Exhibit 2(f)
PRODUCT MANUFACTURING AND
TRANSITION SERVICES AGREEMENT
THIS PRODUCT MANUFACTURING AND TRANSITION SERVICES AGREEMENT
(this "Agreement"), dated as of October 9, 2001, is made by and between SEAL
GRAPHICS AMERICAS CORPORATION, a Delaware corporation, SEAL USA CORPORATION, a
Delaware corporation, and SEAL GRAPHICS TECHNOLOGIES CORPORATION, a Delaware
corporation, (collectively, the "Seal Parties"), and HUNT CORPORATION, a
Pennsylvania corporation ("Hunt").
W I T N E S S E T H:
WHEREAS, pursuant to an Asset Purchase Agreement, dated
October 7, 2001 (the "Purchase Agreement"), by and among Neschen AG, the Seal
Parties, Hunt, Hunt Holdings, Inc. ("HHI") and Hunt Graphics Americas
Corporation (the "Sellers"), the Seal Parties are purchasing, as of the date
hereof, certain assets of the Sellers related to the Graphics Products segment
of Hunt (the "Business") and the Seal Parties will purchase and assume control
over HHI's Sun Prairie, Wisconsin manufacturing facility (the "Wisconsin
Facility") where, prior to the consummation of the transactions contemplated by
the Purchase Agreement, the Sellers conducted the Business and the framing
materials business (the "Framing Business");
WHEREAS, the parties desire to enter into an agreement for the
provision of services by Hunt to the Seal Parties at Hunt's facility in
Statesville, North Carolina (the "Statesville Facility") and Hunt's facility in
Mississauga, Canada (the "Canada Facility" and together with the Statesville
Facility, the "Facilities") and by the Seal Parties to Hunt at the Wisconsin
Facility, for a limited period;
WHEREAS, the execution and delivery of this Agreement is a
condition to the closing of the transactions contemplated by the Purchase
Agreement; and
WHEREAS, capitalized terms used herein but not defined herein
shall have the meanings set forth in the Purchase Agreement.
NOW, THEREFORE, in consideration of the premises, the
covenants set forth herein and the benefits to be derived herefrom, the parties,
intending to be legally bound, hereby agree as follows:
ARTICLE I.
PRODUCT MANUFACTURE AND DISTRIBUTION
1.1. Product Manufacture and Distribution by Hunt.
(a) Manufacture. For a period of time determined in accordance with
Section 6.1 hereof) (the "Graphics Transition Period"), Hunt will (i)
manufacture and convert, on behalf of the Seal Parties, the products of the
Business set forth on Schedule 1.1(a) annexed hereto (the "Graphics Products")
which Graphics Products were produced at Hunt's film conversion center and
pouchboard assembly area within the Statesville Facility during the six month
period preceding the date of this Agreement.
(b) Procedures. Graphics Products shall be manufactured by Hunt in a
quantity sufficient to timely meet delivery requirements for orders processed by
Hunt pursuant to the terms of this Agreement, but in no event shall Hunt be
required to manufacture Graphics Products at a faster rate than the recent
historical practice prior to the Closing Date. Raw materials for production of
Graphics Products will be obtained by Hunt from existing suppliers, to the
extent practicable.
(c) Information. To effect a smooth transition to the Seal Parties of
the manufacturing process at the end of the Graphics Transition Period, Hunt
shall provide to the Seal Parties, beginning no later than three (3) days after
the date of this Agreement, during normal business hours and in a manner that
does not interfere with Hunt's operations, access to Hunt's specifications and
other information and details of the manufacturing process for each of the
Graphics Products. Additionally, Hunt shall afford to representatives of the
Seal Parties the opportunity to observe the manufacturing process, during normal
business hours and without material disruption to the manufacturing processes.
1.2. Product Manufacture by the Seal Parties.
(a) Manufacture. For a period of time determined in accordance with
Section 6.1 hereof (the "Framing Transition Period") the Seal Parties will
manufacture and distribute, on behalf of Hunt, the non-graphics products set
forth on Schedule 1.2(a) annexed hereto (the "Framing Products"), which products
were produced at the Wisconsin Facility, during the six month period preceding
the date of this Agreement.
