Execution Version

 

 

ASSET PURCHASE AND SALE AGREEMENT

between

DEL-TIN FIBER, LLC

and

ROSEBURG FOREST PRODUCTS CO.

 

 

Dated as of December 20, 2018

 

 

 

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TABLE OF CONTENTS

Page

 

 

 

ARTICLE I Purchase and Sale of Transferred Assets

1

SECTION 1.01. Purchase and Sale

1

SECTION 1.02. Transferred Assets and Excluded Assets

1

SECTION 1.03. Consents to Certain Assignments

4

SECTION 1.04. Assumption of Liabilities

5

SECTION 1.05. Risk of Loss

6

ARTICLE II Closing and Post-Closing Purchase Price Adjustment

7

SECTION 2.01. Closing

7

SECTION 2.02. Transactions To Be Effected at the Closing

7

SECTION 2.03. Post-Closing Purchase Price Adjustment

8

ARTICLE III Representations and Warranties of Seller

10

SECTION 3.01. Organization and Standing

10

SECTION 3.02. Authority; Execution and Delivery; Enforceability

11

SECTION 3.03. No Conflicts or Violations; No Consents or Approvals Required

11

SECTION 3.04. Financial Statements

12

SECTION 3.05. Undisclosed Liabilities

12

SECTION 3.06. Assets Other than Real Property Interests

12

SECTION 3.06. Assets Other than Real Property Interests

12

SECTION 3.06. Assets Other than Real Property Interests

12

SECTION 3.07. Real Property

13

SECTION 3.08. Ownership of Scheduled Intellectual Property

14

SECTION 3.09. Inventory

15

SECTION 3.10. Customers and Suppliers

15

SECTION 3.11. Contracts

15

SECTION 3.12. Permits

17

SECTION 3.13. Taxes

18

SECTION 3.14. Proceedings

18

SECTION 3.15. Employee Benefit Matters

18

SECTION 3.16. Employee Matters

19

SECTION 3.17. Absence of Changes or Events

20

SECTION 3.18. Compliance with Applicable Laws

21

SECTION 3.19. Environmental Matters

21

SECTION 3.20. Sufficiency of Transferred Assets

22

SECTION 3.21. Brokers

22

ARTICLE IV Representations and Warranties of Purchaser

22

SECTION 4.01. Organization and Standing

22

 

 

SECTION 4.02. Authority; Execution and Delivery; Enforceability

23

SECTION 4.03. No Conflicts or Violations; No Consents or Approvals Required

23

SECTION 4.04. Proceedings.

23

SECTION 4.05. Availability of Funds; Solvency

24

ARTICLE V Covenants

24

SECTION 5.01. Covenants Relating to Conduct of Business

24

SECTION 5.02. Access to Information and Properties

26

SECTION 5.03. Confidentiality

27

SECTION 5.04. Best Efforts

27

SECTION 5.05. Antitrust Notification and Other Regulatory Filings

27

SECTION 5.06. Further Assurances

29

SECTION 5.07. Insurance Matters

29

SECTION 5.08. No Solicitation of Other Bids

29

SECTION 5.09. Notice of Certain Events

30

SECTION 5.10. Supplement to Schedules

31

ARTICLE VI Employment Matters

31

SECTION 6.01. Continuation of Employment; Purchaser Benefit Plans

31

SECTION 6.02. Accrued Vacation

33

SECTION 6.03. WARN Act

33

SECTION 6.04. Administration

33

SECTION 6.05. Employment Tax Reporting Responsibility

33

ARTICLE VII Conditions to Closing

33

SECTION 7.01. Conditions to Each Party’s Obligation

33

SECTION 7.02. Conditions to Obligation of Purchaser

34

SECTION 7.03. Conditions to Obligation of Seller

36

SECTION 7.04. Frustration of Closing Conditions

36

ARTICLE VIII Termination; Effect of Termination

37

SECTION 8.01. Termination

37

SECTION 8.02. Effect of Termination

38

ARTICLE IX Indemnification and Survival

38

SECTION 9.01. Survival of Representations and Warranties

38

SECTION 9.02. Indemnification by Seller

38

SECTION 9.03. Indemnification by Purchaser

39

SECTION 9.04. Indemnification Procedures

39

SECTION 9.05. Limitations on Indemnification

41

SECTION 9.06. Calculation of Indemnity Payments

42

SECTION 9.07. Payments; Environmental Escrow Amounts

42

SECTION 9.08. Tax Treatment of Indemnification

43

ARTICLE X Tax Matters

43

SECTION 10.01. Purchase Price Allocations

43

ARTICLE XI Non-Competition

44

SECTION 11.01. Agreement Not To Compete

44

ARTICLE XII Additional Agreements

45

SECTION 12.01. Publicity

45

SECTION 12.02. No Use of Certain Retained Names

45

SECTION 12.03. Support Services

45

SECTION 12.04. Post-Closing Information

46

SECTION 12.05. Records

46

SECTION 12.06. Bulk Transfer Laws

46

SECTION 12.07. Refunds and Remittances

46

SECTION 12.08. Environmental Matters

47

ARTICLE XIII Miscellaneous

48

SECTION 13.01. Assignment

48

SECTION 13.02. No Third-Party Beneficiaries

48

SECTION 13.03. Expenses

48

SECTION 13.04. Notices

49

SECTION 13.05. Headings; Certain Definitions

50

SECTION 13.06. Counterparts

53

SECTION 13.07. Integrated Contract; Exhibits and Schedules

53

SECTION 13.08. Severability; Enforcement

54

SECTION 13.09. Governing Law

54

SECTION 13.10. Jurisdiction

54

SECTION 13.11. Service of Process

54

SECTION 13.12. Waiver of Jury Trial

54

SECTION 13.13. Amendments

55

SECTION 13.14. Specific Performance

55

SECTION 13.15. Timely Performance

55

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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INDEX OF DEFINED TERMS

 

AA Land

Section 2.08(a)

Accounting Firm

Section 2.03(c)

Acquisition

Section 1.01

Acquisition Proposal

Section 5.08(a)

Adjusted Purchase Price

Section 2.03(d)

affiliate

Section 13.05(b)

Agreement

Recitals

Ancillary Agreements

Section 13.05(b)

Antitrust Law  

Section 13.05(b)

Antitrust Proceeding

Section 13.05(b)

Applicable Law

Section 13.05(b)

Ash Agreement

Section 12.08(a)

Assumed Liabilities

Section 1.04(a)

Assumed Tax Liabilities

Section 1.04(a)(ii)

Audited Financial Statements

Section 13.05(b)

Balance Sheet

Section 3.04(a)

Balance Sheet Principles

Section 2.03(e)

Business

Recitals

Business Contracts  

Section 3.11(b)

business day

Section 13.05(b)

Business Employee

Sections 3.16(a)

Business Material Adverse Effect

Section 13.05(b)

CAP

Section 3.19(b)

CAP Request

Section 3.19(b)

Closing

Section 2.01

Closing Date

Section 2.01

Closing Date Payment

Section 2.02(b)

Closing Working Capital

Section 2.03(b)

Code

Section 13.05(b)

Competitive Activities  

Section 11.01(a)

Confidentiality Agreement

Section 5.03(a)

Consent

Section 3.03

Contracts

Section 1.02(a)(vii)

DOJ

Section 5.05(a)

$

Section 13.05(b)

Effect

Section 13.05(b)

Environmental Escrow Agreement  

Section 13.05(b)

Environmental Escrow Amount

Section 13.05(b)

Environmental Laws

Section 13.05(b)

Environmental Liabilities

Section 13.05(b)

ERISA

Section 3.15(a)

Exchange Act

Section 3.03

Excluded Assets

Section 1.02(b)

 

 

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Excluded Contracts

Section 1.02(b)(v)

Fiber Supply Agreement

Section 13.05(b)

Financing

Section 4.05(a)

FTC

Section 5.05(a)

GAAP

Section 2.03(e)

Governmental Entity

Section 3.03

Hazardous Material

Section 13.05(b)

HSR Act

Section 3.03

Incentive Lease Agreement

Section 13.05(b)

including

Section 13.05(b)

Indemnified Party

Section 9.04(a)

Indemnifying Party

Section 9.04(a)

Indenture

Section 2.02(d)

Intellectual Property

Section 1.02(a)(iv)

Inventory

Section 1.02(a)(ii)

Judgment

Section 13.05(b)

knowledge of Seller

Section 13.05(b)

Lease

Section 3.07(b)

Leased Property

Section 3.07(b)

Liabilities

Section 3.05

Liens

Section 3.06(a)

Losses

Section 9.01

Material Adverse Effect

Section 13.05(b)

Notice Date

Section 6.01(a)

Notice of Disagreement

Section 2.03(c)

Outside Closing Date

Section 5.04(a)

Owned Property

Section 3.07(a)

Permits

Section 1.02(a)(vi)

Permitted Goods and Services

Section 11.01(a)(i)

Permitted Liens

Section 3.06(a)

person

Section 13.05(b)

Post-Closing Tax Period

Section 13.05(b)

Pre-Closing Tax Period

Section 13.05(b)

Prime Rate

Section 2.03(d)

Proceeding

Section 1.04(b)(iii)

Purchase Price

Section 1.01(a)

Purchaser

Recitals

Purchaser Indemnitees

Section 9.02

Purchaser Material Adverse Effect

Section 13.05(b)

Purchaser Welfare Plan

Section 6.01(e)

Real Property

Section 3.07(b)

Records

Section 1.02(a)(x)

Release

Section 13.05(b)

Retained Liabilities

Section 1.04(b)

Retained Names

Section 1.02(b)(xiv)

Retained Tax Liabilities

Section 1.04(b)(v)

 

 

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Schedule Supplement

Section 5.10

Schedules                                                                                                                                            

Section 5.09(b)

Scheduled Intellectual Property
                                                                    

Section 3.08(a)

Seller                                    

Recitals

Seller Benefit Agreements
                                                                                

Section 3.15(a)

Seller Benefit Plans

Section 3.15(a)

Seller Closing Certificate

Section 7.02(i)

Seller Indemnitees

Section 9.02

Seller Insurance Policies

Section 5.07(a)

Soil Amendment

Section 12.08(b)

Statement

Section 2.03(b)

Straddle Period

Section 13.05(b)

subsidiary

Section 13.05(b)

Tax

Section 13.05(b)

Tax Return

Section 13.05(b)

Taxes

Section 13.05(b)

Taxing Authority

Section 13.05(b)

Technology

Section 1.02(a)(v)

Termination Notice

Section 6.01(a)

Third Party Claim

Section 9.04(a)

Transfer Taxes

Sections 13.05(b)

Transferred Assets

Section 1.02(a)

Transferred Contracts

Section 1.02(a)(vii)

Transferred Employee

Section 6.01(a)

Transferred Equipment
                                                                                                                                                    

Section 1.02(a)(iii)

Transferred Intellectual Property
                                                                                    

Section 1.02(a)(iv)

Transferred Inventory
                                                                                                                              

Section 1.02(a)(ii)

Transferred Permits
                                                                                                          

   Section 1.02(a)(vi)

Transferred Real Property
                                                                                                  

Section 1.02(a)(i)

Transferred Technology
                                                                                              

Section 1.02(a)(v)

Transitional Services Agreement
                                                                      

Section 13.05(b)

Transferred Assets
                                                                                                                                                                      

Section 1.02(a)

Trustee                                                                                                                  

Section 2.02(d)

Union                                                                                                                

  Section 3.16(b)

WARN
Act                                                                                                              

Section 6.03

WC
Amount                                                                                                        

Section 2.03(d)

Welfare Plan
                                                                                                                                                                                        

Section 3.15(a)

Working Capital

Section 2.03(e)

 

 

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ASSET PURCHASE AND SALE AGREEMENT dated as of December 20, 2018 (this
“Agreement”), between DEL-TIN FIBER, LLC, an Arkansas limited liability company
(“Seller”), and ROSEBURG FOREST PRODUCTS CO., an Oregon corporation
(“Purchaser”).

WHEREAS Seller owns and operates a medium density fiberboard facility (the
“Facility”) in El Dorado, Arkansas and a sales office in Lufkin, Texas (such
operation, the “Business”); and

WHEREAS Purchaser wishes to purchase from Seller, and Seller wishes to sell to
Purchaser certain of the assets of the Business (as defined in Section 13.05(b))
of Seller, upon the terms and subject to the conditions of this Agreement;  

NOW, THEREFORE, the parties hereby agree as follows:

ARTICLE I

Purchase and Sale of Transferred Assets

SECTION 1.01.  Purchase and Sale.   

Upon the terms and subject to the conditions of this Agreement, at the Closing
(as defined in Section 2.01), Seller will sell, transfer, assign and deliver to
Purchaser, and Purchaser will purchase, acquire and accept from Seller, all of
Seller’s right, title and interest in, to and under the Transferred Assets (as
defined in Section 1.02(a)) for (A) (i) an aggregate purchase price of
$92,111,000.00 in cash less (ii) the then outstanding amount of the Incentive
Lease Agreement constituting an Assumed Liability (a defined in Section
1.04(a)), less (iii) the amount of accrued vacation assumed pursuant to Section
6.02, plus (iv) amounts paid by Seller prior to the Closing Date (as defined in
Section 2.01) toward the purchase price of the Schelling HMI/PLC upgrade
project  (the “Purchase Price”), subject to adjustment as set forth in
Section 2.03, and (B) the assumption of the Assumed Liabilities (as defined in
Section 1.04(a)).  The purchase and sale of the Transferred Assets and the
assumption of the Assumed Liabilities are collectively referred to in this
Agreement as the “Acquisition”.

SECTION 1.02.  Transferred Assets and Excluded Assets.  

(a)  The term “Transferred Assets” means all the business, properties, assets,
goodwill and rights of Seller of whatever kind and nature, real or personal,
tangible or intangible, that are owned by Seller as of the time of the Closing
(as defined in Section 2.01) and used or held for use primarily in the operation
or conduct of the Business, other than (A) the Excluded Assets (as defined in
Section 1.02(b)) and (B) as otherwise provided for in this Section 1.02(a). Such
Transferred Assets include:

(i) all owned real property, leaseholds and other interests in real property of
Seller listed in Schedule 3.07(a) and Schedule 3.07(b), in each case together
with Seller’s right, title and interest in, to and under all buildings,
improvements and

 

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fixtures thereon and all other appurtenances thereto (the “Transferred Real
Property”);

(ii) all raw materials, work-in-process, finished goods on consignment pursuant
to vendor managed inventory arrangements, and finished goods completed in the
ninety (90) days prior to the Closing Date and products, supplies, and other
inventories (“Inventory”) of Seller that as of the close of business on the
Closing Date are located on the Transferred Real Property and all other
Inventory owned by Seller as of the close of business on the Closing Date, in
each case that is used or held for use primarily in the operation or conduct of
the Business (the “Transferred Inventory”);

(iii) all other tangible personal property and interests therein, including all
machinery, equipment, furniture, furnishings and vehicles, and spare parts
therefor, of Seller that is used or held for use primarily in the operation or
conduct of the Business (the “Transferred Equipment”);

(iv) all patents (including all reissues, divisions, continuations and
extensions thereof), patent applications, patent rights, trademarks, trademark
registrations, trademark applications, servicemarks, trade names, business
names, brand names, copyrights, copyright registrations, designs, design
registrations, and all rights to any of the foregoing (collectively, the
“Intellectual Property”), in each case listed on Schedule 3.08(a) (the
“Transferred Intellectual Property”);

(v) all trade secrets, inventions, know-how, formulae, processes, procedures,
research records, records of inventions, test information, market surveys and
marketing know-how (“Technology”) owned by Seller that are used or held for use
primarily in the operation or conduct of the Business (the “Transferred
Technology”);

(vi) all permits, licenses, franchises, approvals or authorizations from any
Governmental Entity (as defined in Section 3.03) (“Permits”) issued to Seller
that are used or held for use solely in the operation or conduct of the Business
to the extent such Permits are transferable (the “Transferred Permits”);

(vii) all written contracts, leases, subleases, licenses, indentures,
agreements, commitments and all other legally binding instruments (“Contracts”)
to which Seller is a party or by which Seller is bound that are listed in
Schedule 3.11(a), and all other Contracts to which Seller is a party or by which
Seller is bound that are used or held for use primarily in, or that arise
primarily out of, the operation or conduct of the Business (the “Transferred
Contracts”), but excluding the Excluded Contracts (as defined in Section
1.02(b)(v));

(viii) all credits, prepaid expenses (including without limitation the  deposits
paid prior to Closing toward the Schelling HMI/PLC upgrade project), deferred
charges, advance payments, security deposits and prepaid items of Seller that
are used, held for use or intended to be used primarily in, or that arise
primarily out of, the operation or conduct of the Business;

(ix) all rights, causes of action, claims and credits (whether known or unknown)
to the extent relating to the Business, including any such items arising

 

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under any guarantees, warranties, indemnities and similar rights in favor of
Seller in respect to the Business;

(x) all books of account, ledgers, general, financial, accounting and personnel
records, files, invoices, machinery and equipment maintenance files, customers’
and suppliers’ lists, customer purchasing histories, price lists, production
data, quality control records and procedures, research and development files,
records and data (including all correspondence with any Governmental Authority),
other distribution lists, billing records, sales material and records (including
mill specifications, pricing history, total sales, terms and conditions of sale,
sales and pricing policies and practices), sales and promotional literature,
customer and supplier correspondence (in all cases, in any form or medium)  and
research and files relating to the Transferred Intellectual Property and the
Transferred Technology of Seller that are used, held for use or intended to be
used primarily in, or that arise primarily out of, the conduct or operation of
the Business (the “Records”);

(xi) all goodwill of Seller generated by or associated with the Business or the
Transferred Assets; and

(xii) all assets of Seller as of the time of the Closing reflected on the
Balance Sheet (as defined in Section 3.04).

(b)  The term “Excluded Assets” means:

(i) all assets listed in Schedule 1.02(b);

(ii) all cash and cash equivalents of Seller;

(iii) all accounts receivable of Seller as of the close of business on the
Closing Date arising out of the operation or conduct of the Business;

(iv) all rights of Seller in and to products sold or leased (including products
returned after the Closing and rights of rescission, replevin and reclamation in
the operation or conduct of the Business prior to the Closing;

(v) all Contracts listed on Schedule 1.02(b) (the “Excluded Contracts”)

(vi) all Seller Insurance Policies (as defined in Section 5.07(a) and all other
insurance policies of Seller or its affiliates and all rights and claims
thereunder and, subject to Section 5.07, any proceeds thereof;

(vii) all rights, claims and credits of Seller to the extent relating to any
Excluded Asset or any Retained Liability (as defined in Section 1.04(b)),
including any such items arising under any guarantees, warranties, indemnities
and similar rights in favor of Seller solely in respect of any Excluded Asset or
any Retained Liability;

(viii) any shares of capital stock of, or other equity interests in, any
affiliate of Seller or any other person, which are owned by Seller;

 

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(ix) except as specifically provided in Article VI, any assets relating to any
employee benefit plan in which any employees of Seller or any of its affiliates
participate;

(x) original copies of all financial and tax records relating to the Business
that form part of Seller’s general ledger;

(xi) any refund or credit of Taxes (as defined in Section 13.05(b)) attributable
to any Retained Tax Liability (as defined in Section 1.04(b)(v));

(xii) all records of Seller prepared in connection with the sale of the
Business, including bids received from third parties and analyses relating to
the Business;

(xiii) all rights of Seller under this Agreement and any other agreements,
certificates and instruments relating to the sale of the Business (or any
portion thereof) or otherwise delivered in connection with this Agreement;

(xiv) the names and marks set forth on Schedule 1.02(b)(xiv) and any name or
mark derived from, similar to or including any of the foregoing (in each case,
in any style or design) (collectively, the “Retained Names”);

(xv) all Intellectual Property not listed on Schedule 3.08(a);

(xvi) all Permits that are not used or held for use by Seller in the operation
or conduct of the Business and also primarily relate to Seller’s other business;

(xvii) all Contracts to which Seller is a party or by which Seller is bound that
are not listed in Schedule 3.11(a), and all other Contracts to that are not used
or held primarily for use in, or that do not solely arise out of, the operation
or conduct of the Business and that primarily relate to the businesses of
Seller’s affiliates;

(xviii) any other property or assets of Seller and its affiliates not
constituting Transferred Assets; and

(xix) all corporate-level services (excluding the assets related to such
services to the extent such assets are not solely related to the Business) of
the type currently provided to the Business by Seller or any of its affiliates.

