This ASSET PURCHASE AGREEMENT (this "Agreement") is entered into this
18th day of November, 1998 by and between THERMAL LINE WINDOWS, L.L.P., (the
"Buyer"), a Minnesota registered limited liability partnership, and NORTH
COUNTRY THERMAL LINE, INC. (the "Seller"), a North Dakota corporation.
PRELIMINARY STATEMENTS:
The Seller is engaged in the business of manufacturing and selling
insulated glass units with Heat Mirror film with advanced technology spacers,
gases and sealants (the "Business");
The Seller desires to sell or otherwise transfer certain of its assets
and the Business; and
The Buyer desires to purchase the Business.
In consideration of these preliminary statements and the mutual
covenants, representations, warranties and agreements hereinafter set forth, and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
SECTION 1.1 TRANSFER OF ASSETS.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, at the Effective Time (as hereinafter defined) the Seller shall
transfer to the Buyer, free and clear of all claims, charges, liens, contracts,
rights, options, security interests, mortgages, encumbrances and restrictions
whatsoever (collectively, "Claims"), all of the assets, properties and rights
owned by the Seller or in which the Seller has any right or interest of every
type and description, real, personal and mixed, tangible and intangible,
confirmed or contingent (other than the Excluded Assets as hereinafter defined),
including, without limitation, business agreements, property, Inventory (as
defined in Section 2.30), goodwill, supplier lists, customer lists, licenses and
permits, processes, service marks, know-how, show-how, trade secrets, software
(including, without limitation, documentation and related source and object
codes), licenses thereto, computers and computer equipment, files and other
records, systems and processes, security deposits, contracts, arrangements and
understandings, oral and written, formal and informal, for work to be performed
and/or services to be provided, real estate and interests therein, leasehold and
other improvements, machines, machinery, equipment, furniture, fixtures,
supplies, all rights and claims under insurance policies and other contracts of
whatever nature, all causes of action, claims and demands of every nature
relating to the Assumed Liabilities, Contracts and Leases (as hereinafter
defined), the right to use the names "North Country Thermal Line" and "North
Country Glass" or any derivative of either, and all other assets, properties and
rights of every kind and nature owned by the Seller, whether or not specifically
referred to in this Agreement
(collectively, the "Transferred Assets"), all with the intention that the
Business shall be transferred to the Buyer as a going concern.
(b) Notwithstanding any provision of this Agreement to the
contrary, there shall be excluded from the Transferred Assets and retained by
the Seller the following assets (the "Excluded Assets"): (i) all cash on
hand and in banks (including all uncollected items); (ii) all billed and
unbilled accounts receivable; (iii) all other claims for services provided to
customers prior to the Effective Time; and (iv) all contracts, arrangements
and understandings which are not capable of being transferred or assigned
without the approval or consent of any party thereto other than the Seller if
such approval or consent has not been obtained, subject, however, to Sections
1.3 and 5.1 herein.
(c) The Seller shall transfer the Transferred Assets to the Buyer
pursuant to a Xxxx of Sale in substantially the form of EXHIBIT A, an
Assignment and Assumption Agreement in substantially the form of EXHIBIT B, a
Lease Agreement in substantially the form of EXHIBIT C, and such other
documents and instruments as the Buyer or its counsel may reasonably request.
(d) At any time and from time to time after the Closing Date, at
the request of the Buyer and without further consideration, the Seller shall
execute and deliver such other instruments of sale, transfer, conveyance,
assignment and confirmation as may be reasonably requested in order to more
effectively transfer, convey and assign to the Buyer and to confirm the
Buyer's title to the Transferred Assets.
SECTION 1.2 CONSIDERATION FOR THE TRANSFERRED ASSETS. In consideration
for the transfer of the Transferred Assets, upon the terms and subject to the
conditions set forth in this Agreement, the Buyer shall assume the Assumed
Liabilities pursuant to Section 1.3 hereof and shall make payments as follows:
(a) CLOSING PAYMENT. An initial payment of an aggregate of
$277,926 in cash on the Closing Date (defined below) by certified check, wire
transfer or other means of immediately available funds as follows
(i) $115,002 shall be paid to the Seller; and
(ii) $162,924 shall be paid to Norwest Bank, North
Dakota, National Association.
(b) POST CLOSING EARN-OUT. Post closing earn-out payments as set
forth on EXHIBIT D, which is incorporated herein by reference.
SECTION 1.3 ASSUMPTION OF LIABILITIES. The only obligations and
liabilities to be assumed by the Buyer in connection with its acquisition of the
Transferred Assets (the "Assumed Liabilities") are the obligations and
liabilities specifically listed on SCHEDULE 1.3 and obligations and liabilities
arising from the operation of the Business after the Effective Date, including
obligations under executory contracts listed on SCHEDULE 1.3 arising from the
operation of the Business after the Effective Date (provided such contracts are
not in default and are assigned in writing by the Seller with the written
consent of the other party or parties thereto, if necessary, and are delivered
to the Buyer on or prior to the Effective Date).
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The Buyer shall assume such obligations and liabilities pursuant to the
Assignment and Assumption Agreement substantially in the form of EXHIBIT B and
the Lease Agreement substantially in the form of EXHIBIT C. The Seller shall
remain liable for the payment of all other liabilities and obligations which
accrue prior or subsequent to the Effective Date. Except for the Assumed
Liabilities in the amount and to the extent provided in this Section 1.3, the
Buyer shall not assume or be responsible for any other liabilities or
obligations which relate in any manner to the operation of the Business prior to
the Effective Date, and the Seller shall indemnify, defend, and hold the Buyer
harmless from all of such obligations and liabilities as set forth in
Section 9.2 below. Operating expenses, including without limitation, rent
payable under real estate and equipment leases, staff commissions, unpaid
vacation and holiday pay and rebates to customers for which bills are received
or payment became due after the Effective Date with respect to periods both
prior to and after the Effective Date will be allocated to each of the Seller
and the Buyer on a pro-rata basis according to the ratio of pre-Effective Time
days to post-Effective Time days; promptly upon receipt of notice from the Buyer
of amounts so allocated to the Seller, the Seller shall remit full payment
therefor to the Buyer.
SECTION 1.4 ALLOCATION OF PURCHASE PRICE. The considerations paid
and the liabilities assumed by the Buyer pursuant to Sections 1.2 and 1.3
above shall be allocated among the Transferred Assets purchased hereunder as
set forth on SCHEDULE 1.4 attached hereto. The Seller and the Buyer each
hereby covenant and agree that neither of them will take a position on any
income tax return, before any governmental agency, or in any judicial
proceeding that is in any way inconsistent with the allocation set forth on
SCHEDULE 1.4. Each party shall duly and timely file Form 8594 with its
appropriate tax returns.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE SELLER
As an inducement to the Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, the Seller represents and
warrants to the Buyer as follows:
SECTION 2.1 ORGANIZATION AND QUALIFICATION. The Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of North Dakota. The nature of the Business or the Transferred Assets
does not require the Seller to be licensed or qualified in any other
jurisdiction. The Seller has made available to the Buyer complete and correct
copies of the Articles of Incorporation and Bylaws of the Seller as currently in
effect.
SECTION 2.2 CORPORATE POWER AND AUTHORITY. The Seller has the
corporate power and authority to own and hold its properties and to carry on its
business as now conducted, including the right to use the names "North Country
Thermal Line" and North Country Glass." The Seller (a) has the corporate power
and authority to execute, deliver and perform this Agreement and the Exhibits
and to deliver the Schedules hereto and the other documents and instruments
contemplated hereby (collectively this Agreement, the Exhibits and Schedules
hereto, and the other documents and instruments contemplated hereby shall
constitute the "Documents") and to consummate the transactions contemplated
hereby and thereby and (b) has taken all necessary corporate and shareholder
action to authorize and approve the execution, delivery and performance of this
Agreement and the other Documents and the consummation of
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the transactions contemplated hereby and thereby. This Agreement and the
other Documents have been duly and validly executed and delivered by the
Seller and constitute valid and binding obligations of the Seller,
enforceable against the Seller in accordance with their terms.