(b) Procedures. Framing Products shall be manufactured by the Seal
Parties in a quantity sufficient to timely meet delivery requirements for orders
received by Hunt in the ordinary course of business, but in no event shall The
Seal Parties be required to manufacture Framing Products at a faster rate than
the recent historical practice prior to the Closing Date.
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1.3. Product Pricing. During the Graphics Transition Period, pricing and
terms of all promotions, rebates and allowances of Graphics Products will be
based upon the terms of Hunt with respect to such matters in effect immediately
prior to the date hereof. Any changes in pricing terms for Graphics Products
that the Seal Parties may negotiate with customers will be instituted promptly
after written notice thereof is provided to Hunt.
1.4. Product Distribution.
(a) During the Graphics Transition Period, Hunt will use its reasonable
best efforts to ship Graphics Products to customers under the Hunt freight
tariff and carrier contract agreements.
(b) Hunt shall request that the carriers used by it to ship Graphics
Products during the Graphics Transition Period offer the Seal Parties after the
Graphics Transition Period the same preferred rates.
(c) During the Framing Transition Period, the Seal Parties shall ship
Framing Products as reasonably directed by the Hunt Liaison(s) (as hereinafter
defined). It is understood and agreed that the Hunt Liaison(s) will, to the
extent practicable, direct the Seal Parties to distribute Framing Products
pursuant to the same timelines and using the same carriers as were in effect or
used prior to the Closing Date.
(d) In no event shall either party be held liable for any carrier
undercharges, or other liability relating to shipment of goods at a rate other
than the contract rate for such shipments, regardless of the shipment type
(i.e., less-than-truckload, truckload, small package or air freight).
1.5. Product Invoicing.
(a) During the Graphics Transition Period, Hunt will segregate orders
and invoices for the Business from Hunt's orders and invoices and Hunt will send
out all invoices to customers for Graphics Products delivered during the
Graphics Transition Period on letterhead of the Seal Parties. During the Framing
Transition Period, Hunt will continue to receive orders and invoice customers
for Framing Products in its sole discretion.
(b) No later than ten (10) days after the Closing Date, Hunt will
establish separate customer files for its customers that purchase both Graphics
Products and Framing Products. After the Closing Date, Hunt shall promptly refer
Graphics Products customers to the Seal Parties.
(c) During the Graphics Transition Period, Hunt will maintain separate
accounts receivable accounts records for the Business and will create and
maintain an aged accounts receivable trial balance thereof for the Seal Parties.
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(d) Customers transitioning over to the Seal Parties will be notified
by Hunt immediately to remit payment to a new series of lockboxes established by
the Seal Parties to be used only for the transactions of the Seal Parties, such
notice to be given promptly after such information is received by Hunt.
1.6. Lease to Hunt; Repair and Replacement of Included Manufacturing
Equipment.
(a) The Seal Parties hereby lease to Hunt for the rental amount of one
dollar ($1.00), the equipment and tooling required to perform the Hunt Services
(as hereinafter defined) (the "Leased Graphics Products Equipment") during the
Graphics Transition Period, unless this Agreement is terminated at an earlier
date pursuant to the provisions of Section 6.3 hereof.
(b) Hunt hereby leases to the Seal Parties for the rental amount of one
dollar ($1.00) the equipment, tools and other assets used in the production of
the Framing Products (the "Leased Framing Products Equipment") during the
Framing Transition Period, unless this Agreement is terminated at an earlier
date pursuant to the provisions of Section 6.3 hereof.
(c) During the term of this Agreement, Hunt shall (i) perform routine
maintenance on the Leased Graphics Products Equipment utilized by Hunt in
accordance with the terms hereof and, at the Seal Parties' expense, shall
promptly repair any item of Leased Graphics Products Equipment, which has
experienced excessive wear or damage, and (ii) perform routine maintenance on
the Leased Framing Products Equipment utilized by the Seal Parties in accordance
with the terms hereof and, at its own expense, shall promptly repair any item of
Leased Framing Products Equipment which has experienced excessive wear or
damage.
(d) Upon the expiration or termination of this Agreement, Hunt shall
remove the Leased Framing Products Equipment from the Wisconsin Facility as
promptly as reasonably practicable. The Seal Parties shall reasonably cooperate
with Hunt during Hunt's removal of such Leased Framing Products Equipment from
the Wisconsin Facility. Such removal shall be undertaken during normal business
hours and without material disruption to the operation of the Business.