SECTION 1.03.  Consents to Certain Assignments.  

(a)  Notwithstanding anything in this Agreement to the contrary, this Agreement
shall not constitute an agreement to assign, directly or indirectly, any asset
or any claim or right or any benefit arising under or resulting from such asset
if an attempted direct or indirect assignment thereof, without the consent of a
third party, would constitute a breach, default, violation or other
contravention of the rights of such third party, would be ineffective with
respect to any party to an agreement concerning such asset, claim or right, or
would in any way adversely affect the rights of Seller or, upon transfer,
Purchaser under such asset, claim or right.  If any direct or indirect transfer
or assignment by Seller to Purchaser, or any direct or indirect acquisition or
assumption by Purchaser of, any interest in, or liability, obligation or
commitment under, any asset, claim or right requires the consent of a third
party, then such transfer

 

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or assignment or assumption shall be made subject to such consent being
obtained, and thereafter, Seller shall use its reasonable best efforts to obtain
such consent.  

(b)  If any such consent is not obtained prior to the Closing, the Closing shall
nonetheless take place on the terms set forth herein and, thereafter, Purchaser
and Seller shall cooperate (each at its own expense) in any lawful and
commercially reasonable arrangement proposed by Purchaser under which
(i) Purchaser shall obtain (to the maximum extent possible without infringing
upon the legal rights of such third party or violating any Applicable Law (as
defined in Section 13.05(b)) the economic claims, rights and benefits (net of
the amount of any related Tax (as defined in Section 13.05(b)) costs imposed on
Seller or any of its affiliates to the extent not assumed pursuant to clause
(ii) below) under the asset, claim or right with respect to which the consent
has not been obtained in accordance with this Agreement and (ii) Purchaser shall
assume any related economic burden (including the amount of any related Tax
costs imposed on Seller or any of its affiliates) with respect to the asset,
claim or right with respect to which the consent has not been obtained in
accordance with this Agreement.  

SECTION 1.04.  Assumption of Liabilities.  

(a)  Upon the terms and subject to the conditions of this Agreement, Purchaser
shall irrevocably assume, effective as of the Closing, and shall agree to
faithfully pay, perform and discharge when due the following obligations,
liabilities and commitments of Seller (collectively, the “Assumed Liabilities”)
and no other obligation liabilities and commitments:

(i) all liabilities, obligations and commitments under the Transferred Contracts
and the Transferred Permits arising after the Closing Date;

(ii) all liabilities, obligations and commitments of Seller for (A) Taxes
arising out of or relating to or in respect of the Business or the Transferred
Assets for any Post-Closing Tax Period (as defined in Section 13.05(b)),
including the Post-Closing Tax Period of a Straddle Period (as defined in
Section 13.05(b)), and (B) Transfer Taxes (as defined in Section 13.05(b))
subject to Section 10.01(c) (collectively, the “Assumed Tax Liabilities”).

(b)  Notwithstanding any other provision of this Agreement to the contrary,
Purchaser shall not assume, and Seller shall remain responsible for, any other
obligation related to the ownership or operation of the Business or the
Transferred Real Property prior to the Closing Date, including, without
limitation, the following obligations and liabilities((“Retained Liabilities”):

(i) all obligations, liabilities and commitments of Seller to the extent not
related to the Business or the Transferred Assets;

(ii) all obligations, liabilities and commitments of Seller to the extent
relating to or arising out of Excluded Assets;

(iii) all obligations, liabilities and commitments of Seller in respect of any
suit, action or proceeding (a “Proceeding”), pending or threatened, and Claims,
whether or not presently asserted, arising out of or relating to or otherwise in
any

 

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way in respect of the Business prior to Closing or the operation or conduct of
the Business prior to Closing;

(iv) all obligations, liabilities and commitments retained by Seller pursuant to
Article VI;

(v) all liabilities, obligations and commitments of Seller for Taxes arising out
of or relating to or in respect of any business, asset, property or operation of
Seller (including the Business and the Transferred Assets) for any Pre-Closing
Tax Period (as defined in Section 13.05(b)), including the Pre-Closing Tax
Period of a Straddle Period (collectively, the “Retained Tax Liabilities”);

(vi) all liabilities, obligations and commitments of Seller, relating to
completion of the CAP (as defined in Section 3.19(b)), including  all penalties
assessed by any Governmental Entity to resolve Permit violations addressed by
the CAP;

(vii) all liabilities, obligations and commitments arising from failure to
maintain documents and records on or prior to the Closing Date required under
Operating Air Permit Number 1714-AOP-R10, and any other Permit relating the
regulation of air emissions;

(viii) all liabilities, obligations and commitments arising as a result of
Releases of Hazardous Materials (as defined in Section 13.05(b)) on or prior to
the Closing Date by Seller upon, into or at the Transferred Real Property;

(ix) subject to the provisions of Sections 12.08(a) – (c) all liabilities,
obligations and commitments of Seller relating to the rough ash storage pile
existing at the Facility on or prior to the Closing Date and the ash deposits
existing on the Transferred Real Property on or prior to the Closing Date (as
described in Section 12.08(b)), including, without limitation, all penalties
assessed by any Governmental Entity; and

(x) all other obligations, liabilities and commitments of Seller and its
affiliates of any kind or nature whatsoever other than the Assumed
Liabilities.  

SECTION 1.05.  Risk of Loss.  

Until the Closing, any loss of or damage to the Transferred Assets from fire,
casualty or any other occurrence shall be the sole responsibility of Seller, as
applicable.  As of the time of Closing, title to all Transferred Assets shall be
transferred to Purchaser and Purchaser shall thereafter bear all risk of loss
associated with the Transferred Assets and be solely responsible for procuring
adequate insurance to protect the Transferred Assets against any such loss.

ARTICLE II

Closing and Post-Closing Purchase Price Adjustment

SECTION 2.01.  Closing.  

 

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The closing of the Acquisition (the “Closing”) shall take place at the offices
of Haley, Claycomb, Roper & Anderson, PLLC, 114 Myrtle, Warren, Arkansas 71671,
at 10:00 a.m. on the second business day following the satisfaction (or, to the
extent permitted, the waiver) of all the conditions set forth in
Article VII.  The date on which the Closing occurs is referred to in this
Agreement as the “Closing Date”.

SECTION 2.02.  Transactions To Be Effected at the Closing.  

At the Closing:

(a) Seller shall deliver or cause to be delivered to Purchaser (i) duly executed
deeds (in recordable form) for each Owned Property (as defined in
Section 3.07(a)), lease assignments (in recordable form) for each Leased
Property (as defined in Section 3.07(b)), bills of sale, assignments and other
instruments of transfer relating to the Transferred Assets, (ii) a duly executed
counterpart of the Transitional Services Agreement (as defined in Section
13.05(b)), (iii) a duly executed copy of the Fiber Supply Agreement (as defined
in Section 13.05(b)), (iv) a duly executed copy of the Environmental Escrow
Agreement (as defined in Section 13.05(b)) and (v) all such other certificates
and documents required to be delivered to Purchaser at or prior to the Closing
pursuant to this Agreement or any Ancillary Agreement (as defined in
Section 13.05(b));

(b) Purchaser shall deliver to Seller (i) payment, by wire transfer of
immediately available funds to one or more accounts designated in writing by
Seller (such designation to be made at least two business days prior to the
Closing Date), in an amount equal to (A)  the Purchase Price minus (B) an
estimate, prepared by Seller and delivered to Purchaser at least two business
days prior to the Closing Date, of any adjustment to the Purchase Price under
Section 2.03 minus (C) the Environmental Escrow Amount (as defined in
Section 13.05(b)) (the amount of the Purchase Price minus such estimate of any
adjustment under Section 2.03 and the Environmental Escrow Amount being
hereinafter called the “Closing Date Payment”), (ii) duly executed counterparts
of the deeds, lease assignments, bills of sale, assignments and other
instruments of transfer referred to in Section 2.02(a), and duly executed
assumption agreements and other instruments of assumption providing for the
assumption of the Assumed Liabilities, (iii) a duly executed counterpart of the
Transitional Services Agreement, (iv) a duly executed counterpart of the Fiber
Supply Agreement, (v) a duly executed counterpart of the Environmental Escrow
Agreement, and (vi) all such other certificates and documents required to be
delivered to Seller at or prior to the Closing pursuant to this Agreement or any
Ancillary Agreement; and

(c) Purchaser shall deliver to Escrow Agent (as defined in Section 13.05(b))
payment, by wire transfer of immediately available funds of the Environmental
Escrow Amount .

(d) Purchaser shall deposit with U.S. Bank Global Trust, as successor trustee
(“Trustee”) under the Indenture of Trust dated as of December 1, 1998 (the
“Indenture”) between Union County, Arkansas and The First National Bank of
Chicago, as Trustee relating to the Union County, Arkansas Taxable Industrial
Development Revenue Bonds (Del-Tin Fiber LLC Project) Series 1998, a letter of
credit meeting the requirements of the Indenture and the Trustee shall release
the letter of credit issued by SunTrust Bank on behalf of Seller.

 

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(e) All utility charges relating to the Transferred Assets, including without
limitation electric, gas, water, sewer and telephone charges shall be prorated
as of Closing.  Final readings for all utilities shall be made on or before
Closing, and Seller shall arrange and obtain final billings of such utilities
prior to Closing.  If, for reasons beyond Seller’s reasonable control, it is not
possible to obtain final utility readings prior to Closing, prorations as of
Closing shall be completed as soon as possible after Closing and settled between
the parties promptly thereafter.

SECTION 2.03.  Post-Closing Purchase Price Adjustment.  

(a)  The Claim.  Within sixty (60) days after the Closing Date, Purchaser shall
notify Seller pursuant to the provisions of Article IX of claims, if any, that
Seller breached its representation and warranty in Section 3.09 hereof.  Such
notice shall be accompanied by documentary evidence, including photographs,
supporting Purchaser’s claim.  The Parties will endeavor to resolve the claim as
soon as practicable.

(b)  The Statement.  Within 60 days after the Closing Date, Seller shall prepare
and deliver to Purchaser a statement (the “Statement”), setting forth Working
Capital (as defined in Section 2.03(e)) as of the close of business on the
Closing Date (“Closing Working Capital”) and a certificate of Seller that the
Statement has been prepared in compliance with the requirements of this
Section 2.03(e)).  If Purchaser and Seller have not resolved Purchaser’s claim
of a breach of the representations and warranties in Section 3.09, the Statement
shall not include any Inventory subject to Purchaser’s claim.  Purchaser shall
assist Seller in the preparation of the Statement and shall provide Seller
access at all reasonable times to the personnel with knowledge of the Business,
and any books and records of the Business, for such purpose.  Purchaser’s
independent auditors may participate in the preparation of the Statement;
provided, however, that Purchaser acknowledges that Seller shall have the
primary responsibility and authority for preparing the Statement.

(c)  Objections; Resolution of Disputes.  During the 30-day period following
Purchaser’s receipt of the Statement, Purchaser and its independent auditors
shall be permitted to review the working papers relating to the Statement.  The
Statement shall become final and binding upon the parties on the 30th day
following delivery thereof, unless Purchaser gives written notice of its
disagreement with the Statement (a “Notice of Disagreement”) to Seller prior to
such date.  Any Notice of Disagreement shall (i) specify in reasonable detail
the nature of any disagreement so asserted, (ii) only include disagreements
based on mathematical errors or based on Closing Working Capital not being
calculated in accordance with this Section 2.03, (iii) be accompanied by a
certificate of Purchaser that it has complied with Section 2.03(e) and (iv) be
accompanied by a certificate of Purchaser’s independent auditors that they
concur with each of the positions taken by Purchaser in the Notice of
Disagreement.  If a Notice of Disagreement is received by Seller in a timely
manner, then the Statement (as revised in accordance with this sentence) shall
become final and binding upon Seller and Purchaser on the earlier of (A) the
date Seller and Purchaser resolve in writing any differences they have with
respect to the matters specified in the Notice of Disagreement and (B) the date
any disputed matters are finally resolved in writing by the Accounting Firm (as
defined below).  During the 30-day period following the delivery of a Notice of
Disagreement, Seller and Purchaser shall seek in good faith to resolve in
writing any differences that they may have with respect to the matters specified
in the Notice of Disagreement.  During such period Seller and its auditors shall
have access to the

 

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working papers of Purchaser’s independent auditors prepared in connection with
their certification of the Notice of Disagreement.  At the end of such 30-day
period, Seller and Purchaser shall submit to an independent accounting firm (the
“Accounting Firm”) for arbitration any and all matters that remain in dispute
and were properly included in the Notice of Disagreement.  The Accounting Firm
shall be Ernst & Young or, if such firm is unable or unwilling to act, such
other nationally recognized independent public accounting firm as shall be
agreed upon by the parties hereto in writing.  Seller and Purchaser shall use
reasonable efforts to cause the Accounting Firm to render a decision resolving
the matters submitted to the Accounting Firm within 30 days of receipt of the
submission.  Judgment (as defined in Section 13.05(b)) may be entered upon the
determination of the Accounting Firm in any court having jurisdiction over the
party against which such determination is to be enforced.  The cost of any
arbitration (including the fees and expenses of the Accounting Firm and
reasonable attorney fees and expenses of the parties) pursuant to this
Section 2.03 shall be borne by Purchaser and Seller in inverse proportion as
they may prevail on matters resolved by the Accounting Firm, which proportionate
allocations shall also be determined by the Accounting Firm at the time the
determination of the Accounting Firm is rendered on the merits of the matters
submitted.  The fees and disbursements of Seller’s independent auditors incurred
in connection with any review of the Statement and review of any Notice of
Disagreement shall be borne by Seller, and the fees and disbursements of
Purchaser’s independent auditors incurred in connection with any review of the
Statement and certification of any Notice of Disagreement shall be borne by
Purchaser.

(d)  Adjustment Payment.  The Purchase Price shall be decreased by the amount by
which Inventory is less than $4,800,000 (the “WC Amount” and the Purchase Price
as so decreased shall hereinafter be referred to as the “Adjusted Purchase
Price”).  If the Closing Date Payment is more than the Adjusted Purchase Price,
Seller shall, within ten (10) business days after the Statement becomes final
and binding on the parties, make payment by wire transfer in immediately
available funds to one or more accounts designated in writing by Purchaser such
payment of the amount of such difference, together with interest thereon at a
rate equal to the rate of interest from time to time announced publicly by
KeyBank, as its prime rate, calculated on the basis of the actual number of days
elapsed divided by 365, from the Closing Date to the date of payment (the “Prime
Rate”).  

(e)  Working Capital.  For purposes of this Section 2.03, the term “Working
Capital” shall be defined to mean the sum of the amounts reflected on the
Balance Sheet of (i) raw material, (ii) work-in-process, (iii) finished goods,
(iv) bark fuel, (v) prepaid VMI freight, and (vi) consumable materials and
supplies (which materials and supplies are exclusive of any spare parts and in
the total and non-adjustable amount of $525,000), calculated in the same way,
using the same methods, as the line items on the Balance Sheet, subject only to
adjustment in accordance with Exhibit A. WC Amount is to be calculated in the
same way, using the same methods, as the line items comprising Working Capital
on the Balance Sheet, whether or not doing so is in accordance with United
States generally accepted accounting principles (“GAAP”), subject only to
adjustment in accordance with Exhibit A.  The foregoing principles are referred
to in this Agreement as the “Balance Sheet Principles”.  The adjustment
contemplated by this Section 2.03 is intended to show the change in Working
Capital from the date of the Balance Sheet to the Closing Date, and that such
change can only be measured if the calculation is done in the same way, using
the same methods, for both dates.  The scope of the disputes to be resolved by
the Accounting Firm shall be limited to whether such

 

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calculation was done in accordance with the Balance Sheet Principles, and
whether there were mathematical errors in the Statement, and the Accounting Firm
is not authorized or permitted to make any other determination, including any
determination as to whether GAAP was followed for the Balance Sheet or the
Statement or as to whether the WC Amount is correct.  Any items on or omissions
from the Balance Sheet that are based upon errors of fact or mathematical errors
or that are not in accordance with GAAP shall be retained for purposes of
calculating Closing Working Capital.  Without limiting the generality of the
foregoing, the Accounting Firm is not authorized or permitted to make any
determination as to the accuracy of Section 3.04 or any other representation or
warranty in this Agreement or as to compliance by Seller with any of its
covenants in this Agreement (other than in this Section 2.03.)  Any
determinations by the Accounting Firm, and any work or analyses performed by the
Accounting Firm, in connection with its arbitration of any dispute under this
Section 2.03 shall not be admissible in evidence in any suit, action or
proceeding between the parties other than to the extent necessary to enforce
payment obligations under Section 2.03(d).

(f)  Post-Closing Books and Records.  Except for the consummation of the
Closing, Purchaser and Seller agree that on the Closing Date itself the Business
shall be conducted in the ordinary course in a manner substantially consistent
with past practice.  Following the Closing, Purchaser shall not take any actions
with respect to the accounting books and records of the Business for periods
occurring on or prior to Closing on which the Statement is to be based that
would affect the Balance Sheet or the Statement.  Without limiting the
generality of the foregoing, no changes shall be made in any reserve or other
account existing as of the date of the Balance Sheet except as a result of
events occurring after the date of the Balance Sheet and, in such event, with
respect to periods occurring on or prior to Closing, only in a manner consistent
with past practices of the Business.  Purchaser shall cooperate in the
preparation of the Statement, including providing customary certifications to
Seller’s auditors.  During the period of time from and after the Closing Date
through the resolution of any adjustment to the Purchase Price contemplated by
this Section 2.03, Purchaser shall afford to Seller and any accountants, counsel
or financial advisers retained by Seller in connection with any adjustment to
the Purchase Price contemplated by this Section 2.03 reasonable access during
normal business hours to all the properties, books, contracts, personnel and
records of the Business relevant to the adjustment contemplated by this
Section 2.03.

ARTICLE III

Representations and Warranties of Seller

Seller hereby represents and warrants to Purchaser as follows:

SECTION 3.01.  Organization and Standing.  

Seller is a limited liability company duly organized, validly existing and in
good standing under the laws of the State of Arkansas.  Seller has full power
and authority and possesses all governmental franchises, licenses, permits,
authorizations and approvals necessary to enable it to own, lease or otherwise
hold its properties and assets and, together with all governmental franchises,
licenses, permits, authorizations, to conduct the Business as presently
conducted, other than such franchises, licenses, permits, authorizations and
approvals the lack of which, individually or in the aggregate, have not had and
would not

 

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reasonably be expected to have a Business Material Adverse Effect (as defined in
Section 13.05(b)).

SECTION 3.02.  Authority; Execution and Delivery; Enforceability.  

