Document:

purchaseagreementa01

                                                     EXECUTION                                                                 VERSION     STOCK AND ASSET PURCHASE AGREEMENT                      BY AND AMONG                        SPI LLC           FOUNDATION BUILDING MATERIALS, LLC,                   FBM LOGISTICS, LLC                           AND                  FBM CANADA SPI, INC.                     September 26, 2018  

 

                                 TABLE OF CONTENTS                                                                            Page  ARTICLE 1 PURCHASE AND SALE........................................................................................ 1        Section 1.1 Purchased Stock; Purchased Assets; Assumed Liabilities .......................... 1        Section 1.2 Excluded Assets; Excluded Liabilities ........................................................ 2  ARTICLE 2 CONSIDERATION ................................................................................................ 2        Section 2.1 Purchase Price; Payment ............................................................................. 2        Section 2.2 Pre-Closing Adjustment .............................................................................. 3        Section 2.3 Post-Closing Adjustments ........................................................................... 3        Section 2.4 Withholding ................................................................................................ 5        Section 2.5 Allocation of Purchase Price ....................................................................... 5  ARTICLE 3 THE CLOSING ....................................................................................................... 6        Section 3.1 Closing Date................................................................................................ 6        Section 3.2 Deliveries by Seller to Purchaser ................................................................ 6        Section 3.3 Deliveries by Purchaser to Seller ................................................................ 6        Section 3.4 Payoff of Indebtedness and Transaction Expenses; Payment of                    Indemnification Escrow Amount ................................................................ 7  ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLER ............................... 7        Section 4.1 Organization and Good Standing ................................................................ 7        Section 4.2 Capital Structure ......................................................................................... 8        Section 4.3 Authorization of Agreement ....................................................................... 8        Section 4.4 No Violations; No Consents ........................................................................ 8        Section 4.5 Brokers ........................................................................................................ 9        Section 4.6 Financial Statements ................................................................................... 9        Section 4.7 Absence of Changes .................................................................................. 10        Section 4.8 Taxes ......................................................................................................... 10        Section 4.9 Sufficiency of Assets; Ownership and Condition of Assets ..................... 12        Section 4.10 Real Property ............................................................................................ 13        Section 4.11 Intellectual Property .................................................................................. 13        Section 4.12 Material Contracts ..................................................................................... 15        Section 4.13 Litigation ................................................................................................... 17        Section 4.14 Compliance with Laws; Permits ............................................................... 17        Section 4.15 Employee Benefits .................................................................................... 17        Section 4.16 Labor ......................................................................................................... 19        Section 4.17 Environmental Matters.............................................................................. 21        Section 4.18 Customers and Suppliers........................................................................... 22        Section 4.19 Insurance ................................................................................................... 22        Section 4.20 Affiliated Persons Transactions ................................................................ 22        Section 4.21 International Trade and Anti-Corruption Matters ..................................... 22        Section 4.22 Products Liability. ..................................................................................... 23        Section 4.23 Disclaimers of Seller; No Other Representations or Warranties ............... 24        Section 4.24 Investment Canada Act. ............................................................................ 24  ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PURCHASER .................... 24        Section 5.1 Organization and Good Standing .............................................................. 24        Section 5.2 Authorization of Agreement ..................................................................... 24        Section 5.3 No Violations; Consents and Approvals ................................................... 24      

 

      Section 5.4 Litigation ................................................................................................... 25        Section 5.5 Financing................................................................................................... 25        Section 5.6 Solvency .................................................................................................... 26        Section 5.7 Brokers ...................................................................................................... 27        Section 5.8 Parent Limited Guaranty ........................................................................... 27        Section 5.9 Investment Canada Act.. ........................................................................... 27        Section 5.10 No Inducement or Reliance; Independent Assessment ............................. 27  ARTICLE 6 COVENANTS ....................................................................................................... 28        Section 6.1 Access; Opportunity to Ask Questions ..................................................... 28        Section 6.2 Conduct of Business ................................................................................. 28        Section 6.3 Further Actions.......................................................................................... 31        Section 6.4 Consents and Conditions........................................................................... 32        Section 6.5 Litigation Support ..................................................................................... 33        Section 6.6 Bulk Sales Laws ........................................................................................ 33        Section 6.7 Ancillary Agreements ............................................................................... 33        Section 6.8 Financing; Seller and Company Cooperation. .......................................... 34        Section 6.9 Shared Contracts ....................................................................................... 36        Section 6.10 Intercompany Accounts ............................................................................ 37        Section 6.11 Exclusivity ................................................................................................ 37        Section 6.12 Financial Information Prior to Closing.. ................................................... 37        Section 6.13 Supplemental Schedules ........................................................................... 37        Section 6.14 Sublease. ................................................................................................... 38  ARTICLE 7 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER ......... 38        Section 7.1 Accuracy of Representations and Warranties ........................................... 38        Section 7.2 Performance of Covenants ........................................................................ 39        Section 7.3 No Material Adverse Effect ...................................................................... 39        Section 7.4 Officer’s Certificate .................................................................................. 39        Section 7.5 No Legal Restraint .................................................................................... 39        Section 7.6 Antitrust Clearance ................................................................................... 39        Section 7.7 Third Party Consents................................................................................. 39        Section 7.8 Tax Withholding Certificates .................................................................... 39        Section 7.9 Other Deliveries ........................................................................................ 39  ARTICLE 8 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER .................. 39        Section 8.1 Accuracy of Representations and Warranties ........................................... 39        Section 8.2 Performance of Covenants ........................................................................ 40        Section 8.3 Officer’s Certificate .................................................................................. 40        Section 8.4 No Legal Restraint .................................................................................... 40        Section 8.5 Antitrust Clearance ................................................................................... 40        Section 8.6 Other Deliveries ........................................................................................ 40  ARTICLE 9 ADDITIONAL POST-CLOSING COVENANTS .............................................. 40        Section 9.1 Certain Employment Matters .................................................................... 40        Section 9.2 Further Assurances; Novation; Certain Payments .................................... 45        Section 9.3 Use of Seller Names and Business Names ............................................... 46        Section 9.4 Seller’s Access to Documents ................................................................... 47        Section 9.5 Certain Agreements Regarding the R&W Insurance Policy ..................... 48        Section 9.6 Certain Consents.. ..................................................................................... 48                                         iv    

 

      Section 9.7 Release of Claims ..................................................................................... 48        Section 9.8 Wrong Pockets .......................................................................................... 49        Section 9.9 Restrictive Covenants ............................................................................... 50        Section 9.10 Occurrence-Based Insurance Coverage .................................................... 51  ARTICLE 10 SURVIVAL, INDEMNIFICATION AND RELATED MATTERS ................ 52        Section 10.1 Survival ..................................................................................................... 52        Section 10.2 Indemnification by Seller .......................................................................... 52        Section 10.3 Indemnification by Purchaser ................................................................... 53        Section 10.4 Certain Limitations ................................................................................... 53        Section 10.5 Determination of Losses ........................................................................... 55        Section 10.6 Procedures for Indemnification ................................................................. 56        Section 10.7 Exclusive Remedy .................................................................................... 57        Section 10.8 Release of Indemnification Escrow Funds ............................................... 58  ARTICLE 11 TERMINATION ................................................................................................. 58        Section 11.1 Termination ............................................................................................... 58        Section 11.2 Procedure and Effect of Termination ........................................................ 59        Section 11.3 Termination Fee; Limitations on Recovery .............................................. 59  ARTICLE 12 TAX MATTERS .................................................................................................. 61        Section 12.1 Preparation and Filing of Tax Returns ...................................................... 61        Section 12.2 Refunds and Credits .................................................................................. 62        Section 12.3 Tax Contests .............................................................................................. 63        Section 12.4 Cooperation ............................................................................................... 64        Section 12.5 Additional Tax Covenants ......................................................................... 64        Section 12.6 Transfer Taxes ........................................................................................... 65  ARTICLE 13 MISCELLANEOUS ........................................................................................... 65        Section 13.1 Certain Definitions .................................................................................... 65        Section 13.2 Rules of Construction ............................................................................... 81        Section 13.3 Confidentiality; Publicity .......................................................................... 81        Section 13.4 Entire Agreement ...................................................................................... 82        Section 13.5 Governing Law ......................................................................................... 82        Section 13.6 Jurisdiction; Waiver of Jury Trial .............................................................. 82        Section 13.7 Expenses ................................................................................................... 83        Section 13.8 Table of Contents and Headings ............................................................... 84        Section 13.9 Notices ...................................................................................................... 84        Section 13.10 Severability ............................................................................................... 85        Section 13.11 Binding Effect; No Third-Party Beneficiaries; No Assignment ............... 85        Section 13.12 Amendments ............................................................................................. 85        Section 13.13 Waiver ....................................................................................................... 85        Section 13.14 Specific Performance ................................................................................ 85        Section 13.15 Counterparts .............................................................................................. 86        Section 13.16 Legal Representation ................................................................................ 86                                                   iv    

 

EXHIBITS    Exhibit A   CapEx Budget  Exhibit B   Form of FIRPTA Certificates  Exhibit C   Form of Assignment and Assumption Agreement and Bill of Sale  Exhibit D   Sample Calculation of Closing Working Capital  Exhibit E   Form of Escrow Agreement  Exhibit F   Form of R&W Policy  Exhibit G   Form of Transition Services Agreement                                         iv    

 

                      STOCK AND ASSET PURCHASE AGREEMENT         This STOCK AND ASSET PURCHASE AGREEMENT, dated as of September 26, 2018, is made  by  and  among SPI LLC,  a  limited  liability  company established  under  the  Laws  of Delaware   (“Purchaser”), FBM CANADA SPI, INC., an Alberta corporation (the “Company”), and Foundation  Building Materials, LLC, a California limited liability company (“Seller”), and FBM Logistics,  LLC, an Indiana limited liability company (“Logistics”).  Purchaser, the Company and Seller are  each  referred  to  herein  individually  as  a “Party,” and  collectively,  as  the “Parties.”  Unless  otherwise indicated, capitalized terms used herein have the respective meanings set forth in Section  13.1.         WHEREAS, the Company is a direct wholly-owned Subsidiary of Seller;         WHEREAS, the Company and Seller are, directly and indirectly, engaged in distribution,  fabrication, marketing and sale of commercial and industrial insulation and other related insulation  products, tools and accessories, including insulation solutions for pipes and mechanical systems,  to commercial, industrial and residential end markets and the provision of maintenance and repair  services with respect thereto (the “Business”);         WHEREAS,  Purchaser  wishes  to  acquire  the  Company,  the  Purchased Assets  and  the  Business from Seller and Logistics; and         WHEREAS, to effect the acquisition of the Business by Purchaser, Seller and Logistics  wish  to  sell,  assign  and  transfer  to  Purchaser,  and  Purchaser  desires  to  purchase,  acquire  and  assume from Seller and Logistics, all of the rights, title, interests and obligations of Seller and  Logistics in, to and under the Purchased Stock and Purchased Assets, as applicable, as set forth  herein.           NOW, THEREFORE, in consideration of the foregoing and the respective representations,  warranties,  covenants  and  agreements  set  forth  herein,  and  for  other  good  and  valuable  consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby  agree as follows:                                    ARTICLE 1                              PURCHASE AND SALE         Section 1.1 Purchased Stock; Purchased Assets; Assumed Liabilities.  On the terms and  subject to the conditions set forth herein, at the Closing:                (a)   Seller  shall  sell,  assign,  transfer,  convey  and  deliver  to  Purchaser,  and  Purchaser shall purchase, acquire and accept from Seller, all of the right, title and interest of Seller  in, to and under all of the Capital Stock of the Company, all of which is set forth on Schedule  1.1(a) (the “Purchased Stock”) free and clear of all Liens (other than transfer restrictions arising  under applicable securities Law);               (b)   Seller  and  Logistics  shall  (and  each  shall  cause  its  Affiliates  to),  as  applicable, sell, assign, transfer, convey and deliver to Purchaser, and Purchaser shall purchase,  acquire and accept from Seller and Logistics, as applicable, all of the right, title and interest of      

 

Seller, Logistics or their respective Affiliates in, to and under all of the tangible assets, properties  and business (excepting only the Excluded Assets) of every kind and description, whether real,  personal or mixed, owned or held by of the Seller, Logistics or their respective Affiliates used in  the  Business and  located  at  the  locations  set  forth  on Schedule  1.1(b)(i) and  all  other  assets,  properties and business, whether real, personal, or mixed, tangible or intangible, primarily used in  the Business, wherever located and set forth on Schedule 1.1(b)(ii), free and clear of all Liens  (other  than  Permitted  Liens),  and  Logistics  shall  sell,  assign,  transfer,  convey  and  deliver  to  Purchaser, and Purchaser shall purchase, acquire and accept from Logistics, all of the right, title  and interest of Logistics or its Affiliates in, to and under all of the assets set forth on Schedule  1.1(b)(iii), free and clear of all Liens (other than Permitted Liens) (collectively, the “Purchased  Assets”); and               (c)   On the terms and subject to the conditions set forth herein, including the  exclusions  set  forth  in Section  1.2,  at  the  Closing,  Purchaser  shall  assume  and  be  liable  for,  effective as of the Closing, and thereafter pay, perform and discharge, all of the Liabilities and  obligations  of Seller,  Logistics  and/or  the  Company  arising  from  or  related  to  the  Business,  including  the  liabilities  set  forth  on Schedule 1.1(c), but  expressly  excluding  the  Excluded  Liabilities (collectively, the “Assumed Liabilities”).         Section 1.2 Excluded Assets;  Excluded Liabilities.   Notwithstanding  anything  to  the  contrary contained in Section 1.1, the Parties expressly understand and agree that:               (a)   none  of  the  Seller,  Logistics  nor  any  of  their  respective  Affiliates  are  hereunder selling, assigning, transferring, conveying or delivering to Purchaser or its Affiliates any  right, title or interest in, to or under any other assets, properties or rights, whether tangible or  intangible, real, personal or mixed, of the Seller and/or Logistics’ set forth on Schedule 1.2(a),  including without limitation, all of Seller’s and/or Logistics’ assets that are not used in the Business  and  all  Software  that  is  used  in  connection  with  Seller’s  retained  business  (collectively,  the  “Excluded Assets”); and               (b)   neither Purchaser nor any of its Affiliates shall assume or be liable for, or  be responsible to pay, perform or discharge, any liability or obligation of the Company or Seller  or Logistics that is not an Assumed Liability, including, without limitation, the Liabilities set forth  in Schedule 1.2(b) and Liabilities under Section 9.1(e)(i) (Seller Retained Liabilities) (collectively,  the “Excluded Liabilities”).                                    ARTICLE 2                                CONSIDERATION         Section 2.1 Purchase Price; Payment.  The consideration payable to Seller and Logistics  in full consideration of the purchase and sale of the Purchased Stock and Purchased Assets shall  be an aggregate amount of One Hundred Twenty-Two Million Five Hundred Thousand Dollars  ($122,500,000), subject to the adjustments set forth in Section 2.2 and 2.3 (as so adjusted, the  “Purchase Price”), of which $120,000,000 shall be paid to Seller and $2,500,000 shall be paid to  Logistics.  The Purchase Price shall be paid in cash in accordance with Section 3.3(a).  The Parties  acknowledge and agree that the consideration stated herein, including the Purchase Price and all                                          2    

 

payments to which Section 12.5(a) applies, shall be exclusive of all Transfer Taxes (which shall  be borne by the Parties hereto as set forth in Section 12.6).         Section 2.2 Pre-Closing Adjustment.  At  least  three  (3)  Business  Days  prior  to  the  anticipated Closing Date, Seller shall deliver, or caused to be delivered, to Purchaser a statement,  signed by an executive officer of Seller (the “Estimated Closing Statement”), setting forth (a) the  Estimated Net Working Capital, (b) the Estimated Cash, (c) the Estimated Debt, (d) the Estimated  Transaction Expenses, (e) Seller’s resulting calculation of Closing Consideration, (f) reasonable  supporting calculations for the amounts set forth in clauses (a) through (e), (g) invoices for all  Transaction Expenses included in the calculation of Estimated Transaction Expenses, and (h) the  wire instructions for each Person entitled to receive any payment pursuant to Section 3.3(a) and  Section 3.4.  The Estimated Closing Statement will be prepared in accordance with the terms of  this Agreement  and  the  applicable  definitions  herein.  As  contemplated  by Section  3.3(a),  for  purposes of calculating the Closing Consideration payable by Purchaser in cash at the Closing, the  Purchase Price shall be increased or decreased, as applicable, by an amount equal to (i) the amount  by which, if any, the Estimated Net Working Capital is less than the Net Working Capital Lower  Limit plus (ii) the amount by which, if any the Net Working Capital Upper Limit is less than the  Estimated Net Working Capital plus (iii) the Estimated Cash minus (iv) the Estimated Debt  minus  (v) the Estimated Transaction Expenses plus (vi) the Security Deposits Amount (such amount,  expressed as a positive or negative number, the “Estimated Adjustment Amount”).  Seller shall  consider in good faith any reasonable comments Purchaser has to the Estimated Closing Statement  and,  to  the  extent  Seller  reasonably  deems  it  to  be  appropriate,  revise  the  Estimated  Closing  Statement  to  reflect  such  comments.  Any  such  revised  Estimated  Closing  Statement  shall  constitute the Estimated Closing Statement for all purposes of this Agreement.         Section 2.3 Post-Closing Adjustments.               (a)   No  later  than ninety  (90)  days  after  the  Closing  Date,  Purchaser  shall  prepare and deliver to Seller a statement (the “Closing Statement”) setting forth Purchaser’s good  faith  calculation  of  (i)  the  Closing  Cash,  (ii)  the  Closing  Debt,  (iii)  the  Closing  Net Working  Capital,  (iv)  the  Closing  Transaction  Expenses,  (v)  the  Closing  Consideration,  and  (vi)  the  Proposed Adjustment Amount. The “Proposed Adjustment Amount” shall be equal to (which may  be a positive or negative number) Purchaser’s determination of Closing Consideration as set forth  on the Closing Statement delivered pursuant to this Section 2.3 minus the Seller’s determination  of Closing Consideration as set forth in the Estimated Closing Statement delivered pursuant to  Section 2.2. The Closing Statement and all calculations therein shall be prepared in accordance  with the terms hereof and the applicable definitions herein, and the Closing Net Working Capital  shall be prepared in accordance with the terms hereof, the applicable definitions herein, and in  accordance with Exhibit D.               (b)   Seller  shall  have  thirty  (30)  days  following  its  receipt  of  the  Closing  Statement (the “Review Period”) to review the Closing Statement and the calculation, amounts  and other items therein.  During the Review Period, Purchaser shall, and shall cause its Subsidiaries  and Representatives to, reasonably cooperate with and provide assistance to Seller and Seller’s  Representatives in their review of the Closing Statement and make available to Seller and Seller’s  Representatives all personnel, books, records, documents, work papers and other information of  Purchaser, the Company, the Purchased Assets and the Business reasonably available to Purchaser,                                         3    

 

reasonably necessary for Seller’s review of the Closing Statement and reasonably requested by  Seller or its Representatives.  The Closing Statement shall be final, conclusive and binding on the  Parties, unless Seller delivers to Purchaser, on or before the last day of the Review Period, a written  notice stating (i) the amounts or items on the Closing Statement which Seller disputes, and (ii) the  proposed corrections for such amounts or items (the “Notice of Dispute”).  Purchaser and Seller  shall cooperate in good faith to resolve any disputed amounts or items set forth in any Notice of  Dispute within thirty (30) days (or such longer period as agreed to by the Parties) following the  delivery of any Notice of Dispute.               (c)   If Purchaser and Seller do not agree upon a final resolution with respect to  all disputed amounts or items set forth in the Notice of Dispute within such thirty (30) day period  (or such longer period as agreed to by the Parties), then either Purchaser or Seller may submit  those amounts or items that remain in dispute (the “Disputed Items”) to the Accounting Firm for  determination in accordance with this Section 2.3(c).  Parties shall instruct the Accounting Firm,  acting as an expert and not as an arbitrator, to render a written determination with respect to the  Disputed Items within thirty (30) days. The determination of the Accounting Firm shall (i) address  only  the  Disputed  Items;  (ii)  be  limited  to  whether  the  Disputed  Items  were  calculated  in  accordance with the applicable definitions and other provisions in this Agreement, as applicable;  and  (iii)  be  based  upon  a  single  presentation  (limited  to  the  Disputed  Items)  submitted  to  the  Accounting Firm by each of Purchaser and Seller within ten (10) days after its engagement, and  one written response submitted to the Accounting Firm by each of Purchaser and Seller within five  (5) Business Days of their receipt of the presentation of other Parties (and not by independent  review). In making its determination, the Accounting Firm shall not assign a value to any Disputed  Item greater than the greatest value for such item assigned to it by Purchasers, on the one hand, or  Seller, on the other hand, or less than the lowest value for such Disputed Item assigned to it by  Purchaser,  on  the  one  hand,  or  Seller,  on the  other  hand.  Absent  fraud  or  manifest  error,  the  determination of the Accounting Firm shall be final, conclusive and binding upon the Parties.  The  Accounting Firm’s determination of the Disputed Items shall be set forth in a written report which  shall specify in reasonable detail how such determinations were made.  The Accounting Firm’s  engagement fees initially shall be borne fifty percent (50%) by Purchaser and fifty percent (50%)  by Seller; provided, that such fees shall ultimately be borne by Purchaser and Seller in the same  proportion as the aggregate amount of the Disputed Items that are unsuccessfully disputed by each  such Purchaser or Seller (as determined by the Accounting Firm) bears to the total amount of the  Disputed Items submitted to the Accounting Firm.  Except as provided in the preceding sentence,  all  other  costs  and  expenses  incurred  by  the  Parties  in  connection  with  resolving  any  dispute  hereunder before the Accounting Firm shall be borne by the Party incurring such cost or expense.                   (d)   The “Final Adjustment Amount,” which  may  be  a  positive  or  negative  number, shall be equal to (i) the amount agreed to as the Final Adjustment Amount at any time in  writing by Purchaser and the Seller; (ii) if a Notice of Dispute is not delivered by the Seller to  Purchaser within the time period required by Section 2.3(c), the Proposed Adjustment Amount set  forth in the Closing Statement; or (iii) the Final Adjustment Amount as set forth in the written  determination of the Accounting Firm made in accordance with the provisions of this Section 2.3.  If the Final Adjustment Amount is a positive number, then Purchaser shall pay to Seller an amount  equal to the Final Adjustment Amount, within five (5) Business Days of the determination thereof,  in accordance with the provisions of this Section 2.3(d).  If the Final Adjustment Amount is a  negative  number,  then  Seller  shall  pay  to  Purchaser  an  amount  equal  to  the  Final Adjustment                                         4    

 

Amount,  within  five  (5)  Business  Days  of  the  determination  thereof,  in  accordance  with  the  provisions of this Section 2.3(d).  Payments pursuant to this Section 2.3(d) shall be made by wire  transfer  of  immediately  available  funds  in  United  States  Dollars,  to  an  account  or  accounts  designated  by  the  intended  recipient  in  writing  at  least  three  (3)  Business  Days  prior  to  such  payment.         Section 2.4 Withholding.  Purchaser, its Affiliates, and the Company shall be entitled to  deduct and withhold from the consideration and other amounts payable or deliverable pursuant to  this Agreement such amounts as such Person is required to deduct and withhold with respect to the  making of such payment under applicable Tax Laws, and such Person shall timely remit such  amounts to the appropriate Governmental Authority.  To the extent that amounts are so withheld  and paid over to the appropriate Governmental Authority by such Person such amounts shall be  treated for all purposes of this Agreement as having been paid to the Person in respect of which  such deduction and withholding was made by Purchaser.         Section 2.5 Allocation of Purchase Price.               (a)   The  parties  agree  to  allocate  $9,000,000  of  the  Purchase  Price  to  the  Purchased Stock and the balance of the Purchase Price shall be allocated to the Purchased Assets  (the “Asset Purchase Price”).               (b)   Within  sixty  (60)  days  of  the  determination  of  the  Final  Adjustment  Amount, Purchaser shall provide to Seller a schedule allocating the Asset Purchase Price (taking  into account only Assumed Liabilities that are liabilities for Tax purposes) between the Purchased  Stock and the Purchased Assets and, with respect to the Purchased Assets, among the Purchased  Assets (the “Purchase Price Allocation Schedule”).  The Purchase Price Allocation Schedule will  be prepared in accordance with the applicable provisions of the Code and the methodologies set  forth on Schedule 2.6.               (c)    If within the thirty (30) days of receiving the Purchase Price Allocation  Schedule, the Seller has not objected, the Purchase Price Allocation Schedule shall be final and  binding.  If within thirty (30) days the Seller objects to the Purchase Price Allocation Schedule,  the Seller and Purchaser shall cooperate in good faith to resolve their differences, provided that if  after thirty (30) days, the Seller and Purchaser are unable to agree, the Parties shall retain the  Accounting  Firm  to  resolve  their  dispute,  provided  that  the  Accounting  Firm  utilize  the  methodologies for determining fair market sale as set forth on Schedule 2.6.  The determination  of the Accounting Firm shall be final and binding on the parties.  The cost of the Accounting Firm  shall be shared equally by Seller and the Purchaser.               (d)   The  Parties  shall  make  appropriate  adjustments  to  the  Purchase  Price  Allocation  Schedule  to  reflect  changes  in  the  Purchase  Price.   The  Parties  agree  for  all  Tax  reporting  purposes  to  report  the Transaction  in  accordance  with  the  Purchase  Price Allocation  Schedule, as adjusted pursuant to the preceding sentence, and to not take any position during the  course  of  any  audit  or  other  proceeding  inconsistent  with  such  schedule  unless  required  by  a  determination of the applicable Governmental Authority that is final or good faith resolution of a  Tax Proceeding.                                          5    

 

                                 ARTICLE 3                                  THE CLOSING         Section 3.1 Closing Date.  The consummation of the Transaction (the “Closing”) shall  take place at the offices of Winston & Strawn LLP, 333 S. Grand Ave., Los Angeles, CA 90071, at  7:00 a.m. (Pacific time) on the later of (i) the third (3rd) Business Day following the date on which  the  last  of  the  conditions  set  forth  in Articles 7 and 8 have  been  satisfied  (other  than  those  conditions that by their terms are to be satisfied by actions taken at the Closing, but subject to their  satisfaction at the Closing) or, in the case of Article 7, waived by Purchaser, or, in the case of  Article 8, waived by Seller, and (ii) November 1, 2018,  or at such other place or at such other time  and date as may be mutually agreed upon by Purchaser and Seller (such date and time, “Closing  Date”).         Section 3.2 Deliveries by Seller to Purchaser.  At or prior to the Closing, Seller shall  deliver, or shall cause to be delivered, to Purchaser the following:               (a)   Share certificates representing all of the Purchased Stock duly endorsed in  blank  for  transfer,  or  accompanied  by  irrevocable  security  transfer  powers  of  attorney  duly  executed in blank, in either case by the holders of record, together with evidence satisfactory to  Purchaser  that  Purchaser,  or  its  designated Affiliate,  has  been  entered  upon  the  books  of  the  Company as the holder of the Purchased Stock;               (b)   a  duly  executed  receipt  acknowledging  payment  of  the  Closing  Consideration against delivery of the Purchased Stock;               (c)   the certificate referred to in Section 7.3 duly executed by an officer of Seller;                (d)   the FIRPTA Certificates;               (e)   duly executed counterparts to each other Transaction Document to which  Seller, Logistics or Seller’s Affiliates are parties;               (f)   evidence  satisfactory  to  Purchaser  of  the  release  of  all  Liens  on  the  Purchased Assets, Purchased Stock and assets of the Company, in each case, other than Permitted  Liens.         Section 3.3 Deliveries by Purchaser to Seller.  At the Closing, Purchaser shall deliver to  Seller the following:               (a)   an amount equal to (i) the Purchase Price plus (ii) the Estimated Adjustment  Amount  minus (iii)  the  Indemnification  Escrow  Amount  (such  amount,  the “Closing  Consideration”) in accordance with the instructions specified in the Estimated Closing Statement;               (b)   a  duly  executed  receipt  acknowledging  delivery  of  the  Purchased  Stock  against delivery of the Closing Consideration;               (c)   the certificate referred to in Section 8.3 duly executed by a duly authorized  officer of Purchaser; and                                         6    

 

            (d)   duly executed counterparts to each other Transaction Document to which  Purchaser or its Affiliates are parties.         Section 3.4 Payoff  of  Indebtedness  and  Transaction  Expenses;  Payment  of  Indemnification Escrow Amount.                 (a)   At the Closing, Purchaser shall, on behalf of the Seller, Logistics and the  Company, as applicable, repay, or cause to be repaid, all Funded Debt (if any), which shall be paid  in accordance with the instructions set forth in the Estimated Closing Statement and Payoff Letters.   In order to facilitate such repayment of Debt, the Seller shall, at least three (3) Business Days prior  to the Closing Date, deliver customary payoff letters, in form and substance reasonably satisfactory  to the Purchaser, for all such Debt, duly executed by each Person to which such Debt is owed  (“Payoff Letters”), which Payoff Letters shall include wire transfer instructions for the payment  of  such  Debt  and  shall  provide  that,  upon  payment of  the  applicable  payoff  amount  set  forth  therein, all Liens securing such Funded Debt (if any) shall be automatically released. In addition,  Seller shall deliver evidence reasonably satisfactory to Purchaser that there shall be no Liens (other  than Permitted Liens) on the Purchased Stock and the Purchased Assets upon the consummation  of the Closing, including delivery of a certificate signed by an officer of the Seller, certifying that  the Transactions are permitted under the terms of the Debt secured by such Liens to the extent not  being repaid at Closing and that such permitted sale results in the release of the Liens on such  assets,  together  with  the  release  documentation  (including  PPSA  termination  statements  with  respect to the assets of the Company, and UCC-3 partial releases and intellectual property releases  in respect of the Purchased Stock and Purchased Assets) with respect to any liens in Canada or the  United States  on the assets  of or equity interests in  the Company, the Purchased Stock or the  Purchased Assets  from  the  agent  or  holders  of  such  Debt  in  form  and  substance  reasonably  satisfactory to the Purchaser.               (b)   At  the  Closing,  Purchaser  shall  pay,  on  behalf  of  the  Seller  and  the  Company, as applicable, the Estimated Transaction Expenses, to be paid to the applicable payee in  accordance with the instructions set forth in the Estimated Closing Statement delivered by the  Seller to Purchaser at least three (3) Business Days prior to the Closing Date.               (c)   At the Closing, Purchaser shall pay to the Escrow Agent an amount equal  to  the  Indemnification  Escrow  Amount  in  accordance  with  the  instructions  set  forth  in  the  Estimated Closing Statement, which amount shall be deposited and held by the Escrow Agent  pursuant to the terms and conditions of the Escrow Agreement.                                    ARTICLE 4         REPRESENTATIONS AND WARRANTIES OF SELLER & LOGISTICS         As  an  inducement  to  Purchaser  to  enter  into  this Agreement  and  to  consummate  the  Transaction, Seller and Logistics hereby represent and warrant to Purchaser as of the date of this  Agreement and as of the Closing Date that, except for any exceptions set forth on the Schedules  (in accordance with Section 13.4 of this Agreement):          Section 4.1 Organization  and  Good  Standing.   Each  of  Seller,  Logistics  and  the  Company is an entity duly organized, validly existing and in good standing under the Laws of the                                         7    

 

jurisdiction of its organization.  Each of Seller, Logistics and the Company has all requisite power  and authority to own or lease and operate its properties and to carry on the Business as now being  conducted, and is duly qualified to conduct the Business and in good standing under the Laws of  each jurisdiction in which the conduct of the Business or the ownership of its properties or assets  requires such license or qualification, except where the failure to have such power or to be so  qualified or in good standing would not have a Material Adverse Effect.         Section 4.2 Capital Structure.                 (a)   The authorized Capital Stock of the Company, the number of shares of such  Capital  Stock  that  are  issued  and  outstanding,  and  the  ownership  thereof  are  as  set  forth  on  Schedule 4.2.  The Purchased Stock represents all of the issued and outstanding shares of Capital  Stock of the Company.  Seller owns and has good and valid title to all of the Purchased Stock  purported  to  be  owned  by  it  on Schedule  4.2,  free  and  clear  of  all  Liens,  other  than  transfer  restrictions  imposed  by  applicable  securities  Laws.   All  of  the  Purchased  Stock  (i)  is  duly  authorized and validly issued, (ii) is outstanding as fully paid and non-assessable, (iii) was not  issued in violation of any preemptive or similar rights, and (iv) was issued in compliance with all  applicable Laws, including applicable securities Laws.  The Company is not a reporting issuer (as  such  term  is  defined  in  the Securities  Act (Alberta))  and  there  is  no  published  market  for  the  Purchased  Stock.  The  Company  is  a “private  issuer” as  defined  in  Section  2.4  of National  Instrument 45-106 – Prospectus Exemptions.               (b)   The  Company  does  not  have  outstanding  (i)  any subscriptions,  options,  warrants or similar rights to acquire Capital Stock from it, (ii) any securities that are convertible  into or exchangeable for its  Capital  Stock, (iii) any equity appreciation,  phantom stock, profit  participation or similar rights, (iv) any obligation to redeem, purchase, convert or exchange any of  its Capital Stock. There are no outstanding shareholders’ agreements, voting agreements, voting  trusts or other agreements or rights with respect to the voting or transfer of any Capital Stock of  the Company which will survive the Closing.  The Company does not own any Capital Stock or  other securities of any Person.         Section 4.3 Authorization of Agreement. Each of Seller, Logistics and the Company has  all requisite power and authority to execute and deliver this Agreement, and to perform fully its  obligations  hereunder.   The  execution,  delivery  and  performance  by  Seller,  Logistics  and  the  Company of this Agreement has been duly authorized by all necessary limited liability company  or corporate action on the part of Seller, Logistics and the Company, as applicable.  This Agreement  has been duly executed and delivered by Seller, Logistics and the Company, and assuming the due  authorization, execution and delivery by each other Party, is Enforceable against Seller, Logistics  and  the  Company.  No  vote,  consent  or  approval  of  the  stockholders  of  Seller  or  Logistics  is  required  under  applicable  Law,  Seller’s  or  Logistics’ organizational  documents,  or  under  any  Contract between Seller and any stockholder of Seller, or between Logistics and any shareholder  of  Logistics,  to  authorize  or  approve  this  Agreement,  the  Transaction  Documents or  the  transactions contemplated hereunder.         Section 4.4 No Violations; No Consents.                                            8    

 

            (a)   The  execution,  delivery  and  performance  by  Seller,  Logistics  and  the  Company of this Agreement does not, and the consummation by Seller, Logistics and the Company  of  the  Transaction  will  not,  (i)  violate  or  conflict  with  the  Constituent  Documents  of  Seller,  Logistics or the Company; (ii) assuming all consents, waivers, approvals, Orders or authorizations  described in Section 4.4(b) are obtained, violate or conflict with any Law or Order applicable to  Seller, Logistics or the Company, or (iii) except as set forth on Schedule 4.4(a), violate, conflict  with, result in a breach of, constitute a default under or result in the acceleration of, require any  consent, waiver, or approval under, give rise to any right of any party to terminate, or give rise to  any  right  to  accelerate  any right  or obligation with  respect  to  any material  Permit  or Material  Contract.               (b)   The  execution,  delivery  and  performance  by  Seller,  Logistics  and  the  Company of this Agreement does not, and the consummation by Seller, Logistics and the Company  of the Transaction will not, require any consent, waiver, approval, Order or authorization of, or  filing with or notification to any Governmental Authority, except for those (i) listed on Schedule  4.4(b), or (ii) required under applicable Antitrust Laws.         Section 4.5 Brokers.  Except for Piper Jaffray, all Liabilities with respect to the fees and  expenses of whom will be included as Company Transaction Expenses hereunder, no Person has  acted  directly  or  indirectly  as  a  broker,  finder  or  financial  advisor  for  Seller,  Logistics  or  the  Company  in  connection  with  the  negotiation,  execution  or  delivery of  this Agreement  or  the  Transaction, and no Person is entitled to any fee, commission or like payment in respect thereof  from the Company or Purchaser based in any way on any agreement, arrangement or understanding  made by or on behalf of Seller or Logistics.         Section 4.6 Financial Statements.                  (a)   Attached as Schedule 4.6(a) are copies of (i) the unaudited statement of  income of the Business as of December 31, 2017 (“Year End Financial Statements”), and (ii) the  Interim Balance Sheet and the related statement of income for the seven (7)-month period ending  July  31, 2018  (the “Interim Financial  Statements” and  together  with  the Year-End  Financial  Statements, the “Financial Statements”).                 (b)   The  Financial  Statements  (i)  were  derived  from the  financial  books  and  records of the Business (which financial books and records are true and correct in all material  respects), (ii) were prepared in accordance with GAAP, consistently applied throughout the periods  involved, and (iii) fairly present, in all material respects, the individual results of operations and  financial position of the Business as of the respective dates and for the periods referred to in such  Financial  Statements  (with  respect  to  clause  (ii),  subject,  in  the  case  of  the  Interim  Financial  Statements, to normal recurring year-end adjustments and the absence of notes).                (c)   The Company and the Business do not have any material Liabilities, except  for liabilities: (i) for Taxes, assessments or other claims by a Governmental Authority not yet  delinquent  or the  amount or validity of which is being  contested in  good faith by appropriate  proceedings  and  for  which  appropriate  reserves  have  been  established  on  the  Interim  Balance  Sheet; (ii) reflected or reserved against on the Interim Balance Sheet; (iii) incurred after the Interim  Balance Sheet Date in the Ordinary Course (none of which is a liability for breach of contract, tort,                                         9    

 

misappropriation,  or  infringement  or  a  claim  or  lawsuit  or  environmental  liability); (iv)  contemplated by this Agreement or any other Transaction Document; (v) the Excluded Liabilities;  or (vi) as set forth on Schedule 4.6(c).          Section 4.7 Absence of Changes.  Since December 31, 2017, (i) the Company and the  Business have been operated in the Ordinary Course, (ii) there has not been any Material Adverse  Effect, and (iii) neither the Seller, Logistics nor the Company has taken any act or omission that,  if taken between the date hereof and the Closing Date, would have been required to have been  disclosed on Schedule 6.2(b).           Section 4.8 Taxes.  Neither Seller nor Logistics makes any representation in this Section  4.8 with respect to the availability for use in any Post-Closing Tax Period (or portion of a Straddle  Period beginning after the Closing Date) of any Tax attribute (including a net operating loss) or  Tax credit of the Company.  Neither Seller nor Logistics makes any representation in this Section  4.8 (other than the representations contained in Section 4.8(f), (g), (h), (i), (n), (o) and (r) with  respect to any Taxes payable by the Company or with respect to any Purchased Assets in any Post- Closing Tax Period (or portion of a Straddle Period beginning after the Closing Date).               (a)   Except as set forth on Schedule 4.8(a), all Tax Returns required to be filed  by or with respect to the Company or the Purchased Assets have been timely filed (taking into  account  extensions  of  time  to  file)  and  all  such Tax  Returns  are  complete  and  accurate  in  all  material respects;               (b)   Except  as  set  forth  on Schedule  4.8(b),  all Taxes  due  and  payable  with  respect  to  the  Company or with  respect  to  the  Purchased Assets  or  the  Business (or  payable  pursuant to any assessments with respect to such Tax Returns) have been timely paid;               (c)   Except as set forth on Schedule 4.8(c), there is no material Action or re- assessment pending with respect to Taxes of the Company or relating to the Purchased Assets or  the Business;               (d)   All amounts of Taxes required to be withheld or collected by the Company  or with respect to the Purchased Assets or the Business, including from employee salaries, wages  and other compensation and from any creditor, stockholder or other third party, have been collected  or withheld and timely paid to the appropriate Governmental Authorities;               (e)   There are no outstanding  agreements or waivers to  extend the period of  limitations for the assessment or collection of any Taxes of the Company;               (f)   The Company is not bound by any Tax sharing or Tax allocation agreement  or similar agreement or arrangement, other than any agreement entered into in the Ordinary Course  that is not primarily related to Taxes but which typically includes in that type of contract Tax  sharing responsibilities (such as paying real estate Taxes in leases or grossing up for withholding  Taxes in a credit agreement) (any such agreement or arrangement, a “Tax Sharing Agreement”)  and none of the Purchased Assets includes a Tax Sharing Agreement;                                           10    

 

            (g)   The  consummation  of  the  transactions  contemplated  by  this Agreement  (whether alone or together with any other event) will not result in the inability of Purchaser to  deduct any “excess parachute payment,” as defined in Section 280G(b)(1) of the Code;               (h)   The  Company  does  not  have  any  obligation  to “gross-up” or  otherwise  indemnify any individual for the imposition of the excise tax under Section 4999 of the Code or  under Section 409A of the Code;               (i)   Each  arrangement  subject  to  Section  409A  of  the  Code  (if  any)  is  in  compliance in all respects therewith such that no Taxes or interest will be due and owing with  respect to any such arrangement;               (j)   There  are  no  Liens  for  Taxes  on  any  of  the  assets  or  properties  of  the  Company or the Purchased Assets, other than Permitted Liens; and               (k)   At no time in the 60 month period preceding the Closing Date was more  than 50% of the fair market value of any share of the Company derived directly or indirectly (other  than through a corporation, partnership or trust the shares or interests in which were not themselves  taxable Canadian property (as defined in the Tax Act) from one or any combination of real or  immovable property situated in Canada, Canadian resource properties, timber resource properties  options in respect of, or interest in, or for civil law rights in, any such property, whether or not the  property  exists  (as  each  such  term  is  interpreted  for  the  purposes of  the  definition  of  taxable  Canadian property in the Tax Act).               (l)   The Company, Logistics and the Seller with respect to the Purchased Assets  and Business has properly (i) collected and remitted sales, use, valued added and similar applicable  Taxes with respect to sales made or services provided to its customers and (ii) for all sales or  provision of services that are exempt from sales, use, valued added and similar Taxes and that  were made without charging or remitting sales, use, valued added or similar applicable Taxes,  received  and  retained  any  appropriate  Tax  exemption  certificates  and  other  documentation  qualifying such sale or provision of services as exempt.               (m)   The Company has not, either directly or indirectly, transferred property to  or acquired property from a Person with whom the Company was not dealing at arm’s length (as  that term is understood for purposes of the Tax Act) for consideration other than consideration  equal to the fair market value of the property at the time of the disposition or acquisition thereof.  The  Company  has  complied  in  all  material  respects  with  the  intercompany  transfer  pricing  provisions  of  each  applicable  Law  relating  to  Taxes,  including  the  contemporaneous  documentation and disclosure requirements thereunder.               (n)   There  are  no  circumstances  existing,  or  that  have  existed,  which  could  result, or have resulted in the application to the Company of sections 78 and 80 to 80.04 of the Tax  Act or any analogous provision of any comparable Law of any other applicable jurisdiction.               (o)   The  Company  has  not  claimed  nor  will  it  claim  any  reserve  under  any  provision of the Tax Act or any other applicable Law, except in accordance with applicable Law  and only to the extent that the Company has recognized an equivalent deferred revenue or similar  reserve for accounting purposes that is reflected in the Closing Statement.                                         11    

 

            (p)   The Company, and the Seller and Logistics with respect to the Purchased  Assets  and  the  Business,  have  correctly  classified  these  individuals  performing  services  as  common law employees, leased employees, independent contractors or agents.               (q)   The  Company  is  treated  as  a  “controlled  foreign  corporation”  within  meaning of Code Section 957 for U.S. federal income tax purposes.                (r)   Since  December  31,  2017, except  as  set  forth  on Schedule  4.8(r), the  Company has not made or changed any Tax election, filed any amended Tax Return, entered into  any closing agreement, settled any material Tax claim or assessment, surrendered any right to  claim a refund of Taxes, consented to any extension or waiver of the limitation period applicable  to any Tax claim or assessment, incurred any liability for Taxes outside the ordinary course of  business,  failed  to  pay  any  Tax  that  becomes  due  and  payable  (including  any  estimated  tax  payments), prepared or filed any Tax Return in a manner inconsistent with past practice, or adopted  or changed any Tax accounting method.         Section 4.9 Sufficiency of Assets; Ownership and Condition of Assets.                 (a)   Except  as  disclosed  on Schedule 4.9(a), the  Purchased  Assets  and  the  services  and  rights  to  be provided  to  the  Purchaser,  any  of  its  Affiliates  and/or  the  Business  pursuant  to  the Transition  Services  Agreement will  be  adequate  to  operate  and  conduct  the  Business immediately following the Closing in all material respects as conducted by Seller and  Logistics  during  the  twelve-month  period  immediately  preceding  the  Closing  Date.   Without  limiting the generality of the foregoing, except as set forth on Schedule 4.9(a), (i) the Business  Employees constitute all personnel who are engaged in or necessary to the conduct the Business  and  are  adequate  to  conduct  the  Business  immediately  following  the  Closing  in  all  material  respects as conducted by Seller and Logistics and the Company during the twelve-month period  immediately preceding the Closing Date, (ii) neither Seller, Logistics nor any of their respective  Affiliates (other than the Company) owns or licenses any material Intellectual Property used in or  necessary for the operation of the Business (other than the Purchased Assets), and (iii) neither  Seller, Logistics nor any of their respective Affiliates (other than the Company) owns or leases any  real property used or intended to be used in, or otherwise related to, the Business (other than the  Purchased Assets), in each case, except for personnel, Intellectual Property, services and rights to  be provided to the Purchaser, any of its Affiliates and/or the Business pursuant to the Transition  Services Agreement.                 (b)   Except as disclosed on Schedule 4.9(b), each of Seller, Logistics and the  Company has, as applicable, sole and exclusive and good title to, or, in the case of property held  under a lease or other Contract, a sole and exclusive, enforceable license or leasehold interest in,  or adequate rights to use, all of its material tangible and intangible properties, rights and assets  reflected in the Interim Balance Sheet that are Purchased Assets or acquired after the date of the  Interim  Balance  Sheet  that  are  Purchased  Assets,  except  for  inventory  that  has  been  sold  or  otherwise disposed of in the Ordinary Course since such date.                 (c)   Except  as  disclosed  on Schedule 4.9(c),  none  of  the  material  assets  is  subject to any Lien other than a Permitted Lien. Except as set forth on Schedule 4.9(c), all of the  material  fixtures  and  other  material  improvements  to  the  Leased  Real  Property  and  all  of  the                                         12    

 

material tangible personal property (i) are in all material respects adequate and suitable for their  present uses, (ii) are in good working order, operating condition and state of repair (ordinary wear  and  tear  excepted),  and  (iii) have  been  maintained  in  all  material  respects  in  accordance  with  normal industry practice.         Section 4.10 Real Property.                 (a)   The Company does not own and has never owned any real property, and  none of the Purchased Assets constitutes owned real property.               (b)   Schedule 4.10(b) lists (i) the street address of all of the real property leased,  subleased or licensed to the Company or to Seller that constitutes a Purchased Asset (the “Leased  Real Property”), and (ii) each Contract under which such Leased Real Property is occupied or  used by the Company or Seller, including the right to all security deposits and other amounts and  instruments  deposited  by  or  on  behalf of  Seller  thereunder  (together  with  all  amendments,  extensions, renewals, guaranties and other agreements with respect thereto, the “Real Property  Leases”), together  with  the  date  and  name  of  the  parties  to  each  such  Real  Property  Lease  document.  Each Real Property Lease is in full force and effect and is Enforceable against each of  the Company or Seller, as applicable, and, to the Knowledge of Seller, each other party thereto.   Neither Seller nor the Company, or to the Knowledge of Seller, any other party thereto, is in breach  or  violation  of,  in  any  material  respect,  any  Real  Property  Lease.  Except  as  set  forth  on  Schedule 4.10(b), the Seller’s or the Company’s, as applicable, possession and quiet enjoyment  of the Leased Real Property under each Real Property Lease has not been disturbed, and to the  Knowledge of Seller, there are no disputes with respect to any Real Property Lease.  Except as set  forth on Schedule 4.10(b), neither Seller nor the Company has subleased, licensed or otherwise  granted any Person the right to use or occupy any Leased Real Property or any portion thereof.   Neither Seller nor the Company has collaterally assigned or granted any other security interest in  any Real Property Lease or any interest therein.  The Leased Real Property comprises all of the  real property intended to be used in the Business.  Except as set forth on Schedule 4.10(b), all  buildings, structures, improvements, fixtures, building systems and equipment, and all components  thereof, included in the Leased Real Property are in good condition and repair (ordinary wear and  tear excepted), free of any structural deficiencies or latent defects, and sufficient for the operation  of the Business.         Section 4.11 Intellectual Property.               (a)   Except  as  set  forth  on Schedule 4.11(a)(i), and  except  for  personnel,  Intellectual Property, services and rights to be provided to the Purchaser, any of its Affiliates and/or  the  Business  pursuant  to  the  Transition  Services  Agreement,  all  material  Intellectual  Property  currently used or held for use by the Company or the Business consists solely of items and rights  that are (i) owned, directly or indirectly, by the Company or Seller, (ii) in the public domain, or  (iii)  Third  Party  Intellectual  Property  held  or  used  by  the  Company  or  Seller  pursuant  to  an  Enforceable license or other Contract and all such Intellectual Property shall be owned or available  for use by the Purchaser and the Company immediately after the Closing on terms and conditions  identical to those under which the Business owned or used such Intellectual Property immediately  prior to the Closing.  Schedule 4.11(a) lists all registered Intellectual Property (including domain  names) that is (i) owned by the Company or (ii) owned by Seller and that is a Purchased Asset.                                          13    

 

The Company or Seller is the sole and exclusive owner of all right, title, and interest in and to  (i) all Intellectual Property owned or purported to be owned by the Company and (ii) owned or  purported to be owned by Seller and that is a Purchased Asset.                   (b)    (i) None of the Intellectual Property owned or used by the Company or  which is a Purchased Asset is invalid or unenforceable; (ii) there are no Actions pending, or to the  Knowledge of Seller, threatened (A) against the Business with regard to any Intellectual Property  owned  by  the  Company or  Seller,  or  (B)  with  regard  to  or  any  Intellectual  Property  that  is  a  Purchased Asset, including any allegation that the Business  has  infringed, misappropriated, or  violated any Intellectual Property of any other Person; (iii) there are no unsolicited demands from  a third party that the Business license any Intellectual Property; (iv) neither the Company nor the  Business  has,  as  previously  conducted  since  January  1,  2015  infringed,  misappropriated,  or  violated, and, as currently conducted, does not infringe, misappropriate or violate the Intellectual  Property of any other Person; and (v) except as set forth on Schedule 4.11(b), to the Knowledge  of Seller, no Person is infringing upon, misappropriating, or violating any Intellectual Property of  the Company or any Intellectual Property that is a Purchased Asset.               (c)   Seller  and  the  Company  have  taken  steps  reasonable  under  the  circumstances  to  maintain  and  protect  all  of  the  material  owned  Intellectual  Property  of  the  Business.  Each current senior management employee of the Business who has developed any  material Intellectual Property for the Business that was intended to be owned by the Business has  entered into a valid and enforceable written Intellectual Property assignment agreement with the  Seller or Company, as  applicable, assigning such  Intellectual  Property created by such Person  within the scope of such Person’s duties to the Seller or Company, respectively, prohibiting such  Person from using or disclosing the trade secrets or confidential information of the Business or has  assigned such Intellectual Property to Seller or Company by operation of law.  Since August 8,  2016, no independent contractor has developed material Intellectual Property for the Business. To  the  Knowledge  of  Seller,  no  such  current  senior  management  employee  of  the  Business is  in  violation of such agreement.                (d)   With respect to data collection, use, privacy, protection, and security, the  operation of the Business has complied with all applicable Laws, all industry standards (including  the Payment Card Industry Data Security Standard) or requirements applicable to the conduct of  the  Business,  and  all  of  the  internal  or  customer-facing  policies  of  the  Business,  respectively.   Except as set forth on Schedule 4.11(d), in the last three (3) years, the Business has not experienced  any  incident  in  which  confidential  or  sensitive  information,  payment  card  data,  personally  identifiable information, or other protected information relating to individuals was or may have  been stolen or improperly accessed, including any breach of security and neither Seller nor the  Company has received any written notices or complaints from any Person with respect thereto.               (e)   Seller and the Company use commercially reasonable efforts to protect the  confidentiality,  integrity  and  security  of  the Computer  Systems  used  in  the  operation  of  the  Business  from  any  unauthorized  use,  access,  interruption,  or  modification.   Such  Computer  Systems (i) are  sufficient  for  the  immediate  needs  of  the Business,  including  as  to  capacity,  scalability  and  ability  to  process  current  peak  volumes  in  a  timely  manner,  and  (ii) are  in  sufficiently good working condition to effectively perform all information technology operations  and include a sufficient number of license seats for all Software as necessary for the operation of                                         14    