SECTION 2.3 VALIDITY, ETC. Except as set forth on SCHEDULE 2.3,
neither the execution and delivery of this Agreement or the other Documents, the
consummation of the transactions contemplated hereby or thereby, nor the
performance of this Agreement or the other Documents and such other agreements
in compliance with the terms and conditions hereof and thereof by the Seller
will (i) violate, conflict with or result in any breach of any trust agreement,
Articles of Incorporation, bylaw, judgment, decree, order, statute or regulation
applicable to the Seller, (ii) violate, conflict with or result in a breach,
default or termination or give rise to any right of termination, cancellation or
acceleration of the maturity of any payment date of any of the obligations of
the Seller or increase or otherwise affect the obligations of the Seller under
any law, rule, regulation or any judgment, decree, order, governmental permit,
license or order or any of the terms, conditions or provisions of any mortgage,
indenture, note, license, agreement or other instrument or obligation related to
the Seller or to the Seller's ability to consummate the transactions
contemplated hereby or thereby, except for such defaults (or rights of
termination, cancellation or acceleration) as to which requisite waivers or
consents have been obtained in writing and provided to the Buyer, (iii) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
the Seller or (iv) result in the creation of any Claim upon the Transferred
Assets.
SECTION 2.4 SUBSIDIARIES AND INVESTMENTS. The Seller has no
subsidiaries and does not own, directly or indirectly, any capital stock or
other equity or ownership or proprietary interest in any other corporation,
partnership, association, trust, joint venture or other entity.
SECTION 2.5 BOOKS AND RECORDS. The minute books of the Seller, which
have been and will be made available to the Buyer and its representatives,
contain accurate records of all meetings of and corporate actions or written
consents by the shareholders and Board of Directors of the Seller set forth in
such minute books.
SECTION 2.6 FINANCIAL STATEMENTS. The Seller has previously furnished
to the Buyer, and attached hereto as SCHEDULE 2.6 are, the compiled balance
sheet of the Seller as at December 31, 1997 and 1996, the related statements of
income and shareholder equity for the fiscal years then ended, the audited
balance sheet of the Seller as at December 31, 1995 and 1994, the related
statements of income, retained earnings and cash flows and the notes thereto for
the fiscal years then ended, and the internally prepared balance sheet of the
Seller (the "Balance Sheet") as at August 31, 1998 (the "Balance Sheet Date")
and the related statements of income for the eight (8) months then ended. All
such financial statements (the "Financial Statements") have been prepared in
accordance with generally accepted accounting principles ("GAAP") consistently
applied and were prepared from the books and records of the Seller. Such books
and records are complete and correct in all material respects, accurately
reflect all transactions of the Business, and have been made available to the
Buyer for examination. The Financial Statements fairly present the financial
position of the Seller as of the dates thereof and the results of its operations
and cash flows for the periods ended on the dates thereof. The Financial
Statements reflect reserves appropriate and adequate for all known material
liabilities and reasonably anticipated losses as required by GAAP. Since the
Balance Sheet Date (i) there has
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been no change in the assets, liabilities or financial condition of the
assets of the Seller from that reflected in the Balance Sheet except for
changes in the ordinary course of business consistent with past practice and
which have not been materially adverse, and (ii) none of the business,
prospects, financial condition, operations, property or affairs of the Seller
has been materially adversely affected by any occurrence or development,
individually or in the aggregate, whether or not insured against. The Seller
has disclosed to the Buyer all material facts relating to the preparation of
the Financial Statements.
SECTION 2.7 ABSENCE OF UNDISCLOSED LIABILITIES.
(a) Except as and to the extent of the amounts specifically
reflected or reserved against in the Balance Sheet, or except as set forth on
SCHEDULE 2.7, the Seller has no liabilities or obligations of any nature
whatsoever due or to become due, accrued, absolute, contingent or otherwise,
except for liabilities and obligations incurred since the date thereof in the
ordinary course of business and consistent with past practice. The Seller
does not know of, and has no reason to know of, any basis for the assertion
against the Seller of any liability or obligation not fully reflected or
reserved against in the Balance Sheet.
(b) The Seller is not bound by any agreement, or subject to any
charter or other corporate restriction or any legal requirement, which has,
or in the future can reasonably be expected to have, a material adverse
effect on the business or prospects of the Seller.
SECTION 2.8 EMPLOYMENT AND LABOR MATTERS.
(a) SCHEDULE 2.8 lists all employees and officers of the Seller
on the date hereof, along with the amount of the current annual salaries and
total compensation paid or due for services to each employee or officer for
the most recent fiscal year end and the year to date, and a full and complete
description of any commitments to such employees and officers with respect to
compensation payable thereafter. To the best knowledge of the Seller, no key
employee or group of employees has any plans to terminate employment with the
Seller.
(b) The Seller is not a party to or bound by any collective
bargaining agreement with any labor organization, group or association
covering any of its employees, and the Seller has no knowledge of any attempt
to organize the Seller's employees by any Person, unit or group seeking to
act as their bargaining agent. There are no pending or, to the best
knowledge of the Seller, threatened charges (by employees, their
representatives or governmental authorities) of unfair labor practices or of
employment discrimination or of any other wrongful action with respect to any
aspect of employment of any person employed or formerly employed by the
Seller. No union representation election relating to employees of the Seller
has been scheduled by any governmental agency or authority, no organizational
effort is being made with respect to any of such employees, and there is no
investigation of the Seller's employment policies or practices by any
governmental agency or authority pending or threatened. The Seller is not
currently, nor has it been, involved in labor negotiations with any unit or
group seeking to become the bargaining unit for any employees of the Seller.
The Seller has not experienced any material work stoppages, and to the best
knowledge of the Seller, no work stoppage is planned. The Company has
complied with all material laws and regulations relating to the employment of
labor, including, without limitation, any provisions thereof relating to
wages, hours, employment
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practices, terms and conditions of employment, collective bargaining, equal
opportunity or similar laws and the payment of social security and similar
taxes, and is not liable for any material arrears of wages or any material
taxes or penalties for failure to comply with any of the foregoing.
SECTION 2.9 REAL PROPERTY. The Seller owns no real property.
SECTION 2.10 POWERS OF ATTORNEY; ABSENCE OF LIMITATIONS ON COMPETITION;
GUARANTEES.
Except as set forth in SCHEDULE 2.10, (i) no power of attorney or
similar authorization given by the Seller presently is in effect or
outstanding; (ii) no contract or agreement to which the Seller is a party or
is bound or to which the Seller's properties or assets are subject limits the
freedom of the Seller to compete in any line of business or with any Person;
and (iii) the Seller is not a party to or bound by any guarantee of any debt
or obligation of any other Person.
SECTION 2.11 SIGNIFICANT SUPPLIERS. Set forth on SCHEDULE 2.11 is a
true and correct list of the Seller's ten largest suppliers for the most recent
twelve (12) month period ending December 31, 1997, and for the eight (8) month
period ending August 31, 1998, together with the amount of services attributable
to such suppliers expressed in dollars and as a percentage of total purchases.
None of the suppliers identified on SCHEDULE 2.11 has terminated, materially
reduced or threatened to terminate or materially reduce its supplies to the
Seller during the period covered by such schedule.
SECTION 2.12 GOVERNMENTAL APPROVALS. No registration or filing with, or
consent or approval of or other action by, any Federal, state or other
governmental agency or instrumentality is or will be necessary for the valid
execution, delivery and performance by the Seller of this Agreement.
SECTION 2.13 ABSENCE OF ADVERSE CHANGE; CONDUCT OF BUSINESS.
During the period from the Balance Sheet Date to and including the date
of this Agreement, except as set forth on SCHEDULE 2.13, the Seller has not
(i) borrowed or agreed to borrow any material amount of funds or incurred any
liability or obligation of any nature (whether accrued, absolute, contingent or
otherwise), or guaranteed or agreed to guarantee any obligations of others,
(ii) canceled any indebtedness owing to it or any claims that it might have
possessed, waived any material rights of substantial value or sold, leased,
encumbered, transferred or otherwise disposed of, or agreed to sell, lease,
encumber, or otherwise dispose of its assets or permitted any of its assets to
be subjected to any mortgage, pledge, lien, security interest, encumbrance,
restriction or charge of any kind, (iii) made any capital expenditure or
commitment therefor, (iv) increased its indebtedness for borrowed money or made
any loan to any Person, (v) written off as uncollectible any notes or accounts
receivable, except write-offs in the ordinary course of business charged to
applicable reserves, (vi) made any material change in any method of accounting
or auditing practice, (vii) otherwise conducted its business or entered into any
transaction, except in the usual and ordinary manner, or (viii) agreed, whether
or not in writing, to do any of the foregoing.
