STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into on this 14th day of August, 1998 by and between XXXXX X. XXXXXXXX (the
"Seller") and THERMOVIEW INDUSTRIES, INC., a Delaware corporation (the
"Buyer").
PRELIMINARY STATEMENTS
The Seller owns all of the issued and outstanding shares of common
stock, with par value of $4.00 per share (the "Common Stock"), of Xxxxxxxx
Siding and Window, Inc., a North Dakota corporation (the "Company").
The Company is engaged in designing, selling and installing state of the
art custom vinyl new and replacement thermal paned windows and vinyl and
steel siding for the existing home market (the "Business").
The Buyer desires to purchase and the Seller desires to sell all of the
outstanding shares of Common Stock of the Company, upon the terms and subject
to the conditions set forth in this Agreement.
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 I. PURCHASE AND SALE OF STOCK
SECTION 1.1 SALE OF STOCK. Upon the terms and subject to the
conditions set forth in this Agreement, on the Closing Date the Seller agrees
to sell, assign, transfer and deliver to the Buyer, and the Buyer agrees to
purchase 24,408 shares of Common Stock, representing all of the issued and
outstanding shares of Common Stock of the Company. The certificate
representing the Common Stock shall be duly endorsed in blank, or accompanied
by a stock power duly executed in blank, by the Seller.
SECTION 1.2 CONSIDERATION. Upon the terms and subject to
satisfaction of the conditions set forth in this Agreement, in consideration
of the aforesaid sale, assignment, transfer and delivery of all of the issued
and outstanding shares of Common Stock, the Buyer will pay to the Seller
consideration as follows:
(a) A closing payment of $2,240,000 shall be made to the Seller in
cash on the Closing Date (defined below) by certified check, wire transfer or
other means of immediately available funds.
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(b) The Seller shall also be entitled to receive post-closing
earn-out as set forth on SCHEDULE 1.2, partially represented by a contingent
promissory note in substantially the form of EXHIBIT A (the "Contingent
Promissory Note") hereto as described in SCHEDULE 1.2.
SECTION 1.3 PURCHASE PRICE ADJUSTMENT. As soon as practicable but
within thirty (30) days after the Closing Date, the Seller, at his expense,
shall cause Xxxxxx X. Xxxxx, an independent certified public accountant, to
prepare a balance sheet of the Company immediately prior to the Effective
Time (the "Effective Time Balance Sheet") setting forth the tangible net
worth of the Company using accrual accounting and in conformance with
generally accepted accounting principles (the "Tangible Net Worth"). A copy
of the Effective Time Balance Sheet shall be promptly furnished to the Buyer.
If the Buyer disagrees with the Tangible Net Worth, the Buyer shall engage an
independent public accounting firm, at its expense, to audit the Effective
Time Balance Sheet and deliver a certified written report to the Seller
confirming the Tangible Net Worth ("Audited Tangible Net Worth"). If the
Seller fails to notify the Buyer within fifteen (15) days after receiving the
report from the accounting firm selected by the Buyer, such report shall be
deemed accepted for purposes of calculating Tangible Net Worth. If the
Seller should so notify the Buyer of a dispute concerning Audited Tangible
Net Worth, the Buyer shall then engage another big-five independent
accounting firm that is mutually acceptable to the Buyer and the Seller to
resolve such dispute and such firm shall notify the Buyer and the Seller of
its resolution of such dispute within two weeks of its engagement by the
Buyer. The cost of services provided by such big-five accounting firm shall
be borne equally by the Buyer and the Seller. Any such resolution shall be
final and binding on all parties hereto for the purposes of calculating
Tangible Net Worth. In the event the Tangible Net Worth is less than
$770,000, the Seller shall pay such deficit portion to the Buyer within
thirty (30) days following the later of its determination of the Tangible Net
Worth, the Buyer's audit or the resolution of any dispute by such big-five
accounting firm on a dollar-for-dollar basis. In the event the Tangible Net
Worth is greater than $770,000, the Buyer shall pay the excess amount, on a
dollar-for-dollar basis, to the Seller within thirty (30) days following the
later of either Xxxxxx X. Xxxxx'x determination of the Tangible Net Worth or
the determination of Audited Tangible Net Worth. For purposes of this
Section 1.3, "Tangible Net Worth" shall mean the net book value of the
Company at the Effective Time determined in accordance with generally
accepted accounting principles applied on a consistent basis. Net book value
shall be calculated by subtracting the book value of all of the liabilities
of the Company from the book value of all tangible assets of the Company.
ARTICLE II. 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 OWNERSHIP OF STOCK. The Seller represents and warrants
(a) that he owns all of the issued and outstanding shares of Common Stock
free and clear of all pledges, security interests, liens, charges,
encumbrances, equities, claims, options or
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limitations of every kind ("Claims"), and (b) that the delivery to the Buyer
of the Common Stock pursuant to the provisions of this Agreement will
transfer to the Buyer valid title thereto, free and clear of all Claims.
