EXHIBIT 2.1
EXECUTION COPY
AMENDED AND RESTATED
ASSET AND STOCK
PURCHASE AGREEMENT
BY AND AMONG
TUFCO TECHNOLOGIES, INC.,
TUFCO, L.P.
AND
TRIMACO, LLC
DATED AS OF MARCH 31, 2003
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.............................................................................................1
1.1. Specific Definitions...................................................................................1
1.2. Other Terms............................................................................................6
1.3. Other Definitional Provisions..........................................................................6
ARTICLE II PURCHASE AND SALE OF THE BUSINESS......................................................................6
2.1. Purchase and Sale of Assets............................................................................6
2.2. Excluded Assets........................................................................................7
2.3. Assumed Liabilities....................................................................................8
2.4. Excluded Liabilities...................................................................................9
2.5. Purchase Price.........................................................................................9
2.6. Closing; Delivery and Payment..........................................................................9
2.7. Post Closing Purchase Price Adjustment and Net Cash Flow Reconciliation...............................10
2.8. Taxes and Fees........................................................................................13
2.9. Allocation of Purchase Price..........................................................................13
2.10. Nonassignability of Assets............................................................................13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS............................................................14
3.1. Organization and Authority of Sellers.................................................................14
3.2. Financial Information.................................................................................15
3.3. Foremost Shares.......................................................................................15
3.4. Absence of Certain Changes or Events..................................................................15
3.5. Title to Assets; Absence of Liens and Encumbrances, etc...............................................15
3.6. Condition of Transferred Assets.......................................................................15
3.7. Litigation............................................................................................16
3.8. Compliance with Law...................................................................................16
3.9. Contracts.............................................................................................16
3.10. Consents and Approvals................................................................................16
3.11. Collective Bargaining Agreements......................................................................16
3.12. ERISA Plans...........................................................................................16
3.13. Intellectual Property.................................................................................17
3.14. Brokers and Finders...................................................................................17
3.15. Environmental Matters.................................................................................17
3.16. Taxes of Foremost.....................................................................................17
3.17. No Other Representations or Warranties................................................................17
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER...............................................................18
4.1. Organization and Authority of Buyer...................................................................18
4.2. Brokers and Finders...................................................................................18
4.3. Financial Capability..................................................................................18
4.4. Securities Matters....................................................................................18
4.5. Condition of Transferred Assets.......................................................................19
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ARTICLE V CERTAIN COVENANTS AND AGREEMENTS OF SELLERS AND BUYER..................................................19
5.1. Access and Information................................................................................19
5.2. Registrations, Filings and Consents...................................................................19
5.3. Conduct of Business...................................................................................20
5.4. Employee Matters......................................................................................20
5.5. Best Efforts..........................................................................................21
5.6. Books; Records........................................................................................21
5.7. [RESERVED]............................................................................................21
5.8. Further Assurances....................................................................................22
5.9. Compliance with WARN, etc.............................................................................22
5.10. Transitional Services.................................................................................22
5.11. Sale of ▇▇▇▇▇▇▇ Facility..............................................................................22
5.12. Assistance in Collecting Certain Amounts..............................................................22
5.13. Confidentiality.......................................................................................23
5.14. Insurance.............................................................................................23
ARTICLE VI CONDITIONS TO THE PURCHASE AND SALE...................................................................23
6.1. Conditions to the Purchase and Sale Relating to Buyer.................................................23
6.2. Conditions to the Purchase and Sale Relating to Sellers...............................................24
ARTICLE VII AMENDMENT AND WAIVER.................................................................................25
7.1. Amendment and Modification............................................................................25
7.2. Waiver................................................................................................25
ARTICLE VIII SURVIVAL AND INDEMNIFICATION........................................................................25
8.1. Survival of Representations and Warranties; Knowledge of Breach.......................................25
8.2. Indemnification.......................................................................................26
8.3. Method of Asserting Claims, etc.......................................................................27
8.4. Indemnification Limitations...........................................................................28
8.5. Liability for Taxes of Foremost and Related Matters...................................................29
ARTICLE IX MISCELLANEOUS.........................................................................................32
9.1. Right to Terminate....................................................................................32
9.2. Effect of Termination.................................................................................32
9.3. Return of Information.................................................................................33
9.4. Expenses..............................................................................................33
9.5. Public Disclosure.....................................................................................33
9.6. Assignment............................................................................................33
9.7. Entire Agreement......................................................................................34
9.8. Schedules.............................................................................................34
9.9. Counterparts..........................................................................................34
9.10. Section Headings......................................................................................34
9.11. Notices...............................................................................................34
9.12. Governing Law.........................................................................................35
9.13. Bulk Sales Laws.......................................................................................35
9.14. Illegality............................................................................................35
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ATTACHMENTS
EXHIBITS
Exhibit A Form of Escrow Agreement
Exhibit B Form of Letter Agreement
SCHEDULES
Schedule 2.1(b) Fixtures and Equipment
Schedule 2.1(c) Assumed Intellectual Property
Schedule 2.1(f) Computer Equipment
Schedule 2.2(e) Excluded Intellectual Property
Schedule 2.2(h) Other Excluded Assets
Schedule 2.3(i) Assumed Claims
Schedule 2.7(a) Estimated Financial Closing Working Capital
Schedule 2.7(b) Methodology for Determining Net Cash Flow
Schedule 2.9 Purchase Price Allocation
Schedule 3.4 Absence of Changes
Schedule 3.5 Liens
Schedule 3.7 Litigation
Schedule 3.8 Compliance with Law
Schedule 3.9 Contracts
Schedule 3.10 Consents
Schedule 3.11 Collective Bargaining Agreements
Schedule 3.12(a) Benefit Plans
Schedule 3.13(a) Intellectual Property
Schedule 3.13(b) Liens on Intellectual Property
Schedule 3.15 Environmental Matters
Schedule 3.16 Taxes of Foremost
Schedule 5.4 Employees
Schedule 6.1(e) Required Consents
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AMENDED AND RESTATED
ASSET AND STOCK PURCHASE AGREEMENT
THIS IS AN AMENDED AND RESTATED
ASSET AND STOCK PURCHASE
AGREEMENT, dated as of March 31, 2003, by and among TUFCO TECHNOLOGIES, INC., a
Delaware corporation ("Parent"), TUFCO, L.P., a Delaware limited partnership
("Tufco LP" and, together with Parent, "Sellers") and TRIMACO, LLC, a Missouri
limited liability company ("Buyer").
BACKGROUND
A. Parent, Tufco LP and Buyer are parties to the
Asset and
Stock Purchase Agreement, dated as of February 21, 2003 (the "Original
Agreement") and desire to amend and restate the Original Agreement.
B. Parent is the beneficial and record owner of all of the
issued and outstanding capital stock (the "Foremost Shares") of Foremost
Manufacturing, Inc., a Missouri corporation ("Foremost").
▇. ▇▇▇▇▇▇▇ are engaged at the ▇▇▇▇▇▇▇ Facility and the Saint
Louis Office (as hereinafter defined) in the business of manufacturing,
distributing and selling paint sundry products to national retailers, local
merchants, professional paint stores and buying cooperatives through their Paint
Sundries Division (the "Business").
▇. ▇▇▇▇▇▇▇ desire to sell, transfer and assign to Buyer, and
Buyer desires to purchase from Sellers, substantially all of the assets
comprising the Business, defined herein as the Transferred Assets, and Buyer
desires to assume certain of the liabilities of the Business, defined herein as
the Assumed Liabilities, as more specifically provided herein.
E. The members of Buyer (and certain related persons) have
agreed to unconditionally guarantee certain obligations of Buyer hereunder
pursuant to a guarantee being executed and delivered to Sellers on the date
hereof.
TERMS
THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, the parties hereto acknowledge and agree that
this Agreement shall amend and supersede in its entirety the Original Agreement,
and agree as follows:
ARTICLE I
DEFINITIONS
1.1. Specific Definitions. As used in this Agreement, the following
terms shall have the meanings set forth or as referenced below:
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"Accounts Receivable" shall mean all amounts owed to Sellers
as of the Closing Date by third parties that are attributable to the Business.
"Affiliate" shall mean, with respect to any Person, any Person
directly or indirectly controlling, controlled by, or under common control with,
such other Person at any time during the period for which the determination of
affiliation is being made; provided, however, that for purposes of this
Agreement, "Affiliate" shall not include Bradford Venture Partners, L.P.,
Bradford Ventures Ltd., Bradford Investment Partners, ▇.▇. ▇▇▇▇▇▇▇▇ Associates,
Bradford Equities Fund L.P., Bradford Equities Fund III, L.P., Bradford Equities
Management, L.L.C., Bradford Associates Management Corp., Bradford Investors,
L.P., Bradford Management LLC, Overseas Equity Investors Ltd., Overseas Equity
Investors Partners, Bessemer Trust Company, Bessemer Securities Corporation, or
any of their respective successors, subsidiaries, employees, officers,
directors, members, partners, stockholders, affiliates, agents or legal
representatives. For purposes of this definition, the term "control" (including
the correlative meanings of the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of management
policies of such Person, whether through the ownership of voting securities or
by contract or otherwise.
"Agreement" shall mean this Agreement and all exhibits and
schedules hereto.
"Allocation" shall have the meaning set forth in Section 2.9.
"Assumed Liabilities" shall have the meaning set forth in
Section 2.3.
"Audited Financial Statements" means the Balance Sheet
contained in Seller's Consolidated Financial Statements as of September 30,
2002.
"Benefit Plans" shall have the meaning set forth in Section
3.12(a).
"Books and Records" shall mean all books, ledgers, files,
reports, plans and operating records related exclusively to the Transferred
Assets.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banks in
New York City are authorized or obligated by
law or executive order to close.
"Buyer" shall have the meaning set forth in the Preamble.
"Buyer Deductible" shall have the meaning set forth in Section
8.4(a)(iii).
"Buyer Indemnified Party" shall have the meaning set forth in
Section 8.2(a).
"Buyer Indemnifying Party" shall have the meaning set forth in
Section 8.2(b).
"Closing" shall have the meaning set forth in Section 2.6(a).
"Closing Date" shall have the meaning set forth in Section
2.6(a).
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"COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Confidentiality Agreement" shall mean the Confidentiality
Agreements by and between Buyer and Sellers.
"Consents" shall have the meaning set forth in Section 3.10.
"Continuation Coverage" shall have the meaning set forth in
Section 5.4(c).
"Contracts" shall have the meaning set forth in Section 3.9.
"Employees" shall have the meaning set forth in Section
5.4(a).
"Encumbrances" shall mean any liens, charges, encumbrances,
security interests, or restriction of any kind, including any restriction on
voting, use, transfer, receipt of income, or exercise of any other attribute of
ownership.
"Environmental Law" shall mean any applicable law, regulation,
code, license, permit, order, judgment, decree or injunction from any
governmental entity (a) relating to the protection of the environment (including
air, water, soil and natural resources), or (b) the use, storage, handling,
release or disposal of Hazardous Substances, in each case as presently in
effect.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"Escrow Agent" shall mean ▇.▇. ▇▇▇▇▇▇ Trust Company, National
Association.
"Escrow Agreement" shall mean the Escrow Agreement to be
entered into by and among the Escrow Agent, Buyer and Sellers in the form
attached hereto as Exhibit A.
"Escrow Amount" shall mean $500,000.
"Estimated Financial Closing Working Capital" shall have the
meaning set forth in Section 2.7(a)(iv).
"Excluded Assets" shall have the meaning set forth in Section
2.2.
"Final Net Cash Flow Statement" means the determination of the
Net Cash Flow that is final and binding on the parties, either through agreement
by the parties or through the action of the Independent Accounting Firm as
provided in Section 2.7(b).
"Final Working Capital Statement" means the determination of
the Financial Closing Working Capital that is final and binding on the parties,
either through agreement by the parties or through the determination of the
Independent Accounting Firm as provided in Section 2.7(a).
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"Financial Closing" shall mean 12:00 a.m. on March 1, 2003.
"Financial Closing Working Capital" shall mean, for the
Business as of the Financial Closing, Accounts Receivable and Inventory, less
trade payables and Other Accruals prepared in accordance with GAAP applied
consistent with the Audited Financial Statements.
"Financial Statements" shall have the meaning set forth in
Section 3.2.
"Fixtures and Equipment" shall mean all furniture, fixtures,
furnishings, machinery, vehicles, equipment and other tangible personal property
exclusively used in the operation of the Business and located at the ▇▇▇▇▇▇▇
Facility and the Saint Louis Office, other than any Excluded Assets.