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SECTION 2.14 CERTAIN PRACTICES. None of the Seller, the Seller's
directors or officers, or to the best knowledge of the Seller, the Seller's
employees have, directly or indirectly, used any corporate funds for unlawful
contributions, gifts, entertainment, or other unlawful expenses relating to
political activity; made any unlawful payment to foreign or domestic government
officials or employees or to foreign or domestic political parties or campaigns
from corporate funds; violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended; established or maintained any unlawful or unrecorded
fund of corporate monies or other assets; made any false or fictitious entry on
the books or records of the Seller or any subsidiary; made any bribe, rebate,
payoff, influence payment, kickback, or other unlawful payment; given any favor
or gift which is not deductible for federal income tax purposes; or made any
bribe, kickback, or other payment of a similar or comparable nature, whether
lawful or not, to any person or entity, private or public, regardless of form,
whether in money, business or to obtain special concessions, or to pay for
favorable treatment for business secured or for special concessions already
obtained.
SECTION 2.15 COMPLIANCE WITH LAW; LICENSES AND PERMITS.
Except as set forth on SCHEDULE 2.15, the Seller has complied in all
material respects with all laws, ordinances, legal requirements, rules,
regulations and orders applicable to it, its operations, properties, assets,
products and services. Except as set forth on SCHEDULE 2.15, there is no
existing law, rule, regulation or order, and the Seller is not aware of any
proposed law, rule, regulation or order, whether Federal, state or local, which
would prohibit or materially restrict the Buyer from, or otherwise materially
adversely affect the Buyer in, conducting the Business in the manner heretofore
conducted by the Seller in any jurisdiction in which the Business is now
conducted. The Seller possesses all franchises, permits, licenses, certificates
and consents required from any governmental or regulatory authority in order for
the Seller to carry on its business as currently conducted and to own and
operate its properties and assets as now owned and operated and all of such
licenses and permits are set forth on SCHEDULE 2.15.
SECTION 2.16 EMPLOYEE BENEFITS.
(a) Set forth on SCHEDULE 2.16 is a list of all pension, profit
sharing, retirement, deferred compensation, multiemployer (as defined under
ERISA), stock purchase, stock option, incentive, bonus, vacation, severance,
disability, hospitalization, medical insurance, life insurance, fringe
benefit, welfare and other employee benefit plans, programs or arrangements
pursuant to which the Seller or its ERISA Affiliates provides (directly or
indirectly, individually or jointly through others) benefits or compensation
to or on behalf of employees or independent contractors or former employees
or former independent contractors of the Seller or its ERISA Affiliates,
whether formal or informal, whether or not written ("Employee Plan"). On
request by the Buyer, the Seller shall furnish a copy of each Employee Plan
and a copy of any related materials. The Seller will maintain the benefits
listed on SCHEDULE 2.16 in full force and effect through the Effective Date.
The Buyer shall have no obligation or liability of any kind or nature for any
compensation or benefits of any kind or nature to the employees or
consultants of the Seller for services rendered prior to the Effective Date.
(b) Neither the Seller nor any of its ERISA Affiliates is or has
been a participant in, or is or has been obligated to maintain or to make
contributions to, a multi-employer plan
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(within the meaning of ERISA Section 3(37) and ERISA Section 4001(a)(3)) or
an Employee Plan which is subject to Title IV of ERISA. Neither the Seller
nor any ERISA Affiliate has sponsored, contributed to or been obligated under
Title I or IV of ERISA to contribute to a "defined benefit plan" (as defined
in ERISA Section 3(35)).
(c) Neither the Seller nor its ERISA Affiliates have entered into
any contract, agreement or arrangement (whether oral or written) under which
the Seller or its ERISA Affiliates have assumed any liability relating to
their clients' retirement plans, nor have the Seller and/or its ERISA
Affiliates made any verbal representations that the use of any employees of
the Seller or its ERISA Affiliates would have no adverse consequence on such
client retirement plans.
(d) Termination of or withdrawal from any Employee Plan
immediately after the Closing Date would not subject the Buyer to any
liability, tax or penalty whatsoever.
(e) For purposes of this Section 2.16, the term "ERISA" shall
mean the Employee Retirement Income Security Act of 1974, as amended, and the
term "ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) which together with the Seller is treated as a single employer
under Section 414(b), (c), (m), (o) or (t) of the Code.
SECTION 2.17 FIXED ASSETS. SCHEDULE 2.17 contains a true and complete
list of all of the Transferred Assets which are fixed assets with a net book
value of greater than $1,000.00, whether owned or leased. Except as shown on
SCHEDULE 2.17, the Seller has good and marketable title to all of its fixed
assets, free and clear of all claims, liens, mortgages, charges and encumbrances
except as disclosed in the Balance Sheet. All of the Seller's fixed assets,
whether owned or leased, are adequate and usable for the purposes for which they
are currently used, are in good operating condition and repair and have been
properly maintained.
SECTION 2.18 INSURANCE. The Seller is, and will be through the
Effective Date, insured with insurers in respect of its properties, assets
and businesses as set forth on the attached SCHEDULE 2.18. SCHEDULE 2.18
lists the insurance coverage carried by the Seller, which insurance will
remain in full force and effect with respect to all events occurring prior to
the Effective Date. Except as set forth on SCHEDULE 2.18, the Seller (i) has
not failed to give any notice or present any claim under any such policy or
binder in due and timely fashion, (ii) has not received notice of
cancellation or non-renewal of any such policy or binder, (iii) is not aware
of any threatened or proposed cancellation or non-renewal of any such policy
or binder, (iv) has not received notice of any insurance premium which will
be materially increased in the future, and (v) is not aware of any insurance
premium which will be materially increased in the future. There are no
outstanding claims under any such policy which have gone unpaid for more than
45 days, or as to which the insurer has disclaimed liability.
SECTION 2.19 OUTSTANDING CONTRACTS. SCHEDULE 2.19 sets forth a
description of all existing contracts, agreements, leases, commitments, licenses
and franchises, which involve obligations or commitments by the Seller of
$10,000 or more and are not cancelable by the Seller without penalty within 30
days (collectively "Contracts"), whether written or oral, relating to the
Seller. The Seller has delivered or made available to the Buyer true, correct
and complete copies of all of the Contracts specified on SCHEDULE 2.19 which are
in writing, and such schedule sets
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forth a complete description of all Contracts which are not in writing. All
of the Contracts are in full force and effect and enforceable in accordance
with their terms, except to the extent that the enforceability thereof may be
subject to or affected by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, or other laws relating to or
affecting the rights of creditors generally. Except as set forth on SCHEDULE
2.19, the Seller and, to the best knowledge of the Seller, each other party
thereto has materially performed all the obligations required to be performed
by it, has received no notice of default and is not in default (with due
notice or lapse of time or both) under any of the Contracts. The Seller has
no present expectation or intention of not fully performing all its
obligations under each of the Contracts, and the Seller has no knowledge of
any breach or anticipated breach by the other party to any of the Contracts
to which the Seller is a party. Except as set forth on SCHEDULE 2.19, none
of the Contracts has been terminated; no notice has been given by any party
thereto of any alleged default by any party thereunder; and the Seller is not
aware of any intention or right of any party to declare another party to any
of the Contracts to be in default. Except as set forth on SCHEDULE 2.19,
there exists no actual or, to the best knowledge of the Seller, threatened
termination, cancellation or limitation of the business relationship of the
Seller by any party to any of the Contracts.
SECTION 2.20 OUTSTANDING LEASES. SCHEDULE 2.20 sets forth a description
of each agreement by which the Seller leases each parcel of real property (the
"Leased Parcels") used in connection with the Business (collectively, the
"Leases"). The Seller has delivered or made available to the Buyer true,
correct and complete copies of all of the Leases specified on SCHEDULE 2.20.
All rents due under the Leases have been paid. All of the Leases are in full
force and effect and enforceable in accordance with their terms, except to the
extent that the enforceability thereof may be subject to or affected by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium, or other laws relating to or affecting the rights of creditors
generally. Except as set forth on SCHEDULE 2.20, the Seller and to the best
knowledge of the Seller, each other party thereto has performed all the
obligations required to be performed by it, has received no notice of default
and is not in default (with due notice or lapse of time or both) under any of
the Leases. The Seller has no present expectation or intention of not fully
performing all its obligations under each of the Leases, and the Seller has no
knowledge of any breach or anticipated breach by the other party to any of the
Leases. Except as set forth on SCHEDULE 2.20, none of the Leases has been
terminated; no notice has been given by any party thereto of any alleged default
by any party thereunder; and the Seller is not aware of any intention or right
of any party to declare another party to any of the Leases to be in default.
There exists no actual or, to the best knowledge of the Seller, threatened
termination, cancellation or limitation of the business relationship of the
Seller with any party to any of the Leases.
