUTHORIZING AND APPROVING SALE OF THE CAPITAL STOCK OF DAISYTEK (CANADA)
INC. OWNED BY INC. FREE AND CLEAR OF ALL LIENS, CLAIMS, ENCUMBRANCES AND OTHER
INTERESTS
PAGE 8 of 18
Order are hereby APPROVED and AUTHORIZED in their entirety. Any objections to
the Subject Motion that were not withdrawn or settled on the record are
overruled.
2. Inc., International and the other Debtors are authorized and directed to
fully execute, enter into and perform all terms and conditions of the Stock
Purchase Agreement, together with all additional instruments and documents which
are contemplated or required by the Stock Purchase Agreement (including the
Trademark Assignment) or that may be reasonably necessary, convenient or
desirable in performing under the Stock Purchase Agreement, and to take any and
all further actions (including any prorations, adjustments and the like provided
for in the Stock Purchase Agreement) as may be necessary or appropriate in
performing the obligations as contemplated by the Stock Purchase Agreement.
Debtors and Buyer are authorized to enter into mutually acceptable written
amendments that do not alter the purchase price to the Stock Purchase Agreement
and the Trademark Assignment that they deem reasonably required to facilitate
and permit the Closing of the transactions contemplated therein.
4. Subject to the fulfillment of the terms and conditions of the Stock
Purchase Agreement, at the Closing, Inc., International and as applicable the
other Debtors, as is required under the Stock Purchase Agreement, shall sell,
transfer, assign and convey to the Buyer all right, title and interest in and to
the Transferred Stock and consummate the Trademark Assignment. Inc.,
International and the other Debtors are authorized, empowered and hereby
directed to deliver all bills of sale, the Trademark Assignment, and such other
documentation that may be reasonably necessary or reasonably requested by the
Buyer to evidence the transfers and transactions required under the Stock
Purchase Agreement and Trademark Assignment.
5. This Order is and shall be effective as a determination that, upon the
Closing, all "Liens and Claims" (as that term is defined below) existing
against, in or to all or any part of the
ORDER AUTHORIZING AND APPROVING SALE OF THE CAPITAL STOCK OF DAISYTEK (CANADA)
INC. OWNED BY INC. FREE AND CLEAR OF ALL LIENS, CLAIMS, ENCUMBRANCES AND OTHER
INTERESTS
PAGE 9 of 18
Transferred Stock and/or the Canadian Trademarks have been and are adjudged and
declared to be unconditionally released, discharged and terminated, with such
Liens and Claims, if any, attaching to the net sale proceeds from the sale of
the Transferred Stock to the Buyer (with such net sale proceeds calculated net
of and after any purchase price holdbacks, reductions, increases, offsets, or
adjustments set forth in the Stock Purchase Agreement and as so calculated, the
"Net Proceeds"). Upon Closing, the Transferred Stock and Canadian Trademarks are
hereby deemed, adjudged and determined to be absolutely transferred, sold,
conveyed and assigned to the Buyer and Canada, respectively, as of the Closing
free and clear of any and all liens, security interests, rights, interests,
encumbrances, and claims (as claims is defined in Section 101 of the Bankruptcy
Code) of whatever type or description, including, but not limited to, mortgages,
security interests, pledges, judgments, reclamation claims, rights created by
possession, claims seeking substantive consolidation of Canada or its property
and Inc. or other Debtors, leases, subleases, licenses, options, easements,
deeds of trust, conditional sales agreements, causes of action, lawsuits,
liabilities, obligations, indebtedness, title retention arrangements intended as
security, interests of consignment creditors, guarantees, hypothecations,
charges, obligations, rights, restrictions and other interests and encumbrances,
and any other claims and interests (any and all such liens, security interests,
rights, interests, encumbrances, and claims and any other items or matters
described in this paragraph shall be referred to collectively as the "Liens and
Claims"), existing as of the Closing Date or having arisen, existed or accrued
prior to or on the Closing Date, whether such Claims are direct or indirect,
absolute or contingent, choate or inchoate, fixed or contingent, matured or
unmatured, liquidated or unliquidated, voluntarily incurred or arising by
operation of law, against any or all of: (a) Inc. or its bankruptcy estate, (b)
any of the other Debtors or their respective bankruptcy estates; or (c) the
Transferred Stock or the Canadian Trademarks, including without limitation, any
Liens and Claims, if any, of any and
ORDER AUTHORIZING AND APPROVING SALE OF THE CAPITAL STOCK OF DAISYTEK (CANADA)
INC. OWNED BY INC. FREE AND CLEAR OF ALL LIENS, CLAIMS, ENCUMBRANCES AND OTHER
INTERESTS
PAGE 10 of 18
all of the Lenders, GE Capital Public Finance, Inc. and Fleet Capital
Corporation, of any other creditor of any of the Debtors, and any liens, claims,
rights, security interests, or interests granted under the Bankruptcy Code or in
an Order of this Court.