 

the Business.  Except as set forth on Schedule 4.11(e), in the last three (3) years, there have been  no unauthorized intrusions, failures, breakdowns, continued substandard performance, or other  adverse events affecting any such Computer Systems that have caused any substantial disruption  of or interruption in or to the use of such Computer Systems.               (f)   Except  as  set  forth  on Schedule  4.11(f) and  the  Intellectual  Property  provided pursuant to the Transition Services Agreement, neither Seller nor any of its Affiliates  (other than the Company) own any Intellectual Property used in the operation of the Business.         Section 4.12 Material Contracts.                 (a)   Schedule 4.12 sets forth  a true, complete and correct  list  of each of the  following categories of Contracts (i) to which the Company is party or by which its assets, rights  and properties are bound or (ii) that constitute Purchased Assets:                     (i)   Contracts for, or setting forth the terms or conditions relating to, the           employment  or  engagement  or  termination  of  employment  or  engagement  of  any           officer, consultant or Business Employee whose base annual compensation (excluding           bonus or commission) is in excess of $100,000 (other than  agreements or offer letters           that do not deviate in any material respect from the form employment agreement or           offer letter provided to Purchaser which do not provide for payment of severance) or           that  provides  for  severance or  loans  (other  than  advances  in  the  Ordinary  Course)           (collectively, “Individual Agreements”);                     (ii)  collective bargaining agreements or other Contracts with any labor           union, labor organization, works council or group of employees covering any Business           Employees (each a “CBA”);                     (iii) Contracts with any Governmental Authority;                     (iv)  Contracts  that  are  settlement,  conciliation  or  similar  agreements           with any Person or pursuant to which the Business, the Company or the Purchased           Assets will have any material outstanding obligation after the date of this Agreement;                     (v)   Contracts relating to any franchise, distributorship or sales agency           agreement involving annual payments in excess of $100,000;                     (vi)  Contracts  with  (A)  any  Material  Supplier,  (B)  any  Material           Customer,  or  (C)  for  the  purchase,  sale,  supply  or  provision  of  materials,  supplies,           services or merchandise with outstanding annual obligations in excess of $1,000,000,           other than purchase orders entered into in the Ordinary Course;                     (vii) Contracts  whereby  the  Company,  Logistics  or  Seller  (solely  in           connection with the Business or the Purchased Assets) leases an item of machinery,           equipment  or  other  tangible  personal  property  from  any  Person  that  has  an  annual           payment due to the third-party lessor in excess of $100,000;                                          15    

 

         (viii)  Contracts evidencing or creating (A) any Debt of the Company, or  (B) Lien (other than a Permitted Lien) on any Purchased Asset, asset or property owned  or used by the Company;            (ix)  Contracts to (A) loan money or extend credit to any other Person,  other than the extension of trade credit in the Ordinary Course, or (B) act as a guarantor  or surety of the obligations of any other Person;            (x)   Contracts relating to the acquisition or disposition of any assets in  excess of $250,000 in the aggregate for which the Seller, Logistics or the Company has  any  outstanding  obligations,  other  than  those  relating  to  the  sale  or  purchase  or  inventory in the Ordinary Course or the sale or acquisition of any company, business  or line of business;            (xi)  Contracts restricting or purporting to restrict the Company’ rights to  compete with any Person or in any geographic area, engage in any line of business, or  hire or solicit any key Person as an employee, consultant or independent contractor;            (xii) Contracts relating to any partnership, joint venture or comparable  arrangement involving the sharing of profits or losses;            (xiii) Contracts to make any capital expenditure or to purchase a capital  asset with remaining obligations in excess of $100,000, individually or in the aggregate,  other than capital expenditures contemplated by the capital expense budget attached  hereto as Exhibit A (the “CapEx Budget”);             (xiv) any Shared Contract;            (xv)  Contracts  relating  to  (A)  the  licensing  of  material  Intellectual  Property (whether as licensee or licensor), (B) the ownership, development, or use of  any material Intellectual Property owned by the Company or owned by the Seller that  is  a  Purchased Asset,  and  (C)  the  ability  to  use,  enforce,  or  disclose  any  material  Intellectual Property in connection with the resolution of any claim or dispute related  to  Intellectual  Property  owned  by  the  Company  or  owned  by  the  Seller  that  is  a  Purchased Asset,  such  as  consent-to-use,  concurrent  use,  or  settlement  agreements  (excluding in each case of (A),  (B), and (C), (1) licenses for unmodified, commercial  off the shelf Software that are generally available on nondiscriminatory pricing terms  with an aggregate license fee of less than $100,000), (2) non-exclusive licenses granted  to customers and contractors of the Business in the Ordinary Course, (3)  Contracts  relating to Software used in connection with both the Business and Seller’s retained  business,  and  (4)  non-exclusive  licenses  granted  pursuant  to  Contracts  where  the  license grant is incidental to, and is not the primary purpose of, the Contract;             (xvi) Contracts  involving  acquisitions  or  dispositions  (in  each  case  whether  by  merger,  purchase  or  sale  of  assets  or  stock  or  otherwise)  by  Seller  or  Logistics  with  respect  to  the  Business  or  the Company  of  any  company  (or  all  or  substantially  all  of  its  assets),  business  or  line  of  business,  (A)  entered  into  since  January 1, 2015 for consideration in excess of $250,000 and (B) as to which Seller or                                16                 

 

         Logistics  (with  respect  to  the  Business)  or  the Company  has  any  continuing           indemnification or financial obligations or rights or any other material obligation or           rights;                     (xvii) Contracts providing for any Change of Control Payment; and                     (xviii) Contracts  between  the Company on  the  one  hand,  and  Seller  or           Logistics or any controlling Affiliate of Seller or Logistics, on the other hand (each, an           “Affiliate  Contract”  and  together  with  the  Real  Property  Leases  and  the  Contracts           referred to in clauses (i) through (xviii) being, collectively, the “Material Contracts”).               (b)   Seller has made available to Purchaser true and complete copies of each  Material Contract, including all amendments or supplements with respect thereto (or, in the case  of an oral contract, a written summary of the material terms thereof).  Each Material Contract is in  full force and effect and is Enforceable against Seller, Logistics or the Company party thereto, as  applicable,  and  to  the  Knowledge  of  Seller,  each  other  party  thereto.  Except  as  set  forth  on  Schedule 4.12(b), neither the Company nor Seller nor Logistics, or to the Knowledge of Seller,  any other party thereto, is in default or violation of, in any material respect, under any Material  Contract, and no event has occurred event has occurred or circumstance exists which, with the  delivery of notice, the passage of time or both, would constitute such a breach or default.           Section 4.13 Litigation. Schedule 4.13 lists all Actions that since January 1, 2015 have  been pending, or to the Knowledge of Seller, threatened related to the Business, the Purchased  Assets or the Company.  There is no Action pending or, to the Knowledge of Seller, threatened  against Seller, Logistics, the Business, the Company or the Purchased Assets that challenges, or  questions the validity of any Transaction Document or any action taken or to be taken by Seller,  Logistics or their respective controlling Affiliates in connection with, or which seeks to enjoin or  obtain monetary damages in respect of, the consummation of the Transaction.  Except as set forth  on Schedule 4.13, the Company, the Business and the Purchased Assets are not, and since January  1, 2015 have not been, subject to any Order.         Section 4.14 Compliance with Laws; Permits.               (a)   Except as set forth on Schedule 4.14(a), the Company, the Purchased Assets  and the Business are being, and since January 1, 2015 have been, operated in compliance with all  applicable Laws and Permits of or from Governmental Authorities.                (b)   Seller,  Logistics and  the  Company have  obtained  all  material Permits  required for the conduct of the Business, each of which is listed on Schedule 4.14(b), and such  material Permits are valid and in full force and effect.         Section 4.15 Employee Benefits.               (a)   Schedule 4.15(a)(i) sets forth a true and correct list of all Seller Employee  Benefit Plans and separately identifies each such Seller Employee Benefit Plan that is sponsored  or maintained by the Company (each a “Company Employee Benefit Plan”).  For purposes of this  Agreement, “Seller Employee Benefit Plan” means each employee benefit plan  (as defined in  Section 3(3) of ERISA, whether or not subject to ERISA), and all other employee benefit plans or                                         17    

 

compensation plans, arrangements or agreements that are sponsored or maintained by Seller, the  Company, or any other Selling Employer (or any of their respective Subsidiaries or Affiliates), or  under which or with respect to which Seller, the Company, or any other Selling Employer (or any  of their respective Subsidiaries or Affiliates) contributes or is obligated to contribute, or may have  any Liability contingent or otherwise, in any such case, for the benefit of Business Employees, or  Former  Business  Employees,  including  supplemental  unemployment  benefit  incentive,  profit  sharing,  pension,  retirement,  savings,  stock  option,  stock  purchase,  stock  appreciation,  health,  welfare,  medical,  dental,  life  insurance,  employment,  retention,  change-in-control,  severance,  disability, fringe benefit, deferred compensation, bonus or other incentive compensation and stock  option,  purchase  or  other equity  based  plans,  agreements  and  arrangements,  but  excluding  (i) payroll practices, and (ii) plans, agreements and arrangements that are mandated by Law and  maintained by Governmental Authorities.               (b)   True, current and correct copies of  the Seller Employee Benefit Plans and  all related plan documentation, including plan amendments and the most recent plan summaries  and employee handbooks relating thereto, if any, and the Individual Agreements, including all  amendments or supplements thereto; (ii) with respect to each Seller Employee Benefit Plan that is  intended to meet the requirements under Section 401(a) of the Code, a true and complete copy of  the  latest  IRS  determination  letter  or  prototype  opinion  letter;  and  (iii)  with  respect  to  each  Company Employee Benefit Plan, the plan document, summary plan description, any related trust  agreement, insurance policy or funding arrangement, and any non-routine correspondence with  any Governmental Authority have been made available by Seller to Purchaser prior to the date of  this Agreement.               (c)   Except  as  set  forth  on Schedule  4.15(c),  neither  the  execution  of  this  Agreement nor the consummation of the Transaction will (i) entitle any Business Employee to any  increase in any compensation, severance, or benefits (including any cash or equity award or benefit  or severance benefit), or (ii) accelerate the time at which any compensation, benefits or award may  become payable, vested or required to be funded in respect of any Business Employee.               (d)   No  Seller  Employee  Benefit  Plan  is or  is  intended  to  be  a “registered  pension plan” or a “retirement compensation arrangement” as such terms are defined in the Tax  Act.               (e)   None of the Seller Employee Benefit Plans provide for retiree benefits or  post-termination  benefits  for  Business  Employees or  Former  Business  Employees  or  to  the  beneficiaries or dependents of Business Employees or Former Business Employees.               (f)   Each  Company  Employee  Benefit  Plan and,  to  the  extent  any  noncompliance could result in Liability to the Company, each Seller Employee Benefit Plan has  been  established,  administered,  funded  and  maintained,  in  form  and  operation, in  all  material  respects in accordance with its terms and in compliance in all respects with applicable Laws, rules  and  regulations.   No  Actions,  claims,  disputes or  investigations  with  respect  to  the  Company  Employee Benefit Plans or, to the extent as could result in Liability to the Company, any Seller  Employee Benefit Plans (other than routine claims for benefits) are pending or, to the Knowledge  of the Seller, threatened.  With respect to each of the Company Employee Benefit Plans or, to the  extent as could result in Liability to the Company, each Seller Employee Benefit Plan, all required                                         18    

 

contributions, reimbursements, premiums, payments and accruals have been made on a timely  basis and in accordance with the terms of such Seller Employee Benefit Plans and applicable Laws  or, to the extent not yet due, properly accrued.  Each Seller Employee Benefit Plan that is intended  to meet the requirements of a “qualified plan” under Code Section 401(a) is so qualified and has  received a favorable determination letter or can rely on an opinion letter as to its qualification and,  to the Knowledge of Seller, nothing has occurred that could reasonably be expected to cause the  loss of such qualification.  Each Seller Employee Benefit Plan that is intended or required to be  registered  or  approved  by  a  Governmental  Authority  has  been  so  registered  or  approved  and  nothing  has  occurred  since  such  registration  or  approval  that  would adversely  affect  such  registration or approval. The level of reserves under each Company Employee Benefit Plan is  reasonable and sufficient to provide for all incurred but unreported claims.               (g)   No Seller Employee Benefit Plan is and the Company does not sponsor,  maintain, contribute to, is not required to contribute to nor has any Liability with respect to or  under: (i) a defined benefit pension plan or any other plan that is or was subject to Title IV of  ERISA  or  to  the  funding  requirements  of  Code  Section  412  or  Section  302  of  ERISA,  (ii)  a  multiemployer plan (as defined in Section 3(37) of ERISA), (iii) a multiple employer plan (within  the meaning of Section 413(c) of the Code), or (iv) a “multiple employer welfare arrangement” (as  defined in Section 3(40) of ERISA). The Company does not have any Liability by reason of at any  time being considered a single employer under Section 414 of the Code with any other Person. No  Seller Employee Benefit Plan provides (or could require the Company or Purchaser to provide)  post-employment welfare benefits other than coverage mandated by Section 4980B of the Code or  other applicable state continuation coverage law for which the covered individual pays the full  cost of coverage.               (h)   Only Business Employees or Former Business Employees (or any spouses,  dependents,  survivors  or  beneficiaries  of  any  such  Business  Employees  or  Former  Business  Employees) are entitled to participate in the Company Employee Benefit Plans and no entity other  than the Company is a participating employer under any Company Employee Benefit Plan.         Section 4.16 Labor.               (a)   None of the Selling Employers (with respect to any Business Employees),  the Company, the Purchased Assets or the Business are a party to, bound by, or otherwise subject  to, any CBA; there are no CBAs or any other labor-related agreements or arrangements that pertain  to any of the Business Employees with respect to employment with any Selling Employer or the  Company; and no Business Employees are represented by any labor union, works council, or other  labor organization with respect to their employment with any Selling Employer or the Company.               (b)   There are no, and there have not, since January 1, 2015, been any, strikes,  work stoppages, picking, handbilling, slowdowns, lockouts, labor grievances or labor arbitrations  involving any Business Employee or Former Business Employee or against or affecting the Selling  Employers (with  respect  to  any  Business  Employees or  Former  Business  Employee),  the  Company, the Purchased Assets or the Business.  There are no, and there have not, since January  1, 2015, been any, (i) material grievances, unfair labor practice charges or other material labor  disputes or Actions pending or, to the Knowledge of Seller, threatened against or involving the  Selling Employers (with respect to any Business Employees or Former Business Employees), the                                         19    

 

Company, the Purchased Assets or the Business.  To the Knowledge of Seller, since January 1,  2015, there have been no labor organizing activities with respect to any Business Employees or  Former Business Employees.                (c)    Except  as  set  forth  on Schedule  4.16(c),  the  Selling  Employers (with  respect to any Business Employees or Former Business Employees), the Company, the Purchased  Assets and the Business are, and since January 1, 2015 have been, in compliance, in all material  respects, with all Laws and Orders respecting labor, employment and employment practices related  to  the  Business,  including  all  such  Laws  and  Orders relating  to  terms  and  conditions of  employment, wages and hours (including the classification of independent contractors and exempt  and non-exempt employees), collective bargaining, employment discrimination, immigration, pay  equity, disability rights or benefits, civil rights, equal opportunity, affirmative action plans and  affirmative action plan requirements, plant closures and layoffs (including the WARN Act), labor  relations, employee leave issues, occupational safety and health, unemployment insurance, and  workers’ compensation.                (d)   Since January 1, 2015, no labor organization has made a demand or filed an  application for certification against any Selling Employer or the Company for recognition with  respect to representation of any Business Employee or Former Business Employee or group of  Business  Employees or  Former  Business  Employees;  and  there  are  no  certification  or  representation  proceedings  or  written  petitions  seeking  a  representation  proceeding  presently  pending against any Selling Employer or the Company involving any Business Employee or, to  the Knowledge of Seller, threatened in writing or, to the Knowledge of Seller, orally, to be brought  or filed against any Selling Employer or the Company with a labor relations tribunal.  In particular,  no  trade  union  has  applied  to  have  any Selling  Employer  or  the  Company  declared  a  related  employer  pursuant  to  the  Labour  Relations  Act  (Ontario)  or  any  similar  legislation  in  any  jurisdiction in which the Company carries on business.               (e)   Each  Selling  Employer (with  respect  to  any  Business  Employees),  the  Company,  the  Purchased Assets  and  the  Business  have no  material  Liability not  reflected  or  reserved against in the Financial Statements for (i) any unpaid wages, salaries, wage premiums,  commissions, bonuses, fees, and other compensation and/or (ii) any fines, Taxes, interest, or other  penalties for any failure to pay or delinquency in paying such compensation.                 (f)   To the Knowledge of Seller and except as set forth on Schedule 4.16(f), no  Person  is  in  any  respect  in  violation or  breach of  any  term  of any  employment  agreement,  nondisclosure  agreement,  noncompetition  agreement,  restrictive  covenant,  fiduciary  duty,  or  similar obligation:  (i) to the Company, the Purchased Assets or the Business or (ii) with respect to  any Business  Employee,  Former  Business  Employee,  independent  contractor or  temporary  employee providing services to the Business or the Company, to any third party with respect to  such person’s right to be employed or engaged by any Selling Employer or the Company or to the  knowledge or use of trade secrets or proprietary information.                (g)   To the Knowledge of Seller, no Business Employee intends to not accept  employment with, or terminate his or her employment with, Purchaser or its Affiliates (including  the Company).                                          20    

 

            (h)   The  Company does  not  employ any  individuals  who  spend  less  than  substantially all of their working time in connection with such employment providing services to  the Business, and all employees of the Selling Employers or the Company listed on Schedule  13.1(a) spend  substantially  all of  their  working  time  in  connection  with  such  employment  providing services to the Business.               (i)   There  are  no  outstanding  assessments,  penalties,  fines,  liens,  charges,  surcharges,  or  other  amounts  due  or  owing  pursuant  to  any  workplace  safety  and  insurance/workers’ compensation legislation in respect of the Selling Employers or the Company  and neither the Selling Employers nor the Company have been reassessed in any material respect  under such legislation during the past three (3) years.               (j)   The Selling Employers and the Company have provided to the Purchaser all  orders  and  inspection  reports  under  applicable  occupational  health  and  safety  legislation  (“OHSA”) relating to the Business. The Selling Employers and the Company have complied in all  material respects with any orders issued under OHSA in respect of the Business and there are no  appeals of any orders under OHSA currently outstanding.         Section 4.17 Environmental  Matters.   Except  as  set  forth  on Schedule  4.17,  (a)  the  Company, the Purchased Assets and the Business are and, since January 1, 2015, have been in  compliance in  all material  respects  with  all Environmental  Laws;  (b) Seller,  Logistics and the  Company  have  obtained  and,  since  January  1,  2015  have  been  in  compliance  in  all  material  respects with all Permits required under Environmental Laws for the conduct of the Business as it  is currently being conducted as of the Closing Date and the operation of any Leased Real Property;  (c) since January 1, 2015 (or earlier if unresolved), none of Seller, Logistics or the Company has  received any written notice or demand letter from any Governmental Authority or any other person  indicating that Seller, Logistics or the Company may be in material violation of, or have material  liability  under,  any  Environmental  Law  in  connection  with  the  ownership  or  operation  of  the  Business or the Purchased Assets; (d) there are no Actions pending or, to the Knowledge of Seller,  threatened in writing against Seller, Logistics or the Company relating to any material violation,  or alleged material violation, of or material liability under any Environmental Law in connection  with the operation of the Business or relating to the Purchased Assets; (e) the Company, Logistics  and Seller, with respect to the Business and the Purchased Assets, have not handled, treated, stored,  disposed or arranged for the disposal of, transported, released or exposed any Person to, or owned  or operated any property or facility that has been contaminated by, any Hazardous Substances, in  each case so as to give rise to material liability to the Company under Environmental Law; (f) the  Company, Logistics and Seller, with respect to the Business or the Purchased Assets, have not  assumed, undertaken or otherwise become subject to any material liability of any other Person or  provided  any  indemnity  with  respect  to  any  material  liability,  in  each  case  relating  to  Environmental  Laws;  (g)  neither  this  Agreement  nor  the  consummation  of  the  transactions  contemplated by this Agreement will result in any material obligations on the part of the Seller,  Logistics or the Company for site investigation or cleanup pursuant to any Environmental Law or  notification to or consent of any Governmental Authority or third party other than for any Permit  transfer or amendment; and (h) Seller, Logistics and the Company have furnished to Purchaser   environmental, health and safety reports, environmental audits and site  assessments and  other  material documents that address currently unresolved and material environmental, health, or safety                                         21    

 

matters, in each case relating to the Company, the Business or the Purchased Assets and in their  possession or control.         Section 4.18 Customers and Suppliers.  Schedule 4.18(a) sets forth a list of the ten (10)  largest customers (such customers, the “Material Customers”) and ten (10) largest suppliers (such  suppliers, the “Material Suppliers”) to the Business during the twelve (12) month period ended  June 30, 2018, on the basis of revenues generated or expenditures made, as applicable during such  period.  Since January 1, 2018 and except as set forth on Schedule 4.18(b), none of the Material  Customers  or  Material  Suppliers  set  forth  on Schedule 4.18(a) has  canceled,  terminated  or  materially and adversely modified or, to the Knowledge of Seller, threatened in writing (or, to the  Knowledge  of  Seller,  orally)  to  cancel,  terminate  or  materially  and  adversely  modify,  its  relationship with the Company, Logistics or the Seller with respect to the Business.         Section 4.19 Insurance.  Schedule 4.19 sets forth an accurate and complete list of all  insurance policies providing coverage with respect to the Company or any Purchased Assets or  any of their employees, officers or directors of the Business (or equivalent) have been insured  since  January  1,  2017  (the  “Liability  Policies”)  and  any  such  current  policies  (the  “Current  Liability Policies”), including any such Liability Policies with respect to which the Company is  the  policyholder  (each,  a  “Company  Policy”),  and  their  respective  expiration  dates.  The  list  includes for each Liability Policy the type of policy, form of coverage, policy number and name  of  insurer.  Schedule  4.19 describes  any  funded  self-insurance  arrangements  affecting  the  Company, Logistics and the Seller with respect to the Purchased Assets and Business.  For each  of the Current Liability Policies, (i) no pre-closing limits have been exhausted, (ii) all premiums  have  been  paid  when  due,  (iii)  to  the  Knowledge  of  the  Seller,  each  fact,  circumstance,  or  occurrence that may give rise to a claim has been reported to the appropriate insurance carrier, and  (iv) no insurance carrier has issued a reservation of rights with regard to any claims disclosed.  The  Company,  Logistics  and  the  Seller  with  respect  to  the  Purchased  Assets  and  Business has  all  insurance coverage required by the terms of any Contracts to which the Company is a party and  each Contract that is a Purchased Asset.        Section 4.20 Affiliated Persons Transactions.  Except as set forth on Schedule 4.20, no  Affiliate of Seller or Logistics or, to the Knowledge of Seller, no officer or director of Seller or  Logistics or the Company and no parent, child, sibling, spouse or other immediate family member  of any such officer or director (each, a “Affiliated Person”), owns directly or indirectly (other than  through any equity interest in the Seller) in whole or in part, or has any direct or indirect interest  in, any Purchased Asset or the Company;               (b)   has any claim or cause of action against the Company, Logistics or the Seller  with respect to the Purchased Assets or the Business; or                (c)   is party to any Affiliate Contract.         Section 4.21 International Trade and Anti-Corruption Matters.               (a)   None of the Company, Logistics or the Seller, with respect to the Purchased  Assets  and  Business,  nor  any  of their  respective  officers,  directors  or  employees,  nor  to  the  Knowledge of Seller, any agent or other third party representative acting on behalf of the Company,  Logistics and the Seller (with respect to the Purchased Assets and Business) (x) is currently, or has                                         22    

 

been  since  January  1,  2017:  (i)  a  Sanctioned  Person,  (ii)  organized,  resident  or  located  in  a  Sanctioned Country, (iii) engaging in any dealings or transactions with any Sanctioned Person or  in any Sanctioned Country, or (iv) otherwise in violation of applicable Trade Control Laws; or (y)  has at any time (A) made any unlawful payment or given, offered, promised, or authorized or  agreed to give, any money or thing of value, directly or indirectly, to any Government Official or  other Person in violation of any applicable Anti-Corruption Laws, or (B) otherwise violated Anti- Corruption Laws.               (b)   In the last five years, none of the Company, the Seller or Logistics (with  respect to the Purchased Assets and Business) has received from any Governmental Authority or  any other Person any notice, inquiry, or internal or external allegation; made any voluntary or  involuntary disclosure to a Governmental Authority; or conducted any internal investigation or  audit concerning any actual or potential violation or wrongdoing related to Trade Control Laws or  Anti-Corruption Laws.         Section 4.22 Products Liability.               (a)   Except as set forth on Schedule 4.22(a) (and except for other Liabilities for  which (i) there is a reserve that meets the standards described in the following sentence or (ii) is  fully covered by a pass-thru warranty of a supplier or vendor such that none of the Company,  Logistics, nor the Seller (and,  following  the Closing, Purchaser) shall have any  Liability with  respect thereto), each product distributed, sold, or delivered by the Company, Logistics or the  Seller, with respect to the Business (collectively, the “Products”) is, and has been since January  1, 2015, (i) in compliance with all applicable Law, (ii) fit for the ordinary purposes for which it is  intended  to  be  used,  and  (iii)  in  conformity  with  any  and  all  Contracts,  express  and  implied  warranties.  None of the Company, Logistics nor the Seller, with respect to the Business, has any  material  Liability  (and,  to  the  Knowledge  of  Seller,  there  is  no  fact,  situation,  circumstance,  condition or other basis for any present or future Action giving rise to any material Liability) for  replacement or repair of any Products or other damages in connection with any Products, subject  only to the reserve for product warranty claims set forth on the face of the Interim Balance Sheet,  as adjusted for the passage of time and in accordance with GAAP, which reserve is adequate to  address all such Liabilities. There is not currently existing any material design defect with respect  to any material Product.               (b)   Except  as  set  forth  on Schedule  4.22(b),  no  Product  is  subject  to  any  guaranty, warranty, or other indemnity beyond the applicable standard terms and conditions of sale  or fully covered by a pass-thru warranty of a supplier or vendor such that none of the Company,  Logistics nor  the  Seller  (and,  following  the  Closing,  Purchaser)  shall  have  any  Liability  with  respect thereto.  Since January 1, 2015 and to the Knowledge of Seller, there has not been any  product recall or similar action conducted with respect to any product distributed or sold by the  Company, Logistics or the Seller, with respect to the Business.               (c)   There is no basis for any Action alleging any defects in the Products or  services provided by the Company, Logistics or the Seller, with respect to the Business, or the  failure of any such Products or services to meet certain specifications.                                          23    

 

      Section 4.23 Disclaimers of Seller; No Other Representations or Warranties.  Except as  expressly  set  forth  in  this Article  4 and  the  corresponding  sections  of  the  Schedules or  any  certificate delivered hereunder, (a) Seller, any Affiliate (including Logistics and the Company) or  Representative of Seller or any other Person has made or is making any representation or warranty  (whether oral or written, express or implied or of any other kind of nature) on behalf of Seller,  Seller’s Affiliates, the Company, the Purchased Assets or the Business, including, but not limited  to, representations as to merchantability and fitness for a particular purpose, as to the accuracy or  completeness  of  any  information  regarding  the  Purchased  Stock,  the  Purchased  Assets,  the  Company or the Business furnished or made available to Purchaser and Purchaser’s Affiliates and  Representatives, or relating to the future or historical financial condition, results of operations,  profitability,  opportunities,  assets  or  Liabilities  of  the  Business,  the  Company,  the  Purchased  Assets or Seller, Seller’s controlling Affiliates or its and their respective businesses and operations,  and (b) all such other representations and warranties are hereby expressly disclaimed.          Section 4.24 Investment  Canada  Act.   Neither  Seller  nor  entities  controlled  by  Seller  (including  Logistics  and  the  Company)  provide  any  of  the  services,  or  engage  in  any  of  the  activities of a “cultural business” within the meaning of the Investment Canada Act.                                    ARTICLE 5             REPRESENTATIONS AND WARRANTIES OF PURCHASER         As an inducement to Seller and Logistics to enter into this Agreement and to consummate  the Transaction, Purchaser hereby represents and warrants to Seller and Logistics as of the date of  this Agreement and as of the Closing Date that, except for exceptions set forth on the Schedules:         Section 5.1 Organization and Good Standing.  Purchaser is an entity duly organized,  validly  existing  and  in  good  standing  under  the  laws  of  the  jurisdiction  of  its  organization  or  formation, and has the requisite power and authority to own or lease and operate its properties and  to carry on, in all material respects, its business as now being conducted.  Purchaser is duly licensed  or qualified to conduct its business and, if applicable, is in good standing under the Laws of each  jurisdiction (other than the jurisdiction of its organization or formation) in which the conduct of  its business or the ownership of its properties or assets requires such license or qualification, except  where  the  failure  to  be  so  licensed  or  qualified  or  in  good  standing  would  not  reasonably  be  expected to have a Purchaser Material Adverse Effect.         Section 5.2 Authorization  of  Agreement.   Purchaser  has  all  requisite  power  and  authority to execute and deliver this Agreement and, to perform fully its obligations hereunder and  to consummate the Transaction.  The execution, delivery and performance by Purchaser of this  Agreement, and the consummation by Purchaser of the Transaction have been, duly authorized by  all necessary corporate or other action on the part of Purchaser. This Agreement has been duly  executed and delivered by Purchaser, and assuming the due authorization, execution and delivery  by each other Party, is Enforceable against Purchaser.           Section 5.3 No Violations; Consents and Approvals.                 (a)   The execution, delivery and performance by Purchaser of this Agreement  does not, and the consummation by Purchaser of the Transaction will not, (i) violate or conflict                                         24    

 

with  the  Constituent  Documents  of  Purchaser;  (ii)  assuming  all  consents,  waivers,  approvals,  Orders or authorizations described in Section 5.3(b) are obtained, violate or conflict with any Law  or Order applicable to Purchaser or its Affiliates, or (iii) violate, conflict with, result in a breach  of, constitute a default under or result in the acceleration of any Contract to which Purchaser or its  Affiliates are parties or by which their respective assets or properties are bound, except in the case  of clauses (ii) and (iii), where the violation, breach, conflict, default, or acceleration would not  have a Purchaser Material Adverse Effect.               (b)   The execution, delivery and performance by Purchaser of this Agreement  does not, and the consummation by Purchaser of the Transaction will not, require any consent,  waiver, approval, Order or authorization of, or filing with or notification to any Governmental  Authority, except for those (i) listed on Schedule 5.3(b), (ii) required under applicable Antitrust  Laws, or (iii) consents, waivers, approvals, Orders, authorizations, filings or notifications, if not  obtained or made, would not, individually or in the aggregate, have a Purchaser Material Adverse  Effect.         Section 5.4 Litigation.  As  of  the  date  hereof,  there  is  no Action  pending  or,  to  the  knowledge  of  Purchaser,  threatened  against  Purchaser  or  its Affiliates  (i)  that  challenges,  or  questions the validity of this Agreement or any other Transaction Document or any action taken,  or to be taken, by Purchaser or its Affiliates in connection with, or that seeks to enjoin or obtain  monetary damages in respect of, the consummation of the Transaction, or (ii) which if adversely  determined could reasonably be expected to have a Purchaser Material Adverse Effect.  As of the  date hereof, neither Purchaser nor its Affiliates are subject to any Order, except for regulatory  decrees and Orders of general applicability to Persons conducting similar businesses in the affected  jurisdiction which could not reasonably be expected to have a Purchaser Material Adverse Effect.         Section 5.5 Financing.  Purchaser has delivered to the Seller (i) a true and complete  copy of the executed Equity Commitment Letter (including all exhibits, schedules, annexes and  amendments,  restatements,  modifications  or supplements  thereto,  the financing thereunder, the  “Equity Financing”), and (ii) a true and complete copy of the executed Debt Commitment Letter  in effect as of the date of this Agreement and each fee letter associated therewith) with the specific  fee amounts and the specific “flex” provisions contained therein redacted, dated as of the date  hereof  (including all exhibits, schedules, annexes and amendments, restatements, modifications  or  supplements  thereto,  and,  together  with  the  Equity  Commitment  Letter,  the “Commitment  Letters”) from  the  Financing  Sources,  to  provide  to  Purchaser,  subject  only  to  the  terms  and  conditions therein, debt financing in an aggregate amount set forth therein for the purposes of  funding payment of a portion of the amounts payable at the Closing (the “Debt Financing”, and,  together with the Equity Financing, the “Financing”).  As of the date hereof, (x) the Commitment  Letters have not been waived, amended or modified and (y) the commitments contained in the  Commitment Letters have not been withdrawn, terminated or rescinded in any respect.  As of the  date hereof, each of (i) the Equity Commitment Letter and (ii) the Debt Commitment Letter (with  respect  to  any  parties thereto  that  are  not Affiliates  of  the  Purchaser,  to  the  knowledge  of  the  Purchaser) is in full force and effect is the legal, valid and binding obligation of each party thereto,  enforceable against each such party in accordance with is terms, subject to bankruptcy, insolvency,  reorganization or similar laws of general application affecting the rights and remedies of creditors,  and to general equity principles.  As of the date hereof, no event has occurred which, with or  without notice, lapse of time or both, would reasonably be expected to constitute a default or breach                                         25    

 

on the part of Purchaser or any other party thereto, to the knowledge of the Purchaser, of any of  the  material  terms  and  conditions  under  the  Commitment  Letters.  As  of  the  date  hereof,  and  assuming satisfaction of the conditions set forth herein, 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  the  Closing  Date.   Purchaser  has  fully  paid  any  and  all  commitment fees or other fees in connection with the Commitment Letters that are payable on or  prior to the date of this Agreement. As of the date hereof, to Purchaser’s knowledge, no event has  occurred  which,  with  or  without notice,  lapse  of  time  or  both,  would  or  would  reasonably  be  expected to constitute a default or breach under any of the Commitment Letters on the part of  Purchaser or any other party thereto. Assuming the representations and warranties of the Company  contained in this Agreement are accurate in all material respects and the Company complies with  and perform in all material respects all of its agreements and covenants under this Agreement,  upon the funding of the commitments (after giving effect to the “flex” provisions) contained in the  Commitment  Letters  in  accordance  with  their  respective  terms,  the  net  proceeds  from  the  Financing  (when  consummated  in  accordance  and  terms  of  the  Commitment  Letters)  will  be  sufficient when funded for Purchaser, if the Closing occurs, to satisfy all of the payment obligations  of Purchaser contemplated hereunder.         Section 5.6 Solvency.   Assuming  (i)  satisfaction  of  the  conditions  to  Purchaser’s  obligation to consummate the transactions as set forth herein, (ii) that each of the representations  and  warranties  of  Seller  and  Logistics  contained  herein  (a)  other  than  a  Fundamental  Representation,  are  true  and  correct  (disregarding  any  materiality  or  Material Adverse  Effect  qualifications contained therein) in all respects at and as of the Closing Date, except, in each case,  to the extent any such representation or warranty speaks as of a specific date, in which case such  representation or warranty shall be, subject to the qualifications set forth above, true and correct  at and as of such specific date, in each case, except for any such failure to be true and correct as  would not reasonably be expected to have a Material Adverse Effect, and (b) that is a Fundamental  Representation are true and correct in all respects at and as of the Closing Date, except for any de  minimis  failure  to  be  true  and  correct,  (iii)  the  Seller’s  and  Logistics’ compliance  with  their  covenants and agreements contained in this Agreement, and (iv) that the Company, immediately  prior to the Closing, is solvent, then, as of immediately after giving effect to all of the transactions  contemplated by this Agreement, Purchaser and its Subsidiaries (including the Company) will be  solvent. For purposes hereof, “solvent” means, with respect to any Person, that (a) the amount that  may be realized by if the aggregate assets of such Person (including goodwill), were sold as an  entirety with reasonable promptness in an arm’s-length transaction under then-present conditions  for the sale of comparable business enterprises, as of such date, would exceed all of such Person’s  Liabilities, contingent or otherwise, as of such date, (b) such Person will not have, or have access  to, as of such date, an unreasonably small amount of capital for the business in which it is engaged  or will be engaged, and (c) such Person will be able to pay its debts (whether fixed, contingent,  matured, unmatured, disputed, undisputed, secured or unsecured) as they become absolute and  mature, in the ordinary course of business, taking into account the timing of and amounts of cash  to be received by it and the timing of and amounts of cash to be payable on or in respect of its  indebtedness.  No transfer of property is being made and no obligation is being incurred, in each  case, by such Purchaser, in connection with the Transactions with the intent to hinder, delay or  defraud either present or future creditors of the Company.                                          26    

 

      Section 5.7 Brokers.  No Person has acted directly or indirectly as a broker, finder or  financial advisor for Purchaser in connection with the negotiations relating to or the Transaction,  and no Person is entitled to any fee or commission or like payment in respect thereof from Seller  or  its Affiliates  (including  the  Company)  based  in  any  way  on  agreements,  arrangements  or  understandings made by or on behalf of Purchaser.         Section 5.8 Parent Limited Guaranty.               (a)   Purchaser  has  delivered  a  true  and  complete  copy  of  the  fully  executed  limited guaranty, dated as of the date of this Agreement (the “Parent Limited Guaranty”), from  Dunes Point Capital Fund II, LP, a Cayman Islands exempted limited partnership and Dunes Point  Capital Fund II-A, LP, a Cayman Islands exempted limited partnership (collectively, “Parent”),  pursuant to which Parent has guaranteed the obligations of Purchaser under Section 11.3 of this  Agreement.               (b)   Parent has full organizational power and authority to execute and deliver  the Parent Guaranty and to perform its obligations thereunder. The execution and delivery of the  Parent Guaranty by Parent and the performance by Parent of its obligations thereunder have been  duly authorized by all requisite organizational action. The Parent Guaranty constitutes the valid  and legally binding obligation of Parent, enforceable in accordance with its terms and conditions.   The Parent Guaranty has not been amended modified, withdrawn or rescinded in any respect.          Section 5.9 Investment Canada Act.  Purchaser is, and as of Closing will be a WTO  investor/trade  agreement  investor  that  is  not  a  state-owned  enterprise,  all  as  defined  by  the  Investment Canada Act.         Section 5.10 No  Inducement  or  Reliance;  Independent  Assessment.  Purchaser  acknowledges and agrees that (a) none of Purchaser or Purchaser’s Representatives have been  induced by or relied upon (i) any representation, warranty or statements (whether oral or written,  express or implied or of any other kind or nature) by Seller, Logistics any Representative of Seller  or any other Person that are not expressly set forth in the in Article 4 or any certificate delivered  hereunder, (ii) any projections, financial information, or other information, documents, certificates,  summaries,  presentations,  proposals,  charts,  drawings,  calculations,  estimates  or  materials  whatsoever (whether written or oral, made available in any “data rooms” or in an electronic format,  or in any other form) in connection with the Transaction, and (b) none of Seller, Logistics, any  Representative of Seller or Logistics nor any other Person shall have or be subject to any Liability  to Purchaser or any other Person resulting from such representations, warranties, or statements or  the distribution to or use by Purchaser and Purchaser’s Representatives of any such information  and  materials.  Purchaser  further  acknowledges  and  agrees  that  Purchaser  and  Purchaser’s  Representatives (v) have been furnished with documents, materials and information necessary or  appropriate for evaluating the Business, Company, Purchased Assets and Transaction, (w) have  made all such further investigations and inquiries of Seller, Logistics, the Company and Seller’s  other Affiliates as are necessary and appropriate to evaluate the merits and risks of the Business  and the Transaction, (x) have been provided access to and the opportunity to ask questions of, and  receive answers from, Seller, Logistics, the Company and each of their respective Representatives  regarding the terms and conditions of this Agreement, (y) have made their own assessment of the  present condition and the future prospects of the Business, the Purchased Assets and the Company                                         27    

 

and  are  sufficiently  experienced  to  make  an  informed  judgment  with  respect  thereto,  and  (z)  understand  that,  except  as  expressly  set  forth  herein  or  in  any  certificate  delivered  hereunder,  Purchaser is acquiring the Business, the Purchased Stock and the Company “as is” and “where is”  on  that  basis  pursuant  to  Purchaser’s  own  investigation  and  examination  after  having  been  provided with an adequate opportunity and access to complete such investigation or examination.                                      ARTICLE 6                                  COVENANTS         From the date of this Agreement until (A) with respect to covenants contained herein that  relate  solely  to  the  pre-Closing  period,  the  earlier  of  (i)  the  termination  of  this Agreement  in  accordance with Article 11 and (ii) the Closing, and (B) with respect to any covenants set forth  herein  with  obligations  continuing  after  Closing,  until  such  covenants are  fully  performed  in  accordance with their terms, Purchaser and Seller covenant and agree as follows:         Section 6.1 Access;  Opportunity  to Ask  Questions.   Seller  shall,  and  shall  cause  its  Affiliates and Representatives to, permit Purchaser and Purchaser’s Representatives access to (a)  senior  management  of  the  Company  and  the  Business  to  answer  questions  concerning  the  operations and affairs of the Business, and (b) the Leased Real Property, corporate records, books  of  accounts,  assets  and  properties  of  the  Company,  the  Purchased  Assets  and  the  Business  reasonably  requested  by  Purchaser  and  Purchaser’s  Representatives  (excluding  confidential  portions of Personnel Records and medical records); provided, that in each case, such access shall  be:  (x) subject  to  any  limitations  that  are  reasonably  required  to  (1)  comply  with  any  Law  (including any Antitrust Law) or (2) preserve any applicable attorney-client privilege, other legally  recognized privilege, (y) subject to the Confidentiality Agreement, and (z) given at reasonable  times and upon reasonable notice and without undue interruption to the Business or operations or  personnel of Seller, Seller’s Affiliates (including the Company) or the Business.  Notwithstanding  the foregoing, none of Purchaser, Purchaser’s Affiliates or their respective Representatives shall  be permitted to conduct any on-site environmental examinations, investigations or assessments or  meet or communicate with any customer or supplier of Seller, Seller’s Affiliates or the Business  to the extent such meeting or communication is related to the transactions contemplated hereby.   All requests for access, including access to any employees or facilities of Seller or its Affiliates,  shall be made to the designated Representatives of Seller listed on Schedule 6.1, who shall be  solely  responsible  for  coordinating  all  such  requests  and  access  thereunder.   Purchaser  and  Purchaser’s Affiliates and each of their respective Representatives shall not communicate with,  question or attempt to gain access to any employees of Seller or Seller’s Affiliates (including the  Company) without the prior consent, approval and coordination of such Representatives of Seller.           Section 6.2 Conduct of Business.                (a)   From and after the date hereof until the earlier of (i) the termination of this  Agreement  and  (ii)  the  Closing  Date,  except  (A)  as  otherwise  expressly  required  by  this  Agreement, (B) as Purchaser shall otherwise consent in writing, and (C) as set forth in Schedule  6.2(a) of the Schedules, each of Seller and Logistics covenants and agrees that it shall with respect  to the Business and the Purchased Assets, and Seller shall cause the Company to, (i) conduct the  Business and its operations only in the Ordinary Course (subject to any restrictions set forth in  Section  6.2(b)),  (ii)  use  commercially  reasonable  efforts  to  keep  in  full  force  and  effect  its                                         28    

 

existence  and  all  material  rights,  material  Permits,  material  franchises,  material  Intellectual  Property and Material Contracts, pertaining to the Business, (iii) maintain the Purchased Assets in  such general state of repair as is reasonably necessary for the conduct of the Business consistent  with then-present needs and past practices, including replacement in accordance with reasonably  prudent business practices of any inoperable, worn out or obsolete assets with assets of a quality  consistent  with  reasonably  prudent  business  practices  and  then-current  needs  in  a  reasonable  amount of time, (iv) maintain its books, accounts and records as they relate to the Business in  accordance with past custom and practice, (v) maintain all of its insurance policies that are in effect  as of the date hereof, (vi)  use commercially reasonable efforts to preserve its relationship with its  customers and suppliers and to retain the services of its employees and service providers, and (vii)  in the event of a condemnation, casualty, loss or other material damage to any of the assets of the  Company  prior  to  the  Closing  Date,  use  commercial  reasonable  efforts  consistent  with  past  practice to repair or replace such condemned or damaged property through the use of the proceeds  of  such  condemnation  or  insurance,  or  preserve  such  proceeds  for  use  by  the  Company,  as  applicable, following the Closing.               (b)   Without limiting the generality of Section 6.2(a), from and after the date  hereof until the earlier of (i) the termination of this Agreement and (ii) the Closing Date, except  (A) as otherwise expressly required by this Agreement, (B) as Purchaser shall otherwise consent  in writing, which consent shall not be unreasonably withheld, delayed or conditioned, or (C) as set  forth in Schedule 6.2(b) of the Schedules, each of Seller and Logistics covenants and agrees that  it shall (solely with respect to the Business, including with respect to the Purchased Assets), and  Seller shall cause the Company to not:                     (i)   sell, lease, license, abandon, permit to lapse, or otherwise dispose of           any material assets or material Intellectual Property that is owned by the Company, that           is owned by the Seller or Logistics and is a Purchased Asset, or that is used primarily           in  connection  with  the  Business,  except  for  sales  of  inventory  and  non-exclusive           licenses granted in the Ordinary Course;                     (ii)  (A)  increase  or  enhance  the  compensation  or  benefits  of  any           Business Employee with base salary over $150,000 other than as required by applicable           Law or, with respect to any Business Employee with base salary of $150,000 or less,           other than as in the Ordinary Course or as required by applicable Law, (B) establish,           enter into, adopt, amend or terminate, or increase or accelerate or commit to increase           or accelerate the funding, payment or vesting of the compensation or benefits provided           under,  any  Seller  Employee  Benefit  Plan,  (C)  except  to  the  extent  required  by           applicable Law or by written agreements existing on the date of this Agreement that           have  been  disclosed  on  Schedule  4.12(a)(i),  enter  into  or  amend  any  Contracts  of           employment  or  any  consulting,  bonus,  severance,  retention,  change  in  control,           retirement or similar agreement, except for employment agreements or offer letters for           any newly hired officer, director, employee or other service provider of the Company           or  related  to  the  Business in  the  Ordinary  Course  with  an  annual  base  salary  and           incentive  compensation  opportunity  not  to  exceed  $150,000,  (D)  hire,  materially           modify  the  job  responsibility  of,  or  terminate  (other  than  for  “cause”)  any  officer,           director, employee or other service provider of the Company or related to the Business           with  an  annual  compensation  in  excess  of  $150,000,  (E)  implement  any  employee                                         29    

 

layoffs  that  would  reasonably  be  expected  to  implicate  the  WARN  Act  or  similar  legislation in other jurisdictions, or (F) unless required by Law, recognize or certify  any  labor  union,  labor  organization,  works  council,  or  group  of  employees  as  the  bargaining representative for any Business Employee or individual providing services  to any the Company or the Business;            (iii) change,  amend  or  restate  the  charter,  certificate  of  formation  or  incorporation, operating agreement or bylaws (or other comparable organizational or  governing documents) of the Company;            (iv)  authorize for issuance, issue, sell or deliver or agree or commit to  issue, sell or deliver (A) any capital stock of, or other equity or voting interest in, the  Company or (B) any securities convertible into, exchangeable for or evidencing the  right to subscribe for or acquire either (1) any capital stock of, or other equity or voting  interest in, the Company or (2) any securities convertible into, exchangeable for or  evidencing the right to subscribe for or acquire, any shares of the capital stock of, or  other equity or voting interest in, the Company;            (v)   (A)  change,  modify,  or  write-off  as  uncollectible  any  notes  or  accounts receivable of the Business, except write-offs in the Ordinary Course and any  write-off of such notes and accounts receivable that are fully reserved for in a manner  consistent with GAAP, (B) accelerate any accounts receivable or defer any accounts  payable of the Business, in each case outside of the Ordinary Course, or take any other  action outside the Ordinary Course of business with respect to the working capital of  the Business, (C) make any material change in the terms of sale or collection practices  of the Business, nor (D) materially alter its practices with respect to inventory levels or  the product offerings of the Business;             (vi)  split,  combine,  redeem  or  reclassify,  or  purchase  or  otherwise  acquire, any shares of its capital stock or its other securities;            (vii) (A) incur, assume or guarantee any Debt, other than short-term Debt  for borrowed money under existing credit facilities, or (B) make or forgive any loans  or advances to, or capital contributions to or investments in, any other Person, other  than routine advances to employees in the Ordinary Course;            (viii) other than in the Ordinary Course, (A) make, change or revoke any  material Tax election or make any material change to an accounting method for Tax  purposes, (B) settle or compromise any material Tax Liability, (C) file any amended  income Tax Return or other material Tax Return, (D) surrender any material claim for  a Tax refund, (E) enter into any agreements, consents or waivers extending the statutory  period of limitations applicable to the payment or assessment of any Taxes, or (F) enter  into any contractual obligation in respect of Taxes with any tax related Governmental  Authority;            (ix)  enter into, amend or terminate any Material Contract (or Contract  that would constitute a Material Contract if in existence as of the date hereof) or waive                                30                 

 

         material rights with respect thereto, other than terminations by way of expiration of the           term of the applicable Contract in the Ordinary Course consistent with past practice;                     (x)   acquire,  merge  or  consolidate  with,  or  effect  any  business           combination with, any Person, or acquire any material assets of any Person, in each           case whether by purchase of stock, securities or assets, property transfers or otherwise;                     (xi)  adopt  a  plan  of  complete  or  partial  liquidation,  dissolution,           restructuring, recapitalization or other reorganization;                     (xii) settle or compromise any material Action or initiate any material           Action;                     (xiii) grant any Lien, or permit to be subject to any Lien, on the Purchased           Stock or any Purchased Assets;                     (xiv) discontinue any business of the Company or enter into any new line           of business;                     (xv)  except as is required by GAAP, make any change in the Business’           methods, principles and practices of accounting;                     (xvi) take  any  action  that  could  reasonably  be  expected  to  result  in  a           complete or partial withdrawal under a Company Employee Benefit Plan;                     (xvii) terminate,  transfer  or  modify  the  job  responsibilities  of  (i)  any           Business  Employee  (or  who  would  have  been  a  Business  Employee  but  for  such           termination, transfer or modification) in a manner that results in such employee ceasing           to be a Business Employee or (ii) any employee of Seller or its Affiliates (other than a           Business Employee as of the date hereof) where as a result of such termination, transfer           or modification, such employee becomes a Business Employee as of the Closing Date);           and                     (xviii) execute any Contract or letter of intent (whether or not binding) or           enter into any other commitment, whether or not in writing, to do any of the foregoing.         Section 6.3 Further  Actions.   Subject  to  the  other  terms  and  conditions  of  this  Agreement, including Section 6.4:               (a)   Each Party shall use commercially reasonable efforts to take, or cause to be  taken, all actions, and do, or cause to be done (and to cooperate and provide assistance with the  taking of such actions and the doing of such things) necessary, proper or advisable to consummate  the Transaction as soon as practicable, including (i) executing and delivering all documents and  instruments to effect all necessary filings, notices, petitions, statements, registrations, submissions  of information and applications (whether or not expressly contemplated by this Agreement or any  Transaction Document) and (ii) cause the conditions precedent to Closing set forth in Articles 7  and 8 to be satisfied as promptly as possible.                                           31    

 

            (b)   Each Party shall keep each other Parties reasonably apprised of the status of  matters relating to the consummation of the Transaction, including delivering to the other Parties  promptly (i) notice of any Actions commenced or to the knowledge of such Party, threatened in  writing, relating to or otherwise affecting the Company, the Purchased Assets, the Business, this  Agreement or the Transaction, and (ii) the existence or occurrence of any Event (or nonoccurrence  of any Event) that is reasonably likely to constitute a breach of this Agreement or to cause any  condition precedent in Article 7 or Article 8 not to be satisfied.         Section 6.4 Consents and Conditions.                 (a)   Subject to Section 6.4(b), from the date hereof through the date that is nine  (9) months after the Closing, each Party shall use commercially reasonable efforts to: (i) obtain all  necessary  consents,  approvals,  Permits,  Orders  or  waivers  from,  and  give  any  necessary  notifications to, Persons required to be obtained in connection with the execution, delivery and  performance  of  the  Transaction  Documents  and  consummation  of  the  Transaction; provided,  however, that  such  commercially  reasonable  efforts  shall  not  require  any  Party to  make  any  payment (other than (A) amounts required to be paid under any Contract to which such Party or  any of its Affiliates is a Party, and (B) filing fees and similar amounts) or undertake any material  obligation to any Person in order to obtain such consent approval or waiver; provided further, that  neither Seller nor Logistics shall not enter into any Contract, amend or terminate any Contract,  make any payment (other than (x) amounts required to be paid by such Party or any of its Affiliates  under the terms of any Contract, and (y) filing fees and similar amounts) or grant any concession  (or permit the Company to make take any of the foregoing actions), in each case for the purpose  of obtaining any consent, waiver or approval, without the prior written consent of Purchaser; and  (ii) defend or contest any Action challenging any Transaction Document or that may otherwise  prevent, materially impede, interfere with, hinder or delay the consummation of the Transaction,  including seeking to have any stay or temporary restraining Order entered by any Governmental  Authority vacated or reversed.  From the date hereof until the earlier of the date that is nine (9)  months after the Closing or  until such time as the necessary consents, approvals, Permits, Orders  or waivers required by this Section 6.4(a) are received (including, for the avoidance of doubt, after  the Closing to the extent such consents, approvals, Permits, Orders or waivers are not received  prior to Closing), Purchaser and Seller shall use and cause their respective Subsidiaries to use  commercially reasonable efforts to secure an alternative arrangement reasonably satisfactory to  both  Parties  under  which  the  Business  would,  in  compliance  with  applicable  Law,  obtain  the  benefits associated with the applicable portion of such arrangement or Contract.                 (b)   Each Party  agrees  to  supply promptly any information  and documentary  material reasonably available to such Party that may be requested of such Party by the relevant  Governmental Authorities under any applicable Antitrust Law.  Purchaser covenants and agrees to  use reasonable best efforts to take, and to cause its Affiliates to take, any and all steps necessary to  avoid  or  eliminate  as  soon  as  possible  each  and  every  objection,  challenge, Action  or  other  impediment under applicable Antitrust Laws that may be asserted by any Governmental Authority  so as to enable the Parties to expeditiously consummate the Transactions, including committing,  by consent decree, hold separate order, stipulation or otherwise, (i) to sell, hold separate, divest,  redistribute, discontinue or limit any of its assets or properties, businesses or interests, or (ii) to  conditions relating to, or changes or restrictions in, the operations of any such assets or properties,  businesses or interests which could reasonably be expected to materially and adversely impact the                                         32    