SECTION 2.21 INTELLECTUAL PROPERTIES. SCHEDULE 2.21 contains an
accurate and complete list of all domestic and foreign letters patent, patents,
patent applications, patent licenses, software licenses and know-how licenses,
trade names, trademarks, copyrights, unpatented inventions, service marks,
trademark registrations and applications, service xxxx registrations and
applications and copyright registrations and applications, trade secrets or
other confidential proprietary information owned or used by the Seller in the
operation of the Business (collectively the "Intellectual Property"). Except as
set forth on SCHEDULE 2.21 and except for commercial software licensed for use
on personal computers, the Seller owns the entire right, title and interest in
and to the Intellectual Property, trade secrets and technology used in the
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operation of its business and each item constituting part of the Intellectual
Property and trade secrets and technology which is owned by the Seller has been,
to the extent indicated in SCHEDULE 2.21, duly registered with, filed in or
issued by, as the case may be, the United States Patent and Trademark office or
such other government entities, domestic or foreign, as are indicated in
SCHEDULE 2.21 and such registrations, filings and issuances remain in full force
and effect. There have been and are no pending or, to the best knowledge of the
Seller, threatened proceedings or litigation or other adverse claims affecting
or with respect to the Intellectual Property. There is, to the best knowledge
of the Seller, no reasonable basis upon which a claim may be asserted against
the Seller for infringement of any domestic or foreign letters patent, patents,
patent applications, patent licenses and know-how licenses, trade names,
trademark registrations and applications, common law trademarks, service marks,
service xxxx registrations or applications, copyrights, copyright registrations
or applications, trade secrets or other confidential proprietary information.
To the best knowledge of the Seller, no Person is infringing the Intellectual
Property.
SECTION 2.22 PROPRIETARY INFORMATION OF THIRD PARTIES.
Except as disclosed on SCHEDULE 2.22, no third party has claimed or,
to the best knowledge of the Seller, has reason to claim that any Person
employed by or consulting with the Seller ("Related Person") has (i) violated
or may be violating any of the terms or conditions of such person's
employment, non-competition or non-disclosure agreement with such third
party, (ii) disclosed or may be disclosing or utilized or may be utilizing
any trade secret or proprietary information or documentation of such third
party, or (iii) interfered or may be interfering in the employment
relationship between such third party and any of its present or former
employees. No third party has requested information from the Seller which
suggests that such a claim might be contemplated. Except as disclosed on
SCHEDULE 2.22, to the best knowledge of the Seller, no Related Person has
employed or proposes to employ any trade secret or any information or
documentation proprietary to any former employer and no Related Person has
violated any confidential relationship which such person may have had with
any third party, in connection with the development or sale of any service of
the Seller, and the Seller has no reason to believe there will be any such
employment or violation.
SECTION 2.23 TRANSACTIONS WITH AFFILIATES. Except as set forth on
SCHEDULE 2.23, no director, officer or shareholder of the Seller, or member of
the family of any such person, or any corporation, partnership, trust or other
entity in which any such person, or any member of the family of any such person,
has a beneficial interest greater than 5% or is an officer, director, trustee,
partner or holder of any equity interest greater than 5%, is a party to any
transaction with the Seller, including any contract, agreement or other
arrangement providing for the employment of, furnishing of services by, rental
of real or personal property from or otherwise requiring payments or involving
other obligations to any such person or firm.
SECTION 2.24 TAXES. Except as set forth on SCHEDULE 2.24, all federal,
state, local and foreign tax returns and tax reports required to be filed by the
Seller on or before the date hereof have been timely filed with the appropriate
governmental agencies in all jurisdictions in which such returns and reports are
required to be filed and all amounts shown as owing thereon have been paid. All
taxes (including, without limitation, income, accumulated earnings, property,
sales, use, franchise, excise, license, value added, fuel, employees' income
withholding
10
and social security taxes) which have become due or payable or are required
to be collected by the Seller or are otherwise attributable to any periods
ending on or before the Closing Date and all interest and penalties thereon,
whether disputed or not, have been paid or will be paid in full or adequately
reflected on the Balance Sheet or the Seller's books and records in
accordance with generally accepted accounting principles on or prior to the
Closing Date. Except as set forth on SCHEDULE 2.24, all deposits required by
law to be made by the Seller with respect to employees' withholding taxes
have been duly made, and as of the Closing Date all such deposits due will
have been made. The Seller has delivered to the Buyer true and complete
copies of all of the Seller's federal, state and local tax returns for the
fiscal periods ended December 31, 1997, 1996 and 1995 and all reports and
results of income tax audits, if any, related thereto. Except as set forth
on SCHEDULE 2.24, no examination of any tax return of the Seller is currently
in progress. There are no outstanding agreements or waivers extending the
statutory period of limitations applicable to any such tax return.
SECTION 2.25 LITIGATION. Except as set forth on SCHEDULE 2.25, there is
no (i) action, suit, claim, proceeding or investigation pending or, to the best
knowledge of the Seller, threatened against or affecting the Seller (whether or
not such Seller is a party or prospective party thereto), at law or in equity,
or before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
(ii) arbitration proceeding pending relating to the Seller or (iii) governmental
inquiry pending or threatened against or involving the Seller, and there is no
basis for any of the foregoing. The Seller has not received any opinion or
memorandum or legal advice from legal counsel to the effect that it is exposed,
from a legal standpoint, to any liability or disadvantage which may be material
to the business, prospects, financial condition, operations, property or affairs
of the Seller. There are no outstanding orders, writs, judgments, injunctions
or decrees served upon the Seller by any court, governmental agency or
arbitration tribunal against the Seller. There are no facts or circumstances
which may result in institution of any action, suit, claim or legal,
administrative or arbitration proceeding or investigation against, involving or
affecting the Seller or the transactions contemplated hereby. The Seller is not
in default with respect to any order, writ, injunction or decree known to or
served upon it from any court or of any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign. Except as disclosed on SCHEDULE 2.25, there is no action
or suit by the Seller pending or threatened against others.
SECTION 2.26 ENVIRONMENTAL MATTERS.
(a) COMPLIANCE. The Seller and all Leased Parcels are in compliance
with all applicable laws, rules, regulations, orders, ordinances, judgments and
decrees of all governmental authorities with respect to all environmental
statutes, rules and regulations. Except as set forth on SCHEDULE 2.26, the
Seller has not received notice of, nor does the Seller have knowledge of, any
past, present or future events, conditions, circumstances, activities,
practices, incidents, actions or plans of the Seller or the Seller's
predecessors, either collectively, individually or severally, which may
interfere with or prevent continued compliance with, or which may give rise to
any common law or legal liability or otherwise form the basis of any claim,
action, suit, proceeding, hearing, or investigation, based on or related to the
disposal, storage, handling, manufacture, processing, distribution, use,
treatment or transport, or the emission, discharge, release or threatened
release into the environment, of any Substance. As
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used in this Section 2.26, the term "Substance" or "Substances" shall mean
any pollutant, contaminant, hazardous substance, hazardous material,
hazardous waste or toxic waste, as defined in any presently enacted federal,
state or local statute or any regulation that has been promulgated pursuant
thereto. No part of any of the Leased Parcels has been listed or proposed
for listing on the National Priorities List established by the United States
Environmental Protection Agency, or any corresponding list by any state or
local authorities.
(b) ENVIRONMENTAL SUBSTANCE LIABILITY. No event has occurred or
condition exists or operating practice is being employed that could give rise to
liability on the part of the Seller, either at the present time or in the
future, for any losses, liabilities, damages (whether consequential or
otherwise), settlements, penalties, interest, expenses and costs of responses,
including any such liability on account of the right of any governmental or
private entity or person, and including closure expenses, costs of assessment,
containment, removal, or response (other than monitoring or transportation or
disposal of materials required to be transported or disposed of in the ordinary
course of business consistent with past practice) arising under any rule or
federal, state, or local statute, or any regulation that has been promulgated
pursuant thereto, or common law, as a result of or in connection with, or
alleged to be as a result of or in connection with, the following (collectively
the "Hazardous Activities"):
1. the handling, storage, use, transportation or disposal of any
Substances in or near or from the Leased Parcels;
2. the handling, storage, use, transportation or disposal of any
Substances by the Seller or its predecessors which Substances were a product,
by-product or otherwise resulted from the operations conducted by or on
behalf of the Seller or its predecessors;
3. any intentional or unintentional emission, discharge or release of
any Substances in or near or from facilities into or upon the air, surface
water, ground water or land or any disposal, handling, manufacturing,
processing, distribution, use, treatment, or transport of such Substances in or
near or from facilities by or on behalf of the Seller or its predecessors; or
4. the presence of any toxic or hazardous building materials
(including but not limited to friable asbestos or similar substances) in any
facilities of the Seller, including but not limited to the inclusion of such
materials in the exterior and interior walls, floors, ceilings, tile, insulation
or any other portion of building structures.