6. All Liens and Claims in or against the Transferred Stock or the Canadian
Trademarks shall attach to the Net Proceeds arising from the sale of the
Transferred Stock to the Buyer with the same force, validity, effect, priority
and enforceability as such Liens and Claims had prior to such sale. Any issues
regarding the extent, validity, perfection, priority and enforceability of such
Transferred Claims with respect to any Net Proceeds shall be determined by the
Court upon proper application at a later date. The holder of any Liens and
Claims are hereby precluded and injoined from asserting those Liens and Claims
against the Transferred Stock or the Canadian Trademarks.
7. The Buyer does not assume, and shall not be deemed to have assumed, any
"claims" (as that term is defined in Bankruptcy Code (S) 101(5)) against any of
the Debtors or their respective bankruptcy estates, including Inc. and its
bankruptcy estate. The Buyer is not, and shall not be deemed, a successor of or
to any of the Debtors. The Buyer does not assume and is not obligated or liable
for any indebtedness or liability of any or all of Inc. or the other Debtors or
any Liens and Claims against Inc. or any of the other Debtors or their
respective bankruptcy estates (whether direct or indirect, known or unknown,
liquidated or unliquidated, choate or inchoate, or contingent or fixed).
8. As of the Closing, all of the Debtors' interests in the Transferred
Stock shall be transferred to, and vested in, the Buyer free and clear of all
Liens and Claims and all of the Debtors' interest in the Canadian Trademarks
shall be assigned to, and vested in Canada free and clear of Liens and Claims.
Subject to the fulfillment of the terms and conditions of the Stock Purchase
Agreement, as of the Closing, this Order shall be considered and constitute for
all
ORDER AUTHORIZING AND APPROVING SALE OF THE CAPITAL STOCK OF DAISYTEK (CANADA)
INC. OWNED BY INC. FREE AND CLEAR OF ALL LIENS, CLAIMS, ENCUMBRANCES AND OTHER
INTERESTS
PAGE 11 of 18
purposes a full and complete general assignment, conveyance and transfer of the
Transferred Stock, the Canadian Trademarks and/or a bill of sale transferring
good and marketable, indefeasible title and interest in the Transferred Stock to
the Buyer and the Canadian Trademarks to Canada. All governmental recording
offices and all other parties, persons or entities are hereby directed to accept
this Order as such an assignment and/or bill of sale, and, if necessary, this
Order shall be accepted for recordation on or after the Closing as conclusive
evidence of the free and clear, unencumbered transfer of title to the
Transferred Stock conveyed to the Buyer and the Canadian Trademarks assigned to
Canada at the Closing. The Debtors are further authorized and directed to
execute and deliver to the Buyer and Canada such other and further documents as
it may reasonably request to evidence the transfer.
9. This Court shall have exclusive jurisdiction to implement and enforce
the terms and provisions of the Stock Purchase Agreement, the Trademark
Assignment and this Order, including any disputes or controversies relating
hereto or with respect to the sale, the proceeds of sale, the transfer and/or
assignment and delivery of the Transferred Stock to the Buyer, the assignment of
the Canadian Trademarks to Canada, Inc.'s ongoing obligations to Buyer under the
Stock Purchase Agreement, and the Buyer's peaceful use and enjoyment of the
Transferred Stock and Canada's peaceful use and enjoyment of the Canadian
Trademarks after the Closing, free and clear of any Liens and Claims, regardless
of whether a plan of reorganization or liquidation has been confirmed in these
bankruptcy cases, or whether these cases have been closed or a final decree
entered, and irrespective of the provisions of any such plan or order confirming
such plan of reorganization. This Court shall retain jurisdiction in all
circumstance to determine any such issue or dispute, including upon motion by
the Buyer or Canada.