"Foremost" shall have the meaning set forth in the Preamble.
"Foremost Shares" shall have the meaning set forth in the
Preamble.
"GAAP" shall mean generally accepted accounting principles in
the United States.
"Group Health Plans" shall have the meaning set forth in
Section 5.4(c).
"Hazardous Substances" shall mean any substance to the extent
presently listed, defined, designated or classified as hazardous, toxic or
radioactive under any applicable Environmental Law including petroleum or any
derivative or by-products thereof.
"Indemnified Party" shall mean a Buyer Indemnified Party or a
Seller Indemnified Party, as the case may be.
"Indemnifying Party" shall mean the Buyer Indemnifying Party
or the Seller Indemnifying Party, as the case may be.
"Independent Accounting Firm" shall mean Deloitte & Touche
LLP.
"Initial Net Cash Flow Statement" shall have the meaning set
forth in Section 2.7(b)(iii).
"Initial Working Capital Statement" shall have the meaning set
forth in Section 2.7(a)(i).
"Intellectual Property" shall mean patents, patent
applications, inventions, invention disclosures, trade secrets, formulas,
know-how, registered and unregistered trademarks, service marks, trade names,
trade dress, logos and any similar proprietary rights.
"Inventory" shall mean all inventory, including raw materials,
work in process, finished products and shipments in transit, related exclusively
to the Business.
"Letter Agreement" shall have the meaning set forth in Section
6.1(i).
4
"Losses" shall have the meaning set forth in Section 8.2(a).
"Manning Facility" shall mean the manufacturing and
distribution facility of the Business located in Manning, South Carolina.
"Manning Facility Purchase Agreement" shall have the meaning
set forth in Section 5.11.
"Material Adverse Effect" shall mean a material adverse effect
on the Transferred Assets or operation of the Business taken as a whole.
"Measurement Period" shall have the meaning set forth in
Section 2.7(b)(i).
"Notice" shall have the meaning set forth in Section 8.3(a).
"Notice of Disagreement" shall have the meaning set forth in
Section 2.7.
"Other Accruals" shall mean accrued rebates, sales
commissions, accrued but unpaid vacation pay for Employees and property taxes
that are attributable to the Business.
"Other Assets" shall mean the assets set forth on Schedule
2.1(k).
"Parent" shall have the meaning set forth in the Preamble.
"Permitted Encumbrances" shall have the meaning set forth in
Section 3.5.
"Person" shall mean an individual, corporation, partnership,
limited liability company, association, trust or unincorporated organization, a
government or any agency or political subdivision thereof or any other entity or
organization.
"Purchase Price" shall have the meaning set forth in Section
2.5.
"Saint Louis Office" shall mean the sales office of the
Business located in St. Louis, Missouri.
"Sellers" shall have the meaning set forth in the Preamble.
"Seller Deductible" shall have the meaning set forth in
Section 8.4(a)(i).
"Seller Indemnified Party" shall have the meaning set forth in
Section 8.2(b).
"Seller Indemnifying Party" shall have the meaning set forth
in Section 8.2(a).
"Tax" or "Taxes" shall mean all federal, state, local or
foreign income, gross receipts, windfall profits, value added, severance,
property, production, sales, use, license, excise, franchise, employment,
withholding or similar taxes, together with any interest, additions or penalties
with respect thereto and any interest in respect of such additions or penalties.
5
"Tax Returns" shall mean all Federal, state and local reports
and returns required to be filed with respect to Taxes.
"Termination Fee" shall have the meaning set forth in Section
9.2(b).
"Third Party Claim" shall have the meaning set forth in
Section 8.3(a).
"Transferred Assets" shall have the meaning set forth in
Section 2.1.
"Transitional Services Agreement" shall have the meaning set
forth in Section 5.10.
"Tufco LP" shall have the meaning set forth in the Preamble.
"WARN" shall mean the Worker Adjustment and Retraining
Notification Act.
1.2. Other Terms. Other terms may be defined elsewhere in the text of
this Agreement and, unless otherwise indicated, shall have such meaning
throughout this Agreement.
1.3. Other Definitional Provisions.
(a) The words "hereof", "herein", and "hereunder" and words of
similar import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
(b) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) Whenever the word "include," "includes," or "including" is
used in this Agreement, it shall be deemed to be followed by the words "without
limitation."
(d) Whenever a representation or warranty is stated to be
based on the "knowledge of Sellers", the "Sellers' knowledge" or a similar
qualification, such phrase refers to whether any of Sellers' Senior Management
(as hereafter defined) has actual knowledge of the matters involved. For
purposes of this Agreement, the Sellers' "Senior Management" consists of ▇▇▇▇▇
▇▇▇▇▇▇▇▇, III and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
ARTICLE II
PURCHASE AND SALE OF THE BUSINESS
2.1. Purchase and Sale of Assets. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing, Sellers agree to sell,
convey, transfer, assign and deliver to Buyer, and Buyer agrees to purchase from
Sellers, all of Sellers' right, title and interest in and to the assets and
properties of Sellers of every type and description that are currently
exclusively used in the operation of the Business, whether tangible or
intangible, real, personal or mixed, except for the Excluded Assets (the
"Transferred Assets"), including, without limitation, all of Sellers' right,
title and interest in the following:
6
(a) all Accounts Receivable net of reserves and allowances for
accounts (calculated in a manner consistent with Sellers' methodology applied
for calculation of receivables and reserves in connection with the Audited
Financial Statements) and excluding accounts of any accounts debtor who has
filed, or has filed against it, a petition in bankruptcy or an application for
relief under any provision of any state or federal bankruptcy, insolvency, or
debtor-in relief law;
(b) the Fixtures and Equipment set forth on Schedule 2.1(b);
(c) the Intellectual Property listed in Schedule 2.1(c) and
used exclusively in the Business;
(d) all Contracts;
(e) any Books and Records;
(f) all computer hardware, stored data, owned computer
software documentation, including source code and the systems documentation
listed in Schedule 2.1(f);
(g) any Inventory net of reserves and allowances for Inventory
calculated in connection with the Audited Financial Statements (excluding
reserves booked for inventory listed on schedule 2.2(h));
(h) any government licenses, permits and approvals issued to
either Seller with respect to the Business to the extent their transfer is
permitted by law;
(i) all goodwill exclusively related to the Business;
(j) the Foremost Shares; and
(k) the Other Assets.
Notwithstanding anything to the contrary contained in this
Agreement, Sellers may retain copies of any Contract, Books and Records or any
other document or materials.
2.2. Excluded Assets. Notwithstanding anything herein to the contrary,
from and after the Closing, Sellers shall retain all of their right, title and
interest in and to, and there shall be excluded from the sale, conveyance,
assignment or transfer to Buyer hereunder, and the Transferred Assets shall not
include, the following assets and properties (such retained assets and
properties being herein collectively referred to as the "Excluded Assets"):
(a) all (i) cash, including bank balances and bank accounts,
monies in possession of any banks, savings and loans or trust companies and
similar cash items on hand on the Closing Date, and (ii) investment securities
and other short- and medium-term investments of the Business;
(b) all Tax Returns of Sellers;
7
(c) all licensed software and any computer hardware, stored
data, owned computer software documentation, including source code and systems
documentation, not listed in Schedule 2.1(f);
(d) the ▇▇▇▇▇▇▇ Facility and the ▇▇▇▇▇▇▇ Facility Purchase
Agreement;
(e) the Intellectual Property listed in Schedule 2.2(e);
(f) any rights or benefits pursuant to any of Sellers'
insurance policies (intercompany, self-insurance or otherwise);
(g) any causes of action, lawsuits, judgments, claims and
demands of any nature that (i) arose out of or relate to events that occurred on
or prior to the Financial Closing that are related to the Business or (ii) arose
or arise or relate to events that occur or occurred prior to or following the
Closing if related to any of the Excluded Assets or Excluded Liabilities, in
each case (i) and (ii), whether arising by way of counterclaim or otherwise; and
(h) those assets listed in Schedule 2.2(h) hereto and any
assets of Sellers related to the Business located at Sellers' corporate
headquarters in Green Bay, Wisconsin.
2.3. Assumed Liabilities. Subject to the terms and provisions of this
Agreement, and except as otherwise provided by this Section 2.3, Buyer agrees at
the Closing to assume and discharge or perform when due (consistent with the
assumption by Buyer hereunder of all liabilities and obligations of the Business
as of the Financial Closing, including, without limitation as further described
in Section 2.7(b)) the following (the "Assumed Liabilities"):
(a) all of Sellers' liabilities and obligations disclosed in
this Agreement (including, without limitation, on the Schedules hereto, but
excluding, however, the actions disclosed on Schedule 3.7), all liabilities and
obligations of Buyer pursuant to the provisions of this Agreement, including,
without limitation pursuant to Sections 2.7, 2.8, 5.4, 5.9 and 8.5, and all
liabilities and obligations of Buyer pursuant to any agreement, document and
instrument entered into by Buyer in connection with this Agreement;
(b) all of the liabilities and obligations (including, without
limitation, trade and other accounts payable and accrued expenses) reflected or
reserved against the Financial Statements;
(c) all of the liabilities and obligations of Sellers incurred
or arising in the ordinary course of the Business from September 30, 2002
through the Closing Date of a type or nature customarily reflected or reserved
against in the accounts of Sellers;
(d) all obligations and liabilities of Sellers arising under
the contracts (including the Contracts), purchase orders, leases, licenses,
agreements, instruments, commitments and other binding arrangements of Sellers
which are included in the Transferred Assets;
8
(e) all liabilities and obligations of Sellers for Inventory
ordered by Sellers in the ordinary course of business prior to the Financial
Closing and delivered to Buyer on or after the Financial Closing;
(f) all liabilities and obligations to deliver products of the
Business (including, without limitation in respect of replacement products,
warranty obligations and similar matters) on or after the Financial Closing
under purchase orders of, or commitments to, Persons, entered into by Sellers
prior to the Financial Closing in the ordinary course of business;
(g) all debts, liabilities or obligations of any kind,
character or description, whether absolute, contingent, threatened or otherwise,
and whether or not reflected or reserved against in Buyer's financial
statements, books or records, arising from, or incurred in connection with,
events, acts or omissions occurring on or after the Financial Closing with
respect to the ownership or operation of the Transferred Assets or the Business;
(h) all liabilities for state and local real estate and
personal property taxes which relate to periods on or after the Financial
Closing (including, without limitation, in connection with the ▇▇▇▇▇▇▇
Facility);
(i) all liabilities with respect to the claims described in
Schedule 2.3(i); and
(j) all liabilities in respect of accrued but unpaid
obligations for unpaid vacation pay owed to Employees at the time of Financial
Closing.
2.4. Excluded Liabilities. Sellers shall retain and be responsible for
all debts, liabilities and obligations of Sellers other than the Assumed
Liabilities (the "Excluded Liabilities").
2.5. Purchase Price.
Upon the terms and subject to the conditions set forth herein,
at the Closing, Buyer shall (i) pay to Sellers $9,698,229 in cash (the "Purchase
Price") as provided in Section 2.6(b) and (ii) assume the Assumed Liabilities.
The Purchase Price shall be subject to adjustment after the Closing as provided
in Section 2.7(a).
2.6. Closing; Delivery and Payment.
(a) Closing Date. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of Dechert, ▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at 10:00 A.M.,
New York City time, on the
date upon which the conditions to Closing set forth in Article VI shall have
been satisfied or waived, or on such other date or at such other time as may be
mutually agreed upon in writing by Buyer and Sellers (the "Closing Date"). The
Closing shall be deemed to occur on 12:01 a.m. on the Closing Date.
(b) Delivery and Payment. On the Closing Date:
(i) Buyer shall pay an amount equal to the Purchase
Price (exclusive of a post-Closing adjustment, if any), less the Escrow Amount,
to Sellers in immediately
9
available funds by wire transfer to an account which shall be designated by
Sellers not less than two (2) Business Days prior to the Closing Date;
(ii) Buyer shall pay the Escrow Amount to the Escrow
Agent;
(iii) Sellers shall deliver to Buyer such instruments
of transfer, assignment, conveyance and other instruments sufficient to convey,
transfer and assign to Buyer all right, title and interest in and to the
Transferred Assets, together with possession of such Transferred Assets, all in
form and substance reasonably satisfactory to Buyer;
(iv) Buyer shall deliver to Sellers such instruments
of assumption sufficient to assume, discharge or perform when due, all of the
Assumed Liabilities, all in form and substance reasonably satisfactory to
Sellers;
(v) Sellers shall deliver to Buyer stock certificates
representing the Foremost Shares (accompanied by stock powers duly executed by
Parent in blank) and the minute and stock transfer books and corporate seals of
Foremost; and
(vi) Sellers and Buyer shall deliver, each to the
other, such documents as are required pursuant to Article VI hereof.