(c) ENVIRONMENTAL PERMITS. The Seller has obtained and holds all
registrations, permits, licenses, and approvals issued by or on behalf of any
federal, state or local governmental body or agency if any ("Environmental
Permits") that are required in connection with the operation by the Seller of
the Leased Parcels, the discharge or emission of Substances by the Seller
from the Leased Parcels or the generation, treatment, storage,
transportation, or disposal of any such Substances by the Seller. Such
Environmental Permits, which are described on SCHEDULE 2.26, are currently
effective and sufficient for the operation of the Leased Parcels and the
business of the Seller as currently conducted and intended to be conducted.
The Seller is in compliance with all terms and conditions of the
Environmental Permits, and is also in compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules, and timetables contained in those laws or provisions or
12
contained in any regulation, code, plan, order, decree, judgment, notice or
demand letter issued, entered, promulgated or approved thereunder and
applicable to the Seller.
(d) DELIVERIES. The Seller has delivered to the Buyer true and
complete copies and results of any reports, studies, analyses, tests, or
monitoring possessed or initiated by the Seller pertaining to Substances or
Hazardous Activities in, on, or under the Leases Parcels or concerning
compliance by the Seller or any other Person for whose conduct they are or may
be held responsible, with environmental statutes, rules and regulations.
SECTION 2.27 BROKER'S OR FINDER'S FEES. Except as set forth on SCHEDULE
2.27, no agent, broker, person or firm acting on behalf of the Seller is, or
will be, entitled to any commission or broker's or finder's fees from of the
Seller or from any person controlling, controlled by or under common control
with the Seller in connection with any of the transactions contemplated herein.
SECTION 2.28 YEAR-2000 COMPLIANCE.
(a) SCHEDULE 2.28 contains a true and complete list of all Systems
(as hereinafter defined), and each System is Year-2000 Compliant (as hereinafter
defined) to the extent indicated on SCHEDULE 2.28.
(b) As used throughout this Agreement, the following definitions
shall have the following meanings:
1. "External Systems" shall mean all services which are provided to
Seller by third parties and which are dependent on information technology,
including, but not limited to, any external payroll, accounting, or tax filing
services or any checking, savings, or other financial services.
2. "Internal Systems" shall mean all technology products and systems
generally operated or controlled in-house by Seller, or its employees, agents,
or independent contractors including, but not limited to, computers, computer
networks, telephone systems, voicemail systems, intercom systems, pager systems,
and software applications.
3. "Licensed Systems" shall mean all products and systems developed
by or for Seller which are licensed, sold, distributed, or otherwise transferred
by Seller to third parties.
4. "System" or "Systems" shall mean any, all, or any combination of
any Internal System, External System, or Licensed System.
5. "Year-2000 Compliant" shall mean, with respect to each System,
that such System is designed to be used before, during, and after the calendar
year 2000 A.D. and will accurately accept date input and process, store, and
output date data and date-related data, including, without limitation,
calculating, comparing, sorting, and sequencing such data and calculating leap
years before, during, and after the calendar year 2000 A.D. without any manual
intervention.
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SECTION 2.29 INVENTORY. All inventory of the Seller, whether or not
reflected in the financial statements or Balance Sheet, consists of a quality
and quantity usable and salable in the ordinary course of business, except for
obsolete items and items of below-standard quality, all of which have been
written off or written down to net realizable value in the financial statements
or the Balance Sheet, as the case may be (the "Inventory"). A list of Inventory
of the Seller as of Effective Time is set forth on SCHEDULE 2.29. As of the
Effective Time, the value of the Inventory was $97,600. All Inventories not
written off have been priced at the lower of cost or market on a first in, first
out basis. The quantities of each item of Inventory (whether raw materials,
work-in-process, or finished goods) are not excessive, but are reasonable in the
present circumstances of the Seller.
SECTION 2.30 DISCLOSURE. All Documents delivered or to be delivered by
or on behalf of the Seller in connection with this Agreement and the
transactions contemplated hereby are true, complete and correct. Neither this
Agreement, nor any of the other Documents contains any untrue statement of a
material fact or omits a material fact necessary to make the statements made by
the Seller herein or therein, in light of the circumstances in which made, not
misleading. There is no fact known to the Seller which materially and adversely
affects the business, prospects or financial condition of the Seller or its
properties or assets, which has not been set forth in the Documents.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE BUYER
As an inducement to the Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, the Buyer represents and
warrants to the Seller as follows:
SECTION 3.1 DISCLOSURE. All Documents delivered or to be delivered by
or on behalf of the Buyer in connection with this Agreement and the transactions
contemplated hereby are true, complete and correct. Neither this Agreement, nor
any of the other Documents contains any untrue statement of a material fact or
omits a material fact necessary to make the statements made by the Buyer herein
or therein, in light of the circumstances in which made, not misleading. There
is no fact known to the Buyer which may have a material adverse effect on the
Buyer's ability to pay its obligations under this Agreement, which has not been
set forth in the Documents.
ARTICLE 4
COVENANTS AND AGREEMENTS
SECTION 4.1 BEST EFFORTS. The Seller and the Buyer shall each use its
best efforts to procure upon reasonable terms and conditions all consents and
approvals, completion of all filings, all registrations and certificates, and
satisfaction of all other requirements prescribed by law which are necessary for
the consummation of the transactions contemplated by this Agreement and the
Buyer's ownership and operation of the Seller's Business after the
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Closing Date. Prior to the Closing Date, the Seller will use its best efforts
to preserve its relationships with its employees, customers and others having
business relationships with the Seller.
SECTION 4.2 TAX RETURNS. The Seller shall prepare and timely file, at
its sole expense, all of its required tax returns for all periods ending on or
prior to the Effective Date. The Seller shall be responsible for the payment
of, and will indemnify, defend and hold the Buyer harmless against all taxes due
or assessed which relate to the operations of the Business for all periods
ending on or prior to the Effective Date.
SECTION 4.3 PAYMENT OF LIABILITIES. Except for the Assumed
Liabilities, the Seller shall pay and satisfy in full all of its other
obligations and liabilities, of any nature whatsoever, which accrue prior or
subsequent to the Effective Date.
SECTION 4.4 SPECIAL PROVISIONS REGARDING EMPLOYEES OF THE SELLER.
(a) NEW EMPLOYEES OF THE BUYER. It is the intention of the
Buyer, and the Seller hereby acknowledges and agrees with such position, that
any employees of the Seller that the Buyer hires will be new employees of the
Buyer as of the Effective Date or the date of hire, whichever is later. Such
new employees shall be entitled only to such compensation and employee
benefits as are agreed to by such employees and the Buyer or as are otherwise
provided by the Buyer, in its sole discretion.
(b) HIRING OF EMPLOYEES. The Buyer will use its reasonable
efforts to hire the existing employees of the Seller engaged in the Business
in connection with its purchase of the Transferred Assets; provided, however,
that the Buyer shall be entitled to review employee records, conduct employee
interviews and employee screening procedures used by the Buyer in its
business, and may refuse to offer employment to any employee of the Seller if
such employee fails to meet the hiring criteria of the Buyer.
(c) NO CONTRIBUTIONS. After the Closing, the Seller shall make no
contributions to any Employee Plan on behalf of any former employee or
independent contractor of the Seller who is employed by the Buyer after the
Closing.
(d) COBRA ISSUES. The Buyer shall be a successor employer of
Seller solely for the purposes of providing continuation coverage to the
extent required under Code Section 4980B and ERISA Section 601 to
individuals receiving such continuation coverage on the Effective Date and
individuals qualifying (or who would otherwise qualify but for this Section
4.5) for such coverage commencing on or after the Effective Date. The Seller
shall be liable for any and all liabilities, costs, expenses and fees
whatsoever arising under Code Section 4980B and ERISA Section 601 before
the Effective Date.
SECTION 4.5 ACCOUNTS RECEIVABLE. The Seller shall remain responsible
for collection of all amounts due it on account of all Excluded Assets including
without limitation, the Seller's billed and unbilled accounts receivable. The
Buyer agrees that, in the event it shall receive payments from customers or
other persons ("Debtor" or "Debtors") indebted to the Seller
15
for services rendered by the Seller prior to the Effective Time, or for other
amounts, such payments shall be allocated and distributed as follows:
1. In the event that the Debtor is not indebted to the Buyer, any
such payment received shall be distributed to the Seller.