(e) Upon the expiration or termination of this Agreement, the Seal
Parties shall remove the Leased Graphics Products Equipment from the Statesville
Facility as promptly as reasonably practicable. Hunt shall reasonably cooperate
with the Seal Parties during the Seal Parties' removal of such Leased Graphics
Products Equipment from the Statesville Facility. Such removal shall be
undertaken during normal business hours and without material disruption to the
business operations of Hunt at the Statesville Facility.
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1.7. Hunt Warranty.
(a) Hunt Warranty. Subject to the provisions and limitations of Section
4.1 of this Agreement insofar as they relate to the acts or omissions of the
Seal Liaison (as defined in such Section 4.1), Hunt warrants to the Seal Parties
that all Graphics Products manufactured by Hunt pursuant to the terms hereof
shall: (i) conform to all written warranties distributed by Hunt to customers in
connection with the Graphics Products, (ii) conform to the written
specifications for such Graphics Products, (iii) be substantially free from
defects in materials and workmanship, and (iv) be of the same quality,
merchantability and fitness as the Products manufactured by Hunt in the ordinary
course of the Business prior to the Closing Date.
(b) Remedies of the Seal Parties. In addition to the Seal Parties'
right to seek indemnification pursuant to Article V hereof for a breach of
Hunt's warranty set forth in Section 1.7(a), Hunt shall be obligated, at its
sole cost and expense, to ship replacement or repaired Graphics Products to any
customer of the Seal Parties receiving Graphics Products that fail to comply
with Hunt's warranty set forth in Section 1.7(a) above including the cost of
freight, insurance and any similar charges. IN NO EVENT SHALL EITHER PARTY BE
LIABLE TO THE OTHER PARTY FOR ANY CONSEQUENTIAL, INCIDENTAL OR SPECIAL DAMAGES
SUFFERED BY SUCH PARTY ARISING OUT OF THIS AGREEMENT, WHETHER RESULTING FROM
NEGLIGENCE OF THE OFFENDING PARTY OR OTHERWISE.
ARTICLE II.
TRANSITION SERVICES
2.1. Hunt Services. Hunt shall make available to the Seal Parties the
following services (the "Hunt Services"), at levels substantially similar to the
levels of the Hunt Services provided by Hunt in the in the ordinary course of
the Business prior to the Closing Date, in the following categories:
(i) Warehousing of finished goods Inventory, raw
materials and work in process at the
Facilities and packing of Products;
(ii) Customer services;
(iii) Accounting and related services;
(iv) Product distribution services;
(v) Other purchasing and production planning
services as may be reasonably requested from
time to time by the Seal Liaison; and
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(vi) Administrative support during normal business
hours for customer services, technical
services, distributions services, accounting
and information services, demand management
and credit and collections for the Wisconsin
Facility, the Canada Facility, the
Statesville Facility and the other facilities
of the Business located at San Bernadino,
California and Yuba City, California
requested by the Seal Parties;
2.2. Approvals for Acceptance of Orders. The Seal Parties will provide to
Hunt a list of customers of the Business whose orders for the Products may be
accepted without prior approval by the Seal Parties. Before acceptance of orders
for the Products from other persons, Hunt will request approval from the Seal
Parties.
2.3. The Seal Services.
(a) The Seal Parties shall make available to Hunt the following
services (the "Seal Services"):
(i) Warehousing of raw materials, work-in-process
and finished Framing Products inventory at
the Wisconsin Facility and packing of Framing
Products;
(ii) Product distribution services.
(b) Subject to the volume of available work with respect to Framing
Products, the Seal Parties will use their reasonable best efforts to maintain
and keep intact the assignments, responsibilities and other job duties of those
employees of Hunt who, prior to the Closing Date, performed the services to be
provided hereunder by the Seal Parties and will become employees of the Seal
Parties and perform the Seal Services as of the Closing Date (such employees
hereinafter referred to as the "Framing Personnel").
2.4. Excluded Services. Notwithstanding anything to the contrary contained
herein, neither party shall be required to provide legal services, research and
development services or facilities, sales and marketing, or insurance or risk
management services to the other party hereunder.
2.5. Standards of Services.
(a) Unless otherwise requested by the Seal Parties Liaison and approved
in advance by Hunt, Hunt shall cause its personnel providing the Hunt Services
to perform such services with the same degree of care, skill and diligence
utilized by such personnel in the ordinary course of the Business prior to the
Closing Date.