 

economic or business benefits to Purchaser of the Transaction necessary to effectuate the actions  required under clauses (i) and (ii), in order to facilitate the expiration or termination of any waiting  period or otherwise obtain any clearance under the applicable Antitrust Laws.  Purchaser shall pay  the filing fees associated with the any filing made under any Antitrust Law.                (c)   Each  Party  agrees  not  to  participate  in  any  substantive  meeting  or  discussion, either in person or by telephone, with any Governmental Authority in connection with  the Transactions unless it consults (to the extent permitted) with the other Parties in advance, and  to  the  extent  not  prohibited  by  such  Governmental  Authority,  gives  the  other  Parties  the  opportunity to attend and participate.                 (d)   Subject to any applicable confidentiality restrictions and applicable Law,  each Party shall furnish promptly to each other Party copies of all correspondence, filings, notices  or other communications with all other Persons and Governmental Authorities, with respect to the  Transaction; provided,  however, that  such  Party  may,  as  it  deems  advisable  and  necessary,  reasonably designate any commercially or competitively sensitive material provided to the other  Party as “outside counsel  only” and such materials  may be redacted.  Materials  designated  as  “outside counsel only,” and the information contained therein, shall be given only to the outside  legal  counsel  of  the  other  Parties  (and  shall  not  be  disclosed  by  such  outside  counsel  to  any  Representatives of such other Party unless express written consent is obtained in advance from the  disclosing Party’s legal counsel).  Each Party shall, subject to applicable Law, permit counsel for  the other Party reasonable opportunity to consider in good faith the views of such Party concerning  any  proposed  written  communication  to  any  Governmental Authority  in  connection  with  the  consummation of the Transaction.         Section 6.5 Litigation  Support.  Subject  to  any  applicable  confidentiality restrictions  and applicable Law, each Party shall furnish promptly to each other Party notice of any Actions  commenced  or,  to  the  knowledge  of  such  Party,  threatened  in  writing  against,  relating  to  or  otherwise  affecting  the  Company,  the  Purchased Assets,  the  Business,  this Agreement  or  the  Transaction. Subject to Section 6.4(b), each Party shall use commercially reasonable efforts to  defend  or  contest  any Actions  challenging  any  Transaction  Document  or  that  may  otherwise  prevent, materially impede, interfere with, hinder or delay the consummation of the Transaction,  including seeking to have any stay or temporary restraining Order entered by any Governmental  Authority vacated or reversed.  If and for so long as any Party is actively contesting or defending  against any Action in connection with the Transaction, the Parties shall cooperate in the contest or  defense  thereof,  and  make  available  their  respective  personnel  to  provide  such  testimony  and  access to their respective books and records as shall be reasonably necessary in connection with  such contest or defense thereof, all at the sole cost and expense of the Party contesting or defending  such Action.         Section 6.6 Bulk  Sales  Laws.   Purchaser  hereby  waives  compliance  by  Seller  in  connection with the Transaction, with the provisions of any applicable bulk sales Law.         Section 6.7 Ancillary Agreements.   At  or  prior  to,  the  Closing,  each  of  Purchaser,  Logistics, Seller and/or their respective Affiliates, as applicable, shall duly authorize, execute and  deliver each other Transaction Document to which each such Person is a party.                                          33    

 

      Section 6.8 Financing; Seller and Company Cooperation.               (a)   Purchaser shall use commercially reasonable efforts to arrange and obtain  the  Financing  not  later  than  the  Closing  Date,  on  the  terms  and  conditions  described  in  the  Commitment Letters, including using its commercially reasonable efforts to (A) until the execution  of the Definitive Financing Agreements (as defined below) with respect to the Financing, maintain  in effect the Commitment Letters, (B) satisfy, or cause to be satisfied or waived, on a timely basis  all  conditions  applicable  to  Purchaser  obtaining  the  Financing  that  are  within  its  control,  (C)  negotiate and enter into definitive agreements with respect to the Debt Financing on terms and  conditions  described  in  or  contemplated  by  the  Debt  Commitment  Letter  (all  such  definitive  agreements,  collectively,  the  “Definitive  Financing  Agreements”),  (D)  cause  the  Financing  Sources and the sources of the Equity Financing to fund, or provide, as applicable, the Financing  at or prior to the Closing upon the satisfaction (or waiver) of all of the conditions set forth herein,  and (E) enforce its rights under the Debt Commitment Letter.  Purchaser shall not, without the  prior written consent of the Seller (such consent not to be unreasonably withheld, conditioned or  delayed) agree to or permit any termination, amendment, supplement or other modification of, or  waive any of its rights under, any provision of the Commitment Letters or Definitive Financing  Agreements such that the Financing would not be available at Closing, in each case; provided that,  it  is  understood  and  agreed  that  the  Commitment  Letters  and/or  the  Definitive  Financing  Agreements  may  be  amended,  supplemented  or  otherwise  modified  (i)  to  correct  immaterial  typographical errors, (ii) to add agents or arrangers of the Debt Financing who had not executed  the Debt Commitment Letters as of the date hereof or (iii) the assignment of any portion of the  commitments or obligations under the Debt Commitment Letter to additional persons, reallocate  commitments thereunder and/or to assign or reassign titles or roles to, or between or among, any  Financing Sources party to the Debt Commitment Letters.  Upon any amendment, supplement,  modification or waiver of the Commitment Letters or the Definitive Financing Agreements  in  accordance with  this Section 6.8(a),  (x) the terms  “Commitment Letters”, “Debt  Commitment  Letters”, “Equity Commitment Letters” and “Definitive Financing Agreements” as used in this  Agreement (including  as  used  in  any  definition  incorporating  such  terms) shall  mean  such  documents  as  so  amended,  supplemented,  modified  or  waived  and  (y)  the  terms  “Financing”,  “Debt Financing” and “Equity Financing” as used in this Agreement (including as used in any  definition  incorporating such  terms) shall  mean  the  financing  contemplated  by  the  Debt  Commitment  Letters  and  the  Equity  Commitment  Letter,  as  applicable,  as  so  amended,  supplemented, modified or waived.  Nothing contained in this Section 6.8 or elsewhere in this  Agreement shall require, and in no event shall the requisite efforts  of Purchaser be deemed or  construed to require, Purchaser to (i) seek or obtain equity financing (other than pursuant to the  express terms of the Equity Commitment Letter), or (ii) without limiting its obligation to enforce  its rights under the Debt Commitment Letter as described above, initiate, prosecute or maintain  any claim, action, suit, demand, grievance, arbitration or similar proceeding against any Financing  Sources  under  the  Debt  Commitment  Letter  or  Equity  Commitment  Letter  or  other  Persons  providing the Financing under the Commitment Letters.                 (b)   In  the  event  all  or  any  material  portion  of  the  Debt  Financing  becomes  unavailable, (i) Purchaser shall promptly notify Seller in writing and (ii) Purchaser shall use its  commercially reasonable efforts to arrange and obtain, as promptly as practicable following the  occurrence of such event but no later than the Closing Date, alternative debt financing from the  same or alternative sources of debt financing (the “Alternative Debt Financing”) in an amount no                                         34    

 

less than that of the Debt Financing, on conditions that are not less favorable to Purchaser in the  aggregate  as  those  contained  in  the  Debt  Commitment  Letters  and  would  not  reasonably  be  expected to prevent, materially impair or materially delay the consummation of such Alternative  Debt  Financing  or  the  transactions  contemplated  by  this  Agreement  or  by  the  Transaction  Documents; it being agreed that there shall be no obligation on Purchaser to pay any additional  fees and/or obtain Alternative Debt Financing on materially worse terms than is contemplated by  the Debt Financing as of the date hereof.  The obligations under this Section 6.8(b) shall apply  equally to any such Alternative Debt Financing (including any new financing commitment and  any  New  Debt  Commitment  Letters  (as  defined  below)).  The  new  debt  commitment  letters,  including all exhibits, schedules, annexes and amendments thereto entered into in connection with  any Alternative Debt Financing are referred to as the “New Debt Commitment Letters”.  Purchaser  shall provide Seller with (x) true, accurate and complete copies of the New Debt Commitment  Letters and any related fee letters (which may be redacted in a customary manner for economic or  any  “market  flex”  provisions)  for  any  Alternative  Debt  Financing  for  its  review  prior  to  the  execution thereof and (y) fully executed copies thereof as promptly as practicable following the  execution thereof.  In the event Purchaser enters into any such New Debt Commitment Letters, (I)  any reference in this Agreement to the “Debt Financing” (including in any definition incorporating  the term “Debt Financing”) shall mean and include the Alternative Debt Financing and the debt  financing contemplated by the “Debt Commitment Letters” as such term is modified pursuant to  the immediately succeeding clause (II), and (II)  any reference in  this  Agreement to  the “Debt  Commitment  Letters”  (including  in  any  definition  incorporating  the  term  “Debt  Commitment  Letters”) shall be deemed to mean and include the Debt Commitment Letters to the extent not  superseded  by  New  Debt  Commitment  Letters  at  the  time  in  question  and  any  New  Debt  Commitment Letters to the extent then in effect.                (c)   Upon the reasonable written request of Seller, Purchaser shall inform Seller  in reasonable detail of the status of its efforts to arrange the Financing and the negotiation of the  Definitive Financing Agreements.  Without  limiting the  generality of the foregoing, Purchaser  shall  give  Seller  prompt  written  notice  (A)  of  any  material  breach,  material  default,  written  repudiation,  written  cancellation  or  written  termination  of  the  Commitment  Letters  or  the  Definitive Financing Agreements by any party thereto of which Purchaser becomes aware, (B) of  the receipt by Purchaser or its Affiliates of any notice or other communication from the Financing  Sources or the sources of the Equity Financing with respect to any actual material breach, material  default, written repudiation, written cancellation or written termination of the Commitment Letters  or the Definitive Financing Agreements by any party thereto, and (C) if for any reason Purchaser  believes in good faith that it will not be able to obtain all or any portion of the Financing on the  terms,  in  the  manner  or  from  the  sources  contemplated  by  the  Commitment  Letters  or  the  Definitive Financing Agreements.               (d)   Prior to the Closing, the Seller, Logistics and the Company shall provide to  Purchaser, and shall use commercially reasonable efforts to cause their respective Representatives  to, provide or cause to be provided to the Purchaser, on a timely basis, all customary cooperation  reasonably requested by Purchaser in connection with the arrangement and consummation of the  Debt  Financing,  including  using  commercially  reasonable  efforts  to  (i)  deliver  to  Purchaser  information  related  to  Seller,  Logistics  and  the  Company  required  by  regulatory  authorities  including  under  applicable  “know  your  customer”  and  anti-money  laundering  rules  and  regulations, including the Patriot Act, that is requested at least ten (10) Business Days prior to the                                         35    

 

Closing Date, to the extent necessary to satisfy a condition precedent to the Debt Financing; (ii)  permit  the  Financing  Sources  to  evaluate  Seller's  property  and  cash  management  systems  for  purposes  of  establishing  collateral  assignments;  (iii)  assist  with  the  negotiation  of  (and  at  the  Closing the, execution and delivery of) customary definitive financing documentation, including  pledge and security documents, guarantees, certificates, and a solvency certificate, and otherwise  facilitate the pledging of collateral (including providing reasonable and customary information  required in connection with the pledging and identification of bank accounts, real property and  intellectual  property)  and  facilitating  the  delivery  of  customary  legal  opinions,  as  may  be  reasonably requested by Purchaser, in each case solely with respect to the information regarding  the  Business  or  the  Company  (collectively,  “Debt  Financing  Documents”);  and  (iv)  obtain  customary payoff letters and collateral releases in respect to the Funded Debt; provided, however,  that, (v) neither the Company nor the Seller shall be required to produce any financial statements  other than the Financial Statements and the financial information pursuant to Section 6.12, and  any  other  customary  financial  statements  reasonably  required  by  the  Financing  Sources  in  connection with the Debt Financing, (w) irrespective of the above and for the avoidance of doubt,  no obligation of Seller under any such Debt  Financing Documents  shall  be effective until  the  Closing, and none of Seller nor the Company shall be required to take any action under any Debt  Financing Documents that is not contingent upon the Closing or that would be effective prior to  the  Closing,  (x)  nothing  herein  shall  require  such  cooperation  to  the  extent  it  would  interfere  unreasonably with the business or operations of the Seller, (y) neither Seller, the Company nor any  of their respective officers, directors or Affiliates will be required to authorize, execute or deliver,  or incur any liability under or with respect to, any Debt Financing Document (including for the  avoidance  of  doubt  any  authorization  letters)  which  are  effective  prior  to  the  Closing  and  all  marketing material with respect to the Debt Financing will exculpate each such Person with respect  any such liability and (z) none of Seller nor, prior to the Closing, the Company, shall be required  to incur any liability or bear any cost or expense or to pay any commitment or other similar fee or  make any other payment in connection with the Financing.  Purchaser shall indemnify and hold  harmless the Seller, Company, their respective Subsidiaries and their representatives from and  against any and all liabilities, losses, damages, claims, costs, expenses, interest, awards, judgments  and penalties suffered or incurred by them in connection with the arrangement of the Financing  (including any action taken in accordance with this Section 6.8 and any information utilized in  connection  therewith  (other  than  historical  information  relating  to  the  Company  and  its  Subsidiaries) and shall reimburse Seller and the Company for any resulting documented out-of- pocket expenses incurred by them.  For the sake of clarity, Purchaser shall not be required to pay  or reimburse the Seller, the Company or any of their Affiliates for any indirect operating costs or  allocated overhead of the Seller, the Company or any of their Affiliates in connection with any of  the foregoing or otherwise or in connection with the preparation of its regular annual or periodic  financial statements or in connection with the performance of its obligations pursuant to the other  provisions of this Agreement.               (e)   Purchaser  acknowledges  and  agrees  that  the  obtaining  of  the  Debt  Financing, or any Alternative Debt Financing, by Purchaser is not a condition to Closing.         Section 6.9 Shared Contracts.  Promptly following the date hereof and to the extent not  completed prior to the Closing Date, until the nine (9) month anniversary of the Closing Date, with  respect to any Contract (a) with any third party to which Seller or any of its Affiliates (other than  the Company) is a party, (b) which benefits both the Business, on the one hand, and the business                                         36    

 

of  Seller  and  its  Affiliates  (other  than  the Company),  on  the  other  hand,  and  (c)  that  is  not  a  Purchased Asset (each, a “Shared Contract”), Seller shall use, and cause its Affiliates to use,  commercially reasonable efforts to assist the Purchaser and the Company to negotiate with the  counterparties  to  any such Shared Contracts  to  enter into new contracts  with  Purchaser or the  Company, on terms substantially similar to those contained in such Shared Contracts including  with respect to pricing, in order for the Business to receive the applicable benefits under such  Shared Contracts (each such new contract, a “New Contract”).         Section 6.10 Intercompany Accounts.  No later than immediately prior to the Closing,  Seller shall, and shall cause its Affiliates  (other than the Company) to, settle all intercompany  accounts between Seller or any of its Affiliates, on the one hand, and the Company, on the other  hand, without any Liability to the Company and in a manner reasonably satisfactory to Purchaser.         Section 6.11 Exclusivity.  Until the Closing occurs or this Agreement is terminated in  accordance with its terms, Seller and Logistics will not (and Seller and Logistics will cause their  respective Affiliates and Representatives and the Company and its directors, officers, employees  and  Representatives  to  not)  solicit, initiate,  engage  in  or  continue  any  contact  concerning  any  proposal or offer, or any contact that would reasonably be expected to result in a proposal or offer,  from any Person relating to any of the following involving the Company or the Purchased Assets:  (a) a liquidation, dissolution or recapitalization, (b) a merger or consolidation, (c) an acquisition  or purchase of any of the material assets (or any material portion of its assets) of, or any equity  interest  in,  the  Company,  or  (d) any  similar  transaction  or  business  combination  (each,  an  “Acquisition Proposal”); provided, however, that an Acquisition Proposal shall not include any  liquidation, dissolution, recapitalization, merger, consolidation or acquisition or purchase of any  of  the  material  assets  (or  material  portion  of  the  assets)  of  the  Seller  that  do  not  involve  the  Company or the Purchased Assets and this Section 6.11 shall not restrict any activity with respect  thereto.  In the event Seller or the Company receives any unsolicited Acquisition Proposal, Seller  shall  promptly,  an  in  any  event  within  forty-eight  (48)  hours,  provide  written  notice  of  such  Acquisition Proposal to Purchaser.         Section 6.12 Financial  Information  Prior  to  Closing.   No  later  than  fifteen  (15)  days  following the last day of each calendar month (beginning with August 31, 2018) during the period  beginning on the date of this Agreement and ending on the Closing Date, Seller shall deliver to  Purchaser an unaudited income statement and balance sheet for such fiscal month then ended for  the  Business,  in  each  case derived  from  the  financial  books  and  records  of  the  Business  and  prepared in accordance with GAAP (consistently applied throughout the periods involved).         Section 6.13 Supplemental Schedules.                 (a)   From and after the date of this Agreement until the Closing, the Seller and  Purchaser,  as  the  case  may  be,  shall  each  notify  the  other  Party  after  becoming  aware  of  the  existence of any material breach of any of such Party’s representations and warranties set forth in  Article IV (Representations and Warranties of the Seller), in the case of the Seller, and Article V  (Representations and Warranties of the Purchaser), in the case of Purchaser; provided, however,  that, subject to the provisions of Section 6.13(b), no such notice shall be deemed to have cured any  breach of any such representation hereunder, whether for purposes of Article 7, Article 8, Article  10, Article 12, or otherwise.                                         37    

 

            (b)   In the event that (i) on or after the date hereof Seller reasonably determines  that Seller will be unable to certify (as contemplated by Section 7.4) as to the matters set forth in  Section 7.1(a) or Section 7.3 due to an event occurring between the date hereof and the Closing  Date (any such event, an “Intervening Event”), (ii) such Intervening Event did not arise from a  willful breach by Seller of any covenant set forth in this Agreement, and (iii) no later than seven  (7) Business Days after Seller first becoming aware of such Intervening Event Seller delivers to  Purchaser a notice of such Intervening Event (with reference to this Section 6.13(b)), together with  a written summary of such  Intervening Event  and copies of any  amendments,  supplements  or  modifications to the Schedules necessary to reflect such Intervening Event (such update provided  in accordance with the foregoing clauses (i), (ii) and (iii), a “Material Update”), then the following  provisions of this Section 6.13(b) shall apply.  The Seller must promptly provide to Purchaser any  information or documentation reasonably requested by Purchaser in order for Purchaser to evaluate  the Material Update, and, if the Material Update is provided less than five (5) Business Days before  the Outside Date, the Outside Date will be extended until five (5) Business Days after delivery of  the  Material  Update  and  such  information  or  documentation  so  as  to  afford  Purchaser  an  opportunity  to  review  such  information.  After  receiving  the  Material  Update  and  the  related  information and documentation reasonably requested by it, Purchaser will have five (5) Business  Days to terminate this Agreement by providing written notice to Seller, with such termination  being the sole remedy relating to such Intervening Event, and if Purchaser does not terminate this  Agreement within such period, the Material Update will amend the applicable Schedules, qualify  the  corresponding  representations  and  warranties  contained  in  this  Agreement,  and  cure  any  misrepresentation or breach of representations and warranties that would have existed hereunder  had the Material Update not been provided.         Section 6.14 Sublease.  From and after the date of this Agreement until the Closing, the  Seller and Purchaser shall work in good faith to enter into a sublease agreement on commercially  reasonable terms with respect to the premises located at 2975 Crocket Street Beaumont, TX 77701,  which sublease agreement shall be effective as of the Closing.                                     ARTICLE 7           CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER         The obligation of Purchaser to consummate the Transaction on the Closing Date is subject  to  the  satisfaction  (or  waiver  by  Purchaser,  in  its  sole  discretion)  of  each  of  the  following  conditions:         Section 7.1 Accuracy of Representations and Warranties.  Each of the representations  and warranties of Seller and Logistics contained herein (a) other than a Specified Representation,  shall be true and correct (disregarding any materiality or Material Adverse Effect qualifications  contained therein) in all respects at and as of the date hereof and at and as of the Closing Date,  except, in each case, to the extent any such representation or warranty speaks as of a specific date,  in which case such representation or warranty shall be, subject to the qualifications set forth above,  true and correct at and as of such specific date, in each case, except for any such failure to be true  and correct as would not reasonably be expected to have a Material Adverse Effect, and (b) that is  a Specified Representation shall be true and correct in all respects at and as of the date hereof and  at and as of the Closing Date, except for any de minimis failure to be true and correct.                                         38    

 

      Section 7.2 Performance of Covenants.  Seller and Logistics shall have performed and  complied with, in all material respects, the covenants and agreements required to be performed or  complied with by them at or prior to the Closing.         Section 7.3 No  Material  Adverse  Effect.   No  Material  Adverse  Effect  shall  have  occurred since the date of this Agreement.         Section 7.4 Officer’s Certificate.  Purchaser shall have received a certificate to the effect  set forth in Sections 7.1, 7.2, and 7.3, dated the Closing Date, duly executed on behalf of the Seller  and Logistics.         Section 7.5 No Legal Restraint.  There shall be in effect no Law or Order that has the  effect of prohibiting the consummation of the Transactions.         Section 7.6 Antitrust  Clearance.  All  necessary  filings  required  under  any Antitrust  Laws shall have been made and the applicable waiting periods thereunder shall have expired or  been terminated or waived.         Section 7.7 Third Party Consents.  Each of the consents, waivers and approvals required  under the Contracts listed on Schedule 7.7 shall have been obtained and delivered to Purchaser in  form and substance reasonably satisfactory to Purchaser and shall not have been withdrawn.         Section 7.8 Tax Withholding Certificates. On or prior to the Closing Date, the Seller  and Logistics shall deliver or cause to be delivered to the Purchaser a certificate or certificates in  compliance  with  Treasury  Regulation  under  Section  1445,  establishing  that  the  transactions  contemplated by this Agreement are exempt from withholding under Section 1445 of the Code in  the form or forms attached hereto as Exhibit B (the “FIRPTA Certificates”).         Section 7.9 Other Deliveries.  Purchaser shall have received the documents required by  Section 3.2 at or prior to the Closing.                                     ARTICLE 8             CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER         The obligation of Seller and Logistics to consummate the Transaction on the Closing Date  is subject to the satisfaction (or waiver by Seller, in its sole discretion) of each of the following  conditions:         Section 8.1 Accuracy of Representations and Warranties.  Each of the representations  and warranties of Purchaser contained herein shall be true and correct (disregarding any materiality  or Purchaser Material Adverse Effect qualifications contained therein) in all respects at and as of  the date hereof and at and as of the Closing Date with the same force as if made on and as of the  Closing Date and except to the extent any such representation and warranty speaks as of a specific  date, in which case such representation and warranty shall be, subject to the qualifications set forth  above, true and correct, as the case may be, as of such specific date and except, in each case, for  any such failure to be true and correct as would not reasonably be expected to have a Purchaser  Material Adverse Effect.                                         39    

 

      Section 8.2 Performance of Covenants.  Purchaser shall have performed and complied  with, in all material respects, the covenants and agreements required to be performed or complied  with by it at or prior to the Closing.         Section 8.3 Officer’s Certificate.  Seller shall have received a certificate to the effect set  forth in Sections 8.1 and 8.2, dated the Closing Date, duly executed on behalf of Purchaser by a  duly authorized officer of Purchaser.         Section 8.4 No Legal Restraint.  There shall be in effect no Law or Order that has the  effect of prohibiting the consummation of the Transactions.         Section 8.5 Antitrust  Clearance.  All  necessary  filings  required  under  any Antitrust  Laws shall have been made and the applicable waiting periods thereunder shall have expired or  been terminated.         Section 8.6 Other  Deliveries.   Seller  shall  have  received  the  documents  required  by  Section 3.2 at or prior to the Closing.                                     ARTICLE 9                    ADDITIONAL POST-CLOSING COVENANTS               From and after the Closing, the Parties hereby covenant and agree as follows:         Section 9.1 Certain Employment Matters.               (a)   Canadian Business Employees.  Each Business Employee, who is employed  by the Company in Canada (a “Canadian Business Employee”) immediately prior to the Closing,  shall have their employment continue with the Company automatically by operation of Law at the  Effective Time.               (b)   Transferred Employees.                      (i)   Except for the Excluded Employees set forth on Schedule 13.1(b),           the  Parties  intend  that  there  will  be  a  continuity  of  employment  for  any  Business           Employee, who is employed by the Company immediately prior to the Closing, and           any Business Employee who transfers employment from a Selling Employer to the           Purchaser or its Affiliate (including the Company) in connection with the Transaction           at the Effective Time, in each case except for the Excluded Employees.  In furtherance           of the foregoing, no later than ten (10) days following the date of this Agreement, the           Purchaser  shall,  or  shall  cause  its  applicable Affiliate  to,  extend,  to  each  Business           Employee,  other  than  each  Excluded  Employee,  who  is  employed  by  Seller  in  the           United States (each, other than the Excluded Employees, a “Seller Employee”) an offer           of employment (the “Offer Letter”) that, if accepted, would, immediately following the           Closing  Date:  (i)  provide  such  Seller  Employee  with  base  salary,  cash  bonus           opportunity,  and  benefits  (other  than  equity-based,  defined  benefit  pension,  retiree           welfare,  or  nonqualified  deferred  compensation  or  benefits)  that  are  substantially           comparable in the aggregate to the base salary, cash bonus opportunity and benefits           (other  than  equity-based,  defined  benefit  pension,  retiree  welfare,  or  nonqualified                                         40    

 

deferred compensation or benefits) provided by the Seller to  such Seller  Employee  immediately prior to the Closing Date.  Notwithstanding the foregoing, with  respect to  any Seller Employee who is on a short-term or long-term disability or other approved  leave of absence on the Closing Date (each, an “Inactive Employee”), from and after  the Closing  Date,  (i)  Purchaser’s  offer  of  employment  shall  be  effective  for  such  Inactive Employee only when such Inactive Employee presents himself or herself for  active employment within six months of the Closing Date (or such later date as required  under applicable  Law),  (ii)  Seller  or  its  Affiliates  (other  than  the  Company)  shall  continue to employ such Inactive Employee employed by Seller or its Affiliates (other  than  the  Company)  until  such  Inactive  Employee’s  offer  of  employment  becomes  effective in accordance with this Section or as otherwise as required by applicable Law,  and (iii) Seller or its Affiliates (other than the Company) shall permit each Inactive  Employee  to  continue  to  participate  under  Seller’s  employee  benefit  plans  in  accordance  with  the  eligibility  requirements  thereof  while  such  Inactive  Employee  remains employed by Seller or its Affiliates  and as required under applicable Law.   Each Business Employee who accepts Purchaser’s offer of employment shall become  a  Transferred  Employee  as  of the  Closing  Date  or,  with  respect  to  each  Inactive  Employee, such later date that such Inactive Employee presents himself or herself for  active employment with Purchaser within six months of the Closing Date (or such later  date as required under applicable Law).  Purchaser shall bear any costs related to any  claims made by any Seller Employee for any and all severance payments and benefits  (including  the  employer  portion  of  any  employment  Taxes)  arising  out  of  or  in  connection  with  Purchaser’s  failure  to  make  offers  of  employment  to  any  Seller  Employee (other than the Excluded Employees) in accordance with this Agreement.   Seller and its Affiliates shall bear any costs related to any claims made by any Seller  Employee for any and all severance payments and benefits (including the employer  portion of any employment Taxes) other than as assumed by Purchaser in the preceding  sentence,  including  with  respect  to  any  Seller  Employee  who  does  not  become  a  Transferred Employee due to such Seller Employee’s refusal of an offer of employment  made by Purchaser in accordance with this Agreement.             (ii)  Each Business Employee who becomes an employee of Purchaser  or its Affiliates (including the Company) automatically by operation of Law, and each  Business Employee employed by the Company immediately prior to the Closing, and  each  Seller  Employee  who  accepts  an  offer  of  employment  from,  and  commences  employment  with,  Purchaser  or  its Affiliates  (including  the  Company)  pursuant  to  Section 9.1(a) above is referred to herein a “Transferred Employee”; provided, that  any Seller Employee shall become a Transferred Employee as of the date such Seller  Employee  actually  commences  employment  with  Purchaser  or  any  of  its Affiliates.   Purchaser shall, or shall cause its Affiliates to, provide the Transferred Employees with  the following for a one (1) year period following the Effective Time (or, if earlier, until  the date of termination of the relevant Transferred Employee): (i) a base salary or base  hourly wage rate that is no less favorable than that in effect immediately before the  Effective Time, (ii) an incentive cash bonus opportunity not less favorable than, and/or  commission  formula  no  less  favorable  than,  that  in  effect  immediately  prior  to  the  Effective Time, (iii) severance benefits equal to one week of base pay for each year of  completed  service,  and  (iv)  employee  welfare  and  retirement  benefits  (but,  for  the                                41                 

 

avoidance of doubt, not including any defined benefit pension plan or equity or equity- based benefits) that are, at a minimum, substantially comparable in the aggregate to the  employee welfare and retirement benefits that applied to such individual immediately  prior to the Effective Time.  The Parties shall use commercially reasonable efforts to  cooperate  to  comply  with  legal  and regulatory  requirements  to  accomplish  the  employment  transfers  described  in  this Section 9.1.   For  the  avoidance  of  doubt,  Excluded Employees shall continue to be employed by a Seller or an Affiliate of a  Seller  or,  if  applicable,  shall  have  their  employment  transferred  to  a  Seller  or  an  Affiliate of a Seller that is not the Company prior to the Closing, and no Excluded  Employee  shall  in  any  event  be  construed  as  a  Business  Employee  or  Transferred  Employee under this Agreement.      (c)   Post-Closing Compensation and Benefits Generally.            (i)   Benefit Plans Generally.  All Seller Employee Benefit Plans and any  other  benefit  or  compensation  plan,  program,  agreement  or  arrangement  that  is  sponsored or maintained by Seller or any of its Subsidiaries or Affiliates, in each case,  other than the Assumed Benefit Plans (collectively, the “Retained Benefit Plans”) and  all Liabilities with respect thereto shall be assumed and retained by Seller on and after  the Effective Time, and, effective as of the Effective Time, all Transferred Employees  shall cease to accrue benefits under and otherwise to participate as active participants  in the Retained Benefit Plans.  Seller Employee Benefit Plans, including each Company  Employee Benefit Plan, to which Seller, the Company, or any other Selling Employer  (or  any  of  their  respective  Subsidiaries  or Affiliates)  contributes  or  is  obligated  to  contribute, or may have any Liability contingent or otherwise, in any such case, for the  benefit of Transferred Employees in the U.S. that are listed on Schedule 1.1(b) shall be  assumed by or, if applicable, continue to be sponsored or maintained by the Company  after the Closing (the “Assumed Benefit Plans”), and Seller and its Affiliates (other  than the Company) shall have no further obligations or responsibilities relating to such  Assumed Benefit Plans, effective as of the Effective Time.            (ii)  Service  Credit;  Benefit  Transition.  For  purposes  of  eligibility,  vesting  and for  purposes  of  determining  future  vacation  accruals  and  severance  amounts (but, for the avoidance of doubt, not for purposes of benefit accrual under a  defined benefit pension plan or for any purpose under any equity or equity-based plan),  under the employee benefit plans of Purchaser and its Affiliates providing benefits to  any  Transferred  Employees  after  the  Closing,  each  Transferred  Employee  shall  be  credited upon commencement of employment with Purchaser or its Affiliates with his  or her years of service with the applicable Selling Employer (and its Affiliates and their  respective predecessor entities) as of the Effective Time, to the same extent as such  Transferred Employee was credited for such service for the same purpose under any  similar Seller Employee Benefit Plan immediately prior to the Closing Date, except to  the extent such credit would result in a duplication of benefits.                                 42                 

 

   (d)   Certain Specific Compensation and Benefits.            (i)   Welfare Benefits.  Seller and Purchaser, Purchaser’s Affiliates and  the Company shall cooperate so that there shall be in effect, as of the Effective Time,  medical, dental, life, accident and disability insurance plans sponsored by Purchaser  and/or one or more Affiliates of Purchaser for Transferred Employees (“New Welfare  Plans”) that, subject to subject to satisfaction of eligibility provisions after taking into  account Section 9.1(b)(ii), provide Transferred Employees with benefits thereunder.  In  addition, and without limiting the generality of the foregoing, for purposes of each New  Welfare  Plan,  Purchaser  shall  use  commercially  reasonable  efforts  to  (x)  cause  all  preexisting  condition  exclusions  and  actively-at-work  requirements  of  such  New  Welfare Plan that is a health plan to be waived for such Transferred Employee and his  or her covered dependents to the extent such exclusions and requirements were waived  under comparable Seller Employee Benefit Plans, and (y) cause any eligible expenses  incurred by such Transferred Employee and his or her covered dependents during the  portion of the plan year of the Seller Employee Benefit Plans ending on the date such  Transferred Employee’s participation in the corresponding New Welfare Plan begins to  be  taken  into  account  under  such  New  Welfare  Plan for  purposes  of  satisfying  all  deductible, coinsurance and maximum out-of-pocket requirements applicable to such  Transferred Employee and his or her covered dependents for the applicable plan year  as if such amounts had been paid in accordance with the corresponding New Welfare  Plan.  Seller and its Affiliates (other than the Company) shall be solely responsible for  all  Liabilities  under  Section  4980B  of  the  Code  with  respect  to  “M&A  qualified  beneficiaries”  (as  defined  in  Treasury  Regulation  Section  54.4980B-9).   For  the  avoidance of doubt, Purchaser shall be responsible for any Liabilities under Section  4980B of the Code with respect to each Transferred Employee and his or her covered  dependents.            (ii)  Annual Cash Bonus and Commissions.  Each Transferred Employee  who is eligible as of the Effective Time for an annual or quarterly cash bonus under  any Seller Employee Benefit Plan for the performance period in which the Closing  occurs shall be paid a bonus by Purchaser (without regard to any requirement of service  through the end of such period) based on the individual’s target amount or the target  level  of  performance  and  pro-rated  as  of  the  Effective  Time.   Seller  shall  provide  Purchaser with a schedule of such payments prior to or as soon as practicable after the  Closing that is not already reflected in the Estimated Closing Statement and the amount  of such bonuses, plus the employer portion of payroll, social security, unemployment  and similar Taxes thereon, shall be treated as Debt for all purposes of this Agreement  Final Net Working Capital. Such payment shall be made by Purchaser or Purchaser’s  Affiliate at such time as is consistent with the Seller’s historical timing for payment of  such amounts (or promptly following receipt of such schedule, if later). Purchaser or  Purchaser’s Affiliate shall be solely responsible for and pay any amount earned by a  Transferred Employee pursuant to the terms of any Seller Employee Benefit Plan that  provides for commission based compensation with respect to all sales and transactions  occurring  prior  to  the  Closing  (regardless  of  whether  the  Transferred  Employee  continues to be covered under such plan).  No later than thirty (30) days following  Purchaser’s receipt of the audited financial statements of Purchaser for the fiscal year                                43                 

 

ended December 31, 2018, Purchaser shall pay to each of the individuals set forth on  Schedule 9.1(d)(ii) the accrued portion of the customary annual bonuses owing to such  individuals  as  indicated  (which  represents  the  bonus  accrual  for  such  individuals  through  November  1,  2018)  on Schedule  9.1(d)(ii),  in  each  case,  so  long  as  such  employee  has  not  voluntarily  terminated  such  employee’s  employment  with  the  Company, Purchaser or their Affiliates, or been terminated for cause by the Company,  Purchaser or their Affiliates, prior to the Bonus Payment Date.            (iii) Vacation.  To  the  extent  permitted  by  applicable  Law,  Purchaser  shall carry over for each Transferred Employee all accrued but unused paid time off  (“Accrued Paid Time Off”) credited to him or her pursuant to the applicable policies  and historical practices of a Selling Employer as in effect as of the Effective Time to  the  extent  such Accrued  Paid  Time  Off  is  reflected  in  Final  Net  Working  Capital;  provided, however, that to the extent applicable Law requires the payment in cash of  any portion of the Accrued Paid Time Off, Seller shall, or shall cause its Affiliates to,  pay such amounts to the Transferred Employees at, or promptly following the Closing,  in lieu of carrying over such Accrued Paid Time Off.            (iv)  Purchaser shall, or shall cause its Affiliates to, maintain or establish,  a 401(k) plan that is intended to be tax-qualified (the “Purchaser 401(k) Plan”) and in  which the Transferred Employees shall be eligible to participate as of or as soon as  reasonably practicable following the Closing Date, subject to satisfaction of eligibility  provisions and after taking into account Section 9.1(b)(ii). Effective as of the Closing  Date,  each  Transferred  Employee shall  become  fully  vested  in  his  or  her  account  balance in any Seller Employee Benefit Plan that is a tax-qualified 401(k) plan (the  “Seller 401(k) Plan”).  Seller agrees to cause the Seller 401(k) Plan to permit, and  Purchaser agrees to cause the Purchaser 401(k) Plan to accept, rollovers by Transferred  Employees from  the  Seller  401(k)  Plan  (including  promissory  notes  evidencing  outstanding plan loans).      (e)   General.            (i)   Seller’s Retained Liabilities.  Seller or its Affiliates on or after the  Closing  Date  shall  remain  solely  responsible  for  any  and  all  Liabilities (A)  arising  under, in connection with or in respect of the Retained Benefit Plans, subject to the  provisions of Section 9.1(d), and neither Purchaser nor its Affiliates shall have any  responsibility or obligation in respect of any Retained Benefit Plan and (B) arising out  of,  or  relating  to,  the  employment  or  termination  of  employment  of  any  Business  Employees or Former Business Employees with, or the engagement or termination of  engagement of any current or former independent contractors who provide or provided  services primarily to the Business and were or are engaged by, Seller or its Affiliates  other than the Company.  No assets held in trust for any Retained Benefit Plan will be  transferred to  Purchaser  or to  any employee benefit  plan adopted or maintained by  Purchaser or its Affiliates; provided, however, that rollovers of account balances under  the Seller 401(k) Plan shall permitted in accordance with Section 9.1(c) above.                                 44                 

 

            (f)   WARN Act. On the Closing Date, Seller shall provide a list of any and all  employees of Seller who have experienced or will experience an employment loss or layoff as  defined by the WARN Act, within ninety (90) days prior to, or after, the Closing Date, at any site  of employment in which a Business Employee is employed, noting the site of employment, the  number  of  employees  employed  at  such  site(s)  during  the  ninety  (90)  day  period  prior  to  the  Closing and the date of the proposed or actual employment loss or layoff.  In the event of any  “plant closing” or “mass layoff” with respect to the Business, as defined by the Worker Adjustment  and Retraining Notification Act  of 1988 (“WARN Act”), or any state, provincial  or local  Law  equivalent, that shall occur on or within ninety (90) days of the Closing, Purchaser shall comply  with all of the requirements of the WARN Act and any applicable state, provincial and local Law  equivalent, and shall assume any and all liabilities with respect thereto.               (g)   Personnel Records. To the extent permitted by applicable Law, the originals  of all records set forth in the Transferred Employees’ and Former Business Employees’ personnel  files (the “Personnel Records”) that are created prior to their commencement of employment with  Purchaser or its Affiliate shall be transferred to Purchaser or its Affiliates as of such date (provided  that any such Personnel Records held by the Company shall be deemed to be so transferred), with  the Selling Employers retaining copies of all such records, at Seller’s option.                 (h)   Cooperation.  After the Closing, each Party shall cooperate with the other,  to  the  extent  permitted  by  applicable  Law,  in  providing  access  to  relevant  data,  including  employment  records,  as  reasonably  necessary  to  (i)  administer  the  benefits  of  the  Business  Employees under any Seller Employee Benefit Plan and the Transferred Employees under any  benefit plan established or maintained by Purchaser or its Affiliates that covers the Transferred  Employees, or (ii) assist in the prosecution, defense, and/or settlement of any Action involving a  Business Employee, Former Business Employee, a Seller Employee Benefit Plan or an employee  benefit plan established by Purchaser or its Affiliates that covers Transferred Employees.                 (i)   Effect of this Agreement.  Nothing in this Section 9.1 or any other provision  of this Agreement shall be construed to modify, amend or establish any benefit plan, program or  arrangement or in any way affect the ability of the Parties or any other Person to modify, amend  or terminate any of its benefit plans, programs or arrangements.  This Section 9.1 is not intended  to, and shall not be construed to, confer any Person, other than the Parties, any rights or remedies  hereunder (or any third-party beneficiary rights) or any Transferred Employee any promise or right  to employment for any duration.         Section 9.2 Further Assurances; Novation; Certain Payments.               (a)   Each Party shall, and shall cause its Affiliates to, take all such further actions  and do all such further things (including acknowledging, executing, delivering and/or filing all  such  further  conveyances,  notices,  assumptions,  releases  and  acquittances  and  such  other  instruments  and  documents)  as  may  be  reasonably  required  to  effect  the  provisions  of  this  Agreement and each other Transaction Document and to give full effect to the Transactions.               (b)   For a period of six (6) months following the Closing, the Parties shall use  commercially reasonable efforts to obtain, or to cause to be obtained, any consent, substitution,  approval or amendment required to novate all rights and obligations of Seller, Logistics and their                                         45    

 

Affiliates (other than the Company) under any and all Contracts that constitute Purchased Assets  and any Liabilities that constitute Assumed Liabilities, or to obtain in writing the unconditional  release of Seller, Logistics and its Affiliates, so that, in any such case, Purchaser (or the Company)  shall be solely responsible for such Liabilities; provided, however, that commercially reasonable  efforts shall not require Seller, Logistics or Purchaser to amend any Contract, to pay or to offer  to pay any money or incur any material liability that is not required to be paid or incurred by such  Party or any of its Affiliates under the terms of any Contract.               (c)   For a period of  six (6) months following the Closing, the Parties shall use  commercially reasonable efforts to obtain, or to cause to be obtained, any consent, substitution,  approval or amendment required to novate all rights and obligations of Purchaser and its Affiliates  (including the Company) under any and all Contracts that constitute Excluded Assets and any  Liabilities that constitute Excluded Liabilities, or to obtain in writing the unconditional release of  Purchaser and its Affiliates, so that, in any such case, Seller shall be solely responsible for such  Liabilities; provided, however, that commercially reasonable efforts shall not require Seller or  Purchaser to amend any Contract, to pay or to offer to pay any money or incur any material liability  that is not required to be paid or incurred by such Party or any of its Affiliates under the terms of  any Contract.               (d)   If any Party receives any payment or other funds due to any other Party  pursuant  to  the  terms  of  any  Transaction  Document,  then  the  receiving  Party  shall  promptly  forward such payment or funds to the appropriate other Party.  The Parties acknowledge and agree  there is no right of setoff regarding such payments and a Party may not withhold funds received  from any Person for the account of the other Party in the event there is a dispute regarding any  other  issue  under  any  Transaction  Document.   Seller  shall,  and  shall  cause  its  Affiliates  to,  promptly forward to Purchaser or Purchaser’s Affiliates all payments collected in respect of all  accounts receivable and other receivables generated by the Company and the Business after the  Effective Time that have been assigned to Purchaser or Purchaser’s Affiliates hereunder.         Section 9.3 Use of Seller Names and Business Names.                 (a)   Purchaser shall:                     (i)   within  sixty  (60)  days  after  the  Closing  Date,  remove  all           Trademarks, trade dress, internet address, trade name, service mark, logo, design or           any derivative thereof previously or currently used by Seller or Seller’s Affiliates that           are not related solely to the Business, specifically, “Foundation Building Materials,”           “FBM,” “FBM Logistics,” “Hinderlighter Trucking,”  and “Winroc” or any iterations           thereof (collectively, the “Seller Names”) from all buildings, signs, vehicles, invoices,           letterhead, domain names and web sites, advertising and promotional materials, office           forms and business cards of the Company and the Business; and, with respect to those           Trademarks, trade dress, internet address, trade name, service mark, logo, design or           any  derivative  thereof  that  are  not  specifically  referenced  in  the  foregoing  clause           (“collectively, the “Additional Seller Names”), were previously or are currently used           by Seller or Seller’s Affiliates that are not related solely to the Business, within sixty           (60) days of Seller’s notice to Purchaser, remove such Additional Seller Names from           all  buildings,  signs,  vehicles,  invoices,  letterhead,  domain  names  and  web  sites,                                         46    

 

         advertising and promotional materials, office forms and business cards of the Company           and the Business;                     (ii)  within six (6) months after the Closing Date: (i) remove from the           inventory of the Business all remaining packaging materials that include or incorporate           Seller Names (the “Existing Inventory”); and (ii) use commercially reasonable efforts           to remove the Seller Names from those assets of the Business that are not Existing           Inventory,  including  those  assets  (including  tools,  molds  and  machines)  used  in           association  with  the  manufacture  of  the  products  of  the  Business  or  otherwise           reasonably used in the conduct of the Business after the Closing Date; and                     (iii) not, at any time, advertise or hold itself out, or permit its Affiliates           to advertise or hold themselves out, as Seller or Seller’s Affiliate at any time before, on           or after the Closing Date.               (b)   Seller shall, and shall cause its Affiliates to:                     (i)   within  sixty  (60)  days  after  the  Closing  Date,  remove  all           Trademarks, trade dress, internet address, trade name, service mark, logo, design or           any derivative thereof previously or currently used by the Company or related primarily           to the Business required to be set forth on Schedule 4.11(a) except with respect to any           Seller Names (the “Business  Names”) from  all buildings,  signs,  vehicles,  invoices,           letterhead, domain names and web sites, advertising and promotional materials, office           forms and business cards of Seller;                     (ii)  as soon as possible following the Closing, cease use of and remove           all Trademarks, trade dress, internet address, trade name, service mark, logo, design or           any derivative thereof that include any Business Name, (e.g., “Winroc-SPI” and “FBM-          SPI”) (the “Combined Names”) from all buildings, signs, vehicles, invoices, letterhead,           domain names and web sites, advertising and promotional materials, office forms and           business cards of Seller;                     (iii) within six (6) months after the Closing Date: (i) remove from the           inventory of Seller all remaining packaging materials that include or incorporate names           of the Company or the Business except with respect to any Seller Names or Combined           Names (the “Remaining Inventory”); and (ii) use commercially reasonable efforts to           remove the Business Names or Combined Names from those assets of the Seller that           are  not  Remaining  Inventory,  including  those  assets  (including  tools,  molds  and           machines) used in association with the manufacture of the products of the Seller or           otherwise reasonably used in the conduct of Seller’s business after the Closing Date;           and                     (iv)  not, at any time, advertise or hold itself out, or permit its Affiliates           to advertise or hold themselves out, as Purchaser or Purchaser’s Affiliate at any time           before, on or after the Closing Date.         Section 9.4 Seller’s Access to Documents.  Purchaser shall, and shall cause its Affiliates  to, afford to Seller’s Representatives, upon reasonable notice, during normal business hours and                                         47    

 

without undue interruption to Purchaser’s business, reasonable access to the books and records  pertaining to the operations of the Business prior to the Closing Date (including financial records)  for  a  period  of  seven  (7)  years  following  the  Closing  Date  in  connection  with  any  applicable  reporting obligations, the Excluded Liabilities, the Excluded Assets, Rebates and other reasonable  business purposes; provided, that nothing herein shall limit Seller’s rights of discovery.  Purchaser  shall hold all of the books and records of the Business included in the assets of the Company in  accordance with Purchaser’s standard record retention policies and the relevant Tax Laws of any  jurisdiction in which the Company is situated; provided, that Purchaser shall not destroy, alter or  dispose of any of such books and records for a period of seven (7) years from the Closing Date or  such longer time as may be required by applicable Law without first offering in writing at least  ninety  (90)  calendar  days  prior  to  such  destruction  or  disposition  to  surrender  them  to  Seller.   Notwithstanding the foregoing, with respect to any information sought by Seller or its Affiliates  with  respect  to  any  disputed  direct  indemnification  claim  between  any  Purchaser  Indemnified  Party and Seller under Article 10, Purchaser and its Affiliates shall not be required to provide any  such access to the extent that such access would materially prejudice Purchaser’s and its Affiliates’  rights in connection with any disputed indemnification claim pursuant to Article X         Section 9.5 Certain Agreements Regarding the R&W Insurance Policy.  Purchaser shall  not amend or consent to amending the R&W Insurance Policy in any manner which adversely  affects the Seller without the Seller’s prior written consent.         Section 9.6 Certain Consents. In the event that any consent to the Transaction of the  counterparties to the agreements set forth on Schedule 9.6(a) are not obtained prior to Closing,  Seller and Purchaser shall share in certain expenses as described on Schedule 9.6(a).  With respect  to the consents, waivers and approvals listed on Schedule 7.7, Purchase hereby agrees to take the  actions set forth on Schedule 9.6(b) to the extent reasonably necessary to facilitate receipt of such  consents, waivers and approvals.         Section 9.7 Release of Claims.                 (a)   Effective as of the Closing, Seller, on behalf of itself, Foundation Building  Materials,  Inc.  and its  Subsidiaries and its  and their successors and assigns  (collectively, with  Seller, the “Seller Releasors”), hereby releases, acquits and forever discharges, to the fullest extent  permitted  by  Law  the  Company  and  its  past,  present  or  future  officers,  managers,  directors,  stockholders, partners, members, Affiliates, employees, counsel and agents (each, a “Purchaser  Releasee”) of, from and against any and all actions, causes of action, claims, demands, damages,  Losses, judgments, debts, dues and suits of every kind, nature and description whatsoever, in law  or in equity, which such Seller Releasor or its heirs, legal representatives, successors or assigns  ever  had,  now  has  or  may  in  the  future  have  on  or  by  reason  of  any  matter,  cause  or  thing  whatsoever related to the business or other operations of, or value of, the Business or the Company  prior to the Closing.  Seller covenants and agrees not to, and shall cause each Seller Releasor not  to, assert any such claim against any Purchaser Releasee.  Notwithstanding anything contained in  this Section 9.7 to the contrary, the releases set forth in this Section 9.7 shall not release, acquit or  discharge, or otherwise limit or affect, the obligations of Purchaser or any other Purchaser Releasee  under this Agreement or any Transaction Document.                                          48    

 

            (b)   Effective as of the Closing, Purchaser, on behalf of itself, its parent and its  Subsidiaries  and  their  successors  and  assigns  (collectively,  with  Seller,  the  “Purchaser  Releasors”), hereby releases, acquits and forever discharges, to the fullest extent permitted by Law  the Company and its past, present or future officers, managers, directors, stockholders, partners,  members,  Affiliates,  employees,  counsel  and  agents  (each,  a  “Seller  Releasee”)  of,  from  and  against any and all actions, causes of action, claims, demands, damages, Losses, judgments, debts,  dues and suits of every kind, nature and description whatsoever, in law or in equity, which such  Purchaser Releasor or its heirs, legal representatives, successors or assigns ever had, now has or  may in the future have on or by reason of any matter, cause or thing whatsoever related to the  business  or  other  operations  of,  or  value  of,  the  Business  or  the  Company  prior  to  the  Closing.  Purchaser covenants and agrees not to, and shall cause each Purchaser Releasor not to,  assert any such claim against any Seller Releasee.  Notwithstanding anything contained in this  Section 9.7 to the contrary, the releases set forth in this Section 9.7 shall not release, acquit or  discharge,  or  otherwise  limit  or  affect,  the  obligations  of  Seller,  Logistics  or  any  other  Seller  Releasee under this Agreement or any Transaction Document.         Section 9.8 Wrong Pockets.                 (b)   If, after the Closing, (i) Seller or Purchaser reasonably determines that any  tangible or intangible asset that should not have been transferred to Purchaser pursuant to this  Agreement has been transferred to Purchaser or (ii) Seller or Purchaser reasonably determines that  any tangible or intangible asset that should have been transferred to Purchaser pursuant to this  Agreement (including by reason of the fact that such asset is used exclusively in the Business, or  in the event that the failure to transfer such asset to Purchaser resulted in or would reasonably be  expected to result in a breach of the representations and warranties set forth in Section 4.9(a)), has  not been transferred to Purchaser, Purchaser and Seller shall consult with one another in good faith  and  reasonably  cooperate  to  determine  if  such  asset  is  held  by  the  wrong  Party  and,  if  so  determined, to effect the transfer of such asset to the appropriate Party or its designee as soon as  practicable and for no additional consideration.               (c)   If  and  solely  to  the  extent  that  any  Software  or  Intellectual  Property  (excluding Trademarks) owned by a Seller or any Affiliate of a Seller as of the Closing (i) was  used in any product or service of, or in the conduct of, the Business and (ii) would be infringed,  misappropriated, or otherwise violated by the continued use or other commercial exploitation of  such product or service or the continued conduct of the Business in (1) the same manner as used,  exploited or conducted by Seller immediately prior to Closing, or (2) the reasonable expansion of  the Business hereafter, then Seller, on behalf of itself and its Affiliates and its and their successors  and assigns, hereby agrees not to, initiate, institute, commence, file, maintain or prosecute any  action, lawsuit, proceeding or other claim of any kind against Purchaser, its Affiliates, any of its  or  their  successors  or  assigns,  or  any  of  its  or  their  sublicensees,  suppliers,  manufacturers,  distributors, resellers, contractors, consultants and customers, with respect to use of such Software  or Intellectual Property (excluding Trademarks) in connection with, and to the extent it relates to,  the Business, or assist or cause any third party to do any of the foregoing.               (d)   Any  dispute  between  the  Parties  regarding  whether  any  Intellectual  Property should be transferred or licensed under this Section 9.8 may be brought by any Party in  a court of competent jurisdiction in accordance with Section 13.6.                                         49    

 