2. In the event that the Debtor is indebted both to the Seller and
to the Buyer (for services rendered by the Buyer after the Effective Time)
any such payment received shall be allocated and distributed as follows:
(a) A payment received which has been identified by the Debtor as
relating to a specific invoice or claim shall be allocated and distributed to
the creditor (the Seller or the Buyer) rendering such invoice or owning such
claim.
(b) In the case of a payment which has not been identified by the
Debtor as relating to a specific invoice or claim, the Buyer shall use its best
efforts to contact the Debtor to determine which specific invoice or claim the
Debtor intended to pay. The Buyer shall allocate and distribute the amount
received in accordance with such determination.
(c) In the event that the Buyer is not able to ascertain from the
Debtor the invoice or claim to which the payment was related, the Buyer shall
allocate and distribute the amount received as may be mutually determined by
either Xxxxx Xxxxxxxx on the one hand and Xxxxx X. XxxXxxxx on the other.
3. (a) For the purpose of identifying amounts due the Seller,
within twenty (20) days after the Effective Date, and by the 10th business day
of each month thereafter until April 30, 1999, the Seller shall provide to the
Buyer a list ("Seller's List") of all outstanding accounts receivable and
claims, including the invoice numbers, remaining due to it as of the last day of
the previous month.
(b) The Buyer agrees that, commencing in December 1998, it
will deliver to the Seller, on or before the 10th day of each month, an
Accounting of all amounts received by it during the preceding month from
Debtors shown on any of Seller's Lists and the Buyer will, together with such
Accounting, remit to the Seller all amounts due to the Seller from such
collections.
SECTION 4.6 POST-CLOSING MATTERS. The Buyer agrees to use its best
efforts to cause Norwest Equipment Financing to release the personal guarantees
of Xxxxx X. Xxxxxxxx in connection with certain of the Seller's debt obligations
on or before the expiration of sixty (60) days after the Closing Date.
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ARTICLE 5
CONDITIONS TO THE BUYER'S OBLIGATIONS
The obligation of the Buyer to make deliveries to the Seller pursuant to
Section 1.2 and 1.3 hereof and to consummate the other transactions contemplated
hereby is subject to the satisfaction, on or before the Closing Date, of the
following conditions each of which may be waived by the Buyer in its sole
discretion:
SECTION 5.1 CONSENTS. Except as set forth on SCHEDULE 5.1, all
requisite governmental approvals identified on such schedule and consents of
third parties identified on such schedule or otherwise identified by the Seller
as required to be received to prevent any material license, permit or agreement
relating to the Business from terminating prior to its scheduled termination, as
a result of the consummation of the transactions contemplated hereby, shall have
been obtained and all permits listed in SCHEDULE 2.15 shall have been
transferred or reissued to the Buyer.
SECTION 5.2 OPINION OF COUNSEL TO THE SELLER. The Buyer shall have
received from Xxxxxx Xxxxxx Xxxx & Xxxxxx, P.L.L.P., counsel to the Seller, an
opinion, dated as of the Closing Date, in form and substance reasonably
satisfactory to the Buyer, and to the following effect:
(a) The Seller is a corporation duly organized, validly existing and
in good standing under the laws of the State of North Dakota. The nature of the
Business or the Transferred Assets does not require the Seller to be licensed or
qualified in any other jurisdiction;
(b) The Seller has the corporate power and authority to own and hold
its properties and to carry on its business as now conducted. The Seller has
the corporate power and authority to execute, deliver and perform the Agreement
and the other Documents. The execution, delivery and performance of the
Agreement and the other Documents and the consummation of the transactions
contemplated hereby and thereby have been duly authorized and approved by all
necessary corporate action of the Seller. The Agreement and each of the other
Documents to be executed and delivered by the Seller have been duly executed and
delivered by, and constitute the legal, valid and binding obligation of the
Seller, enforceable against the Seller in accordance with their terms;
(c) There is no (i) action, suit, claim, proceeding or investigation
pending or, to the best knowledge of counsel, threatened against or affecting
the Seller (whether or not the Seller is a party or prospective party thereto),
at law or in equity, or before or by any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, (ii) arbitration proceeding pending relating to the Seller
or (iii) governmental inquiry pending or threatened against or involving the
Seller, and, to the best knowledge of counsel, there is no basis for any of the
foregoing. The Seller has not received any opinion or memorandum or legal
advice from legal counsel to the effect that it is exposed, from a legal
standpoint, to any liability or disadvantage which may be material to the
business, prospects, financial condition, operations, property or affairs of the
Seller. There are no outstanding orders, writs, judgments, injunctions or
decrees served upon the Seller by any court,
17
governmental agency or arbitration tribunal against the Seller. To the best
knowledge of counsel, there are no facts or circumstances which may result in
institution of any action, suit, claim or legal, administrative or
arbitration proceeding or investigation against, involving or affecting the
Seller or the transactions contemplated hereby. The Seller is not in default
with respect to any order, writ, injunction or decree known to or served upon
it from any court or of any Federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign. There is no action or suit by the Seller pending or threatened
against others;
(d) The execution and delivery of this Agreement and the other
Documents, the consummation of the transactions contemplated hereby and thereby,
and the performance of the Agreement and such other agreements in compliance
with the terms and conditions hereof and thereof by the Seller will not (i)
violate, conflict with or result in any breach of any trust agreement, articles
of incorporation, bylaw, judgment, decree, order, statute or regulation
applicable to the Seller, (ii) violate, conflict with or result in a breach,
default or termination or give rise to any right of termination, cancellation or
acceleration of the maturity of any payment date of any of the obligations of
the Seller or increase or otherwise affect the obligations of the Seller under
any law, rule, regulation or any judgment, decree, order, governmental permit,
license or order or any of the terms, conditions or provisions of any mortgage,
indenture, note, license, agreement or other instrument or obligation related to
the Seller or to the Seller's ability to consummate the transactions
contemplated hereby or thereby, except for such defaults (or rights of
termination, cancellation or acceleration) as to which requisite waivers or
consents have been obtained in writing and provided to the Buyer, (iii) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
the Seller or (iv) result in the creation of any Claim upon the Transferred
Assets; and
(e) The Xxxx of Sale conveys all right, title and interest in and to
the Transferred Assets.
SECTION 5.3 CHANGE OF CORPORATE NAME. The Seller shall amend its
respective Articles of Incorporation to change its name to a name other than
"North Country Thermal Line" and "North Country Glass." The Seller shall
deliver to the Buyer at the Closing, an executed copy of such Amendment to the
Articles of Incorporation, and any such other documents or consents needed to
effectuate such change in name, for filing with the Office of the North Dakota
Secretary of State. Also, the Seller shall withdraw its assumed trade or
fictitious names, which are set forth on SCHEDULE 5.3 hereto. The Seller shall
deliver to the Buyer at the Closing, an executed copy of such withdrawal, and
any such other documents or consents needed to effectuate such change in name,
for filing with the Office of the North Dakota Secretary of State.
SECTION 5.4 CLOSING DOCUMENTS. The Seller shall have delivered all of
the resolutions, certificates, documents and instruments required by this
Agreement.
SECTION 5.5 APPROVAL OF THE BUYER AND ITS COUNSEL. All actions,
proceedings, consents, instruments and documents required to be delivered by, or
at the behest or direction of, the Seller hereunder or incident to its
performance hereunder, and all other related matters, shall be reasonably
satisfactory as to form and substance to the Buyer and its counsel.
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ARTICLE 6
CONDITIONS TO THE SELLER'S OBLIGATIONS
The obligation of the Seller to transfer the Transferred Assets to the
Buyer and to consummate the other transactions contemplated hereby is subject to
the satisfaction, on or before the Closing Date, of the following conditions,
each of which may be waived by the Seller in its sole discretion:
SECTION 6.1 CLOSING DOCUMENTS. The Buyer shall have delivered all of
the resolutions, certificates, documents and instruments required by this
Agreement.
SECTION 6.2 APPROVAL OF THE SELLER AND ITS COUNSEL. All actions,
proceedings, consents, instruments and documents required to be delivered by, or
at the behest or direction of, the Buyer hereunder or incident to its
performance hereunder, and all other related matters, shall be reasonably
satisfactory as to form and substance to the Seller and its counsel.
ARTICLE 7
THE CLOSING AND CERTAIN CLOSING DELIVERIES
SECTION 7.1 TIME AND PLACE OF CLOSING. Upon the terms and subject to
the satisfaction or waiver of the conditions contained in this Agreement, the
closing of the transactions contemplated by this Agreement (the "Closing") shall
take place on the date hereof or on such other date and time as may be mutually
agreed upon by the parties (the "Closing Date"). The transactions contemplated
by this Agreement shall be effective as of 12:01 a.m. (the "Effective Time") on
November 1, 1998 (the "Effective Date").