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(b) The Seal Parties shall not knowingly prevent or hinder the Framing
Personnel providing the Seal Services from performing such services with the
same degree of care, skill and diligence utilized by such personnel in the
ordinary course of the Business prior to the Closing Date.
2.6. Separate Business Unit. Prior to the Closing Date, Hunt will segregate
the Business on its financial books and records as a separate business unit to
facilitate the accounting required under this Agreement.
ARTICLE III.
PRODUCTION AND SERVICE FEES
3.1. Hunt Amount. In consideration of the Graphics Product manufacturing
and the Hunt Services to be provided by Hunt to the Seal Parties under Articles
I and II of this Agreement, Hunt shall be entitled to receive throughout the
Graphics Transition Period, an amount equal to the sum of the following
(collectively, the "Hunt Manufacture and Service Fees"):
(a) The actual cost of manufacturing each Graphics Product pursuant to
the terms of this Agreement, as set forth on Schedule 3.1(a) annexed hereto;
(b) The transportation costs for shipments out of Statesville and
Canada and between the two locations, which shall consist of direct cost of
freight and the indirect costs of the transportation and distribution
departments allocated to the Seal Parties as a percentage of sales by product
line;
(c) Sixty-Thousand Dollars ($60,000) per month as a fixed management
fee for the Hunt Services provided pursuant to Section 2.1, plus monthly
reimbursement of actual personnel costs based upon the hours worked by Hunt
employees in rendering the Hunt Services, as reflected on timesheets submitted
by Hunt employees.
(d) The costs of the Plant General and Administrative Departments
(including Customer Service, Information Sources, Accounting, Demand Management,
Technical Service, Credit and Collections) allocated to the Seal Parties in the
same manner as allocated to the Business as of the Closing Date (the "Graphics
Administrative Costs").
3.2. Seal Parties Amount. In consideration of the Framing Product
manufacturing and the Seal Services to be provided by the Seal Parties to Hunt
under Articles I and II of this Agreement, the Seal Parties shall be entitled to
receive throughout the Framing Transition Period an amount equal to the sum of
the following (collectively the "Seal Manufacture and Services Fees"):
(a) The actual cost of manufacturing each Framing Product pursuant to
the terms of this Agreement, as set forth on Schedule 3.2(a) annexed hereto; and
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(b) Any transportation costs incurred by the Seal Parties for shipments
of Framing Products to or for Hunt out of the Wisconsin Facility.
3.3. Inventory.
(a) The Seal Parties shall own all Graphics Products inventory produced
by Hunt at the Facilities during the Graphics Transition Period.
(b) Hunt shall own all Framing Products inventory produced by the Seal
Parties at the Wisconsin Facility.
3.4. Invoicing.
(a) Within ten (10) days of the end of each of Hunt's monthly fiscal
accounting periods during the Graphics Transition Period (including any
modifications as provided in Section 6.1 hereto), Hunt shall invoice the Seal
Parties for the amount of the Hunt Manufacture and Service Fees in respect of
the immediately preceding month (the "Hunt Monthly Invoice").
(b) Within ten (10) days of the end of each of the Seal Parties'
monthly fiscal accounting periods during the Framing Transition Period, the Seal
Parties shall invoice Hunt for the Seal Manufacturing and Services Fees for the
same period (the "Seal Monthly Invoice" and together with the Hunt Monthly
Invoice, the "Monthly Invoices").
(c) Each Monthly Invoice shall be accompanied by a statement and any
other documentation reasonably adequate to enable the recipient to verify the
amount of the costs incurred by the invoicing party. The net amount of each set
of Monthly Invoices shall be paid net fifteen (15) days via wire transfer.
3.5. Review of Statement.
(a) The recipient of a Monthly Invoice shall have the right to object
in good faith to a Monthly Invoice, provided the recipient notifies the
invoicing party in writing within thirty (30) days following its receipt of the
applicable Monthly Invoice (a "Dispute Notice").
(b) In the event a Dispute Notice is delivered, an interim Manufacture
and Service Fees amount shall be paid based upon the average of the Seal
Parties' and Hunt's good faith estimates of the disputed Manufacture and Service
Fees calculation within five (5) days after the delivery of such Dispute Notice
with an adjustment to be made, if required, upon a final resolution of such
dispute in accordance with this Section 3.5.