2.7. Post Closing Purchase Price Adjustment and Net Cash Flow
Reconciliation.
(a) Purchase Price Adjustment.
(i) Within 30 days after the Closing Date, Buyer
shall prepare and deliver to Sellers a statement setting forth its determination
of the Financial Closing Working Capital (the "Initial Working Capital
Statement"), which statement shall set forth in reasonable detail the basis for
such determination. During the 20 Business Days immediately following the
Sellers' receipt of the Initial Working Capital Statement, Sellers and their
representatives will be permitted to review at the Sellers' offices Buyer's
working papers relating to the Initial Working Capital Statement as well as all
of the books and records relating to the operations and finances of the
Businesses with respect to the period up to and including the Financial Closing,
and Buyer shall make reasonably available at Sellers' offices the individuals
responsible for the preparation of the Initial Working Capital Statement in
order to respond to the reasonable inquiries of Sellers.
(ii) Sellers shall notify Buyer in writing (the
"Notice of Disagreement") within 20 Business Days after receiving the Initial
Working Capital Statement if Sellers disagree with Buyer's calculation of the
Financial Closing Working Capital, which Notice of Disagreement shall set forth
in reasonable detail the basis for such dispute and the U.S. Dollar amounts
involved and Sellers' good faith estimate of the Financial Closing Working
Capital. If no Notice of Disagreement is received by Buyer within such 20
Business Day period, then the Initial Working Capital Statement shall be deemed
to have been accepted by Sellers shall become final and binding upon the parties
and shall be the Final Working Capital Statement.
(iii) During the 20 Business Days immediately
following the delivery of a Notice of Disagreement, Sellers and Buyer shall seek
in good faith to resolve any
10
differences that they may have with respect to any matter specified in the
Notice of Disagreement. If at the end of such 20 Business Day period Sellers and
Buyer have been unable to agree upon a Final Working Capital Statement, Sellers
and Buyer shall submit to the Independent Accounting Firm for review and
resolution any and all matters that remain in dispute with respect to the Notice
of Disagreement. The Independent Accounting Firm shall use commercially
reasonable efforts to make a final determination, binding on the parties hereto,
of the Financial Closing Working Capital within 20 Business Days, and such final
determination shall be the Final Working Capital Statement. The cost of the
Independent Accounting Firm's review and determination shall be borne equally by
Sellers and Buyer. During the 20 Business Day review by the Independent
Accounting Firm, Buyer and Sellers will each make available to the Independent
Accounting Firm interviews with such individuals and such information, books and
records as may be reasonably required by the Independent Accounting Firm to make
its final determination.
(iv) (A) If the Financial Closing Working Capital (as
set forth in the Final Working Capital Statement) exceeds the estimated amount
thereof set forth on Schedule 2.7(a) (the "Estimated Financial Closing Working
Capital"), then Buyer shall pay to Sellers an amount equal to such excess or (B)
if the Estimated Financial Closing Working Capital exceeds the Financial Closing
Working Capital (as set forth in the Final Working Capital Statement), then the
Sellers shall pay to Buyer an amount equal to such excess, in either case within
five (5) Business Days after the Final Working Capital Statement becomes final
and binding on the parties hereto. If the amount described in the preceding
sentence shall not have been paid within 30 days after the Closing Date, such
amount shall be payable with accrued interest thereon from the Financial Closing
Date until the date of payment at a rate of 6% per annum calculated on the basis
of a 360-day year. If the Financial Closing Working Capital (as set forth in the
Final Working Capital Statement) is equal to the Estimated Financial Closing
Working Capital, then neither Buyer nor Sellers shall owe any amount to the
other party pursuant to this Section 2.7(a).
(v) Buyer agrees that following the Closing through
the date that payment, if any, is made pursuant to Section 2.7(a)(iv), it will
not take any actions with respect to any accounting books, records, policy or
procedure on which the Initial Working Capital Statement or the Final Working
Capital Statement is to be based that are inconsistent with past practices of
Sellers or that would make it impossible or impracticable to calculate the
Financial Closing Working Capital in the manner and utilizing the methods
required hereby.
(b) Net Cash Flow Reconciliation.
(i) In connection with the purchase of the Business
by Buyer hereunder, the parties hereby acknowledge and agree that Buyer is
taking profit and loss responsibility for the Business as of the Financial
Closing and therefore shall be entitled to the benefit of the revenues of the
Business during the period from and after the Financial Closing and extending
until the Closing (the "Measurement Period"), and shall be responsible for and
shall assume the expenses, obligations, losses and liabilities of the Business
during the Measurement Period. In furtherance thereof, Buyer acknowledges and
agrees that, commencing on the Financial Closing, Sellers have been collecting
revenues, expending funds and satisfying obligations and liabilities of the
Business for the benefit of Buyer. In order to equitably apportion the benefits
of revenues to the Buyer, and to reimburse Sellers for the expenses and
11
liabilities satisfied by them in connection with the operation of the Business
during the Measurement Period, the parties hereby agree to undertake a
reconciliation of Net Cash Flow (defined below) of the Business during the
Measurement Period and to make the payments as provided in this Section 2.7(b).
(ii) As used herein "Net Cash Flow" of the Business
shall mean the net cash flow of the Business determined hereunder in accordance
with the methodology set forth in Schedule 2.7(b) and in a manner consistent
with Seller's reporting of its business segments in financial statements
contained in reports filed with the Securities and Exchange Commission pursuant
to Securities Exchange Act of 1934, as amended.
(iii) Within 30 days after the Closing Date, Buyer
shall prepare and deliver to Sellers a statement setting forth its determination
of Net Cash Flow (the "Initial Net Cash Flow Statement"), which statement shall
set forth in reasonable detail the basis for such determination. During the 20
Business Days immediately following the Sellers' receipt of the Initial Net Cash
Flow Statement, Sellers and their representatives will be permitted to review at
the Sellers' offices Buyer's working papers relating to the Initial Net Cash
Flow Statement as well as all of the books and records relating to the
operations and finances of the Businesses with respect to the Measurement
Period, and Buyer shall make reasonably available at Sellers' offices the
individuals responsible for the preparation of the Initial Net Cash Flow
Statement in order to respond to the reasonable inquiries of Sellers.
(iv) Sellers shall notify Buyer in writing (the
"Notice of Disagreement") within 20 Business Days after receiving the Initial
Net Cash Flow Statement if Sellers disagree with Buyer's calculation of Net Cash
Flow, which Notice of Disagreement shall set forth in reasonable detail the
basis for such dispute and the U.S. Dollar amounts involved and Sellers' good
faith estimate of Net Cash Flow. If no Notice of Disagreement is received by
Buyer within such 20 Business Day period, then the Initial Net Cash Flow
Statement shall be deemed to have been accepted by Sellers shall become final
and binding upon the parties and shall be the Final Net Cash Flow Statement.
(v) During the 20 Business Days immediately following
the delivery of a Notice of Disagreement, Sellers and Buyer shall seek in good
faith to resolve any differences that they may have with respect to any matter
specified in the Notice of Disagreement. If at the end of such 20 Business Day
period Sellers and Buyer have been unable to agree upon a Final Net Cash Flow
Statement, Sellers and Buyer shall submit to the Independent Accounting Firm for
review and resolution any and all matters that remain in dispute with respect to
the Notice of Disagreement. The Independent Accounting Firm shall use
commercially reasonable efforts to make a final determination, binding on the
parties hereto, of the Net Cash Flow within 20 Business Days, and such final
determination shall be the Final Net Cash Flow Statement. The cost of the
Independent Accounting Firm's review and determination shall be borne equally by
Sellers and Buyer. During the 20 Business Day review by the Independent
Accounting Firm, Buyer and Sellers will each make available to the Independent
Accounting Firm interviews with such individuals and such information, books and
records as may be reasonably required by the Independent Accounting Firm to make
its final determination.
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(vi) (A) If Net Cash Flow (as set forth in the Final
Net Cash Flow Statement) is a positive amount, then Sellers shall pay to Buyer
an amount equal to such positive amount or (B) if Net Cash Flow (as set forth in
the Final Net Cash Flow Statement) is a negative amount, then the Buyer shall
pay to Seller an amount equal to such negative amount, in either case within
five (5) Business Days after the Final Net Cash Flow Statement becomes final and
binding on the parties hereto. If the amount described in the preceding sentence
shall not have been paid within 30 days after the Closing Date, such amount
shall be payable with accrued interest thereon from the Closing Date until the
date of payment at a rate of 6% per annum calculated on the basis of a 360-day
year.
(vii) Buyer agrees that following the Closing through
the date that payment, if any, is made pursuant to Section 2.7(b)(vi), it will
not take any actions with respect to any accounting books, records, policy or
procedure on which the Initial Net Cash Flow Statement or the Final Net Cash
Flow Statement is to be based that are inconsistent with past practices of
Sellers or that would make it impossible or impracticable to calculate Net Cash
Flow in the manner and utilizing the methods required hereby.
2.8. Taxes and Fees. Sales and use taxes, transfer taxes, value added
or similar taxes, if any, and recording fees imposed upon the transfer of the
Transferred Assets hereunder and the filing of any instruments shall be paid by
Buyer.
2.9. Allocation of Purchase Price. Sellers and Buyer agree that the
Purchase Price (which shall include, for purposes of this Section 2.9, the
purchase price for the ▇▇▇▇▇▇▇ Facility) shall be allocated among the
Transferred Assets, tangible and intangible, in accordance with Schedule 2.9
hereto (the "Allocation"). Sellers and Buyer agree to report, pursuant to
Section 1060 of the Code and the regulations promulgated thereunder, if and when
required, the Allocation of the Purchase Price among the Transferred Assets in a
manner entirely consistent with such Allocation in the preparation and filing of
all Tax Returns (including IRS form 8594) and any contest relating thereto.
Neither Sellers nor Buyer will take any action that would call into question the
bona fides of such Allocation.
2.10. Nonassignability of Assets. Notwithstanding anything to the
contrary contained in this Agreement, to the extent that the sale, assignment,
transfer, conveyance or delivery or attempted sale, assignment, transfer,
conveyance or delivery to Buyer, of any asset that would be a Transferred Asset
or any claim or right or any benefit arising thereunder or resulting therefrom
is prohibited by any applicable law or would require any governmental or third
party authorizations, approvals, consents or waivers, and such authorizations,
approvals, consents or waivers shall not have been obtained prior to the
Closing, the Closing shall proceed without the sale, assignment, transfer,
conveyance or delivery of such asset and this Agreement shall not constitute a
sale, assignment, transfer, conveyance or delivery of such asset or an attempt
thereof; provided, however, if such failure causes a failure of any of the
conditions to Buyer's obligations to consummate the transactions contemplated by
this Agreement, the Closing shall proceed only if Buyer elects, in its sole
discretion, to waive such conditions. In the event that the Closing proceeds
without the transfer or assignment of any such asset, then following the
Closing, the parties shall use their reasonable efforts, and cooperate with each
other, to obtain promptly such authorizations, approvals, consents or waivers;
provided, however, that neither Sellers nor Buyer shall be required to pay any
consideration for any such authorization, approval,
13
consent or waiver other than filing, recordation or similar fees which shall be
paid by the party who is required by law or this Agreement to do so. Pending
such authorization, approval, consent or waiver, the parties shall cooperate
with each other in any mutually agreeable, reasonable and lawful arrangements
designed to provide to Buyer the benefits of use of such asset and to Sellers
the benefits, including any indemnities, that they would have obtained had the
asset been conveyed to Buyer at the Closing. To the extent that Buyer is
provided the benefits pursuant to this Section 2.10 of any Contract, Buyer shall
perform for the benefit of the other Persons that are parties thereto the
obligations of Sellers thereunder and any related liabilities that, but for the
lack of an authorization, approval, consent or waiver to assign such obligations
or related liabilities to Buyer, would be a direct obligation of Buyer, and in
any event would be considered an Assumed Liability. Once authorization,
approval, consent or waiver for the sale, assignment, transfer, conveyance or
delivery of any such asset not sold, assigned, transferred, conveyed or
delivered at the Closing is obtained, Sellers shall assign, transfer, convey and
deliver such asset to Buyer at no additional cost to Buyer. To the extent that
any such asset cannot be transferred or the full benefits of use of any such
asset cannot be provided to Buyer following the Closing pursuant to this Section
2.10, then Buyer and Sellers shall use their reasonable best good faith efforts
to enter into such arrangements (including sublicensing or subcontracting) to
provide to the parties the economic (taking into account Tax costs and benefits)
and operational equivalent, to the extent permitted, of obtaining such
authorization, approval, consent or waiver and the performance by Buyer of the
obligations thereunder. Sellers shall hold in trust for and pay to Buyer
promptly upon receipt thereof, all income, proceeds and other monies received by
Sellers in connection with their use of any asset (net of any Taxes and any
other costs imposed upon Sellers) in connection with the arrangements under this
Section 2.10.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers represent and warrant to Buyer, as of the Financial
Closing, as follows:
3.1. Organization and Authority of Sellers. Parent has been duly
incorporated, is validly existing and is in good standing under the laws of its
jurisdiction of incorporation, with all requisite corporate power and authority
to enter into this Agreement and to perform its obligations hereunder. Parent is
duly qualified to do business as a foreign corporation and is in good standing
in the State of South Carolina. Tufco LP has been duly organized, is validly
existing and is in good standing under the laws of its jurisdiction of
formation, with all requisite partnership power and authority to enter into this
Agreement and to perform its obligations hereunder. This Agreement has been duly
authorized, executed and delivered by Sellers and constitutes a legal, valid and
binding agreement of Sellers, enforceable in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles, and no other proceedings on the part of
Sellers are necessary to authorize this Agreement and the transactions
contemplated hereby. Neither the execution and delivery of this Agreement nor
compliance by Sellers with its terms and provisions will violate (a) any
provision of the certificate of incorporation or by-laws of Parent or the
partnership agreement of Tufco LP;
14
or (b) any Contract; or (c) any law, statute or regulation or, insofar as is
known to Sellers, any injunction, order or decree of any government agency or
authority or court to which Sellers are subject, except where, in all cases,
such a violation would not prohibit or materially impair Sellers' ability to
perform their obligations under this Agreement.