      Section 9.9 Restrictive Covenants.               (a)   Seller and  Logistics,  on  behalf  of  themselves,  Foundation  Building  Materials, Inc. and each of their respective Subsidiaries (other than the Company) (collectively,  the “Restricted Parties” and each, a “Restricted Party”) hereby agrees that, (from the Closing Date  until the fifth (5th) anniversary of the Closing Date, Seller and Logistics shall not, and will cause  each other Restricted Party to not, in any manner (whether on his, her or its own account, or as an  owner, operator, manager, consultant, officer, director, employee, investor, agent or otherwise),  engage directly or indirectly in the Competing Business, or own any interest in, manage, control,  provide financing to, participate in (whether as an owner, operator, manager, consultant, officer,  director, employee, investor, agent, representative or otherwise), render services for or consult  with any Person that is engaged in a Competing Business.                (b)   Seller and Logistics each hereby agrees that, from the Closing Date until the  fifth  (5th)  anniversary  of  the  Closing  Date,  such  Person  shall  not,  and  will  cause  each  other  Restricted  Party  to  not,  in  any  manner  (whether  on  its  own  account,  as  an  owner,  operator,  manager, consultant, officer, director, employee, investor, agent or otherwise), (i) hire or engage  or recruit, solicit or otherwise attempt to employ or engage or enter into any business relationship  with  any  Person  employed  by  Purchaser  or  the  Company  or  related  to  the  Business  as  of  the  Closing Date, or induce or attempt to induce any such Person to leave such employment, or (ii) in  any way tortiously interfere with the relationship between Purchaser or the Company, on the one  hand, and any employee, sales representative, broker, supplier, licensee or other business relation  (or any prospective, supplier, licensee or other business relationship) of Purchaser or its Affiliates,  on  the  other  hand  (including  by  making  any  disparaging  statements  or  communications  about  Purchaser, the Company or any of their operations, officers, managers, directors or investors).                (c)   Seller  and  Logistics  each  hereby  acknowledges  that  the  success  of  the  Business  and  the  Company  after  the  Closing  depends  upon  the  continued  preservation  of  the  confidentiality  of  certain  information  about  the  Business  and  the  Company  possessed  by  the  Restricted Parties, that the preservation of the confidentiality of such information by the Restricted  Parties  is  an  essential  premise  of  the  bargain  among  Seller,  Logistics  and  Purchaser,  and  that  Purchaser  would  be  unwilling  to  enter  into  this  Agreement  in the  absence  of  this Section  9.9(c).  Accordingly, during the five (5)-year period following the Closing, each of Seller and  Logistics will, and will cause each other Restricted Party and each of their respective Affiliates,  agents and representatives to, hold in confidence, not disclose, and not use in any manner so as to  cause  any  violation  of  any  covenant  of  the  Restricted  Parties  under  this  Agreement  any  confidential, proprietary or non-public information involving or relating to the Business or the  Company; provided,  that  the  information  subject  to  this Section  9.9(c) will  not  include  any  information generally available to, or known by, the public (other than as a result of disclosure in  violation hereof) or information that is required to be disclosed by Law.               (d)   Each  of  Seller  and  Logistics  has  consulted  with  counsel  regarding  the  restrictions set forth in this Section 9.9 and based on such consultation has determined and hereby  acknowledges that such restrictions contained herein are reasonable in terms of time and type of  activity  and  geographic  scope  and  are  necessary  to  protect  the  goodwill  of  Business  and  the  Company and the substantial investment made by Purchaser under this Agreement. Each of Seller  and Logistics hereby acknowledges and agrees that remedies at law may be inadequate to protect                                         50    

 

Purchaser against any breach of this Section 9.9, and, without prejudice to any other rights and  remedies  otherwise  available  to  Purchaser,  each  of  Seller  and  Logistics  hereby  agrees  that  Purchaser shall be entitled to seek injunctive relief to enforce the provisions of this Section 9.9  without the posting of any bond or other security.  The Parties agree that no amount is payable by  Purchaser in consideration of any “restrictive covenant” (as such term is defined in the Tax Act)  contained in this Agreement and that no part of the Purchase Price has been allocated to such  “restrictive  covenants”.  The  Parties  agree  that  any  “restrictive  covenants”  contained  in  this  Agreement has been granted to maintain or preserve the value of the Purchased Stock to be sold  by Seller to Purchaser.         Section 9.10 Occurrence-Based Insurance Coverage.                 (a)   From and after the Closing, Purchaser and the Company shall have the right  to claim proceeds under insurance policies of Seller or its Affiliates covering the Business or the  Company  with  respect  to  any  occurrence-based  insurance  coverage  (such  policies,  the  "Seller  Occurrence-Based  Insurance  Policies")  in  respect  of  any  Loss  arising  from  any  claim,  act,  omission, event or circumstance that occurred or existed prior to the Closing Date that is potentially  covered by under any of the Seller Occurrence-Based Insurance Policies.                (b)   To the extent the Purchaser or the Company has a right to claim proceeds  covered  under  the  Seller  Occurrence-Based  Insurance  Policies  pursuant  to Section  9.19(a),  Purchaser  or the  Company shall  promptly  deliver  a  written  notice  to  Seller  setting  forth  (i)  a  description of, and an estimated amount payable (if and to the extent known at the time of such  assertion) pursuant to, such claim, (ii) the applicable Seller Occurrence-Based Insurance Policy  which the Company is asserting should provide coverage for such claim, and (iii) a reasonably  detailed explanation of the basis for such claim. Purchaser or the Company may make requests for  claims proceeds under the Seller Occurrence-Based Insurance Policies to the extent coverage and  limits are available thereunder for such entities; provided, that Purchaser or the Company shall  pay, incur and bear sole responsibility with respect to any such claim proceeds for all amounts  relating to any self-insured retention, deductible, co-payments, and all out-of-pocket fees, costs  and expenses incurred by Seller or its Affiliates in connection with the collection of any such claim  proceeds.  Within fifteen (15) days of Seller’s receipt of any such written notice, Seller shall, or  shall cause its Affiliates to, forward such notice to the claims administrator for the applicable Seller  Occurrence-Based Insurance Policies and likewise shall forward any written response that Seller  or its Affiliates receives with respect thereto within five (5) Business Days.               (c)   Seller and its Affiliates (other than the Company) shall retain all rights to  access, control and make claims under the Seller Occurrence-Based Insurance Policies, including  the right to settle or otherwise resolve disputes, or to commence or not commence litigation, with  respect to any of the Seller Occurrence-Based Insurance Policies or claims made thereunder, in  each case, provided, that Seller acts in a commercially reasonable manner and in consultation with  Purchaser.               (d)   Seller  shall  use,  and  shall  cause  its  Affiliates  to  use,  commercially  reasonable efforts to cooperate with reasonable requests (including requests for claim proceeds  coverage information) by Purchaser or the Company relating to the subject matter of this Section  9.10 in  order  to  avail  Purchaser  with  the  benefits  of  the  Seller  Occurrence-Based  Insurance                                         51    

 

Policies.  For  the  purposes  of  this Section  9.10,  “commercially  reasonable  efforts” shall  mean  commercially reasonable efforts as used by the Seller in making claims against insurers in the  operation  of  the  Business  with  respect  to  reasonably  comparable  insurance  claims  during  the  twelve months prior to the Closing Date.                                    ARTICLE 10             SURVIVAL, INDEMNIFICATION AND RELATED MATTERS         Section 10.1 Survival.                 (a)   Subject  to  the limitations  and other provisions of this  Agreement (i) the  representations and warranties (other than the Fundamental Representations) of each Party in this  Agreement  (and  the  liability  of  each  Party  in  respect  of  any  breach  thereof)  shall  survive  the  Closing  until  the  twelve  (12)  month anniversary  of  the  Closing  Date;  (ii)  the  Fundamental  Representations (except the representations and warranties contained in Section 4.8 (Taxes)) shall  survive the Closing until the sixth anniversary of the Closing Date; (iii) the representations and  warranties contained in Section 4.8 (Taxes) and the indemnity for Indemnified Taxes in Section  10.2(d) shall survive the Closing until the date that is sixty (60) days following the expiration of  the applicable statute of limitations (with respect to the underlying liabilities at issue), (iv) the  representations and warranties contained in Section 4.9(a) (Sufficiency of Assets) shall survive the  Closing until the two (2) year anniversary of the Closing Date; (v) the covenants and agreements  of each Party in this Agreement that contemplate actions to be performed or complied with (x)  prior to the Closing (and the liability of any Party in respect of any breach thereof) shall survive  until the twelve (12) month anniversary of the Closing Date and (y) after the Closing (and the  liability of each Party in respect of any breach thereof) shall survive until the latest date with  respect  to  which  performance  of  such  covenant  is  required,  and  (vi)  any  Excluded  Liability,  Assumed  Liability  or  Designated  Liability shall  survive  indefinitely; provided, that  if  an  Indemnifying Party is delivered notice with respect to any indemnity claim pursuant to this Article  10 prior to the expiration of the survival period in this Section  10.1(a) applicable to such claim,  then such survival period shall continue as to the underlying indemnity claim until it is finally  resolved.               (b)   No representation, warranty, covenant or other agreement of any Party shall  survive any termination of this Agreement except as set forth in Section 11.2.  Except as expressly  set forth herein, the Parties intend to modify the statute of limitations to provide for the survival  periods set forth herein and agree that no claim or Action may be brought against Seller, Purchaser  or  any of  their  respective Affiliates  or  Representatives  based  upon,  directly  or  indirectly,  the  representations, warranties, covenants or other agreement of the Parties in this Agreement after (y)  the relevant period set forth in Section 10.1(a), or (z) any termination of this Agreement, except as  provided in Section 11.2.         Section 10.2 Indemnification  by  Seller.  Subject  to  the  limitations  set  forth  in  this  Agreement,  from  and  after  the  Closing  Date,  Seller  shall  indemnify  and  hold  harmless  each  Purchaser Party (which, for the avoidance of doubt shall include the Company from and after  Closing) from and against any and all Losses incurred or suffered by such Purchaser Party arising  out of or resulting from:                                          52    

 

            (a)   any breach of, or inaccuracy in, any representation or warranty made by  Seller or Logistics (other than any Fundamental Representations) in this Agreement;               (b)   any breach of, or inaccuracy in, any Fundamental Representation made by  Seller or Logistics;               (c)   any  breach  or  violation  of  any  covenant  or  other  agreement  of  Seller,  Logistics or the Company in this Agreement;                (d)   the  Indemnified  Taxes (excluding  any  Indemnified  Taxes  to  the  extent  included as a liability in Closing Debt or included as a liability in Closing Net Working Capital,  in each case, as finally determined hereunder); and               (e)   the Excluded Liabilities and any Designated Liabilities.         Section 10.3 Indemnification  by  Purchaser.  Subject  to  the  limitations  set  forth  in  this  Agreement, from and after the Closing Date, Purchaser shall indemnify and hold harmless each  Seller Party from and against any and all Losses incurred or suffered by such Seller Party arising  out of or resulting from:               (a)   any breach of, or inaccuracy in, any representation or warranty made by  Purchaser (other than any Fundamental Representations) in this Agreement;                (b)   any breach of, or inaccuracy in, any Fundamental Representation made by  Purchaser;               (c)   any breach or violation of any covenant or other agreement of Purchaser in  this Agreement; and               (d)   the Assumed Liabilities.         Section 10.4 Certain Limitations. Notwithstanding any other provision of this Agreement  to the contrary:               (a)   With respect to any claims under Section 10.2(a), a Buyer Party shall pursue  recovery for such  Losses  in  the following order of priority:  (i) first,  from  the then remaining  portion  of  the  Indemnification  Escrow  Funds;  (ii)  second,  from  the  Seller  until  the  aggregate  amount of Losses with respect to claims under Section 10.2(a) equal the excess, if any of (x) the  Indemnification Escrow Amount minus (y) the amount of Losses recovered under clause (i), (iii)  thereafter, from the R&W Insurance Policy (whether or not coverage is available), and (iv) solely  with respect to the representations and warranties set forth in Section 4.9(a) and only to the extent  Losses under Section 10.1(a), 10.2(b) and 10.2(d) exceed $13,475,000 (without giving effect to  any coverage under the R&W Insurance Policy), directly against the Seller in an amount not to  exceed $5,000,000.  With respect to any claim pursuant to Section 10.2(b) or Section 10.2(d), a  Buyer Party shall pursue recovery for such Losses in the following order of priority:  (i) first, from  the then remaining portion of the Indemnification Escrow Funds; (ii) second, directly from the  Seller until the cumulative amount of Losses with respect to claims under Section 10.2(a),  Section  10.2(b) and Section 10.2(d) equals $1,347,500 (without giving effect to any coverage under the                                         53    

 

R&W Insurance Policy); (iii) third, from the R&W Insurance Policy (whether or not coverage is  available) until all Losses pursuant to Sections 10.2(a), 10.2(b) and 10.2(d) equal $13,475,000  (without giving effect to any coverage under the R&W Insurance Policy); and (iv) after all Losses  pursuant to Section 10.2(a), 10.2(b) and 10.2(d) equal $13,475,000 (without giving effect to any  coverage under the R&W Insurance Policy), directly against Seller.   With respect to any claims  pursuant to Section 10.2(c) or Section 10.2(e) (other than with respect to an Excluded Liability  that would also give rise to a valid claim under Section 10.2(a), 10.2(b) or 10.2(d) and that is not  excluded from coverage under the R&W Policy), Buyer shall pursue recovery of such amounts  first from the then remaining portion of the Indemnification Escrow Funds (if any) and thereafter  directly against Seller. With respect to any claim under Section 10.2(e) with respect to an Excluded  Liability that would also give rise to a valid claim under Section 10.2(a), 10.2(b) or 10.2(d) and  that is not excluded from coverage under the R&W Policy, a Buyer Party shall pursue recovery  for such Losses in the following order of priority:  (i) first, from the then-remaining portion of the  Indemnification Escrow Funds; (ii) second, from available coverage under the R&W Insurance  Policy (if any) and (iii) thereafter directly against Seller.               (b)   Neither  the  Purchaser  Parties  nor  the  Seller  Parties  shall  be  entitled  to  indemnification under this Article 10 in  respect of any individual indemnity claim unless such  indemnity claim is asserted timely during the period specified in Section 10.1(a).               (c)   Neither the Purchaser Parties nor the Seller Parties shall be entitled to assert  any claim for indemnification under Sections 10.2(a) or 10.3(a) in respect of any individual Loss  (treating any group of related Losses as an individual Loss for this purpose) unless such Loss  exceeds  $50,000  (the “Threshold”); provided,  that  notwithstanding  the  foregoing,  solely  with  respect to claims under Section 4.9(a), the Threshold shall be deemed to be $20,000.               (d)   The  Purchaser  Parties  shall  not  be  entitled  to  assert  any  claim  for  indemnification  under Section  10.2(a) (other  than  with  respect  to  the  representations  and  warranties set forth in Section 4.9(a)) until such time as the aggregate of all Losses (excluding any  individual Loss less than the Threshold) that such Purchaser Parties have incurred under Section  10.2(a) exceeds $612,500 (the “Deductible”), and then only for the amount by which such Losses  exceed the Deductible.               (e)   The  Seller  Parties  shall  not  be  entitled  to  assert  any  claim  for  indemnification until such time as the aggregate of all Losses (excluding any individual Loss less  than  the  Threshold)  that  such  Seller  Parties  have  incurred  under Section  10.3(a) exceeds  the  Deductible, and then only for the amount by which such Losses exceed the Deductible.               (f)   The aggregate liability of Seller for indemnification claims under (i) Section  10.2(a) shall be limited to an amount equal to the Indemnification Escrow Amount (other than with  respect to the representations and warranties set forth in Section 4.9(a), in which case Seller shall  be liable for an additional $5,000,000 subject to the provisions of Section 10.4(a)), and (ii) Section  10.2(b), 10.2(c) and  Section 10.2(d) shall be an amount equal to $109,025,000; provided, that the  aggregate liability of Seller for all indemnification claims under Section 10.2 (including in respect  of  any  Fraud)  shall  not  exceed  the  Purchase  Price.   The  aggregate  liability  of  Purchaser  for  indemnification claims under Section 10.3(a) shall be limited to an amount equal to the Purchase  Price.                                           54    

 

            (g)   Notwithstanding  anything  else  in  this  Agreement  to  the  contrary:  (i)  no  Indemnified Party shall be entitled to recover duplicate Losses for indemnification claims under  or with respect to any provision of this Agreement to the extent a claim for indemnification has  already been paid out with respect to another provision of this Agreement, including any amount  that  reduced  the  final  Purchase  Price  on  a  dollar-for-dollar  basis in  the  calculation  of  the  consideration payable under Section 2.3.               (h)   Notwithstanding anything to the contrary in this Agreement or otherwise, in  no event shall any Purchaser Party’s actual, constructive or alleged knowledge of the inaccuracy  of any of Seller’s or Logistics’ representations or warranties set forth herein or in any certificate  delivered hereunder in any manner limit any Purchaser Party’s rights hereunder.         Section 10.5 Determination of Losses.               (a)   For purposes of determining the amount of any Losses that are the subject  matter of a claim  for indemnification hereunder and for purposes  of determining whether  any  representation or warranty has been breached or is inaccurate), the representations and warranties  set forth in this Agreement shall be considered without regard to any “material,” “Material Adverse  Effect” or similar qualifications set forth therein.               (b)   The  amount  of  Losses  for  which  indemnification  is  available  under  this  Article 10 shall be calculated net of (i) any amounts recovered by an Indemnified Party under  insurance policies (including the R&W Insurance Policy) or an indemnification, contribution or  similar obligation of another Person (other than an Affiliate of such Indemnified Party) (in each  case, reduced by any costs of recovery or resulting insurance premium increases), and (ii) any Tax  Benefit realized and attributable to such Losses as a dollar-for-dollar reduction in Taxes payable  in the year of the realized Loss or the next two taxable years.  The Indemnified Party shall use  commercially reasonable efforts to recover under insurance policies or indemnity, contribution or  other similar agreements for any Losses; provided, however, that in no event shall Purchaser be  obligated to (i) obtain or maintain any level of insurance coverage, or (ii) bring an Action against  any Person prior to making any claim for indemnification hereunder.  The Indemnified Party shall  promptly remit to the Indemnifying Party all amounts by which such Losses are subsequently  reduced as a result of any insurance payment or other recovery from any Person or any Tax Benefit  realized and attributable to such Losses as a dollar-for-dollar reduction in Taxes payable in the two  taxable years subsequent to the incurrence of such Losses if not previously taken into account in  calculating the amount of such Losses. In the event any claim under the R&W Insurance Policy is  denied in whole or in part by the R&W Provider or is subject to a retention, deductible or limit  under the R&W Insurance Policy, the amount of the Losses that are not reimbursed or reimbursable  pursuant to the R&W Insurance Policy shall be paid by or on behalf of the Seller only to the extent  otherwise required by, and subject to all of the limitations contained in, this ARTICLE 10.  To the  extent  required  by  applicable  Law,  each  Indemnified  Party  shall  use  commercially  reasonable  efforts to mitigate any Loss for which such Indemnified Party seeks indemnification.  The Seller  shall  promptly  reimburse  the  Purchaser  the  amount  of  any Tax  Benefit  (plus  any  interest  and  penalty assessed in connection with such Tax Benefit) that reduced a Loss pursuant to this Section  10.5 if such Tax Benefit is later denied or reduced by a Governmental Authority.                                          55    

 

            (c)   Notwithstanding anything to the contrary contained herein, no Seller Party  may make a claim for indemnification under Section 10.3 with respect to any Losses incurred or  suffered by any Seller Party arising out of or resulting from any claim by any Purchaser Party for  indemnification under Section 10.2.          Section 10.6 Procedures for Indemnification.               (a)   Whenever a claim shall arise for indemnification under this Article 10, the  Indemnified Party shall promptly notify in writing the Indemnifying Party of such claim, which  notice shall set forth a summary of the facts and circumstances constituting the basis for such claim  (to the extent known), stating the amount of any Losses, if known, and the method of computation  thereof; provided, however, that no delay in delivering any such notice shall in any manner limit  any Indemnified Party’s rights hereunder unless and only to the extent the Indemnifying Party is  actually and materially prejudiced thereby; provided, further, that as contemplated by the Escrow  Agreement,  in  the  event  that  Purchaser  delivers  an  indemnification  notice  with  no  amount  of  Losses stated therein, Purchaser shall work in good faith and use commercially reasonable efforts  to  deliver  a  supplemental  indemnification  notice  specifying  an  amount  claimed  with  respect  thereto  as  soon  as  reasonably  practicable  following  such  time  as  Purchaser,  its  Affiliates  or  Representatives obtain sufficient information with respect to the underlying claim to determine  such amount.               (b)   If any such claim for indemnification arises out of, relates to or results from  a Third Party Claim, the Indemnifying Party or its designee may, at the Indemnifying Party’s sole  cost and expense (but subject to the applicable limitations and exclusions set forth in Article 10),  assume the defense or resolution thereof by delivering to the Indemnified Party written notice  within sixty (60) calendar days of receipt of Indemnified Party’s written notice of such claim or  Action, provided that (i) the Indemnifying Party shall have confirmed in writing that it is obligated  hereunder to indemnify for all Loses suffered or incurred with respect to such claim, (ii) such Third  Party Claim involves only money damages and does not seek an injunction or other equitable  relief, (iii) the Indemnifying Party conducts the defense of the Third Party Claim actively and  diligently, and (iv) such Third Party Claim does not involve any criminal liability or any admission  of criminal  wrongdoing, and (v) the amount of  Losses  arising therefrom would be reasonably  expected to exceed the amount of Losses for which the Indemnifying Party is liable in respect  thereof.  The Indemnified Party may retain separate co-counsel at its sole cost and expense and  participate  in  the  defense  of  the  Third  Party  Claim  (though  not  of  record,  and  shall  not  communicate with the Person asserting a Third Party Claim about such Third Party Claim, or such  Person’s Representatives, without the prior written consent of the Indemnifying Party).  If the  Indemnifying Party or its  designee assumes  the defense or  resolution  of any such Third Party  Claim, the Indemnifying Party or its designee shall be entitled to take all steps that it considers, in  its  reasonable  judgment,  necessary  for  the  defense  or  resolution  thereof; provided, that  the  Indemnifying Party shall not consent to the entry of any judgment or enter into any compromise  or  settlement  with  respect  to  the  Third  Party  Claim  without  the  prior  written  consent  of  the  Indemnified Party (such consent not to be unreasonably withheld, conditioned or delayed) unless  such judgment, compromise or settlement (i) provides for the payment of money as sole relief for  the  claimant,  the  entire  amount  of  which  will  be  paid  by  the  Indemnifying  Party,  (ii)  such  settlement  involves  no  admission  of  wrongdoing  by  the  Indemnified  Party,  and  (iii)  such                                         56    

 

settlement provides for a release of the Indemnified Party and its Affiliates with respect to all  Liability with respect to the facts and circumstances giving rise to such claim.               (c)   The Indemnifying Party, or its designee, and the Indemnified Party shall  cooperate reasonably (at the Indemnifying Party’s sole cost and expense) in all aspects of any  investigation, defense, pre-trial activities, trial, compromise, settlement, discharge or resolution  (including remedial  action) of any Third Party  Claim  in  respect  of which indemnity is  sought  pursuant  to  this Article 10,  including,  but  not  limited  to,  execution  of  documents  reasonably  necessary to resolve such Third Party Claim in accordance with the terms and conditions hereof  and by providing the each other Party with reasonable access to its facilities and other premises,  books and records reasonably related to the facts and circumstances underlying such Third Party  Claim; provided, that, in each case, such access shall be given at reasonable times, upon reasonable  notice, during normal business hours and without undue interruption to such Party’s businesses,  operations or personnel.  So long as the Indemnifying Party is in good faith defending or resolving  a Third Party Claim under this Section 10.6, the Indemnified Party shall not compromise, settle or  in any matter interfere with the defense or resolution of such claim or Action.                 (d)   If the Indemnifying Party does not assume the defense of any such Third  Party Claim in accordance with the terms of this Section 10.6 (and pending any such assumption),  the Indemnified Party may defend against such claim or Action, or undertake actions necessary for  the resolution thereof,  in such manner as it may deem appropriate, including settling such Third  Party Claim (after giving prior written notice of the same to the Indemnifying Party and obtaining  the Indemnifying Party’s prior written consent, which consent shall not be unreasonably withheld,  conditioned or delayed) on such terms as the Indemnified Party may reasonably deem appropriate;  provided, however, that that the Indemnifying Party will not be bound by the entry of any such  judgment consented to, or any such compromise or settlement effected, in connection with any  Third  Party  Claim  without  its  prior  written  consent  (which  consent  will  not  be  unreasonably  withheld, conditioned or delayed), and the Indemnifying Party shall be permitted to participate in  such defense at its sole cost and expense.         Section 10.7 Exclusive Remedy.  Subject to the last sentence of this Section 10.7, each  Party hereby covenants and agrees that from and after the Closing the remedies provided for in  Section 2.3 and this Article 10 shall constitute the sole and exclusive remedy for all Losses that  any Indemnified Party may suffer or incur arising from, or directly or indirectly relating to the  Purchased  Stock,  Purchased Assets,  the  Company,  the  Business,  the Assumed  Liabilities,  the  Excluded Liabilities, this Agreement, or the Transaction.  In furtherance of the foregoing, from  and after the Closing, each Party hereby irrevocably waives to the fullest extent permitted under  applicable Law, any other rights or remedies (whether at law or in equity and whether based on  contract, tort, statute or otherwise) that they may otherwise have had, now have or may in the  future  have against  any  other  Party  arising  from,  or  directly  or  indirectly  relating  to,  (i)  the  Purchased  Stock,  the  Purchased Assets,  the  Company,  the  Business,  the  Excluded Assets,  the  Assumed  Liabilities  or  the  Excluded  Liabilities,  (ii)  this  Agreement,  the  other Transaction  Documents  or  the Transaction,  or  (iii)  any  Law  or Action  (including, inter  alia,  any  rights  of  contribution  or  recovery  under  any  Environmental  Law),  whether  at  common  law,  in  equity  (including, inter alia, any rights of rescission) or otherwise, and covenant not to sue or otherwise  assert any claim (or assist any other Person in suing or otherwise asserting any claim) encompassed  by the foregoing covenant, agreement and waiver.  Notwithstanding the foregoing, the covenants,                                         57    

 

agreements  and  waivers  of  the  Parties  in  this Section 10.7 shall  not  (x)  limit  any  Party’s  (or  Indemnified Party’s) right to bring any Action in a court of law or equity for Fraud, (y) apply to  the Parties’ rights to seek specific performance as contemplated by Section 13.14, nor (z) limit any  Party’s rights or remedies under any other Transaction Document.           Section 10.8 Release of Indemnification Escrow Funds.  Each of Purchaser and the Seller  covenants and agrees that, on the first Business Day immediately following the twelve (12) month  anniversary of the Closing Date, it shall deliver a Joint Written Direction (as defined in the Escrow  Agreement) to the Escrow Agent directing the Escrow Agent to release to the Seller an amount  equal to (a) the amount of Indemnification Escrow Funds remaining in the Indemnification Escrow  Account as of such time minus (b) such portion of such Indemnification Escrow Funds that may  be necessary to  satisfy  all indemnification claims asserted at  or prior to  such time against the  Indemnification Escrow Funds that have not then been finally resolved and satisfied (collectively,  “Unresolved Indemnification Claims”) (which portion of Indemnification Escrow Funds shall be  retained by the Escrow Agent until such Unresolved Indemnification Claims have been finally  resolved  and  satisfied  and  thereafter  shall  be  distributed  in  accordance  with  the  terms  of  this  Agreement and the Escrow Agreement). In the event that prior to the Release Date (as defined in  the Escrow Agreement), the Purchaser validly delivers an Indemnity Claim Notice (as defined in  the Escrow Agreement) to the Escrow Agent and Seller with no amount of Losses to be claimed  stated therein and, following the Release Date, Purchaser delivers a supplemental Indemnity Claim  Notice to the Escrow Agent specifying an amount of Losses claimed with respect to the matters  contained in the applicable original Indemnity Claim Notice, then, to the extent that aggregate  amount of all Unresolved Indemnification Claims does not exceed the Indemnification Escrow  Funds remaining in the Indemnification Escrow Account, on the first Business Day immediately  following delivery of such supplemental Indemnity Claim Notice, each of Purchaser and the Seller  shall deliver a Joint Written Direction to the Escrow Agent directing the Escrow Agent to release  to the Seller an amount equal to (a) the amount of Indemnification Escrow Funds remaining in the  Indemnification Escrow Account as of such time minus (b) the aggregate amount of all Unresolved  Indemnification Claims.                                     ARTICLE 11                                 TERMINATION         Section 11.1 Termination.   This  Agreement  may  be  terminated  and  the  Transaction  abandoned any time prior to the Closing:               (a)   upon the written agreement of Purchaser and Seller;               (b)   by Purchaser, if Seller or Logistics breaches this Agreement and such breach  (i) would result in the failure of any condition set forth in Section 7.1 or 7.2, (ii) Purchaser has  notified Seller and Logistics of such breach in writing and (iii) such breach (A) is not cured within  thirty (30) days after delivery of such notice of breach, or (B) is incapable of being cured; provided,  that Purchaser shall not have the right to terminate this Agreement pursuant to this Section 11.1(b)  if Purchaser is then in material breach of this Agreement such that would give Seller the right to  terminate under Section 11.1(c);                                          58    

 

            (c)   by Seller, if Purchaser breaches this Agreement and such breach (i) would  result in the failure of any condition set forth in Section 8.1 or 8.2, (ii) Seller has notified Purchaser  of such breach in writing and (iii) such breach (A) is not cured within thirty (30) days after delivery  of such notice of breach, or (B) is incapable of being cured; provided, that Seller shall not have the  right to terminate this Agreement pursuant to this Section 11.1(c) if Seller or Logistics is then in  material breach of this Agreement such that would give Purchaser the right to terminate under  Section 11.1(b);                (d)   by Purchaser or by Seller on or after the earlier of (i) December 4, 2018, (ii)  the date of issuance by an applicable court of competent jurisdiction of a preliminary or permanent  injunction prohibiting the Closing, and (iii) the date of effectiveness of any Law that makes the  consummation of the Transaction illegal or otherwise prohibited;               (e)   by Seller, if (i) all of the conditions to Closing set forth in Article 7 have  been satisfied or waived (other than conditions that by their terms or nature are to be satisfied by  actions to be taken at the Closing), (ii) Seller has notified Purchaser in writing that it irrevocably  confirms  that  the  conditions  to  the  obligations  of  the  Seller  to  consummate  the  transactions  contemplated  by  this  Agreement  set  forth  in  Article  8  have  been  satisfied  or  that  Seller  is  irrevocably waiving (to the extent permitted by Law) such unsatisfied conditions and that Seller is  ready, willing and able to consummate the Closing, and (c) Purchaser fails to consummate the  Closing pursuant to Section 3.1 within five (5) Business Days after the later of (A) the date of  delivery of the written notice specified in clause (ii) above and (B) the date upon which the Closing  was  required  to  occur  pursuant  to Section  3.1 (it  being  understood  that  the  conditions  to  the  obligation of Purchaser to consummate the transactions contemplated by this Agreement set forth  in Article 7 shall have remained satisfied or waived by Purchaser at the close of business on such  fifth (5th) Business Day).         Section 11.2 Procedure and Effect of Termination.  Any Party wishing to terminate this  Agreement pursuant to Section 11.1(b), 11.1(c), 11.1(d), or Section 11.1(e) shall give written notice  of the termination to the other Party, and upon the delivery of such notice of termination (or at  such later date as is provided in Section 11.1), this Agreement shall terminate and be of no further  force  or  effect  without  further  action  by  either  Party,  except  that,  subject  to  the  provisions  of  Section 11.3, (a) the rights and obligations of the Parties under this Section 11.2, Section 11.3, and  Article 13 hereof shall survive such termination, and (b) nothing herein will release or otherwise  relieve any Party from any Liability for Fraud, or a willful and material breach by such Party of its  respective representations  warranties,  covenants  or agreements  set  forth  herein  (which, for the  avoidance of doubt, shall include any failure by such Party to consummate the Transactions if they  are obligated to do so hereunder) prior to a termination of this Agreement pursuant to Section 11.1.   No  termination  of  this Agreement  will  affect  the  obligations  contained  in  the  Confidentiality  Agreement, all of which obligations will survive termination of this Agreement in accordance with  their terms.         Section 11.3 Termination Fee; Limitations on Recovery.               (a)   In  the  event  that  this Agreement  is  terminated  by  the  Seller  pursuant  to  Section 11.1(c) or Section 11.1(e), then Purchaser shall promptly, but in no event later than five  (5) Business Days after the date of such termination, pay or cause to be paid to the Seller or their                                         59    

 

respective designees an amount equal to $5,500,000 (the “Termination Fee”) by wire transfer of  same  day  funds  (it  being  understood  that  in  no  event  shall  Purchaser  be  required  to  pay  the  Termination Fee on more than one occasion).  Solely for purposes of establishing the basis for the  amount thereof, and without in any way increasing the amount of the Termination Fee or expanding  the circumstances in which the Termination Fee is to be paid, it is agreed that the Termination Fee  is a liquidated damage, and not a penalty.               (b)   Notwithstanding anything to the contrary contained herein or otherwise, if  this Agreement is terminated in accordance with Section 11.1 or Section 6.13(b), the right of Seller  (or its  designee(s)) to  receive the Termination Fee if terminated by Seller pursuant  to Section  11.1(c) or Section 11.1(e), together with any amounts owing under Section 11.3(e) (subject to the  limitations set forth therein), shall be the sole and exclusive remedy (whether at law, in equity, in  contract, in tort, or otherwise) of Seller, Logistics and their respective Affiliates against Purchaser,  Parent,  their  Affiliates  and each of their respective current  and former  equityholders,  officers,  directors,  employees,  managers,  members,  general  or  limited  partners,  agents  and  other  representatives  (each,  a  “Non-Recourse  Party”)  for  any  and  all  breaches,  losses  or  damages,  including, but not limited to, special, indirect or punitive damages, suffered or incurred by the  Seller,  Logistics  or  any  other  Person  in  connection  with  this  Agreement,  the  transactions  contemplated hereby (and the abandonment or termination thereof) or any matter forming the basis  for such termination, and neither Seller, Logistics nor any other Person shall be entitled to assert,  bring or maintain, and Seller on behalf of itself and its Affiliates hereby waives any right to assert,  bring or maintain, any claim, suit, action or proceeding against Purchaser or any of its Affiliates  arising out of or in connection with this Agreement or the transactions contemplated hereby (and  the abandonment or termination thereof) with respect to any matter forming the basis for such  termination, whether by or through (i) attempted piercing of the corporate veil, (ii) a claim by or  on behalf of Purchaser or its Affiliates against another Affiliate of Purchaser or (iii) any legal or  equitable proceeding whether at law, in equity, in contract, in tort or otherwise. For the avoidance  of doubt, under no circumstances will Seller, Logistics or any of their respective Affiliates be  entitled to, nor will Seller, Logistics or any of their respective Affiliates accept, monetary damages  in excess of the amount of the Termination Fee (plus any amounts (if any) owing under Section  11.3(e)) in the event this Agreement is terminated pursuant to Section 11.1. Although Seller may  pursue both a grant of specific performance pursuant to Section 13.14(b), on the one hand, and the  payment  of  the  Termination  Fee  pursuant  to Section  11.3(a)),  on  the  other  hand,  under  no  circumstances shall Seller, Logistics or any of their respective Affiliates be permitted or entitled  to receive both (x) a grant of specific performance pursuant to Section 13.14(b) and (y) all or any  portion of the Termination Fee or any monetary damages pursuant to Section 11.3(e). In addition,  notwithstanding anything in this Agreement to the contrary, the Seller, on behalf of itself and its  Affiliates and Representatives hereby waives any claims against the Financing Sources and hereby  agrees that in no event shall the Financing Sources have any liability or obligation to Seller or any  of its Affiliates and the Company relating to or arising out of this Agreement, the Debt Financing,  the Debt Commitment Letter or the transactions contemplated hereby.               (c)   The Parties acknowledge that the agreements contained in this Section 11.3  are an integral part of the transactions contemplated by this Agreement, and that, without these  agreements, the parties would not enter into this Agreement.                                          60    

 

            (d)   Subject to the limitations set forth in Section 11.3(b), and the provisions of  Section 13.4(b), nothing in this Article 11 will be deemed to impair the right of any Party to compel  specific performance or other equitable remedies by another party hereto of its obligations under  this Agreement pursuant to Section 13.14(b) prior to the termination of this Agreement.               (e) Purchaser,  Seller  and  Logistics  each  hereby  acknowledges  agrees  that,  if  following any termination of this Agreement any Party commences any Action arising out of any  dispute between Purchaser, on the one hand, and Seller or  Logistics, on the other hand, as to  whether the Termination Fee is due and payable in accordance with Section 11.3(a), then (i) in the  event  that  Purchaser  is  the  prevailing  Party  (as  finally  determined  by  a  court  of  competent  jurisdiction), Seller shall reimburse Purchaser for all out-of-pocket costs and expenses (including  reasonable fees and expenses of counsel) incurred by Purchaser in connection with such Action,  and (ii) in the in the event that Seller or Logistics is the prevailing Party (as finally determined by  a court of competent jurisdiction), Purchaser shall reimburse Seller and Logistics for all out-of- pocket costs and expenses (including reasonable fees and expenses of counsel) incurred by Seller  and Logistics in connection with such Action; provided, that in no event shall any Party’s liability  under this Section 11.3(e) exceed $2,000,000.                                                   ARTICLE 12                                 TAX MATTERS         Section 12.1 Preparation and Filing of Tax Returns.                 (a)   The Seller shall prepare, or cause to be prepared, and shall timely file, or  cause to be filed, all Tax Returns of the Company due (after taking into account all appropriate  extensions) on or prior to the Closing Date and all income Tax Returns of the Company for any  Pre-Closing  Tax  Period,  the  due  date  of  which  is  after  the  Closing  Date (“Seller  Prepared  Returns”).  Any income Tax Returns of the Company for any Pre-Closing Tax Period the due date  of which is after the Closing Date shall be prepared at the sole cost and expense of the Seller.  Each  Seller  Prepared  Return  shall  be  prepared  on  a  basis  consistent  with  existing  procedures  and  practices and accounting methods except as required by applicable Law.  At least thirty (30) days  prior to the due date of any Seller Prepared Return with respect to income Taxes, Seller shall  provide a draft of such Tax Return to the Purchaser for its review and approval (such approval not  to be unreasonably withheld, conditioned or delayed).  To the extent that a Seller Prepared Return  is required to be filed after the Closing Date by the Company, the Company shall cause such Tax  Return to be filed timely.               (b)   Purchaser,  at  Seller’s  sole  cost  and  expense  solely  with  respect  to  Tax  Returns for Pre-Closing Tax Periods, shall cause the Company to prepare and timely file all Tax  Returns (other than Seller Prepared Returns) for Pre-Closing Tax Periods or a Straddle Periods of  the Company, the due date of which (taking into account extensions of time to file) is after the  Closing Date (the “Purchaser Prepared Returns”). Such Tax Return’s shall be prepared on a basis  consistent with existing procedures and practices and accounting methods except as required by  applicable Law.  At least thirty (30) days prior to the due date of any Purchaser Prepared Return  with respect to income Taxes, Purchaser shall provide a draft of such Tax Return to the Seller for                                         61    

 

its  review  and  comment.   Purchaser  shall  cause  the  Company  to  incorporate  any  reasonable  comments made by the Seller in the Tax Return actually filed to the extent consistent with the  standard set forth in the second sentence of this Section 12.1(a).               (c)   To the extent permissible under applicable Laws, the Parties agree to elect  (and have the Company elect) to have each Tax year of the Company end on the Closing Date and,  if such election is not permitted or required in a jurisdiction with respect to a specific Tax such that  the  Company  is  required  to  file  a  Tax  Return  for  a  Straddle  Period,  to  utilize  the  following  conventions for determining the amount of Taxes attributable to the portion of the Straddle Period  ending on the Closing Date: (i) in the case of property Taxes and other similar Taxes imposed on  a periodic basis, the amount attributable to the portion of the Straddle Period ending on the Closing  Date shall equal the Taxes for the entire Straddle Period multiplied by a fraction, the numerator of  which is the number of calendar days in the portion of the period ending on the Closing Date and  the denominator of which is the number of calendar days in the entire Straddle Period; and (ii) in  the case of all other Taxes (including income Taxes, sales Taxes, employment Taxes, withholding  Taxes), the amount attributable to the portion of the Straddle Period ending on the Closing Date  shall be determined as if the taxable  year of Company ended on the Closing Date and filed a  separate Tax Return for such period using a “closing of the books methodology.”  For purposes of  applying  the  foregoing,  (x)  any  item  determined  on  an  annual  or  periodic  basis  (including  amortization  and  depreciation  deductions)  for  income  Tax  purposes  shall  be  allocated  to  the  portion of the Straddle Period ending on the Closing Date based on the relative number of days in  such portion of the Straddle Period as compared to the number of days in the entire Straddle Period;  and (y) any Tax or item of income, gain, loss, deduction or credit from a Purchaser Closing Date  Transaction shall be allocated to the portion of the Straddle Period beginning on the day after the  Closing Date.               (d)   Without  the  prior  written  consent  of  Seller (which  consent  shall  not  be  unreasonably withheld, conditioned, or delayed), except as required by applicable Law, Purchaser  shall not, and shall not allow the Company to, initiate or agree to, any (i) amendment of a Tax  Return of the Company for a Pre-Closing Tax Period or Straddle Period; (ii) make or change any  Tax election or accounting method or practice with respect to, or that has retroactive effect to, any  Pre-Closing Tax Period or Straddle Period; (iii) extension or waiver of the applicable statute of  limitations with respect to a Tax of any of the Company for a Pre-Closing Tax Period or Straddle  Period (other than pursuant to extensions of time to file Tax Returns obtained in the Ordinary  Course); (iv) filing of any Tax ruling request with any Governmental Authority for a Pre-Closing  Tax Period or Straddle Period; or (v) entry or pursuit of any voluntary disclosure agreements with  any Governmental Authority for any Pre-Closing Tax Period or Straddle Period.         Section 12.2 Refunds and Credits.               (a)   After  the  Closing  Date,  except  to  the  extent  (A)  included  as  an  asset  in  Closing Net Working Capital as finally determined hereunder, or (B) attributable to the carryback  of any loss or Tax credit from a Post-Closing Tax Period to a Pre-Closing Tax Period, Seller shall  be entitled to all Tax refunds (and Overpayment Credits) received by the Purchaser or the Company  for any Pre-Closing Tax Period  (or portion of any Straddle Period ending on the Closing Date  determined  using  the  same  methodology  as  provided  for  in Section  12.1(c))  to  the  extent  attributable to (A) Taxes paid by or on behalf of the Company on or prior to the Closing Date, (B)                                         62    

 

Taxes indemnified by the Seller hereunder, or (C) Taxes included as a liability in Closing Debt or  as a liability in Closing Net Working Capital (in each case finally determined hereunder).                 (b)   Purchaser will pay over to the Seller any such Tax refund promptly (but in  all  cases  within  ten  (10)  days) after  actual  receipt  of  such Tax  refund  (or,  in  the  case  of  any  Overpayment Credits, promptly (but in all cases within ten (10) days) upon filing the applicable  Tax Return where such Overpayment Credit is used to reduce Taxes otherwise payable); provided  that, any such payments to the Seller be reduced by any Taxes (including withholding Taxes) and  costs and expenses attributable to the receipt or delivery of such Tax refund (or application of  Overpayment Credits).                (c)   The Seller shall promptly reimburse the Purchaser the amount of any Tax  refund and Overpayment Credit paid (plus any interest and penalty assessed in connection with  such refund or overpayment) to  the Seller pursuant  to  this Section 12.2 if such Tax refund or  Overpayment Credit is later denied or reduced by a Governmental Authority.         Section 12.3 Tax Contests.               (a)   If any Governmental Authority (i) issues to the Company a notice of its  intent to audit or conduct another Action by or against any Governmental Authority with respect  to Taxes or Tax Returns of the Company for any Pre-Closing Tax Period or Straddle Period (a “Tax  Proceeding”), (ii) issues to the Company a notice of deficiency for Taxes for any Pre-Closing Tax  Period or Straddle Period, or (iii) asserts a Tax claim in respect of the Company for a Pre-Closing  Tax Period or Straddle Period, Purchaser shall provide written notice thereof to the Seller within  fourteen (14) calendar days of receipt.               (b)   Seller shall have the right to control any Tax Proceeding to the extent it  relates to any Pre-Closing Tax Period provided that prior to taking control, Seller first verifies to  Purchaser in writing that the Seller has agreed in writing to indemnify the Purchaser Parties and  the Company hereunder with respect to any Taxes and Losses related to the matter underlying such  Tax Proceeding.  If the Seller elects to control a Tax Proceeding for a Pre-Closing Tax Period,  Seller shall notify Purchaser of such intent within ten (10) Business Days of receiving notice of  such Tax Proceedings, Purchaser shall promptly complete and execute, and promptly cause the  Company, to complete and execute, any powers of attorney or other documents that are necessary  (or that the Seller reasonably requests) to allow the Seller to control such Tax Proceeding that  Seller has  the  right  to  control  and  has  elected  to  control.   Prior  to  the  Seller  taking  control,  Purchaser shall control, or cause the Company to control, such Tax Proceeding in good faith, and  shall not allow the Company to settle or otherwise resolve any Tax Proceeding without the prior  written permission of the Seller.  While the Seller controls any Tax Proceeding, the Seller shall (v)  pay to the Company any amount required to be paid to the relevant Governmental Authority to  stay  collection  proceedings  or  to  have  the  right  to  contest  such  Tax  Proceeding  during  the  contestation period, (w) control such Tax Proceeding in good faith, (x) keep Purchaser reasonably  informed regarding the status of such Tax Proceeding, (y) allow Purchaser or the Company, at  Purchaser’s sole cost and expense, to participate in such Tax Proceeding, and (z) not settle, resolve,  or abandon any such Tax Proceeding without the prior written consent of the Purchaser (which  shall not be unreasonably withheld, conditioned or delayed).                                           63    

 

            (c)   If the Seller does not control or participate in a Tax Proceeding (whether by  election or otherwise) that relates to a Pre-Closing Tax Period or Straddle Period and the Seller is  liable for the resulting Tax under this Agreement, then Purchaser shall: (i) control, or cause the  Company to control, such Tax Proceeding in good faith; (ii) keep the Seller reasonably informed  regarding the status of such Tax Proceeding; and (iii) not without the Seller’s written permission  or request, settle (or cause the Company to settle) the Tax Proceeding on terms acceptable to the  applicable Governmental Authority and the Seller.         Section 12.4 Cooperation. Each Party shall, and shall cause its Affiliates to, provide the  other Party with such cooperation, documentation and information as either of them reasonably  may request in (a) the preparation and filing any Tax Return, (b) determining a Liability for Taxes  or an indemnity obligation under this Article 12 or amount of refund of Taxes, (c) conducting any  Tax Proceeding, or (d) determining an allocation of Taxes between a Pre-Closing Tax Period and  Post-Closing Tax Period.  Such cooperation and information shall include providing copies of all  relevant portions of relevant Tax Returns, together with all relevant accompanying schedules and  work papers (or portions thereof) and other supporting documentation, relevant documents relating  to rulings or other determinations by Governmental Authority and relevant records concerning the  ownership and Tax basis of property and any other relevant information, which any such Party  may possess.  Each Party will retain all Tax Returns, schedules and work papers, and all material  records and other documents relating to Tax matters, of the Company for any Pre-Closing Tax  Period or Straddle Period until the expiration of the statute of limitations (taking into account any  extensions) for the Tax periods to which the Tax Returns and other documents relate.  Each Party  shall make its employees reasonably available on a mutually convenient basis at its cost to provide  explanation of any documents or information so provided.         Section 12.5 Additional Tax Covenants.               (a)   To the extent permitted by applicable Law, Seller and Purchaser and their  respective Affiliates shall treat any and all payments under Article 10 or this Article 12, whenever  made, as an adjustment to the Purchase Price for all Tax purposes.  Seller and Purchaser shall, for  all Tax purposes, allocate any such adjustment between to the Company and the Purchased Assets  based upon the item or items to which such adjustment is principally attributable.               (b)   Purchaser shall not, and shall cause its Affiliates not to, make an election  under Section 338 of the Code or any comparable election applicable Tax Law with respect to the  Company without Seller’s prior written consent.               (c)   The Parties shall treat any gains, income, deductions, losses, or other items  realized by the Company for income Tax purposes with respect to any Purchaser Closing Date  Transaction as occurring on the day immediately following the Closing Date.               (d)   In the case of any property Taxes or similar ad valorem Taxes imposed on a  periodic basis and that relate to the Purchased Assets for a Straddle Period, Seller shall reimburse  Purchaser for any such Taxes payable by Purchaser that are attributable to the portion of such  Straddle Period ending on the Closing Date (determined in the same manner as set forth  with  respect to Taxes of the Company pursuant to Section 12.1(c)(i)) and Purchaser shall reimburse  Seller for any such Taxes payable by Seller that are attributable to the remainder of such Straddle                                         64    

 

Period.  Notwithstanding the foregoing, Seller shall not be required to reimburse for any such  Taxes pursuant to this Section 12.5(d) to the extent such Taxes were included in the computation  of the Final Net Working Capital, included in the computation of Final Debt, or included in Final  Transaction Expenses, in each case, as finally determined.         Section 12.6 Transfer Taxes.  Purchaser and Seller shall each bear one half of any and all  stamp and recording, transfer (including all real property transfer and conveyance Taxes and fees),  documentary, sales, use, registration, and other such similar Taxes, and fees, costs and expenses  associated with such Taxes as a result of the transfer of the Purchased Assets and the Purchased  Stock  hereunder  (collectively, “Transfer  Taxes”) incurred  as  a  result  of  the  transfer  of  the  Purchased Assets and the Purchased Stock hereunder regardless of the Person liable for such Taxes  under applicable Law or local custom.  The party that is required under applicable Law to file Tax  Returns with respect to all such Transfer Taxes shall, at its own expense, prepare and file all such  necessary Tax Returns with respect to all such Transfer Taxes, promptly provide the other party  such Tax Returns and any related documentation and, to the extent required by applicable Law,  Purchaser or Seller, as applicable, shall, and shall cause its Affiliates to, join in the preparation and  execution of any such Tax Returns.  To the extent Purchaser or Seller, as applicable, or any of their  respective Affiliates files such Tax Returns with respect to Transfer Taxes and pays such Transfer  Taxes, the party that did not file such Tax Return or pay such Transfer Taxes shall indemnify and  hold harmless and, within ten (10) days of a written request therefor, reimburse the other party for  the portion of all such Transfer Taxes for which it is liable in accordance with this Section 12.6  and the same portion of any out-of-pocket expenses incurred in connection with the preparation  and filing of such Tax Returns.                                    ARTICLE 13                                MISCELLANEOUS         Section 13.1 Certain  Definitions.   Capitalized  used  herein  shall  have  the  following  meanings:         “Accounting Firm” means KPMG US LLP.         “Accrued Paid Time Off” has the meaning set forth in Section 9.1(d)(iii).         “Acquisition Proposal” has the meaning set forth in Section 6.11.         “Action” means  any  action,  complaint,  charge,  claim,  petition,  audit,  examination,  investigation, inquiry, arbitration, judicial or administrative action, suit or proceeding (public or  private), whether civil or criminal, at law or in equity, by or before any Governmental Authority.         “Additional Seller Names” has the meaning set forth in Section 9.3(a)(i).         “Affiliate” means, with regard to any Person, (a) any Subsidiary of such Person and (b) any  other Person that, directly or indirectly, controls, is controlled by, or is under common control with,  such Person.  For the purposes of this definition, “control” means the possession of the power to  direct,  or  cause  the  direction  of,  management  and  policies  of  a  Person,  whether  through  the  ownership of voting securities, by Contract or otherwise.                                         65    

 

      “Affiliate Contract” has the meaning set forth in Section 4.12(a)(xviii).         “Affiliated Person” has the meaning set forth in Section 4.20.         “Agreement” means this Stock and Asset Purchase Agreement, together with all Exhibits,  Schedules and other attachments hereto.         “Alternative Debt Financing” has the meaning set forth in Section 6.8(b).         “Anti-Corruption Laws” means all U.S. and non-U.S. Laws relating to the prevention of  corruption and bribery, including the U.S. Foreign Corrupt Practices Act of 1977, as amended.          “Antitrust  Law” means  any  Law  governing  competition,  trade  regulation,  foreign  investment, or national security or defense matters designed to prohibit, restrict or regulate actions  with the purpose or effect of monopolization or restraint of trade (including Hart-Scott-Rodino  Antitrust Improvements Act of 1976, as amended), and all rules and regulations promulgated under  such Laws.         “Asset Purchase Price” has the meaning set forth in Section 2.5(a).         “Assignment and Assumption Agreement and Bill of Sale” means the Assignment and  Assumption Agreement and Bill of Sale, to be entered into on the Closing Date, by and among  Purchaser, Logistics and Seller, in the form attached hereto as Exhibit C.         “Assumed U.S. Benefit Plans” has the meaning set forth in Section 9.1(c)(i).         “Assumed Liabilities” has the meaning set forth in Section 1.1(c).         “Bonus Payment Date” has the meaning set forth in Section 9.1(c)(ii).         “Business” has the meaning set forth in the recitals.           “Business Day” means any day other than a Saturday, a Sunday or a day on which banks  in New York, New York are authorized or obligated by Law to close.         “Business Names” has the meaning set forth in Section 9.3(b)(i).         “Business Employees” means (i) all individuals employed by Seller or its Affiliates on the  date hereof who spend substantially all of their working time in connection with such employment  providing  services  to  the  Business,  all  of  which  are  set  forth  on Schedule  13.1(a) and  (ii) all  individuals employed on the date hereof by the Company, all of which are set forth on Schedule  13.1(a), so  long  as  they spend substantially  all  of their working time in connection with  such  employment providing services to the Business, in each case other than the Excluded Employees.  For the avoidance of doubt, the term Business Employees includes individuals described in the  foregoing sentence who are absent due to vacation, holiday, sickness or other short-term approved  leave of absence (including maternity leave, short-term disability leave and military leave or other  statutory leaves), but does not include Excluded Employees.                                          66    

 