Seller has full power and authority to execute this Agreement, the Ancillary
Agreements and the other agreements and instruments to be executed and delivered
in connection with this Agreement and the Ancillary Agreements to which it is,
or is specified to be, a party and to consummate the transactions contemplated
to be consummated by it by this Agreement and such Ancillary Agreements.  Seller
has taken all action required by its Articles of Organization and Amended and
Restated Operating Agreement to authorize the execution and delivery of this
Agreement and the Ancillary Agreements and the other agreements and instruments
to be executed and delivered in connection with this Agreement and the Ancillary
Agreements to which it is, or is specified to be, a party and to authorize the
consummation of the transactions contemplated to be consummated by it by this
Agreement and the Ancillary Agreements.  Seller has duly executed and delivered
this Agreement and prior to the Closing will have duly executed and delivered
each Ancillary Agreement and the other agreements and instruments to be executed
and delivered in connection with this Agreement and the Ancillary Agreements to
which it is, or is specified to be, a party, and this Agreement constitutes, and
each Ancillary Agreement and other agreement and instrument to be executed and
delivered in connection with this Agreement and the Ancillary Agreements to
which it is, or is specified to be, a party will after the Closing constitute,
its legal, valid and binding obligation, enforceable against it in accordance
with its terms subject, as to enforcement, to applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting creditors’ rights generally
and to general equitable principles.  

SECTION 3.03.  No Conflicts or Violations; No Consents or Approvals Required.  

The execution and delivery by Seller of this Agreement does not, the execution
and delivery by Seller of each Ancillary Agreement and other agreement and
instrument to be executed and delivered in connection with this Agreement and
the Ancillary Agreements to which it is, or is specified to be, a party will
not, and the consummation by Seller of the transactions contemplated to be
consummated by it by this Agreement and such Ancillary Agreements, will not
conflict with, or result in any breach of or constitute a default or give rise
to any right of termination or acceleration under, or result in the creation of
any Lien (as defined in Section 3.06(a)) (other than Permitted Liens (as defined
in Section 3.06(a)) or Liens arising from acts of Purchaser or its affiliates)
upon any of the Transferred Assets, any provision of (i) Seller’s Articles of
Organization or Amended and Restated Operating Agreement, (ii) except as set
forth in Schedule 3.03, any Business Contract (as defined in Section 3.11(b)) or
require notice to any person or permit any person to accelerate, terminate,
modify or cancel any Business Contract or (iii) any material Judgment or
material Applicable Law applicable to Seller or any of the Transferred
Assets.  No consent, approval or authorization (“Consent”) of, or Permit from,
or registration, declaration or filing with, any Federal, state, local or
foreign court of competent jurisdiction, governmental agency, authority,
instrumentality or regulatory body (a “Governmental Entity”) is required to be
obtained or made by or with respect to Seller in connection with the execution,
delivery and performance of this Agreement or any Ancillary Agreement or the
consummation of the Acquisition, other than (A) compliance with and filings
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
“HSR Act”),

 

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(B) compliance with and filings and notifications under applicable Environmental
Laws (as defined in Section 13.05(b), (C) those that may be required solely by
reason of Purchaser’s (as opposed to any other third party’s) participation in
the Acquisition and the other transactions contemplated by this Agreement and by
the Ancillary Agreements, and (D) compliance with and filings under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), and (e) those
the failure of which to obtain or make have not had or would not reasonably be
expected to have a Business Material Adverse Effect.

SECTION 3.04.   Financial Statements.  

The Audited Financial Statements (as defined in Section 13.05(b)) have been
audited by KPMG LLP, and (ii) have been prepared in accordance with GAAP
consistently applied throughout the periods covered thereby, except as otherwise
expressly noted therein, and are based on the books and records of the
Business.  The unaudited interim balance sheet (, the “Balance Sheet”) of the
Seller related to the Business as of November 30, 2018, and the related
unaudited interim statement of operations for the period February 21, 2018
through the period ended November 30, 2018 (i) has been prepared in accordance
with GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein and (ii) presents fairly  in all material
respects the consolidated financial condition and results of operations of the
Seller related to the Business as of such date and for such period.  Complete
copies of the Audited Financial Statements and the Balance Sheet have been
delivered to the Purchaser.  Seller maintains a standard system of accounting
for the Business established and administered in accordance with GAAP.

SECTION 3.05.  Undisclosed Liabilities.  

Seller has no liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) (“Liabilities”) with respect to the Business,
except (a) those which are adequately reflected or reserved against in the
Balance Sheet, and (b) those which have been incurred in the ordinary course of
business consistent with past practice since the date of the Balance Sheet and
which are not, individually or in the aggregate, material in amount.

SECTION 3.06.  Assets Other than Real Property Interests.  

(a)  Seller has, or as of the close of business on the Closing Date will have,
good and valid title to all Transferred Assets, other than those set forth in
Schedule 3.06 and those sold or otherwise disposed of since the date of the
Balance Sheet in the ordinary course of business and not in violation of this
Agreement, in each case free and clear of all mortgages, liens, charges, claims,
pledges, security interests, options, restrictions of any kind, rights of first
refusal or other encumbrances of any kind (collectively, “Liens”), except for
(i) such Liens as are set forth in Schedule 3.06, (ii) mechanics’, carriers’,
workmen’s, repairmen’s or other like Liens arising or incurred in the ordinary
course of business consistent with past practice or in amounts that are not
delinquent and would not, individually or in the aggregate, reasonably be
expected to have a Business Material Adverse Effect, (iii) Liens arising under
original purchase price conditional sales Contracts and equipment leases with
third parties entered into in the ordinary course of business with respect to
the equipment being purchased or leased, (iv) Liens for Taxes and other
governmental charges that are not due and payable, which are being contested in
good faith, and (v) other non-monetary imperfections of title, licenses or
encumbrances, if any, which do not materially impair,

 

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individually or in the aggregate, the continued use and operation of the assets
to which they relate in the conduct of the Business as currently conducted (the
Liens described in clauses (i) through (v) above, together with the Liens
referred to in clauses (ii) through (vi) of the second sentence of
Section 3.07(a), are referred to collectively as “Permitted Liens”).

(b)  This Section 3.06 does not relate to Real Property (as defined in Section
3.07(b)) or interests in Real Property, such items being the subject of
Section 3.07, or to Intellectual Property, such items being the subject of
Section 3.08.

SECTION 3.07.  Real Property.  

(a)  Schedule 3.07(a) lists all real property owned and used or held by Seller
for use primarily in, or are necessary for, the operation or conduct of the
Business, other than any such property or interest constituting an Excluded
Asset, together with the address by which it is commonly known or its tax block
and lot number or other legal description (each, together with the interest of
Seller in any structures, improvements, fixtures, rights of way, easements or
other similar rights appurtenant thereto, an “Owned Property”).  Seller has
good, marketable and insurable fee title to the Owned Property free of all Liens
other than (i) Liens described in clauses (i) through (v) of Section 3.06(a),
(ii) such Liens as are set forth in Schedule 3.07(a), (iii) Liens that have been
placed by any developer or other third party on property over which Seller has
easement rights and any subordination or similar agreements relating thereto,
(iv) leases, subleases and similar agreements set forth in Schedule 3.07(b), (v)
both (A) recorded or unrecorded easements, covenants, restrictions,
rights-of-way and other similar matters and (B) any conditions that may be shown
by a current, accurate survey or that would be apparent as part of a physical
inspection of any Owned Property made prior to the Closing which, in the case of
both clauses (A) and (B), do not, individually or in the aggregate, materially
impair the continued use and operation of the Owned Property in the conduct of
the Business as currently conducted and (vi) zoning, building and other similar
governmental restrictions.

(b)  Schedule 3.07(b) lists all leasehold interests used or held for use by
Seller primarily in the operation or conduct of the Business, other than any
such property or interest constituting an Excluded Asset, together with the
address by which it is commonly known (each, together with the interest of
Seller in any structures, improvements, easements or other, similar rights
appurtenant thereto, a “Leased Property”, and, collectively with the Owned
Property, the “Real Property”, and the lease, sublease or other agreement
pursuant to which it is occupied by Seller, and all amendments and modifications
thereto and extensions thereof, a “Lease”).  Seller has good and valid title to
the leasehold estate in the Leased Property.  Complete and correct copies of the
Leases have been made available to Purchaser for review.  Except as set forth in
Schedule 3.07(b), all of the Leases are valid, binding and in full force and
effect in all material respects and are enforceable by Seller in accordance with
their terms subject, as to enforcement, to applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting creditors’ rights generally
and to general equitable principles.  Seller enjoys peaceful and undisturbed
possession of the Leased Property.  Except as set forth in Schedule 3.07(b),
Seller is not in material default under any Lease and, to the knowledge of
Seller, as of the date of this Agreement, no other party to any Lease is in
material breach or material default thereunder.  Seller is not in breach or
default under such Lease, and no event has occurred or circumstance exists

 

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which, with the delivery of notice, passage of time or both, would constitute
such a breach or default, and Seller has paid all rent due and payable under
such Lease.  Seller has not received nor given any notice of any default or
event that with notice or lapse of time, or both, would constitute a default by
Seller under any of the Leases and, to the knowledge of Seller, no other party
is in default thereof, and no party to any Lease has exercised any termination
rights with respect thereto.  Seller has not subleased, assigned or otherwise
granted to any person the right to use or occupy such Leased Real Property or
any portion thereof.  Seller has not pledged, mortgaged or otherwise granted a
Lien on its leasehold interest in any Leased Real Property.

(c)  Seller has not received any written notice of (i) material violations of
building codes and/or zoning ordinances or other Applicable Laws affecting the
Real Property, (ii) existing, pending or threatened condemnation proceedings
affecting the Real Property, or (iii) existing, pending or threatened zoning,
building code or other moratorium proceedings, or similar matters which would
not reasonably be expected to have a Business Material Adverse Effect.

(d)  The Real Property is sufficient for the continued conduct of the Business
after the Closing in substantially the same manner as conducted prior to the
Closing and constitutes all of the real property necessary to conduct the
Business as currently conducted.

(e)  This Section 3.07 does not relate to environmental matters, such items
being the subject of Section 3.19.

SECTION 3.08.  Ownership of Scheduled Intellectual Property.  

(a)  Schedule 3.08(a) lists (i) the patents included in the Transferred
Intellectual Property and (ii) the trademark registrations and applications
included in the Transferred Intellectual Property.  With respect to trademark
registrations and applications, Schedule 3.08(a) lists the jurisdictions where
such trademarks are registered or where such applications have been filed and
all registration and application numbers.  Except as set forth in Schedule
3.08(a), Seller is the sole and exclusive owner of the Intellectual Property set
forth in Schedule 3.08(a) (“Scheduled Intellectual Property”) and no license
fees of any kind in respect of such Scheduled Intellectual Property are required
for the use by Seller of such Intellectual Property in those jurisdictions where
such Intellectual Property is currently used.  Neither the execution, delivery
or performance of this Agreement, nor the consummation of the transactions
contemplated hereunder, will result in the loss or impairment of or payment of
any additional amounts with respect to, nor require the consent of any other
person in respect of, the Purchaser’s right to own or use any Transferred
Intellectual Property.

(b)  Non-Infringement.  Except as set forth in Schedule 3.08(b), no material
claims are pending or, to the knowledge of Seller, threatened, as of the date of
this Agreement against Seller by any person claiming infringement by use of the
Intellectual Property or Transferred Technology in the operation or conduct of
the Business as currently conducted. To Seller’s Knowledge, the conduct of the
Business as currently and formerly conducted, including the use of the
Transferred Intellectual Property in connection therewith, and the products,
processes, and services of the Business have not infringed, misappropriated, or
otherwise violated the intellectual property or other rights of any person. No
person has infringed, misappropriated, or otherwise violated any Transferred
Intellectual Property.

 

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SECTION 3.09.  Inventory.

All of the Inventory constituting finished goods included in Working Capital as
of the Closing Date, whether or not reflected in the Balance Sheet, consists of
a quality and quantity usable and salable in the ordinary course of business
consistent with past practice, except for items that have been written off or
written down to fair market value or for which adequate reserves have been
established.

SECTION 3.10.  Customers and Suppliers.

(a)  Customers.  Seller has not received any notice, and has no reason to
believe, that any of Seller’s customers who has paid aggregate consideration to
Seller for goods or services rendered in an amount greater than or equal to
$500,000 for the most recent fiscal year (collectively, the "Material
Customers") has ceased, or intends to cease after the Closing, to use the goods
or services of the Business or to otherwise terminate or materially reduce its
relationship with the Business.

(b)  Suppliers.  Schedule 3.10(b) of the Disclosure Schedules sets forth with
respect to the Business each supplier to whom Seller has paid consideration for
goods or services rendered in an amount greater than or equal to $500,000 for
the most recent fiscal year (collectively, the "Material Suppliers"). Seller has
not received any notice, and has no reason to believe, that any of the Material
Suppliers has ceased, or intends to cease, to supply goods or services to the
Business or to otherwise terminate or materially reduce its relationship with
the Business.  

SECTION 3.11.  Contracts.  

(a)  Except as set forth in Schedule 3.11(a) and except for Contracts relating
to Excluded Assets, Seller is not a party to or bound by any Contract that is
used and held for use solely in, or that arises solely out of, the operation or
conduct of the Business (in each case other than (x) this Agreement and the
Ancillary Agreements and (y) Contracts entered into after the date of this
Agreement in accordance with Section 5.01), in each case that is:

(i) a Contract involving aggregate consideration in excess of $500,000 and
which, in each case, cannot be cancelled without penalty or without more than 60
days' notice

(ii) A written employment or independent consultant Contract that has an
aggregate future liability in excess of $200,000 and is not terminable by Seller
by notice of not more than 60 days for a cost of less than $200,000, or an
employee collective bargaining agreement or other Contract with any labor union;

(iii) a covenant not to compete or restricting the development, marketing or
distribution of the products of the Business that materially limits the conduct
of the Business;

(iv) (A) a continuing Contract for the future purchase of materials, supplies,
equipment, raw materials, packaging or commodities (other than purchase
Contracts and orders in the ordinary course of business), (B) a management,
brokerage, franchise, agency service, consulting or other similar Contract
(other than Contracts for services in the ordinary course of business, including

 

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transportation and warehousing Contracts) or (C) an advertising Contract, in any
such case which has an aggregate future liability to any person (other than
Seller) in excess of $200,000 and is not terminable by Seller by notice of not
more than 90 days for a cost of less than $200,000;

(v) a Contract under which Seller has borrowed any money from, or issued any
note, bond, debenture or other evidence of indebtedness to, any person (other
than Seller) or any other note, bond, debenture or other evidence of
indebtedness of Seller (other than in favor of Seller) in any such case which,
individually, is in excess of $200,000;

(vi) a Contract (including any so-called take-or-pay or keep well agreement)
under which (A) any person (other than Seller) has directly or indirectly
guaranteed indebtedness, liabilities or obligations of Seller or (B) Seller has
directly or indirectly guaranteed indebtedness, liabilities or obligations of
any person, other than Seller (in each case other than endorsements for the
purpose of collection in the ordinary course of business), in any such case
which, individually, is in excess of $200,000;

(vii) a material Contract granting a Lien upon any Owned Property or Leased
Property;

(viii) a Contract with (A) Seller or any of its affiliates or (B) any officer or
director of Seller (in each case other than Contracts that shall be terminated
as of the Closing);

(ix) a lease, sublease or similar Contract with any person (other than Seller)
under which Seller is a lessor or sublessor of, or makes available for use to
any person (other than Seller), (A) any Owned Property, (B) any Leased Property
or (C) any portion of any premises otherwise occupied by Seller that, in either
case, specifies annual payments in excess of $200,000;

(x) a lease or similar Contract with any person (other than Seller) under which
Seller is lessee of, or holds or uses, any machinery, equipment, vehicle or
other tangible personal property owned by any person which lease or similar
Contract has an aggregate future liability in excess of $200,000 and is not
terminable by Seller, by notice of not more than 90 days for a cost of less than
$200,000;

(xi) any Contract with any person (other than Seller) involving a partnership,
or joint venture;

(xii) any Contract with any person (other than Seller) providing for
indemnification of any person with respect to liabilities relating to the
Business, other than the constitutive documents of Seller and any of its
subsidiaries, and marketing agreements, property leases and other commercial
agreements entered into in the ordinary course of business;

(xiii) any Contract that requires Seller to use any supplier or third party for
all or substantially all of Seller’s requirements or needs or requires Seller to
provide to other parties “most favored nation” pricing; or

 

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(xiv) any other Contract that has an aggregate future liability to any person
(other than Seller) in excess of $200,000 and is not terminable by Seller by
notice of not more than 180 days for a cost of less than $200,000 (other than
(i) purchase orders or sales orders entered into in the ordinary course of
business after the date of this Agreement and not in violation of this Agreement
and (ii) Contracts required to be listed in Schedule 3.07(a), Schedule 3.07(b)
or Schedule 3.08).

(b)  Except as set forth in Schedule 3.11(b),  all Transferred Contracts
required to be listed in Schedule 3.11(a) (such Contracts, the “Business
Contracts”) are valid, binding and in full force and effect and are enforceable
as to Seller and, to the knowledge of Seller, all other parties thereto in
accordance with their terms, except for such failure to be valid, binding, in
full force and effect or enforceable that, individually or in the aggregate,
have not had and would not reasonably be expected to have a Business Material
Adverse Effect and, subject, as to enforcement, to applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws affecting creditors’
rights generally and to general equitable principles.  Except as set forth in
Schedule 3.11(b), Seller has performed all material obligations required to be
performed by it to date under the Business Contracts, and Seller is not in
breach or default thereunder and, to the knowledge of Seller, no other party to
any Business Contract as of the date of this Agreement is in breach or default
of any material obligation thereunder, except for such noncompliance, breaches
and defaults that, individually or in the aggregate, have not had and would not
reasonably be expected to have a Business Material Adverse Effect.  No event or
circumstance has occurred that, with notice or lapse of time or both, would
constitute an event of default under any Business Contract or result in a
termination thereof or would cause or permit the acceleration or other changes
of any right or Business or the loss of any benefit thereunder.  Complete and
correct copies of each Business Contract (including all modifications,
amendments and supplements thereto and waivers thereunder) have been made
available to Purchaser. There are no material disputes pending or threatened
under any Business Contract.

SECTION 3.12.  Permits.  

Except as set forth in Schedule 3.12, (i)  all Transferred Permits are validly
held by Seller, and Seller has complied in all material respects with the terms
and conditions thereof, (ii) during the 12 months immediately preceding the date
of this Agreement, Seller has not received written notice of any Proceeding
relating to the revocation or modification of any such Transferred Permits the
loss of which, individually or in the aggregate, has had or would reasonably be
expected to have a Business Material Adverse Effect and (iii) to the knowledge
of Seller, none of such Transferred Permits would reasonably be expected to be
subject to suspension, modification, revocation or nonrenewal as a result of the
execution and delivery of this Agreement or the consummation of the Acquisition,
except for any such suspensions, modifications, revocations or nonrenewals that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Business Material Adverse Effect.  All fees and charges with
respect to the Transferred Permits as of the date hereof have been paid in
full.  To the knowledge of Seller, the Transferred Permits are all of the
permits required to operate the Business as currently conducted.

SECTION 3.13.  Taxes.  

(a)   Except as disclosed in Schedule 3.13(a) and except as would not
individually, or in the aggregate, be reasonably expected to have a Business
Material Adverse Effect, Seller has timely paid all Taxes imposed on, or in
connection with,  

 

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including any deficiencies asserted by any taxing authority, the Transferred
Assets (and filed on a timely basis all Tax Returns (as defined in
Section 13.05(b)) required to be filed relating to the Transferred Assets, which
Tax Returns were true, complete and correct in all material respects) that are
due and payable on or prior to the Closing Date (except for Taxes being
contested in good faith and Transfer Taxes).

(b)  No material Tax Liens have been filed and no material claims are being
asserted in writing with respect to any Taxes due with respect to the
Transferred Assets.

(c)  Seller has withheld and paid each Tax required to have been withheld and
paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, customer, shareholder or other party, and complied with
all information reporting and backup withholding provisions of Applicable Law.