SECTION 7.2 DELIVERIES BY THE SELLER. At the Closing, the Seller will
deliver or cause to be delivered to the Buyer the following:
(a) All required consents of third parties to the sale
conveyance, transfer, assignment and delivery of the Transferred Assets and
Business of the Seller hereunder, including but not limited to the consent of
Southwall Technologies Inc. to the assignment of the North American Heat
Mirror Value-Added Reseller Agreement and the consent of Norwest Equipment
Finance, Inc. to the assignment of the Lease Agreement;
(b) A certificate of the Secretary of the Seller certifying as of
the Closing Date, (i) a true, correct, and complete copy of the Articles of
Incorporation of the Seller and all amendments thereto as in effect on the
Closing Date; (ii) a true, correct, and complete copy of the bylaws of the
Seller and all amendments thereto as in effect on the Closing Date; (iii) a
true, correct, and complete copy of the resolutions approved and adopted by
the Seller's Board of Directors and Shareholders authorizing and approving
the execution, performance and delivery of this Agreement and the
transactions contemplated by this Agreement; (iv) Good Standing
19
Certificate from the North Dakota Secretary of State and all other
jurisdictions where the Seller is qualified to do business; and (v) the
incumbency of the duly authorized officers of the Seller.
(c) The affidavit of the Seller certifying as to its non-foreign
status in accordance with Section 1445(b)(2) of the Code;
(d) The Xxxx of Sale required by Section 1.1(c);
(e) The Assignment and Assumption Agreement required by
Section 1.1(c);
(f) The Lease Agreement required by Section 1.1(c);
(g) The First Amendment to the Earn-Out Schedule;
(h) The opinion of the Seller's counsel required by Section 5.2
above;
(i) Duly executed Amendment to the Articles of Incorporation of the
Seller and withdrawal of assumed trade names as required by Section 5.3 above;
(j) All other documents, instruments and writings required to be
delivered by the Seller at or prior to the Closing Date pursuant to this
Agreement or otherwise required in connection herewith.
SECTION 7.3 DELIVERIES BY THE BUYER. At the Closing, the Buyer will
deliver the following to or for the account of the Seller or certain of its
employees, as the case may be:
(a) The payment required by Section 1.2(a) above;
(b) The Assignment and Assumption Agreement required by Section 1.3;
(c) The Lease Agreement required by Section 1.3;
(d) The First Amendment to the Earn-Out Schedule;
(e) All other documents, instruments and writings required to be
delivered by the Buyer at or prior to the Closing Date pursuant to this
Agreement or otherwise required in connection herewith.
ARTICLE 8
[INTENTIONALLY OMITTED]
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ARTICLE 9
INDEMNIFICATION
SECTION 9.1 SURVIVAL. All representations and warranties in this
Agreement and the other Documents shall survive the Closing of the purchase of
the Transferred Assets contemplated hereby and any investigation at any time
made by or on behalf of any party for a period of three years and all such
representations and warranties shall expire on the third anniversary of the
Closing Date, except that (a) claims, if any, asserted in writing prior to such
third anniversary identified as a claim for indemnification pursuant to this
Article IX shall survive until finally resolved and satisfied in full; (b) any
Year-2000 Indemnification Obligations (as hereinafter defined) shall survive
until February 1, 2003 and until finally resolved and satisfied in full if
asserted on or prior to February 1, 2003; and (c) tax or environmental claims
arising from a breach of Section 2.24 or Section 2.26, respectively, shall
survive for the full period of the applicable statute of limitations, and until
finally resolved and satisfied in full if asserted on or prior to the expiration
of any such period. The representations and warranties shall not be affected or
otherwise diminished by any investigation at any time by or on behalf of the
party for whose benefit such representations and warranties were made.
SECTION 9.2 INDEMNIFICATION BY THE SELLER. Subject to the terms
herein, the Seller shall indemnify, defend, and hold the Buyer and the
respective officers, directors, and employees of the Buyer, and their successors
and assigns (the "Seller's Indemnitees") harmless from, against and with respect
to any claim, liability, obligation, loss, damage, assessment, judgment, cost or
expense of any kind or character, including reasonable attorneys' fees (the
"Damages"), arising out of or in any manner incident, relating or attributable
to:
(a) Any inaccuracy in any representation or breach of any
warranty of the Seller contained in this Agreement;
(b) Any failure by the Seller to perform or observe, or to have
performed or observed, in full, any covenant, agreement or condition to be
performed or observed by it under this Agreement;
(c) Reliance by the Buyer on any books or records of the Seller or
written information furnished to the Buyer pursuant to this Agreement by or on
behalf of the Seller in the event that such books and records or written
information are false or materially inaccurate; or
(d) Liabilities or obligations of, or claims against, the Buyer
(whether absolute, accrued, contingent or otherwise) relating to, or arising out
of, the operation of the Business prior to the Closing Date or facts and
circumstances relating specifically to the Business, the Leased Parcels, or the
Seller existing at or prior to the Closing Date, including but not limited to
matters set forth on SCHEDULE 2.25, whether or not such liabilities, obligations
or claims were known on such date, excluding only the Assumed Liabilities.
SECTION 9.3 NOTICE TO THE SELLER, ETC. If any of the matters as to
which the Seller's Indemnitees are entitled to receive indemnification under
Section 9.2 should entail litigation with or claims asserted by parties other
than the Seller, the Seller shall be given prompt notice thereof
21
and shall have the right, at his expense, to control such claim or litigation
upon prompt notice to the Buyer of his election to do so. To the extent
requested by the Seller, the Buyer, at its expense, shall cooperate with and
assist the Seller, in connection with such claim or litigation. The Buyer
shall have the right to appoint, at its expense, single counsel to consult
with and remain advised by the Seller in connection with such claim or
litigation. The Seller shall have final authority to determine all matters
in connection with such claim or litigation; PROVIDED, HOWEVER, that the
Seller shall not settle any third party claim without the consent of the
Buyer, which shall not be unreasonably denied or delayed.
SECTION 9.4 INDEMNIFICATION BY THE BUYER. The Buyer shall indemnify,
defend, and hold the Seller and its successors and assigns (the "Buyer's
Indemnitees") harmless from, against and with respect to any claim, liability,
obligation, loss, damage, assessment, judgment, cost or expense of any kind or
character, including reasonable attorneys' fees (the "Damages"), arising out of
or in any manner incident, relating or attributable to:
(a) Any inaccuracy in any representation or breach of warranty of
the Buyer contained in this Agreement;
(b) Any failure by the Buyer to perform or observe, or to have
performed or observed, in full, any covenant, agreement or condition to be
performed or observed by it under any of the Documents;
(c) Reliance by the Seller on any books or records of the Buyer or
reliance by the Seller on any written information furnished to the Seller
pursuant to this Agreement by or on behalf of the Buyer in the event that such
books and records or written information are false or inaccurate;
(d) The failure of the Buyer to pay or perform the Assumed
Liabilities, Contracts and Leases subsequent to the Closing Date; or
(e) Liabilities or obligations of, or claims against, the Seller
(whether absolute, accrued, contingent or otherwise) relating to, or arising out
of, the operation of the Business subsequent to the Closing Date.
SECTION 9.5 NOTICE TO THE BUYER, ETC. If any of the matters as to
which the Buyer's Indemnitees are entitled to receive indemnification under
Section 9.4 should entail litigation with or claims asserted by parties other
than the Buyer, the Buyer shall be given prompt notice thereof and shall have
the right, at its expense, to control such claim or litigation upon prompt
notice to the Seller of its election to do so. To the extent requested by the
Buyer, the Seller, at his expense, shall cooperate with and assist the Buyer, in
connection with such claim or litigation. The Seller shall have the right to
appoint, at its expense, single counsel to consult with and remain advised by
the Buyer in connection with such claim or litigation. The Buyer shall have
final authority to determine all matters in connection with such claim or
litigation; PROVIDED, HOWEVER, that the Buyer shall not settle any third party
claim without the consent of the Seller, which shall not be unreasonably denied
or delayed.