3.2. Financial Information. Sellers have previously delivered to Buyer
Sellers' unaudited Balance Sheet for the Business as of September 30, 2002 (the
"Financial Statements"). The Financial Statements were compiled by management
from each Sellers' books and records and in a manner consistent in all material
respects with the preparation of the Audited Financial Statements, subject to
year-end adjustments.
3.3. Foremost Shares. All of the Foremost Shares have been duly
authorized and are validly issued, fully paid and nonassessable and are owned of
record and beneficially by Parent. There are no outstanding securities
convertible into or exchangeable for or carrying the right to acquire any equity
security of Foremost and there are no outstanding options, warrants or other
agreements or commitments that relate to or require the issuance, sale or
disposition of any equity securities of Foremost.
3.4. Absence of Certain Changes or Events. Except as set forth in
Schedule 3.4 hereto or otherwise disclosed in this Agreement, to the knowledge
of Sellers, since September 30, 2002, Sellers have conducted the Business in the
ordinary and usual course and have not, with respect to the Business, suffered
any damage, destruction or other casualty loss (not covered by insurance) which
would have a Material Adverse Effect.
3.5. Title to Assets; Absence of Liens and Encumbrances, etc. Except as
set forth in Schedule 3.5, Sellers have good title to the property included in
the Transferred Assets, free and clear of all Encumbrances, except: (i) any
Encumbrances reflected in the Financial Statements; (ii) any Encumbrances which
do not materially restrict or impair the use by the Business of the property
subject thereto or affected thereby in such a way as would have a Material
Adverse Effect; (iii) any Encumbrances for Taxes (and assessments) not
delinquent or which are being contested in good faith; (iv) any workmen,
repairman, warehousemen and carriers liens and Encumbrances arising in the
ordinary course of business; and (v) any Encumbrances which are matters of
record, such as easements, quasi-easements, rights of way, land use ordinances
and zoning plans (all items included in (i) through (v) are referred to
collectively herein as "Permitted Encumbrances"). All amounts advanced, if any,
by ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Manufacturing Company or its parent, subsidiaries or
affiliates, to either Seller, were only used, if at all, to purchase equipment
in, and located at, Seller's manufacturing plant in Green Bay, Wisconsin, and no
such advanced amounts, if any, and the UCC Financing Statement, File #20536510,
and all amendments thereto, relate to any asset used in the Business, or any
assets sold to Buyer pursuant to this Agreement.
3.6. Condition of Transferred Assets.
(a) To the knowledge of Sellers, all items of machinery,
equipment and other tangible assets of the Business which are Transferred Assets
are in reasonably good condition, subject to ordinary wear and tear, other than
items currently under or scheduled for repair or construction.
15
(b) To the knowledge of Sellers, the Inventory is saleable or
usable in the ordinary course of business.
3.7. Litigation. Except as set forth in Schedule 3.7 hereto, there is
no action, suit, proceeding or investigation pending or, to Sellers' knowledge,
threatened against Sellers with respect to the Business, at law, in equity or
otherwise, in, before or by any court or governmental agency or authority which,
individually or in the aggregate, would have a Material Adverse Effect.
3.8. Compliance with Law. Except as set forth in Schedule 3.8, to the
knowledge of Sellers, the Business is not being conducted in material violation
of any law, ordinance or regulation of any governmental entity (including,
without limitation, those relating to occupational safety and health practices),
except for possible violations which, individually or in the aggregate, would
not have a Material Adverse Effect.
3.9. Contracts. To the knowledge of Sellers, attached hereto as
Schedule 3.9 is a complete and accurate list of all written contracts and leases
(each a "Contract" and collectively the "Contracts") to which Sellers are a
party (except for (i) certain immaterial contracts which are each not in excess
of $10,000 in any 12-month period or which are for a period of less than one
year, such immaterial contracts are included in the Transferred Assets and (ii)
the ▇▇▇▇▇▇▇ Facility Purchase Agreement, which is an Excluded Asset), relating
exclusively to the operation of the Business, all of which are included in the
Transferred Assets. To the knowledge of Sellers, each Contract is valid and
subsisting and is in full force and effect in accordance with the terms of such
Contract, subject to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
3.10. Consents and Approvals. To the knowledge of Sellers, set forth in
Schedule 3.10 is a list of those Persons whose approval, consent, waiver or
authorization (the "Consents") is legally or contractually required to duly and
validly transfer or assign any of the Contracts (or any rights thereunder),
except for those Contracts for which the failure to obtain such approval,
consent, waiver or authorization would not have a Material Adverse Effect.
3.11. Collective Bargaining Agreements. Except as set forth in Schedule
3.11, Sellers are not a party to or bound by any material labor agreement or
collective bargaining agreement respecting the Employees, nor is there pending
or, to the knowledge of Sellers, threatened, any strike, walkout or other work
stoppage by or respecting the Employees.
3.12. ERISA Plans.
(a) All benefit plans, contracts or arrangements covering
Employees, including, but not limited to, "employee benefit plans" within the
meaning of Section 3(3) of ERISA, and plans of deferred compensation (the
"Benefit Plans"), are listed in Schedule 3.12(a).
(b) All contributions required to be made under the terms of
any Benefit Plan have been timely made or reflected in the Financial
Information.
16
(c) Schedule 3.12(a) hereto identifies each Plan which is an
"employee pension benefit plan", as such term is defined in Section 3(2) of
ERISA ("Pension Plan"). Each Pension Plan that is intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter from
the IRS that it is a qualified plan for purposes of Section 401(a) of the Code
and any amendments to any such Pension Plan subsequent to such determination
letter do not adversely affect such qualified status. No Benefit Plan is now or
at any time has been subject to Part 3, Subtitle B of Title I of ERISA or Title
IV of ERISA.
3.13. Intellectual Property.
(a) Set forth in Schedule 3.13(a) hereto is a list of all
patents, registered trademarks, trade names, service marks, service names,
registered copyrights and all applications for the same, included in the
Intellectual Property owned by Sellers that are included in the Transferred
Assets. To the knowledge of Sellers, except as set forth in Schedule 3.13(a),
Sellers have not received any written notice from any other Person challenging
or questioning the right of Sellers to use any of the Intellectual Property
listed in Schedule 3.13(a) in the operation of the Business which, if resolved
adversely to Sellers, would have a Material Adverse Effect.
(b) Except as set forth in Schedule 3.13(b), to the knowledge
of Sellers, Sellers own all right, title and interest in and to, or have a
license, sublicense or otherwise have permission to use, all of the Intellectual
Property set forth in Schedule 3.13(a), free and clear of all Encumbrances other
than Permitted Encumbrances, except as would not have a Material Adverse Effect.
3.14. Brokers and Finders. Sellers have not employed any broker,
finder, consultant or intermediary in connection with the transactions
contemplated by this Agreement who would be entitled to a broker's, finder's or
similar fee or commission in connection therewith or upon the consummation
thereof.
3.15. Environmental Matters. To the knowledge of Sellers, except as
disclosed in Schedule 3.15 or as would not have a Material Adverse Effect, the
operation of the Business (i) is in substantial compliance with all applicable
Environmental Laws, (ii) is not the subject of any pending written notice from
any governmental entity alleging the violation of any applicable Environmental
Laws, (iii) is not currently subject to any court order, administrative order or
decree arising under any Environmental Law, and (iv) has not been used for the
disposal of Hazardous Substances.
3.16. Taxes of Foremost. Except as set forth on Schedule 3.16, (i) all
material Tax Returns that are required to be filed by or with respect to
Foremost have been duly filed, (ii) all Taxes shown to be due on the Tax Returns
referred to in clause (i) have been paid in full, and (iii) to the knowledge of
Sellers, there is no pending or threatened action that if determined adversely
to Foremost or to the Sellers would result in the assertion of any deficiency
which would have a Material Adverse Effect on Foremost.
3.17. No Other Representations or Warranties. Except for the
representations and warranties contained in this Article III, neither Sellers
nor any other Person makes any other express or implied representation or
warranty on behalf of Sellers, and Sellers hereby disclaim
17
any such representation or warranty whether by Sellers or any of their or the
Business' respective officers, directors, employees, agents or representatives
or any other Person, with respect to the execution and delivery of any of this
Agreement or the transactions contemplated hereby, notwithstanding the delivery
or disclosure to Buyer or any of its officers, directors, employees, agents or
representatives or any other Person of any documentation or other information by
Sellers or any of their or the Business' respective officers, directors,
employees, agents or representatives or any other Person with respect to any one
or more of the foregoing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
4.1. Organization and Authority of Buyer. Buyer has been duly formed,
is validly existing and is in good standing under the laws of its jurisdiction
of incorporation, with full power and authority to enter into this Agreement and
perform its obligations hereunder. This Agreement has been duly authorized,
executed and delivered by Buyer and constitutes a legal, valid and binding
obligation of Buyer, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles, and no other proceedings on the part of Buyer
are necessary to authorize this Agreement and the consummation of transactions
contemplated hereby. Neither the execution or delivery of this Agreement nor
compliance by Buyer with its terms and provisions will violate (a) any provision
of the certificate of formation or limited liability company agreement of Buyer;
or (b) any contract provision, license, franchise or permit to which Buyer is a
party or by which it is bound; or (c) any law, statute or regulation or, insofar
as is known to Buyer, any injunction, order or decree of any government agency
or authority or court to which Buyer is subject except where, in all cases, such
a violation would not prohibit or materially impair Buyer's ability to perform
its obligations under this Agreement.
4.2. Brokers and Finders. Buyer has not employed any broker, finder,
consultant or intermediary in connection with the transactions contemplated by
this Agreement who would be entitled to a broker's, finder's or similar fee or
commission in connection therewith or upon the consummation thereof.
4.3. Financial Capability. Buyer has sufficient funds in place to
purchase the Business on the terms and conditions contained in this Agreement
and will have such funds on the Closing Date. Buyer has furnished to Sellers
prior to the date hereof documentation and evidence, reasonably satisfactory to
Sellers, of such funds.
4.4. Securities Matters. Buyer understands that the offering and sale
of the Foremost Shares hereunder is intended to be exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act")
pursuant to Section 4(2) thereof. The Foremost Shares are being acquired by the
Buyer for its own account and without a view to the public distribution of the
Foremost Shares or any interest therein. Buyer has sufficient knowledge and
experience in financial and business matters so as to be capable of evaluating
the merits and risks
18
of its investment in the Foremost Shares, and Buyer is capable of bearing the
economic risks of such investment, including a complete loss of its investment
in the Foremost Shares. In evaluating the suitability of an investment in the
Foremost Shares, Buyer has relied solely upon the representations, warranties,
covenants and agreements made by Sellers herein and the Buyer has not relied
upon any other representations or other information (whether oral or written and
including any projections or supplemental data) made or supplied by or on behalf
of Sellers or any Affiliate, employee, agent or other representative of Sellers.