(d)  All deficiencies asserted, or assessments made, against Seller as a result
of any examinations by any taxing authority have been fully paid.

(e)  Seller is not a “foreign person” within the meaning of Section 1445 of the
Code (as defined in Section 13.05(b)).  

SECTION 3.14.  Proceedings.  

Except as set forth in Schedule 3.14, as of the date of this Agreement there are
no pending or, to the knowledge of Seller, threatened Proceedings against
Seller, which arise out of the conduct of the Business and pursuant to which a
party seeks (a) more than $25,000 from Seller or (b) injunctive relief
prohibiting or delaying the consummation of the Acquisition.  Schedule 3.14
lists as of the date of this Agreement each pending Proceeding initiated by
Seller (as to which a complaint has been served by Seller on the opposing party)
which arises out of the conduct to the Business and pursuant to which Seller
seeks more than $25,000 from the opposing party.  To the knowledge of Seller,
except as set forth in Schedule 3.14, Seller is not party or subject to or in
default under any unsatisfied Judgment that is applicable to the conduct of the
Business.

SECTION 3.15.  Employee Benefit Matters.  

(a)  Schedule 3.15(a)(i) contains a list of each “employee pension benefit plan”
(as defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended (“ERISA”)), “employee welfare benefit plan” (as defined in
Section 3(1) of ERISA) (“Welfare Plan”) and all other bonus, pension, profit
sharing, deferred compensation, incentive compensation, stock ownership, stock
purchase, stock appreciation, restricted stock, stock repurchase rights, stock
option, phantom stock, performance, retirement, vacation, severance, disability,
death benefit, hospitalization, medical, dental, vision, disability, welfare,
paid time off, Code Section 125 Cafeteria Plan or other plan, arrangement or
understanding, maintained, sponsored, contributed to or required to be
maintained, sponsored or contributed to by Seller, providing benefits to any
current or former officer, director or employee of Seller that is on the Closing
Date (or was, in the case of a former officer, director or employee) primarily
employed in connection with the Business (including, for the avoidance of doubt,
any individual who is not actively at work by reason of illness, vacation,
short-term disability or other leave of absence (each such person being a
“Business Employee”)) (such plans being, collectively, “Seller Benefit
Plans”).  Seller has delivered or made available to Purchaser true, complete and
correct copies of each Seller Benefit Plan (or, in the case of any

 

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unwritten Seller Benefit Plan, a description thereof).  Schedule 3.15(a)(ii)
contains a list of each employment, consulting, indemnification, severance,
termination, change in control, bonus or similar agreement or arrangement
between Seller, on the one hand, and any Business Employee, on the other hand
that doesn’t end on or prior to the Closing Date (collectively, “Seller Benefit
Agreements”).  

(b)   With respect to each Seller Benefit Plan (i) no such plan is a any
multiemployer plan within the meaning of Section 3(37) of ERISA; (ii) no such
plan is a "multiple employer plan" within the meaning of Section 413(c) of the
Code or a "multiple employer welfare arrangement" (as defined in Section 3(40)
of ERISA); (iii) no Action has been initiated by the PGBC to terminate any such
plan or to appoint a trustee for any such plan.

(c)  Except as set forth in Schedule 3.15(c), neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated hereby
shall (i) result in any material payment (including severance, change in control
or otherwise) becoming due to any Business Employee under any Seller Benefit
Plan or Seller Benefit Agreement, (ii) materially increase any benefits
otherwise payable under any Seller Benefit Plan or Seller Benefit Agreement to
any Business Employee or (iii) result in the acceleration of time of payment or
vesting of any such benefits under any Seller Benefit Plan or Seller Benefit
Agreement to any material extent.

SECTION 3.16.  Employee Matters.

(a)  Schedule 3.16(a) contains a list of all persons who are employees of the
Business as of the date hereof, including any employee who is on a leave of
absence of any nature, paid or unpaid, authorized or unauthorized, and sets
forth for each such individual the following: (i) name; (ii) title or position
(including whether full-time or part-time); (iii) hire or retention date; (iv)
current annual base compensation rate or contract fee; (v) commission, bonus or
other incentive-based compensation; and (vi) a description of the fringe
benefits provided to each such individual as of the date hereof. Except as set
forth in Schedule 3.16(a), as of the date hereof, all compensation, including
wages, commissions, bonuses, fees and other compensation, payable to all
employees of the Business for services performed on or prior to the date hereof
have been paid in full and there are no outstanding agreements, understandings
or commitments of Seller with respect to any compensation, commissions, bonuses
or fees.

(b)  Seller is not, and has not been for the past seven (7) years, a party to,
bound by, or negotiating any collective bargaining agreement or other Contract
with a union, works council or labor organization (collectively, "Union"), and
there is not, and has not been for the past five (5) years, any Union
representing or purporting to represent any employee of Seller, and, to the
knowledge of Seller, no Union or group of employees is seeking or has sought to
organize employees for the purpose of collective bargaining. There has never
been, nor has there been any threat of, any strike, slowdown, work stoppage,
lockout, concerted refusal to work overtime or other similar labor disruption or
dispute affecting Seller or any employees of the Business. Seller has no duty to
bargain with any Union.

(c)  Seller is and has been in compliance with all Applicable Laws pertaining to
employment and employment practices to the extent they relate to employees,
consultants and independent contractors of the Business, including all
Applicable Laws relating to labor relations, equal employment opportunities,
fair employment practices,

 

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employment discrimination, harassment, retaliation, reasonable accommodation,
disability rights or benefits, immigration, wages, hours, overtime compensation,
child labor, hiring, promotion and termination of employees, working conditions,
meal and break periods, privacy, health and safety, workers' compensation,
leaves of absence, paid sick leave and unemployment insurance. All individuals
characterized and treated by Seller as consultants or independent contractors of
the Business are properly treated as independent contractors under all
applicable Laws. All employees of the Business classified as exempt under the
Fair Labor Standards Act and state and local wage and hour laws are properly
classified.  Seller is in compliance with and has complied with all immigration
laws, including Form I-9 requirements and any applicable mandatory E-Verify
obligations.  There are no Proceedings against Seller pending, or to the
knowledge of Seller, threatened to be brought or filed, by or with any
Governmental Authority or arbitrator in connection with the employment of any
current or former applicant, employee, consultant or independent contractor of
the Business, including, without limitation, any charge, investigation or claim
relating to unfair labor practices, equal employment opportunities, fair
employment practices, employment discrimination, harassment, retaliation,
reasonable accommodation, disability rights or benefits, immigration, wages,
hours, overtime compensation, employee classification, child labor, hiring,
promotion and termination of employees, working conditions, meal and break
periods, privacy, health and safety, workers' compensation, leaves of absence,
paid sick leave, unemployment insurance or any other employment related matter
arising under applicable Laws.

(d)  Seller has complied with the WARN Act (as defined in Section 6.03) and has
not taken any action in the past twelve (12) months that would trigger the WARN
Act.

SECTION 3.17.  Absence of Changes or Events.  

Except as set forth in Schedule 3.17, from the date of the Balance Sheet to the
date of this Agreement, (a) there has not been a Business Material Adverse
Effect or an event, occurrence or development that could reasonably be expected
to have, individually or in the aggregate, a Business Material Adverse Effect,
(b) there has not been any material damage, destruction or loss, or any material
interruption in use, of any Transferred Assets, whether or not covered by
insurance, (c) Seller has not taken any of the actions described in Section
5.01, and (d) Seller has caused the Business to be conducted in the ordinary
course and substantially in the same manner as previously conducted.  Purchaser
acknowledges that there may have been disruption to the Business as a result of
the announcement of Seller of its intention to sell the Business (and there may
be disruption to the Business as a result of the execution of this Agreement and
the consummation of the transactions contemplated hereby), and Purchaser
acknowledges that such disruptions do not and shall not constitute a breach of
this Section 3.17.

SECTION 3.18.  Compliance with Applicable Laws.  

Except as set forth in Schedule 3.18, the Business is, and during the year
immediately preceding the date of this Agreement has been, in compliance with
all Applicable Laws.  Seller has not received any written communication during
the year immediately preceding the date of this Agreement from a Governmental
Entity that alleges that the Business is not in compliance with any Applicable
Laws.  This Section 3.18 does not relate to matters with respect to Taxes, which
are the subject of Section 3.13, to

 

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employee matters, which are the subject of Sections 3.15 and 3.16, or to
environmental matters, which are the subject of Section 3.19.

SECTION 3.19.  Environmental Matters.

(a)  Except as set forth in Schedule 3.19(a) and except for matters that,
individually or in the aggregate would not reasonably be expected to have a
Business Material Adverse Effect:  (i) Seller conducts, and during the three (3)
years immediately preceding the date of this Agreement has conducted, the
Business in compliance with all Environmental Laws, (ii) Seller has not received
within the five (5) years immediately preceding the date of this Agreement any
written notice alleging any violation of, or liability under, or any written
information request pursuant to, any Environmental Law (the substance of which
has not been materially resolved) arising from or related to the Business, (iii)
there have been no Releases of Hazardous Materials (each as defined in
Section 13.05(b)), and to the knowledge of Seller no threatened Releases, by the
Business upon, into or at any Transferred Real Property, (iv) to the knowledge
of Seller, there have been no Releases of Hazardous Materials by any party upon,
into or at any property adjacent to the Transferred Real Property, and
(v) Seller has not assumed, contractually or by operation of law, any
liabilities or obligations to third parties under any Environmental Laws.

(b)  The Seller submitted a Corrective Action Plan on January 30, 2018 to the
Arkansas Department of Environmental Quality pursuant to the Facility’s NPDES
Permit (the “CAP”) in its good faith effort to resolve the matters described in
the Request for a Corrective Action Plan (“CAP Request”), dated December 1,
2017, and matters relating thereto.  To the knowledge of Seller, Seller has used
its reasonable efforts to implement the CAP.  To the knowledge of the Seller,
the CAP was created in good faith upon the advice of Seller’s environmental
consultants with the intention of causing the Facility to comply with the
Environmental Laws referenced in the CAP Request.

(c)  Except as set forth in Schedule 3.19(c), Seller has not received any notice
regarding potential liabilities with respect to off-site Hazardous Materials
treatment, storage, or disposal facilities or locations used by Seller.

(d)  Seller has provided or otherwise made available to Purchaser and listed in
Schedule 3.19(d) any and all material documents concerning planned or
anticipated capital expenditures required to reduce, offset, limit or otherwise
control pollution and/or emissions, manage waste or otherwise ensure compliance
with current or future Environmental Laws (including, without limitation, costs
of remediation, pollution control equipment and operational changes).

(e)  Except as set forth in Schedule 3.19(e), Seller is not aware of or
reasonably anticipates, as of the Closing Date, any condition, event or
circumstance concerning the Release or regulation of Hazardous Materials that
might, after the Closing Date, prevent, impede or materially increase the costs
associated with the ownership, lease, operation, performance or use of the
Business or the Transferred Assets as currently carried out.

SECTION 3.20.  Sufficiency of Transferred Assets.  

 

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Except for the exclusion of the Excluded Assets and except as set forth in
Schedule 3.20(a) or as contemplated by the Ancillary Agreements, including the
Transitional Services Agreement and the Fiber Supply Agreement, and assuming
that Purchaser has the ability to provide to the Business all corporate-level
services (set forth in Schedule 3.20(a)) of the type currently provided to the
Business by Seller or any of its affiliates, the Transferred Assets are
sufficient to permit Purchaser to conduct the Business immediately following the
Closing in all material respects as it is currently being conducted and
constitute all of the rights, properties and assets necessary for the conduct of
the Business.  To the knowledge of Seller, Seller has provided or otherwise made
available to Purchaser and listed in Schedule 3.20(b) any and all material
documents concerning planned capital expenditures and deferred maintenance
relating to the Business or Transferred Assets for the fiscal year 2019.

SECTION 3.21.  Brokers.  

Except for CIBC World Markets, Inc., no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement or any Ancillary Document
based upon arrangements made by or on behalf of Seller.

ARTICLE IV

Representations and Warranties of Purchaser

Purchaser hereby represents and warrants to Seller as follows:

SECTION 4.01.  Organization and Standing.

Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Oregon.  Purchaser has full corporate power and
authority and possesses all governmental franchises, licenses, permits,
authorizations and approvals necessary to enable it to own, lease or otherwise
hold its properties and assets and to carry on its business as currently
conducted, other than such franchises, licenses, permits, authorizations and
approvals the lack of which would not reasonably be expected to have a Purchaser
Material Adverse Effect (as defined in Section 13.05(b)).

SECTION 4.02.  Authority; Execution and Delivery; Enforceability.  

Purchaser has full corporate power and authority to execute this Agreement and
the Ancillary Agreements to which it is, or is specified to be, a party and to
consummate the Acquisition and the other transactions contemplated by this
Agreement and such Ancillary Agreements.  Purchaser has taken all corporate
action required by its Articles of Incorporation and By-laws to authorize the
execution and delivery of this Agreement and the Ancillary Agreements to which
it is, or is specified to be, a party and to authorize the consummation of the
Acquisition and the other transactions contemplated by this Agreement and such
Ancillary Agreements.  Purchaser has duly executed and delivered this Agreement
and prior to the Closing will have duly executed and delivered each Ancillary
Agreement to which it is, or is specified to be, a party, and this Agreement
constitutes, and each Ancillary Agreement to which it is, or is specified to be,
a party will after the Closing constitute, its legal, valid and binding
obligation, enforceable against it in accordance with its terms subject, as to
enforcement, to applicable bankruptcy, insolvency,

 

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moratorium, reorganization or similar laws affecting creditors’ rights generally
and to general equitable principles.  

SECTION 4.03.  No Conflicts or Violations; No Consents or Approvals Required.  

The execution and delivery by Purchaser of this Agreement and the Ancillary
Agreements to which Purchaser is a party do not, and the consummation by
Purchaser of the Acquisition and the other transactions contemplated to be
consummated by it by this Agreement and such Ancillary Agreements will not
conflict with, or result in any breach of or constitute a default or give rise
to any right of termination or acceleration under, or result in the creation of
any Lien upon any of the properties or assets of Purchaser or any of its
subsidiaries under, any provision of (i) the Articles of Incorporation, By-laws
or other organizational documents of Purchaser or any of its subsidiaries,
(ii) any material Contract to which Purchaser or any of its subsidiaries is a
party or by which any of their respective properties or assets is bound or
(iii) any material Judgment or Applicable Law applicable to Purchaser or any of
its subsidiaries or their respective properties or assets, in each case other
than any such items that would not reasonably be expected to have a Purchaser
Material Adverse Effect.  No Consent of, or registration, declaration or filing
with, any Governmental Entity is required to be obtained or made by or with
respect to Purchaser or any of its subsidiaries in connection with the
execution, delivery and performance of this Agreement or the consummation of the
Acquisition, other than (A) compliance with and filings under the HSR Act,
(B) compliance with and filings and notifications under applicable Environmental
Laws, (C) those that may be required solely by reason of Seller’s (as opposed to
any third party’s) participation in the Acquisition and the other transactions
contemplated by this Agreement and by the Ancillary Agreements, (D) compliance
with and filings under the Exchange Act, and (E) those the failure of which to
obtain or make would not reasonably be expected to have a Purchaser Material
Adverse Effect.

SECTION 4.04.  Proceedings.

There are not any Proceedings pending or, to the knowledge of Purchaser,
threatened against Purchaser or any of its subsidiaries seeking injunctive
relief prohibiting or delaying the consummation of the Acquisition.

SECTION 4.05.  Availability of Funds; Solvency.  

(a)  Purchaser has or at Closing will have cash available or has existing
borrowing facilities which together are sufficient to enable it to consummate
the Acquisition and the other transactions contemplated by this Agreement.  The
financing required to consummate the Acquisition and the other transactions
contemplated by this Agreement is referred to in this Section 4.05 collectively
as the “Financing”.  Purchaser does not have any reason to believe that any of
the conditions to the Financing will not be satisfied or that the Financing will
not be available to Purchaser on a timely basis to consummate the Acquisition
and the other transactions contemplated by this Agreement.

(b)  As of the Closing and immediately after consummating the Acquisition and
the other transactions contemplated by this Agreement, Purchaser will not (i) be
insolvent (either because its financial condition is such that the sum of its
debts is greater than the fair value of its assets or because the present fair
salable value of its assets will be less than the amount required to pay its
probable liability on its debts as they become absolute and matured), (ii) have
unreasonably small capital with which to

 

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engage in its business, including the Business, or (iii) have incurred or plan
to incur debts beyond its ability to repay such debts as they become absolute
and matured.

ARTICLE V

Covenants

SECTION 5.01.  Covenants Relating to Conduct of Business.  

(a)  Except for matters (x) set forth in Schedule 5.01, (y) expressly agreed to
in writing by Purchaser or (z) otherwise expressly permitted or required by the
terms of this Agreement, from the date of this Agreement to the Closing Date,
Seller shall conduct the Business, or shall cause the Business to be conducted,
in all material respects in the ordinary course of business in a manner
consistent with past practice and, to the extent consistent therewith, use its
reasonable best efforts to preserve the material business relationships of the
Business with trademark licensors, customers, suppliers, distributors and others
with whom the Business deals in the ordinary course of business.  In addition,
except as set forth in Schedule 5.01 or otherwise expressly permitted or
required by the terms of this Agreement, Seller shall not do any of the
following in connection with the Business without the prior written consent of
Purchaser (which consent shall not be unreasonably withheld or delayed):

(i) grant to any Business Employee any increase in compensation or benefits,
except in the ordinary course of business consistent with past practice or as
may be required under existing agreements and except for any increases for which
Seller and its affiliates shall be solely obligated (provided that Seller shall
provide Purchaser with prompt notice of any such increase);

(ii) incur or assume any liabilities, obligations or indebtedness for borrowed
money or guarantee any such liabilities, obligations or indebtedness, other than
in the ordinary course of business consistent with past practice and except for
any liabilities, obligations, indebtedness or guarantees for which Seller and
its affiliates shall be solely obligated (provided that Seller shall provide
Purchaser with prompt notice of any such liabilities, obligations, indebtedness
or guarantees regarding any Material Supplier;

(iii) subject any of the Transferred Assets to any Lien of any nature whatsoever
other than Permitted Liens;

(iv) waive any claims or rights of material value (solely to the extent such
claims or rights relate primarily to the Business);

(v) make any change in any method of accounting or accounting practice or policy
other than those required by GAAP or by Applicable Law (solely to the extent
such change would be binding on Purchaser);

(vi) acquire by merging or consolidating with, or by purchasing a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or division
thereof or otherwise acquire any assets (other than Inventory) that are material
to the Business

 

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(solely to the extent a substantial portion of the assets acquired constitutes
Transferred Assets);

(vii) adopt any plan of merger, consolidation, reorganization, liquidation or
dissolution or filing of a petition in bankruptcy under any provisions of
federal or state bankruptcy law or consent to the filing of any bankruptcy
petition against it under any similar law;

(viii) make or incur any capital expenditure (of a non-emergency nature) (solely
to the extent such capital expenditure relates exclusively to the Business) that
is not currently approved or budgeted, which exceeds $200,000 individually or
$500,000 in the aggregate, in each case except for any such capital expenditures
for which Seller and its affiliates shall be solely obligated;

(ix) sell, lease, license or otherwise dispose of any Transferred Asset that is
material to the Business, except (A) Inventory and obsolete or excess equipment
sold or disposed of in the ordinary course of business and (B) any Excluded
Asset;

(x) enter into or amend any lease of real property (solely to the extent such
lease relates primarily to the Business), except (A) any renewals of existing
Leases in the ordinary course of business consistent with past practice and
(B) leases entered into in the ordinary course of business with aggregate annual
lease payments not in excess of $200,000;

(xi) transfer or assign or grant of any license or sublicense under or with
respect to any Transferred Intellectual Property (except non-exclusive licenses
or sublicenses granted in the ordinary course of business consistent with past
practice);

(xii) abandon or permit to lapse or fail to maintain in full force and effect
any registration of Transferred Intellectual Property, or fail to take or
maintain reasonable measures to protect the confidentiality of any Transferred
Technology;

(xiii) permit the acceleration, termination, abandonment, material modification
to or cancellation of any Transferred Contract or Transferred Permit;

(xiv) permit any material increase or decrease in Inventory other than in the
ordinary course of the business; and

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

SECTION 5.02.  Access to Information and Properties .