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(c) Any Dispute Notice shall set forth in reasonable detail a
description of the dispute. Within thirty (30) days after the delivery of any
such Dispute Notice, the Seal Parties and Hunt shall meet at a mutually
acceptable time and place and thereafter as often as such parties reasonably
deem necessary and shall, in good faith, cooperate in an attempt to resolve such
dispute.
(d) If any dispute is not finally resolved within thirty (30) business
days after the delivery of a Dispute Notice, as aforesaid, or if the parties
shall fail to meet within fifteen (15) days after the delivery of any such
Dispute Notice, then the dispute shall be resolved in accordance with the
dispute resolution provisions set forth in Section 7.7 hereof.
ARTICLE IV.
PERSONNEL; SUPERVISION BY THE SEAL PARTIES
4.1. Seal Parties Personnel.
(a) During the term of this Agreement, the Seal Parties shall designate
one or more representatives to monitor the manufacture of the Graphics Products
and the performance of the Hunt Services hereunder (each a "Seal Liaison"). Each
Seal Liaison shall at all times be the employee, agent or other representative
of the Seal Parties, and Hunt shall have no obligation, liability or other
responsibility for the acts or omissions of any Seal Liaison. At all times
during the term of this Agreement, each Seal Liaison shall comply with and
adhere to all applicable (i) federal, state and local laws, regulations,
statutes, rules and orders including, without limitation, those governing or
regulating employment, safety and health matters, and (ii) the rules and
regulations applicable to the employees and other personnel of Hunt at the
Facility where each Seal Liaison may be situated from time to time including,
without limitation, those governing employment, safety and health. Under no
circumstances will a Seal Liaison have the right or authority to direct any of
Hunt's personnel with respect to any matter covered hereby unless approved in
advance by Hunt.
(b) During the term of this Agreement, the Seal Parties' employees
shall at all times be the employees of the Seal Parties, and Hunt shall have no
obligation, liability or other responsibility for the acts or omissions of the
Seal Parties' employees, except for any such act or omission taken at the
direction of a Hunt Liaison. At all times during the term of this Agreement, the
Seal Parties shall comply with and adhere to all applicable (i) federal,
provincial, state and local laws, regulations, statutes, rules and orders
including, without limitation, those governing or regulating employment, safety
and health matters, and (ii) the rules and regulations applicable to the
employees and other personnel of the Seal Parties including, without limitation,
those governing employment, safety and health.
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4.2. Hunt Personnel. During the term of this Agreement, Hunt shall
designate one or more representatives to monitor the manufacture of the Framing
Products and the performance of the Seal Services provided hereunder (each a
"Hunt Liaison"). Each Hunt Liaison shall at all times be the employee, agent or
other representatives of Hunt, and the Seal Parties shall have no obligation,
liability or other responsibility for the acts or omissions of each Hunt
Liaison. At all times during the term of this Agreement, each Hunt Liaison shall
comply with and adhere to all applicable (i) federal, state and local laws,
regulations, statutes, rules and orders including, without limitation, those
governing or regulating employment, safety and health matters, and (ii) the
rules and regulations applicable to the employees and other personnel of the
Seal Parties at the Facility where each Hunt Liaison may be situated from time
to time including, without limitation, those governing employment, safety and
health.
4.3. Under no circumstances will a Hunt Liaison have the right or authority
to direct any of the Seal Parties' personnel with respect to any matter covered
hereby unless approved in advance by the Seal Parties. During the term of this
Agreement, Hunt's employees shall at all times be the employees of Hunt, and the
Seal Parties shall have no obligation, liability or other responsibility for the
acts or omissions of Hunt's employees, except for any such act or omission was
not at the direction of a the Seal Parties Liaison. At all times during the term
of this Agreement, Hunt shall comply with and adhere to all applicable (i)
federal, provincial, state and local laws, regulations, statutes, rules and
orders including, without limitation, those governing or regulating employment,
safety and health matters, and (ii) the rules and regulations applicable to the
employees and other personnel of Hunt including, without limitation, those
governing employment, safety and health.
ARTICLE V.