      “Canadian Business Employee” has the meaning set forth in Section 9.1(a).         “Canadian Employee Benefit Plans” has the meaning set forth in Section 9.1(a)(ii).          “CapEx Budget” has the meaning set forth in Section 4.12(a)(xii).         “Capital  Stock” means,  with  respect  to  a  Person,  (i)  all  capital  stock,  shares,  limited  liability company interests, units, partnership or membership interests (whether general or limited)  or  other  equivalents  of  such  Person’s  equity,  however  designated  and  whether  voting  or  non- voting;  and  (i)  all  options,  warrants,  convertible  or  exchangeable  securities,  or  other  similar  instruments with respect to any of the foregoing.         “Cash” means  all  cash  and  cash  equivalents,  determined  in  accordance  with  GAAP;  provided, that Cash shall exclude (i) any Restricted Cash and (ii) any amounts required to fund  outstanding checks or wire transfers and shall include any amounts payable upon the deposit or  clearance of any received checks or wire transfers.         “CBA” has the meaning set forth in Section 4.12(a)(ii).         “Change  of  Control  Payment” means any  discretionary  bonuses,  stay  or  incentive  bonuses, or any sale, transaction or change of control payments, severance payments, retention  payments or other similar obligations payable by the Seller or any of its Affiliates (including the  Company) to any Person or that will be triggered, either automatically or with the passage of time,  as a result of or in connection with the consummation of the transactions contemplated by this  Agreement; provided, that, for the avoidance of doubt, any discretionary bonuses, stay or incentive  bonuses, or any sale, transaction or change of control payments, severance payments, retention  payments  or  other  similar  obligations  that  become  due  and  payable  due  to  any  action  of  the  Purchaser or any of its Affiliates following the Closing payable by the Seller or any of its Affiliates  shall not be a Change of Control Payment hereunder.         “Closing” has the meaning set forth in Section 3.1.         “Closing Cash” means, as of 12:01 a.m. Pacific time on the Closing Date, the Cash of the  Company calculated in accordance with GAAP.         “Closing Consideration” has the meaning set forth in Section 3.3(a).         “Closing Date” has the meaning set forth in Section 3.1.         “Closing Debt” means, at and as of immediately prior to the Closing on the Closing Date,  the Debt of the Company.         “Closing Net Working Capital” means, as of 12:01 a.m. Pacific time on the Closing Date,  the difference between (i) the current assets of the Company and the Seller relating to the Business  as of such date, and (ii)  the current liabilities of the Company and the Seller relating to the Business  as of such date, in the case of each of clauses (i) and (ii), calculated in accordance with GAAP and  using only those line items as used in computing the Sample Working Capital set forth on Exhibit  D (the “Sample Working Capital”) and computing those line items consistent with past practice                                         67    

 

(to the extent consistent with GAAP); provided that any asset or liability included in the calculation  of Debt, Cash, Transaction Expenses or Restricted Cash (including, for the avoidance of doubt, the  Security Deposits Amount) will not be included in the calculation of Closing Net Working Capital  so that the calculation of Closing Net Working Capital does not double count any asset or liability  that is also included in Debt, Cash, or Transaction Expenses.         “Closing Statement” has the meaning set forth in Section 2.3(a).         “Closing Transaction Expenses” means, as of immediately prior to the Closing on the  Closing Date, the Transaction Expenses.         “Code” means, collectively, the United States Internal Revenue Code of 1986, as amended,  and the regulations promulgated by the United States Department of the Treasury thereunder.         “Commitment Letters” has the meaning set forth in Section 5.5.         “Company” has the meaning set forth in the recitals.         “Company Employment Benefit Plan” has the meaning set forth in Section 4.15(a).         “Company Policy” has the meaning set forth in Section 4.19.         “Company Transaction Expenses” means, in each case, solely to the extent not paid prior  to  or  at  the  Closing,  without  duplication,  the  sum  of  (i)  all  amounts  that  are  payable  by  the  Company to (x) Winston & Strawn LLP and any other outside counsel to the Company, Logistics  or  Seller  and  (y)  Piper  Jaffray  and  all  other  third  party  transaction  advisors  engaged  by  the  Company,  Logistics  or  Seller,  including  financial  advisors,  investment  bankers,  brokers,  accountants and data room administrators, in connection with this Agreement and the transaction  contemplated hereunder, in the case of each of clauses (x) and (y) for services rendered through  the close of business on the Closing Date, (ii) the employer portion of any withholding, payroll or  other  Taxes  payable  by the  Company attributable  to  any  compensatory  amount  incurred  in  connection with the transactions contemplated hereby (including, for the avoidance of doubt, any  Change of Control Payment) and any amounts payable to gross up or make whole any Person for  income or excise Taxes imposed with respect to such amounts due and payable by or on behalf of  the Company in connection with or arising as a result of the transactions contemplated hereby, (iii)  fifty percent (50%) of the amount of any Transfer Taxes, (iv) the amount of any Change of Control  Payment, and (v) fifty percent (50%) of (x) the premium under the R&W Insurance Policy, (y) any  other  fees  and  expenses  of  the  underwriter  required  to  be  borne  by  Purchaser,  and  (z)  any  applicable surplus lines Taxes.         “Competing Business”  shall  mean the distribution,  fabrication,  marketing  and  sale  of  commercial and industrial insulation and other related insulation products, including insulation  solutions for pipes and mechanical systems, to commercial, industrial and residential end markets,  including the provision of any maintenance and repair services with respect thereto, but excluding  building insulation products  (including, but  not  limited to,  batts,  rolls,  blown, spray  foam  and  safing), tools and accessories, safety products and Absorption Plus acoustic panels.                                          68    

 

      “Computer Systems” means Software, computer firmware, computer hardware, electronic  data  processing,  telecommunications  networks,  network  equipment,  interfaces,  platforms,  peripherals, computer systems, and information contained therein or transmitted thereby, including  any outsourced systems and processes.          “Confidentiality Agreement” means that certain letter agreement dated February 27, 2018,  between  Seller  and  Dunes  Point  Capital,  LP,  regarding  the  disclosure  of  certain  confidential  information of Seller and its Affiliates.         “Constituent Documents” means, with respect to any Person (other than an individual),  the  (a)  certificate  or  articles  of  incorporation,  organization  or  formation,  (b)  limited  liability  company, operating or partnership (general or limited) agreement, bylaws, articles of association  or (c) similar documents or Contracts relating to the legal organization or governance of such  Person.         “Contract” means  any  contract,  agreement,  indenture,  note,  bond, instrument,  lease,  sublease,  concession,  conditional  sale  contract,  CBA,  mortgage,  license,  franchise,  insurance  policy, undertaking, commitment or other enforceable arrangement or agreement, whether written  or oral.         “Current Liability Policies” has the meaning set forth in Section 4.19.         “Debt” means, with respect to any Person, all obligations of such Person (including all  obligations in respect of principal, accrued interest, penalties, fees and prepayment premiums) (i)  for borrowed money, (ii) for the deferred purchase price of goods, property, or services, including  the  maximum  amount  payable  in  respect  of any  earn  out  or  similar  obligation  (but  excluding  customer deposits and trade payables in the Ordinary Course), (iii) under derivative or hedging  instruments, including agreements for interest rate protection, swaps and collars, (iv) evidenced  by notes, bonds, debentures or other instruments, (v) in respect of intercompany payables of the  Company to Seller or its Affiliates, (vi) capital leases (determined in accordance with GAAP), (vii)  letters of credit, surety bonds, and bankers acceptances, (viii) the unpaid amount of income Taxes  of the Company for all Pre-Closing Tax Periods and the portion of any Straddle Period up to and  including the Closing Date (which shall not be an amount less than zero and which shall not include  any offsets or reductions with respect to Tax refunds or overpayments of Tax), and (viii) in the  nature of guarantees of the obligations described in clauses (i) through (vii) above of any other  Person; provided, that in no event will any Transaction Expenses be included in the calculation of  Debt.         “Debt Commitment Letter” shall mean the executed commitment letter, dated on the date  hereof, among Purchaser and the Financing Sources party thereto, including all exhibits, schedules  and annexes thereto and as amended, restated, supplemented, replaced or otherwise modified in  accordance with the terms therein.          “Debt Financing” has the meaning set forth in Section 5.5.         “Debt Financing Documents” has the meaning set forth in Section 6.8(d).         “Deductible” has the meaning set forth in Section 10.4(d).                                         69    

 

      “Definitive Financing Agreements” has the meaning set forth in Section 6.8(a).         “Designated Liabilities” means (i) any Liability for any amounts in respect of the Closing  Debt or Closing Transaction Expenses not included in the calculation of the Final Debt or Final  Transaction  Expenses,  as  applicable  and  (ii)  any  Liability  under  any  management  agreement,  monitoring agreement, indemnification agreement or similar agreement between the Seller or any  of its Affiliates (including the Company) on the one hand, and Lone Star Funds,  LSF9 Cypress  Parent 2 LLC or any of their respective Affiliates, on the other hand.         “Disputed Items” has the meaning set forth in Section 2.3(c).         “Dollars” or “$,” unless otherwise specified herein, means United States Dollars.  The  exchange rate for conversion of United States Dollars into Canadian Dollars hereunder shall be  the applicable foreign exchange rate as published by The Wall Street Journal on the date hereof.         “Effective Time” means 12:01 a.m. Pacific time on the Closing Date.          “Enforceable” means, with respect to any Person under any Contract, that such Contract  is  the  legal,  valid  and  binding  obligation  of  such  Person,  enforceable  against  such  Person  in  accordance with  its  terms, except  (a) to  the extent  that such  enforceability may  be limited by  applicable  bankruptcy,  insolvency,  reorganization,  moratorium  or  other  similar  Laws  now  or  hereafter in effect relating to creditors’ rights generally, and general principals of equity (regardless  of whether such enforceability is considered in Action at law or in equity) and (b) that the remedy  of  specific  performance  and  injunctive  and  other  forms  of  equitable  relief  may  be  subject  to  equitable defenses and to the discretion of the Governmental Authority before which any Action  therefor may be brought.         “Environmental Law” means any Law regulating pollution, protection of the environment,  public or worker health and safety (to the extent addressing exposure to Hazardous Substances)  including (i) any manner of generating, accumulating, storing, treating, transporting or disposing  of any Hazardous Substance or (ii) any spilling, leaking, pumping, pouring, emitting, emptying,  discharging,  injecting,  escaping,  leaching,  dumping,  or  disposing  into  the  environment  of  any  Hazardous Substance, including the abandonment or discarding of barrels, containers and other  closed receptacles containing any Hazardous Substance.         “Equity Commitment Letter” shall mean the commitment letter, dated as of the date hereof,  to  provide  to  Purchaser,  subject  to  the  terms  and  conditions  therein,  equity  financing  in  an  aggregate amount set forth therein.         “Equity Financing” has the meaning set forth in Section 5.5.         “Escrow Agent” has the meaning set forth in the Escrow Agreement.         “Escrow Agreement” means  the  Escrow Agreement,  in  substantially  the  form  attached  hereto as Exhibit E.         “Estimated Adjustment Amount” has the meaning set forth in Section 2.2.                                         70    

 

      “Estimated Cash” means Seller’s good faith estimate of the Closing Cash.         “Estimated Closing Statement” has the meaning set forth in Section 2.2.         “Estimated Debt” means Seller’s good faith estimate of the Closing Debt.         “Estimated Net Working Capital” means Seller’s good faith estimate of the Closing Net  Working Capital.         “Estimated Transaction Expenses” means Seller’s good faith estimate of the Transaction  Expenses.         “Event” means  any  event,  change,  effect  or  occurrence,  state  of  facts,  development  or  circumstance.         “Excluded Assets” has the meaning set forth in Section 1.2(a).         “Excluded Employees” means the individuals set forth on Schedule 13.1(b).         “Excluded Liabilities” has the meaning set forth in Section 1.2(b).         “Excluded Taxes” means (x) all Liabilities for Taxes attributable to or imposed upon Seller  or Logistics (or for which Seller or Logistics may otherwise be liable) without regard to whether  such Taxes relate to periods (or portions thereof) ending on or prior to the Closing Date (other than  any Taxes imposed upon Seller or Logistics with respect to the Purchased Assets for the portion  of  any  Straddle  Period  beginning  after  the  Closing  Date,  and  (y)  all  Liabilities  for  Taxes  attributable or imposed on the Purchased Assets for any period ending on or prior to the Closing  Date or the portion of any Straddle Period ending on the Closing Date (calculated in accordance  with  Section 12.1(c)  (including,  in  the  case  of  clause  (x)  and  (y),  any  liabilities  of  Seller  or  Logistics for Taxes attributable to the transactions contemplated by this Agreement).         “Existing Inventory” has the meaning set forth in Section 9.3(a)(ii).         “Final Adjustment Amount” has the meaning set forth in Section 2.3(d).         “Final Debt” means the Closing Debt (i) as set forth in the Closing Statement delivered by  Purchaser and accepted by Seller; (ii) as set forth in the Closing Statement delivered by Purchaser,  if Seller fails to timely deliver a Notice of Dispute in accordance with Section 2.3(b); (iii) as finally  determined  by  the Accounting  Firm  pursuant  to Section  2.3(c);  or  (iv)  as  otherwise  may  be  mutually agreed by Purchaser and Seller.         “Final Net Working Capital” means the Closing Net Working Capital (i) as set forth in the  Closing Statement delivered by Purchaser and accepted by Seller; (ii) as set forth in the Closing  Statement delivered by Purchaser, if Seller fails to timely deliver a Notice of Dispute in accordance  with Section 2.3(b); (iii) as finally determined by the Accounting Firm pursuant to Section 2.3(c);  or (iv) as modified by any agreement among Purchaser and Seller.                                          71    

 

      “Final Transaction Expenses” means the Closing Transaction Expenses (i) as set forth in  the Closing Statement delivered by Purchaser and accepted by Seller; (ii) as set forth in the Closing  Statement delivered by Purchaser, if Seller fails to timely deliver a Notice of Dispute in accordance  with Section 2.3(b); (iii) as finally determined by the Accounting Firm pursuant to Section 2.3(c);  or (iv) as otherwise may be mutually agreed by Purchaser and Seller.         “Financial Statements” has the meaning set forth in Section 4.6(a).         “Financing Related Parties” means any Financing Source’s Affiliates or any of its or its  Affiliates’ former, current or future general or limited partners, stockholders, managers, members,  controlling persons, agents, employees, officers, directors, accountants, consultants, legal counsel,  financial advisors or any of their successors or assigns.         “Financing Sources” shall those Persons that are party to the Debt Commitment Letter  and any other Person who becomes a party to the Debt Commitment Letter as a Lender prior to  Closing  or  any  other  Person  who  provides  debt  financing used  to  finance  the  transactions  contemplated by this Agreement.         “FIRPTA Certificates” has the meaning set forth in Section 7.8.         “Former Business Employees” means individuals who were formerly employed by the  Business or its predecessors.         “Fraud” means (i) with respect to the Company, Logistics or Seller, means that Lonnie  Ray Sears, Dan Bofinger, Mike Feehery or Chance Mercure actually knew that the Company,  Logistics or Seller was deliberately making an untrue representation or warranty in this Agreement,  or in any Transaction Document or any certificate delivered hereunder or thereunder, with the  intent to deceive and induce reliance upon such representation and warranty and that Purchaser  relied on such representation or warranty (it being understood that the intent of the foregoing is  not to convert a contract claim into a tort claim), or (ii) with respect to Purchaser, means that James  Baker, Adam Cohn or Erik Minor actually knew that Purchaser was deliberately making an untrue  representation or warranty in this Agreement, or in any Transaction Document or any certificate  delivered  hereunder  or  thereunder,  with  the  intent  to  deceive  and  induce  reliance  upon  such  representation and warranty and that Seller, Logistics or the Company, as applicable, relied on  such  representation  or  warranty  (it  being  understood  that  the  intent  of  the  foregoing  is  not  to  convert a contract claim into a tort claim).          “Fundamental  Representations” shall  mean  the  representations  and  warranties  of  the  Seller set forth in Section 4.1 (Organization and Good Standing), Section 4.2 (Capital Structure),  Section 4.3 (Authorization of Agreement), Section 4.5 (Brokers), Section 4.8 (Taxes), Section  4.9(b) (Ownership  of  Assets), Section 5.1 (Organization  and  Good  Standing), Section  5.2  (Authorization of Agreement), Section 5.7 (Brokers) and Section 5.8 (Parent Limited Guaranty).          “Funded Debt” means any Debt of the Company of the type contemplated by clauses (i)  and (iv) of the definition of Debt.         “GAAP” means United States generally accepted accounting principles, as in effect at the  relevant time.                                         72    

 

       “Government Official” means any officer or employee of a Governmental Authority, or  of a public organization or any Person acting in an official capacity for or on behalf of any such  Governmental Authority.         “Governmental Authority” means any government or governmental or regulatory body  thereof, or political subdivision thereof, of any country or subdivision thereof, whether national,  federal, state, provincial, municipal or local, or any agency, official, subdivision, commission or  instrumentality thereof, or any court or arbitrator (public or private).         “Hazardous Substance” means any substance, waste or material regulated as a “hazardous  waste” or “hazardous substance” under, or for which standards of conduct or liability are imposed  pursuant to, any Environmental Law.         “Inactive Employee” has the meaning set forth in Section 9.1(b)(i).         “Indemnification Escrow Account” means an account established by the Escrow Agent  pursuant to the Escrow Agreement to hold the Indemnification Escrow Amount.         “Indemnification Escrow Amount” means $612,500.         “Indemnification  Escrow  Funds” means,  as  of  any  time,  the  portion  of  the  Indemnification Escrow Amount then remaining in the Indemnification Escrow Account.         “Indemnified Party” means a Person entitled to indemnification under this Agreement.         “Indemnified Taxes” means (i) all Taxes (or the nonpayment thereof) of the Company for  all Pre- Closing Tax Periods and the portion of any Straddle Period up to and including the Closing  Date, (ii) any and all Taxes of any affiliated, consolidated, combined, unitary or similar group  imposed on the Company by reason of the Company being a member of any such group on or prior  to the Closing Date, (iii) any and all Taxes of any Person (other than the Company) imposed on  the Company as a transferee or successor, by contract or pursuant to any law, rule or regulation,  which Taxes relate to an event or transaction occurring before the Closing, and (iv) the reasonable  out-of-pocket costs of preparing all Tax Returns to the extent provided in Section 12.1(a).         “Indemnifying Party” means the Party from which indemnification is sought under this  Agreement.         “Individual Agreements” has the meaning set forth in Section 4.12(a)(i).         “Intellectual Property” means all intellectual or proprietary rights arising under the laws  of any jurisdiction throughout the world, including: (a) Trademarks; (b) all pending and issued  patents,  including  design  patents  and  utility  patents,  reissues,  divisions,  continuations,  continuations-in-part,  reexaminations  and  extensions  thereof;  (c) copyrights  and  copyrightable  works;  (d) invention  disclosures;  (e) Internet domain  names;  (f)  trade  secrets  and  specialized  knowledge  which  is  proprietary,  formulae,  product  formulations,  processes,  product  designs,  specifications, quality control, procedures, technology, technical information, engineering data and  design and engineering specifications; (g) rights in Software and data, and (h) registrations of, and                                         73    

 

applications to register, any of the foregoing with any Governmental Authority and any renewals  or extensions thereof.          “Interim Balance Sheet” means the unaudited consolidated balance sheet of the Business  as of the Interim Balance Sheet Date.         “Interim Balance Sheet Date” means July 31, 2018.         “Interim Financial Statements” has the meaning set forth in Section 4.6(a).         “Intervening Event” has the meaning set forth in Section 6.13(b).         “Investment Canada Act” means the Investment Canada Act (Canada), and the regulations  promulgated thereunder, as amended.         “Knowledge of Seller” means the actual knowledge after review of this Agreement and the  Schedules,  and  assuming  reasonable  independent  investigation,  of Lonnie  Ray  Sears,  Dan  Bofinger, Mike Feehery and Chance Mercure.         “Law” means, with regard to any Person, any national, federal, state, provincial, municipal  or  local  law  (including  common  law),  statute,  constitutional  provision,  code,  ordinance,  rule,  regulation,  directive,  concession,  Order  or  other  requirement  of  any  Governmental Authority  applicable to such Person.         “Leased Real Property” has the meaning set forth in Section 4.10(b).         “Liability” or “Liabilities” means any indebtedness, obligations or liabilities of any kind,  whether accrued or fixed, known or unknown, liquidated or unliquidated, absolute, contingent or  otherwise, and whether due or to become due or asserted or unasserted.         “Liability Policies” has the meaning set forth in Section 4.19.         “Lien” means any lien (statutory or otherwise), pledge, mortgage, deed of trust, security  interest, easement, covenant, license, charge, servitude, transfer restriction or encumbrance of any  kind.         “Losses” means all claims, actions, causes of action, judgements, awards, Taxes, losses,  damages, Liabilities, costs or expenses, including reasonable attorneys’ fees and expenses.         “Material Adverse Effect” means any Event that, individually or together with all other  such Events, has had or would reasonably be expected to have a material or adverse effect on (A)  the Company or the Business taken as a whole, except for any such Event to the extent relating to  or arising out of (a) changes in GAAP or the interpretation thereof, (b) changes resulting from the  public announcement of the Transaction or the identity of the Purchaser, including any adverse  change in any employee, customer, distributor, supplier or similar relationship resulting therefrom,  (c) changes or developments resulting from any action expressly required or permitted to be taken  by this Agreement or in order to consummate the Transaction (excluding, for the avoidance of  doubt, compliance with the provisions of Section 6.2), or any act or omission taken or omitted to                                         74    

 

be taken at the express written request of Purchaser, (d) changes or developments in financial,  debt,  credit  or  securities  markets  or  the  economy  in  general,  including  changes  in  currency  exchange  or  interest  rates,  (e) the  failure  to  meet  any  revenue,  earnings  or  other  financial  or  operational forecasts or projections (provided that the underlying causes of any such failure may  be  taken  into  account  to  the  extend  not  otherwise  prohibited  by  clauses  (a)  through  (f)),  or  (f) changes or developments resulting from acts of hostilities, terrorism, sabotage or war (whether  or not declared), or any worsening thereof, or any natural disaster or act of God; except in the case  of (d) or (f), to the extent that the Company or the Business, taken as a whole, is disproportionately  affected compared to other similarly situated participants in the industry in which the Business  operates, (g) the exclusion of, or any changes or developments affecting, the Excluded Assets or  Excluded Liabilities, or (h) any adverse change in or effect on the Company that is caused by any  delay in consummating the Closing as a result of any violation or breach by Purchaser of any  covenant, representation or warranty contained in this Agreement; or (B) the ability of the Seller  or Logistics to timely consummate the transactions contemplated hereby and by the Transition  Services Agreement.         “Material Contracts” has the meaning set forth in Section 4.12(a)(xviii).         “Material Customers” has the meaning set forth in Section 4.18.         “Material Suppliers” has the meaning set forth in Section 4.18.         “Net Working Capital Lower Limit” means $69,000,000.         “Net Working Capital Upper Limit” means $71,000,000.         “New Contract” has the meaning set forth in Section 6.9.         “New Debt Commitment Letters” has the meaning set forth in Section 6.8(b).         “New U.S. Welfare Plans” has the meaning set forth in Section 9.1(d)(i).         “Notice of Dispute” has the meaning set forth in Section 2.3(b).         “Offer Letter” has the meaning set forth in Section 9.1(b)(i).         “Order” means  any determination,  order,  injunction,  judgment,  decree,  ruling,  writ,  temporary restraining order, assessment or award of any Governmental Authority.         “Ordinary Course” means, as it relates to the Business, in a manner substantially the same  as that normally employed by the Company, Logistics or Seller, as applicable, in the ordinary  course business, consistent with the Business’s practices over the preceding twelve (12) months,  including, as applicable, with respect to quantity and frequency.         “Overpayment Credits” means any overpayment of Taxes of the Company from a Pre- Closing Tax Period applied to reduce Taxes in a tax period beginning after the Closing Date.         “Parent” has the meaning set forth in Section 5.8(a).                                         75    

 

      “Parent Limited Guaranty” has the meaning set forth in Section 5.8(a).         “Party” or “Parties” has the meaning set forth in the preamble.         “Payoff Letters” has the meaning set forth in Section 3.4(a).         “Permit” means  any  approval,  authorization,  consent,  franchise,  license,  permit  or  certificate of or by any Governmental Authority.         “Permitted Liens” means (a) Liens for current Taxes, assessments or other claims not yet  delinquent  or the  amount or validity of which is being  contested in  good faith by appropriate  proceedings and for which adequate reserves have been established on the Interim Balance Sheet  in accordance with GAAP; (b) statutory, mechanics’, carriers’, workers’, repairers’ and similar  Liens arising under applicable Law and incurred in the Ordinary Course or the amount or validity  of  which  is  being  contested  in  good  faith  by  appropriate  proceedings and  for  which  adequate  reserves have been established on the Interim Balance Sheet in accordance with GAAP; (c) Liens  in favor of any lessor, sub-lessor, licensor or sub-licensor arising under any Contract provided such  Liens do not affect the use or value of the assets affected thereby; (d) with respect to any Leased  Real Property, all public and private roads, streets and sidewalks, and electric power, telephone,  cable, gas, sanitary sewer, storm sewer, water and other utility improvements and structures, and  all  licenses,  easements, rights-of-way  and  other  similar  agreements  or  arrangements  relating  thereto which do not affect the use or value of the Leased Real Property affected thereby.          “Person” means any individual, corporation, partnership, limited liability company, firm,  joint venture, association, joint-stock company, trust, unincorporated organization, representative  office, branch, Governmental Authority or other similar entity.         “Personnel Records” has the meaning set forth in Section 9.1(f).         “Post-Closing Tax Period” means  any taxable period (or portion  of a Straddle Period)  beginning after the Closing Date.         “Pre-Closing Representation” has the meaning set forth in Section 13.15(a)(i).         “Pre-Closing Tax Period” means any taxable period ending on or prior to the Closing Date.         “Prior Company Counsel” has the meaning set forth in Section 13.15(a)(i).         “Products” has the meaning set forth in Section 4.22(a).         “Proposed Adjustment Amount” has the meaning set forth in Section 2.3(a).         “Purchase Price” has the meaning set forth in Section 2.1.         “Purchase Price Allocation Schedule” has the meaning set forth in Section 2.5(b).         “Purchased Assets” has the meaning set forth in Section 1.1(b).         “Purchased Stock” has the meaning set forth in Section 1.1(a).                                         76    

 

      “Purchaser” has the meaning set forth in the preamble.         “Purchaser 401(k) Plan” has the meaning set forth in Section 9.1(d)(iv).         “Purchaser Closing Date Transaction” means any transaction engaged in by the Company  on the Closing Date, after the Closing, that is not contemplated by this Agreement and is outside  the Ordinary Course, including any transaction engaged in by the Company in connection with the  financing of any obligations of the Purchaser to make a payment under this Agreement.         “Purchaser Material Adverse Effect” means any Event that has had, or would reasonably  be  expected  to  have,  a  material  adverse  effect  on  Purchaser’s  ability  to  consummate  the  Transaction.         “Purchaser Parties” means, collectively, Purchaser and Purchaser’s Affiliates, and each of  their respective Representatives.         “Purchaser Prepared Returns” has the meaning set forth in Section 12.1(a).         “Purchaser Releasee” has the meaning set forth in Section 9.7.         “Purchaser Releasors” has the meaning set forth in Section 9.7.         “R&W Insurance Policy” means the “buyer’s” representations and warranties insurance  policy from the R&W Provider, bound as of the date of this Agreement, in substantially the form  attached hereto as Exhibit F.         “R&W Provider” means Ethos Specialty Insurance Services LLC.         “Real Property Leases” has the meaning set forth in Section 4.10(b).         “Rebates” means all rebates due to the Seller and/or the Company from their respective  vendors with respect to any period prior to the Closing.         “Remaining Inventory” has the meaning set forth in Section 9.3(b)(ii).         “Representative” means, with respect to any Person, such Person’s Affiliates and its and  their  respective  equityholders,  managers,  directors,  officers,  employees,  consultants,  financial  advisors, legal counsel, accountants and other agents.         “Restricted Cash” means any Cash (i) the use of which is restricted by Law or Contract,  including the Security Deposits Amount and any other deposits with third parties, (ii) that are  insurance proceeds in respect of a condemnation, casualty, loss or other material damage to any of  the assets of the Business prior to the Closing Date that have not been used to repair or replace  such condemned or damaged property as permitted or required pursuant to the terms hereof, (iii)  that are held by the Company that cannot be repatriated to the United States, and (iv) equal to the  withholding or other Taxes that would be imposed on the repatriation to the United States of any  Cash held by the Company.                                          77    

 

      “Restricted Party” has the meaning set forth in Section 9.9(a).         “Retained U.S. Benefit Plans” has the meaning set forth in Section 9.1(c)(i).         “Review Period” has the meaning set forth in Section 2.3(b).         “Sanctioned Country” means any country or region that is, or has been in the last five  years, the subject or target of a comprehensive embargo under Trade Control Laws (including,  without limitation, Cuba, Iran, North Korea, Sudan, Syria, and the Crimea region of Ukraine).         “Sanctioned  Person”  means  any  Person  that  is  the  subject  or  target  of  sanctions  or  restrictions under Trade Control Laws, including: (i) any Person listed on any applicable U.S. or  non-U.S. sanctions- or export-related restricted party list, including, without limitation, the U.S.  Department of the Treasury Office of Foreign Assets Control’s Specially Designated Nationals  and Blocked Persons List; (ii) any entity that is, in the aggregate, 50 percent or greater owned,  directly or indirectly, or otherwise controlled by a Person or Persons described in clause (i); or (iii)  any national of a Sanctioned Country.          “Schedules” means the disclosure schedules to Article 4 prepared and delivered by Seller  and Purchaser on the date of this Agreement.         “Security Deposits Amount” means an amount equal to all of the security deposits paid by  the Seller under any Real Estate Leases related to the Business to which the Seller is party plus all  of the security deposits paid by the Company under all Real Estate Leases to which the Company  is party, in each case, calculated as of the Closing Date and in accordance with GAAP.          “Seller” has the meaning set forth in the preamble.         “Seller 401(k) Plan” has the meaning set forth in Section 9.1(d)(iv).         “Seller Employee Benefit Plans” has the meaning set forth in Section 4.15(a).         “Seller Names” has the meaning set forth in Section 9.3(a).         “Seller  Occurrence-Based  Insurance  Policies” has  the  meaning  set  forth  in Section  9.10(a).         “Seller  Parties” means,  collectively,  Seller  and  Seller’s  Affiliates,  and  each  of  their  respective Representatives.          “Seller Releasee” has the meaning set forth in Section 9.7.         “Seller Releasors” has the meaning set forth in Section 9.7.          “Seller Transaction Expenses” means, without duplication, all fees and expenses of the  Seller  and  its  Affiliates  incurred  in  connection  with  the  Agreement and  the  transactions  contemplated hereby, which have not otherwise been paid at or prior to Closing and to the extent  such fees and expenses do not constitute Company Transaction Expenses, including all amounts                                         78    

 

that are payable by the Seller, Logistics or their respective Affiliates to any third party transaction  advisors, including financial advisors, investment bankers, brokers, legal counsel, accountants and  data room administrators, in connection with this Agreement and the transaction contemplated  hereunder, for services rendered through the close of business on the Closing Date and all Change  in Control Payments (in each case, including the employer portion of any payroll, social security,  unemployment or similar Taxes imposed on such amounts).           “Seller’s Termination Expenses” has the meaning set forth in Section 13.7.         “Selling  Employer” means  Seller  or  any  Affiliate  of  Seller  that  employs  a  Business  Employee or employed a Former Business Employee.         “Shared Contract” has the meaning set forth in Section 6.9.         “Software” means  any  and  all  computer  programs, including  operating  system  and  applications software, implementations of algorithms, and program interfaces, whether in source  code or object code form, databases and all documentation relating to the foregoing, including user  manuals relating to the foregoing.         “Specified Representations” shall mean the representations and warranties of the Seller set  forth in Section 4.1 (Organization and Good Standing), Section 4.2 (Capital Structure), Section  4.3 (Authorization of Agreement), Section 4.5 (Brokers), Section 4.9(b) (Ownership of Assets),  Section 5.1 (Organization and Good Standing), Section 5.2 (Authorization of Agreement), Section  5.7 (Brokers) and Section 5.8 (Parent Limited Guaranty).         “Straddle Period” means any taxable period beginning on or prior to and ending after the  Closing Date.         “Subsidiary” means, with respect to any Person, any other Person of which such Person  (either  alone  or  through  or  together  with  any  other  Subsidiary)  owns,  directly  or  indirectly,  a  majority of the outstanding equity securities or securities carrying a majority of the voting power  in the election of the board of directors or other governing body of such Person (or is entitled to  the majority of the profits or holds a majority of the partnership or similar interests of such Person).         “Tax” or “Taxes” means any net income, capital gains, gross income, gross receipts, sales,  use,  transfer,  ad  valorem,  escheat,  abandoned  or  undefined  property,  good  and  services,  harmonized sales Tax, franchise, profits, license, capital, stamp, duties, import or export taxes,  withholding, payroll, employer contribution, employment, property, alternative, value added, or  other tax of any kind whatsoever imposed by any Governmental Authority, or any interest, with  respect to the Company  penalties or additional tax incurred under Laws with respect to such taxes.         “Tax Act” means the Income Tax Act, R.S.C. 1985 (5th Supp.) c.1., as amended, and the  regulations promulgated thereunder.         “Tax Benefit” shall, with respect to the Company, mean any reduction in Taxes payable to  a Governmental Authority calculated on a with or without basis.         “Tax Proceeding” has the meaning set forth in Section 12.3.                                         79    

 

      “Tax Return” means a report, return, declaration, report, form, notice, claim for refund or  other information return supplied or required to be supplied to a Governmental Authority with  respect to Taxes (including any amendments and schedules thereto).         “Tax Sharing Agreement” has the meaning set forth in Section 4.8(f).         “Termination Fee” has the meaning set forth in Section 11.3(a).         “Third Party Claim” means any claim for indemnification under this Agreement that arises  out of, relates to or results from any claim or Action by any Person other than the Parties.         “Third Party Intellectual Property” means  Intellectual Property owned by any Person,  other than the Seller or the Company, without regard as to whether the Seller or the Company has  any rights therein, used in the conduct of the Business.         “Threshold” has the meaning set forth in Section 10.4(c).         “Trade Control Laws” means all U.S. and non-U.S. Laws relating to (i) economic, trade,  and financial sanctions, including, without limitation, those administered and enforced by the U.S.  Department  of  Treasury  Office  of  Foreign  Assets  Control,  the  U.S.  Department  of  State,  the  European Union, Her Majesty’s Treasury, and the United Nations; (ii) export, import, reexport,  transfer, and retransfer controls, including, without limitation, those administered and enforced by  the U.S. Department of Commerce Bureau of Industry and Security, U.S. Customs and Border  Protection, the European Union, the United Kingdom, and the United Nations; (iii) antiboycott  requirements and (iv) the prevention of money laundering.         “Trademarks” means trademarks, service marks, brand names, logos, certification marks,  trade dress, assumed names and trade names, including all applications for registration therefor  and all translations, adaptations, derivations, renewals, modifications and extensions thereof, and  all goodwill associated therewith.         “Transaction” means, collectively, the transactions contemplated by this Agreement and  the other Transaction Documents.         “Transaction  Documents” means,  collectively, this Agreement,  the Transition  Services  Agreement, the Assignment and Assumption Agreement and Bill of Sale, the Escrow Agreement  and all other agreements, instruments and certificates contemplated hereby and thereby.         “Transaction Expenses” means the Seller Transaction Expenses and Company Transaction  Expenses.         “Transfer Taxes” has the meaning set forth in Section 12.6.         “Transferred Employee” has the meaning set forth in Section 9.1(b)(ii).         “Transition Services Agreement” means the Transition Services Agreement, to be dated as  of the Closing Date, by and between the Seller and the Company, in the form attached hereto as  Exhibit G.                                         80    

 

      “U.S. Transferred Employee” has the meaning set forth in Section 9.1(b)(ii).         “United States” means the United States of America.         “Unresolved Indemnification Claims” has the meaning set forth in Section 10.8.         “WARN Act” has the meaning set forth in Section 9.1(f).         “Welfare Plan Losses” has the meaning set forth in Section 9.1(d)(i).         “Year-End Financial Statements” has the meaning set forth in Section 4.6(a).         Section 13.2 Rules of Construction.  This Agreement is the result of the joint efforts of  Purchaser,  Logistics  and  Seller,  and  each  provision  hereof  has  been  subject  to  the  mutual  consultation, negotiation and agreement of the Parties and there shall be no construction against  either Party based on any presumption of that Party’s involvement in the drafting thereof.  Any  reference  to  any  statute  or  Law  shall  be  deemed  also  to  refer  to  all  rules  and  regulations  promulgated thereunder, interpretations  thereof,  amendments thereto  and successor provisions,  unless the context  requires  otherwise.  Whenever used in  this Agreement,  except  as  otherwise  expressly provided or unless the context otherwise requires,  (a) any noun or pronoun shall be  deemed  to  include  the  plural  as  well  as  the  singular  and  to  cover  all  genders,  (b)  the  terms  “include,” “includes” and “including” shall be inclusive and not exclusive and shall be deemed to  be followed by the following phrase “without limitation,” (c) “hereof,” “herein,” “hereunder” and  words of similar import will refer to this Agreement as a whole and not to any particular Section  or provision of this Agreement, (d) “or” shall not be exclusive, (e) references Sections and Articles  refer  to  the  numbered  and  lettered Articles,  Sections  and subsections  of  this Agreement,  and   references to a particular Article or Section of this Agreement will include all subdivisions thereof,  (f) the word “will” shall have the same meaning as the word “shall”; (g) the word “extent” in the  phrase “to the extent” means the degree to which a subject or other thing extends and shall not  simply mean “if”; (h) references to “day” or “days” in the lower case means calendar days; (i)  references to the “date hereof” are to the date of this Agreement; (j) references to a particular  Person  include  such  Person’s  successors  and  assigns  to  the  extent  not  prohibited  by  this  Agreement; and (k) “made available,” “delivered” and words of similar import shall, for purposes  of Article 4, shall mean that the information referred to has been posted in the Intralinks “Project  Shield” data room established by Seller at least two (2) Business Days prior to the date hereof and  remains available for viewing as of the date hereof.  All monetary amounts in this Agreement are  expressed in Dollars.         Section 13.3 Confidentiality; Publicity.                 (a)   Purchaser  hereby  acknowledges,  covenants  and  agrees  that  (i)  the  Confidentiality Agreement remains in full force and effect in accordance with its terms, (ii) any  confidential  information  of  or  relating  to  the  business  and  operations  of  Seller  or  any  of  its  Affiliates and Representatives disclosed in connection with this Agreement or the Transaction shall  subject  to  the  terms  of  Confidentiality  Agreement  to  the extent  constituting “Confidential  Information” thereunder, and (iii) the provisions of this Section 13.3(a) shall continue in full force  and effect regardless of any termination of this Agreement or abandonment of the Transaction.                                         81    

 

            (b)   No  Party shall  issue  any  press  release,  make  any  public  statement  or  otherwise communicate with any news or media outlet regarding the execution or performance of  this Agreement, without the prior written consent of the other Parties, unless (i) such information  is otherwise generally available to and known by the public, other than as a result of a disclosure  by the Party made in breach of this Section 13.3(b), or (ii) the release of such information is, in the  reasonable judgment of the Party (based on advice of counsel), required by any Law or Order to  which the Party is bound or subject.  Each Party shall advise and cooperate with the other Parties  with respect to the timing and content all such releases, statements and other communications  concerning this Agreement or the Transaction; provided, however, that (a) following the Closing,  any Party may make announcements (x) that are required by applicable Laws or stock exchange  rule or (y) that are consistent with the Parties’ prior public disclosures regarding the transactions  contemplated  hereunder  and  may  disclose  the  fact  of  and  the  identity  of  the  Parties  to  this  transaction, but, in the case of this clause (b), not any of the economic or other material terms of  this Agreement except as required by applicable Law, and (b) the Purchaser and its Affiliates may  provide customary  information  regarding  this  Agreement  and  the  transactions  contemplated  hereby to existing or prospective investors, equity holders, members, managers and any of their  respective Affiliates.         Section 13.4 Entire Agreement.  The Schedules and Exhibits to this Agreement shall be  construed with and as an integral part of this Agreement to the same extent as if the same had been  set forth verbatim herein; provided, that no form of Transaction Document attached hereto (or the  terms therein) shall have any binding legal effect unless until such Transaction Document is duly  executed and delivered by each party thereto (and then only to the extent provided therein). Any  matter disclosed by the Parties on any one Schedule shall be deemed disclosed for purposes of  each other Schedule to the extent that the applicability of such disclosure to such other Schedule  is  reasonably  apparent  on  the  face  of  such  disclosure.   This  Agreement  (together  with  the  Schedules, Exhibits, all other Transaction Documents and other agreements referenced herein) and  the Confidentiality Agreement contain, and are intended as, a complete statement of all of the  terms, conditions and arrangements between the Parties with respect to the matters provided for  herein,  and  supersede  any  previous  agreements  and  understandings  between  the  Parties  with  respect to those matters.         Section 13.5 Governing Law.  This Agreement and all disputes and other matters arising  hereunder  (whether  in  contract,  tort  or  otherwise)  shall  be  governed  by  and  construed  in  accordance the internal Laws of the State of New York applicable to agreements made in and to  be wholly performed in such state, without giving effect to any choice or conflict of law provision  or rule (whether of the State of New York or any other jurisdiction) that would cause the application  of the Laws of any jurisdiction other than the State of New York.         Section 13.6 Jurisdiction; Waiver of Jury Trial.               (a)   With respect to any Action, each Party irrevocably (i) agrees and consents  to  be  subject  to  the  exclusive  jurisdiction  of  the  state  and  federal  courts  in  the  Borough  of  Manhattan within the City of New York and (ii) waives (A) any objection which it may have at  any time to the laying of venue of any Action brought in any such court, (B) any claim that such  Action has been brought in an inconvenient forum and (C) the right to object, with respect to such  Action, that such court does not have any jurisdiction over such Party.  The foregoing consent to                                         82    

 

jurisdiction shall not constitute general consent to service of process in the State of New York for  any purpose except as provided above and shall not be deemed to confer rights on any Person other  than the respective Parties to this Agreement.  Each of Seller, Logistics and Purchaser irrevocably  agrees that service of any process, summons, notice or document by United States registered mail  to such Party’s address set forth in Section 13.9 shall be effective service of process for Action in  New York with respect to any matters for which it has submitted to jurisdiction pursuant to this  Section 13.6.                    (b)    WITHOUT LIMITING THE     TERMS OF  SECTION   13.6(A), IF NOTWITHSTANDING  THOSE TERMS ANY ACTION, CAUSE OF ACTION, CLAIM, CROSS-CLAIM OR THIRD-PARTY CLAIM OF ANY  KIND  OR  DESCRIPTION, WHETHER  IN  LAW  OR  IN  EQUITY, WHETHER  IN  CONTRACT    OR  IN  TORT  OR  OTHERWISE,  IS  BROUGHT  OR  MAINTAINED AGAINST ANY  PARTY,     ANY  FINANCING  SOURCE  OR ANY  FINANCING  RELATED  PARTY  IN  ANY  WAY  RELATING  TO  THIS      AGREEMENT  OR  ANY  OF  THE  TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, INCLUDING ANY DISPUTE ARISING OUT OF OR  RELATING  IN  ANY  WAY TO  THE  DEBT  FINANCING  OR  THE  PERFORMANCE  THEREOF,      THE  PARTIES  HERETO AGREE THAT  IT   MAY  NOT  BE  BROUGHT  OR  MAINTAINED  IN ANY   FORUM  OTHER THAN ANY  FEDERAL COURT OF THE UNITED STATES OF AMERICA LOCATED IN, OR, IF THAT COURT DOES NOT HAVE  SUBJECT MATTER JURISDICTION, IN ANY STATE COURT LOCATED IN, IN EACH CASE, THE BOROUGH OF  MANHATTAN  IN  THE  CITY    OF  NEW   YORK  AND  EACH  OF  THE    PARTIES  HERETO  KNOWINGLY,  VOLUNTARILY AND IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF EACH SUCH COURT  IN ANY SUCH ACTION OR PROCEEDING AND WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE  TO VENUE OR TO CONVENIENCE OF FORUM.                    (c)    EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH  MAY ARISE,  WHETHER  IN  CONTRACT,   TORT,  OR  OTHERWISE,  RELATING  TO  THIS AGREEMENT,    ANY  OTHER TRANSACTION DOCUMENT OR THE TRANSACTION IS LIKELY TO INVOLVE COMPLICATED AND  DIFFICULT ISSUES (INCLUDING ANY LEGAL ACTION ARISING OUT OF OR RELATING IN ANY WAY TO THE  DEBT  FINANCING  OR  THE  PERFORMANCE  THEREOF  AGAINST  ANY       FINANCING    SOURCE  OR  ANY  FINANCING  RELATED   PARTY), AND THEREFORE  IT  HEREBY  IRREVOCABLY AND       UNCONDITIONALLY  WAIVES ANY  RIGHT  IT MAY  HAVE  TO A  TRIAL  BY  JURY  IN  RESPECT  OF ANY ACTION  DIRECTLY  OR  INDIRECTLY  ARISING  OUT  OF  OR  RELATING  TO  THIS AGREEMENT  OR  ANY  OTHER     TRANSACTION  DOCUMENT,    THE  FACTS  AND  CIRCUMSTANCES  LEADING  TO     THE  EXECUTION  OR  PERFORMANCE  HEREOF AND THEREOF, OR THE TRANSACTION.  EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT  (i) NO REPRESENTATIVE,   ATTORNEY  OR  OTHER AGENT  OF ANY  OTHER     PARTY  HAS  REPRESENTED,  EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY ACTION,  SEEK  TO  ENFORCE  THE   FOREGOING  WAIVER,    (ii) IT  UNDERSTANDS  AND  HAS  CONSIDERED  THE  IMPLICATIONS OF SUCH WAIVER, (iii) IT MAKES SUCH WAIVER KNOWINGLY AND VOLUNTARILY, AND  (iv) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL  WAIVERS AND CERTIFICATIONS IN THIS SECTION 13.6(A).          Section 13.7   Expenses.  Except as otherwise expressly provided in this Agreement, each  Party shall bear its own expenses (including fees and disbursements of its counsel, accountants  and  other  experts)  incurred  by  it  in  connection  with  the  preparation,  negotiation,  execution,  delivery  and  performance  of  this  Agreement  and  each  other  Transaction  Document,  and  the  consummation of the Transaction.                                                   83    

 

      Section 13.8 Table of Contents and Headings.  The table of contents, captions and section  headings in this Agreement and in the Schedules are for convenience of reference only and are to  be given no effect in the construction, interpretation or effect hereof.         Section 13.9 Notices.   All  notices,  requests,  demands,  and  other  communications  hereunder shall be in writing and deemed to have been given (a) when delivered personally with  confirmation  of  receipt,  (b)  when  delivered  if  sent  by  a  recognized  overnight  courier  with  confirmation of receipt, or (c) on the date sent, if sent by facsimile or e-mail prior to 6:00 pm  Pacific  time  on  any  Business  Day,  with  confirmation  of  transmission,  if  sent  during  normal  business hours of the recipient, and on the next Business Day if sent after normal business hours  of the recipient, to a Party at the following address (or to such other address as such Party may  have specified by notice given to the other Party pursuant to this Section 13.9):               If to Seller or Logistics, to:                                                Foundation Building Materials, LLC                                741 Walnut Ave.                                Suite 200                                Tustin, CA 92780                                Tel:  (714) 380-3127                                Email: ric.tilley@sbmsales.com                                            Attn: Ric Tilley               with a copy to:   Winston & Strawn LLP                                333 S. Grand Ave.                                Los Angeles, CA 90071                                Tel:  (213) 615-1719                                Fax:  (213) 615-1750                                Email: evadavis@winston.com                                                     Attn:   Eva Davis               If to Purchaser, to: SPI LLC                                c/o Dunes Point Capital, LLC                                411 Theodore Fremd Avenue                                Suite 125                                Rye, NY 10580                                 Tel:  (914) 269-2020                                Email: James.Baker@dunespointcapital.com                                 Attn:    James Baker                      with a copy to:   Kirkland & Ellis LLP                                300 North LaSalle                                Chicago, IL 60654                                Tel:  (312) 862-2201                                Fax:  (312) 862-2200                                Email: jeffrey.seifman@kirkland.com                                      michael.sartor@kirkland.com                                         84    

 

                              Attn:   Jeffrey Seifman, P.C.                                      Michael Sartor          Section 13.10 Severability.  The invalidity or unenforceability of any provision hereof in  any jurisdiction shall not affect the validity or enforceability of any other provision hereof or render  invalid or unenforceable such provision in any other jurisdiction.  To the extent that any provision  hereof is deemed to be invalid or unenforceable, such provision shall be modified to the minimum  extent necessary to make such provision enforceable under applicable Law in its reduced form and  so as to give the maximum effect to the intent of the Parties.          Section 13.11 Binding  Effect;  No  Third-Party  Beneficiaries;  No  Assignment.  This  Agreement shall be legally binding upon and inure to the benefit of the Parties and their respective  successors  and  assigns.   Nothing  herein  shall  create  or  be  deemed  to  create  any  third-party  beneficiary rights in any Person that is not a Party, except that (i) the Seller Parties and Purchaser  Parties shall be express third-party beneficiaries of Article 10), (ii) each Seller Party and Prior  Company Counsel shall be an express third-party beneficiary of Section 13.15 and (iii) the Non- Recourse Parties are express third-party beneficiaries of Section 11.3(b).  No assignment hereof or  of any rights or obligations hereunder may be made by any Party (by operation of law or otherwise)  without the other Party’s prior written consent and any attempted assignment without such required  consent shall be without effect; provided, that (i) Purchaser may make a collateral assignment of  all or part of its rights under this Agreement to any lender (or agent therefor) of Purchaser’s or the  Company’s  secured  loans  (provided,  further,  that  no  such  assignment  shall  limit  Purchaser’s  obligations hereunder or relieve Purchaser of any of its obligations hereunder), and (ii) Purchaser  may assign any of its rights or obligations hereunder to any Affiliate of Purchaser; provided further,  that  no  assignment  pursuant  to  the  immediately  preceding  clause  (ii)  shall  limit  Purchaser’s  obligations hereunder or relieve Purchaser of any of its obligations hereunder.         Section 13.12 Amendments.  This Agreement may be amended, supplemented or modified  only pursuant to a written instrument making specific reference hereto signed by all of the Parties.         Section 13.13 Waiver.  At  any  time,  the  Parties  may  (a) extend  the  time  for  the  performance of any of the obligations or other acts of the Parties, (b) waive any inaccuracies in the  representations and warranties contained herein or in any document delivered pursuant hereto, or  (c) waive compliance with any of the agreements or conditions contained herein, to the extent  permitted by applicable Law.  Any agreement on the part of a Party to any such extension or waiver  will be valid only if set forth in a writing signed on behalf of such Party.  No waiver by any Party  of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional  or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach  of warranty or covenant hereunder or affect in any way any rights arising by virtue of any such  prior or subsequent occurrence.         Section 13.14 Specific Performance.                 (a)   Each Party expressly acknowledges and agrees that each Party would suffer  irreparable harm if any of the covenants of the Agreement are not performed in accordance with  their specific terms or are otherwise breached.  Accordingly, each Party agrees that the other Party  shall be entitled to  an injunction or injunctions  to  prevent  the breach of any provision  of this                                         85    

 

Agreement and to enforce specifically this Agreement and the terms and provisions hereof, in  addition to any other remedy to which such Party may be entitled, at law, in equity or otherwise.                 (b)   Notwithstanding  the  foregoing  or  anything  in  this  Agreement  to  the  contrary,  the Parties  hereby  acknowledge  and  agree  that  (A)  Seller  and  Logistics  shall  not  be  entitled to specific performance to cause Purchaser to cause the Equity Financing to be funded  pursuant to the terms and conditions of the Equity Commitment Letter and to thereafter cause the  Purchaser  to  effect  the  Closing  in  accordance  with  Section  2.5,  in  each  case,  unless  (i)  all  conditions in Article 7 have been satisfied (other than conditions that by their nature are to be  satisfied by actions to be taken at the Closing, but subject to the satisfaction of such conditions at  the Closing), (ii) the Debt Financing has been funded in accordance with the terms of the Debt  Commitment Letter or the Financing Sources have irrevocably confirmed in writing that such Debt  Financing will be funded at the Closing if the Equity Financing is contemporaneously funded at  the Closing, (iii) each of Seller and Logistics has irrevocably notified Purchaser in writing that all  of the conditions in Article 8 have been satisfied or irrevocably waived and that the Seller and  Logistics are ready, willing and able to consummate the Closing if specific performance is granted  and  the  Equity  Financing  and  the  Debt  Financing  are  funded,  and  (iv)  Purchaser  fails  to  consummate the Closing within three (3) Business Days of the date the Closing was required to  have occurred pursuant to Section 2.5, and (B) notwithstanding anything herein to the contrary  (including Section 5.5), it is acknowledged and agreed that the Seller and Logistics shall not be  entitled to seek the remedy of specific performance with respect to Purchaser’s rights under the  Debt Commitment Letter against the Financing Sources.         Section 13.15 Counterparts.  This Agreement may be executed in counterparts, each of  which shall be deemed an original, but both of which together shall constitute one and the same  instrument.   Copies  of  executed  counterparts  transmitted  by  facsimile  or  other  electronic  transmission service shall be considered original executed counterparts for purposes of this Section  13.15.         Section 13.16 Legal Representation.                 (a)   Purchaser, for itself and on behalf of the Purchaser Parties (including the  Company following the Closing), hereby:                     (i)   acknowledges that Winston & Strawn LLP (any other legal counsel           representing the Company or Seller Party prior to the Closing, each, a “Prior Company           Counsel”) represented the Seller and the Company prior to the Closing in connection           with preparation, negotiation, execution and delivery of this Agreement and the other           Transaction Documents,  and Transaction generally (“Pre-Closing Representation”),           and may continue to represent the Seller Parties in various matters from and after the           Closing, including in connection with any dispute with the Purchaser Parties arising           out of or relating to the Transaction Documents or the Transaction;                      (ii)  waives any claim that Prior Company Counsel has or will have or           that the Pre-Closing Representation creates or will create conflict of interest, or that           Prior Company Counsel or is otherwise prohibited from representing any Seller Party           in any dispute with any Purchaser Party or any other matter arising out of or relating to                                         86    

 

         the Transaction Documents (the negotiation or subject matter hereof and thereof) or the           Transaction, after the Closing Date, despite the fact that (A) the interests of one or more           of the Seller Parties  in  such dispute or other matter may be directly adverse to  the           interests of one or more Purchaser Parties and (B) Prior Company Counsel may have           represented  one  or  more  of  the  Company  in  a  matter  substantially  related  to  such           dispute or other matter and may be handling ongoing matters for one or more Purchaser           Parties; and                     (iii) covenants and agrees, that (A) as to all communications between           any Prior Company Counsel, on the one hand, and any Seller Party or the Company           (with respect to the Company, solely prior to the Closing), on the other hand, relating           in  any  way  to  the  Pre-Closing  Representation  that  constitutes  communications           protected  by  the  attorney-client  privilege,  the  attorney-client  privilege  and  the           expectation of client confidence belong to and shall be controlled by the Seller or Seller           Party, and shall not pass to or be claimed by any Purchaser Party, and (B) no Purchaser           Party may use or rely on any communications described in clause (A) in any claim or           Action against or involving any of the Seller Parties.               (b)   Notwithstanding the foregoing, if after the Closing a dispute arises between  any Purchaser Party, on the one hand, and any other Person (other than a Seller Party), on the other  hand, then such Purchaser Party (to the extent applicable) may assert the attorney-client privilege  to  prevent  disclosure  to  such  other  Person  of  confidential  communications  by  Prior  Company  Counsel; provided, that no Purchaser Party may waive such privilege without the prior written  consent Seller.                 (c)   This Section 13.16 is for the benefit of the Seller Parties and each Prior  Company Counsel, and the Seller Parties and each Prior Company Counsel are intended third-  party beneficiaries of this Section 13.16.  This Section 13.16 shall survive the Closing indefinitely,  shall be irrevocable, and no term of this Section 13.16 may be amended, waived or modified,  without the prior written consent of each of the Seller and Prior Company Counsel affected thereby.                 (d)   Parent further acknowledges and agrees that it has had adequate opportunity  to consult with counsel of its choosing, and has consulted with such counsel, in connection with  its decision to agree to the terms of this Section 13.16.                               [Signature Page Follows]                                          87    

 

 

 

 

 

                                                  EXHIBIT      TRANSITION SERVICES AGREEMENT                   by and among                    SPI LLC,   FOUNDATION BUILDING MATERIALS, LLC,                       and             FBM CANADA SPI, INC.             Dated as of [             ], 2018  

 

                  FORM OF TRANSITION SERVICES AGREEMENT         This  TRANSITION  SERVICES  AGREEMENT,  dated  as  of [________],  2018  (the  “Effective Date”) (this “Agreement”), is made by and among SPI LLC, a Delaware limited liability  company established under the Laws of Delaware (“Purchaser”), Foundation Building Materials,  LLC, a California limited liability company (“Seller”), and FBM Canada SPI, Inc., an Alberta  corporation  (“Company”).  Purchaser,  the  Company  and  Seller are  each  referred  to herein  individually as a “Party,” and collectively, as the “Parties.”                                   R E C I T A L S:         WHEREAS,  Purchaser,  Company  and  Seller  have  entered  into  the  Stock  and  Asset  Purchase Agreement, dated as of September 26, 2018 (as amended, modified or supplemented  from time to time in accordance with its terms, the “Purchase Agreement”), pursuant to which, at  the Closing, Purchaser acquired all of the issued and outstanding capital stock of the Company,  the Purchased Assets and the Business from Seller, upon the terms and subject to the conditions  set forth in the Purchase Agreement;         WHEREAS, in connection with the transactions contemplated by the Purchase Agreement,  Seller desires to provide, or cause to be provided, to the Company and Purchaser, and Purchaser  and the Company desire to receive from Seller, certain services on a transitional basis, upon the  terms and subject to the conditions set forth herein.         NOW,  THEREFORE,  in  consideration  of  the  foregoing  and  the  mutual  agreements  contained herein, the Parties hereby agree as follows:                                    ARTICLE I                                   DEFINITIONS         Section 1.01 Certain Defined Terms.               (a)   Unless otherwise defined herein, all capitalized terms used herein shall have  the meaning ascribed to the terms as set forth in the Purchase Agreement.               (b)   The  following  capitalized  terms  used  in  this Agreement  shall  have  the  meanings set forth below:               “Action” means any action, complaint, charge, claim, petition, audit, examination,  investigation, inquiry, arbitration, judicial or administrative action, suit or proceeding (public or  private), whether civil or criminal, at law or in equity, by or before any Governmental Authority.               “Agreement” shall have the meaning set forth in the Preamble.               “Business” shall have the meaning set forth in the Purchase Agreement.               “Business Day” means any day other than a Saturday, a Sunday or a day on which  banks in New York, New York are authorized or obligated by Law to close.      