(a)  Seller shall (i) afford to Purchaser and its accountants, counsel and other
representatives reasonable access, upon reasonable prior notice during normal
business hours during the period prior to the Closing, to the personnel,
properties, books, Contracts, commitments and records (excluding any
confidential personnel records) relating to the Business (other than the
Excluded Assets), (ii) furnish Purchaser and its representatives with such
financial, operating and other data and information related to the Business as
Purchaser or any of its representatives may reasonably request, (iii) permit
Purchaser to conduct interviews with employees that may become Transferred
Employees pursuant to Section 6.01, and (iv) instruct the representatives of
Seller to

 

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cooperate with Purchaser in its investigation of the Business; provided,
however, that foregoing access does not unreasonably disrupt the normal
operations of Seller or the Business.  Notwithstanding the foregoing, Seller
need not disclose to Purchaser (A) any document or information that is
confidential pursuant to Applicable Law or pursuant to the terms of a
confidentiality agreement with a third party or (B) such portions of documents
or information relating to pricing or other matters that are highly sensitive if
the exchange of such documents (or portions thereof) or information, as
determined by Seller’s counsel, might reasonably result in antitrust
difficulties for Seller (or any of its affiliates).  If any material is withheld
by Seller pursuant to the immediately preceding sentence, Seller shall inform
Purchaser as to the general nature of what is being withheld.  Seller may redact
such portions of its books and records that do not relate to the Transferred
Assets, the Assumed Liabilities and the Business.  

(b)  Following the expiration of the waiting periods referenced in Section 5.05
below, including early termination of such waiting periods, Seller shall afford
to Purchaser and its employees and other representatives reasonable access, upon
reasonable prior notice during normal business hours during the period prior to
the Closing, to the Facility for the purpose of staging and installing
information technology, telephone, communications and other similar equipment;
provided, however, that such equipment shall not be networked to, or otherwise
able to share data with, Seller’s information technology equipment until after
Closing. Purchaser and Seller shall develop a plan for data transmission and
exchange following the Closing pursuant to the Transitional Services Agreement.
In the event that this Agreement is terminated pursuant to Article VIII, Seller
shall afford Purchaser and its employees and other representatives reasonable
access, upon reasonable prior notice during normal business hours during the
period prior to the Closing, to the Facility to remove any equipment installed
pursuant to the preceding sentence.

SECTION 5.03.  Confidentiality.  

(a)  Purchaser acknowledges that the information being provided to it in
connection with the Acquisition and the consummation of the other transactions
contemplated by this Agreement is subject to the terms of a mutual
confidentiality agreement between Purchaser and Seller as of October 17, 2018
(the “Confidentiality Agreement”), the terms of which are incorporated herein by
reference.  Effective upon, and only upon, the Closing, the Confidentiality
Agreement shall terminate with respect to information relating solely to the
Business; provided, however, that Purchaser acknowledges that any and all other
information provided to it by Seller, any of its affiliates or their respective
representatives concerning Seller or any of its affiliates shall remain subject
to the terms and conditions of the Confidentiality Agreement after the Closing.

(b)  After the Closing Date, Seller shall keep confidential, and cause its
affiliates and instruct its and their officers, directors, employees and
advisors to keep confidential, all information relating to the Business except
as required by law or administrative process (provided that Seller shall use
reasonable best efforts to obtain an appropriate protective order or other
reasonable assurance that confidential treatment will be accorded such
information) and except for information which is available to the public on the
Closing Date, or thereafter becomes available to the public other than as a
result of a breach of this Section 5.03(b).  The covenant set forth in this
Section 5.03(b) shall terminate three years after the Closing Date.

 

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SECTION 5.04.  Best Efforts.

(a)  On the terms and subject to the conditions of this Agreement, each of
Seller and Purchaser shall use its best efforts to cause the Closing to occur,
including taking all actions necessary to comply promptly with all legal
requirements that may be imposed on it or any of its affiliates with respect to
the Closing.  Without limiting the requirements for Closing set forth in
Section 2.02 or the provisions set forth in Article VII, each party shall use
its best efforts to cause the Closing to occur on or prior to March 15, 2019
(the “Outside Closing Date”).  Seller and Purchaser shall not, and shall not
permit any of their respective affiliates to, take any actions that would, or
that could reasonably be expected to, result in any of the conditions set forth
in Article VII not being satisfied.

(b)  Except as expressly provided in Section 5.05(c), each of Purchaser and
Seller shall use its best efforts to have any restraint or prohibition of the
type described in Section 7.01(b) terminated as promptly as practicable.

(c)  Without limiting Section 5.04(a), Purchaser and Seller shall use their
reasonable best efforts to obtain, or to cause to be obtained, an additional
Permit for the Purchaser with respect to each Permit used by Seller in
connection with the Business that is not a Transferred Permit pursuant to
Section 1.02(a)(vi); provided, that, Seller shall not be obligated to pay any
consideration to any third party or governmental Entity from whom such Permits
are requested under this Section 5.04(c).

SECTION 5.05.  Antitrust Notification and Other Regulatory Filings.  

(a)  Each of Seller and Purchaser shall (i) file or cause to be filed as
promptly as practicable, but in no event later than 20 days following the
execution and delivery of this Agreement, with the United States Federal Trade
Commission (the “FTC”) and the United States Department of Justice (the “DOJ”)
all notification and report forms that may be required for the transactions
contemplated by this Agreement and the Ancillary Agreements and any supplemental
information requested in connection therewith pursuant to the HSR Act, (ii) make
such other filings as promptly as practicable, but in no event later than 15
days following the execution and delivery of this Agreement, as are necessary
under the Antitrust Laws (as defined in Section 13.05(b)) and shall promptly
provide any supplemental information requested by applicable Governmental
Entities relating thereto, and (iii)  include in each such filing, notification
and report form referred to in the immediately preceding clauses (i) and (ii) a
request for early termination or acceleration of any applicable waiting
periods.  Any such filing, notification and report form and supplemental
information shall be in substantial compliance with the requirements of the HSR
Act and other Antitrust Laws.  Each of Seller and Purchaser shall furnish to the
other copies of any notification and report forms it shall file and such
necessary information and reasonable assistance as the other may reasonably
request in connection with its preparation of any filing or submission that is
necessary under the HSR Act and other Antitrust Laws.  Each of Seller and
Purchaser shall keep each other apprised of the status of any communications
with, and any inquiries or requests for additional information from, the FTC,
the DOJ and any other applicable Governmental Entity and shall comply with any
such inquiry or request as promptly as practicable.  Each party shall use its
best efforts to obtain clearance required under the HSR Act and other Antitrust
Laws for the consummation of the transactions contemplated by this Agreement and
the Ancillary Agreements as promptly as practicable.

 

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(b)  Seller and Purchaser shall use their best efforts to cause the expiration
or termination of the applicable waiting periods under the HSR Act and any other
Antitrust Law as soon as practicable.  Seller and Purchaser shall not extend,
directly or indirectly, any such waiting period or enter into any agreement with
a Governmental Entity to delay or not to consummate the transactions
contemplated by this Agreement and the Ancillary Agreements to be consummated on
the Closing Date, except with the prior written consent of the other party
hereto.  Seller and Purchaser shall not have any substantive contact with any
Governmental Entity in respect of any filing or proceeding contemplated by this
Section 5.05 unless it consults with the other party in advance and, to the
extent permitted by such Governmental Entity, gives the other party the
opportunity to participate.  If any Antitrust Proceeding (as defined in
Section 13.05(d)) is instituted (or threatened to be instituted) challenging any
of the transactions contemplated by this Agreement and the Ancillary Agreements
under any Antitrust Law, Seller and Purchaser shall use their best efforts to
resolve (and to avoid the institution of) any such Antitrust Proceeding.  If,
notwithstanding such best efforts, any such Antitrust proceeding is instituted,
Seller and Purchaser shall further use their best efforts to contest such
Antitrust Proceeding until each such Antitrust Proceeding is resolved pursuant
to a settlement or a final nonappealable court order.

(c)  Notwithstanding the foregoing provisions of Section 5.05, “best efforts”
of  Purchaser and Seller shall not include selling, holding separate or
otherwise disposing of, any of the Transferred Assets or the Business or any
assets or business of Purchaser or any of its subsidiaries or affiliates on or
after the Closing, including agreeing with any Governmental Entity to take any
such action.

SECTION 5.06.  Further Assurances.

From time to time, as and when requested by any party, each party shall execute
and deliver, or cause to be executed and delivered, all such documents and
instruments and shall take, or cause to be taken, all such further or other
actions, as such other party may reasonably deem necessary or desirable to
consummate the transactions contemplated by this Agreement, including, in the
case of Seller, executing and delivering to Purchaser such assignments, deeds,
bills of sale, consents and other instruments as Purchaser or its counsel may
reasonably request as necessary or desirable for such purpose.

SECTION 5.07.  Insurance Matters.  

(a)  Seller shall keep all insurance policies currently maintained with respect
to the Transferred Assets (the “Seller Insurance Policies”), or suitable
replacements therefor, in full force and effect through the close of business on
the Closing Date.  Purchaser acknowledges that any and all Seller Insurance
Policies are owned and maintained by Seller and its affiliates (and not the
Business) and are Excluded Assets.  Purchaser will not have any rights under the
Seller Insurance Policies from and after the Closing.

(b)  In the event that prior to the Closing any Transferred Asset suffers any
damage, destruction or other casualty loss, Seller shall surrender to Purchaser
after the Closing Date (i) all insurance proceeds received by the Seller with
respect to such damage, destruction or loss, less any proceeds applied to the
physical restoration of such asset, and (ii) all rights of Seller with respect
to any causes of action, whether or not litigation has commenced as of the
Closing Date, in connection with such damage, destruction or loss.  Seller shall
make available to Purchaser the benefits of any Seller

 

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Insurance Policy covering the Transferred Assets with respect to insured events
or occurrences prior to the Closing (whether or not claims relating to such
events or occurrences are made prior to or after the Closing Date); provided,
however, that the benefits of such insurance shall be subject to (and recovery
thereon shall be reduced by the amount of) any applicable deductibles and
co-payment provisions or any payment or reimbursement obligations of Seller in
respect thereof.  Seller shall promptly pay to Purchaser all insurance proceeds
relating to the Transferred Assets received by Seller under any Seller Insurance
Policy.

SECTION 5.08.  No Solicitation of Other Bids.

(a)  Seller shall not, and shall not authorize or permit any of its affiliates
or any of its or their representatives to, directly or indirectly, (i)
encourage, solicit, initiate, facilitate or continue inquiries regarding an
Acquisition Proposal; (ii) enter into discussions or negotiations with, or
provide any information to, any person concerning a possible Acquisition
Proposal; or (iii) enter into any agreements or other instruments (whether or
not binding or contingent) regarding an Acquisition Proposal. Seller shall
immediately cease and cause to be terminated, and shall cause its affiliates and
all of its and their representatives to immediately cease and cause to be
terminated, all existing discussions or negotiations with any persons conducted
heretofore with respect to, or that could lead to, an Acquisition Proposal, and
shall not commence, or permit to be commenced, any discussions or negotiations
with any persons with respect to, or that could lead to, an Acquisition
Proposal. For purposes hereof, "Acquisition Proposal" means any inquiry,
proposal or offer from any person (other than Purchaser or any of its
affiliates) relating to the direct or indirect disposition, whether by sale,
merger or otherwise, of all or any portion of the Business or the Transferred
Assets.

(b)  In addition to the other obligations under this Section 5.08, Seller shall
promptly (and in any event within three (3) business days after receipt thereof
by Seller or its Representatives) advise Purchaser orally and in writing of any
Acquisition Proposal, any request for information with respect to any
Acquisition Proposal, or any inquiry with respect to or which could reasonably
be expected to result in an Acquisition Proposal, the material terms and
conditions of such request, Acquisition Proposal or inquiry, and the identity of
the person making the same.

(c)  Seller agrees that the rights and remedies for noncompliance with this
Section 5.08 shall include having such provision specifically enforced by any
court having equity jurisdiction, it being acknowledged and agreed that any such
breach or threatened breach shall cause irreparable injury to Purchaser and that
money damages would not provide an adequate remedy to Purchaser.

SECTION 5.09.  Notice of Certain Events.

(a)  From the date hereof until the Closing, Seller shall promptly notify
Purchaser in writing of:

(i) any fact, circumstance, event or action the existence, occurrence or taking
of which (A) has had, or could reasonably be expected to have, individually or
in the aggregate, a Business Material Adverse Effect, (B) has resulted in, or
could reasonably be expected to result in, any representation or warranty made
by Seller hereunder not being true and correct or (C) has resulted in, or could

 

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reasonably be expected to result in, the failure of any of the conditions set
forth in Section 7.02 to be satisfied;

(ii) any notice or other communication from any person alleging that the Consent
of such Person is or may be required in connection with the transactions
contemplated by this Agreement;

(iii) any notice or other communication from any Governmental Entity in
connection with the transactions contemplated by this Agreement; and

(iv) any Proceedings commenced or, to knowledge of Seller, threatened against,
relating to or involving or otherwise affecting the Business, the Transferred
Assets or the Assumed Liabilities that, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant Section 3.14
or that relates to the consummation of the transactions contemplated by this
Agreement.

(b)  Purchaser's receipt of information pursuant to this Section 5.09 shall not
operate as a waiver or otherwise affect any representation, warranty or
agreement given or made by Seller in this Agreement and shall not be deemed to
amend or supplement the Schedules to this Agreement (“Schedules”).

SECTION 5.10.  Supplement to Schedules.

From time to time prior to the Closing, Seller (or in the case of Schedule
6.01(a), Purchaser) shall promptly provide written updates to the  Schedules
(“Schedule Supplement”), with respect to any matter hereafter arising which, if
existing, occurring or known as of the date of this Agreement, (i) would have
been required to be set forth in a Schedule or which is necessary to correct any
information which has been rendered inaccurate thereby or (ii) which relates to
an event or circumstance occurring after the date hereof in the ordinary course
of business without a breach of Section 5.01.  Each amendment, supplement or
other modification of the Schedules pursuant to this Section 5.10 shall be
deemed to have modified the representations, warranties or covenants of the
Seller or Purchaser herein, as the case may be, for purposes of determining
whether the conditions set forth in Section 7.02 and 7.03, as the case may be,
have been satisfied, shall affect whether a breach of such representations,
warranties or covenants has occurred or shall otherwise affect the Purchaser’s
or Seller’s rights under Article VIII or IX with respect thereto unless such
amendment, supplement or other modification, individually or in the aggregate,
constitutes a Business Material Adverse Effect.  

ARTICLE VI

Employment Matters

SECTION 6.01.  Continuation of Employment; Purchaser Benefit Plans.  

(a)  General.  (i) For purposes of this Agreement, the term “Transferred
Employee” shall refer to each Business Employee to whom Purchaser extends offers
of employment as of the Closing Date as set forth in Schedule 6.01 and each
Business Employee whose employment transfers from Seller to Purchaser by
operation of law as of the Closing.  At Closing, all Transferred Employees shall
be hired by and become employees of Purchaser.   Seller shall terminate the
employment of the Transferred

 

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Employees immediately thereafter.  No later than seven (7) days prior to the
Closing Date (the “Notice Date”) , the Purchaser shall notify the Transferred
Employees that immediately upon the Closing on the Closing Date, the Transferred
Employees shall become employed by the Purchaser on an “at will” basis.  On the
Notice Date, Seller shall deliver a notice of termination to all Transferred
Employees (the “Termination Notice”) to be immediately effective after
Closing.  The Parties shall coordinate such that the Termination Notice and the
notice of hire are delivered simultaneously to each Transferred Employee.  On
the Closing Date, Seller shall terminate any existing employment agreement or
arrangements between the Seller and the Transferred Employees, without any
liability to the Purchaser on or following the Closing.  All employees of Seller
who are not Transferred Employees shall remain employees of the Seller.

(ii) Seller agrees to (A) not make offers of employment to any Transferred
Employee in any business of Seller’s affiliates included in the Excluded Assets
prior to the Closing Date and for a period of one (1) year thereafter, (B)
encourage all Transferred Employees to accept offers of employment with
Purchaser, and (C) at Purchaser’s request, enter into retention agreements with
such Transferred Employees as Purchaser may designate, it being understood that
all liabilities and obligations of Seller under such retention agreements shall
be assumed by Purchaser at Closing. Notwithstanding the foregoing, the
restrictions of this Section 6.01(a)(ii)(A) shall not prohibit Seller from (x)
conducting any general solicitations for employment, such as any newspaper or
Internet help wanted advertisement, directly or through any agent (including
placement and recruiting agencies) that is not directed at such Transferred
Persons, or (y) hiring any such Transferred Person whose employment with
Purchaser has ceased at least one month prior to such time.

 

(b)  Prior Service Credit.  From and after the Closing Date, Purchaser shall
give or cause to be given each Transferred Employee full credit for all purposes
under any employee benefit plans and arrangements provided, maintained or
contributed to by Purchaser and its affiliates, for such Transferred Employee’s
service with Seller and its subsidiaries, and with any predecessor employer, to
the same extent recognized by Seller and its subsidiaries immediately prior to
the Closing Date, except to the extent such credit would result in duplication
of benefits for the same period of service; provided, however, that (i) such
credit shall be given pursuant to payroll or plan records, at the election of
Purchaser, in its sole and absolute discretion; and (ii) such service crediting
shall be permitted and consistent with Purchaser's defined contribution
retirement plan.

(c)  No Assumption of Liabilities.  Seller shall remain solely responsible for
the satisfaction of all claims for medical, dental, life insurance, health
accident or disability benefits brought by or in respect of current or former
employees, officers, directors, independent contractors or consultants of the
Business or the spouses, dependents or beneficiaries thereof, which claims
relate to events occurring on or prior to the Closing Date. Seller also shall
remain solely responsible for all worker's compensation claims of any current or
former employees, officers, directors, independent contractors or consultants of
the Business which relate to events occurring on or prior to the Closing Date.
Seller shall pay, or cause to be paid, all such amounts to the appropriate
persons as and when due.

(d)  Eligibility for Purchaser Benefit Plans.  Each employee of the Business who
becomes employed by Purchaser in connection with the transactions contemplated

 

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by this Agreement shall be eligible to receive the salary and benefits
maintained for employees of Purchaser on substantially similar terms and
conditions in the aggregate as are provided to similarly situated employees of
Purchaser.

(e)  Certain Welfare Benefits Matters.  With respect to each of Purchaser’s
benefit plans that is an “employee welfare benefit plan” within the meaning of
Section 3(1) of ERISA (a “Purchaser Welfare Plan”), Purchaser shall use its best
efforts (i) waive all limitations as to preexisting conditions, exclusions and
waiting periods and actively-at-work requirements with respect to participation
and coverage requirements applicable to the Transferred Employees and their
dependents and beneficiaries under the Purchaser Welfare Plans to the extent
waived under the applicable corresponding Seller Benefit Plan immediately prior
to the Closing and (ii) provide each Business Employee and his or her eligible
dependents and beneficiaries with credit under Purchaser Welfare Plans for any
co-payments and deductibles paid under corresponding Seller Benefit Plans prior
to the Closing in the calendar year in which the Closing occurs for purposes of
satisfying any applicable deductible or out-of-pocket requirements under any
Purchaser Welfare Plans in which the Transferred Employees participate.