INDEMNIFICATION
5.1. Hunt Indemnification. Subject to any limitations set forth herein,
Hunt shall indemnify, defend and hold harmless the Seal Parties and its
affiliates, shareholders, officers and directors (each a "Seal Indemnified
Party") from and against any and all damages, losses, obligations, settlement
payments, liabilities, claims, actions or causes of action, encumbrances, costs
and expenses (collectively, "Damages") suffered, sustained, incurred or required
to be paid by a Seal Indemnified Party resulting from or relating to: (a) the
breach of any representation, warranty, covenant or agreement of Hunt contained
in or made pursuant to this Agreement or in any document or instrument referred
to herein or required to be delivered in connection with this Agreement,
including any schedule hereto or document delivered hereunder, or any facts or
circumstances constituting a breach, (b) any act or omission of Hunt, its
employees or agents in connection with this Agreement including, without
limitation, for personal injury (including death), property damage, violations
of any federal or state benefit claims, wages, or other compensation for any
matter whatsoever or (c) actions brought by any governmental or regulatory
agency, or any third party with standing to sue against a Seal Indemnified Party
for matters referred to in Section 1.4(d) (unless such overshort or damage
report is determined to be the fault of the Seal Parties), or (d) all reasonable
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costs and expenses (including, without limitation, reasonable attorneys' fees,
interest and penalties) incurred by a Seal Indemnified Party in connection with
any action, suit, proceeding, demand, claim, assessment or judgment incident to
any of the matters indemnified against in this Section 5.1, except, in each
case, for Damages arising out of or related to the directions of a Seal Liaison.
5.2. Seal Parties Indemnification. Subject to any limitations set forth
herein, the Seal Parties shall indemnify, defend and hold harmless Hunt and its
affiliates, shareholders, officers and directors (each a "Hunt Indemnified
Party") from and against any and all Damages suffered, sustained, incurred or
required to be paid by a Hunt Indemnified Party resulting from or relating to:
(a) the breach of any representation, warranty, covenant or agreement of the
Seal Parties contained in or made pursuant to this Agreement or in any document
or instrument referred to herein or required to be delivered in connection with
this Agreement, including any schedule hereto or document delivered hereunder,
or any facts or circumstances constituting a breach, (b) any act or omission of
the Seal Parties, its employees or agents in connection with this Agreement,
including, without limitation, for personal injury (including death), property
damage, or any other matter whatsoever, unless the same shall have resulted from
the acts or omissions of Hunt or (c) actions brought by any governmental or
regulatory agent, or any third party with standing to sue against a Hunt
Indemnified Party for matters referred to in Section 1.4(d) (unless such
overshort or damage report is determined to be the fault of Hunt), or (d) all
reasonable costs and expenses (including, without limitation, reasonable
attorneys' fees, interest and penalties) incurred by a Hunt Indemnified Party in
connection with any action, suit, proceeding, demand, claim, assessment or
judgment incident to any of the matters indemnified against in this Section 5.2,
except, in each case, for Damages arising out of or related to the directions of
a Hunt Liaison.
ARTICLE VI.
TERM, EXTENSION PAYMENTS AND TERMINATION
6.1. Term.
(a) The Graphics Transition Period shall terminate automatically one
hundred twenty (120) days from the date hereof; provided, however, that (i) the
Seal Parties, at their option, on no less than thirty (30) calendar days advance
written notice to Hunt, may elect to shorten the Graphics Transition Period to
the ending day specified in such notice.
(b) The Framing Transition Period shall terminate sixty (60) days from
the date hereof; provided, however, that Hunt, at its option, on no less than
thirty (30) calendar days advance written notice to the Seal Parties, may elect
to shorten the Framing Transition Period to the ending day specified in such
notice.
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(c) This Agreement shall terminate when both the Graphics Transition
Period and the Framing Transition Period have terminated (except for the
indemnification provisions and Article VII which shall survive termination).
6.2. Termination.
(a) This Agreement may be terminated by the non-breaching party for a
material breach of the other party's representations, warranties or covenants
contained herein by delivering written notice to the other party, provided that
the breaching party shall be afforded fifteen (15) days to cure any alleged
breach.