 

               “Company” shall have the meaning set forth in the Preamble.               “Company Contract Manager” shall have the meaning set forth in Section 8.01.               “Company Indemnified Person” shall have the meaning set forth in Section 5.02(b).               “Confidential  Information”  means,  with  respect  to  either  Party,  any  and  all  information of such Party or any of its Affiliates of a confidential or proprietary nature (whether  or not specifically labeled or identified as “confidential”), in any form or medium, that relates to  the business, products, services or research or development of such Party, its Affiliates, or its or  their  respective  suppliers,  distributors,  customers,  independent  contractors  or  other  business  relations, which information is disclosed to (or in the case of Company Confidential Information,  is, as of the Effective Date, in the possession or under the control of) the other Party, its Affiliates,  or its or their respective Representatives in connection with this Agreement.  Notwithstanding the  foregoing, Confidential Information shall not include (A) information of the Disclosing Party that  is or becomes generally available to the public other than as a result of a breach of this Agreement  by the Receiving Party, (B) any information that was or becomes available to the Receiving Party  on a non-confidential basis and from a source (other than a Party to this Agreement or any Affiliate  or other Representative of such Party) that is not bound by a confidentiality agreement with respect  to such information, or (C) any information is independently developed by the Receiving Party  after  the  Closing  without  the  aid,  application  or  use  of  any  information  that  is  to  be  kept  confidential  under Section  9.01 as  evidenced  by  a  written  record  proving  such  independent  development.               “Contract Managers” shall have the meaning set forth in Section 8.01.               “Disclosing Party” means, collectively, either Party and its Affiliates, as applicable,  who  disclose  or  make  available  Confidential Information  to  a  Receiving  Party  under  this  Agreement.               “Dispute” shall have the meaning set forth in Section 9.12.               “Force Majeure” means, with respect to a Party, an event beyond the control of  such Party (or any Person acting on its behalf), including acts of God, storms, floods, riots, fires,  earthquakes, sabotage, civil commotion or civil unrest, strikes, lockouts or other labor difficulties,  interference by civil or military authorities, riots, insurrections or other hostilities, embargo, fuel  or energy shortage, acts of a Governmental Authority (including bank closings, seizures and other  actions), acts of war (declared or undeclared) or armed hostilities or other national or international  calamity or one or more acts of terrorism or failure or interruption of networks or energy sources.               “Governmental Authority” means any government or governmental or regulatory  body  thereof,  or  political  subdivision  thereof,  of  any  country  or  subdivision  thereof,  whether  national, federal, state, provincial or local, or any agency, official, subdivision, commission or  instrumentality thereof, or any court or arbitrator (public or private).               “Indemnified  Person”  means  any  Company  Indemnified  Person  or  Seller  Indemnified Person.                                          2  

 

               “Law” means, with regard to any Person, any national, federal, state, provincial or  local  law  (including  common  law),  statute,  constitutional  provision,  code,  ordinance,  rule,  regulation, directive,  concession,  Order  or  other  requirement  of  any  Governmental  Authority  applicable to such Person.               “Licensee” shall have the meaning set forth in Section 9.11(a).               “Licensor” shall have the meaning set forth in Section 9.11(a).               “Loss”  shall  mean  all  losses,  liabilities,  claims,  demands,  judgments,  damages,  fines, suits, actions, costs and expenses.               “Migration Services” shall have the meaning set forth in Section 2.09.               “Migration Services Charges” shall have the meaning set forth in Section 2.09.               “Migration Services Provider” shall have the meaning set forth in Section 2.09.               “Migration Services Recipient” shall have the meaning set forth in Section 2.09.               “Notice of Dispute” shall have the meaning set forth in Section 9.12.               “Order” means any determination, order, injunction, judgment, decree, ruling, writ,  temporary restraining order, assessment or award of any Governmental Authority.               “Pass-Through Charges” shall have the meaning set forth in Section 3.02.               “Person” means any individual, corporation, partnership, limited liability company,  firm,  joint  venture,  association,  joint-stock  company,  trust,  unincorporated  organization,  representative office, branch, Governmental Authority or other similar entity.               “Provider” means Seller and any Person that Seller causes to provide one or more  Services  to  one  or  more  Recipients  under  this  Agreement,  in  each  case,  in  its  capacity  as  the  provider of such Service(s).               “Purchase Agreement” shall have the meaning set forth in the Recitals.               “Purchased Assets” shall have the meaning set forth in the Purchase Agreement.               “Purchaser” shall have the meaning set forth in the Preamble                “Receiving Party” means any Person who receives or has access to the Confidential  Information of a Disclosing Party under this Agreement.               “Recipient” means the Purchaser, the Company or any Person that receives any  Service under this Agreement, in each case, in its capacity as the recipient of such Service(s) under  this Agreement.                                          3  

 

               “Representatives” means, with respect to either Party, such Party’s Affiliates, and  each of their respective members, directors, officers, employees, attorneys, accountants, financial  advisors, agents and representatives.               “Seller” shall have the meaning set forth in the Preamble.               “Seller Contract Manager” shall have the meaning set forth in Section 8.01.               “Seller  Entities”  means  Seller,  Foundation  Building  Materials,  Inc.  and  its  Subsidiaries.               “Seller Indemnified Person” shall have the meaning set forth in Section 5.02(a).               “Service Charge” shall have the meaning set forth in Section 3.01.               “Service Manager” shall have the meaning set forth in Section 8.02.               “Services” shall have the meaning set forth in Section 2.01.               “Virus(es)” means any malicious computer code or instructions that have a material  adverse effect on the operation, security or integrity of (a) a computing, telecommunications or  other  electronic  operating  or  processing  system  or  environment,  (b) software  programs,  data,  databases or other computer files or libraries or (c) computer hardware, networking devices or  telecommunications  equipment,  including  (i)  viruses,  Trojan  horses,  time  bombs,  back  door  devices,  worms  or  any  other  software  routine  or  hardware  component  designed  to  permit  unauthorized access, disable, erase or otherwise harm software, hardware or data or perform any  other such harmful or unauthorized actions and (ii) similar malicious code or data.                                    ARTICLE II                                     SERVICES         Section 2.01 Services to be Provided.  On the terms and subject to the conditions set forth  in this Agreement, from and after the Closing and for the periods set forth in Schedule 2.01 as such  periods may be extended or earlier terminated under this Agreement, Seller shall provide or cause  to be provided to the Purchaser and the Company the services set forth in Schedule 2.01 including  all  functions,  responsibilities,  activities  or  tasks  that  are not  specifically  described  in  this  Agreement or the Schedules, but are reasonably required for or are a necessary or inherent part of  the  proper  performance  and  delivery  of  such  services (each,  a  “Service”  and  collectively,  the  “Services”); provided, however, that, notwithstanding anything to the contrary contained herein,  Seller shall not be obligated to (and shall not be obligated to cause any Provider to) provide any  Services if the provision of such Services would (x) violate any Law or, subject to Section 2.05(b),  any Contract or license to which any of Seller Entities, the Purchaser or the Company is subject or  (y) require disclosure of information protected by the attorney-client privilege and would result in  waiver of the attorney-client privilege with respect to such information.         Section 2.02 Omitted  Services.   Notwithstanding  anything  in  this  Agreement  to  the  contrary, if, during the nine (9) month period following the Effective Date, a service historically  provided by Seller or its Affiliates to the Business in connection with the conduct of the Business                                         4  

 

   was omitted from the Schedules and such service was not expressly identified in Schedule 2.01,  then  Company  may  provide  notice  thereof  to  Seller.   As  soon  as  commercially  practicable  following receipt of such notice (provided that Seller does not dispute in good faith that such  service was historically provided by Seller or its Affiliates to the Business in connection with the  conduct of the Business), Seller shall provide such service on a time and materials basis at the rate  of $180 per hour for management personnel and $100 per hour for non-management personnel of  the  Seller  Entities,  such  service  shall  be  deemed  to  be  automatically  added  as  a  Service  for  purposes of this Agreement, and the Parties shall promptly meet to identify and document the  scope of such Service.           Section 2.03 Standard of the Provision of Services.  Seller shall provide or shall cause to  be provided the Services in good faith, in a professional and workmanlike manner, and in a manner,  degree  of  care,  and  at  a  level  of  quality,  skill,  prudence,  performance,  diligence,  timeliness,  efficacy, availability, reliability, and level of service at least consistent with that provided by the  Seller and/or Providers to and for the Business during the twelve (12) month period preceding the  Effective Date (the terms “historically” or “historically provided”, as used herein, shall refer to  such twelve (12) month period).  Without limiting the Company’s rights or Seller’s obligations  under this Agreement, each of the Purchaser and the Company acknowledges and agrees that (a)  Seller is not in the business of providing the Services, (b) Seller is providing (or causing to be  provided)  the  Services  to  Recipients  solely  for  the  purpose  of  facilitating  the  transactions  contemplated by the Purchase Agreement and (c) all of the Services shall be for the sole use and  benefit  of  the  Business  and  not  the  Purchaser  or  the  Company  more  broadly  or  any  of  their  Affiliates  beyond  to  the  extent  to  which  such  Affiliates  are  involved  in  the  operation  of  the  Business, and shall be solely for the purpose of conducting the Business in a manner substantially  consistent with the manner in which it was conducted immediately prior to the Closing and the  natural or reasonable expansion thereof.  Without limiting any of Seller’s obligations under this  Agreement, including its obligation to provide the Services in accordance with the standards set  forth in this Section 2.03, no Provider shall have any obligation, and Seller shall not have any  obligation  to  cause  any  Provider,  to  purchase,  lease  or  license,  or  to  renew  a  lease  or  license  applicable to, any facility, equipment or software.           Section 2.04 Change in Services.  A Provider may, upon thirty (30) days’ notice to the  Company, reasonably supplement, modify, substitute or otherwise alter the Services provided by  it, provided that such modification: (i) does not adversely affect the quality or availability of such  Services as specified in Section 2.03; (ii) increase the cost of such Services; (iii) is made necessary  by changes, or is a desirable change, to Seller’s internal organization in the ordinary course of  business; and (iv) applies generally to the provision of services by the Seller internally or to its  Affiliates and business units.         Section 2.05 Services Provided by Other Persons.               (a)   Seller may cause any Person, including any Seller Entity, to provide any  Services or any portion thereof; provided, however, that Seller shall not subcontract any of the  Services that are provided solely to Purchaser and/or the Company and not to Seller or any of its  Affiliates, without Company’s prior written consent, such consent not to be unreasonably withheld  or  delayed.   Seller  acknowledges  that  notwithstanding  any  delegation  or  subcontracting  of  its  performance under this Agreement to any Person, such Person shall be subject to service standards                                         5  

 

   and confidentiality provisions at least  equivalent to those set  forth herein and that Seller shall  remain responsible for the performance by such Person of all of its obligations hereunder with  respect to the Services provided by such Person so that such performance is in accordance with  the terms and conditions hereof.  Any breach of this Agreement by any such Person (as if they  were party hereto as Seller) shall constitute a breach of this Agreement by Seller.  With respect to  any  Service  provided  by  Seller  to  the  Business  prior  to  the  effective  date  of  the  Purchase  Agreement, if Seller subcontracts such Service then Purchaser shall not be responsible for any  Pass-Through Charges for the subcontractor (i.e., the original Service Charges for such Service set  forth in Schedule 2.01 shall still apply) unless agreed by the Purchaser in advance in writing, such  agreement not to be unreasonably withheld; provided, however, that Seller continue to be entitled  to receive the applicable Service Fee for such Service.               (b)   Seller  shall,  with  cooperation  and  assistance  from  the  Company,  use  commercially reasonable efforts to obtain any consents, licenses or approvals of third parties that  are necessary for the Seller to provide the Services to the Company, or for the Company to receive  the Services (each, a “Consent”) and any fees or other charges related to such Consents shall be  shared equally (50/50) between the Seller and the Company.  In the event a third party requires a  fee for its Consent, Seller shall notify the Purchaser prior to agreeing to the fee.  Seller’s obligation  to provide or cause to be provided any Service will be contingent upon Seller or the applicable  Seller Entity receiving the consent, approval or authorization from any third party that is necessary  or  required  for  such  Service  to  be  provided,  in  each  case  in  accordance  with  the  terms  and  conditions of any applicable agreements between such third parties and Seller or the Seller Entities,  as applicable; provided, however, that if a third party has refused to provide a Consent or the Seller  has not obtained a Consent despite Seller’s attempt to do so pursuant to the foregoing sentence,  then the Parties shall cooperate to determine and adopt, subject to the Company’s approval, such  alternative approaches that may be necessary to provide the Services without such Consent, if  possible.  Any additional  fees  or other charges  related to  such alternative approaches  shall be  charged by Seller to  Purchaser on a time and materials  basis  at  the  rate of $180 per hour for  management personnel and $100 per hour for non-management personnel of the Seller Entities,  providing consulting services in connection therewith, and the Purchase and Seller shall each bear  fifty percent  (50%) of the non-consulting fees  and expenses  incurred in connection therewith;  provided, however,  that  with  respect  to  any  alternative  approaches  that  may  be  necessary  to  provide any of Infor, Host Analysis, Concur and Avalara, the Purchaser and Seller shall, in each  case, negotiate in good faith to agree upon an alternate approach and price with respect thereto.  If  Purchaser elects to establish its own replacement contract with a third party provider of Seller,  then (i) Seller shall not pay the Consent fee, and (ii) Purchaser shall no longer be responsible for  paying such third party’s  costs as  a Pass-Through Charge or as  part of the applicable Service  Charge associated with the Service (and Seller shall reduce the Service Charge accordingly, as  applicable); provided that, with respect to the foregoing clause (ii), so long as Purchaser needs  continued  access  to  the  applicable  third  party  system  maintained  by  Seller,  Purchaser’s  replacement contract permits Purchaser to continue to have such access to Seller’s system (i.e.,  Purchaser does not need rights under Seller’s agreement with that third party).  Without limiting  Seller’s  obligations  under  this Section  2.05,  any  Services  provided  in  whole  or  in  part  to  the  Purchaser or the Company by a third party provider, or through the use or license of intellectual  property, services or other assets owned by, licensed or purchased from  third parties, and any  license  to  use  intellectual  property  owned  by  third  parties,  will  be  subject  to  the  terms  and  conditions of any applicable agreements between Seller or the Seller Entities and such third parties.                                         6  

 

         Section 2.06 Personnel.  A Provider shall have the right, in its reasonable discretion, to  (a) designate which personnel it will assign to perform such Service and (b) remove and replace  such  personnel  at  any  time.  Without  limiting  Seller’s  obligation  to  perform  the  Services  in  accordance with this Agreement, Purchaser and Company acknowledge that each Provider shall  have no independent  obligation (and Seller shall have no independent  obligation to  cause any  Provider) to hire any additional employees or provide any incentives to employees or to retain the  employment  of  any  particular  employee  or  retain  the  services  of  any  particular  consultant,  contractor or agent.  In performing their respective duties hereunder, all personnel of a Provider  shall be under the direction, control and supervision of such Provider, and such Provider shall have  the sole right to exercise all authority with respect to the employment (including termination of  employment), assignment and compensation of such personnel.         Section 2.07 Cooperation.  Each of the Purchaser and the Company shall, and shall cause  any  other  Recipients  to, use  their  commercially  reasonable  efforts  to  (a)  cooperate  with  the  applicable Provider and its Affiliates with respect to the provision of any Service and (b) enable  the  applicable  Provider  and  its  Affiliates  to  provide  the  Services  in  accordance  with  this  Agreement.  Further, each Recipient and its Affiliates shall use commercially reasonable efforts to  provide information and documentation sufficient for each Provider to perform the Services in the  manner they were provided in the ordinary course immediately prior to  the Closing, and each  Recipient shall use commercially reasonable efforts to make available, as reasonably requested by  each Provider, sufficient resources and timely decisions, approvals and acceptances in order that  each Provider may perform its obligations under this Agreement in a timely and efficient manner.   Provider’s failure to perform the Services shall be excused if and to the extent it results from  Recipient’s  failure  to  provide  any  data  systems,  personnel,  intellectual  property  or  any  other  underlying resources reasonably necessary for Provider to provide any of the Services hereunder;  provided, that if either Party becomes aware of any failure of the Recipient to provide any such  data systems, personnel, intellectual property or other resources, then such Party shall provide  notice thereof to the other Party as soon as reasonably practicable and the Parties shall cooperate  to minimize any disruption to the Services.  In the event a Provider has to use materially different  data systems, personnel, intellectual property or any other underlying resources to provide any of  the Services because of Recipient’s change to the operation of the Business, then the Parties shall  negotiate in good faith to amend Schedule 2.01 or the applicable Service Charges and, if the Parties  are unable to agree after a reasonable amount of time, Seller’s obligation to continue to provide  such Service notwithstanding such change shall be subject to Purchaser agreeing to reimburse  Seller for the incremental costs incurred by Seller with respect to such Service while the Parties  continue to negotiate in good faith to effect such amendment.          Section 2.08 Electronic and Other Access; Security Procedures.               (a)   Each  of  the  Purchaser  and  the  Company  shall,  and  shall  cause  each  Recipient to, comply with any security (including physical security, internet security and personal  data security), access, use, Virus protection, disaster recovery, confidentiality and other policies,  procedures and limitations of the Seller Entities in place as of the Closing, and only to the same  extent as the Business historically complied with such policies, procedures and limitations of the  Seller Entities.                                          7  

 

               (b)   Seller shall ensure that each Provider maintain or exceed its current level of  security with  respect  to  all of its  facilities, networks and systems  used in connection with  the  Services and all of the data contained therein throughout the term of this Agreement.               (c)   While  Services  are  being  provided  hereunder,  each  Party  shall  take  commercially reasonable measures to ensure that, in connection with the provision of any Services,  no Virus or similar items are coded or introduced into either its own (including its Affiliates) or  the  other  Party’s  (including  its  Affiliates)  computer  networks  or  databases.   With  respect  to  Services provided by third Persons, such Services shall be deemed to have sufficient commercially  reasonable measures for the purposes of this Section 2.08(c).  If, in connection with the provision  of  any  Services,  a  Virus  is  found  to  have  been  introduced  into  such  computer  networks  or  databases, each Party shall use commercially reasonable efforts to cooperate and to diligently work  together with the other Party to eliminate the effects of such Virus.  The Parties shall, and shall  cause  their  respective  Providers  and  Recipients  to,  exercise  commercially  reasonable  care  to  prevent  unauthorized  Persons  from  accessing  the  Services,  or  the  computer  and  technology  systems or networks of any of the Providers.               (d)   Each of the Purchaser and the Company shall make available on a timely  basis  to  Seller  all  information  and  materials  in  the  possession  or  reasonable control  of  the  Purchaser, the Company or any of their Affiliates that is requested by a Provider to the extent  reasonably  necessary  for  the  purposes  of  providing  the  Services;  provided  that  none  of  the  Purchaser nor the Company shall be required to provide Seller any information or materials if the  provision of such information or materials would violate any Law or any agreement or license to  which the Purchaser, the Company or any of their Affiliates is a party or is subject to, or would  result in the disclosure of information or materials subject to the attorney-client privilege.  Seller  shall make available on a timely basis to Purchaser all information and materials in the possession  or  reasonable  control  of  Seller  or  its  Affiliates  that  is  requested  by a  Recipient  to  the  extent  reasonably necessary for the purposes of receiving the Services; provided that the Seller shall not  be  required  to  provide  the  Recipient  any  information  or  materials  if  the  provision  of  such  information or materials would violate any Law or any agreement or license to which Seller or any  of its  Affiliates  is  a party  or is  subject  to,  or would  result in  the disclosure of information or  materials subject to the attorney-client privilege.  Each Party shall, upon reasonable notice, give  the other Party reasonable access, during regular business hours and at such other times as are  reasonably required, to the relevant premises to the extent reasonably necessary for the purposes  of providing or receiving the Services.  Seller will not be liable or responsible for (and shall not be  deemed  to  be  in  breach  of  this  Agreement  as  a  result  of  or  to  have  any  liability  under  this  Agreement with respect to) any failure or delay to provide a Service as a result of the material  incompleteness or inaccuracy of information or materials provided by Purchaser or the Company,  or material delay to provide such access by the Purchaser or the Company, in each case with respect  to the relevant Service; provided, however, that Seller shall promptly notify Purchaser and the  Company of any such failure or delay and shall use commercially reasonable efforts to perform  such Service notwithstanding such failure or delay.         Section 2.09 Migration.  Seller agrees to, and to cause the Providers to, and each of the  Purchaser and the Company agrees to, and to cause their Affiliates to, cooperate with and assist  each  other  in  good  faith  in  connection  with  the  migration  of  the  Business  from  Seller  to  the  Purchaser, Company and their Affiliates, including the migration from the performance of any                                         8  

 

   Service  by  a  Provider  to  the  performance  of  such  Service  by  the  Company  or  a  third  Person  (“Migration Services”), taking into account the desire to minimize both the cost of such migration  and the disruption to the ongoing business activities of Seller, any of the Providers and any of the  Purchaser, the Company or their respective designees.  The Parties acknowledge that Migration  Services may include the provision of services requested by the designees of the Purchaser and/or  the  Company  in  connection  with  their  migration  to  non-Seller  Entity  systems,  including  the  transfer of records, segregation and migration of historical data, migration-specific enhancements  and cooperation with and assistance to third-Person consultants engaged by the designees of the  Purchaser and/or the Company in connection with the foregoing.  The costs and fees associated  with any Migration Services shall be borne by Seller and, as such, shall be deemed to be covered  by the Service Charges paid by the Purchaser or the Company hereunder.  Migration Services, the  substance and price of which are not specified on Schedule 2.01, shall be agreed upon by the  Parties  and  shall  be  charged  to  the  Purchaser,  the  Company  or  any  of  their  Affiliates  that  is  receiving Migration Services (each, a “Migration Services Recipient”) on a time and materials  basis  at  the  rate  of  $180  per  hour  for  management  personnel  and  $100  per  hour  for  non- management  personnel  of  the  Seller  Entities  providing  such  Migration  Services  (each,  a  “Migration Services Provider”), and shall include actual out-of-pocket costs and expenses incurred  by a Migration Services Provider in the provision of Migration Services that have been approved  by Purchaser in advance in writing (collectively, the “Migration Services Charges”).  In the event  the  Parties  do  not  reach  agreement  on  the  cost  of  Migration  Services  not  specified  on  Schedule 2.01, the Parties agree that Purchaser may request an independent third party consultant  to validate Seller’s estimate of the cost of the proposed Migration Services, and, if so requested,  the Parties shall work in good faith to jointly select an independent third party consultant to validate  the Seller’s estimate of proposed costs.  In the event that such third party consultant validates the  Seller’s estimate of proposed costs, Purchaser may have Seller perform the Migration Services at  Seller’s estimate, and in the event such third party consultant estimates costs to be lower than  Seller’s estimate, Seller shall charge Purchaser not more than the estimated costs provided by such  third party consultant.                                     ARTICLE III                           COSTS AND DISBURSEMENTS         Section 3.01 Service Charges.  As consideration for providing the Services, the Purchaser  and the Company shall pay, or shall cause the Recipients to pay, to Seller the amount specified  next to each Service set forth in Schedule 2.01, (with respect to a Service, the “Service Charge”  for such Service).  Each month’s undisputed Service Charges (pro-rated if applicable to less than  a full calendar month) shall be payable in arrears, unless otherwise specified for each Service in  Schedule 2.01,  via  electronic  funds  transfer  (instructions  to  be  separately  provided),  to  Seller  within thirty (30) days of receipt of an invoice.  For purposes of converting any foreign currency  into U.S. dollars in connection with the calculation of the Service Charge, the foreign exchange  rate shall be the spot exchange rate for the respective currency vs. U.S. dollars as reported by the  Wall Street Journal on the Business Day immediately prior to the respective invoice date.           Section 3.02 Pass-Through Charges.  In addition to any Service Charges, the Purchaser  and the Company shall pay, or shall cause the Recipients to pay, to Seller, reasonable and necessary  out-of-pocket  costs  and  expenses  incurred  and  paid  for  by  Seller  in  the  ordinary  course  of  a  Provider’s provision of, or in setting-up for, preparing for, facilitating or enabling the provision                                         9  

 

   of,  any  Services,  in  each  case,  including  as  identified  on Schedule  3.02 (the  “Pass-Through  Charges”), which Pass-Through Charges shall not exceed $2,500,000 in the aggregate per month,  unless otherwise approved in advance in writing by Purchaser, in good faith, such approval not to  be unreasonably withheld.  Any Pass-Through Charges shall be reasonably calculated and invoiced  by Seller to the Purchaser or the Company, as applicable, and documented in the weekly settlement  statement indicating the amount of Pass-Through Charges paid by vendor in the current month.   Seller shall pay, or shall cause its Providers to pay, Pass-Through Charges from Purchaser’s or the  Company’s  accounts  maintained  by  Seller  on  a  weekly  basis.  Seller  shall  pay  all  third  party  invoices consistent with the historical practice of the Business.           Section 3.03 Taxes.               (a)   A  Provider  shall  be  entitled  to  charge  and  collect  from  the  applicable  Recipient an additional amount equal to all state, local and/or foreign sales tax, value added tax or  any other similar tax with respect to the provision of any Services provided by such Provider  hereunder and shall timely remit such taxes to the appropriate tax authorities.  For the avoidance  of doubt, where, in the sole discretion of the Provider, the Provider is not required by law to charge  or  collect  state,  local  and/or  foreign  sales  tax,  value  added  tax  or  any  other  similar  tax,  the  applicable Recipient shall be responsible for, and shall timely remit to the appropriate authorities,  any such taxes that are required to be self-assessed by the applicable Recipient.               (b)   Any payment to the Providers made hereunder shall be made net of any  deduction or withholding for any required withholding taxes.  The Purchaser and the Company, in  the  case  of  a  Recipient,  shall  cause  such  Recipient  to  timely  remit  any  such  deduction  or  withholding for tax to the appropriate taxing authority and, upon request, provide the Provider  with  a  receipt  confirming  such  payment.   The  Providers  shall  reasonably  cooperate  with  the  Recipients  to  minimize  any  applicable  withholding  taxes  (e.g.,  by  providing  tax  residency  certificates and other documents required under a certain tax treaty to obtain the benefit of a lower  withholding rate).         Section 3.04 Late Charges.  Any amount required to be paid under this Article III and not  paid by the due date for payment (except for any disputed amount identified in a written notice  pursuant to Section 9.02) shall be subject to late charges at an annual interest rate of three percent  (3%) over the U.S. dollar prime rate, as published by the Wall Street Journal, from the date on  which  the  payment  was  due  to  and  including  the  date  of  payment  based  on  a  365-day  year,  compounded monthly, but in no event lower than any amount charged by a landlord for late rent.         Section 3.05 Audit.  The Seller shall provide supporting information and documentation,  including invoices from third party providers, as reasonably requested by the Company to validate  the Service Charges, Pass-Through Charges, Migration Charges, termination charges and other  amounts invoiced to the Company and payable by the Company pursuant to this Agreement.  With  respect to Services provided by third parties that are received by both the Seller and the Company  and  that  are  paid  for  by  the  Company  on  a  pass-through  basis,  the  Seller  shall  provide  any  information and documentation reasonably requested by the Company to support the Pass-Through  Charges and allocation and pass through costs charged to the Company, including the relative  quantities of services received by each Party.  The Company or its representatives shall have the  right, after providing no less than 10 days’ advance written notice and during business hours, to                                         10  

 

   inspect and audit the books, accounts and records of the Seller pertaining to the Service Charges,  Pass-Through Charges, Migration Charges, termination charges and other amounts invoiced to the  Company  to  verify  such  amounts; provided, however,  that  in  no  event  shall  Purchaser,  the  Company or any of their respective Representatives or Affiliates have access to any of the Seller’s  or its Affiliates’ data, information, technology or other systems, except to the extent necessary to  verify the amounts invoiced.  Any information disclosed during such audit shall be considered the  Confidential Information of the Seller and shall be treated as such in accordance with Section 9 of  this Agreement.  Notwithstanding anything in this agreement, neither Purchaser nor the Company  shall have the right to dispute the Seller’s good faith classification of “management” or “non- management” personnel of the Seller or any of its Affiliates.                                   ARTICLE IV                         WARRANTIES AND COMPLIANCE         Section 4.01 Authorization.  Each Party hereby represents and warrants that (a) it has the  requisite  power  and  authority  to  execute  and  deliver  this  Agreement  and  to  perform  the  transactions contemplated hereby, (b) all corporate action on the part of such Party necessary to  approve or to authorize the execution and delivery of this Agreement and the performance of the  transactions contemplated hereby to be performed by it has been duly taken, (c) this Agreement is  a valid and binding obligation of such Party, enforceable in accordance with its terms, subject to  the effect of principles of equity and the applicable bankruptcy, insolvency or other similar laws,  now or hereafter in effect, affecting creditors’ rights generally and other customary qualifications.         Section 4.02 Disclaimer of Warranties.  Except as expressly set forth herein, each of the  Purchaser and the Company (on behalf of it and its Affiliates) acknowledges and agrees that (a) the  Services are provided as-is, (b) each of the Purchaser and the Company assumes all risks and  liabilities arising from or relating to its use of and reliance upon the Services and (c) Seller makes  no representations or warranties with respect thereto.  EXCEPT AS EXPRESSLY SET FORTH  HEREIN AND IN THE PURCHASE AGREEMENT, EACH OF SELLER, THE PURCHASER,  AND  THE  COMPANY  (ON  BEHALF  OF  ITSELF  AND  ITS  AFFILIATES)  HEREBY  EXPRESSLY  DISCLAIMS  ANY  AND  ALL  REPRESENTATIONS  AND  WARRANTIES  REGARDING  THIS  AGREEMENT  OR  THE  SERVICES,  WHETHER  EXPRESS  OR  IMPLIED,  INCLUDING  ANY  REPRESENTATION  OR  WARRANTY  IN  REGARD  TO  QUALITY,    PERFORMANCE,      NONINFRINGEMENT,       COMMERCIAL      UTILITY,  MERCHANTABILITY OR FITNESS OF THE SERVICES FOR A PARTICULAR PURPOSE.   In addition, each of the Purchaser and the Company (on behalf of itself and its Affiliates) expressly  disclaims any express or implied warranty of the Services that could be construed to require a  Provider to provide Services hereunder in such a manner to allow a Recipient to comply with any  Law applicable to the actions or functions of a Recipient.         Section 4.03 Compliance with Laws and Regulations.  Seller shall comply with any and  all Laws applicable to the performance of its obligations under this Agreement.  The Company  and Purchaser shall comply with Laws applicable to it in using the Services to the same extent as  the Business historically complied with such Laws.  For the avoidance of doubt, the foregoing  compliance obligations apply solely to the time period arising after the Effective Date.                                          11  

 

                                    ARTICLE V                   LIMITED LIABILITY AND INDEMNIFICATION         Section 5.01 Limited Liability.  No Provider or Recipient shall have any liability to any  Person, for or in connection with (a) any Services provided, received or to be provided or received  pursuant to this Agreement or (b) any actions or inactions in connection with any such Services  referred to in the immediately preceding clause (a), in each case, except to the extent that such  Person suffers a Loss that results from such Provider’s or Recipient’s (i) gross negligence, fraud,  intentional misrepresentation, bad faith, or willful misconduct, (ii) a breach of any provision of  this  Agreement  or  (iii) as  otherwise  expressly  set  forth  in  this Article  V or  elsewhere  in  this  Agreement.         Section 5.02 Indemnity.               (a)   Subject to the limitations set forth in this Article V and Section 7.01, each  of the Purchaser and the Company hereby agrees, at all times during the term of this Agreement  and thereafter, to indemnify the Seller and any of their respective shareholders, owners, officers,  directors, employees, agents and representatives (“Seller Indemnified Persons”) against, and hold  such Persons harmless from, any and all Losses arising out of, relating to, or in connection with  (i) the gross negligence, fraud, intentional misrepresentation, bad faith, or wilful misconduct of  Purchaser or the Company, or (ii) a breach of this Agreement by the Purchaser or the Company;  provided, however, that the Purchaser or the Company shall not be required to indemnify any  Seller Indemnified Persons against any Losses that shall have resulted from the gross negligence,  fraud,  intentional  misrepresentation,  bad  faith,  or  wilful  misconduct  of,  or  breach  of  this  Agreement by, such Person.               (b)   Subject to the limitations set forth in this Article V and Section 7.01, Seller  hereby agrees, at all times during the term of this Agreement and thereafter, to indemnify the  Purchaser,  the  Company,  and  any  of  its  and  their  respective  shareholders,  owners,  officers,  directors, employees, agents and representatives (“Company Indemnified Persons”) against, and  hold such Persons harmless from, any and all Losses arising out of, relating to, or in connection  with (i) the gross negligence, fraud, intentional misrepresentation, bad faith, or wilful misconduct  of Seller, or (ii) a breach of this Agreement by Seller; provided, however, that Seller shall not be  required to indemnify Company Indemnified Persons against any Losses that shall have resulted  from the gross negligence, fraud, intentional misrepresentation, bad faith, or wilful misconduct of,  or breach of this Agreement by, such Person.          Section 5.03 Additional Limitations on Liability.               (a)   EXCEPT  WITH  RESPECT  TO  (i)  EITHER  PARTY’S  FRAUD,  INTENTIONAL  MISREPRESENTATION,  BAD  FAITH,  GROSS  NEGLIGENCE,  OR  WILLFUL  MISCONDUCT;  (ii)  EITHER  PARTY’S  INDEMNIFICATION  OBLIGATIONS  SET FORTH IN SECTION 5.02; OR (iii) EITHER PARTY’S BREACH OF Section 9.01, NO  PARTY, NOR ANY OF ITS AFFILIATES OR ITS OR THEIR REPRESENTATIVES (NOR  ANY SUCCESSORS OR  ASSIGNS OF SUCH PERSONS) SHALL  BE  LIABLE  FOR  ANY  INCIDENTAL,  SPECIAL,  INDIRECT,  EXEMPLARY,  PUNITIVE  OR  CONSEQUENTIAL  DAMAGES (INCLUDING IN THE FORM OF LOSS OF PROFIT OR LOSS OF REVENUE)                                         12  

 

   OF  THE  OTHER  PARTY,  ITS  SUCCESSORS,  ASSIGNS  OR  THEIR  RESPECTIVE  AFFILIATES AND REPRESENTATIVES, IN ANY WAY DUE TO, RESULTING FROM OR  ARISING  IN  CONNECTION  WITH  THIS  AGREEMENT,  REGARDLESS  OF  WHETHER  SUCH LIABILITY ARISES IN TORT (INCLUDING NEGLIGENCE), CONTRACT, BREACH  OF  WARRANTY,  STRICT  LIABILITY,  INDEMNIFICATION  OR  OTHERWISE  AND  REGARDLESS  OF  WHETHER  ANY  SUCH  DAMAGES  ARE  FORESEEABLE  OR  WHETHER AN INDEMNIFIED PERSON HAS BEEN ADVISED OF THE POSSIBILITY OF  SUCH LOSSES.               (b)   Each of the Purchaser and the Company acknowledges that neither Seller  nor any of its Affiliates is in the business of providing services of the type contemplated by this  Agreement, and that the Services are to be provided on a temporary basis to assist with the orderly  separation of the Business from Seller’s other businesses and operations.  Accordingly, except  with respect to (i) either Party’s fraud, intentional misrepresentation, bad faith, gross negligence  or wilful misconduct; or (ii) either Party’s breach of Section 9.01 the liability of each Party to the  other Party under this Agreement, whether in contract, tort or otherwise, (1) for direct damages  shall  not  exceed  the  fees  paid  or  payable  by  the  Purchaser  or  the  Company  pursuant  to  this  Agreement, and (2) for incidental, special, indirect, or consequential damages (including in the  form of loss of profit or loss of revenue) shall not exceed $1,000,000.               (c)   Each  of  Seller,  Purchaser,  and  Company  agrees  that  it  shall  use  commercially reasonable efforts to mitigate and otherwise minimize its respective Losses, whether  direct or indirect, due to, resulting from or arising in connection with any failure by the other Party  to perform fully any obligations under, and comply with, this Agreement.               (d)   Any claim for indemnification by an Indemnified Person must be made in  writing to Seller, the Purchaser, or the Company, as the case may be, before the day that is the six- month anniversary of the date the Service giving rise to such claim was terminated.               (e)   Nothing in this Article V shall be deemed to eliminate or limit the express  obligation of the Purchaser and the Company in this Agreement to pay all required Service Charges  for Services in accordance with this Agreement.         Section 5.04 Insurance.  The Party seeking indemnity hereunder agrees to, and to cause  its Providers (in the case of Seller seeking indemnity) or Recipients (in the case of the Purchaser  or the Company seeking indemnity), to  use reasonable efforts  to  pursue recovery of any such  Losses under applicable insurance policies.  The Indemnified Person’s Losses sought against the  indemnifying Party shall be reduced to the extent that such Losses are actually recovered by the  Indemnified Person from its third Person insurance provider.           Section 5.05 Exclusive Remedy.  Each Party acknowledges and agrees that, following  the Closing, other than (i) in the case of actual fraud by the Purchaser, the Company or Seller or  any  of  their  respective  Affiliates  or  other  Representatives,  (ii)  as  expressly  set  forth  in  this  Agreement and (iii) either Party’s breach of Section 9.01, the indemnification provisions of this  Article V shall be the sole and exclusive remedy for any breach of this Agreement by other Party  or any failure by the other Party to perform or comply with any of its covenants or agreements  contained in this Agreement.                                         13  

 

                                   ARTICLE VI                            TERM AND TERMINATION         Section 6.01 Term and Termination of Services.               (a)   Each Service shall be provided for a term commencing on the Closing Date  and ending nine (9) months thereafter, or such shorter term if earlier terminated pursuant to the  terms of this Agreement.  The Company may elect to extend the term of any Service for up to an  additional three (3) months, provided that the Company delivers to the Seller prior written notice  of such election at least fifteen (15) days prior to the expected conclusion of such term.  In the  event of any such extension, the Service Charges for the Service(s) to be extended shall be an  amount equal to 115% multiplied by the applicable Service Charge set forth on Schedule 2.01.  For  the avoidance of doubt the foregoing 115% multiplier on extension of a Service shall apply to the  Service Charge set forth on Schedule 2.01 only, and shall not apply to any other fees or costs  invoiced to Purchaser, such as Pass-Through Charges or early termination charges.               (b)   With respect to any Service:                     (i)   the Purchaser or the Company may terminate such Service, in whole        or in part, consistent with Schedule 2.01, with respect to such Service: (A) for any reason        or no reason, upon at least thirty (30) days’ prior written notice to the Seller; or (B) at any        time, upon prior written notice to the Seller, if the Provider has failed to perform any of its        material obligations under this Agreement with respect to such Service and such failure        shall continue to exist thirty (30) days after receipt by Seller of a written notice of such        failure from the applicable Recipient;                     (ii)  the Seller may terminate such Service, in whole but not in part with        respect to such Service at any time, upon prior written notice to the Purchaser and the        Company, if the Purchaser and the Company has failed to pay to the Seller the undisputed        portion  of  invoiced  amounts  due  and  payable  under  this  Agreement  and  the  failure        continues to exist thirty (30) days after receipt by Purchaser and the Company of a written        notice of such failure from the Seller;                      (iii) either Party may terminate such Service in whole but not in part with        respect to such Service immediately upon the non-terminating Party’s receipt of written        notice: (A) if the continued performance or receipt of such Service by the Party seeking to        terminate  would  be  a  violation  of  any  applicable  Law,  provided  that  the  Parties  shall        cooperate to determine and adopt, subject to the Company’s and Seller’s approval, such        alternative  approaches  that  may  be  necessary  to  provide  the  Services  in  a  manner  that        complies with applicable Law; or (B) as provided in Section 7.02; and                     (iv)  at any time upon mutual written agreement of the Parties.         Section 6.02 Termination of Agreement.               (a)   This Agreement shall terminate on the earliest to occur of (i) the latest date  on which any Service is to be provided as indicated in Section 6.01, (ii) the date on which the                                          14  

 

   provision of all Services has terminated or been cancelled pursuant to Section 6.01 and (iii) the  date on which this Agreement is terminated pursuant to Section 6.02(b).               (b)   Notwithstanding the term for providing any Service, this Agreement may  be terminated earlier as set forth below:                     (i)   by the Company and Purchaser, if the Seller is in material breach of        its covenants or agreements under this Agreement and fails to cure such breach within        thirty (30) days of the Company or Purchaser delivering a written notice of such breach to        Seller;                     (ii)  by the Seller, if the Purchaser and the Company fails to pay to the        Seller the undisputed portion of invoiced amounts due and payable under this Agreement        and the failure continues to exist thirty (30) days after receipt by the Purchaser and the        Company of a written notice of such failure from the Seller;                     (iii) by either Party, if the other Party commences a voluntary case or        other proceeding seeking liquidation, reorganization or other relief with respect to itself or        its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect        or seeking the appointment  of a trustee, receiver, liquidator, custodian or other similar        official of it or any substantial part of its property, or shall consent to any such relief or to        the appointment of or taking possession by any such official in an involuntary case or other        proceeding commenced against it, or shall make a general assignment for the benefit of        creditors or shall take any corporate action to authorize any of the foregoing.         Section 6.03 Termination Charges.  Within 30 days after the Effective Date, Seller shall  provide written notice to Purchaser, identifying the termination charges that would be directly  attributable to Purchaser’s early termination of each Service set forth in Schedule 2.01, providing  generally the applicable allocation to the Company for out-of-pocket, third party breakage fees,  early termination fees or charges, minimum volume make-up charges, or other wind-down costs  required to be paid by Seller to the applicable third party as a result of Seller’s early termination  of its agreement with such third party.  Following delivery of such notice, Seller and Purchaser  shall negotiate in good faith to resolve any disputes regarding such termination charges and, in the  event that Seller and Purchaser are unable to agree with respect to a particular Service, then the  Parties acknowledge that the termination charges for such Service will not exceed the expected  actual allocation of Pass-Through Charges to the Company for the applicable third party agreement  for the remainder of the then-current term of this Agreement.  As soon as reasonably practicable  following any notice of early termination of any Service pursuant to Section 6.01(b)(i)(A), Section  6.01(b)(ii), Section 6.02(b)(ii), or Section 6.01(b)(iii) (with respect to Section 6.01(b)(iii), only  where  Seller  is  terminating),  Provider  shall  deliver  notice  to  the  Recipient  of  the  terminated  Service(s)  specifying such  out-of-pocket,  third  party breakage  fees,  early  termination  fees  or  charges, minimum volume make-up charges, or other wind-down costs that are (i) no more than  the  amount  identified  by  Seller  to  Purchaser  in  accordance  with  the  first  sentence  of  this  Section 6.03,  (ii)  directly  attributable  to  Recipient’s  early  termination  of  such  Service  and  (iii) actually paid or payable by the Seller or its Affiliates to third Persons in order to discontinue  earlier than originally anticipated the provision of such Service.  Seller shall invoice Purchaser for  termination charges in accordance with the foregoing.  Seller shall, and shall cause each Provider                                         15  

 

   to,  use  commercially  reasonable  efforts  to  minimize  the  existence  and  amount  of  such  early  termination  charges.   All  termination  charges  shall  be  due  and  payable  to  the  Provider  in  immediately  available  funds  within  thirty  (30)  days  of  the  Recipient’s  receipt  of  any  invoice  therefor.  For the avoidance of doubt, Purchaser shall not be responsible for paying Seller early  termination  charges  for  any  third  party  agreement  where  Purchaser  has  obtained  its  own  replacement agreement with the applicable third party, so long as Purchaser’s replacement contract  does not prohibit Purchaser from continuing to have access to Seller’s system where Purchaser  needs such access to receive the Services.         Section 6.04 Effect of Termination.               (a)   If  any  Service  is  terminated  in  accordance  with  this  Agreement,  Schedule 2.01 shall  be  updated  to  reflect  such  termination.   In  addition,  to  the  extent  that  a  Provider’s ability to provide a Service is dependent on the continuation of another Service, such  Provider’s obligation to provide such Service shall terminate automatically with the termination  of such supporting Service, unless Purchaser or the Company agree to continue paying the pro rata  Service Charges that would apply for the Provider to continue to provide such dependent Service  with respect to the terminated supporting Service.  Upon termination of any Service in accordance  with this Agreement, (i) such Provider will have no further obligation to provide such terminated  Service, (ii) such Recipient shall have no obligation to pay any Service Charges, Pass-Through  Charges  or  other  required  amounts  relating  to  any  such  Service;  provided,  however,  that the  Recipient shall remain obligated to pay to the Purchaser, the Company or Seller, as applicable, (A)  any  Service  Charges,  Pass-Through  Charges  or  other  required  amounts  owed  and  payable  in  respect of such terminated Service that was provided prior to the effective date of such termination,  (B)  any  Migration  Services  Charges  owed  and  payable  prior  to  the  effective  date  of  such  termination, and in the case of each of clause (A) and clause (B), and in the event that the effective  date of such termination is a day other than at the end of a month, the Service Charge, the Pass- Through Charges and other amounts due to the Purchaser, the Company or Seller, as applicable,  in  respect  of  such  terminated  Service  shall  be  pro-rated  as  appropriate,  and  (C)  the  early  termination charges  applicable to such Service that are reimbursable by Purchaser to Seller as  required in accordance with Section 6.03, (iii) any and all rights to intellectual property granted to  a Recipient and/or Provider hereunder in connection with the provision of a terminated Service  shall immediately cease upon such termination.  In connection with the termination of any Service,  the provisions of this Agreement not relating solely to such terminated Service shall survive any  such termination.               (b)   In connection with any termination of this Agreement pursuant to Section  6.02, the provisions of Article I, Article IV, Article V, Article IX, Section 6.03 and this Section  6.04,  and  liability  for  all  due  and  unpaid  Service  Charges,  Pass-Through  Charges  and  other  amounts required to be paid under this Agreement shall continue to survive indefinitely.                                   ARTICLE VII                                   Force Majeure         Section 7.01 Effect of Force Majeure.  Each Party (or any Person acting on its behalf)  shall have no liability or responsibility for any interruption, delay or other failure to fulfill any  obligation (other than a payment obligation) under this Agreement, so long as and to the extent to                                         16  

 

   which  the  fulfillment  of  such  obligation  is  prevented,  frustrated,  hindered  or  delayed  as  a  consequence of circumstances of a Force Majeure, provided that such Party (or such Person) shall  have exercised commercially reasonable efforts to minimize the effect of a Force Majeure on its  obligations.  In the event of an occurrence of a Force Majeure, the Party whose performance is  affected  thereby  shall  give  notice  (orally  or  in  writing)  of  suspension  as  soon  as  reasonably  practicable to the other stating the date and extent of such suspension and the cause thereof, and  such Party shall resume the performance of such obligations as soon as reasonably practicable  upon the cessation of such Force Majeure and its effects.         Section 7.02 Affected Services.  During the period of a Force Majeure, each affected  Recipient shall be entitled to seek an alternative service provider at its own cost with respect to the  Services affected.  If a Force Majeure shall continue to exist for more than thirty (30) consecutive  days, either Party shall be entitled to permanently terminate the Services affected.  The Purchaser  and the Company shall be relieved of the obligation to pay any Service Charges or Pass-Through  Charges for the provision of the affected Services throughout the duration of such Force Majeure.                                   ARTICLE VIII                               POINTS OF CONTACT         Section 8.01 Contract Managers.  The Purchaser and the Company, on the one hand, and  Seller, on the other hand, shall appoint an individual to act as the primary point of operational  contact  for the administration and operation of this Agreement.  The individual or individuals  appointed by the Purchaser or the Company (the “Company Contract Manager”) and the individual  or individuals appointed by Seller (the “Seller Contract Manager” and, together with the Company  Contract  Manager,  the  “Contract  Managers”)  pursuant  to  this Section  8.01 as  the  Parties’  respective primary points  of operational  contact  in  connection with  this Agreement shall have  overall operational responsibility for coordinating, on behalf of the Company, the Purchaser or  Seller,  as  applicable,  all  activities  undertaken  under  this  Agreement,  in  the  case  of  Company  Contract Manager, by the Purchaser, the Company, their Recipients and their respective Affiliates  and other Representatives or, in the case of Seller Contract Manager, by Seller, Providers and their  respective  Affiliates  and  other  Representatives,  including  in  each  case  the  performance  of  the  Parties’ obligations hereunder, acting as a day-to-day contact with the Contract Manager appointed  by the other Party.  Each Party may replace its Contract Manager from time to time upon at least  ten (10) days prior written notice to the other Party.  The Parties shall ensure that the Company  Contract  Manager  and  the  Seller  Contract  Manager  shall  meet  in  person  or  telephonically  as  frequently as reasonably necessary or advisable for the performance of the Parties’ obligations  hereunder.         Section 8.02 Service Managers.  The initial points of contact for the Providers and the  Recipients with respect to any matters of day-to-day provisions of the Services shall be the service  managers designated by each of the Parties for each of the Services (each such Person, a “Service  Manager”).  The Service Managers shall have authority to handle such daily operational matters  related  to  the  Services,  including  attempting  to  resolve  any  issues  that  may  arise  during  the  performance of the Services.                                          17  