SECTION 6.02.  Accrued Vacation.  

For purposes of determining the number of vacation days to which each
Transferred Employee shall be entitled, Purchaser shall assume and honor all
vacation days accrued or earned but not yet taken by such Transferred Employee
as of the Closing Date.  To the extent that a Transferred Employee is entitled
under any Applicable Law or any policy of Seller or any of its respective
subsidiaries to be paid for any vacation days accrued or earned but not yet
taken by such Transferred Employee as of the Closing Date, Purchaser shall
assume the liability for such vacation days.

SECTION 6.03.  WARN Act.  

Purchaser shall bear any and all obligations and liability under the Worker
Adjustment and Retraining Notification Act, as amended (the “WARN Act”)
resulting from employment losses pursuant to Section 6.01.  Seller agrees, with
respect to Business employees, to cooperate with Purchaser regarding the
provision of any required notice under the WARN Act, and any similar federal,
state or local law or regulation, and to otherwise comply with the WARN Act and
any such other similar law or regulation with respect to any “plant closing” or
“mass layoff” (as defined in the WARN Act) or group termination or similar event
affecting Business Employees (including as a result of the consummation of the
transactions contemplated by this Agreement) and occurring from and after the
Closing.  Seller shall notify Purchaser of any layoffs of any Business Employees
in the 90-day period prior to the Closing.

SECTION 6.04.  Administration.  

Following the date of this Agreement, Seller and Purchaser shall reasonably
cooperate in all matters reasonably necessary to effect the transactions
contemplated by this Article VI.

SECTION 6.05.  Employment Tax Reporting Responsibility.  

Purchaser and Seller hereby agree to follow the standard procedure for United
States employment tax withholding as provided in Section 5 of Rev. Proc.
2004-53, 1996

 

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53 I.R.B. 24.  Accordingly, Seller shall have United States employment tax
reporting responsibilities for Transferred Employees for the period ending on
close of business the Closing Date, and Purchaser shall have United States
employment tax reporting responsibilities for Transferred Employees following
the close of business on the Closing Date.

ARTICLE VII

Conditions to Closing

SECTION 7.01.  Conditions to Each Party’s Obligation.  

The obligation of Purchaser to purchase and pay for the Transferred Assets, and
the obligation of Seller to sell, transfer, assign and deliver the Transferred
Assets to Purchaser, are subject to the satisfaction (or waiver by Purchaser and
Seller) on or prior to the Closing Date of the following conditions:

(a)  Governmental Approvals.  The waiting period under the HSR Act shall have
expired or been terminated in relation to the Acquisition.  Any consents,
authorizations, orders, approvals, declarations and filings under the HSR Act or
any other Applicable Law, the absence of which would prohibit the consummation
of the purchase and sale of any portion of the Transferred Assets, or the
assumption of any portion of the Assumed Liabilities, to the extent the
exclusion of such portion of the Transferred Assets or Assumed Liabilities would
be reasonably likely to have a Material Adverse Effect, shall have been made or
obtained.

(b)  No Injunctions or Restraints.  No statute, rule, regulation, executive
order, decree, writ, judgment, stipulation, temporary restraining order,
preliminary or permanent injunction or other order enacted, entered,
promulgated, enforced or issued by any Governmental Entity, or other legal
restraint or prohibition shall be in effect preventing, the purchase or sale of
any portion of the Transferred Assets or the assumption of any portion of the
Assumed Liabilities, to the extent the exclusion of such portion of the
Transferred Assets or Assumed Liabilities would be reasonably likely to have a
Material Adverse Effect.

SECTION 7.02.  Conditions to Obligation of Purchaser.  

The obligation of Purchaser to purchase and pay for the Transferred Assets is
subject to the satisfaction (or waiver by Purchaser) on or prior to the Closing
Date of the following conditions:

(a)  Representations and Warranties.  The representations and warranties of
Seller in this Agreement qualified as to materiality or Business Material
Adverse Effect shall be true and correct as so qualified, and those not so
qualified shall be true and correct in all material respects, as of the Closing
Date as though made on the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date (in which
case such representations and warranties qualified as to materiality or Business
Material Adverse Effect shall be true and correct, and those not so qualified
shall be true and correct in all material respects, on and as of such earlier
date).  Purchaser shall have received a certificate signed by an authorized
officer of Seller as to the satisfaction of the foregoing condition.

 

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(b)  Performance of Obligations of Seller.  Seller shall have performed or
complied in all material respects with all obligations and covenants required by
this Agreement and each Ancillary Agreement to be performed or complied with by
it by the time of the Closing.  Purchaser shall have received a certificate
signed by an authorized officer of Seller as to the satisfaction of the
foregoing condition.

(c)  Execution and Delivery of Ancillary Agreements.  Seller shall have executed
and delivered the Ancillary Agreements to which it is a party.

(d)  Receipt of Consents.  Subject to Section 1.03, all approvals, consents and
waivers that are listed on Schedule 3.03 shall have been received, and executed
counterparts thereof shall have been delivered to Purchaser at or prior to the
Closing.

(e)  No Business Material Adverse Effects.  From the date of this Agreement,
there shall not have occurred any Business Material Adverse Effect, nor shall
any event or events have occurred that, individually or in the aggregate, with
or without the lapse of time, could reasonably be expected to result in a
Business Material Adverse Effect.

(f)  Permits.  Purchaser shall have received all Permits that are necessary for
it to conduct the Business as conducted by Seller as of the Closing Date except
for Permits the failure to receive individually or in the aggregate would not
reasonably be expected to have a Business Material Adverse Effect.

(g)  Title Insurance and Survey.  Purchaser shall have received an owner's title
insurance policy with respect to each Owned Property, and Leased Property where
the length of a lease exceeds five (5) years, issued by First American Title
Insurance Company, written as of the Closing Date, insuring Purchaser in such
amounts and together with such endorsements, and otherwise in such form, as
Purchaser shall require. Such title insurance policy shall insure fee simple
title to each Owned Real Property and the leasehold interest in each Leased
Property, free and clear of all Liens other than Permitted Liens. For all Leased
Property Purchaser shall have received an estoppel certificate from the owner
thereof in a form reasonably acceptable to Purchaser including representations
that the entire Lease as amended is attached thereto, that there is no breach or
default by any party under the Lease, that all rents and other sums due to the
landlord under the Lease have been timely paid through the date thereof and
other commercially reasonable assurances. For all other Leased Property, Seller
shall use its reasonable best efforts to obtain and deliver to Purchaser an
estoppel certificate from the owner thereof in a form reasonably acceptable to
Purchaser including representations that the entire Lease as amended is attached
thereto, that there is no breach or default by any party under the lease, that
all rents and other sums due to the landlord under the lease have been timely
paid through the date thereof and other commercially reasonable assurances. For
all indebtedness to be assumed by Purchaser that constitutes a lien on the Real
Property, Seller shall use its reasonable best efforts to obtain and deliver to
Purchaser an estoppel certificate from the lender that the note as amended is
attached thereto, that there is no breach or default by any party under the loan
documents, that all loan payments and other sums due to the lender under the
loan documents have been timely paid through the date thereof and other
commercially reasonable assurances. Purchaser shall have received an
appropriately certified ALTA/NSPS Land Title Survey showing no Liens other than
the Permitted Liens, and otherwise in form and substance satisfactory to
Purchaser, for the Real Property.

 

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(h)  Release of Liens.  All Liens relating to the Transferred Assets shall have
been released in full, other than Permitted Liens, and Seller shall have
delivered to Purchaser written evidence, in form satisfactory to Purchaser in
its sole discretion, of the release of such Liens.

(i)  Certificates as to Conditions:  Purchaser shall have received a
certificate, dated the Closing Date and signed by a duly authorized officer of
Seller, that each of the conditions set forth in Section 7.02(a) and Section
7.02(b) have been satisfied (the "Seller Closing Certificate").

(j)  Closing Certificates.  Purchaser shall have received a certificate of the
Secretary or an Assistant Secretary (or equivalent officer) of Seller certifying
that the board of directors of Seller has passed resolutions authorizing the
execution, delivery and performance of this Agreement and the Ancillary
Documents and the consummation of the transactions contemplated hereby and
thereby, and that all such resolutions are in full force and effect.  Purchaser
shall have received a certificate of the Secretary or an Assistant Secretary (or
equivalent officer) of Seller certifying the names and signatures of the
officers of Seller authorized to sign this Agreement, the Ancillary Documents
and the other documents to be delivered hereunder and thereunder.

(k)  FIRPTA Certificate.  Purchaser shall have received a certificate pursuant
to Treasury Regulations Section 1.1445-2(b) (the "FIRPTA Certificate") that
Seller is not a foreign person within the meaning of Section 1445 of the Code
duly executed by Seller.

(l)  Environmental Matters.  Purchaser shall have received copies of the
findings of the Phase I and Phase II analyses conducted by SLR Consulting,
together with a letter permitting Purchaser to rely upon the findings in such
analyses, and, subject to weather conditions, Seller shall have cleaned, or
caused to be cleaned, the Facility’s storm drains and ditches.

(m)  Employee Matters.  Randal J. Reutzel shall have accepted a job offer from
Purchaser.

SECTION 7.03.  Conditions to Obligation of Seller.  

The obligation of Seller to sell, transfer, assign and deliver the Transferred
Assets to Purchaser is subject to the satisfaction (or waiver by Seller) on or
prior to the Closing Date of the following conditions:

(a)  Representations and Warranties.  The representations and warranties of
Purchaser made in this Agreement qualified as to materiality or Purchaser
Material Adverse Effect shall be true and correct, and those not so qualified
shall be true and correct in all material respects, as of the Closing Date as
though made on the Closing Date, except to the extent such representations and
warranties expressly relate to an earlier date (in which case such
representations and warranties qualified as to materiality or Purchaser Material
Adverse Effect shall be true and correct, and those not so qualified shall be
true and correct in all material respects, on and as of such earlier
date).  Seller shall have received a certificate signed by an authorized officer
of Purchaser as to the satisfaction of the foregoing condition.

 

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(b)  Performance of Obligations of Purchaser.  Purchaser shall have performed or
complied in all material respects with all obligations and covenants required by
this Agreement to be performed or complied with by Purchaser by the time of the
Closing.  Seller shall have received a certificate signed by an authorized
officer of Purchaser as to the satisfaction of the foregoing condition.

(c)  Execution and Delivery of Ancillary Agreements.  Purchaser shall have
executed and delivered the Ancillary Agreements.

SECTION 7.04.  Frustration of Closing Conditions.  

Neither Purchaser nor Seller may rely on the failure of any condition set forth
in this Article VII to be satisfied if such failure was caused by such party’s
failure to act in good faith or to use its best efforts to cause the Closing to
occur, as required by Section 5.04.

ARTICLE VIII

Termination; Effect of Termination

SECTION 8.01.  Termination.  

(a)  Notwithstanding anything in this Agreement to the contrary, this Agreement
may be terminated and the Acquisition and the other transactions contemplated by
this Agreement abandoned at any time prior to the Closing:

(i) by mutual written consent of Seller and Purchaser;

(ii) by Seller if (x) any of the conditions set forth in Section 7.03 shall have
become incapable of fulfillment, and shall not have been waived by Seller, (y)
30 days have elapsed since the receipt by Purchaser of a written notice by
Seller of such incapability and (z) Purchaser shall have failed to fulfill such
condition within such 30-day period;

(iii) by Purchaser if (x) any of the conditions set forth in Section 7.02 shall
have become incapable of fulfillment, and shall not have been waived by
Purchaser, (y) 30 days have elapsed since the receipt by Seller of a written
notice by Purchaser of such incapability and (z) Seller shall have failed to
fulfill such condition within such 30-day period;

(iv) by Seller or Purchaser, if the Closing does not occur on or prior to the
Outside Closing Date; provided, further, that this Section 8.01(iv) shall not in
any way limit any other right of Seller or Purchaser to terminate this Agreement
pursuant to any other provision of Section 8.01.

provided, however, that the party seeking termination pursuant to clause (ii),
(iii) or (iv) is not in material breach of any of its representations,
warranties, covenants or agreements contained in this Agreement.

(b)  In the event of termination by Seller or Purchaser pursuant to this
Section 8.01, written notice thereof shall forthwith be given to the other party
and the

 

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transactions contemplated by this Agreement shall be terminated, without further
action by any party.  If the transactions contemplated by this Agreement are
terminated as provided herein:

(i) Purchaser shall, and shall cause each of its directors, officers, employees,
agents, representatives and advisors to, return to Seller all documents and
other material received from Seller or any of its affiliates relating to the
transactions contemplated by this Agreement, whether so obtained before or after
the execution hereof; and

(ii) all confidential information received by either Purchaser or Seller, and
their respective directors, officers, employees, agents, representatives or
advisors, with respect to the businesses of such other party shall be treated in
accordance with the Confidentiality Agreement, which shall remain in full force
and effect notwithstanding the termination of this Agreement.

SECTION 8.02.  Effect of Termination.  

If this Agreement is terminated and the transactions contemplated by this
Agreement are abandoned as described in Section 8.01, this Agreement shall
become null and void and of no further force and effect, except for the
provisions of (i) Section 5.03(a) relating to confidentiality, (ii) Section 8.01
and this Section 8.02, (iii) Section 12.01 relating to publicity and
(iv) Section 13.03 relating to certain expenses.  Nothing in this Section 8.02
shall be deemed to release any party from any liability to the other party for
any breach by such party of the terms, conditions, covenants and other
provisions of this Agreement or to impair the right of any party to compel
specific performance by any other party of its obligations under this Agreement.

ARTICLE IX

Indemnification and Survival

SECTION 9.01.  Survival of Representations and Warranties.  

All representations and warranties made in this Agreement shall survive until
the first anniversary of the Closing Date, except for (i) the representations
and warranties contained in Section 3.09 (the “Inventory Representations”) which
shall survive sixty (60) days after the Closing Date; (ii) the representations
and warranties contained in Section 3.19 (the “Environmental
Representations”  which shall survive until the fourth anniversary of the
Closing Date; and (iii) the representations and warranties contained in Sections
3.02, 3.06, 3.07 and 3.13 (the “Fundamental Representations”, which shall
survive until expiration of the applicable statute of limitations to the subject
matter of the representations.

SECTION 9.02.  Indemnification by Seller.  

Subject to the limitations set forth in Section 9.05, from and after the
Closing, Seller shall indemnify, defend and hold harmless Purchaser and its
affiliates and each of their respective officers, directors, employees,
stockholders, agents and representatives (the “Purchaser Indemnitees”) from and
against any and all claims, losses, damages, liabilities, obligations,
judgments, interest, awards, penalties, costs or expenses of any kind, including

 

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reasonable legal fees and expenses (collectively, “Losses”), to the extent
arising or resulting from any of the following:

(i) any breach as of the Closing Date of any representation or warranty of
Seller contained in this Agreement or any Ancillary Agreement;

(ii) any breach of any covenant of Seller contained in this Agreement or any
Ancillary Agreement;

(iii) any Retained Liability;

(iv) Seller’s access to, entry upon and use of the Transferred Real Property,
and any claims by third parties arising out of or relating thereto, in
connection with Seller’s fulfillment of its covenants in Section 12.08; and

(v) any and all obligations, liabilities and commitments of any nature, whether
known or unknown, express or implied, primary or secondary, direct or indirect,
liquidated, absolute, accrued, contingent or otherwise and whether due or to
become due, arising from, or relating to, the ownership or operation of the
Business or the Transferred Assets prior to and on the Closing Date, including
without limitation, all Third Party Claims; and

(vi) any fees, expenses or other payments incurred or owed by Seller to any
agent, broker, investment banker or other firm or person retained or employed by
it in connection with the transactions contemplated by this Agreement and the
Ancillary Agreements.

SECTION 9.03.  Indemnification by Purchaser.  

From and after the Closing, Purchaser shall indemnify, defend and hold harmless
Seller and its affiliates and each of their respective officers, directors,
employees, stockholders, agents and representatives (the “Seller Indemnitees”)
from and against any and all Losses, to the extent arising or resulting from any
of the following:

(i) any breach as of the Closing Date of any representation or warranty of
Purchaser contained in this Agreement or any Ancillary Agreement;

(ii) any breach of any covenant of Purchaser contained in this Agreement or any
Ancillary Agreement;

(iii) any Assumed Liability;

(iv) any fees, expenses or other payments incurred or owed by Purchaser or its
affiliates to any agent, broker, investment banker or other firm or person
retained or employed by it in connection with the transactions contemplated by
this Agreement and the Ancillary Agreements;

(v) any and all obligations, liabilities and commitments of any nature, whether
known or unknown, express or implied, primary or secondary, direct or indirect,
liquidated, absolute, accrued, contingent or otherwise and whether due or to
become due, arising from, or relating to, the ownership or operation of the
Business or the Transferred Assets after the Closing Date.

 

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SECTION 9.04.  Indemnification Procedures.  

(a)  Procedures Relating to Indemnification of Third Party Claims.  If any party
(the “Indemnified Party”) receives written notice of the commencement of any
action or proceeding or the assertion of any claim by a third party or the
imposition of any penalty or assessment for which indemnity may be sought under
Section 9.02 or 9.03 (a “Third Party Claim”), and such Indemnified Party intends
to seek indemnity pursuant to this Article IX, the Indemnified Party shall
promptly provide the other party (the “Indemnifying Party”) with written notice
of such Third Party Claim, stating the nature, basis and the amount thereof, to
the extent known, along with copies of the relevant documents evidencing such
Third Party Claim and the basis for indemnification sought.  Failure of the
Indemnified Party to give such notice will not relieve the Indemnifying Party
from liability on account of this indemnification, except if and to the extent
that the Indemnifying Party is actually prejudiced thereby.  The Indemnifying
Party will have 30 days from receipt of any such notice of a Third Party Claim
to give notice to assume the defense thereof.  Prior to and during such 30 day
period, the Indemnified Party may take actions it deems necessary in its
reasonable discretion to preserve all defenses available regarding the Third
Party Claim, the costs of which, including the incurrence of reasonable
attorneys’ fees, shall be borne by the Indemnifying Party.  If notice to the
effect set forth in the immediately preceding sentence is given by the
Indemnifying Party, the Indemnifying Party will have the right to assume the
defense of the Indemnified Party against the Third Party Claim with counsel of
its choice; provided, however, that such counsel is reasonably satisfactory to
the Indemnified Party; provided, further, however, that in the event the
Indemnifying Party assumes the defense of any Third Party Claim it shall
actively pursue such defense in good faith.  If the Indemnifying Party does not
assume the defense of such Third Party Claim within 30 days of receipt of such
notice, the Indemnified Party against which such Third Party Claim has been
asserted will have the right to assume the defense thereof, at its sole cost and
expense, upon delivery of notice to such effect to the Indemnifying Party.  In
any event, if the Indemnifying Party at any time agrees to assume the defense of
such Third Party Claim, the Indemnifying Party shall bear the reasonable fees,
costs and expenses of the Indemnified Party’s counsel incurred prior to the time
of the Indemnifying Party’s assumption of such defense. So long as the
Indemnifying Party has assumed the defense of the Third Party Claim in
accordance herewith, (i) the Indemnified Party may retain separate co-counsel at
its sole cost and expense and participate in the defense of the Third Party
Claim; provided, however, that in the event such Third Party Claim results in a
Loss paid by the Indemnifying Party pursuant to Section 9.02 or 9.03, such Loss
shall include the reasonable legal fees and expenses of the Indemnified Party
incurred in the participation of such defense, except to the extent such legal
fees and expenses shall have been incurred by the Indemnified Party following
the receipt of written acknowledgment from the Indemnifying Party that the
Indemnifying Party shall be obligated to indemnify the Indemnified Party under
Section 9.02 or 9.03 in connection with such Third Party Claim and shall assume
defense of the Third Party Claim (in which case such legal fees and expenses
shall be borne solely by the Indemnified Party), (ii) except during any period
when the Indemnifying Party has not assumed defense of the Third Party Claim,
the Indemnified Party will not consent to the entry of any judgment or, at any
time, enter into any settlement with respect to the Third Party Claim without
the prior written consent of the Indemnifying Party (which consent shall not be
unreasonably withheld or delayed) and (iii) the Indemnifying Party will not
(A) admit to any wrongdoing or (B) consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim to the extent such
judgment or settlement (x) with

 

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any of the Indemnified Party’s current customers or suppliers, (y) that provides
for relief other than money damages or (z) that provides for money damages if
the Indemnifying Party has not acknowledged in writing that it shall be
responsible for such money damages, in each case, without the prior written
consent of the Indemnified Party (which consent shall not be unreasonably
withheld or delayed).  The parties will use their reasonable best efforts to
minimize Losses from Third Party Claims and will act in good faith in responding
to, defending against, settling or otherwise dealing with such claims.  The
parties will also cooperate in any such defense and give each other reasonable
access to all information relevant thereto.  Whether or not the Indemnifying
Party has assumed the defense, such Indemnifying Party will not be obligated to
indemnify the Indemnified Party hereunder for any settlement entered into or any
judgment that was consented to without the Indemnifying Party’s prior written
consent.