(b) This Agreement shall terminate automatically and without any notice
if either the Seal Parties or Hunt:
(i) is adjudicated an involuntary bankrupt, or a decree or order
approving a petition or answer filed against such party asking for
reorganization under the federal bankruptcy laws as now or hereafter amended, or
under the laws of any state, shall be entered, or if a petition for involuntary
bankruptcy has been filed against the such party and such petition (and the
proceeding arising therefrom, if any) has not been dismissed within thirty (30)
days of the filing;
(ii) files or admits to the jurisdiction of the court and the
material allegations contained in any petition pursuant, or purporting to be
pursuant, to the federal bankruptcy laws as now or hereafter amended, or such
party shall institute any proceeding for any relief under any bankruptcy or
insolvency law or any law relating to the relief of debtors, readjustment of
indebtedness, reorganization, arrangements, composition or extension; or
(iii) makes any assignment for the benefit of creditors or applies
for consent to the appointment of a receiver for itself or any of its
properties.
ARTICLE VII.
MISCELLANEOUS
7.1. Books and Records.
(a) Each party (in such capacity, a "Record-keeping Party") shall
maintain accurate and complete records of all expenses incurred in connection
with its manufacture of the products and the provision of services, in
accordance with such party historical accounting practices consistently applied.
All such records and all documents and materials will be maintained for a period
of four (4) years following termination of this Agreement (the "Retention
Period"). During the Retention Period, upon reasonable notice and during the
normal business hours, the other party shall have the right, at its sole cost
and expense, to audit, inspect and make copies of such records, documentation
and materials. Before destroying any of the aforementioned records upon
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expiration of the Retention Period, the Record-keeping Party shall first make a
written offer of such records to the other party. If the other party does not
respond to such written offer within fifteen (15) days of receipt of such
notice, the Record-keeping Party shall be permitted to destroy such records and
shall have no further obligations to the other party with respect to such
records.
(b) The Seal Parties will have access to all existing financial and
sales reporting currently available for the Business. In addition, the Seal
Parties will inform Hunt if any other special reporting is required and it will
be provided by Hunt to the Seal Parties, if possible, on a billable hours basis.
A designated financial representative from the Seal Parties will be given access
to all financial and transactional information concerning the Business.
7.2. Capital Expenditures.
(a) It is anticipated that during the Graphics Transition Period no
capital expenditures for the Seal Parties' account will be required for the
Business. No such expenditures shall be permitted without the approval of a
designated representative of the Seal Parties.
(b) It is anticipated that during the Framing Transition Period no
capital expenditures for Hunt's account will be required for the Framing
Business. No such expenditures shall be permitted without the approval of a
designated Hunt representative.
7.3. Assignment. No party hereto may transfer or assign this Agreement or
any of their respective obligations or rights herein without the consent of the
other party, except as provided in Section 11.5 in the Purchase Agreement.
7.4. Independent Contractor. In manufacturing the products and performing
the services hereunder, each party shall be considered to be an independent
contractor, and in no event shall the Seal Parties and Hunt be deemed to be
partners, co-venturers or agents of the other party. Unless otherwise approved
in advance no party hereunder shall have any authority to determine or control
any other party's manner of performing the manufacturing services or the
services except as to specify the (i) quantity of the products to be
manufactured within the limits set forth herein or, (ii) the types of the
services to be performed hereunder within the limits set forth herein.
7.5. Notices. All notices, requests for approval and other communications
hereunder shall be in writing and shall be deemed to have been fully given if
delivered or mailed, first class mail, postage prepaid or sent by a recognized
overnight delivery services as follows (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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(i) To Hunt, as follows:
Hunt Corporation
One Commerce Square
2005 Market Street
Philadelphia, Pennsylvania 19103
Attn: Donald L. Thompson, Chief Executive Officer
With a copy to:
John C. Bennett, Jr.
Drinker Biddle & Reath LLP
One Logan Square
18th & Cherry Streets
Philadelphia, Pennsylvania 19103
(ii) To Neschen as follows:
Neschen AG
Hans Neschen Strasse 1
D-3165 Bueckeburg
Germany
With a copy to:
William Harnisch, Esq.
Cummings & Lockwood
Four Stamford Plaza
P. O. Box 120
Stamford, Connecticut 06904-0120
7.6. Governing Law. This Agreement shall be governed by and construed in
accordance with laws of the State of Delaware, without regard to its principles
of conflicts of laws.