SECTION 9.6 SURVIVAL OF INDEMNIFICATION. The obligations to indemnify
and hold harmless pursuant to this Article IX shall survive the Closing of the
purchase of the Transferred
22
Assets contemplated hereby for a period of three years, notwithstanding any
investigation at any time made by or on behalf of any party, except that (a)
claims, if any, asserted in writing prior to such third anniversary
identified as a claim for indemnification pursuant to this Article IX shall
survive until finally resolved and satisfied in full; (b) any Year-2000
Indemnification Obligations (as hereinafter defined) shall survive until
February 1, 2003 and until finally resolved and satisfied in full if asserted
on or prior to February 1, 2003; and (c) tax or environmental claims arising
from a breach of Section 2.24 or Section 2.26, respectively, shall survive
for the full period of the applicable statute of limitations, and until
finally resolved and satisfied in full if asserted on or prior to the
expiration of any such period. As used in this Article IX, the term
"Year-2000 Indemnification Obligations" shall mean Seller's obligation to
indemnify, defend, and hold the Seller's Indemnitees harmless from, against
and with respect to any Damages arising out of or in any manner incident,
relating or attributable to (i) any claim or allegation that any Licensed
System is not Year-2000 Compliant and (ii) any claim arising from a breach of
Section 2.28.
SECTION 9.7 OFFSET. The Seller acknowledges and agrees that the Buyer
shall be entitled to offset any indemnity claim under Section 9.2 against any
payment due to the Seller under Section 1.2(b) hereof at the Buyer's sole
option.
ARTICLE 10
MISCELLANEOUS
SECTION 10.1 KNOWLEDGE OF THE SELLER. Where any representation or
warranty contained in this Agreement is expressly qualified by reference to the
best knowledge of the Seller, the Seller confirms that it has made due and
diligent inquiry of its President as to the matters that are the subject of such
representation and warranty.
SECTION 10.2 KNOWLEDGE OF THE BUYER. Where any representation or
warranty contained in this Agreement is expressly qualified by reference to the
best of knowledge of the Buyer, the Buyer confirms that it has made due and
diligent inquiry of its President as to the matters that are the subject of such
representations and warranties.
SECTION 10.3 "PERSON" DEFINED. "Person" shall mean and include an
individual, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or other department or agency
thereof.
SECTION 10.4 NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a party
may designate by notice hereunder, and shall be either (i) delivered by hand,
(ii) sent by recognized overnight courier, (iii) made by telecopy or facsimile
transmission, or (iv) sent by registered or certified mail, return receipt
requested, postage prepaid.
If to the Buyer:
23
c/o ThermoView Industries, Inc.
0000 Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, President
Fax No: (000) 000-0000
With a copy to:
Xxxxxx & Xxxxxxxx
000 X. Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Fax No: (000) 000-0000
If to the Seller:
Xxxxx X. Xxxxxxxx
X.X. Xxx 000
Xxxxxx, XX 00000
Fax No.: (000) 000-0000
With a copy to:
Xxxxxx Xxxxxx Xxxx & Xxxxxx, P.L.L.P.
Xxxxxxx Avenue and Xxxx Xxxxxx
X.X. Xxx 000
Xxxxxx, Xxxxx Xxxxxx 00000-0000
Attn: Xxxxx X. Xxxx
Fax No: (000) 000-0000
All notices, requests, consents and other communications hereunder shall be
deemed to have been given (i) if by hand, at the time of the delivery thereof to
the receiving party at the address of such party set forth above, (ii) if sent
by overnight courier, on the next business day following the day such notice is
delivered to the courier service, (iii) if made by telecopy or facsimile
transmission, at the time that receipt thereof has been acknowledged by
electronic confirmation or otherwise, or (iv) if sent by registered or certified
mail, on the fifth business day following the day such mailing is sent. The
address of any party herein may be changed at any time by written notice to the
parties.
SECTION 10.5 ENTIRE AGREEMENT. This Agreement and the other Documents
embody the entire agreement and understanding between the parties hereto with
respect to the subject matter hereof and supersede all prior oral or written
agreements and understandings relating to the subject matter hereof. No
statement, representation, warranty, covenant or
24
agreement of any kind not expressly set forth in the other Documents shall
affect, or be used to interpret, change or restrict, the express terms and
provisions of this Agreement.
SECTION 10.6 MODIFICATIONS AND AMENDMENTS. The terms and provisions of
this Agreement may be modified or amended only by written agreement executed by
all parties hereto.
SECTION 10.7 ASSIGNMENT/BINDING EFFECT. Neither this Agreement, nor any
right hereunder, may be assigned by any of the parties hereto without the prior
written consent of the other parties. This Agreement shall be binding upon, and
inure to the benefit of, the parties hereto and their respective heirs, personal
representatives, successors and permitted assigns.
SECTION 10.8 PARTIES IN INTEREST. Nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights or remedies of
any nature whatsoever under or by reason of this Agreement. Nothing in this
Agreement shall be construed to create any rights or obligations except among
the parties hereto, and no person or entity shall be regarded as a third-party
beneficiary of this Agreement.
SECTION 10.9 GOVERNING LAW. This Agreement and the rights and
obligations of the parties hereunder shall be construed in accordance with and
governed by the internal laws of the State of North Dakota without giving effect
to the conflict of law principles thereof.
SECTION 10.10 ARBITRATION. Any dispute or difference between the parties
hereto arising out of or relating to this Agreement shall be finally settled by
arbitration in accordance with the Commercial Rules of the American Arbitration
Association by a panel of three qualified arbitrators. The Seller and the Buyer
shall each choose an arbitrator and the third shall be chosen by the two so
chosen. If either the Seller or the Buyer fails to choose an arbitrator within
30 days after notice of commencement of arbitration or if the two arbitrators
fail to choose a third arbitrator within 30 days after their appointment, the
American Arbitration Association shall, upon the request of any party to the
dispute or difference, appoint the arbitrator or arbitrators to constitute or
complete the panel as the case may be. Arbitration proceedings hereunder may be
initiated by either the Seller or the Buyer making a written request to the
American Arbitration Association, together with any appropriate filing fee, at
the office of the American Arbitration Association in Bismarck, North Dakota.
All arbitration proceedings shall be held in Bismarck, North Dakota. Any order
or determination of the arbitral tribunal shall be final and binding upon the
parties to the arbitration and may be entered in any court having jurisdiction.
SECTION 10.11 SEVERABILITY. In the event that any arbitral tribunal of
competent jurisdiction shall finally determine that any provision, or any
portion thereof, contained in this Agreement shall be void or unenforceable in
any respect, then such provision shall be deemed limited to the extent that such
arbitral tribunal determines it enforceable, and as so limited shall remain in
full force and effect. In the event that such arbitral tribunal shall determine
any such provision, or portion thereof, wholly unenforceable, the remaining
provisions of this Agreement shall nevertheless remain in full force and effect.
SECTION 10.12 INTERPRETATION. The parties hereto acknowledge and agree
that: (i) the rule of construction to the effect that any ambiguities are
resolved against the drafting
25
party shall not be employed in the interpretation of this Agreement, and (ii)
the terms and provisions of this Agreement shall be construed fairly as to
all parties hereto and not in favor of or against any party, regardless of
which party was generally responsible for the preparation of this Agreement.
SECTION 10.13 HEADINGS AND CAPTIONS. The headings and captions of the
various subdivisions of this Agreement are for convenience of reference only and
shall in no way modify, or affect, or be considered in construing or
interpreting the meaning or construction of any of the terms or provisions
hereof.
SECTION 10.14 RELIANCE. The parties hereto agree that, notwithstanding
any right of any party to this Agreement to investigate the affairs of any other
party to this Agreement, the party having such right to investigate shall have
the right to rely fully upon the representations and warranties of the other
party expressly contained herein.
SECTION 10.15 EXPENSES. Each party shall pay its own fees and expenses
(including the fees of any attorneys, accountants, appraisers or others engaged
by such party) incurred in connection with this Agreement and the transactions
contemplated hereby whether or not the transactions contemplated hereby are
consummated.
SECTION 10.16 GENDER. All pronouns and any variation thereof shall be
deemed to refer to the masculine, feminine, neuter, singular, or plural as the
identity of the person or entity or the context may require.
SECTION 10.17 PUBLICITY. Except by the mutual agreement between the
Seller and the Buyer, no party shall issue any press release or otherwise make
any public statement with respect to the execution of, or the transactions
contemplated by, this Agreement except as may be required by law.
SECTION 10.18 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by different parties hereto on separate counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Buyer and the Seller have each caused this
Agreement to be executed by its duly authorized officer all as of the day and
year first above written.
Buyer: THERMAL LINE WINDOWS, L.L.P.
By: ICE, INC., General Partner
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------
Xxxxxxx X. Xxxxxxxx, President
26
By: BLIZZARD ENTERPRISES, INC., General
Partner
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------
Xxxxxxx X. Xxxxxxxx, President
Seller: NORTH COUNTRY THERMAL LINE, INC.
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------
Xxxxx X. Xxxxxxxx, President
27