Buyer understands and agrees that it may not sell or dispose of any of the
Foremost Shares other than pursuant to a registered offering or in a transaction
exempt from the registration requirements of the Securities Act.
4.5. Condition of Transferred Assets. BUYER ON BEHALF OF ITSELF AND ITS
AFFILIATES, UNDERSTANDS AND AGREES THAT THE TRANSFERRED ASSETS ARE SOLD,
ASSIGNED, TRANSFERRED AND CONVEYED TO BUYER IN AN "AS IS" CONDITION ON A "WHERE
IS" BASIS WITHOUT ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED, EXCEPT AS OTHERWISE EXPRESSLY
STATED IN THIS AGREEMENT.
ARTICLE V
CERTAIN COVENANTS AND
AGREEMENTS OF SELLERS AND BUYER
5.1. Access and Information.
(a) Prior to the Closing (or the earlier termination of this
Agreement), Sellers will give Buyer and its representatives, employees, counsel
and accountants reasonable access to the properties, books and records of the
Business upon reasonable prior written notice and during mutually agreeable
business hours and reasonable access to the personnel of the Business; provided,
however, that if Buyer conducts any environmental assessment or compliance
review, Buyer shall furnish copies of any report of the findings thereof to
Sellers as soon as it is received by Buyer; and provided further, however, that
neither Buyer nor its representatives shall conduct any air, soil, groundwater,
surface water, asbestos or other environmental tests or analyses at any of the
properties (whether owned or leased) of the Business without the prior written
consent of Sellers, which consent can be withheld at Sellers' sole discretion;
and provided further, however, that Buyer must provide prior written notice of
its intention to contact any non-management personnel of the Business and must
receive permission from an executive officer of the Business before contacting
any such non-management personnel. In connection with such access, Buyer shall
not, and Buyer shall cause its agents and representatives not to, cause any
disruption to the business or operations of Sellers or the Business.
(b) All information provided or obtained pursuant to clause
(a) above shall be held by Buyer in accordance with and subject to the terms of
those certain confidentiality letter agreements between Buyer and Sellers
(collectively, the "Confidentiality Agreements").
5.2. Registrations, Filings and Consents. Sellers and Buyer will
cooperate and use their respective reasonable good faith efforts to make all
registrations, filings and applications, to
19
give all notices and to obtain the Consents or any governmental transfers,
approvals, orders, qualifications and waivers necessary for the consummation of
the transactions contemplated hereby.
5.3. Conduct of Business.
(a) Prior to the Closing, and except as otherwise contemplated
by this Agreement or consented to or approved by Buyer, Sellers covenant and
agree that:
(i) they shall operate the Business only in the
ordinary and usual course and use reasonable efforts to preserve their
properties, business and relationships with suppliers and customers of the
Business;
(ii) they shall maintain insurance coverage with
respect to the Business at presently existing levels (so long as such insurance
is available at commercially reasonable rates); and
(iii) the Business shall not, other than in the
ordinary and usual course of business, (A) acquire or dispose of any substantial
Transferred Assets; (B) create a material Encumbrance on any of its properties,
incur a material amount of additional indebtedness or enter into any other
material transaction; (C) incur any other material liabilities; or (D) enter
into any contract, agreement, commitment or arrangement with respect to any of
the foregoing.
5.4. Employee Matters.
(a) Effective as of the Closing, Buyer shall offer employment
or shall cause the Business to retain employment in comparable positions to
those employees listed in Schedule 5.4 who are employed in connection with the
Business (the "Employees").
(b) Effective as of the Closing Date, all those Employees who
accept an offer of employment by the Buyer or the Business, as applicable
("Transferred Employees") shall cease to actively participate in the Tufco
Technologies, Inc. Profit Sharing Savings and Investment Plan (the "Sellers'
Savings Plan"). Buyer and Sellers hereby agree that the transactions
contemplated by this Agreement constitute an event described in Section
401(k)(10) of the Code and that amounts held in trust by Sellers' Savings Plan
for the benefit of participants who are or shall become Transferred Employees
shall be distributed to any such Transferred Employee (or his or her
beneficiary, if applicable) who requests such a distribution after the Closing
Date. Buyer shall adopt a savings plan that meets the requirements of sections
401(a), 401(k) and 501 of the Code ("Buyer's Savings Plan"), as soon as
practicable following the Closing Date. Buyer's Savings Plan shall permit the
roll over of the amounts distributed from Sellers' Savings Plan on a
tax-deferred basis in accordance with Section 401(a)(31) and 402 of the Code.
(c) Effective as of the Closing, Transferred Employees shall
cease to be covered by Sellers' employee welfare benefit plans, including plans,
programs, policies and arrangements which provide medical and dental coverage,
life and accident insurance, disability coverage, medical and dental care
spending accounts and vacation and severance pay. Sellers shall remain solely
responsible for all liabilities relating to, arising out of, or resulting from
the
20
requirements of COBRA to provide continuation of group health plan coverage
("Continuation Coverage") under any of its Benefit Plans in respect of the
Transferred Employees and their qualified beneficiaries and dependents, to the
extent related to a qualifying event occurring on or before the Closing Date.
Buyer shall provide Continuation Coverage to any Transferred Employee and his or
her qualified beneficiaries who incur a qualifying event after the Closing Date.
As soon as practicable after the Closing Date (but in no event more than 60 days
after the Closing Date), Buyer shall establish benefit plans which are "group
health plans" within the meaning of Section 4980B(g) of the Code and Section 607
of ERISA ("Group Health Plans") for the benefit of Transferred Employees of the
same type that Seller maintains for such employees immediately prior to the
Closing Date. Furthermore, Buyer shall continue to maintain one or more Group
Health Plans for the required Continuation Coverage period under COBRA, so that
Sellers shall not have any contingent liability under COBRA or the applicable
Treasury regulations thereunder with respect to any Benefit Plan of Sellers
maintained as of the Closing Date. In the event any Transferred Employee elects
Continuation Coverage under Sellers' Group Health Plans, Buyer shall reimburse
Sellers for any expenses or costs related to such election, including, without
limitation, for any claims, judgments or other liabilities related thereto.
(d) Sellers shall retain liability for all medical, vision,
dental and health claims incurred by Employees (and their dependents) under
Sellers' employee welfare benefit plans prior to the Financial Closing. Subject
to financial adjustment pursuant to Section 2.7(b), Buyer shall be liable for
all medical, dental and health claims incurred by Transferred Employees (and
their dependents) under the employee welfare benefit plans of Buyer on or after
the Financial Closing. For purposes of this paragraph, a claim shall be deemed
to have been incurred on the date on which the medical or other treatment or
service was rendered and not the date of the inception of the related illness or
injury or the date of submission of a claim related thereto.
(e) Sellers shall retain any liability for payment of
long-term or short-term disability claims arising from disabilities that
occurred prior to the Financial Closing and up until such time as an Employee
returns to work. Subject to financial adjustment pursuant to Section 2.7(b),
Buyer shall be responsible for payment of long-term and short-term disability
claims that arise from disabilities that occur on or after the Financial
Closing, or any claims of a Transferred Employee after the Transferred Employee
has returned to work with Buyer.
5.5. Best Efforts. Each of the parties hereto shall use its respective
best efforts to fulfill or obtain the fulfillment of the conditions of the
Closing, including, without limitation, the execution and delivery of all
agreements or other documents contemplated hereunder to be so executed and
delivered.
5.6. Books; Records. For a period of six (6) years after the Financial
Closing, (a) Buyer agrees to, or cause the Business to, retain all Books and
Records and to make the same available after the Closing Date for inspection and
copying at Sellers' expense, upon reasonable request and upon reasonable notice
and (b) no such Books and Records shall be destroyed by Buyer without first
advising Sellers in writing and giving Sellers a reasonable opportunity to
obtain possession thereof.
5.7. [RESERVED]
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5.8. Further Assurances. At any time after the date hereof, Sellers and
Buyer shall promptly execute, acknowledge and deliver any other assurances or
documents reasonably requested by Buyer or Sellers, as the case may be, and
necessary for Buyer or Sellers, as the case may be, to satisfy their obligations
hereunder. Without limiting the generality of the foregoing, Buyer agrees to
make available to the Sellers, such officers and employees of Buyer that Sellers
shall reasonably request, in order to assist Sellers defend any claims, lawsuits
and other actions (whether currently pending or threatened, or brought or
threatened against Sellers in the future) in respect of the Business (it being
understood that ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall be made available to Sellers in respect to
such defense).
5.9. Compliance with WARN, etc.. With respect to the Employees, Buyer
will timely give all notices required to be given under, or will otherwise
comply with, WARN or other similar statutes or regulations of any jurisdiction
relating to any plant closing or mass layoff or as otherwise required by such
statute. For this purpose, Buyer shall be deemed to have caused a mass layoff if
the mass layoff would not have occurred but for Buyer's failure to employ the
Employees in accordance with the terms of this Agreement. For avoidance of
doubt, Buyer shall responsible for any and all WARN obligations, severance
payments or other obligations that may apply with respect to any Transferred
Employee.
5.10. Transitional Services. On the Closing Date, Buyer and Sellers
shall execute and deliver a transitional services agreement (the "Transitional
Services Agreement"), pursuant to which Sellers shall (i) make available to
Buyer at fully allocated cost, access to Sellers' As400 computer system (or any
replacement system), (ii) grant to Buyer a non-exclusive, non-transferable
license to use the name "Tufco" for a period not to exceed 12 months for the
sole purpose of allowing Buyer to sell Inventory being transferred to Buyer
hereunder (to the extent such Inventory includes labels or similar markings
bearing the name "Tufco") and (iii) provide such other services reasonably
requested by Buyer and agreed to by Sellers. The term of the Transitional
Services Agreement shall be not less than nine (9) and not more than 12 months,
and shall contain such other terms and conditions as shall be customarily
contained in similar agreements (including, without limitation, an indemnity by
Buyer in favor of Sellers regarding the use by Buyer of the name "Tufco").
5.11. Sale of ▇▇▇▇▇▇▇ Facility. In connection with the sale of the
Business, on the Closing Date, Buyer shall purchase the ▇▇▇▇▇▇▇ Facility for a
purchase price of not less than $2,600,000. As soon as practicable after the
date hereof, Sellers and Buyer shall prepare and execute a purchase agreement
for the sale of the ▇▇▇▇▇▇▇ Facility, which shall contain such terms and
conditions reasonably acceptable to both Sellers and Buyer (the "▇▇▇▇▇▇▇
Facility Purchase Agreement").
5.12. Assistance in Collecting Certain Amounts. Sellers shall use all
reasonable efforts to remit (by wire) daily to Buyer any payments or other sums
received by Sellers after the Closing Date that relate to any sales or shipments
made by Buyer after the Financial Closing or that otherwise are properly for the
account of Buyer. If, after the Closing Date, Sellers wish to make a claim or
otherwise take action with respect to an Excluded Asset or an Excluded
Liability, Buyer, at Sellers' sole cost and expense, shall (a) use its
reasonable best efforts to assist, cooperate and consult with Sellers with
respect to such claim or such action; provided,
22
however, that Buyer shall not be required to assist, cooperate or consult with
Sellers with respect to any such claim or action which is reasonably likely to
materially disrupt any existing relationship of Buyer or the Business with any
customers or suppliers thereof and (b) in any event, remit promptly to Sellers
any payments or other sums received by Buyer that relate thereto. Sellers and
Buyer agree that such collection efforts shall be conducted in a manner which
will not materially disrupt any existing relationship of Buyer or the Business;
provided, however, that Sellers shall not be prevented from taking appropriate
actions, including collection actions, to resolve any claim for an unpaid
receivable.