7.7. Dispute Resolution. All disputes arising out of or in connection with
this Agreement and the transactions contemplated herein shall be submitted to
arbitration pursuant to the Rules of Arbitration of the International Chamber of
Commerce. Such arbitration shall be held in Wilmington, Delaware and shall be
conducted in English by one (1) arbitrator appointed in accordance with said
Rules.
7.8. Severability. In the event that any one or more provisions of this
Agreement is held to be unenforceable, invalid or illegal under applicable law,
(i) such unenforceability, invalidity or illegality shall not affect any other
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provision of this Agreement, (ii) this Agreement shall be construed as if said
unenforceable, invalid or illegal provision had not been contained herein, and
(iii) the parties shall negotiate in good faith to replace the unenforceable,
invalid or illegal provision by such enforceable provision as has the affect
nearest to the provision being replaced.
7.9. Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement or any provision hereof.
7.10. No Third Party Beneficiaries. Except as expressly provided herein,
nothing in this Agreement shall entitle any person other than Hunt or the Seal
Parties, or their respective affiliates, successors and assigns permitted hereby
to any claim, cause of action, remedy or right of any kind.
7.11. Counterparts. This Agreement may be executed in any number of
counterparts, no one of which needs to be executed by the parties hereunder, and
this Agreement shall be binding upon the parties with the same force and effect
as if the parties had signed the same document, and each such signed counterpart
shall constitute an original of this Agreement.
7.12. Confidentiality.
(a) Each party hereunder recognizes that by reason of such party's
ownership of and/or operation of the Business or the Framing Business, as
applicable, such party may have acquired Confidential Information and trade
secrets concerning the operation of the Business or the Framing Business, the
use or disclosure of which could cause the other parties hereunder or the
Business or the Framing Business substantial loss and damages that could not be
readily calculated and for which no remedy at law would be adequate.
Accordingly, the parties hereunder covenant and agree that no party hereunder
will at any time, except in performance of the their obligations hereunder, if
any, to the other parties or without the prior written consent of the other
parties, directly or indirectly, disclose any Confidential Information that the
such party may have acquired or may acquire, or use such information in a manner
detrimental to the interests of the other parties or the Business or the Framing
Business, unless (i) such information becomes known to the public generally
through no fault of the parties hereunder, (ii) disclosure of such information
is required by law, or (iii) the party reasonably believes that such disclosure
is required in connection with the defense of a lawsuit against such party;
provided, however, that prior to disclosing any information pursuant to this
Section, such party shall give prior written notice of such proposed disclosure
to the other parties, provide the other parties with the reasonable opportunity
to contest such disclosure, and shall reasonably cooperate with all efforts to
prevent such disclosure.
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(b) The term "Confidential Information" means products, facilities,
intellectual property (including, without limitation, methods and trade
secrets), software, source code, systems, procedures, manuals, reports, price
lists, customer lists, financial information, business plans, prospects, or
opportunities of the parties hereunder or any of their affiliates related to the
Business or the Framing Business, as applicable.
7.13. Amendment. No modification or amendment of this Agreement shall be
binding upon any party hereunder unless in writing and signed by the parties
hereto.
7.14. Force Majeure. No party hereunder shall be responsible for failure or
delay in the delivery of any service or product hereunder, nor shall any party
be responsible for failure or delay in receiving such service or product, caused
by act of God or public enemy, war, government acts, regulations, or orders,
fire, flood, embargo, quarantine, epidemic, labor stoppage or other disruption,
accidents, unusually severe weather, or other cause beyond the control of the
defaulting party.
7.15. Entire Agreement. This Agreement, together with the Purchase
Agreement and all schedules attached thereto, constitutes the entire agreement
between the parties pertaining to the subject matter hereof, and supersedes all
prior agreements, understandings, negotiations and discussions, whether oral or
written, of the parties hereto regarding the subject matter hereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date and year first above written.
SEAL GRAPHICS AMERICAS CORPORATION
By:_________________________________________
Name:_______________________________________
Title:______________________________________
SEAL USA CORPORATION
By:_________________________________________
Name:_______________________________________
Title:______________________________________
SEAL GRAPHICS TECHNOLOGIES CORPORATION
By:_________________________________________
Name:_______________________________________
Title:______________________________________
HUNT CORPORATION
By:_________________________________________
Name:_______________________________________
Title:______________________________________
[SIGNATURE PAGE TO PRODUCT MANUFACTURING AND TRANSITION
SERVICES AGREEMENT]