 

                                   ARTICLE IX                              GENERAL PROVISIONS         Section 9.01 Treatment of Confidential Information.  Neither Party shall, and each Party  shall  cause  other  Persons  under  its  control  (including  its  Affiliates,  Providers  and  other  Representatives)  that  are  providing  or  receiving  Services  or  that  otherwise  have  access  to  Confidential Information of the Disclosing Party not to, disclose or make available to any other  Person,  except  as  required  to  perform  its  obligations  under  this  Agreement,  any  Confidential  Information of the Disclosing Party; provided, however, that each Party may disclose (subject to  applicable Law) Confidential Information of the Disclosing Party to Providers and Recipients and  their respective Representatives, in each case who (x) require such information in order to perform  their duties in connection with this Agreement and (y) have agreed to maintain the confidentiality  of such information, in each case, consistent with the terms hereof; and provided, further, that the  Receiving  Party  may  disclose  (subject  to  applicable  Law)  Confidential  Information  of  the  Disclosing  Party  if (i) any  such  Confidential  Information  (including  any  report,  statement,  testimony or other submission to a Governmental Authority) is required by applicable Law or such  Governmental Authority to be disclosed, after prior notice has been given to the Disclosing Party  to the extent such notice is permitted by applicable Law, or (ii) any such Confidential Information  is reasonably necessary to be disclosed in connection with any Action or in any Dispute with  respect to this Agreement (including in response to any summons, subpoena or other legal process  or formal or informal investigative demand issued to the Receiving Party in the course of any  litigation, arbitration, mediation, investigation or administrative proceeding).         Section 9.02 Notices.   All  notices,  requests,  demands,  and  other  communications  hereunder shall be in writing and deemed to have been given (a) when delivered personally with  confirmation  of  receipt,  (b)  when  delivered  if  sent  by  a  recognized  overnight  courier  with  confirmation of receipt, or (c) on the date sent, if sent by facsimile or e-mail prior to 6:00 pm  Pacific  time  on  any  Business  Day,  with  confirmation  of  transmission,  if  sent  during  normal  business hours of the recipient, and on the next Business Day if sent after normal business hours  of the recipient, to a Party at the following address (or to such other address as such Party may  have specified by notice given to the other Party pursuant to this Section 9.02):      If to the Seller:             Foundation Building Materials, LLC                                   2741 Walnut Ave., Suite 200                                   Tustin, CA 92780                                   Email: ric.tilley@sbmsales.com                                   Attention: Ric Tilley      With a copy (which will not   Winston & Strawn LLP     constitute notice) to:        333 S. Grand Ave.                                   Los Angeles, CA 90071                                   E-mail: evadavis@winston.com                                   Attention: Eva Davis                                          18  

 

      If to the Purchaser and the   FBM Canada SPI, Inc.     Company:                      [______________________________]                                   [______________________________]                                   Attention:  [__________________]                                   E-mail:  [_________________]      With a copy (which will not   [______________________________]     constitute notice) to:        [______________________________]                                   [______________________________]                                   Attention:  [__________________]                                   E-mail:  [_________________]         Section 9.03 Amendment;  Waivers,  etc.  This  Agreement  may  be  amended,  supplemented or modified only pursuant to a written instrument making specific reference hereto  signed by all of the Parties.  At any time, the Parties may (a) extend the time for the performance  of  any  of  the  obligations  or  other  acts  of  the  Parties,  (b) waive  any  inaccuracies  in  the  representations and warranties contained herein or in any document delivered pursuant hereto, or  (c) waive compliance with any of the agreements or conditions contained herein, to the extent  permitted by applicable Law.  Any agreement on the part of a Party to any such extension or waiver  will be valid only if set forth in a writing signed on behalf of such Party.  No waiver by any Party  of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional  or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach  of warranty or covenant hereunder or affect in any way any rights arising by virtue of any such  prior or subsequent occurrence.         Section 9.04 Governing Law.               (a)   This  Agreement  and  all  Disputes  and  other  matters  arising  hereunder  (whether in  contract,  tort  or otherwise) shall be  governed  by and construed in  accordance the  internal  Laws  of  the  State  of  New  York  applicable  to  agreements  made  in  and  to  be  wholly  performed in such state, without giving effect to any choice or conflict of law provision or rule  (whether of the State of New York or any other jurisdiction) that would cause the application of  the Laws of any jurisdiction other than the State of New York.         Section 9.05 Jurisdiction; Waiver of Jury Trial.               (a)   With respect to any Action, each Party irrevocably (i) agrees and consents  to  be  subject  to  the  exclusive  jurisdiction  of  the  state  and  federal  courts  in  the  Borough  of  Manhattan within the City of New York and (ii) waives (A) any objection which it may have at  any time to the laying of venue of any Action brought in any such court, (B) any claim that such  Action has been brought in an inconvenient forum and (C) the right to object, with respect to such  Action, that such court does not have any jurisdiction over such Party.  The foregoing consent to  jurisdiction shall not constitute general consent to service of process in the State of New York for  any purpose except as provided above and shall not be deemed to confer rights on any Person other  than the respective Parties to this Agreement.  Each of Seller, the Purchaser and the Company  irrevocably agrees that service of any process, summons, notice or document by United States  registered mail to such Party’s address set forth in Section 9.02 shall be effective service of process                                         19  

 

   for Action in New York with respect to any matters for which it has submitted to jurisdiction  pursuant to this Section 9.05.               (b)   WITHOUT  LIMITING  THE  TERMS  OF        Section  9.05(a),  IF  NOTWITHSTANDING  THOSE  TERMS  ANY  ACTION,  CAUSE  OF  ACTION,  CLAIM,  CROSS-CLAIM OR THIRD-PARTY CLAIM OF ANY KIND OR DESCRIPTION, WHETHER  IN LAW OR IN EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, IS  BROUGHT OR MAINTAINED AGAINST EITHER PARTY IN ANY WAY RELATING TO  THIS AGREEMENT, THE PARTIES HERETO AGREE THAT IT MAY NOT BE BROUGHT  OR  MAINTAINED  IN  ANY  FORUM  OTHER  THAN  ANY  FEDERAL  COURT  OF  THE  UNITED STATES OF AMERICA LOCATED IN, OR, IF THAT COURT DOES NOT HAVE  SUBJECT  MATTER  JURISDICTION,  IN  ANY  STATE  COURT  LOCATED  IN,  IN  EACH  CASE, THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK AND EACH OF  THE PARTIES HERETO KNOWINGLY, VOLUNTARILY AND IRREVOCABLY SUBMITS  TO THE EXCLUSIVE JURISDICTION OF EACH SUCH COURT IN ANY SUCH ACTION  OR PROCEEDING AND WAIVES ANY OBJECTION IT MAY NOT OR HEREAFTER HAVE  TO THE VENUE OR TO CONVENIENCE OF FORUM.               (c)   EACH  PARTY  ACKNOWLEDGES  AND  AGREES  THAT  ANY  CONTROVERSY  WHICH  MAY  ARISE,  WHETHER  IN  CONTRACT,  TORT,  OR  OTHERWISE,  RELATING  TO  THIS  AGREEMENT  IS  LIKELY  TO  INVOLVE  COMPLICATED  AND  DIFFICULT  ISSUES,  AND  THEREFORE  IT  HEREBY  IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A  TRIAL BY JURY IN RESPECT OF ANY ACTION DIRECTLY OR INDIRECTLY ARISING  OUT  OF  OR  RELATING  TO  HIS  AGREEMENT,  THE  FACTS  AND  CIRCUMSTANCES  LEADING  TO  THE  EXECUTION  OR  PERFORMANCE  HEREOF.   EACH  PARTY  CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, ATTORNEY OR  OTHER  AGENT  OF  ANY  OTHER  PARTY  HAS  REPRESENTED,  EXPRESSLY  OR  OTHERWISE,  THAT  SUCH  OTHER  PARTY  WOULD  NOT,  IN  THE  EVENT  OF  ANY  ACTION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) IT UNDERSTANDS AND  HAS  CONSIDERED  THE  IMPLICATIONS  OF  SUCH  WAIVER,  (iii)  IT  MAKES  SUCH  WAIVER  KNOWINGLY  AND  VOLUNTARILY,  AND  (iv)  IT  HAS  BEEN  INDUCED  TO  ENTER  INTO  THIS  AGREEMENT  BY,  AMONG  OTHER  THINGS,  THE  MUTUAL  WAIVERS AND CERTIFICATIONS IN THIS Section 9.05.         Section 9.06 Assignment.  This Agreement shall not be assigned by either Party, in whole  or in part, by operation of law or otherwise without the prior written consent of the other Party;  provided, however, (i) that Seller may assign any or all of its rights and obligations under this  Agreement to any of its Affiliates, so long as such assignment does not release Seller from any  liability under this Agreement and (ii) that the Company or Purchaser may assign its rights or  obligations hereunder to one or more of its Affiliates, for collateral security purposes to any lender  providing financing to the Company or its Affiliates, or to a third party acquirer of the Company  or its Subsidiaries or all or substantially all of their assets; provided, however, that the Seller’s  consent shall be required for the assignment of this Agreement to a third party acquirer where the  acquirer  has  greater  than  $75M  in  annual  revenue  in  the  prior  fiscal  year  and  the  sale  and/or  distribution  of  stucco,  steel,  ceiling  and/or  drywall  is  a  substantial  portion  of  such  acquirer’s  business (where substantial portion means at least 25% of the acquirer’s revenue from the prior                                         20  

 

   fiscal year comes from the sale and/or distribution of stucco, steel, ceiling and/or drywall).  Any  attempted assignment in violation of this Section 9.06 shall be void.  This Agreement shall be  binding upon and inure to the benefit of the Parties and their respective successors and permitted  assigns.         Section 9.07 Entire Agreement.  The Schedules to this Agreement shall be construed with  and as an integral part of this Agreement to the same extent as if the same had been set forth  verbatim  herein.   This  Agreement  (together  with  the  Schedules)  is  intended  to  be  a  complete  statement of all of the terms, conditions and arrangements between the Parties with respect to the  matters provided for herein, and supersedes any previous agreements and understandings between  the Parties with respect to those matters.         Section 9.08 Severability.  The invalidity or unenforceability of any provision hereof in  any jurisdiction shall not affect the validity or enforceability of any other provision hereof or render  invalid or unenforceable such provision in any other jurisdiction.  To the extent that any provision  hereof is deemed to be invalid or unenforceable, such provision shall be modified to the minimum  extent necessary to make such provision enforceable under applicable Law in its reduced form and  so as to give the maximum effect to the intent of the Parties.         Section 9.09 No Third-Party Beneficiaries.  Except as set forth in Article V with respect  to Indemnified Persons, this Agreement is for the sole benefit of the Parties and their successors  and permitted assigns, and nothing in this Agreement, express or implied, is intended to or shall  confer  upon  any  other  Person  any  legal  or  equitable  right,  benefit  or  remedy  of  any  nature  whatsoever under or by reason of this Agreement.         Section 9.10 No Agency.  Nothing in this Agreement shall be deemed in any way or for  any purpose to constitute any Party acting as an agent of another unaffiliated Party in the conduct  of such other Party’s business, or as creating any type of partnership, joint venture or fiduciary  relationship between or among the Parties.  Any Provider of any Service hereunder shall act as an  independent contractor and not as the agent of any Recipient or its Affiliates in performing such  Service.         Section 9.11 Ownership of Intellectual Property.               (a)   Except as otherwise expressly provided in this Agreement or in the Purchase  Agreement each of the Parties and their respective Affiliates shall retain all right, title and interest  in  and  to  their  respective  intellectual  property  and  any  and  all  improvements,  modifications,  enhancements or derivative works thereof.  No license or right, express or implied, is granted under  this  Agreement  by  either  Party  or  such  Party’s  Affiliates  in  or  to  their  respective  intellectual  property, except that, solely to the extent required for the provision or receipt of the Services in  accordance with this Agreement, each Party (“Licensor”), for itself and on behalf of itself and its  Affiliates,  hereby  grants to  the other Party (“Licensee”) (and the  Licensee’s Affiliates) a non- exclusive, revocable (solely as expressly provided in this Agreement), non-transferable (except as  provided in Section 9.06), non-sublicenseable (except to third parties as required for the provision  or receipt of Services, but not for their own independent use), royalty-free, worldwide license  during the term of this Agreement to use such intellectual property of the Licensor in connection  with this Agreement, but only to the extent and for the duration necessary for the Licensee to                                         21  

 

   provide or receive the applicable Service under this Agreement.  Upon the expiration of such term,  or the earlier termination of such Service in accordance with this Agreement, the license to the  relevant intellectual property will terminate; provided, that all licenses granted hereunder shall  terminate immediately upon the expiration or earlier termination of this Agreement in accordance  with the terms hereof.  Upon the expiration or termination of this Agreement or an applicable  Service, the Licensee shall cease use of the Licensor’s intellectual property pursuant to this Section  9.11 and shall return or destroy at the Licensor’s request all information or embodiments of such  intellectual  property  provided  in  connection  with  this  Agreement;  unless  Purchaser  or  the  Company has a right to use Seller’s intellectual property under the Purchase Agreement.  The  foregoing license is subject to any licenses granted by others with respect to intellectual property  not owned by the Parties or their respective Affiliates.               (b)   Subject to the limited license granted in Section 9.11(a), in the event that  any intellectual property is created, developed, written or authored by a Party in connection with  the performance or receipt of the Services by such Party, all right, title and interest throughout the  world in and to all such intellectual property shall vest solely in such Party unconditionally and  immediately upon such intellectual property having been created, developed, written or authored,  unless the Parties agree otherwise in writing.               (c)   To the extent title to any intellectual property that is the subject of Section  9.11(b), vests, by operation of Law, in the Party or an Affiliate of the Party that did not create,  develop, write or author such intellectual property, such Party or Affiliate of the Party hereby  assigns to the other Party or its designated Affiliate all right, title and interest in such intellectual  property and agrees to provide such assistance and execute such documents as such other Party  may reasonably request to vest in such Party all right, title and interest in such intellectual property.         Section 9.12 Dispute  Resolution.   Any  dispute,  controversy  or  claim  arising  out  of,  relating to or in connection with this Agreement, or the breach, termination, or validity hereof  (each,  a  “Dispute”)  shall  be  resolved  by  submitting  such  Dispute  first  to  the  relevant  Service  Manager of each Party, and such Service Managers shall seek to resolve such Dispute through  informal good faith negotiation.  In the event that any Dispute between the Parties relating to the  Services or this Agreement is not resolved by such Service Managers within ten (10) Business  Days after the claiming Party verbally notifies the other Party of the Dispute (during which time  the Service Managers shall meet in person or by telephone as often as reasonably necessary to  attempt to resolve the Dispute), such Service Managers shall escalate the Dispute to the Company  Contract Manager and the Seller Contract Manager for resolution.  In the event that the Company  Contract Manager and the Seller Contract Manager fail to meet or, if they meet, fail to resolve the  Dispute within an additional ten (10) Business Days, then the claiming Party will provide the other  Party with a written “Notice of Dispute”, describing (i) the issues in dispute and such Party’s  position thereon, (ii) a summary of the evidence and arguments supporting such Party’s positions,  (iii) a summary of the negotiations that have taken place to date, and (iv) the name and title of the  senior executives or their respective designees who will represent the claiming Party.  The senior  executives or their respective designees of the claiming Party designated in such Notice of Dispute  shall meet in person or by telephone with the senior executives or their respective designees of the  non-claiming Party as often as reasonably necessary to resolve the Dispute and shall confer in a  good faith effort to resolve the Dispute.  If such senior executives or their respective designees  decline to meet within the allotted time or fail to resolve the Dispute within twenty (20) Business                                         22  

 

   Days after receipt of the Notice of Dispute, then either Party may pursue the remedy set forth in  Section 9.05.         Section 9.13 No Right to Set-Off.  The Purchaser and the Company shall pay to Seller,  the full amount of Service Charges, Migration Service Charges, Pass-Through Charges and other  amounts  required  to  be  paid  under  this  Agreement  and  not  set-off,  counterclaim  or  otherwise  withhold any amount owed or claimed to be owed to Seller under this Agreement on account of  any obligation owed by such Provider, whether or not such obligation has been finally adjudicated,  settled or otherwise agreed upon in writing.         Section 9.14 Construction.  The words “hereof”, “herein” and “hereunder” and words of  like import used in this Agreement shall refer to this Agreement as a whole and not to any particular  provision of this Agreement.  The captions herein are included for convenience of reference only  and shall be ignored in the construction or interpretation hereof.  References to Articles, Sections,  Schedules and Exhibits are to Articles, Section, Schedules and Exhibits of this Agreement unless  otherwise specified.  All Schedules and Exhibits 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  term used in any Schedule or Exhibit but not otherwise defined therein shall have the meaning  given to such term in this Agreement.  Any singular term in this Agreement shall be deemed to  include the plural, and any plural term the singular.  Whenever the words “include”, “includes” or  “including” are used in this Agreement, they shall be deemed to be followed by the words “without  limitation”,  whether  or  not  they  are  in  fact  followed  by  those  words  or  words  of  like  import.   “Writing”,  “written”  and comparable  terms  refer  to  printing,  typing  and  other  means  of  reproducing words (including electronic media) in a visible form.  References to any agreement or  contract are to that agreement or contract as amended, modified or supplemented from time to time  in accordance with the terms hereof and thereof.  References to any Person include the successors  and permitted assigns of that Person.  References from or through any date mean, unless otherwise  specified, from and including or through and including, respectively.  Any reference to “days”  means  calendar  days  unless  Business  Days  are  expressly  specified.   If  any  action  under  this  Agreement is required to be done or taken on a day that is not a Business Day, then such action  shall be required to be done or taken not on such day but on the first succeeding Business Day  thereafter.  Each Party hereto has participated in the drafting of this Agreement, which each Party  acknowledges is the result of extensive negotiations between the Parties, and consequently this  Agreement shall be interpreted without reference to any rule or precept of Law to the effect that  any ambiguity in a document be construed against the drafter.         Section 9.15 Counterparts; Effectiveness.  This Agreement may be executed in several  counterparts, each of which shall be deemed an original and all of which shall together constitute  one and the same instrument.  Copies of executed counterparts transmitted by facsimile or other  electronic transmission service shall be considered original executed counterparts for purposes of  this Section 9.15. This Agreement shall become effective when each Party shall have received a  counterpart  hereof  signed  by  the other  Party.   Until  and  unless  each  Party  has  received  a  counterpart hereof signed by the other Party, this Agreement shall have no effect and no Party shall  have any right or obligation hereunder (whether by virtue of any other oral or written agreement  or other communication).                                          23  

 

         Section 9.16 Specific Performance.  The Parties agree that irreparable damage may occur  if any provision of this Agreement were not performed in accordance with the terms hereof and  that the Parties shall be entitled to seek an injunction or injunctions to prevent breaches of this  Agreement  or  to  enforce  specifically  the  performance  of  the  terms  and  provisions  hereof,  in  addition to any other remedy to which they are entitled at law or in equity.  The Parties hereby  waive, in any action for specific performance, the defense of adequacy of a remedy at law and the  posting of any bond or other security in connection therewith.               [REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]                                          24  

 

         IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed on the  date first written above by their respective duly authorized officers.                                       FOUNDATION BUILDING MATERIALS,                                      LLC                                                                             By:   ____________________________________                                            Name:                                            Title:                                       FBM CANADA SPI, INC.                                                                             By:   ____________________________________                                            Name:                                            Title:                                       SPI LLC                                                                             By:   ____________________________________                                            Name:                                            Title:                       Signature Page to Transition Services AgreementTherapeuticsMD, Inc. 10-K

     

    
        Exhibit 10.20
    

    
         
    

    CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO THE CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED AS [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 

    EXECUTION VERSION

    SOFTGEL COMMERCIAL SUPPLY AGREEMENT

    (Estradiol and Progesterone softgel capsules) 

     

    This Softgel Commercial Supply Agreement (“Agreement”) is made as of this 24th day of June, 2016 (“Effective Date”), by and between TherapeuticsMD, Inc., a Nevada corporation, with a place of business at 6800 Broken Sound Parkway NW, Third Floor, Boca Raton, Florida 33487 (“Client”), and Catalent Pharma Solutions, LLC, a Delaware limited liability company, having a place of business at 14 Schoolhouse Road, Somerset, New Jersey 08873 (“Catalent”).

    RECITALS

    
        A.
                        
        Client is a company that develops, markets and sells pharmaceutical products;
    

    B.
                         Catalent is a leading provider of advanced technologies, and development, manufacturing and packaging services for pharmaceutical, biotechnology and consumer healthcare companies;

    C.
                         Client and Catalent have entered into the Master Development and Clinical Supply Agreement dated as of December 4, 2015 and amended on April 20, 2016 (as amended, the “Development Agreement”); and

    D.
                        Client desires to engage Catalent to provide certain services to Client in connection with the processing of Client’s Product, and Catalent desires to provide such services, all pursuant to the terms and conditions set forth in this Agreement.

    THEREFORE, in consideration of the mutual covenants, terms and conditions set forth below, the parties agree as follows:

    ARTICLE 1

    DEFINITIONS

    The following terms have the following meanings in this Agreement:

    1.1
                      “Acknowledgement” has the meaning set forth in Section 4.3.

    1.2
                      “Affiliate(s)” means, with respect to Client or any third party, any corporation, firm, partnership or other entity that controls, is controlled by or is under common control with such entity; and with respect to Catalent, Catalent Pharma Solutions, Inc. and any corporation, firm, partnership or other entity controlled by it. For the purposes of this definition, “control” means the ownership of at least 50% of the voting share capital of an entity or any other comparable equity or ownership interest or possession of the right to control the management and policies of such entity.

    
    
        	 

    

    
        	 

    

    
     

    1.3
                      “Agreement” has the meaning set forth in the introductory paragraph, and includes all its Attachments and other appendices agreed to by the parties (all of which are incorporated herein by reference) and any amendments to any of the foregoing made as provided herein or therein.

    1.4
                      “API” means the generic compounds Estradiol and Progesterone, as further described in the Specifications that have been released by Client and provided to Catalent, along with a certificate of analysis, as provided in this Agreement.

    1.5
                      “Applicable Laws” means, with respect to Client, all laws, ordinances, rules and regulations of each jurisdiction in which API or Product is produced, marketed, distributed, used or sold; and with respect to Catalent, all laws, treaties, or ordinances, rules, regulations, cGMP, guidances, interpretations, authorizations, judgments, directives, injunctions, or orders of any court of any international, national, regional, local, or other governmental body, agency, authority, or court, or arbitrator, that has jurisdiction over the location where Catalent performs services under this Agreement (and applicable cGMP), including, but not limited to, the Federal Food, Drug and Cosmetic Act and Good Laboratory Practices, in each of the foregoing cases as in effect from time-to-time.

    1.6
                       “Batch” means a defined quantity of Product that has been or is being Processed in accordance with the Specifications.

    1.7
                      “Catalent” has the meaning set forth in the introductory paragraph, or any successor or permitted assign. Catalent shall have the right to cause any of its Affiliates, upon prior written notice to and approval from Client, to perform any of its obligations hereunder, and Client upon its prior approval of the use of the Affiliate, shall accept such performance as if it were performance by Catalent, but Catalent shall remain jointly and severally liable for the performance by any of its Affiliates under this Agreement.

    1.8
                      “Catalent Defective Processing” has the meaning set forth in Section 5.2.

    1.9
                      “Catalent Indemnitees” has the meaning set forth in Section 13.2.

    1.10
                  “Catalent IP” has the meaning set forth in the Development Agreement.

    1.11
                  “cGMP” means current Good Manufacturing Practices promulgated by the Regulatory Authorities in the jurisdictions included in Applicable Laws (as applicable to Client and Catalent respectively). In the United States, this includes 21 C.F.R. Parts 210 and 211, as amended together with pertinent guidelines and guidance documents; in the European Union, this includes 2003/94/EEC Directive (as supplemented by Volume 4 of EudraLex published by the European Commission), as amended, if and as implemented in the relevant constituent country, together with pertinent guidelines and guidance documents, in Japan (this includes the guidelines of good manufacturing control and quality control based on the requirements of the Pharmaceutical Affairs law of Japan as implemented in April of 2005), and in Canada (including the Food and Drugs Act, pertinent rules and regulations promulgated by Health Canada including Part C, Division 2 of the Food and Drugs Regulations and the Good Manufacturing Practices (GMP) Guidelines – 2009 Edition, Version 2).

    
    
        	 	
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    1.12
                  “Client” has the meaning set forth in the introductory paragraph, or any successor or permitted assign.

    1.13
                  “Client Indemnitees” has the meaning set forth in Section 13.1.

    1.14
                  “Client IP” has the meaning set forth in the Development Agreement.

    1.15
                  “Client-supplied Materials” means any materials to be supplied by or on behalf of Client to Catalent for Processing, as provided in Attachment A, including API and reference standards.

    1.16
                  “Commencement Date” means the date of first commercial sale by Client following approval by a Regulatory Authority of Catalent as a manufacturer of the Product. Client shall notify Catalent in writing promptly following such first commercial sale.

    1.17
                  “Confidential Information” has the meaning set forth in Section 10.1.

    1.18
                  “Contract Year” means each consecutive 12 month period beginning on the Commencement Date or anniversary thereof, as applicable.

    1.19
                  “Defective Product” has the meaning set forth in Section 5.2.

    1.20
                   “Development Agreement” has the meaning set forth in Recital C.

    1.21
                  “Development Batch” has the meaning set forth in the Development Agreement.

    1.22
                  “Discloser” has the meaning set forth in Section 10.1.

    1.23
                  “Effective Date” has the meaning set forth in the introductory paragraph.

    1.24
                  “Exception Notice” has the meaning set forth in Section 5.2.

    1.25
                  “Facility” means Catalent’s facility located in St. Petersburg, Florida or Morrisville, North Carolina; or such other facility as agreed by the parties in writing.

    1.26
                  “Firm Commitment” has the meaning set forth in Section 4.2.

    1.27
                  “Generic Product” has the meaning set forth in Section 11.5.

    1.28
                  “Invention” has the meaning set forth in Article 11.

    1.29
                  “Losses” has the meaning set forth in Section 13.1.

    
    
        	 	
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    1.30
                  “Marks” means trademarks, trade names, service marks, logos and symbols.

    1.31
                  “Minimum Requirement” has the meaning set forth in Section 4.1.

    1.32
                  “Process” or “Processing” means the compounding, filling, encapsulating, producing, testing and bulk packaging (but not secondary or retail packaging) of Client-supplied Materials and Raw Materials into Product by Catalent, in accordance with the Specifications and under the terms of this Agreement.

    1.33
                  “Processing Date” means the day on which the first step of physical Processing is scheduled to occur, as identified in an Acknowledgement.

    1.34
                  “Process Know-How” means all know-how provided by Client to Catalent and, subject to the exclusions in the next sentence, certain know-how to the extent it relates to the processing, manufacture, quality control, formulation, filling, finishing, testing and packaging of a Product, whether in bulk or final form, and regardless of container, including, without limitation, analytical tests methods for in-process and final Product, copies of manufacturing records, formulation recipes, designs and drawings (limited to ink print design, and capsule color, shape, and design), and formulae, used in the delivery of Processing for a Product to the extent it is in the possession, or under the control, of Catalent, its Affiliates and their respective subcontractors; “Process Know-How” does not include any of the following: (i) Catalent IP, and (ii) the proprietary process information contained in the drug master file, including without limitation, the gelatin master batch record, the gelatin conversion section of the master batch record, the encapsulation set up page, and processing aids (lubricants and wash solution).

    1.35
                  “Process Know-How Transfer” means the commercially reasonable efforts of the parties undertaken pursuant to the Process Know-How Transfer Plan to transfer copies of all Process Know-How (together with relevant books and records) and the “Standards” (defined below) in Catalent’s possession, to Client as set forth in greater detail in the Process Know-How Transfer Plan. Catalent shall only be obligated to use its commercially reasonable efforts in the implementation of the Process Know-How Transfer Plan, and in no case shall Catalent personnel visit the site of Client or any third party manufacturer of softgels, as the case may be. For the avoidance of doubt, the foregoing prohibition shall not be construed as a basis for Catalent refusing to assist in the transfer of analytical methods to an independent laboratory, including a visit by Catalent personnel to such site to assist in method transfer, if, and only as, reasonably necessary, and at Client’s cost and expense. As used herein “Standards” means data, information, or samples of validated or Catalent manufactured or partially manufactured Product or other indicia measured at various points during Processing, to the extent Catalent possesses such data, information, or samples. “Standards” does not include any of the following: (i) Catalent IP, and (ii) the proprietary process information contained in the drug master file, including without limitation, the gelatin master batch record, the gelatin conversion section of the master batch record, the encapsulation set up page, and processing aids (lubricants and wash solution).

    
    
        	 	
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    1.36
                  “Process Know-How Transfer Plan” means that plan addressing orderly Process Know-How Transfer, to be prepared in writing and reasonably agreed to by the parties within the sixty (60) day period following notice from Client to Catalent of its intention to commence Process Know-How Transfer.

    1.37
                   “Product” means the bulk pharmaceutical product containing the API, as more specifically described in the Specifications.

    1.38
                  “Product Maintenance Services” has the meaning set forth in Section 2.2.

    1.39
                  “Purchase Order” has the meaning set forth in Section 4.3.

    1.40
                  “Quality Agreement” has the meaning set forth in Section 9.6.

    1.41
                  “Raw Materials” means all raw materials, supplies, components and packaging necessary to manufacture and ship Product in accordance with the Specifications, but excluding Client-supplied Materials.

    1.42
                  “Recall” has the meaning set forth in Section 9.5.

    1.43
                  “Recipient” has the meaning set forth in Section 10.1.

    1.44
                  “Regulatory Approval” means any approvals, permits, product and/or establishment licenses, registrations or authorizations, including approvals pursuant to U.S. Investigational New Drug Applications, New Drug Applications and Abbreviated New Drug Applications, as applicable, of any Regulatory Authorities that are necessary or advisable in connection with the development, manufacture, testing, use, storage, exportation, importation, transport, promotion, marketing, distribution or sale of API or Product in the Territory.

    1.45
                  “Regulatory Authority” means the international, federal, state or local governmental or regulatory bodies, agencies, departments, bureaus, courts or other entities in the Territory that are responsible for (A) the regulation (including pricing) of any aspect of pharmaceutical or medicinal products intended for human use including, but not limited to, their manufacture, handling and storage, or (B) health, safety or environmental matters generally. In the United States, this includes the United States Food and Drug Administration.

    1.46
                  “Representatives” of an entity mean such entity’s duly-authorized officers, directors, employees, agents, accountants, attorneys or other professional advisors.

    1.47
                  “Review Period” has the meaning set forth in Section 5.2.

    1.48
                  “Rolling Forecast” has the meaning set forth in Section 4.2.

    1.49
                  “Sample” has the meaning set forth in Section 5.1.

    
    
        	 	
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    1.50
                  “Softgel Technology” means Catalent’s proprietary technology, whether or not patented or patentable, for the manufacture of softgels for various uses, including the oral administration of pharmaceutically active ingredients (including health and nutritional substances). The Softgel Technology includes proprietary know how relating to (A) the development of fill and shell formulations, (B) the design and use of the encapsulation process to enhance stability, solubility, bioavailability and manufacturability of active ingredient chemical entities in softgels, (C) the selection and preparation of solvents, vehicles, excipients, surfactants, stabilizers, gelatin and gelatin substitutes, plasticizers and other components of the liquid fill and the shell and (D) certain encapsulation, drying and related manufacturing techniques and machinery for making experimental, clinical, or commercial quantities of softgels. For clarity, Softgel Technology does not encompass any technology or information provided by Client to Catalent, including, but not limited to, the formulation of the Product.

    1.51
                  “Specifications” means the procedures, requirements, standards, quality control testing and other data and the scope of services as set forth in Attachment A, as modified from time to time in accordance with Article 8.

    1.52
                  “Term” has the meaning set forth in Section 16.1.

    1.53
                  “Territory” means the United States of America, and any other country that the parties agree in writing to add to this definition of Territory in an amendment to this Agreement, except shall not include countries that are targeted by the comprehensive sanctions, restrictions or embargoes administered by the United Nations, European Union, United Kingdom, or the United States. Catalent shall not be obliged to Process Products for sale in any of such countries if it is prevented from doing so, or would be required to obtain or apply for special permission to do so, due to any restrictions (such as embargoes) imposed on it by any governmental authorities, including without limitation, those imposed by the U.S. Office of Foreign Asset Control.

    1.54
                  “Unit Pricing” has the meaning set forth in Section 7.1(A).

    1.55
                  “Vendor” has the meaning set forth in Section 3.2(B).

    ARTICLE 2

    PROCESSING & RELATED SERVICES

    2.1
                      Supply and Purchase of Product. Catalent shall Process Product in accordance with the Specifications, Applicable Laws and the terms and conditions of this Agreement.

    2.2
                      Product Maintenance Services. Client will receive the following product maintenance services (the “Product Maintenance Services”): one annual audit (as further described in Section 9.5); regulatory audits (as further described in Section 9.4); one annual Product review (within the meaning of 21 CFR § 221.180); drug master file updates for the Territory, if applicable; access to document library over and above the Quality Agreement, including additional copies of Batch paperwork or other Batch documentation; assistance in preparing Regulatory Approvals; Product document and sample storage relating to cGMP requirements; vendor re-qualification; and maintenance, updates and storage of master batch records and audit reports. For avoidance of doubt, the following services and items are not included in Product Maintenance Services: technology transfer; analytical work; stability; and process rework.

    
    
        	 	
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    2.3
                      Other Related Services. Catalent shall provide such Product-related services, other than Processing or Product Maintenance Services, as agreed to in writing by the parties from time to time. Such writing shall include the scope and fees for any such services and be appended to this Agreement. The terms and conditions of this Agreement shall govern and apply to such services.

    2.4
                      Validation Services. Catalent shall Process validation Batches and perform validation services at prices to be agreed in writing between the parties.

    ARTICLE 3

    MATERIALS

    3.1
                      Client-supplied Materials.

    A.
                        Client shall supply to Catalent for Processing, at Client’s cost, all Client-supplied Materials, in quantities sufficient to meet Client’s requirements for Product. Client shall deliver such items and associated certificates of analysis to the Facility no later than 60 days (but not earlier than 90 days, unless agreed to by the Parties or accepted by Catalent) before the Processing Date. Client’s failure to fulfill the foregoing obligations in this Section 3.1 shall not by itself give rise to a cause of action in Catalent or a right by it to terminate this Agreement. Client shall be responsible at its expense for securing any necessary DEA, export or import, similar clearances, permits or certifications required in respect of such supply. Catalent shall use such items solely for Processing. Prior to delivery of any such items, Client shall provide to Catalent a copy of all associated material safety data sheets, safe handling instructions and health and environmental information and any Regulatory certifications or authorizations that may be required under Applicable Laws relating to the API and Product, and shall promptly provide any updates thereto.

    B.
                         Following receipt of Client-supplied Materials, Catalent shall inspect such items employing such measures as are set forth in the Specifications. Catalent will receive, handle, store and use all Client-supplied Materials in compliance with all Applicable Laws and labeled storage requirements, or lacking labeled storage requirement, the written instructions of Client, as agreed to by Catalent, such agreement not to be unreasonably withheld. Unless otherwise expressly required by the Specifications, Catalent shall have no obligation to test such items to confirm that they meet the associated specifications or certificate of analysis or otherwise; but in the event that Catalent detects a nonconformity with Specifications, Catalent shall give Client prompt notice of such nonconformity. Catalent shall not be liable for any defects in Client-supplied Materials, or in Product resulting from defective Client-supplied Materials, unless Catalent failed to properly perform the foregoing obligations. Catalent shall follow Client’s reasonable written instructions in respect of return or disposal of defective Client-supplied Materials, at Client’s cost.

    
    
        	 	
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    C.
                         Client shall retain title to Client-supplied Materials at all times and shall bear the risk of loss thereof, except for losses to the extent due to the negligent acts or omissions of Catalent or Catalent’s failure to follow storage and handling requirements or mutually agreed to written instructions of Client, in each case, subject to Article 14.

    3.2
                      Raw Materials.

    A.
                        Catalent shall be responsible for procuring, inspecting and releasing adequate Raw Materials as necessary to meet the Firm Commitment, unless otherwise agreed to by the parties in writing. Catalent shall not be liable for any delay in delivery of Product if (i) Catalent is unable to obtain, in a timely manner, a particular Raw Material necessary for Processing and (ii) Catalent placed orders for such Raw Materials promptly following receipt of Client’s Firm Commitment. In the event that any Raw Material becomes subject to purchase lead time beyond the Firm Commitment time frame, the parties will negotiate in good faith an appropriate amendment to this Agreement, including Section 4.2.

    B.
                         In certain instances, Client may require a specific supplier, manufacturer or vendor (“Vendor”) to be used for Raw Material. In such an event occurring after the Effective Date, (i) such Vendor will be identified in the Specifications and (ii) the Raw Materials from such Vendor shall be deemed Client-supplied Materials for purposes of this Agreement. If the cost of the Raw Material from any such Vendor is greater than Catalent’s costs for the same raw material of equal quality from other vendors, Catalent shall add the difference between Catalent’s cost of the Raw Material and the Vendor’s cost of the Raw Material to the Unit Pricing. Client will be responsible for all costs associated with qualification of any Vendor specifically required to be used upon written instruction from Client, which Vendor has not been previously qualified by Catalent.

    C.
                         In the event of (i) a Specification change for any reason, (ii) obsolescence of any Raw Material or (iii) termination or expiration of this Agreement, Client shall bear the cost of any unused Raw Materials (including packaging), so long as Catalent purchased such Raw Materials in quantities consistent with Client’s most recent Firm Commitment and the vendor’s minimum purchase obligations. Such Raw Material shall be the property of Client upon payment therefor.

    3.3
                      Artwork and Labeling. Client shall provide or approve, prior to the procurement of applicable Raw Material, all artwork, advertising and labeling information necessary for Processing, if any. Such artwork, advertising and labeling information is and shall remain the exclusive property of Client, and Client shall be solely responsible for the content thereof. Such artwork, advertising and labeling information or any reproduction thereof may not be used by Catalent in any manner other than performing its obligations hereunder.

    ARTICLE 4

    MINIMUM COMMITMENT, PURCHASE ORDERS & FORECASTS

    4.1
                      Minimum Requirement. During each Contract Year, Client shall purchase the minimum number of units of Product set forth on Attachment B (“Minimum Requirement”). If Client does not purchase such Minimum Requirement during any Contract Year, then within [***] days after the end of such Contract Year, Client shall pay Catalent [***] of difference between (A) the total amount Client would have paid to Catalent if the Minimum Requirement had been fulfilled for the Product and (B) the sum of all purchases of Product from Catalent during such Contract Year. For the avoidance of doubt, validation Batches which are commercialized by Client shall count towards satisfaction of the Minimum Requirement in the first Contract Year.

    
    
        	 	
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    4.2
                      Forecast. On or before the [***] of each calendar month, beginning at least [***] prior to the anticipated Commencement Date, Client shall furnish to Catalent a written [***] rolling forecast of the quantities of Product that Client intends to order from Catalent during such period (“Rolling Forecast”); provided, that the quantities forecasted to be purchased in any rolling [***] period commencing on the [***] of the Commencement Date shall not be less than [***] of the Minimum Requirement for the relevant Contract Year. The first [***] of each such Rolling Forecast shall constitute a binding order for the quantities of Product specified therein (“Firm Commitment”) and the following [***] of the Rolling Forecast shall be non-binding, good faith estimates.

    4.3
                      Purchase Orders.

    A.
                        From time to time as provided in this Section 4.3(A), Client shall submit to Catalent a binding, non-cancelable purchase order for Product specifying the number of Batches to be Processed, the Batch size (to the extent the Specifications permit Batches of different sizes) and the requested delivery date for each Batch (“Purchase Order”); provided, that no Purchase Order may be for less than [***]. Concurrently with the submission of each Rolling Forecast, Client shall submit a Purchase Order for the Firm Commitment. Purchase Orders for quantities of Product in excess of the Firm Commitment shall be submitted by Client at least [***] days in advance of the delivery date requested in the Purchase Order.

    B.
                         Promptly following receipt of a Purchase Order, Catalent shall issue a written acknowledgement (“Acknowledgement”) that it accepts or rejects such Purchase Order. Each acceptance Acknowledgement shall either confirm the delivery date set forth in the Purchase Order or set forth a reasonable alternative delivery date, and shall include the Processing Date. Catalent may reject any Purchase Order in excess of the Firm Commitment or otherwise not given in accordance with this Agreement; provided, however, Catalent shall accept any Purchase Order that meets the requirements of this Agreement if Client is not in arrears in paying amounts due and payable under this Agreement.

    C.
                         Notwithstanding Section 4.3(B), Catalent shall use commercially reasonable efforts to supply Client with quantities of Product which are up to [***] in excess of the quantities specified in the Firm Commitment, subject to Catalent’s other supply commitments and manufacturing, packaging and equipment capacity.

    D.
                        In the event of a conflict between the terms of any Purchase Order or Acknowledgement and this Agreement, the terms of this Agreement shall control.

    
    
        	 	
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    4.4
                      Catalent’s Cancellation of Purchase Orders. Notwithstanding Section 4.5, Catalent reserves the right to cancel all, or any part of, a Purchase Order upon written notice to Client, and Catalent shall have no further obligations or liability with respect to such Purchase Order, if Client refuses or fails to timely supply conforming Client-supplied Materials in accordance with Section 3.1. Any such cancellation of Purchase Orders shall not constitute a breach of this Agreement by Catalent nor shall it absolve Client of its obligation in respect of the Minimum Requirement. Catalent shall use reasonable efforts to re-schedule Processing reflected on such Purchase Order promptly after conforming Client-supplied Materials are delivered to Catalent.

    4.5
                      Client’s Modification or Cancellation of Purchase Orders.

    A.
                        Client may modify the delivery date or quantity of Product in a Purchase Order only by submitting a written change order to Catalent at least [***] business days in advance of the earliest Processing Date covered by such change order. Such change order shall be effective and binding against Catalent only upon the written approval of Catalent, and notwithstanding the foregoing, Client shall remain responsible for the Firm Commitment.

    B.
                         Notwithstanding any amounts due to Catalent under Section 4.4 or Section 4.1, if Client fails to place Purchase Orders sufficient to satisfy the Firm Commitment, Client shall pay to Catalent the Unit Pricing for all Units that would have been Processed if Client has placed Purchase Orders sufficient to satisfy the Firm Commitment and Catalent shall Process and deliver such quantity of Product as if Purchase Orders sufficient to satisfy the Firm Commitment had been placed.

    C.
                         Neither changes to nor postponement of any Batch of Product, nor the payment of the fees described in this Section 4.5, will reduce or in any way effect Client’s Minimum Requirement obligations set forth in Section 4.1; provided, however, any payment pursuant to this Section 4.5 shall be applied towards the Minimum Requirement.

    4.6
                      Unplanned Delay or Elimination of Processing. Catalent shall use commercially reasonable efforts to meet the Purchase Orders, subject to the terms and conditions of this Agreement. Catalent shall provide Client with as much advance notice as practicable if Catalent determines that any Processing will be delayed or eliminated for any reason. Any delay in Processing by Catalent in excess of [***], but less than [***], days shall result in a proportional reduction of the Minimum Requirement pertaining to the then-current Contract Year, based on the actual number of days of delay until normal, orderly Processing re-commences. Any delay in Processing subsisting for a continuous period of [***] days, or the elimination of Processing representing in excess of [***] of the Minimum Requirement for the Contract Year in which the relevant Purchase Orders were submitted shall result in an elimination of the Minimum Requirement for the balance of such Contract Year, so long as such delay or elimination was not attributable to an act or omission of Client.

    4.7
                      Observation of Processing. In addition to Client’s audit right pursuant to Section 9.4, Client may send up to 2 Representatives to the Facility to observe Processing for a maximum of 10 days per Contract Year (unless otherwise agreed by Catalent in writing), upon at least 10 business days’ prior notice, at reasonable times during regular business hours. The foregoing limitations shall not apply to time spent by Client Representatives on site at the Facility to participate in or witness research and development activities or to witness Processing of validation Batches of Product. Such Representatives shall abide by all Catalent safety rules and other applicable employee policies and procedures, and Client shall be responsible for such compliance. Client shall indemnify and hold harmless Catalent for any action, omission or other activity of such Representatives while on Catalent’s premises. Client’s Representatives who are not employees of Client shall be required to sign Catalent’s standard visitor confidentiality agreement prior to being allowed access to the Facility.

    
    
        	 	
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    ARTICLE 5

    TESTING; RELEASE

    5.1
                      Batch Release. After Catalent completes Processing of a Batch, Catalent shall also provide Client or its designee with Catalent’s certificate of analysis and certificate of compliance for such Batch. Issuance of a certificate of analysis and a certificate of compliance by Catalent constitutes release of the Batch by Catalent to Client. Client shall be responsible for final release of Product to the market.

    5.2
                      Testing; Rejection. No later than [***] days after receipt of the Batch (“Review Period”), Client or its designee shall notify Catalent whether the Batch conforms to Specifications. Upon receipt of notice from Client that a Batch meets Specifications, or upon failure of Client to respond by the end of the Review Period, the Batch shall be deemed accepted by Client and Client shall have no right to reject such Batch other than for defects which existed at the time of delivery and were not discovered or discoverable in the exercise of reasonable care (“Latent Defects”). For the avoidance of doubt, (i) Batches failing to meet Specifications at the time of delivery due to Latent Defects may be rejected, if at all, only upon notice to Catalent within [***] days following the date on which such Latent Defect was discovered or should have been discovered in the exercise of reasonable care and (ii) in no event may Client reject Product after such Product’s expiration date. If Client or its designee timely notifies Catalent in writing (an “Exception Notice”) that a Batch does not conform to the Specifications or otherwise does not meet the warranty set forth in Section 12.1(A), whether due to a Latent Defect or otherwise (“Defective Product”), and provides a sample of the alleged Defective Product, Catalent shall conduct an appropriate investigation in its discretion to determine whether or not it agrees with Client that Product is Defective Product and to determine the cause of any nonconformity. If Catalent agrees that Product is Defective Product and determines that the cause of nonconformity is attributable to Catalent’s failure to perform the Processing in accordance with the Specifications (“Catalent Defective Processing”), then Section 5.4 shall apply. For avoidance of doubt, where the cause of nonconformity cannot be determined or assigned, it shall be deemed not Catalent Defective Processing.

    5.3
                      Discrepant Results. If the parties disagree as to whether Product is Defective Product and/or whether the cause of the nonconformity is Catalent Defective Processing, and this is not resolved within 30 days of the Exception Notice date, the parties shall cause a mutually acceptable independent third party to review records, test data and to perform comparative tests and/or analyses on samples of the alleged Defective Product and its components, including Client-supplied Materials. The independent party’s results as to whether or not Product is Defective Product and the cause of any nonconformity shall be final and binding. Unless otherwise agreed to by the parties in writing, the costs associated with such testing and review shall be borne by Catalent if Product is Defective Product attributable to Catalent Defective Processing, and by Client in all other circumstances. Client will be apprised in writing of all Defective Product investigations executed by Catalent on Client’s materials/products, including Product and Client-supplied Materials, as well as final investigation outcome and conclusion(s).

    
    
        	 	
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    5.4
                      Defective Processing. Catalent shall, at Client’s option, either (A) replace at its cost another Batch of Product (as a replacement for any Batch of Defective Product attributable to Catalent Defective Processing) using Client-supplied Materials provided at Client’s cost or (B) credit any payments made by Client for such Batch. THE OBLIGATION OF CATALENT TO REPLACE CATALENT DEFECTIVE PROCESSING IN ACCORDANCE WITH THE SPECIFICATIONS OR CREDIT PAYMENTS MADE BY CLIENT FOR DEFECTIVE PRODUCT ATTRIBUTABLE TO CATALENT DEFECTIVE PROCESSING SHALL BE CLIENT’S SOLE AND EXCLUSIVE REMEDY UNDER THIS AGREEMENT FOR DEFECTIVE PRODUCT AND IS IN LIEU OF ANY OTHER WARRANTY, EXPRESS OR IMPLIED.

    ARTICLE 6

    DELIVERY

    6.1
                      Delivery. Catalent shall deliver Product ExWorks (Incoterms 2010) at the Facility promptly following Catalent’s release of Product; provided, however, Catalent shall be responsible for loading the Product on the carrier’s vehicle using due care. Catalent shall segregate and store all Product until tender of delivery. Title to Product shall transfer to Client upon such delivery. Client shall qualify at least 2 carriers to ship Product and then designate the priority of such qualified carriers to Catalent.

    6.2
                      Storage Fees. If Client fails to take delivery of any Product on any scheduled delivery date, Catalent shall store such Product until otherwise instructed by Client and Client shall be invoiced on the first day of each month following such scheduled delivery for reasonable administration and storage costs ([***] per pallet per month). Client will have at least [***] days after being notified that Product is released to take delivery, and Catalent will provide reasonable notification of the scheduled dates when Product is expected to be released. Such items shall be stored in compliance with requirements set forth in the Specification, or if no such storage Specification exists for such item, Catalent shall store such items using due care taking into account the identity of such item.

    6.3
                      Subcontracting. Catalent may utilize third parties to provide any part of the Processing only with the prior written approval of Client, provided that the foregoing will not apply to generally available goods and services or to subcontracting to Catalent Affiliates. If Client approves a subcontractor, then Catalent shall enter a written agreement with such subcontractor that enables Catalent to comply with its obligations under this Agreement and places such subcontractors under obligations of confidentiality, non-use and intellectual property ownership no less burdensome than those set forth herein and applicable to Catalent.  Catalent will oversee all services performed by any subcontractor, and will be responsible for such services as if such services were performed by Catalent. Catalent shall remain liable for the performance of its subcontractors under this Agreement. The use of subcontractors shall not relieve Catalent of any responsibility under this Agreement.

    
    
        	 	
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    ARTICLE 7

    PAYMENTS

    		7.1	Fees. In consideration for Catalent performing services hereunder:

     

    A.
                        Client shall pay Catalent the unit pricing for Product set forth on Attachment B (“Unit Pricing”). Catalent shall submit an invoice to Client for such fees upon tender of delivery of Product as provided in Section 6.1.

    B.
                         Client shall pay Catalent the annual fees for Product Maintenance Services set forth on Attachment B. Catalent shall submit an invoice to Client for such fees upon the Effective Date and upon each anniversary of the Effective Date during the Term.

    C.
                         Other Fees. Client shall pay Catalent for all other fees and expenses of Catalent owing in accordance with the terms of this Agreement, including pursuant to Sections 2.3, 4.1, 6.2 and 16.3. Catalent shall submit an invoice to Client for such fees as and when appropriate.

    7.2
                      Unit Pricing Increase. The Unit Pricing shall be adjusted on an annual basis, effective on each July 1st (with the first price adjustment to be effective on July 1, 2017), upon 60 days’ prior written notice from Catalent to Client, to reflect increases in labor, utilities and overhead and shall be in an amount equal to the change in the Producer Price Index (“PPI”), "Pharmaceutical Preparation Manufacturing” (Series ID: PCU325412325412), not seasonally adjusted, as published by the U.S. Department of Labor, Bureau of Labor Statistics. The initial base period for comparison shall be the twelve (12) month period ending on the date most closely preceding July 1, 2017, but which allows enough time for Catalent to provide to Client the notice required by this Section 7.2. In addition, price increases for raw materials, and components shall be passed through to Client. For the avoidance of doubt, no such annual increase shall exceed [***] in the aggregate for the PPI and raw materials and component costs.

    7.3
                      Payment Terms. Payment of all Catalent invoices shall be due 30 days after the date of invoice. No invoice shall be issued to Client for Processing until the Batch so Processed has been delivered to Client pursuant to Section 6.1. Client shall make payment in U.S. dollars, and otherwise as directed in the applicable invoice. If any payment is not received by Catalent by its due date, then Catalent may, in addition to any other remedies available at equity or in law, charge interest on the outstanding sum from the due date (both before and after any judgment) at 1.5% per month until paid in full (or, if less, the maximum amount permitted by Applicable Laws).

    
    
        	 	
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    7.4
                      Advance Payment. Notwithstanding any other provision of this Agreement, if at any time Catalent reasonably determines that Client’s credit has materially eroded as compared to its status as of the Effective Date, and Client is in arrears in paying amounts due under this Agreement, Catalent may require payment in advance before performing any further services or making any further shipment of Product. If Client shall fail, within a reasonable time, to make such payment in advance, or if Client shall fail to make any payment when due, Catalent shall have the right, at its option, to suspend any further performance hereunder until such default is corrected, without thereby releasing Client from its obligations under this Agreement.

    7.5
                      Taxes. All taxes, duties and other amounts assessed (excluding tax based on net income and franchise taxes) on Client-supplied Materials, services or Product prior to or upon provision or sale to Catalent or Client, as the case may be, are the responsibility of Client, and Client shall reimburse Catalent for all such taxes, duties or other expenses paid by Catalent or such sums will be added to invoices directed at Client, where applicable.

    7.6
                      Client and Third Party Expenses. Except as may be expressly covered by Product Maintenance Service fees, Client shall be responsible for 100% of its own and all third-party expenses associated with the development, Regulatory Approvals and commercialization of Product, including regulatory filings and post-approval marketing studies. The preceding sentence shall not be construed in derogation of Catalent’s obligations pursuant to Section 9.2 herein.