5.13. Confidentiality. Sellers acknowledge and agree that, as prior
operators of the Business, Sellers possess knowledge of the trade secrets and
proprietary information of the Business which, for purposes of this Agreement,
shall mean and include any and all non-public information, technical data or
know-how, including, without pricing, expenses, margins, revenues and other
financial information, technical, detail, schematic and other designs, graphs,
schematic and other diagrams, notes, plans, worksheets, outlines and similar
items created in connection with any products of the Business, and all research
and development, formulas, processes, ideas, inventions, know-how, techniques
and other information of a technical nature, whether in tangible or intangible
form, consulting or other business projects or proposals, customer data
(including names, addresses, telephone numbers and contact individuals, pricing,
product and service needs), sales procedures, volume figures and strategies and
supplier lists, in each case used exclusively in the Business ("Buyer
Confidential Information"). From and after the Closing Date, Sellers shall not,
and shall cause each of their subsidiaries and agents for their benefit not to,
without the prior written approval of Buyer, communicate, divulge, disseminate,
disclose any Buyer Confidential Information; provided, however, that nothing
herein shall prohibit Sellers from communicating, divulging, disseminating or
disclosing Buyer Confidential Information which (i) becomes generally available
to the public other than by a breach by Sellers of this Section 5.13 or (ii) is
required to be disclosed by law, legal process or stock exchange rule.
5.14. Insurance. Buyer shall purchase and cause to be maintained from
the Closing Date insurance covering general liability (including, without
limitation, premises liability) and products liability, which insurance shall be
on a "claims made" basis and which shall be in amounts customary for the
industries in which the Business operates. Sellers shall be named in such
insurance as an "additional insured" or "loss payee" in connection with any
liability arising out of or relating to the use by Buyer of the name "Tufco"
pursuant to the Transitional Services Agreement.
ARTICLE VI
CONDITIONS TO THE PURCHASE AND SALE
6.1. Conditions to the Purchase and Sale Relating to Buyer. The
obligation of Buyer at the Closing to consummate the transactions contemplated
hereby shall be subject to the satisfaction or waiver by Buyer on or prior to
the Closing Date of each of the following conditions:
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(a) Each of the representations and warranties of Sellers
contained in this Agreement shall be true in all material respects when made and
as of the Closing Date, with the same effect as though such representations and
warranties had been made on and as of the Closing Date (except (i) that
representations and warranties that are made as of a specific date need be true
in all material respects only as of such date and (ii) as contemplated or
permitted by this Agreement to change between the date of this Agreement and the
Closing Date).
(b) Each of the covenants and agreements of Sellers to be
performed on or prior to the Closing Date shall have been duly performed in all
material respects.
(c) Buyer shall have been furnished with a certificate of an
authorized officer of each Seller, dated as of the Closing Date, certifying to
the effect that the conditions contained in Sections 6.1(a) and 6.1(b) have been
fulfilled.
(d) There shall not have been issued and be in effect any
order, decree or judgment of any court or tribunal of competent jurisdiction
which makes the consummation of the purchase and sale of the Business illegal.
(e) Buyer shall have received evidence, in form and substance
reasonably satisfactory to it, that all consents set forth in Schedule 6.1(e)
have been obtained.
(f) Parent shall have executed and delivered to Buyer the
Transitional Services Agreement.
(g) Sellers and the Escrow Agent shall have executed and
delivered to Buyer the Escrow Agreement.
(h) Sellers shall have released ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇
from any and all obligations under his noncompetition agreement with Sellers.
(i) Tufco LP shall have entered into a letter agreement
regarding the future relationship among the parties hereto incorporating the
provisions set forth on Exhibit B hereto (the "Letter Agreement").
6.2. Conditions to the Purchase and Sale Relating to Sellers. The
obligation of Sellers at the Closing to consummate the transactions contemplated
hereby shall be subject to the satisfaction or waiver by Sellers on or prior to
the Closing Date of each of the following conditions:
(a) Each of the representations and warranties of Buyer
contained in this Agreement shall be true in all material respects when made and
as of the Closing Date, with the same effect as though such representations and
warranties had been made on and as of the Closing Date (except (i) that
representations and warranties that are made as of a specific date need be true
in all material respects only as of such date and (ii) as contemplated or
permitted by this Agreement to change between the date of this Agreement and the
Closing Date).
(b) Each of the covenants and agreements of Buyer to be
performed on or prior to the Closing Date shall have been duly performed in all
material respects.
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(c) Sellers shall have been furnished with a certificate of an
authorized officer of Buyer, dated as of the Closing Date, certifying to the
effect that the conditions contained in Sections 6.2(a) and 6.2(b) have been
fulfilled.
(d) There shall not have been issued and be in effect any
order, decree or judgment of any court or tribunal of competent jurisdiction
which makes the consummation of the purchase and sale of the Business illegal.
(e) The ▇▇▇▇▇▇▇ Facility shall have been sold pursuant to the
terms of the ▇▇▇▇▇▇▇ Facility Purchase Agreement.
(f) Sellers shall have received an executed Release in the
form and substance reasonably acceptable to Sellers from each of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and ▇▇▇▇ ▇▇▇▇ releasing Sellers from any and all liability with respect to each
such Person's employment by Sellers.
(g) Buyer shall have entered into the Letter Agreement.
(h) Buyer shall have procured the insurance policies described
in Section 5.14 and shall have delivered evidence satisfactory to Sellers that
such policies are in full force and effect as of the Closing Date.
ARTICLE VII
AMENDMENT AND WAIVER
7.1. Amendment and Modification. This Agreement may only be amended or
modified in writing, signed by Sellers and Buyer with respect to any of the
terms contained herein.
7.2. Waiver. At any time prior to the Closing either Sellers or Buyer
may (i) extend the time for the performance of any of the obligations or other
acts of the other party hereto, (ii) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto, and (iii) waive compliance with any of the
agreements or conditions of the other party contained herein. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid if set
forth in a written instrument executed by the party granting such extension or
waiver. No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
ARTICLE VIII
SURVIVAL AND INDEMNIFICATION
8.1. Survival of Representations and Warranties; Knowledge of Breach.
(a) The representations and warranties in this Agreement shall
survive the Closing solely for purposes of Sections 8.2(a) and 8.2(b) of this
Agreement and shall terminate at
25
the close of business six (6) months following the Financial Closing; provided,
however, that the representations and warrantees set forth in Sections 3.1
(organization and authority of Sellers), 3.3 (Foremost Shares) and 4.1
(organization and authority of Buyer) shall terminate twelve (12) months
following the Financial Closing. The obligations to indemnify and hold harmless
a Buyer Indemnified Party or a Seller Indemnified Party, as the case may be,
pursuant to Sections 8.2(a)(i) and 8.2(b)(i) shall terminate when the applicable
representation or warranty terminates; provided, however, that such obligations
to indemnify and hold harmless shall not terminate with respect to any item as
to which the Person to be indemnified shall have, before the expiration of the
applicable period, previously made a claim by delivering a notice stating in
reasonable detail the basis of such claim to the party providing the
indemnification.
(b) No party hereto shall be deemed to have breached any
representation, warranty or covenant if (i) such party shall have notified the
other parties hereto in writing, on or prior to the Closing Date, of the breach
of, or inaccuracy in, or of any facts or circumstances constituting or resulting
in the breach of or inaccuracy in, such representation, warranty or covenant,
and (ii) such other parties have permitted the Closing to occur and, for
purposes of this Agreement, are thereby deemed to have waived such breach or
inaccuracy.
8.2. Indemnification.
(a) From and after the Closing Date and subject to Sections
8.1 and 8.4, Sellers (the "Seller Indemnifying Party") agree to indemnify and
hold harmless Buyer and its Affiliates and their respective officers, directors
and employees (each a "Buyer Indemnified Party") against and in respect of any
and all losses, claims, damages, liabilities, costs and expenses, including
reasonable legal fees and expenses ("Losses"), resulting or arising from or
otherwise relating to (i) any breaches of the Seller Indemnifying Party's
representations and warranties set forth in this Agreement, other than the
representations and warranties set forth in Section 3.16 of this Agreement, (ii)
any nonfulfillment of or failure to comply with any covenant set forth in this
Agreement by the Seller Indemnifying Party, or (iii) any Excluded Liability.
Except as provided herein, Buyer hereby waives and releases Sellers from any and
all claims, known and unknown, foreseen and unforeseen, which exist now or may
arise in the future under any Environmental Laws as they may exist from time to
time, including under the Comprehensive Environmental Response Compensation and
Liability Act ("CERCLA") and common law claims, in relation to Assumed
Liabilities.
(b) From and after the Closing Date and subject to Sections
8.1 and 8.4, Buyer (the "Buyer Indemnifying Party") agrees to indemnify and hold
harmless Sellers and their Affiliates and their respective officers, directors
and employees (each a "Seller Indemnified Party") against and in respect of any
and all Losses resulting or arising from or otherwise relating to (i) any
breaches of the Buyer Indemnifying Party's representations and warranties set
forth in this Agreement, (ii) any nonfulfillment of or failure to comply with
any covenant set forth in this Agreement by the Buyer Indemnifying Party, or
(iii) any Assumed Liability. In addition, Buyer shall indemnify and hold
harmless the Seller Indemnified Parties against and in respect of any and all
Losses incurred thereby or caused thereto under or pursuant to WARN resulting or
arising from or otherwise relating to any act or omission to act by or of Buyer
or the Business with regard to any site of employment or one or more facilities
or operating units within any site of employment of the Business. Except as
provided herein, Sellers hereby waive and release
26
Buyer from any and all claims, known and unknown, foreseen and unforeseen, which
exist now or may arise in the future under any Environmental Laws as they may
exist from time to time, including under CERCLA and common law claims, in
relation to Excluded Liabilities.
(c) Any payments pursuant to this Article VIII shall be
treated as an adjustment to the Purchase Price. In determining the amount of
Losses to which an indemnified party is entitled under this Article VIII, full
allowance shall be made for any proceeds received pursuant to the indemnified
party's insurance policies or from any third party. In the event such proceeds
or recovery are received by an indemnified party after payment of an indemnity
claim by an indemnifying party hereunder, the indemnified party shall promptly
pay the amount of such proceeds or other recovery to the indemnifying party to
the extent it is duplicative of the indemnity claim.
(d) The Indemnifying Party hereunder shall retain all rights
to pursue remedies outside this Agreement against any third party, including
claims for compensation and contribution in connection with any indemnity
obligation under this Agreement.
8.3. Method of Asserting Claims, etc.
(a) All claims for indemnification by any Indemnified Party
hereunder shall be asserted and resolved as set forth in this Section 8.3. An
Indemnified Party shall give prompt notice to an Indemnifying Party of the
assertion of any claim or assessment (but in no event shall such notice be given
later than 15 days after a senior officer of such Indemnified Party has actual
knowledge of such claim or assessment), and shall notify the Indemnifying Party
of the commencement of any action, suit, audit or proceeding by a third party in
respect of which indemnity may be sought hereunder (a "Third Party Claim")
within 20 days of such commencement. Any such notice shall specify in reasonable
detail the claim, assessment, action, suit, audit or proceeding. The Indemnified
Party will give the Indemnifying Party such information with respect thereto as
the Indemnifying Party may reasonably request. Thereafter, the Indemnified Party
shall promptly deliver to the Indemnifying Party after the Indemnified Party's
receipt thereof, copies of all notices and documents (including court papers)
received by the Indemnified Party relating to the Third Party Claim. The
Indemnifying Party shall have the right, exercisable by written notice (the
"Notice") to the Indemnified Party at any time following receipt of notice from
the Indemnified Party of the commencement of or assertion of any Third Party
Claim, to assume the defense of such Third Party Claim, using counsel selected
by the Indemnifying Party. Should the Indemnifying Party so elect to assume the
defense of a Third Party Claim, the Indemnifying Party will not be liable to the
Indemnified Party for legal expenses subsequently incurred by the Indemnified
Party in connection with the defense thereof. Regardless of whether the
Indemnifying Party elects to assume the defense of any such Third Party Claim,
the Indemnified Party shall not admit any liability with respect to, or settle,
compromise or discharge, such Third Party Claim without the Indemnifying Party's
prior written consent.
(b) The Indemnifying Party or the Indemnified Party, as the
case may be, shall in any event have the right to participate, at its own
expense, in the defense of any Third Party Claim which the other is defending.
27
(c) The Indemnifying Party, if it shall have assumed the
defense of any Third Party Claim and if such Third Party Claim involves solely
monetary damages, shall have the right to consent to the entry of judgment with
respect to, or otherwise settle such Third Party Claim, provided that as between
the Indemnifying Party and the Indemnified Party, the Indemnifying Party shall
be obligated to satisfy and discharge such judgment or settlement. Otherwise,
such settlement only may be made with the written consent of the Indemnified
Party, which consent shall not be unreasonably withheld.