10. The terms and provisions of this Order shall be binding in all respects
upon the Debtors, their respective bankruptcy estates, their employees,
officers, and directors, their
ORDER AUTHORIZING AND APPROVING SALE OF THE CAPITAL STOCK OF DAISYTEK (CANADA)
INC. OWNED BY INC. FREE AND CLEAR OF ALL LIENS, CLAIMS, ENCUMBRANCES AND OTHER
INTERESTS
PAGE 12 of 18
creditors, any holders of Liens or Claims against the Debtors or their
respective bankruptcy estates, any parties having received notice of these
proceedings (actual or constructive), any affected third parties and other
parties in interest, any persons or entities asserting a Lien and Claim against,
or an interest in, any of the Transferred Stock or Canadian Trademarks sold,
conveyed and assigned pursuant to this Order, the Buyer, and all successors,
transferees or assigns of the above-mentioned parties, including, but not
limited to, a chapter 11 trustee or chapter 7 trustee. This Order is enforceable
in any chapter 7 case of the Debtors.
11. This Order is a final order (as opposed to an interlocutory order)
regarding this matter and is enforceable upon entry. To the extent necessary
under Bankruptcy Rules 5003, 9014, 9021 and 9022, this Order constitutes the
Court's separate judgment and this Court expressly finds that there is no just
reason for delay in the implementation of this Order and expressly directs entry
of judgment by this Order as set forth herein. Upon expiration of the ten-day
automatic stay imposed by Bankruptcy Rules 6004(g) and 6006(d) that shall be
calculated from the date of entry of this Order, the Closing may occur and this
Order, the Stock Purchase Agreement and the Trademark Assignment are subject to
immediate execution and fulfillment by the Debtors, the Buyer and Canada.
12. The Buyer and Canada are good faith purchasers under Bankruptcy Code
(S) 363(m) and, as such, are entitled to the full protection of Bankruptcy Code
(S) 363(m).
13. Pursuant to Bankruptcy Code (S) 363(m), the reversal or modification of
this Order on appeal will not affect the validity of the transfer of the
Transferred Stock to the Buyer and the Canadian Trademarks to Canada, as well as
the transactions contemplated and/or authorized by this Order, unless the same
is stayed pending appeal prior to the Closing on the Stock Purchase Agreement
and the Trademark Assignment.
ORDER AUTHORIZING AND APPROVING SALE OF THE CAPITAL STOCK OF DAISYTEK (CANADA)
INC. OWNED BY INC. FREE AND CLEAR OF ALL LIENS, CLAIMS, ENCUMBRANCES AND OTHER
INTERESTS
PAGE 13 of 18
14. Each and every federal, state and local government agency or department
is hereby directed to accept any and all documents and instruments necessary and
appropriate to consummate the transactions contemplated by the Stock Purchase
Agreement, the Trademark Assignment and this Order, including, but not limited
to, documents and instruments for recording in any governmental agency or
department required to transfer to the Buyer or Canada the names and any and all
other licenses or permits under the Debtors' ownership necessary for the
operations that are associated with the Transferred Stock. All county and state
offices are further directed to accept any and all termination statements under
the Uniform Commercial Code for release of any liens or encumbrances against any
of the Transferred Stock or the Canadian Trademarks. Pursuant to section 1146(c)
of the Bankruptcy Code, the execution, delivery and/or recordation of any and
all documents or instruments necessary or desirable to consummate the
transactions contemplated by the Stock Purchase Agreement, the Trademark
Assignment and this Order and the transfer of the Transferred Stock and the
Canadian Trademarks pursuant thereto shall be, and hereby is, exempt from the
imposition and payment of any and all recording, transfer, sales and use, stamp
or other similar taxes.
15. To the extent requested by Buyer or Canada (as applicable), any and all
parties asserting Liens and Claims against the Transferred Stock or Canadian
Trademarks shall execute contemporaneously with Closing (or as soon as
reasonably practical thereafter as requested by the Buyer), any and all
documents, releases or instruments as may be reasonably necessary to release,
remove or terminate the Liens and Claims, if any, which have been asserted
against any of the Transferred Stock or Canadian Trademarks. If such a party
fails to act, the Debtors are authorized to execute contemporaneously with
Closing on the Stock Purchase Agreement (or as soon as reasonably practical
thereafter as requested by the Buyer or Canada (as applicable)), any and all
documents, releases or instruments as may be reasonably necessary to release,
remove or
ORDER AUTHORIZING AND APPROVING SALE OF THE CAPITAL STOCK OF DAISYTEK (CANADA)
INC. OWNED BY INC. FREE AND CLEAR OF ALL LIENS, CLAIMS, ENCUMBRANCES AND OTHER
INTERESTS
PAGE 14 of 18
terminate the Liens and Claims, if any, which have been asserted against the
Transferred Stock or Canadian Trademarks.