(b)  Procedures for Non-Third Party Claims.  The Indemnified Party will notify
the Indemnifying Party in writing promptly of its discovery of any matter that
does not involve a Third Party Claim being asserted against or sought to be
collected from the Indemnified Party, giving rise to the claim of indemnity
pursuant hereto.  The failure so to notify the Indemnifying Party shall not
relieve the Indemnifying Party from liability on account of this
indemnification, except only to the extent that the Indemnifying Party is
actually prejudiced thereby.  The Indemnifying Party will have 30 days from
receipt of any such notice to give notice of dispute of the claim to the
Indemnified Party.  The Indemnified Party will reasonably cooperate and assist
the Indemnifying Party in determining the validity of any claim for indemnity by
the Indemnified Party and in otherwise resolving such matters.  Such assistance
and cooperation will include providing reasonable access to and copies of
information, records and documents relating to such matters, furnishing
employees to assist in the investigation, defense and resolution of such matters
and providing legal and business assistance with respect to such matters.

SECTION 9.05.  Limitations on Indemnification.  

(a)  Notwithstanding anything in this Article IX to the contrary:  

(i) Seller shall not be responsible, pursuant to clause (i) or (ii) of
Section 9.02, for any Losses suffered by any Purchaser Indemnitee arising out of
a breach of any representation, warranty or covenant of Seller herein unless a
claim therefor is asserted in writing within 24 months after the Closing Date
(except that in the case of a breach of an Inventory Representation, such claim
must be asserted in writing within sixty (60) days after the Closing Date, in
the case of a breach of an Environmental Representation, such claim must be
asserted in writing within five (5) years after the Closing Date, and in the
case of a breach of a Fundamental Representation, and in the case of a breach of
any of the covenants set forth in Section 12.08, Article X and Article XI, such
claim must be asserted in writing prior to the expiration of the applicable
statute of limitations);

(ii) Seller shall not be liable, pursuant to clause (i) or (ii) of Section 9.02,
for Losses suffered by Purchaser Indemnitees unless the aggregate of all Losses
suffered by the Purchaser Indemnitees as a result of the matters described in
such clauses exceeds an amount equal to 1% of the Adjusted Purchase Price, and
then only to the extent of any such excess; provided, however, that this
clause (ii) shall not apply to any claim for indemnification arising out of a
breach of any

 

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Fundamental Representation or any covenant in Section 12.08, Article X or
Article XI;

(iii) the aggregate liability of Seller hereunder, pursuant to clauses (i) and
(ii) of Section 9.02, for Losses suffered by the Purchaser Indemnitees as a
result of matters described in such clauses shall in no event exceed an amount
equal to 10% of the Adjusted Purchase Price; provided, however, that this
clause (iii) shall not apply to any claim for indemnification arising out of a
breach of any Fundamental Representation or any covenant in Section 12.08,
Article X or Article XI;

(iv) neither party hereto shall be liable to the others for indirect, special,
incidental, consequential or punitive damages claimed by such other party
resulting from such first party’s breach of its representations, warranties or
covenants hereunder;

(v) Seller shall have no obligations under clause (i) of Section 9.02 with
respect to any breach of the representations and warranties contained in
Section 3.19 to the extent any Losses suffered by any Purchaser Indemnitee
arising out of such breach are (A) result from conditions contributed to or
exacerbated by any Purchaser Indemnitee, but only to the extent the condition
was contributed to or exacerbated by such Purchaser Indemnitee, and (B) result
from any change in use of any Transferred Real Property, but only to the extent
the condition resulted from such change; and

(vi) Seller shall not, notwithstanding anything in this Agreement to the
contrary, be obligated to indemnify the Purchaser Indemnitees or any other
person with respect to any matter to the extent that such matter was reflected
in the calculation of the adjustment to the Closing Date Payment, if any,
pursuant to Section 2.03(d).

SECTION 9.06.  Calculation of Indemnity Payments.  

The amount of any Loss for which indemnification is provided under this
Article IX shall be net of any amounts recovered by the Indemnified Party under
insurance policies, net of any recovery costs, or underground storage tank
reimbursement programs, with respect to such Loss and shall be (a) increased to
take account of any net Tax cost actually incurred by the Indemnified Party
arising from the receipt of indemnity payments hereunder (grossed up for such
increase) and (b) reduced to take account of any net Tax benefit actually
realized by the Indemnified Party arising from the incurrence or payment of any
such indemnified amount.  

SECTION 9.07.  Payments; Environmental Escrow Amounts.  

(a)  Once a Loss is agreed to by the Indemnifying Party or finally adjudicated
to be payable pursuant to this Article IX, the Indemnifying Party shall satisfy
its obligations within five (5) business days of such final, non-appealable
adjudication by wire transfer of immediately available funds. The parties hereto
agree that should an Indemnifying Party not make full payment of any such
obligations within such five (5) business day period, any amount payable shall
accrue interest from and including the date of agreement of the Indemnifying
Party or final, non-appealable adjudication to but excluding the date such
payment has been made at a rate per annum equal to the Prime

 

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Rate plus 2%. Such interest shall be calculated daily on the basis of a 365/366
day year and the actual number of days elapsed, without compounding.

(b)  Purchaser and Seller agree that any claim owed by Seller to a Purchaser
Indemnified Party for a Loss relating to Section 3.19 or the matters described
in Section 12.08 shall be paid first from the Environmental Escrow Amount, and,
then, to the extent the Environmental Escrow Amount is insufficient, in cash by
the Seller.

(c)  Upon satisfaction of the conditions and covenants contained in Section
12.08, any portion of the Environmental Escrow Amount not subject to a claim for
indemnification shall be remitted to the Seller.  Subject to its right to assert
claims for indemnification under this Article IX and its right to have such
claims paid from the Environmental Escrow under Section 9.07(b), Purchaser
agrees that it will not unreasonably withhold or delay instructions to the
Escrow Agent in compliance with the foregoing sentence.

SECTION 9.08.  Tax Treatment of Indemnification.  

For all Tax purposes, Purchaser and Seller agree to treat any indemnity payment
under this Agreement as an adjustment to the Purchase Price unless a final
determination (which shall include the execution of an IRS Form 870-AD or
successor form) provides otherwise.

ARTICLE X

Tax Matters

SECTION 10.01.  Purchase Price Allocations.

(a)  Seller and Purchaser agree to allocate the Purchase Price and the Assumed
Liabilities to the Transferred Assets in accordance with Schedule 10.01(a)(i).

(b)  The allocation described in Section 10.01(a) must comply with the
requirements of Section 1060 of the Code.  Any subsequent adjustments to the
Purchase Price and Assumed Liabilities shall be reflected in the allocation in a
manner consistent with Section 1060 of the Code.  Seller and Purchaser agree
that they shall (i) cooperate in good faith in preparing Internal Revenue
Service Form 8594, (ii) furnish a copy of such Form 8594 to the other in draft
form within a reasonable period of time prior to its filing due date, (iii)
report the sale and purchase of the Transferred Assets for United States Tax
purposes in accordance with such allocations and (iv) not take any position
inconsistent with such allocations on any of their respective United States Tax
returns, in any refund claim, in any litigation or otherwise.  The parties will
promptly inform one another of any challenge with respect to such allocation by
any Governmental Entity, and agree to consult and keep one another informed with
respect to the status of, and any discussion, proposal or submission with
respect to, such challenge.

(c)  Transfer Taxes.  Each Party shall pay 50% of all Transfer Taxes applicable
to the conveyance and transfer from Seller to Purchaser of the Transferred
Assets and any other transfer or documentary Taxes or any filing or recording
fees applicable to such conveyance and transfer.  Each party shall use
reasonable efforts to avail itself of any available exemptions from any such
Taxes or fees, and to cooperate

 

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with the other parties in providing any information and documentation that may
be necessary to obtain such exemptions.

(d)  Straddle Period.  Any sales, value-added, goods and services, stamp duties,
property, ad valorem and similar Taxes (other than Taxes described in Section
10.01(c)) imposed with respect to a Straddle Period shall be allocated between
the portions of the Straddle Period in the following manner: (i) in the case of
a property Tax for a Straddle Period, the amount of such Tax allocable to a
portion of the Straddle Period shall be the total amount of such Tax for the
period in question multiplied by a fraction, the numerator of which is the total
number of days in such portion of such Straddle Period and the denominator of
which is the total number of days in such Straddle Period, and (ii) in the case
of sales, value-added and similar transaction-based Taxes (other than Taxes
described in Section 10.01(c) and 10.01(d)(i)) for a Straddle Period, such Taxes
shall be allocated to the portion of the Straddle Period in which the relevant
transaction occurred.  

(e)  Tax Refunds and Remittances.  Seller, on the one hand, shall be entitled to
any refunds or credits of any Retained Tax Liability.  Purchaser, on the other
hand, shall be entitled to any refunds or credits of Taxes relating to the
Business or Transferred Assets, other than any such refunds or credits of any
Retained Tax Liability.  The amount of any such refunds or credits received by
Seller, on the one hand, or Purchaser, on the other hand, as the case may be,
that the other party is entitled to pursuant to this Section shall be paid
promptly to such other party following the receipt of any such refund or credit,
provided, however, that such other party shall promptly repay Seller, on the one
hand, or Purchaser, on the other hand, as the case may be, any such refund or
credit, or portion thereof, that is subsequently disallowed.

ARTICLE XI

Non-Competition

SECTION 11.01.  Agreement Not To Compete.

(a)  Seller understands that Purchaser shall be entitled to protect and preserve
the going concern value of the Business to the extent permitted by Applicable
Law and that Purchaser would not have entered into this Agreement absent the
provisions of this Section 11.01 and, therefore, for a period of five (5) years
following the Closing Date, Seller shall not, and shall cause each of its
affiliates not to, directly or indirectly, engage in activities or businesses,
or establish any new businesses, within North America that are substantially in
competition with the Business as presently conducted (“Competitive Activities”),
including (i) selling goods or services of the type sold by the Business, except
that if any goods or services were not sold by the Business during the period of
time that it was owned by Seller and are not sold by the Business at the time of
the Closing (collectively, “Permitted Goods and Services”), Seller may sell any
Permitted Goods and Services notwithstanding anything contained in this
Agreement, (ii) soliciting any customer or prospective customer of the Business
to purchase any goods or services sold by the Business, other than Permitted
Goods and Services, from anyone other than Purchaser and its affiliates, and
(iii) assisting any person in any way to do, or attempt to do, anything
prohibited by clause (i) above; and

 

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(b)  Section 11.01(a) shall be deemed not breached as a result of the ownership
by Seller or any of its affiliates of:  (i) any securities (other than 5% or
more of any class of stock having general voting power in the election of
directors) of a person engaged, directly or indirectly, in Competitive
Activities; or (ii) a person that engages, directly or indirectly, in
Competitive Activities if such Competitive Activities account for less than 10%
of such person’s consolidated annual revenues.

(c)  Nothing contained in Section 11.01(a) shall prohibit or restrict activities
or businesses of Seller or any of its subsidiaries with respect to Excluded
Assets nor with respect to any restructuring or sale of Excluded Assets.

ARTICLE XII

Additional Agreements

SECTION 12.01.  Publicity.  

No public release or announcement concerning the transactions contemplated by
this Agreement and the Ancillary Agreements shall be issued by a party without
the prior consent of the other party (which consent shall not be unreasonably
withheld or delayed), except as such release or announcement may be required by
law or the rules or regulations of any United States securities exchange, in
which case the party required to make the release or announcement shall allow
the other party reasonable time to comment on such release or announcement in
advance of such issuance; provided, however, that each of the parties may make
internal announcements to their respective employees that are consistent with
the parties’ prior public disclosures regarding the transactions contemplated by
this Agreement after reasonable prior notice to and consultation with the other.

SECTION 12.02.  No Use of Certain Retained Names.  

Purchaser shall, and shall cause its subsidiaries to, promptly, and in any event
(a) within 30 days after the Closing, make all necessary filings and take all
other necessary actions to discontinue any references to the Retained Names,
(b) within 90 days after the Closing, to revise print advertising, product
labeling and all other information or other materials, including any Internet or
other electronic communications vehicles, to delete all references to the
Retained Names and (c) within 90 days after the Closing, to change signage and
stationery and otherwise discontinue use of the Retained Names; provided,
however, that for a period of three months following the Closing Date, Purchaser
may continue to distribute product literature that uses any Retained Names and
distribute products with labeling or packaging that uses any Retained Names to
the extent that such product literature and labeling or packaging exists on the
Closing Date.  In no event shall Purchaser or any of its subsidiaries use any
Retained Names after the Closing in any manner or for any purpose different from
the use of such Retained Names by Seller during the 90-day period preceding the
Closing.  With respect to the Transferred Inventory, Purchaser may continue to
sell such Transferred Inventory, notwithstanding that it or its labeling or
packaging bears one or more of the Retained Names, for a reasonable time after
the Closing (not to exceed three months).  None of the foregoing provisions of
this Section 12.02 shall be construed to obligate Purchaser to require any
wholesaler, retailer or other merchant or customers of the Business to conduct
themselves in accordance therewith.

 

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SECTION 12.03.  Support Services.  

Purchaser acknowledges that, as of the Closing, neither Seller nor any of its
affiliates shall have any obligation to provide any support or other services to
Purchaser or the Business other than those services expressly required to be
provided pursuant to the Transitional Services Agreement and the Fiber Supply
Agreement, which agreements shall be entered into by Seller and Purchaser as of
the Closing.

SECTION 12.04.  Post-Closing Information.  

Following the Closing for so long as such information is retained by a party
(which shall be for a period of at least three years), upon reasonable written
notice, each party shall afford or cause to be afforded to the other party and
its agents, representatives and auditors reasonable access to the personnel,
properties, books, systems, Contracts and records (including financial and other
Tax records) relating to the Business for any reasonable business purpose,
including in respect of litigation, insurance matters, preparation of Tax
returns and financial reporting of such party and its affiliates, including by,
as and when reasonably requested by the other party, providing copies of any the
foregoing books, systems, Contracts and records (including financial and other
Tax records) relating to the Business to the other party; provided, that the
party requesting such access agrees to reimburse the other party promptly for
all reasonable and necessary out-of-pocket costs and expenses incurred in
connection with any such request.  Notwithstanding the foregoing, a party will
not be required to disclose any information (i) which such party is prohibited
from disclosing by a confidentiality agreement with a third party if such party
has used reasonable best efforts to obtain the consent of the third party to
such disclosure (it being understood that no party shall be obligated to pay any
consideration to any third party from whom such consent is requested), and
(ii) which would constitute privileged attorney-client communications or
attorney work product, the transfer of which or the provision of access to which
would constitute a waiver of any such privilege.  If any material is withheld by
a party pursuant to the immediately preceding sentence, such party shall inform
the other party as to the general nature of what is being withheld.  Seller may
redact such portions of such books and records that do not relate to the
Transferred Assets, the Assumed Liabilities or the Business.

SECTION 12.05.  Records.  

Purchaser recognizes that certain records may contain information relating to
subsidiaries, divisions or businesses of Seller and its affiliates other than
the Business and that Seller may retain copies thereof.

SECTION 12.06.  Bulk Transfer Laws.  

Purchaser and Seller each hereby waives compliance with the provisions of any
so-called “bulk transfer laws” of any jurisdiction in connection with the
Acquisition.

SECTION 12.07.  Refunds and Remittances.  

After the Closing, if Seller or any of its affiliates receives any refund or
other amount which is a Transferred Asset or is otherwise properly due and owing
to Purchaser in accordance with the terms of this Agreement, Seller promptly
shall remit, or shall cause to be remitted, such amount to Purchaser at the
address set forth in Section 13.04.  After the Closing, if Purchaser or any of
its affiliates receives any refund or other amount which

 

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is an Excluded Asset or is otherwise properly due and owing to Seller or any of
its affiliates in accordance with the terms of this Agreement, Purchaser
promptly shall remit or shall cause to be remitted, such amount to Seller at the
address set forth in Section 13.04.  After the Closing, if Purchaser or any of
its affiliates receives any refund or other amount which is related to claims
(including workers’ compensation), litigation or other matters for which Seller
is responsible hereunder, and which amount is not a Transferred Asset, or is
otherwise properly due and owing to Seller in accordance with the terms of this
Agreement, Purchaser promptly shall remit, or cause to be remitted, such amount
to Seller at the address set forth in Section 13.04.  After the Closing, if
Seller or any of its affiliates receives any refund or other amount which is
related to claims (including workers’ compensation), litigation or other matters
for which Purchaser is responsible hereunder, and which amount is not an
Excluded Asset, or is otherwise properly due and owing to Purchaser in
accordance with the terms of this Agreement, Seller promptly shall remit, or
cause to be remitted, such amount to Purchaser at the address set forth in
Section 13.04.

SECTION 12.08.  Environmental Matters.  

(a)  Seller agrees, at its sole expense, to use its best efforts to cause the
rough ash storage pile existing at the Facility on the Closing Date to be
removed as soon as practicable, and in no event later than after the first
anniversary of  the Closing Date.  Purchaser acknowledges that in furtherance of
Seller’s covenant in this Section 12.08(a), Seller has entered into a Rough Ash
Purchase and Sale Agreement dated November 29, 2018 (“Ash Agreement”) with AA
Land & Timber, Inc. (“AA Land”).  Seller shall assign the Ash Agreement to
Purchaser at Closing and Purchaser shall make all payments due to AA Land under
the Ash Agreement for removal of the volume of ash present as of the Closing
Date, as determined by measurements taken by Purchaser and Seller as of such
date, and Purchaser shall make claims for amounts paid against the Environmental
Escrow Amount (Seller shall not unreasonably withhold, condition or delay
consent to payment of such amounts by the Escrow Agent).  Purchaser shall
promptly notify Seller of any default under the Ash Agreement and Seller shall
have the right to cause such default to be cured or, in the alternative, to
direct Purchaser to terminate the Ash Agreement, in which event Seller shall
remove remaining rough ash in an amount equal to the volume of ash determined by
measurements taken by Purchaser and Seller as of the Closing Date, less the
volume of ash removed by AA Land prior to the default under the Ash Agreement.