(d) Whether or not the Indemnifying Party chooses to defend or
prosecute any Third Party Claim, all the parties hereto shall cooperate
reasonably in the defense or prosecution thereof and shall furnish such records,
information and testimony, and attend such conferences, discovery proceedings,
hearings, trials and appeals as may be reasonably requested in connection
therewith. Such cooperation shall include access during normal business hours
afforded to the Indemnifying Party to, and reasonable retention by the
Indemnified Party of, records and information which are reasonably relevant to
such Third Party Claim, and making employees available on a mutually convenient
basis to provide additional information and explanation of any material provided
hereunder, and the Indemnifying Party shall reimburse the Indemnified Party for
all its reasonable out-of-pocket expenses in connection therewith.
8.4. Indemnification Limitations.
(a) Notwithstanding anything to the contrary contained in this
Agreement, the following limitations shall apply to indemnification claims under
this Agreement:
(i) Sellers shall not be required to indemnify and
hold harmless any Buyer Indemnified Party pursuant to Section 8.2(a), (A) if
such claim or demand otherwise was raised (whether or not accepted) in
connection with the Purchase Price adjustment or Net Cash Flow reconciliation
procedures set forth in Section 2.7(a) and (b), respectively, (B) with respect
to any individual claim for payment of any Loss, unless such claim involves
Losses in excess of $20,000 (nor shall any such item be considered for purposes
of calculating the aggregate amount of the Buyer Indemnified Parties' Losses)
and (C) until the aggregate amount of Losses to which Buyer Indemnified Parties
shall be entitled exceed $200,000 (the "Seller Deductible"), in which case the
Seller Indemnifying Party shall only be liable for the amount by which all
Losses exceed the Seller Deductible.
(ii) (A) The aggregate indemnification obligations of
Sellers pursuant to Section 8.2(a)(i) (other than for breaches of the
representations and warranties set forth in Sections 3.1 (organization and
authority of Sellers) or 3.3 (Foremost Shares)) and Section 8.2(a)(ii) shall in
no event exceed $500,000, (B) the aggregate indemnification obligations of
Sellers (x) pursuant to Section 8.2(a)(i) solely in respect of breaches of the
representations and warrantees set forth in Sections 3.1 (organization and
authority of Sellers) and 3.3 (Foremost Shares), (y) pursuant to Section
8.2(a)(iii) (Excluded Liabilities) and (z) pursuant to Section 8.5(a) (Taxes of
Foremost) shall in no event exceed $2,000,000 and (C) the cumulative aggregate
indemnification obligations of Sellers hereunder shall in no event exceed
$2,000,000.
(iii) Buyer shall not be required to indemnify and
hold harmless any Seller Indemnified Party pursuant to Section 8.2(b), (A) if
such claim or demand otherwise was
28
raised (whether or not accepted) in connection with the Purchase Price
adjustment or Net Cash Flow reconciliation procedures set forth in Section
2.7(a) and (b), respectively, (B) with respect to any individual claim for
payment of any Loss, unless such claim involves Losses in excess of $20,000 (nor
shall any such item be considered for purposes of calculating the aggregate
amount of the Seller Indemnified Parties' Losses) and (C) until the aggregate
amount of Losses to which Seller Indemnified Parties shall be entitled exceed
$200,000 (the "Buyer Deductible"), in which case the Buyer Indemnifying Party
shall only be liable for the amount by which all Losses exceed the Buyer
Deductible.
(iv) The cumulative indemnification obligations of
Buyer hereunder shall in no event exceed $2,000,000.
(b) Buyer acknowledges and agrees that, from and after the
date hereof, its sole and exclusive remedy with respect to any and all claims
relating to the subject matter of this Agreement shall be pursuant to the
indemnification provisions set forth in this Article VIII. In furtherance of the
foregoing, as a material inducement for the execution and delivery of this
Agreement by Sellers, Buyer, on behalf of itself and its Affiliates, hereby
waives, from and after the date hereof, to the fullest extent permitted under
applicable law, any and all rights, claims and causes of action it may have
against Sellers (or their Affiliates or representatives) relating to the subject
matter of this Agreement, the Business (or its operations) or otherwise, whether
known or unknown, including claims arising under or based upon any federal,
state or local statute, law, ordinance, rule or regulation, except claims
brought under and subject to the terms of this Agreement.
(c) Buyer acknowledges and agrees that, other than the
representations and warranties of Sellers expressly set forth in Article III
hereof, there are no representations or warranties of Sellers expressed or
implied relating to the subject matter of this Agreement, Sellers or the
Business (or its operations) and that there shall be no claim against Sellers or
the Business or their Affiliates or representatives or right to indemnification
with respect to any information (whether written or oral), documents or
materials furnished by such parties (or any of their Affiliates or
representatives) to Buyer or any of its Affiliates or representatives, including
any "business plan," "executive summary," confidential information memorandum or
other marketing materials, or any information contained therein, or any
projections, estimates or budgets heretofore delivered to or made available to
Buyer of future revenues, expenses or expenditures, future results of operations
(or any component thereof), future cash flows or future financial condition (or
any component thereof) of the Business. Except as expressly provided in this
Agreement, Buyer is accepting the Transferred Assets on an "as is, where is,
with all faults" basis.
8.5. Liability for Taxes of Foremost and Related Matters.
(a) Sellers' Liability for Taxes. Subject to Section 2.8,
Sellers shall be liable for and indemnify Buyer for all Taxes (including,
without limitation, any obligation to contribute to the payment of a Tax
determined on a consolidated, combined or unitary basis with respect to a group
of corporations that include or included Foremost and Taxes resulting from
Foremost ceasing to be a member of such group of corporations) imposed on
Foremost or for which Foremost may otherwise be liable for any taxable year or
period that ends on or before the
29
Financial Closing and, with respect to any taxable year or period beginning
before and ending after the Financial Closing, the portion of such taxable year
or period ending on and including the Financial Closing ending on and including
the Financial Closing. Sellers shall be entitled to any refund of Taxes of
Foremost received for such periods.
(b) Buyer's Liability for Taxes. Buyer shall be liable for and
indemnify Sellers for all Taxes of Foremost for any taxable year or period that
begins after the Financial Closing and, with respect to any taxable year or
period beginning before and ending after the Financial Closing, the portion of
such taxable year or period beginning after the Financial Closing, subject to
the limitations set forth in Section 8.5(c). Buyer shall be entitled to any
refund of Taxes of Foremost received for such periods.
(c) Taxes for Short Taxable Year. For purposes of subsections
(a) and (b), whenever it is necessary to determine the liability for Taxes of
Foremost for a portion of a taxable year or period that begins before and ends
after the Financial Closing, the determination of the Taxes of Foremost for the
portion of the year or period ending on, and the portion of the year or period
beginning after, the Financial Closing shall be determined by assuming that
Foremost had a taxable year or period which ended at the close of the Financial
Closing, except that exemptions, allowances or deductions that are calculated on
an annual basis, such as the deduction for depreciation, shall be apportioned on
a time basis. In allocating any liability for Taxes between Sellers and Buyer,
there shall only be allocated to Sellers Tax liability arising from the ordinary
business activities of Foremost. Without limiting the generality of the
foregoing, if Buyer shall dissolve Foremost or cause Foremost to transfer all or
any significant portion of its assets on the Financial Closing (whether by sale,
exchange, merger, distribution or otherwise), or if Foremost shall conduct any
other activity outside of the ordinary course of its business on or after the
Financial Closing, any and all resulting Tax liability shall be the sole
responsibility of Buyer.
(d) Adjustment to Purchase Price. Any payment by Buyer or
Sellers under this Section 8.5 will be an adjustment to the Purchase Price.
(e) Tax Returns. Sellers shall file or cause to be filed when
due all Tax Returns that are required to be filed by or with respect to Foremost
for taxable years or periods ending on or before the Financial Closing and shall
pay any Taxes due in respect of such Tax Returns, and Buyer shall file or cause
to be filed when due all Tax Returns that are required to be filed by or with
respect to Foremost for taxable years or periods ending after the Financial
Closing and shall remit any Taxes due in respect of such Tax Returns. Sellers
shall pay Buyer the Taxes for which Sellers are liable pursuant to subsection
(a) but which are payable with Tax Returns to be filed by Buyer pursuant to the
previous sentence within five (5) Business Days prior to the due date for the
filing of such Tax Returns. Buyer shall promptly furnish Sellers with a copy of
any Tax return filed by or with respect to Foremost that includes a Tax period
that begins prior to the Financial Closing and ends after the Financial Closing,
together with a detailed description of the allocation of Tax liability, if any,
in respect of such Tax return and the allocation (if any) of such Tax liability
between Buyer and Sellers, which allocation shall be reasonably acceptable to
Sellers.
30
(f) Contest Provisions.
(i) Buyer shall promptly notify Sellers in writing
upon receipt by Buyer, any of its Affiliates or Foremost of notice of any
pending or threatened federal, state, local or foreign income or franchise tax
audits or assessments which may affect the tax liabilities of Foremost for which
Sellers would be required to indemnify Buyer pursuant to subsection (a).
(ii) Sellers shall have the sole right to represent
Foremost's interests in any tax audit or administrative or court proceeding
relating to taxable periods ending on or before the Financial Closing, and to
employ counsel of their choice at their expense.
(iii) Sellers shall be entitled to participate at
their expense in the defense of any claim for Taxes for the year or period
ending after the Financial Closing which may be the subject of indemnification
by Sellers pursuant to subsection (a) and, with the written consent of Buyer,
and at its sole expense, may assume the entire defense of such tax claim.
Neither Buyer nor Foremost may agree to settle any tax claim for the portion of
the year or period ending on the Financial Closing which may be the subject of
indemnification by Sellers under subsection (a) without the prior written
consent of Sellers, which consent shall not be unreasonably withheld.
(g) Termination of Tax Allocation Agreements. Any tax
allocation or sharing agreement or arrangement, whether or not written, that may
have been entered into by Sellers and Foremost shall be terminated as to
Foremost as of the Financial Closing, and no payments which are owed by or to
Foremost pursuant thereto shall be made thereunder.
(h) Assistance and Cooperation. After the Closing Date, each
of Sellers and Buyer shall:
(i) assist (and cause their respective Affiliates to
assist) the other party in preparing any Tax Returns or reports which such other
party is responsible for preparing and filing in accordance with this Section
8.5;
(ii) cooperate fully in preparing for any audits of,
or disputes with taxing authorities regarding, any Tax Returns of Foremost;
(iii) make available to the other and to any taxing
authority as reasonably requested all information, records, and documents
relating to Taxes of Foremost;
(iv) provide timely notice to the other in writing of
any pending or threatened tax audits or assessments of Foremost for taxable
periods for which the other may have a liability under this Section 8.5; and
(v) furnish the other with copies of all
correspondence received from any taxing authority in connection with any tax
audit or information request with respect to any taxable period for which the
other may have a liability under this Section 8.5.
(i) Survival of Obligations. The obligations of Sellers set
forth in this Section 8.5 shall be unconditional and absolute and shall remain
in effect for a period of 12 months after
31
the Financial Closing; provided, however, that Sellers' obligations under
Section 8.5(a) shall not terminate with respect to any pending or threatened tax
audit or assessment that would result in additional tax liability as to which
Buyer or Sellers shall have delivered notice pursuant to Section 8.5(h)(iv)
above prior to the expiration of such 12 month period. The obligations of Buyer
set forth in this Section 8.5 shall be unconditional and absolute and shall
remain in effect without limitation as to time.
ARTICLE IX
MISCELLANEOUS
9.1. Right to Terminate. (a) If the transactions contemplated by this
Agreement shall not have been consummated prior to April 30, 2003, each of the
parties hereto shall have the right to terminate this Agreement at any time
thereafter by giving at least three (3) Business Days advance notice of such
termination to Buyer or Sellers, as the case may be; provided, however, that the
party seeking to terminate this Agreement shall have fully complied with its
obligations hereunder.
(b) Sellers and Buyer shall have the right to terminate this
Agreement upon their mutual written consent.
(c) Buyer or Sellers shall have the right to terminate this
Agreement if a court of competent jurisdiction or governmental or regulatory
body shall have issued an order, decree or ruling, or taken any other action,
restraining, enjoining or otherwise prohibiting the Closing of the transactions
contemplated hereby and such order, decree, ruling or other action shall have
become final and non-appealable.
(d) Sellers shall have the right to terminate this Agreement
at any time prior to the Closing Date if (i) the representations and warranties
of Buyer contained in this Agreement were incorrect in any material respect when
made or (ii) Buyer is in breach of any of its covenants or agreements contained
in this Agreement, such breach continues uncured for ten (10) days after written
notice thereof by Sellers, and such breach is reasonably expected to prohibit
the consummation of the transactions contemplated by this Agreement.