SECTION 2.2 AUTHORITY RELATIVE TO THIS AGREEMENT. The Seller has
full legal power, capacity 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. 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 FOREIGN PERSON. The Seller is not a foreign person as
that term is defined in Section 1445(f)(3) of the Code and applicable
regulations.
SECTION 2.4 ORGANIZATION, QUALIFICATION AND CORPORATE POWER.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of North Dakota. The Company is
qualified to do business as a foreign corporation and is in good standing in
the states set forth on SCHEDULE 2.4. The nature of the Business does not
require the Company 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 Company as currently in effect.
The Company has the corporate power and authority to own, lease, operate and
hold its properties and to carry on its business as now conducted, including
the right to use the name "Xxxxxxxx Century Siding and Window" or any
derivative thereof.
SECTION 2.5 CAPITALIZATION. The Company has authorized capital
consisting of 25,000 shares of common stock, with par value of $4.00 per
share, of which 24,408 shares are issued and outstanding and no shares are
held as treasury stock. All of the outstanding shares of the Company have
been duly authorized and validly issued and are fully paid and nonassessable.
None of the outstanding shares of the Company has been issued in violation
of any preemptive right. There are no outstanding options, warrants, rights,
calls, commitments, conversion rights, rights of exchange, plans or other
agreements of any character providing for the purchase, issuance or sale of
any shares of capital stock of the Company, other than as contemplated by
this Agreement.
SECTION 2.6 SUBSIDIARIES AND INVESTMENTS. The Company 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.
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SECTION 2.7 BOOKS AND RECORDS. The minute books of the Company,
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
Company set forth in such minute books. The Company does not have any of its
records, systems, controls, data or information recorded, stored, maintained,
operated or otherwise wholly or partly dependent upon or held by any means
(including any electronic, mechanical or photographic process, whether
computerized or not) which (including all means of access thereto and
therefrom) are not under the exclusive ownership and direct control of the
Company.
SECTION 2.8 FINANCIAL STATEMENTS. The Seller has previously
furnished to the Buyer, and attached hereto as SCHEDULE 2.8 are, the audited
balance sheets of the Company as of December 31, 1997 and 1996, December 31,
1996 and 1995 and December 31, 1995 and 1994 and the related audited
statements of income, changes in retained earnings, and cash flows for the
years then ended and the unaudited balance sheet of the Company (the "Balance
Sheet") as at June 30, 1998 (the "Balance Sheet Date") and the related
statement of income for the six (6) 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 Company. 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 Company as of 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 been no change in the assets, liabilities or
financial condition of the Company 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 Company 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 2.9 EMPLOYMENT AND LABOR MATTERS.
(a) SCHEDULE 2.9 lists all employees, leased employees,
independent contractors and officers of the Company on the date hereof, along
with the amount of the current annual salaries and total compensation paid or
due for services to each employee, leased employee, independent contractor 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, leased
employees, independent contractors and officers with respect to compensation
payable thereafter. To the best knowledge of the Seller, (1) no key employee
or group of employees has any plans to terminate employment with Company and
(2) no independent contractor has any plans to terminate its services to the
Company and the Company has no plans to
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terminate its relationship with any of its independent contractors.
(b) The Company 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 Company's employees by any Person, unit or group seeking to
act as their bargaining agent. There are no pending or 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 Company. No union representation election relating
to employees of the Company 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 Company's employment policies
or practices by any governmental agency or authority pending or threatened.
The Company 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 Company. The Company has not experienced any material work
stoppages, and to the best knowledge of the Seller, no work stoppage is
planned.
SECTION 2.10 REAL PROPERTY. The Company owns no real property.
SECTION 2.11 POWERS OF ATTORNEY; ABSENCE OF LIMITATIONS ON COMPETITION;
GUARANTEES.
Except as set forth in SCHEDULE 2.11, (i) no power of attorney or
similar authorization given by the Company presently is in effect or
outstanding; (ii) no contract or agreement to which the Company is a party or
is bound or to which the Company's properties or assets are subject limits
the freedom of the Company to compete in any line of business or with any
Person; and (iii) the Company is not a party to or bound by any guarantee of
any debt or obligation of any other Person.
SECTION 2.12 SIGNIFICANT SUPPLIERS. Set forth on SCHEDULE 2.12 is a
true and correct list of the Company's ten largest suppliers for the most
recent twelve (12) month period ending December 31, 1997, and most recent
seven (7) month period ending July 31, 1998 together with the amount
attributable to such suppliers expressed in dollars and as a percentage of
total supplies purchased. None of the suppliers identified on SCHEDULE 2.12
has terminated, materially reduced or threatened to terminate or materially
reduce its supply of products or services to the Company during the period
covered by such schedule.
SECTION 2.13 GOVERNMENTAL APPROVALS. Except as set forth on SCHEDULE
2.13, 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 2.14 VALIDITY, ETC. Except as set forth on SCHEDULE 2.14,
neither the
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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 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 Company, (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 Company or increase or otherwise affect the obligations of the Company
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 Company 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,
or (iii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Company.