16. The Debtors are authorized and directed to pay to Houlihan Lokey Howard
& Zukin Capital Group, its fees for serving as investment bankers for the
Debtors in accordance with the terms of their engagement previously approved by
the Court. After payment of the Houlihan fees, the Debtors are authorized and
directed to pay from the Net Proceeds to the Lenders until the Lenders' claim is
paid in full, unless the Debtors, the Lenders and the Committee agree to (or the
court orders pursuant to 11 U.S.C. Section 363 after notice and opportunity for
hearing) use of a portion of the sales proceeds as cash collateral, and provided
further that the payment to the Lenders shall be subject to the claims, if any,
of the Official Committee of Unsecured Creditors may assert against the Lenders
except as to the validity, enforceability and priority of the liens asserted by
the Lenders.
17. Upon the Effective Time, Inc. and the other Debtors and their
respective bankruptcy estates shall be deemed to have released, waived and
discharged any and all Claims (as defined in the Stock Purchase Agreement),
Liens (as defined in the Stock Purchase Agreement) and causes of action they
have or may have against Canada, and its existing employees or assets,
including, without limitation, Claims (as defined in the Stock Purchase
Agreement) under Chapter 5 of the Bankruptcy Code and any avoidance claims or
causes of action under the Bankruptcy Code and any alleged obligations or
Indebtedness owed by Canada to Inc.; provided, however, that the foregoing
release does not release, waive or discharge any obligations of Canada or Buyer
contained in the Stock Purchase Agreement or related documents, including
without limitation, Buyer's obligation in Section 8.15 of the Stock Purchase
Agreement. Debtors are authorized and directed to execute a release agreement at
Closing in favor of Canada to further evidence this release. Inc. and the
Debtors are authorized
ORDER AUTHORIZING AND APPROVING SALE OF THE CAPITAL STOCK OF DAISYTEK (CANADA)
INC. OWNED BY INC. FREE AND CLEAR OF ALL LIENS, CLAIMS, ENCUMBRANCES AND OTHER
INTERESTS
PAGE 15 of 18
to settle and finally resolve the asserted intercompany indebtedness and claim
owed by Canada to Inc. or the other Debtors as provided in Section 8.15 of the
Stock Purchase Agreement. Upon payment of the amount identified in Section 8.15
of the Stock Purchase Agreement to Inc., all intercompany indebtedness or
obligations alleged to exist or to be owed by Canada to Inc. or the other
Debtors and not previously released as provided herein shall be deemed released,
satisfied and discharged.
18. The rights of the Debtors under the Stock Purchase Agreement may be
vested in a representative of the bankruptcy estates under any plan of
reorganization or liquidation confirmed in the Bankruptcy Cases.
Dated: September 12, 2003
/s/ Harlin D. Hale
----------------------------------------
THE HONORABLE HARLIN D. HALE
UNITED STATES BANKRUPTCY JUDGE
Agreed to and Accepted by:
VINSON & ELKINS L.L.P.
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
Tel: 214-220-7700
Fax: 214-220-7716
By : /s/ Holly J. Warrington
--------------------------------------
Daniel C. Stewart, SBT # 19206500
Paul E. Heath, SBT # 09355050
Richard H. London, SBT # 24032678
Holly J. Warrington, SBT # 24037671
ATTORNEYS FOR THE DEBTORS
- -AND-
ORDER AUTHORIZING AND APPROVING SALE OF THE CAPITAL STOCK OF DAISYTEK (CANADA)
INC. OWNED BY INC. FREE AND CLEAR OF ALL LIENS, CLAIMS, ENCUMBRANCES AND OTHER
INTERESTS
PAGE 16 of 18
LOCKE, LIDDELL & SAPP LLP
2200 Ross Avenue
Suite 2200
Dallas, Texas 75201
Tel: 214-740-8000
Fax: 214-740-8800
By: /s/ Greg A. Lowry (signed with permission HJW)
------------------------------------------------
Greg A. Lowry, SBT # 12641360
ATTORNEYS FOR THE BUYER
ORDER AUTHORIZING AND APPROVING SALE OF THE CAPITAL STOCK OF DAISYTEK (CANADA)
INC. OWNED BY INC. FREE AND CLEAR OF ALL LIENS, CLAIMS, ENCUMBRANCES AND OTHER
INTERESTS
PAGE 17 of 18
[Exhibit Omitted]