(e) Buyer shall have the right to terminate this Agreement at
any time prior to the Closing if (i) the representations and warranties of
Sellers contained in this Agreement were incorrect in any material respect when
made or (ii) Sellers are in breach of any of their covenants or agreements
contained in this Agreement, such breach continues uncured for ten (10) days
after written notice thereof by Buyer, and such breach is reasonably expected to
prohibit the consummation of the transactions contemplated by this Agreement.
9.2. Effect of Termination. (a) If this Agreement is terminated as
provided herein, this Agreement shall thereafter become void and have no effect,
and no party shall have any liability or further obligation to any other party
or their respective Affiliates, directors, officers or employees under the terms
of this Agreement or otherwise, except for the obligations of the parties hereto
contained in this Section 9.2 and in Sections 9.3, 9.4, 9.5, 9.6, 9.7, 9.11,
9.12 and 9.14 (and any related definitional provisions set forth in Article I),
and except that nothing in this
32
Section 9.2(a) shall relieve any party from liability for any breach of this
Agreement that arose prior to such termination; provided, however, that in no
event shall either party be liable for an amount in excess of $500,000.
(b) In the event this Agreement is terminated pursuant to
Sections 9.1(a) or 9.1(d), then Buyer shall promptly pay to Sellers an amount
equal to $500,000 (the "Termination Fee") within three (3) Business Days after
such termination (by wire transfer of same day funds).
(c) Buyer acknowledges that the Termination Fee provided for
in Section 9.2(b) is an integral part of the transactions contemplated by this
Agreement and not a penalty, and that, without the Termination Fee provided for
above, Sellers would not enter into this Agreement. Further, nothing in this
Section 9.2 shall be deemed to limit the liability of any party hereto for any
breach in any respect of any representations, warranties or covenants contained
in this Agreement that occurs prior to termination of this Agreement.
9.3. Return of Information. If for any reason whatsoever the
transactions contemplated by this Agreement are not consummated, Buyer shall
upon request from Sellers promptly return to Sellers all books, records and
documents (including all copies, if any, thereof) furnished by Sellers, the
Business, or any of their respective agents, employees, or representatives, and
shall not use or disclose the information contained in such books, records or
documents for any purpose or make such information available to any other entity
or Person.
9.4. Expenses. Unless otherwise indicated, the parties shall bear their
own respective expenses (including, but not limited to, all compensation and
expenses of counsel, financial advisors, consultants, actuaries and independent
accountants) incurred in connection with the preparation and execution of this
Agreement and consummation of the transactions contemplated hereby.
9.5. Public Disclosure. Buyer agrees that neither it nor its Affiliates
will make any statement to the press, press release or other public announcement
regarding this Agreement or the transactions contemplated hereby unless the text
and time of the release of any such statement has been approved by Sellers,
except where such disclosure is required pursuant to applicable law (in which
case Buyer will consult with Sellers regarding any such public statements prior
to disclosure). Sellers agree that, prior to making any statement to the press,
press release or other public announcement regarding this Agreement or the
transactions contemplated hereby, they will consult with Buyer regarding any
such public statements prior to disclosure.
9.6. Assignment. Except as provided in the following sentence, this
Agreement may not be assigned, by Buyer by operation of law or otherwise. Buyer
may assign or delegate its rights, obligations or liabilities under this
Agreement in whole or in part to a subsidiary of Buyer; provided, however, that
in such event, Buyer shall remain fully liable for the fulfillment of all such
obligations and liabilities. Any attempted assignment or delegation in
contravention hereof shall be null and void. This Agreement shall be binding
upon and inure to the benefit of the successors and assigns of the parties
hereto.
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9.7. Entire Agreement. Except as otherwise contemplated herein, this
Agreement (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties, with
respect to the subject matter hereof (other than the Confidentiality Agreement);
and (b) is not intended to confer upon any other Persons any rights or remedies
hereunder.
9.8. Schedules. The inclusion of any matter in any Schedule to this
Agreement shall be deemed to be an inclusion for all purposes of this Agreement,
including each representation and warranty to which it may relate, but inclusion
therein shall expressly not be deemed to constitute an admission by Sellers or
Buyer or otherwise imply, that any such matter is material or creates a measure
for materiality for the purposes of this Agreement.
9.9. Counterparts. This Agreement and any amendments hereto may be
executed in one or more counterparts, each of which shall be deemed to be an
original, but all of which shall be considered one and the same instrument.
9.10. Section Headings. The section and paragraph headings contained in
this Agreement are for reference purposes only and shall not in any way affect
the meaning or interpretation of this Agreement.
9.11. Notices. All notices hereunder shall be deemed given if in
writing and delivered personally or sent by facsimile transmission or by
registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other addresses as shall be specified by like
notice):
(a) if to Sellers, to:
Tufco L.P.
▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ III
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Bradford Ventures, Ltd.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Dechert LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇ ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
34
(b) if to Buyer, to:
Trimaco, LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
Ottsen, Mauze, Leggat & ▇▇▇▇, ▇▇
▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: 314- 863-3821
Any notice given by mail shall be effective when received. Any
notice given by facsimile transmission shall be effective when the appropriate
facsimile transmission acknowledgment is received.
9.12. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of
New York without reference to the
choice of law principles thereof. Any action, suit or other proceeding initiated
by Buyer or Sellers against the other under or in connection with this Agreement
shall be brought only in the United States District Court for the Southern
District of
New York or any
New York State court sitting in the City of
New
York. Buyer and Sellers hereby submit themselves to the exclusive jurisdiction
of any such court and hereby waive, to the fullest extent permitted by law, any
objection which they may now or hereafter have to the laying of the venue of any
such action, suit or proceeding brought in such a court has been brought in an
inconvenient forum.
9.13. Bulk Sales Laws. Each of the parties hereto hereby waives
compliance by Sellers with the provisions of "bulk sales," "bulk transfer" or
similar applicable laws as such relate to the transfer of the Transferred
Assets.
9.14. Illegality. In case any provision in this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
[SIGNATURE PAGE FOLLOWS]
35
IN WITNESS WHEREOF, this Agreement has been signed on behalf
of each of the parties hereto as of the date first above written.
TRIMACO, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Manager
TUFCO TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, III
-----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, III
Title: President and Chief
Executive Officer
TUFCO, L.P.
By: Tufco LLC, its
General Partner
By: Tufco Technologies, Inc., its
Sole Managing Member
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, III
-----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, III
Title: President and Chief
Executive Officer
ACKNOWLEDGED AND
AGREED TO THIS 31 DAY
OF MARCH, 2003:
-----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
[SIGNATURE PAGE TO
ASSET AND STOCK PURCHASE AGREEMENT]
36
EXHIBIT B
[Letter Agreement]
1. Commencing on the Closing Date for a period of two (2) years after the
Financial Closing, Buyer and Tufco LP shall not, directly or
indirectly, and shall each cause their subsidiaries and agents acting
for their benefit not to, without prior written approval of the other
party hereto, solicit for employment any employees of the other party
hereto; provided, however, that solicitations of employment published
in a journal, newspaper or other publication of general circulation and
not specifically directed towards such employees shall not be deemed to
constitute solicitation for purposes of this paragraph.
2. Commencing on the Closing Date for a period of two (2) years after the
Financial Closing, Buyer and Tufco LP shall not, directly or
indirectly, and shall cause each of their subsidiaries and agents
acting for their benefit not to, without prior written approval of the
other party hereto, engage in Competition. For purposes of this
Paragraph, the term "Competition" shall mean (i) in the case of Tufco
LP, the manufacturing, distributing, marketing and selling products
and/or services that are currently (or for a period of 12 months prior
to the date hereof have been) manufactured, distributed, marketed or
sold in connection with the Business and (ii) in the case of the Buyer,
the manufacturing, distributing, marketing and selling products and/or
services that are currently (or for a period of 12 months prior to the
date hereof have been) manufactured, distributed, marketed or sold in
connection with the business segments of Tufco LP other than the
Business, including, without limitation, the printing, contract
packaging and converting segments of Tufco LP's business.
3. If, at the time of enforcement of paragraphs 1 or 2, a court holds that
the restrictions stated herein are unreasonable under the
circumstances, Buyer and Tufco LP agree that the maximum period, scope
or geographical area reasonable under such circumstances shall be
substituted for the stated period, scope or area, it being specifically
agreed by the parties hereto that it is their continuing desire that
this covenant be enforced to the full extent of its terms and
conditions or if a court finds the scope of the covenant unenforceable,
the court shall redefine the covenant so as to comply with applicable
law. The parties hereto agree that money damages would not be an
adequate remedy for any breach of paragraphs 1 or 2. Therefore, in the
event of a breach or threatened breach of paragraphs 1 or 2, the
parties hereto may, in addition to other rights and remedies existing
in their favor, apply to any court of competent jurisdiction for
specific performance and/or injunctive or other relief in order to
enforce, or prevent any violation of, the provisions hereof (without
posting a bond or other security). Buyer and Tufco LP agree that the
restrictions contained in paragraphs 1 or 2 are reasonable.
4. Commencing on the Closing Date for a period of one (1) year after the
Financial Closing, if Tufco LP desires to introduce its wet wipes
product line (the "Wet Wipes Product") in the sector in which the
Business currently operates, Tufco LP will first provide Buyer with
written notice of Tufco LP's intent to introduce the Wet Wipes Product
prior to the introduction of such new product. Within five (5) business
days after receipt of such notice
(the "Exercise Period"), Buyer may notify Tufco LP in writing that it
desires to exercise its right to negotiate with Tufco LP to distribute
and market the Wet Wipes Product. If Buyer does not exercise its right
to negotiate within the Exercise Period, Tufco LP may introduce the Wet
Wipes Product without any further obligation to Buyer under this
paragraph 4. If Buyer exercises its right in writing within the
Exercise Period, the parties hereto will negotiate in good faith during
the fifteen (15) day period after Tufco LP's receipt of the
aforementioned notice to agree on the terms for a distribution and
marketing arrangement with respect to the Wet Wipes Product. If no
written agreement or memorandum of understanding between the parties
hereto is signed within such 15-day period, for any reason then Tufco
LP may introduce such new product with no further obligation to Buyer
under this paragraph 4. Notwithstanding the foregoing, Tufco LP shall
not be required to terminate or breach its obligations under any
agreements in effect on the date hereof with third parties pursuant to
which Tufco LP has granted distribution or marketing or confidentiality
rights.
5. Notwithstanding anything to the contrary contained herein, if any
Person acquires or succeeds to all of, or a controlling interest in,
the equity capital, business or assets of Tufco LP, Parent or any of
their respective Affiliates, successors or assigns, including, without
limitation, any subsidiary, division, business segment or product line
of Tufco LP, Parent or any of their respective Affiliates, successors
or assigns, whether by purchase of assets or stock, or by merger,
consolidation, reorganization, recapitalization, liquidation or any
similar transaction involving such Person and Tufco LP, Parent or any
of their respective Affiliates, successors or assigns, the agreements
set forth in paragraph 1 (non-solicitation), paragraph 2
(non-competition) and paragraph 4 (right of negotiation) of this Letter
Agreement shall not apply to, or be binding upon, such Person or such
Person's Affiliates, partners, stockholders, subsidiaries, investee
companies (i.e., companies where such Person owns a minority or
non-controlling position), portfolio companies (i.e., companies where
such Person owns a majority or controlling position), successors or
assigns, or be binding on any such business, assets, subsidiary,
division, business segment or product line acquired from Tufco LP,
Parent or any of their respective Affiliates, successors and assigns by
such Person. By way of illustration, if Tufco LP sold its Business
Imaging Segment in a transaction described above, but retained its
Contract Manufacturing Segment, then the aforementioned paragraphs 1, 2
and 4 would still apply to the Contract Manufacturing Segment (and the
other portions of Tufco LP's business not transferred in connection
with such transaction).
6. Commencing on the Closing Date for a period of two (2) years after the
Financial Closing, Tufco LP agrees that it shall not manufacture Red
Rosin Paper, Builder's Paper or Masking Paper at its Newton, North
Carolina plant.
7. This entire Letter Agreement shall terminate, and the parties hereto
shall be released from all obligations hereunder upon the sale of all
or substantially all of the assets or stock of Parent (whether by stock
sale, asset sale, merger, consolidation, reorganization,
recapitalization, liquidation or otherwise).
8. Defined terms used herein but not otherwise defined herein shall have
the meanings ascribed thereto in the
Asset and Stock Purchase Agreement
by and among Tufco Technologies, Inc., Tufco, L.P. and TRIMACO, LLC,
dated as of February 21, 2003, as amended.