(b)  Seller agrees, at its sole expense, to cause a sufficient amount of the ash
deposits, ash plumes and other similar contamination as described in the Phase
II Environmental Assessment dated December, 2018 by SLR International
Consultants to be removed in order to bring such deposits in compliance with the
Arkansas State Plant Board Registration for Soil Amendment Products for the year
2018-2019 (“Soil Amendment”).  Such ash shall be removed as soon as practicable
and in no event later than the first anniversary after the Closing Date.
Purchaser shall afford to Seller and its employees and other representatives
reasonable access, upon reasonable prior notice during agreed upon hours, to the
portions of the Facility containing the aforementioned ash and other contaminant
deposits for the purpose of implementing the Soil Amendment, subject to
Purchaser’s right to revoke access on a temporary, emergency basis.  Purchaser
shall not deposit any materials any ash deposits, ash piles and ash plumes
existing on the Transferred Property on the Closing Date, including, without
limitation, ash, prior to satisfaction by Seller of its obligations under this
Section 12.08(b).

 

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(c)  Seller agrees, prior to and following Closing, at its sole expense, to
perform the actions described in the CAP and to cause the CAP to be fulfilled to
the satisfaction of the Arkansas Department of Environmental Quality to permit
such CAP to closed and to permit the Facility to meet applicable effluent
standards, as soon as practicable and in no event later than one year following
the Closing Date.  Purchaser acknowledges and agrees that in furtherance of the
foregoing, Seller intends to (i) install upgraded level controls on the wet ash
conveyor at the Facility to prevent overflow of water and ash, (ii) repurpose
the existing squeeze water tank to hold collected process waters for re-use as
make-up water for the Facility’s ash quench and refiner cooling systems,
including the installation of a pump system, additional piping and electrical
runs, to create a recycle loop for several small process water streams, and
(iii) wetting the ESP ash in a spray box before it drops into roll-offs in an
effort to decrease required housekeeping efforts by keeping fine dust in the
hoppers.  In the event the foregoing actions fail to close the CAP, Seller
agrees, at its sole expense, to undertake such further actions as Seller,
following consultation with Purchaser, deems reasonably necessary to close the
CAP.  Purchaser agreed to use best management practices to manage wastewater at
the Facility, including the processes that are subject to the CAP.   If the
NPDES Permit is not renewed prior to the Closing Date, Purchaser and Seller
agree to cooperate in the Permit renewal process to facilitate closure of the
CAP, including without limitation, seeking modification of any effluent limits
in the renewed permit.

ARTICLE XIII

Miscellaneous

SECTION 13.01.  Assignment.  

Neither this Agreement nor any of the rights and obligations of the parties
hereunder may be assigned by either party hereto without the prior written
consent of the other party hereto, except as provided in Section 13.01(b) and
except that Purchaser may assign its right to purchase any of the Transferred
Assets to any of its wholly owned subsidiaries without the prior written consent
of the Seller; provided, that no such assignment shall limit or otherwise affect
Purchaser’s obligations hereunder or increase or otherwise affect Seller’s
obligations hereunder.  Subject to the first sentence of this Section 13.01(a),
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns and no other person shall
have any right, obligation or benefit hereunder.  Subject to Section 13.01(b),
any attempted assignment or transfer in violation of this Section 13.01(a) shall
be void.

SECTION 13.02.  No Third-Party Beneficiaries.  

Except as provided in Article IX, this Agreement is for the sole benefit of the
parties hereto and their permitted assigns and nothing herein expressed or
implied shall give or be construed to give to any person, other than the parties
hereto and such assigns, any legal or equitable rights hereunder.

SECTION 13.03.  Expenses.

(a)  Whether or not the transactions contemplated by this Agreement are
consummated, except as otherwise expressly provided herein, each of the parties
hereto shall be responsible for the payment of its own respective costs and
expenses incurred in

 

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connection with the negotiations leading up to and the performance of its
respective obligations pursuant to this Agreement and the Ancillary Agreements
including the fees of any attorneys, accountants, brokers or advisors employed
or retained by or on behalf of such party.  For the avoidance of doubt, Section
10.01(c) shall exclusively govern Transfer Taxes.  

(b)  The filing fees required under the HSR Act shall be borne equally by
Purchaser and Seller.

SECTION 13.04.  Notices.  

All notices, requests, permissions, waivers and other communications hereunder
shall be in writing and shall be deemed to have been duly given (a) five (5)
business days following sending by registered or certified mail, postage
prepaid, (b) when sent, if sent by facsimile, provided that the facsimile
transmission is promptly confirmed by telephone, (c) when delivered, if
delivered personally to the intended recipient, (d) when delivered, if delivered
by email transmission, unless sent after normal business hours, in which case
notice will be deemed delivered at the start of the next business day, and
(e) one business day following sending by overnight delivery via a national
courier service and, in each case, addressed to a party at the following address
for such party:

 

(i)

if to Seller,

Del-Tin Fiber, LLC
601 West First Avenue, Suite 1600
Spokane, WA 99201
Attention:   Director of Strategy, Planning & Analysis
Email: Aaron.Howard@PotlatchDeltic.com

with a copy to:

PotlatchDeltic Corporation
601 West First Avenue, Suite 1600
Spokane, WA 99201
Attention:  VP & General Counsel
Email: Lorrie.Scott@PotlatchDeltic.com

 

(ii)

if to Purchaser,

Roseburg Forest Products Co.  
3660 Gateway Street
Springfield, OR 97477  
Attention: VP & General Counsel
Email: StuartG@rfpco.com

or to such other address(es) as shall be furnished in writing by any such party
to the other party hereto in accordance with the provisions of this
Section 13.04

SECTION 13.05.  Headings; Certain Definitions.  

(a)  The descriptive headings of the several Articles and Sections of this
Agreement and the Schedules to this Agreement and the Table of Contents to this

 

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Agreement are inserted for convenience only, do not constitute a part of this
Agreement and shall not affect in any way the meaning or interpretation of this
Agreement.  All references herein to “Articles”, “Sections”, “Exhibits” or
“Schedules” shall be deemed to be references to Articles or Sections hereof or
Exhibits or Schedules hereto unless otherwise indicated.

(b)  For all purposes hereof:

“$” means United States dollars.

“affiliate” of any party means any person or entity controlling, controlled by
or under common control with such party or any entity a majority of the voting
shares of which is owned directly or indirectly by such party.

“Ancillary Agreements” means the Transitional Services Agreement, the Fiber
Supply Agreement, the Confidentiality Agreement, the Environmental Escrow
Agreement and deeds, bills of sale, assignments and other instruments of
transfer related to the Transferred Assets delivered by Seller and Purchaser
pursuant to Section 2.02(a) and Section 2.02(b).

“Antitrust Law” means the HSR Act or any other Applicable Law in the United
States that pertains to antitrust, merger control or competition matters.

“Antitrust Proceeding” means any proceeding seeking a preliminary injunction or
other comparable legal impediment to the Acquisition or to Purchaser’s freedom
to operate the Business after Closing under any Antitrust Law.

“Applicable Law” means any statute, law, ordinance, rule or regulation
applicable to Seller or any of the Transferred Assets.

“Audited Financial Statements” means the audited financial statements of Seller
for the fiscal years ended December 31 of 2012, 2013, 2014, 2015, 2016 and 2017.

“business day” shall refer to a day, other than a Saturday or a Sunday, on which
commercial banks are not required or authorized to close in New York City.

“Business Material Adverse Effect” means any state of facts, change, effect,
condition, development, event or occurrence (any such item, an “Effect”) that,
individually or in the aggregate with other Effects, has been or would
reasonably be likely to be material and adverse to (A) the business, assets,
properties, condition (financial or otherwise), or results of operations of the
Business, other than an Effect relating to (i) the economy generally, (ii) the
industries in which the Business operates generally (including changes in prices
for energy and raw materials), (iii) the financial, securities and currency
markets generally, (iv) acts of god and natural disasters (including
hurricanes), (v) changes in Applicable Law and GAAP, (vi) any action required or
permitted by this Agreement and (vii) the entering into or the public
announcement or disclosure of this Agreement or the consummation or proposed
consummation of the Acquisition or the pendancy thereof (in each of clauses (i),
(ii) and (iii) to the extent such Effect does not disproportionally affect the
Business), or to (B) the ability of Seller to perform its obligations under this
Agreement and Ancillary Agreements or consummate the Acquisition and the other
transactions contemplated by this Agreement and the Ancillary Agreements.

 

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“Code” means the Internal Revenue Code of 1986, as amended.

“Environmental Escrow Agreement” means The Escrow Agreement in substantially the
form attached hereto as Exhibit D.

“Environmental Escrow Amount” means $1,000,000.

“Environmental Laws” means all Applicable Laws, Judgments and Permits (a)
relating to pollution, natural resources or protection or restoration of the
environment (including ambient air, surface water, groundwater, land surface or
subsurface strata), endangered or threatened species, or human health, or (b)
concerning the presence of, exposure to, or the management, manufacture, use,
containment, storage, recycling, reclamation, reuse, treatment, generation,
discharge, transportation, processing, production, disposal or remediation of
any Hazardous Materials.

“Environmental Liabilities” means all obligations, liabilities, costs or
commitments relating to or in respect of environmental, health or safety
matters, including (i) the compliance or noncompliance with Environmental Laws;
(ii) the alleged or actual presence or Release, or threatened Release of, or
exposure to, Hazardous Materials; (iii) the offsite transportation, storage,
disposal or arrangement for disposal of Hazardous Materials; and (iv) any other
obligations, liabilities, costs or commitments relating to Environmental Laws,
including, in each case, all investigatory, cleanup and other remediation costs,
administrative oversight costs, natural resources damages, property damages,
personal injury damages, indemnity, contribution and similar obligations and all
costs and expenses, interest, fines, penalties and other monetary sanctions in
connection with the foregoing.

“Escrow Agent” means First American Title Insurance Company.

“Fiber Supply Agreement” means the fiber supply agreement substantially in the
form attached hereto as Exhibit C.

“Hazardous Materials” means, (i) any petroleum or petroleum products,
radioactive materials or wastes, asbestos in any form, urea formaldehyde foam
insulation and polychlorinated biphenyls; and (ii) any other chemical, material,
substance or waste that is prohibited, limited or regulated under any
Environmental Law.

“includes” or “including” means including, without limitation.

“Judgment” means any judgment, order or decree.

“knowledge of Seller” means the actual or constructive knowledge of Trey Golden,
Zack Kozel, Aaron Howard, Randal J. Reutzel, and Tom Temple after due inquiry.

“Incentive Lease Agreement” means that Lease Agreement by and between Union
County, Arkansas and the Seller related to the Union County, Arkansas Taxable
Industrial Development Bonds (Del-Tin Fiber L.L.C. Project) Series 1998.

“Material Adverse Effect” means any Effect that has been or would reasonably be
likely to be material and adverse to the business, assets, properties, condition
(financial or otherwise), or results of operations of the Business, taken as a
whole, other than an Effect relating to (i) the economy generally, (ii) the
financial, securities and

 

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currency markets generally, (iii) acts of god and natural disasters (including
hurricanes), (iv) industries in which the Business operates generally (including
changes in prices for energy or raw materials) (v) changes in Applicable Law and
GAAP, (vi) any action required or permitted by this Agreement and (vii) the
entering into or the public announcement or disclosure of this Agreement or the
consummation or proposed consummation of the Acquisition or the pendancy thereof
(in each of clauses (i), (ii) and (iii) to the extent such Effect does not
disproportionally affect the Business).

“person” means any individual, firm, corporation, partnership, limited liability
company, trust, joint venture, Governmental Entity or other entity.

“Post-Closing Tax Period” means all taxable periods beginning after the Closing
Date and the portion beginning on the day after the Closing Date of any tax
period that includes but does not end on the Closing Date.

“Pre-Closing Tax Period” means all taxable periods ending on or prior to the
Closing Date and the portion ending on the Closing Date of any taxable period
that includes but does not end on the Closing Date.

“Purchaser Material Adverse Effect” means any Effect that has been or would
reasonably be likely to be material and adverse to (A) the business, assets,
properties, condition (financial or otherwise), or results of operations of
Purchaser and its subsidiaries, taken as a whole, other than an Effect relating
to the economy generally or the medium-density fiberboard industry generally
that does not disproportionately affect Purchaser and its subsidiaries, or
(B) the ability of Purchaser to perform its obligations under this Agreement and
Ancillary Agreements or consummate the Acquisition and the other transactions
contemplated by this Agreement and the Ancillary Agreements.

“Release” means any actual release, spill, emission, leaking, dumping,
injection, pouring, deposit, disposal, discharge, dispersal, leaching or
migration into or through the environment (including ambient air, surface water,
groundwater, land surface or subsurface strata) or within any building,
structure, facility or fixture.

“Straddle Period” shall mean any Tax period that includes (but does not end on)
the Closing Date.

“subsidiary” of any person means any corporation or other organization whether
incorporated or unincorporated of which at least a majority of the securities or
interests having by the terms thereof ordinary voting power to elect at least a
majority of the board of directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
owned or controlled (i) by such person, (ii) by any one or more of its
subsidiaries, or (iii) by such person and one or more of its subsidiaries;
provided, however, that no person that is not directly or indirectly wholly
owned by any other person shall be a subsidiary of such other person unless such
other person controls, or has the right, power or ability to control, that
person.

“Tax” or “Taxes” means all forms of taxation imposed by any Federal, state,
provincial, local, foreign or other Taxing Authority (as defined below),
including income, franchise, property, sales, use, excise, employment,
unemployment, payroll, social security, estimated, value added, ad valorem,
transfer, recapture, withholding, health and other taxes of any kind, including
any interest, penalties and additions thereto.

 

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“Taxing Authority” means any Federal, state, provincial, local or foreign
government, any subdivision, agency, commission or authority thereof or any
quasi-governmental body exercising Tax regulatory authority.

“Tax Return” means any report, return, document, declaration or other
information or filing required to be supplied to any Taxing Authority with
respect to Taxes, including any amendment made with respect thereto.

“Transfer Taxes” means all sales use, transfer, recording, filing, value added,
ad valorem, privilege, documentary, gross receipts, registration, conveyance,
excise, license, stamp or similar Taxes and notarial or other fees arising out
of, in connection with or attributable to the transactions effectuated pursuant
to this Agreement.

“Transitional Services Agreement” means the transitional services agreement
substantially in the form attached hereto as Exhibit B.

SECTION 13.06.  Counterparts.  

This Agreement may be executed in one or more counterparts, all of which shall
be considered one and the same agreement, and shall become effective when one or
more counterparts have been signed by each of the parties hereto and delivered,
in person, by facsimile, or by electronic image scan, receipt acknowledged in
each case, to the other party hereto.

SECTION 13.07.  Integrated Contract; Exhibits and Schedules.  

This Agreement, including the Schedules (and the Introduction thereto) and
Exhibits hereto, any written amendments to the foregoing satisfying the
requirements of Section 13.13 hereof, the Confidentiality Agreement and the
Ancillary Agreements, including the schedules and exhibits thereto, constitute
the entire agreement among the parties with respect to the subject matter hereof
and thereof and supersede any previous agreements and understandings between the
parties with respect to such matters.  All Exhibits and Schedules annexed hereto
or referred to herein are hereby incorporated in and made a part of this
Agreement as if set forth in full herein.  Any capitalized terms used in any
Schedule or Exhibit but not otherwise defined therein shall be defined as set
forth in this Agreement.  There are no restrictions, promises, representations,
warranties, agreements or undertakings of any party hereto with respect to the
transactions contemplated by this Agreement, the Confidentiality Agreement or
the Ancillary Agreements other than those set forth herein or therein or in any
other document required to be executed and delivered hereunder or
thereunder.  In the event of any conflict between the provisions of this
Agreement (including the Schedules (and the Introduction thereto) and Exhibits
hereto), on the one hand, and the provisions of the Confidentiality Agreement or
the Ancillary Agreements (including the schedules and exhibits thereto), on the
other hand, the provisions of this Agreement shall control.  Any matter
disclosed in any of the Schedules shall be deemed disclosed for all purposes and
all Schedules to the extent that the relevance of any such disclosure to any
other Schedule is reasonably apparent from the text of such disclosure.

SECTION 13.08.  Severability; Enforcement.

The invalidity of any portion hereof shall not affect the validity, force or
effect of the remaining portions hereof.  If it is ever held that any
restriction hereunder is too broad

 

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to permit enforcement of such restriction to its fullest extent, each party
agrees that a court of competent jurisdiction may enforce such restriction to
the maximum extent permitted by law, and each party hereby consents and agrees
that such scope may be judicially modified accordingly in any proceeding brought
to enforce such restriction.

SECTION 13.09.  Governing Law.

This Agreement and any disputes arising under or related hereto (whether for
breach of contract, tortious conduct or otherwise) shall be governed and
construed in accordance with the laws of the State of Arkansas, without
reference to its conflicts of law principles.

SECTION 13.10.  Jurisdiction.

Each party irrevocably agrees that any legal action, suit or proceeding against
them arising out of or in connection with this Agreement or the transactions
contemplated by this Agreement or disputes relating hereto (whether for breach
of contract, tortious conduct or otherwise) shall be brought exclusively in the
United States District Court for the Western District of Arkansas, or, if such
court does not have subject matter jurisdiction, the state courts of Arkansas
located in Union County and hereby irrevocably accepts and submits to the
exclusive jurisdiction and venue of the aforesaid courts in personam, with
respect to any such action, suit or proceeding.

SECTION 13.11.  Service of Process.

Each of the parties agrees that service of any process, summons, notice or
document by United States registered mail to such party’s respective address set
forth above shall be effective service of process for any action, suit or
proceeding in Arkansas with respect to any matters for which it has submitted to
jurisdiction pursuant to Section 13.10.

SECTION 13.12.  Waiver of Jury Trial.

Each party hereby waives, to the fullest extent permitted by Applicable Law, any
right it may have to a trial by jury in respect to any litigation directly or
indirectly arising out of, under or in connection with this Agreement or the
transactions contemplated by this Agreement or disputes relating hereto.  Each
party (a) certifies that no representative, agent or attorney of any other party
has represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce the foregoing waiver and (b) acknowledges
that it and the other party hereto have been induced to enter into this
Agreement by, among other things, the mutual waivers and certifications in this
Section 13.12.

SECTION 13.13.  Amendments.

This Agreement may be amended, modified, superseded or canceled and any of the
terms, covenants, representations, warranties or conditions hereof may be waived
only by an instrument in writing signed by each of the parties hereto or, in the
case of a waiver, by or on behalf of the party waiving compliance.

SECTION 13.14.  Specific Performance.

 

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The parties agree that irreparable damage would occur if any provision of this
Agreement were not performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy to which they are entitled at law or in equity.

SECTION 13.15.  Timely Performance.  

Time is of the essence as to the performance of the obligations required of the
respective parties to this Agreement

[signature page follows]

 

 

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IN WITNESS WHEREOF, Seller and Purchaser have duly executed this Agreement as of
the date first written above.

del-tin fiber, llc,

by

 

/s/ Eric J. Cremers

 

Name:Eric J. Cremers

 

Title:President and COO

 

 

ROSEBURG FOREST PRODUCTS CO.,

by

 

/s/ Grady Mulbery

 

Name:Grady Mulbery

 

Title:President and CEO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Schedule of Omitted Exhibits and Schedules

 

The following exhibits and schedules to this Exhibit 10.1 have been omitted
pursuant to Item 601(b)(2) of Regulation S-K. PotlatchDeltic will furnish a copy
of any such omitted exhibits and schedules to the Securities and Exchange
Commission upon request but may request confidential treatment for any exhibit
or schedule so furnished.

 

Exhibit A    Working Capital Calculations

 

Exhibit B    Transitional Services Agreement

 

Exhibit C    Fiber Supply Agreement

 

Exhibit D   Escrow Agreement

 

Seller Disclosure Schedules