    7.7
                      Development Batches. Development Batches produced after the Effective Date shall be deemed to have been produced under the Development Agreement. Client will be responsible for the cost of such Development Batches, including those necessary to support the validation portion of Client’s submissions for Regulatory Approvals, which fail to meet the Specifications as set forth in Section 4.1 of the Development Agreement. Catalent and Client shall cooperate in good faith to resolve any problems causing the out-of-Specification Batch.

    ARTICLE 8

    CHANGES TO SPECIFICATIONS

    8.1       All Specifications and any changes thereto agreed to by the parties from time to time shall be in writing, dated and signed by the parties. No change in the Specifications shall be implemented by Catalent, whether requested by Client or requested or required by any Regulatory Authority, until the parties have agreed in writing to such change, the implementation date of such change, and any increase or decrease in costs, expenses or fees associated with such change (including any change to Unit Pricing). Catalent shall respond promptly to any request made by Client for a change in the Specifications, and both parties shall use commercially reasonable, good faith efforts to agree to the terms of such change in a timely manner. As soon as possible after a request is made for any change in Specifications, Catalent shall notify Client of the costs associated with such change and shall provide such supporting documentation as Client may reasonably require. Client shall pay all costs associated with such agreed upon changes. If there is a conflict between the terms of this Agreement and the terms of the Specifications, this Agreement shall control. Catalent reserves the right to postpone effecting changes to the Specifications until such time as the parties agree to and execute the required written amendment.

    
    
        	 	
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    ARTICLE 9

    RECORDS; REGULATORY MATTERS

    9.1
                      Recordkeeping. Catalent shall maintain complete and accurate Batch, laboratory data, reports and other technical records relating to Processing in accordance with Catalent standard operating procedures. Such information shall be maintained for a period of at least 2 years from the relevant finished Product expiration date or longer if required under Applicable Laws or the Quality Agreement. Catalent will retain samples required by cGMP and such samples shall be stored at the Facility pursuant to Catalent’s standard operating procedures. Prior to the destruction of any such Product specific items, Catalent shall notify Client of the impending destruction and provide Client a reasonable opportunity to receive any or all such items.

    9.2
                      Regulatory Compliance. Catalent shall obtain and maintain, at its cost and expense, all permits and licenses with respect to general Facility operations required by any Regulatory Authority in the jurisdiction in which Catalent Processes Product. Client shall obtain and maintain, at its cost and expense, all other Regulatory Approvals, authorizations and certificates, including those necessary for Catalent to commence Processing. Client shall reimburse Catalent for any payments Catalent is required to make to any Regulatory Authority pursuant to Applicable Laws resulting from Catalent’s formulation, development, manufacturing, processing, filling, packaging, storing or testing of Client’s Product or Client-supplied Materials at the Facility (including without limitation any payments or fees Catalent is required to make pursuant to the Generic Drug User Fee Amendments of 2012 (“GDUFA”) and pursuant to Applicable Laws similar to GDUFA; provided, however, that on a Facility by Facility basis, in the event Catalent’s Facility is referenced in a third party(ies) regulatory filing, the pertinent fee shall be apportioned and reduced accordingly between the third party(ies) and Client for each year thereafter (e.g., in the event that Catalent is required to pay such fee as a result of Client and a single third party, Client shall only be obligated to reimburse Catalent for [***] of such fee payment). Catalent and Client hereby acknowledge that as of the Effective Date, GDUFA does not apply to the Product or its Processing. Upon reasonable written request, Client shall provide Catalent with a copy of applicable Regulatory Approvals required to distribute, market and sell Product in the Territory. If Client is unable to provide such information, Catalent shall have no obligation to deliver Product to Client, notwithstanding anything to the contrary in this Agreement. During the Term, Catalent will assist Client with all regulatory matters relating to Processing and review the Common Technical Document pertaining to the Product and make such corrections as are necessary to accurately reflect the Product, in each case at Client’s request and reasonable expense; provided, however, Catalent shall review and correct such documents as they relate to Catalent activities at no charge to Client. In addition, Catalent will maintain at Catalent’s expense, the relevant Drug Master File, including any updates thereto, and shall provide a letter authorizing Client to reference Catalent Drug Master Files on file with the FDA and other regulatory authorities in connection with the pursuit of Regulatory Approval for the Product. The parties intend and commit to cooperate to allow each party to satisfy its obligations under Applicable Laws relating to Processing under this Agreement.

    
    
        	 	
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    		9.3	Regulatory Communications.

     

    A.
                        Each party may communicate with any governmental agency, including, but not limited to, governmental agencies responsible for granting regulatory approval for the Products, regarding such Products if in the opinion of that party’s counsel, such communication is necessary to comply with the terms of this Agreement or the requirements of any Applicable Law; provided, however, that unless in the reasonable opinion of its counsel there is a legal prohibition against doing so, such party will permit the other party to review and take part in any communications with the applicable agency, and to receive copies of all such communications from that agency.

    B.
                         Catalent will notify Client promptly if Catalent receives any warning letters from or on behalf of a governmental agency directly related to the Product or systems utilized in Processing the Product including, without limitation, any Form FDA-483. Catalent will provide Client copies of any written communication from a governmental agency relating to a Client Product within three (3) business days of its receipt.

    C.
                         Catalent will promptly notify Client upon receipt of a notice from a Regulatory Authority for an inspection of any Facility where the Processing is being performed due to an issue related to the Product or a system used in the performance of such services, or, in the event of an unannounced inspection, Catalent will provide such prior notice as is possible and permissible. If not prohibited by the Regulatory Authority, Client will have the right to be present during such audit or inspection and any wrap-up meeting with such Regulatory Authority as it applies to the Product. If Catalent receives any request by a Regulatory Authority with respect to the Product, including, but not limited to, a notice of deficiency or FDA-483 that requires a written response regarding Client-supplied Materials, project, or protocol, Catalent will provide a copy to Client of the deficiency notice within forty-eight (48) hours of Catalent’s receipt of the notice. Catalent will provide Client a draft of the response prior to the response being submitted to the Regulatory Authority so as to provide Client with reasonable time to review and comment on the response, which comments Catalent, in good faith, will consider incorporating into the response.

    9.4
                      Governmental Inspections and Requests. Catalent shall promptly advise Client if an authorized agent of any Regulatory Authority notifies Catalent that it intends to or does visit a Facility or any other site for the purpose of reviewing the Processing or testing. Upon request, Catalent shall provide Client with a copy of any report issued by such Regulatory Authority received by Catalent following such visit, redacted as appropriate to protect any confidential information of Catalent and Catalent’s other customers. Client acknowledges that it may not direct the manner in which Catalent fulfills its obligations to permit inspection by and to communicate with Regulatory Authorities, but such acknowledgement shall not be construed to vitiate Catalent’s obligations to Client pursuant to this Agreement. Client shall reimburse Catalent for all reasonable and documented costs, at a rate of [***] per hour, associated with inspections by Regulatory Authorities specifically concerning the Product, such as the pre-approval inspection. Client will not be required to pay costs to mitigate any deficiencies cited in a Form 483 or Catalent’s Facility deficiencies. Such documentation will include a description of the activities and time expended for such inspections.

    
    
        	 	
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    9.5
                      Client Facility Audits. During the Term, Client’s Representatives shall be granted access upon at least 10 business days’ prior notice, at reasonable times during regular business hours, to (A) the portion of the Facility where Catalent performs Processing, (B) relevant personnel involved in Processing and (C) Processing records described in Section 9.2, in each case solely for the purpose of verifying that Catalent is Processing in accordance with cGMPs, Applicable Laws, the Specifications and the Product master Batch records. Client may not conduct an audit under this Section more than once during any 12-month period; provided, that additional inspections may be conducted by or on behalf of Client as deemed appropriate by Client in the event there is a material quality or compliance issue concerning Product or its Processing or to measure remediation following an audit by either Client or a Regulatory Authority that resulted in a finding of deficiency. Client’s Quality Assurance Manager will arrange Client audits with Catalent Quality Management. Audits shall be designed to minimize disruption of operations at the Facility. Client’s Representatives who are not employees of Client shall be required to sign Catalent’s standard visitor confidentiality agreement prior to being allowed access to the Facility. Such Representatives shall comply with the Facility’s rules and regulations which are made known in advance to Client. Client shall indemnify and hold harmless Catalent for any action or activity of such Representatives while on Catalent’s premises.

    9.6
                      Recall. If a Regulatory Authority orders or requires the recall of any Product supplied hereunder or if either Catalent or Client believes a recall, field alert, Product withdrawal or field correction (“Recall”) may be necessary with respect to any Product supplied under this Agreement, the party receiving the notice from the Regulatory Authority or that holds such belief shall promptly notify the other party in writing. With respect to any Recall, Catalent shall provide all necessary cooperation and assistance to Client.  Client shall provide Catalent with an advance copy of any proposed submission to a Regulatory Authority in respect of any Recall, and shall consider in good faith any comments from Catalent.  The cost of any Recall shall be borne by Client, and Client shall reimburse Catalent for expenses incurred in connection with any Recall, in each case except to the extent such Recall is caused by Catalent’s breach of its Processing obligations under this Agreement or Catalent’s violation of Applicable Laws, then such cost shall be borne by Catalent in proportion to Catalent’s contribution to the cause of the Recall.  For purposes hereof, such Catalent cost shall be limited to reasonable, actual and documented administrative costs incurred by Client for such Recall and if applicable, replacement of the Product subject to Recall both in accordance with Article 5. 

    9.7
                      Quality Agreement. Within 6 months after the Effective Date, and in any event prior to the first Processing of Product hereunder, the parties shall negotiate in good faith and enter into a quality agreement on Catalent’s standard template or such other template agreed to by the parties (the “Quality Agreement”). The Quality Agreement shall in no way determine liability or financial responsibility of the parties for the responsibilities set forth therein. In the event of a conflict between any of the provisions of this Agreement and the Quality Agreement with respect to quality-related activities, including compliance with cGMP, the provisions of the Quality Agreement shall govern. In the event of a conflict between any of the provisions of this Agreement and the Quality Agreement with respect to any commercial matters, including allocation of risk, liability and financial responsibility, the provisions of this Agreement shall govern.

    
    
        	 	
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    ARTICLE 10

    CONFIDENTIALITY AND NON-USE

    10.1
                  Definition. As used in this Agreement, the term “Confidential Information” includes all information furnished by or on behalf of Catalent or Client, their respective Affiliates or any of its or their respective Representatives (the “Discloser”), to the other party (the “Recipient”), its Affiliates or any of its or their respective Representatives, whether furnished before, on or after the Effective Date and furnished in any form, including written, verbal, visual, electronic or in any other media or manner and information acquired by observation or otherwise during any site visit at the other party’s facility. Confidential Information includes all proprietary technologies, know-how, trade secrets, discoveries, inventions and any other intellectual property (whether or not patented), analyses, data, regulatory submission Information, compilations, business or technical information, strategies, or plan, samples, and other materials prepared or possessed by either party, their respective Affiliates, or any of its or their respective Representatives, containing or based in whole or in part on any information furnished by the Discloser, its Affiliates or any of its or their respective Representatives. Confidential Information also includes the existence of this Agreement and its terms. The manufacturing process parameters which are being provided to Catalent from Client, the Specifications and data resulting from performance of this Agreement by Catalent shall be considered Client’s Confidential Information. Items and information for which ownership has been allocated to Client under the Development Agreement shall be deemed to be the Confidential Information of Client under this Agreement.

    10.2
                  Exclusions. Notwithstanding Section 10.1, Confidential Information does not include information that (A) is or becomes generally available to the public or within the industry to which such information relates other than as a result of a breach of this Agreement, (B) is already known by the Recipient at the time of disclosure as evidenced by the Recipient’s written records created in the ordinary course of business, (C) becomes available to the Recipient on a non-confidential basis from a source that is entitled to disclose it on a non-confidential basis or (D) was or is independently developed by or for the Recipient without reference to the Confidential Information of the Discloser as evidenced by the Recipient’s contemporaneously created written records.

    10.3
                  Mutual Obligation. The Recipient agrees that it will not use the Discloser’s Confidential Information except in connection with the performance of its obligations or the exercise of its rights under this Agreement, and will not disclose, without the prior written consent of the Discloser, Confidential Information of the Discloser to any third party, except that the Recipient may disclose the Discloser’s Confidential Information to any of its Affiliates and its or their respective Representatives and subcontractors for which consent has been given pursuant to Section 6.3 and who have obligations of confidentiality and non-use at least as rigorous as those terms herein, in each case, that (A) need to know such Confidential Information for the purpose of performing under this Agreement, (B) are advised of the contents of this Article and (C) are bound to the Recipient by obligations of confidentiality at least as restrictive as the terms of this Article. Each party shall be responsible for any breach of this Article by its Affiliates or any of its or their respective Representatives or any person receiving Confidential Information directly or indirectly from or through the Recipient.

    
    
        	 	
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    10.4
                  Permitted Disclosure. The Recipient may disclose the Discloser’s Confidential Information to the extent required by law or regulation; provided, that prior to making any such legally required disclosure, the Recipient shall give the Discloser as much prior notice of the requirement for and contents of such disclosure as is practicable under the circumstances. Any such disclosure, however, shall not relieve the Recipient of its obligations contained herein.

    10.5
                  No Implied License. Except as expressly set forth in Section 10.1, the Recipient will obtain no right of any kind or license under any Confidential Information of the Discloser, including any patent application or patent, by reason of this Agreement. All Confidential Information will remain the sole property of the Discloser, subject to Article 11.

    10.6
                  Return of Confidential Information. Upon expiration or termination of this Agreement, the Recipient will (and will cause its Affiliates and its and their respective Representatives to) cease its use and, upon written request, within 30 days either return or destroy (and certify as to such destruction) all Confidential Information of the Discloser, including any copies thereof, except for a single copy which may be retained for the sole purpose of ensuring compliance with its continuing obligations under this Agreement.

    10.7
                  Survival. The obligations of this Article will terminate with respect to items of Confidential Information upon the entry thereof into general knowledge in the public domain, other than due to breach of this Agreement by the Recipient thereof or by a person receiving such Confidential Information from or through the Recipient, but in no event earlier than five (5) years from the expiration or earlier termination of this Agreement.

    10.8
                  Reverse Engineering. Unless otherwise consented to by the Discloser in writing or provided for in a separate agreement between the parties, the Recipient will not analyze for chemical composition any samples or materials that are the Confidential Information of Discloser, nor to allow or cause any such samples or materials that are the Confidential Information of Discloser to be released to third parties for analysis; provided, however, (i) this Section 10.8 shall not be construed to prevent Client from testing Product or items related to Product itself or through third parties, as it sees fit in its sole and absolute discretion; and (ii) this Section 10.8 shall not be construed to prevent Catalent from analyzing for chemical composition samples or materials that are commercially available or from developing or manufacturing products containing both, or either, Estradiol and Progesterone, including Generic Products so long as Catalent does not utilize Client’s Confidential Information to do so.

    
    
        	 	
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    ARTICLE 11

    INTELLECTUAL PROPERTY

    11.1       The parties hereby acknowledge that it is neither their intention nor the purpose of this Agreement to engage in inventive steps in the conception, reduction to practice or development of intellectual property. Nevertheless, in the event, and to the extent, that intellectual property is conceived, reduced to practice, developed or otherwise created by or on behalf of either or both of the parties in connection with this Agreement, the ownership of such intellectual property shall be subject to the terms and conditions of Sections 7.1 and 7.2 of the Development Agreement, as if such intellectual property was conceived, reduced to practice or developed pursuant to the Development Agreement.

    11.2       Transfer. Following notice given by Client to Catalent, Catalent will provide reasonable assistance to effect the timely and orderly transfer of the Process Know-How, and pertinent books and records (or copies thereof, as the case may be) pursuant to the Process Know-How Transfer Plan to Client pursuant to this Section 11.2 and the Process Know-How Transfer Plan whether to establish a second source during the term of this Agreement or at or about the time of termination or expiration of this Agreement. Catalent shall only be obligated to use its commercially reasonable efforts in the implementation of the Process Know-How Transfer Plan, and in no case shall Catalent personnel visit the site of Client or any third party manufacturer of softgels, as the case may be. For the avoidance of doubt, the foregoing prohibition shall not be construed as a basis for Catalent refusing to assist in the transfer of analytical methods to an independent laboratory, including a visit by Catalent personnel to such site to assist in method transfer, if, and only as, reasonably necessary, and at Client’s cost and expense.

    11.3       Books and Records. Where any document, or books and records contain Process Know-How together with other information of Catalent, its Affiliates or their respective subcontractors, or other Catalent customers, Catalent shall only be required to provide to Client a copy of that portion of that document or books and records that discloses the Process Know-How that pertains to the Product. When transferred to Client, such copies will be the property of Client. Catalent may retain the original books and records and any documents required by Applicable Laws to be retained by Catalent, which disclose the Process Know-How. After completion of performance of the Process Know-How Transfer Plan, before destroying any documents, or books and records which contain material disclosures of Process Know-How that have not been previously been provided to Client (whether in the same form or some other form), Catalent will notify Client of such intended destruction and provide Client with thirty (30) days to notify Catalent in writing whether Client wishes to obtain the same to the extent it is entitled to under this Agreement, in which case Catalent will deliver the requested document or books and records (or copies of all or a portion thereof, as the case may be) to Client at Client’s sole cost and expense.

    
    
        	 	
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    11.4       Client Marks. Catalent will not use Client’s Marks without prior written authorization from Client. The Marks are, and will remain, Client’s sole and exclusive property, and Catalent has not acquired, and will not acquire (by operation of law, this Agreement, or otherwise), any right, title, or interest in any of Client’s Marks other than as explicitly provided in writing by Client. Any and all goodwill and rights that arise under trademark and copyright law, and all other intellectual property rights that arise in favor of Client’s Marks as a result of this Agreement or otherwise, will inure to the sole and exclusive benefit of Client. Subject to the next sentence, during the Term of this Agreement, Catalent will not attack, dispute, or challenge Client’s right, title, and interest in and to Client’s Marks or assist others in so doing. Catalent reserves the right to attack, dispute, or challenge Client’s right, title, and interest in and/or to Client’s Marks or assist others in so doing, if Catalent believes in good faith that Client’s Mark infringes a Mark owned by or licensed to Catalent or one of its Affiliates.

    11.5       Analytical Methods. Catalent, in the development of analytical methods for a Generic Product, whether on its own behalf or on behalf of a third party, shall not use the services of any person, whether an employee or contractors, in the development of such methods, who either (i) provided analytical method development services on behalf of Catalent under this Agreement or the Development Agreement, or (ii) has such intimate knowledge of the Client’s analytical methods or the manner in which such methods were developed that such persons participation in the development of the analytical method for a Generic Product could reasonably be determined to materially accelerate the development of such methods for the Generic Product.  “Generic Product” shall mean [***].

    ARTICLE 12

    REPRESENTATIONS AND WARRANTIES AND COMPLIANCE

    12.1
                  Catalent. Catalent represents, warrants and undertakes to Client that:

    A.
                        at the time of delivery by Catalent as provided in Section 6.1, Product shall have been Processed in accordance with this Agreement and with Applicable Laws and in conformance with the Specifications and shall not be adulterated, misbranded or mislabeled within the meaning of Applicable Laws; provided, that Catalent shall not be liable for defects attributable to Client-supplied Materials (including artwork, advertising and labeling);

    B.
                         all personnel, employees, and agents of Catalent and its Affiliates and their respective subcontractors who perform services, are and will continue to be qualified and to have sufficient technical expertise to perform Catalent’s obligations under this Agreement;

    
    
        	 	
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    C.
                         Catalent has the full power and authority to execute and deliver this Agreement and perform its covenants, duties, and obligations described in this Agreement, and once executed, this Agreement will be a valid, legal, and binding obligation upon Catalent;

    D.
                        Catalent is not now, nor will it be, a party to any agreement which would prevent Catalent from fulfilling its obligations under this Agreement, and that during the Term of this Agreement will not enter into any agreement with any other party that would in any way prevent Catalent from performing its obligations under this Agreement;

    E.
                         Catalent will maintain all records and reports as required under this Agreement, and as required to comply with Applicable Laws.

    F.
                          Catalent will not in the performance of its obligations under this Agreement use the services of any person debarred or suspended (or subject to debarment or suspension) under 21 U.S.C. §335(a) or (b) or otherwise disqualified by Applicable Law;

    G.
                         (i) Catalent is not nor has it ever been, and (ii) Catalent has not used, and will not use, the services of any person excluded, debarred, suspended, or otherwise ineligible to participate in the Federal health care programs or in Federal procurement or non-procurement programs, and has not used, and will not use, the services of any person listed on the HHS/OIG List of Excluded Individuals/Entities (http://www.oig.hhs.gov), the GSA’s List of Parties Excluded from Federal Programs (http://www.epls.gov), or the FDA Debarment List (http://www.fda.gov/ora/compliance_ref/debar/default.htm), as amended or replaced from time to time, in connection with any of the services performed under this Agreement. Catalent further certifies that it, and any other person or entity used by Catalent in performing any of the services under this Agreement, has not been convicted of a criminal offense that falls within the ambit of 42 U.S.C. §1320a-7(a). Catalent agrees to notify Client promptly in the event Catalent, or any person used by Catalent in connection with this Agreement, ever becomes excluded, debarred, suspended, or otherwise ineligible to participate in Federal health care programs or in Federal procurement or non-procurement programs. This certification applies to Catalent and its respective officers, agents, and employees as well as subcontractors performing on behalf of Catalent under this Agreement;

    H.
                        Catalent has all necessary authority to use the Catalent technology utilized with the Product and as contemplated by this Agreement; there are no patents owned by others related to the Catalent IP utilized with the Product that would be infringed or misused by Catalent’s performance of the Agreement; and, to its knowledge, no trade secrets or other proprietary rights of others related to the Catalent IP utilized with the Product that would be infringed or misused by Catalent’s performance of this Agreement;

    I.
                            Catalent will not release any Batch of Product if the required certificates of conformance indicate that Product does not comply with the Specifications; and

    
    
        	 	
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    J.
                           no transactions or dealings under this Agreement shall be conducted with or for an individual or entity that is designated as the target of any sanctions, restrictions or embargoes administered by the United Nations, European Union, United Kingdom, or the United States. 

    12.2
                  Client. Client represents, warrants and undertakes to Catalent that:

    A.
                        all Client-supplied Materials shall have been produced in accordance with Applicable Laws, shall comply with all applicable specifications, including the Specifications, shall not be adulterated, misbranded or mislabeled within the meaning of Applicable Laws, and shall have been provided in accordance with the terms and conditions of this Agreement;

    B.
                         the content of all artwork provided to Catalent shall comply with all Applicable Laws;

    C.
                         all Product delivered to Client by Catalent shall be held, used and disposed of by or on behalf of the Client in accordance with all Applicable Laws, and Client will otherwise comply with all laws, rules, regulations and guidelines applicable to Client’s performance under this Agreement;

    D.
                        Client will not release any Batch of Product if the required certificates of conformance indicate that Product does not comply with the Specifications or if Client does not hold all necessary Regulatory Approvals to market and sell the Product;

    E.
                         Client has all necessary authority to use and to permit Catalent to use pursuant to this Agreement all intellectual property related to Product or Client-supplied Materials (including artwork), and the Processing by Catalent of the foregoing, including any copyrights, trademarks, trade secrets, patents, inventions and developments; to Client’s knowledge there are no patents owned by others related to the Client IP utilized with the Product that would be infringed or misused by Client’s performance of the Agreement; and, to its knowledge, no trade secrets or other proprietary rights of others related to the Client IP utilized with the Product that would be infringed or misused by Client’s performance of this Agreement;

    F.
                          To Client’s knowledge the services to be performed by Catalent under this Agreement will not violate or infringe upon any trademark, tradename, copyright, patent, trade secret, or other intellectual property or other right held by any person or entity; provided that Client makes no representation with respect to the Catalent IP;

    G.
                        Client has all authorizations and permits required to deliver API (or have delivered) to Catalent’s Facility.

    H.
                        Client has the full power and authority to execute and deliver this Agreement and perform its covenants, duties, and obligations described in this Agreement, and once executed, this Agreement will be a valid, legal, and binding obligation upon Client; and I.
                            no transactions or dealings under this Agreement shall be conducted with or for an individual or entity that is designated as the target of any sanctions, restrictions or embargoes administered by the United Nations, European Union, United Kingdom, or the United States. 

    
    
        	 	
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    12.3
                  Limitations. THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE ARE THE SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES MADE BY EACH PARTY TO THE OTHER PARTY, AND NEITHER PARTY MAKES ANY OTHER REPRESENTATIONS, WARRANTIES OR GUARANTEES OF ANY KIND WHATSOEVER, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, NON-INFRINGEMENT OR FITNESS FOR A PARTICULAR PURPOSE.

    		
                12.4
            	
                Compliance with Anti-Corruption Laws.
            

     

    Each party agrees that, in the performance of its obligations under this Agreement, it will not: (i) provide or promise to provide, directly or indirectly, any unlawful contribution, gift, entertainment, or other unlawful payment to any foreign or domestic government employee relating to political activity; (ii) take any action, directly or indirectly, that violates Foreign Corrupt Practices Act (“FCPA”), or any other applicable anti-corruption law of any foreign jurisdiction, including, without limitation, “use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay, or authorization of the payment of any money, or offer, gift, promise to give, or authorization of the giving of anything of value” to any “foreign official” (as is defined in the FCPA), any foreign political party or official thereof, or any candidate for foreign political office, to influence their acts or decisions in their official capacity, to induce them to do or omit from doing any act in violation of their lawful duty, or to secure any improper advantage in order to assist in obtaining business, or retaining business, or directing business to any person; and (iii) make or propose to make any bribe, payoff, influence payment, kickback, unlawful rebate, or other similar unlawful payment of any nature, including to healthcare providers or those employed by any governmental institutions.

     

    ARTICLE 13

    INDEMNIFICATION

    13.1
                  Indemnification by Catalent. Catalent shall indemnify, defend and hold harmless Client, its Affiliates, and their respective shareholders, directors, officers and employees (“Client Indemnitees”) from and against any and all suits, claims, losses, demands, liabilities, damages, costs and expenses (including reasonable attorneys’ fees and reasonable investigative costs) in connection with any suit, demand or action brought by any third party (“Losses”) directly or indirectly arising out of or resulting from (a) any breach of its representations, warranties or obligations set forth in this Agreement; (b) any negligence or willful misconduct by Catalent, its Affiliates, subcontractors, employees or agents; (c) any misrepresentation made by Catalent in this Agreement; (d) a violation of, or non-compliance with any Applicable Law by Catalent, its Affiliates, subcontractors, employees or agents in the performance of this Agreement; or (e) the infringement or alleged infringement of any trade secrets, copyrights, trademarks, trade names, or other proprietary or contractual rights of any third party arising from Catalent’s performance of services under this Agreement (except to the extent arising from the making or using of Client-supplied Materials, Client Confidential Information, or API), in each case of clauses (a) through (e) above, except to the extent that Client is obligated to indemnify any of the Catalent Indemnitees pursuant to Section 13.2 for such events.

    
    
        	 	
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    13.2
                  Indemnification by Client. Client shall indemnify, defend and hold harmless Catalent, its Affiliates, and their respective shareholders, directors, officers and employees (“Catalent Indemnitees”) from and against any and all Losses directly or indirectly arising out of or resulting from (a) any manufacture (other than due to negligence by or on behalf of Catalent), packaging (other than due to negligence by or on behalf of Catalent), promotion, distribution, sale or use of or exposure to the Product or Client-supplied Materials, including API and including product liability or strict liability, other than claims by Catalent employees arising from their handling of Client-supplied Materials in performing the services under this Agreement; provided, however, Client delivered to Catalent all known material information regarding such risks of handling or such information was otherwise in the public domain; (b) any negligence or willful misconduct of Client, its Affiliates, subcontractors, employees or agents, (c) any breach of its representations, warranties or obligations set forth in this Agreement; (d) the content of Client’s instructions to the extent they are followed by Catalent and violate Applicable Laws; (e) the conduct of any clinical trials utilizing Product or API; (f) Client’s exercise of control over the Processing, to the extent that Client’s instructions or directions violate Applicable Laws, (g) any actual or alleged infringement or violation of any third party patent, trade secret, copyright, trademark or other proprietary right by the use, as authorized, of intellectual property or other information provided by Client to Catalent, including Client-supplied Material; in each case of clauses (a) through (g) above, except to the extent that Catalent is obligated to indemnify any of the Client Indemnitees pursuant to Section 13.1 for such events.

    13.3
                  Indemnification Procedures. All indemnification obligations in this Agreement are conditioned upon the indemnified party (a) promptly notifying the indemnifying party of any claim or liability of which the indemnified party becomes aware (including a copy of any related complaint, summons, notice or other instrument); provided, that failure to provide such notice within a reasonable period of time shall not relieve the indemnifying party of any of its obligations hereunder except to the extent the indemnifying party is prejudiced by such failure, (b) allowing the indemnifying party to conduct and control the defense of any such claim or liability and any related settlement negotiations (at the indemnifying party’s expense), (C) cooperating with the indemnifying party in the defense of any such claim or liability and any related settlement negotiations (at the indemnifying party’s expense) and (D) not compromising or settling any claim or liability without prior written consent of the indemnifying party.

    ARTICLE 14

    LIMITATIONS OF LIABILITY

    14.1
                  CATALENT’S LIABILITY UNDER THIS AGREEMENT FOR ANY AND ALL CLAIMS FOR LOST, DAMAGED OR DESTROYED CLIENT-SUPPLIED MATERIALS, WHETHER OR NOT SUCH CLIENT SUPPLIED MATERIALS ARE USED IN THE SERVICES OR INCORPORATED INTO PRODUCT, CAUSED BY CATALENT’S NEGLIGENCE OR BREACH SHALL NOT EXCEED [***] PER INCIDENT.

    
    
        	 	
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    14.2
                  CATALENT’S TOTAL LIABILITY UNDER THIS AGREEMENT SHALL IN NO EVENT EXCEED THE TOTAL FEES PAID BY CLIENT TO CATALENT OR INVOICED BY CATALENT UNDER THIS AGREEMENT DURING THE TWELVE (12) MONTHS PRECEDING RELEASE OF THE BATCH OR SERVICES GIVING RISE TO THE CLAIM. DURING THE FIRST CONTRACT YEAR, SUCH LIMITATION SHALL BE THE GREATER OF (I) TOTAL FEES PAID BY CLIENT TO CATALENT OR INVOICED BY CATALENT FROM THE COMMENCEMENT DATE, OR (II) [***]. THE FOREGOING LIMITATION SHALL NOT BE DEEMED TO LIMIT CATALENT’S LIABILITY UNDER SECTION 13.1 (INDEMNIFICATION) WITH RESPECT TO AMOUNTS PAID BY CLIENT TO THIRD PARTIES FOR BODILY INJURY.

    14.3
                  NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES OR LOSS OF REVENUES, PROFITS OR DATA ARISING OUT OF PERFORMANCE UNDER THIS AGREEMENT, WHETHER IN CONTRACT OR IN TORT, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

    ARTICLE 15

    INSURANCE

    15.1       Each of Catalent and Client shall, at its own cost and expense, obtain and maintain in full force and effect during the Term the following: (A) Commercial General Liability Insurance with a per-occurrence limit of not less than $[***]; (B) Products and Completed Operations Liability Insurance with a per-occurrence limit of not less than $[***]; (C) Workers’ Compensation Insurance with statutory limits and Employers Liability Insurance with limits of not less than $[***] per accident; and (D) All Risk Property Insurance, including transit coverage, in an amount equal to the full replacement value of its property while in, or in transit to, a Catalent facility as required under this Agreement. Each party may self-insure all or any portion of the required insurance as long as, together with its Affiliates, its US GAAP net worth is greater than $[***] million or its annual EBITDA (earnings before interest, taxes, depreciation and amortization) is greater than $[***] million. If any of the required policies of insurance are written on a claims made basis, such policies shall be maintained throughout the Term and for a period of at least [***] years thereafter. Each required insurance policy, other than self-insurance, shall be obtained from an insurance carrier with an A.M. Best rating of at least A- VII. To secure the performance of its obligations under this Agreement, Client will at all times during the Term of this Agreement, maintain commercial general liability insurance providing coverage of no less than $[***] per occurrence, professional liability insurance providing coverage of no less than $[***] per occurrence, errors and omissions insurance providing coverage of no less than $[***] per occurrence and Workers’ Compensation Insurance with statutory amounts and Employers Liability Insurance with limits of not less than $[***] per accident; and Auto Liability insurance for owned, hired and non-owned vehicles in a minimum amount of $[***] combined single limit. If requested by the other party, the party will furnish certificates of insurance evidencing such coverages or the original of the insurance policies. No such policies required hereunder will be cancelable or subject to reduction of coverage or other modification except after [***] days’ prior written notice to the other party.

    
    
        	 	
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    ARTICLE 16

    TERM AND TERMINATION

    16.1
                  Term. This Agreement shall commence on the Effective Date and shall continue until the end of the seventh Contract Year, unless earlier terminated in accordance with Section 16.2 (as may be extended in accordance with this Section, the “Term”). The Term shall automatically be extended for successive 2-year periods unless and until one party gives the other party at least 12 months’ prior written notice of its desire to terminate as of the end of the then-current Term.

    16.2
                  Termination. This Agreement may be terminated immediately without further action:

    A.
                        by either party if the other party files a petition in bankruptcy, or enters into an agreement with its creditors, or applies for or consents to the appointment of a receiver, administrative receiver, trustee or administrator, or makes an assignment for the benefit of creditors, or suffers or permits the entry of any order adjudicating it to be bankrupt or insolvent and such order is not discharged within 30 days, or takes any equivalent or similar action in consequence of debt in any jurisdiction; or

    B.
                         by either party if the other party materially breaches any of the provisions of this Agreement and such breach is not cured within 60 days after the giving of written notice requiring the breach to be remedied; provided, that in the case of a failure of Client to make payments in accordance with the terms of this Agreement, Catalent may terminate this Agreement if such payment breach is not cured within 30 days of receipt of notice of non-payment from Catalent.

    C.
                         By Client upon one hundred eighty (180) days prior written notice to Catalent in the event Client ceases pursuit of Regulatory Approval for, or to offer for sale or to sell, Product, due to material regulatory, patient health, or intellectual property issues.

    16.3
                  Effect of Termination. Expiration or termination of this Agreement shall be without prejudice to any rights or obligations that accrued to the benefit of either party prior to such expiration or termination. In the event of a termination of this Agreement:

    A.
                        Catalent shall promptly return to Client, at Client’s expense and direction, any remaining inventory of Product or Client-supplied Materials; provided, that all outstanding invoices have been paid in full;

    
    
        	 	
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    B.
                         Client shall pay Catalent all invoiced amounts outstanding hereunder, plus, upon receipt of invoice therefor, for any (i) Product that has been shipped pursuant to Purchase Orders but not yet invoiced, (ii) Product Processed pursuant to Purchase Orders that has been completed but not yet shipped, and (iii) in the event that this Agreement is terminated for any reason other than by Client pursuant to Section 16.2(A) or (B), or by Catalent pursuant to Section 16.2(C), all Product in process of being Processed pursuant to Purchase Orders (or, alternatively, Client may instruct Catalent to complete such work in process, and the resulting completed Product shall be governed by clause (ii)); and

    C.
                         in the event that this Agreement is terminated for any reason other than by Client pursuant to Section 16.2(A) or (B), or by Catalent pursuant to Section 16.2(C), Client shall pay Catalent for all costs and expenses incurred, and all noncancellable commitments made, in connection with Catalent’s performance of this Agreement, so long as such costs, expenses or commitments were made by Catalent consistent with Client’s most recent Firm Commitment and the vendor’s minimum purchase obligations.

    16.4
                  Survival. The rights and obligations of the parties shall continue under Articles 11 (Intellectual Property), 13 (Indemnification), 14 (Limitations of Liability), 17 (Notice), 18 (Miscellaneous); under Articles 10 (Confidentiality and Non-Use) and 15 (Insurance), in each case to the extent expressly stated therein; and under Sections 7.3 (Payment Terms), 7.5 (Taxes), 7.6 (Client and Third Party Expenses), 9.1 (Recordkeeping), 9.6 (Recall), 12.3 (Limitations on Warranties), 16.3 (Effect of Termination) and 16.4 (Survival), in each case in accordance with their respective terms if applicable, notwithstanding expiration or termination of this Agreement.

    ARTICLE 17

    NOTICE

    All notices and other communications hereunder shall be in writing and shall be deemed given: (A) when delivered personally or by hand; (B) when delivered by facsimile transmission (receipt verified); (C) when received or refused, if sent by registered or certified mail (return receipt requested), postage prepaid; or (D) when delivered, if sent by express courier service; in each case to the parties at the following addresses (or at such other address for a party as shall be specified by like notice; provided, that notices of a change of address shall be effective only upon receipt thereof):

     

    
    
        	 	
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    	To Client:	TherapeuticsMD, Inc.
	 	6800 Broken Sound Parkway NW, Third Floor
	 	Boca Raton, Florida 33487
	 	Attn:  President
	 	 
	With a copy to:	Chief Legal Counsel at the above address
	 	 
	To Catalent:	Catalent Pharma Solutions, LLC
	 	2725 Scherer Drive N.
	 	St. Petersburg, FL 33716
	 	Attn: President, Softgel
	 	 
	With a copy to:	Catalent Pharma Solutions
	 	14 Schoolhouse Road
	 	Somerset, NJ  08873
	 	Attn: General Counsel (Legal Department)
	 	Facsimile: +1 (732) 537-6491

     

    ARTICLE 18

    MISCELLANEOUS

    18.1
                  Entire Agreement; Amendments. This Agreement, together with the Quality Agreement, constitutes the entire understanding between the parties, and supersedes any contracts, agreements or understandings (oral or written) of the parties, with respect to the subject matter hereof. For the avoidance of doubt, this Agreement does not supersede any existing generally applicable confidentiality agreement between the parties as it relates to time periods prior to the date hereof or to business dealings not covered by this Agreement. No term of this Agreement may be amended except upon written agreement of both parties, unless otherwise expressly provided in this Agreement.

    18.2
                  Captions; Certain Conventions. The captions in this Agreement are for convenience only and are not to be interpreted or construed as a substantive part of this Agreement. Unless otherwise expressly provided herein or the context of this Agreement otherwise requires, (A) words of any gender include each other gender, (B) words such as “herein”, “hereof”, and “hereunder” refer to this Agreement as a whole and not merely to the particular provision in which such words appear, (C) words using the singular shall include the plural, and vice versa, (D) the words “include(s)” and “including” shall be deemed to be followed by the phrase “but not limited to”, “without limitation” or words of similar import, (E) the word “or” shall be deemed to include the word “and” (e.g., “and/or”) and (F) references to “Article,” “Section,” “subsection,” “clause” or other subdivision, or to an Attachment or other appendix, without reference to a document are to the specified provision or Attachment of this Agreement. This Agreement shall be construed as if it were drafted jointly by the parties.

    
    
        	 	
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    18.3
                  Further Assurances. The parties agree to execute, acknowledge and deliver such further instruments and to take all such other incidental acts as may be reasonably necessary or appropriate to carry out the purpose and intent of this Agreement.

    18.4
                  No Waiver. Failure by either party to insist upon strict compliance with any term of this Agreement in any one or more instances will not be deemed to be a waiver of its rights to insist upon such strict compliance with respect to any subsequent failure.

    18.5
                  Severability. If any term of this Agreement is declared invalid or unenforceable by a court or other body of competent jurisdiction, the remaining terms of this Agreement will continue in full force and effect.

    18.6
                  Independent Contractors. The relationship of the parties is that of independent contractors, and neither party will incur any debts or make any commitments for the other party except to the extent expressly provided in this Agreement. Nothing in this Agreement is intended to create or will be construed as creating between the parties the relationship of joint ventures, co-partners, employer/employee or principal and agent. Neither party shall have any responsibility for the hiring, termination or compensation of the other party’s employees or contractors or for any employee benefits of any such employee or contractor.

    18.7
                  Successors and Assigns. This Agreement will be binding upon and inure to the benefit of the parties, their successors and permitted assigns. Neither party may assign this Agreement, in whole or in part, without the prior written consent of the other party, except that either party may, without the other party’s consent (but subject to prior written notice), assign this Agreement in its entirety to an Affiliate or to a successor to substantially all of the business or assets of the assigning party or the assigning party’s business unit responsible for performance under this Agreement.

    18.8
                  No Third Party Beneficiaries. This Agreement shall not confer any rights or remedies upon any person or entity other than the parties named herein and their respective successors and permitted assigns.

    18.9
                  Governing Law. This Agreement shall be governed by and construed under the laws of the State of Delaware, USA, excluding its conflicts of law provisions. The United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Agreement.

    18.10
              Dispute Resolution. Any dispute that arises between the parties in connection with this Agreement shall first be presented to the senior executives of the parties for consideration and resolution. If such executives cannot reach a resolution of the dispute within a reasonable time, then the parties may seek remedies in a court of law.

    18.11
              Prevailing Party. In any dispute resolution proceeding between the parties in connection with this Agreement, the prevailing party may be entitled to recover its reasonable attorney’s fees and costs in such proceeding from the other party.

    
    
        	 	
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    18.12
              Publicity. Neither party will make any press release or other public disclosure regarding this Agreement or the transactions contemplated hereby without the other party’s express prior written consent, except as required under Applicable Laws, by any governmental agency or by the rules of any stock exchange on which the securities of the disclosing party are listed, in which case the party required to make the press release or public disclosure shall use commercially reasonable efforts to obtain the approval of the other party as to the form, nature and extent of the press release or public disclosure prior to issuing the press release or making the public disclosure.

    18.13
              Right to Dispose and Settle. If Catalent requests in writing from Client direction with respect to disposal of any inventories of Product, Client-supplied Materials, equipment, samples or other items belonging to Client and is unable to obtain a response from Client within a reasonable time period after making reasonable efforts to do so, Catalent shall be entitled in its sole discretion to (A) dispose of all such items and (B) set-off any and all amounts due to Catalent or any of its Affiliates from Client against any credits Client may hold with Catalent or any of its Affiliates.

    18.14
              Force Majeure. Except as to payments required under this Agreement, neither party shall be liable in damages for, nor shall this Agreement be terminable or cancelable by reason of, any delay or default in such party’s performance hereunder if such default or delay is caused by events beyond such party’s reasonable control, including acts of God, law or regulation or other action or failure to act of any government or agency thereof, war or insurrection, civil commotion, destruction of production facilities or materials by earthquake, fire, flood or weather, labor disturbances, epidemic or failure of suppliers, vendors, public utilities or common carriers; provided, that the party seeking relief under this Section shall immediately notify the other party of such cause(s) beyond such party’s reasonable control. The party that may invoke this Section shall use commercially reasonable efforts to reinstate its ongoing obligations to the other party as soon as practicable. If the cause(s) shall continue unabated for 180 days, then both parties shall meet to discuss and negotiate in good faith what modifications to this Agreement should result from such cause(s).

    18.15
              Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument. Any photocopy, facsimile or electronic reproduction of the executed Agreement shall constitute an original.

    [Signature page follows]

     

    
    
        	 	
                    31
                    
                	 

    

    
        	 

    

    
     

    IN WITNESS WHEREOF, the parties have caused their respective duly authorized Representatives to execute this Agreement effective as of the Effective Date.

    	
                CATALENT PHARMA SOLUTIONS, LLC
            	 	
                THERAPEUTICSMD, INC.
            
	 	 	 
	By:	/s/ Aris Gennadios	 	 	By:	/s/ Robert Finizio	 
	Name:	Aris Gennadios, Ph.D.	 	Name:	Name: Robert Finizio
	Title:	President Softgel Technologies	 	Title:	Title: CEO

     

     

    Signature Page to Softgel Commercial Supply Agreement

     

    
    
        	 	
                    32
                    
                	 

    

    
        	 

    

    
     

    ATTACHMENT A

     

    SPECIFICATIONS

     

     

    I.        Client-supplied Materials (and associated specifications)

     

    		•	API

    		
                o
            	Estradiol 

     

    	Test	Acceptance Criteria	Analytical Method
	
                Appearance 
            	[***]	[***]
	
                Identification A (IR)
            	[***]	[***]
	
                Identification B (UV)
            	[***]	[***]
	
                Melting range
            	[***]	[***]
	
                Specific rotation
            	[***]	[***]
	
                Water 
            	[***]	[***]
	
                Assay (HPLC)

                 

            	[***]	[***]
	
                Microbial limits

                Total aerobic microbial count (TAMC):

            	[***]	[***]
	
                Total combined yeasts and mold count (TYMC):
            	[***]
	
                Escherichia in 1 g
            	[***]

     

    
    
        	 

    

    
        	 

    

    
     

    	
                Related substances (HPLC):

                 

                Estrone (Ph.Eur.A)

            	[***]	[***]
	17α-estradiol (Ph.Eur.B)	[***]
	Δ9(11)-estradiol (Ph.Eur.D)	[***]
	4-Cl-estradiol	[***]
	Individual unspecified impurity	[***]
	Total impurities	[***]
	
                Residual Solvents (GC):

                 

                [***]

            	[***]	[***]1
	[***]	[***]
	[***]	[***]
	[***]	[***]
	[***]	[***]
	[***]	[***]
	[***]	[***]
	[***]	[***]
	
                 

                Particle size by laser diffraction

                 

            	[***]	[***]2

    
        1 [***]

    
        2 [***]

    [***]
               
    

    HPLC = high performance liquid chromatography

    UV = ultraviolet

    IR = infrared

    GC = gas chromatograph

    Ph. Eur. or EP = European Pharmacopeia

    USP = United States Pharmacopeia

    cfu = colony forming unit

    ppm = parts per million

     

    
    
        	 

    

    
        	 

    

    
     

    		
                o
            	Progesterone 

     

    	Heavy Metals	[***]	[***]
	Assay of Progesterone-HPLC	[***]	[***]
	Related Substances HPLC	[***]	[***]	[***]
	[***]	[***]
	[***]	[***]
	[***]	[***]
	[***]	[***]
	[***]	[***]
	[***]	[***]
	[***]	[***]
	[***]	[***]
	[***]	[***]
	[***]	[***]
	[***]	[***]
	Residual Solvents	[***]	[***]	[***]
	[***]	[***]
	[***]	[***]
	[***]	[***]
	[***]	[***]
	[***]	[***]
	 	 	 	 	 

    
    
        	 

    

    
        	 

    

    
     

    	Palladium	[***]	[***]

     

    USP = United States Pharmacopeia, EP = European Pharmacopoeia
        
 RS = reference standard, CSR = current reference substance
        
 NLT = not less than; NMT = not more than
        
 HPLC = high performance liquid chromatography; GC = gas cinematograph; TLC = thin layer chromatography
        
 ICP-MS = inductively coupled plasma mass spectrometry
        
 ppm = parts per million
        
 DMF = drug master file

     

    II.       Product Specifications 

     

    	Progesterone 100 mg/Estradiol 0.5mg
	Test	Method	Limit
	Appearance	[***]	[***]
	Assay Estradiol (LC = 0.5mg/capsule
                
 (Tested at Lancaster Labs)	[***]	[***]
	Assay Progesterone (LC= 100mg/capsule
                
 (Tested at Lancaster Labs)	[***]	[***]
	Estradiol Related Compounds/Degradants
                
 (Tested at Lancaster Labs	[***]	[***]
	[***]
	[***]
	[***]
	Progesterone Related Compounds/Degradants
                
 (Tested at Lancaster Labs)	[***]	[***]
	[***]
	Estradiol Dissolution (Tested al KTP)	[***]	[***]
	[***]

     

    
    
        	 

    

    
        	 

    

    
     

    	Progesterone Dissolution	[***]	[***]
	[***]
	Water Content to Fill	[***]	[***]
	Total Aerobic Microbial Count	[***]	[***]
	Total Combined Yeasts and Molds	[***]	[***]
	E. coli	[***]	[***]
	Salmonella	[***]	[***]
	S.aureus	[***]	[***]

     

     

    	Progesterone 50mg/Estradiol 0.5mg
	Test	Method	Limits
	Appearance	[***]	[***]
	Assay Estradiol (LC=0.5mg/capsule)
                
 (Tested at Lancaster Labs)	[***]	[***]
	Assay Progesterone (LC=50mg/capsule)
                
 (Tested at Lancaster Labs)	[***]	[***]
	Estradiol Related Compounds/Degradants
                
 (Tested at Lancaster Labs)	[***]	[***]
	[***]
	[***]
	[***]
	Progesterone Related Compounds/Degradants
                
 (Tested at Lancaster Labs)	[***]	[***]
	[***]

     

    
    
        	 

    

    
        	 

    

    
     

    	Estradiol Dissolution (Tested at RTP)	[***]	[***]
	[***]
	Progesterone Dissolution	[***]	[***]
	[***]
	Water Content to Fill	[***]	[***]
	Total Aerobic Microbial Count	[***]	[***]
	Total Combined Yeasts and Molds	[***]	[***]
	E. coli	[***]	[***]
	Salmonella	[***]	[***]
	S. aureus	[***]	[***]

     

     

    	Progesterone 50mg/Estradiol 0.25mg
	Test	Method	Limits
	Appearance	[***]	[***]
	Assay Estradiol (LC=0.25mg/capsule)
                
 (Tested at Lancaster Labs)	[***]	[***]
	Assay Progesterone (LC=50mg/capsule)
                
 Tested at Lancaster Labs)	[***]	[***]
	Estradiol Related Compounds/Degradants
                
 (Tested at Lancaster Labs)	[***]	[***]
	[***]
	[***]
	[***]

     

    
    
        	 

    

    
        	 

    

    
     

    	Progesterone Related Compounds/Degradants
                
 (Tested at Lancaster Labs)	[***]	[***]
	[***]
	Estradiol Dissolution (Tested at RTP)	[***]	[***]
	[***]
	Progesterone Dissolution	[***]	[***]
	[***]
	Water Content to Fill	[***]	[***]
	Total Aerobic Microbial Count	[***]	[***]
	Total Combined Yeasts and Molds	[***]	[***]
	E. coli	[***]	[***]
	Salmonella	[***]	[***]
	S. aureus	[***]	[***]

     

     

     

    	Progesterone 100mg/Estradiol 1.0mg
	Test	Method	Limits
	Appearance	[***]	[***]
	Assay Estradiol (LC=1.0mg/capsule)
                
 (Tested at Lancaster Labs)	[***]	[***]
	Assay Progesterone (LC=100mg/capsule)
                
 (Tested at Lancaster Labs)	[***]	[***]

      

    
    
        	 

    

    
        	 

    

    
     

    	Estradiol Related Compounds/Degradants
                
 (Tested at Lancaster Labs)	[***]	[***]
	[***]
	[***]
	[***]
	Progesterone Related Compounds/Degradants
                
 (Tested at Lancaster Labs)	[***]	[***]
	[***]
	Estradiol Dissolution (Tested at RTP)	[***]	[***]
	[***]
	Progesterone Dissolution	[***]	[***]
	[***]
	Water Content to Fill	[***]	[***]
	Total Aerobic Microbial Count	[***]	[***]
	Total Combined Yeasts and Molds	[***]	[***]
	E. coli	[***]	[***]
	Salmonella	[***]	[***]
	S. aureus	[***]	[***]

     

     

     

    
    
        	 

    

    
        	 

    

    
     

     

    ATTACHMENT B

     

     

    UNIT PRICING, FEES AND MINIMUM REQUIREMENT

     

    	Product Unit Strength	Product Size	Batch Size	Initial Unit* Price for Total Softgels Shipped in Calendar Year
	[***]	[***]	For Incremental Volume over [***]	For Incremental Volume over [***]
	100mg Progesterone + 1mg Estradiol	[***] oval	[***]	$[***]	$[***]	$[***]	$[***]
	100mg Progesterone + 0.5mg Estradiol	[***] oval	[***]	$[***]	$[***]	$[***]	$[***]
	50mg Progesterone + 0.5mg Estradiol	[***] oval	[***]	$[***]	$[***]	$[***]	$[***]
	50mg Progesterone + 0.25mg Estradiol	[***] oval	[***]	$[***]	$[***]	$[***]	$[***]
	50mg Progesterone + 0.5mg Estradiol	[***] oval	[***]	$[***]	$[***]	$[***]	$[***]
	50mg Progesterone + 0.25mg Estradiol	[***] oval	[***]	$[***]	$[***]	$[***]	$[***]

     

    * One unit is [***] softgel capsules. Prices include full API release testing, cost of Processed softgels, Product full release testing and bulk packaging. Prices do not include cost of API, tooling or other Product-specific capital items, artwork, shipping, insurance or duty. Prices also do not include any testing, retesting or testing supplies other than as expressly set forth in the Specifications. Prices are based on certain assumptions as to manufacturing processes, storage conditions, etc.
        Accordingly, prices are subject to adjustment in the event any such assumptions are subject to revision in connection with the validation of the Product. The foregoing prices are for the United States only. Prices will be adjusted for the Processing of Product for use in other jurisdictions based upon actual differences in cost resulting from the intended use of Product in countries other than the United States.

     

    
    
        	 

    

    
        	 

    

    
     

     

    	MINIMUM REQUIREMENT
	Contract Year	Product 	Minimum Requirement*
	[***]	Across all four strengths	[***] Softgels
	[***]	Across all four strengths	[***] Softgels
	[***]	Across all four strengths	[***] Softgels
	[***]	Across all four strengths	[***] Softgels
	[***]	Across all four strengths	[***] Softgels
	[***]	Across all four strengths	[***] Softgels

     

    		*	Softgels shipped per Contract Year qualify towards the Minimum Requirement.

     

     

    	ADDITIONAL FEES
	Type of Fee	Amount	Payable
	Product Maintenance Fee	$[***] for the first strength; $[***] for each additional strength	
                [***]

                 

                 

            
	Hormone Suite Occupancy Fee	Waived based on minimum volume guarantees	N/A

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