SECTION 2.15 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 2.15, the Company 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) declared or paid any dividend or
made any distribution on any shares of its capital stock, or redeemed,
purchased or otherwise acquired any shares of its capital stock or any
option, warrant or other right to purchase or acquire any such shares, (v)
increased its indebtedness for borrowed money, or made any loan to any
Person, (vi) written off as uncollectible any notes or accounts receivable,
except write-offs in the ordinary course of business charged to applicable
reserves, (vii) made any material change in any method of accounting or
auditing practice, (viii) otherwise conducted its business or entered into
any transaction, except in the usual and ordinary manner, or (ix) agreed,
whether or not in writing, to do any of the foregoing.
SECTION 2.16 CERTAIN PRACTICES. None of the Seller, the Company, the
Company's directors or officers, or to the best knowledge of the Seller, the
Company's employees has, 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
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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 Company 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 2.17 COMPLIANCE WITH LAW; LICENSES AND PERMITS.
Except as set forth on SCHEDULE 2.17, the Company 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 2.17, there is no
existing law, rule, regulation or order, and the Seller are 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 Company in any jurisdiction in which the
Business is now conducted. The Company possesses all franchises, permits,
licenses, certificates and consents required from any governmental or
regulatory authority in order for the Company 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 2.17.
SECTION 2.18 EMPLOYEE BENEFITS.
(a) Set forth on SCHEDULE 2.18 is a list of all pension, profit
sharing, retirement, deferred compensation, 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 Company 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
Company 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
Company will maintain the benefits listed on SCHEDULE 2.18 in full force and
effect through the Effective Date. Except as set forth on SCHEDULE 2.18, the
Buyer shall not have any 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 Company for services rendered prior to the Effective Date.
(b) Each Employee Plan covering any present or former employee of the
Company which is subject to the continuation health coverage requirements of
Section 4980B
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of the Code or Section 601 of ERISA or any applicable state law has complied
with all such requirements for continuation coverage.
(c) There are no actions, suits or claims pending (other than
routine claims for benefits) or threatened against or with respect to any
Employee Plan or the assets of any Employee Plan.
(d) Each Employee Plan (and the related trust or funding vehicle,
if any) has been administered and maintained in accordance with its terms and
with applicable law. Except as set forth on SCHEDULE 2.18(d), each Employee
Plan which is intended to be qualified under Section 401 of the Code and each
amendment to such plan is subject to a favorable determination letter from
the Internal Revenue Service and each such plan has at all times been
maintained, by its terms and in operation, in accordance with Section 401 of
the Code. The assets of each Employee Plan which is not funded through the
general assets of the Company are at least equal to the liabilities under
such Employee Plan, and all assets of each Employee Plan are shown on the
books and records of such Employee Plan at fair market value. No Employee
Plan has unfunded liabilities that as of the Closing Date are not accurately
and fully reflected on the Company's Balance Sheet.
(e) Neither the Company 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 (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 Company 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)).
The Company is not obligated to provide post-retirement medical benefits or
any other unfunded post-retirement welfare benefits to or on behalf of any
persons whatsoever (except the benefits pursuant to the continuation health
coverage requirements under Section 4980B of the Code, ERISA Section 601, or
applicable state law).
(f) Neither the Company nor its ERISA Affiliates is subject to
and, to the best knowledge of the Seller, no facts exist which could subject
the Company or any of its ERISA Affiliates to, any liability whatsoever which
is directly or indirectly related to any Employee Plan, including, but not
limited to, liability for benefit payments or related claims, any liability
for any tax or related penalty under the Code, or liability for any damages
or penalties arising under Title I or Title IV of ERISA. No reportable event
under Section 4043 of ERISA has occurred or, to the best knowledge of the
Seller, will occur with respect to such Employee Plan.
(g) 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.
(h) The execution or performance of the transactions contemplated by
this
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Agreement will not create, accelerate or increase any obligations under the
Employee Plans, including any obligation to make any payment which would not
be deductible as an excess golden parachute payment under Section 280G of the
Code.
(i) All contributions to or under each Employee Plan and all
expenses of each Employee Plan are fully deductible for income tax purposes
for the taxable year for which such contributions are made or such expenses
are paid. All contributions to or under each Employee Plan have been made
when due under the terms of such Employee Plan in accordance with applicable
law.
(j) For purposes of this Section 2.18, 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 Company is treated as a single employer
under Section 414(b), (c), (m), (o) or (t) of the Code.
SECTION 2.19 FIXED ASSETS. SCHEDULE 2.19 contains a true and complete
list of all of the Company's fixed assets with a net book value of greater
than $1,000.00, whether owned or leased. Except as shown on SCHEDULE 2.19,
the Company 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 Company'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 2.20 INSURANCE. The Company is, and will be through the
Closing, insured with insurers in respect of its properties, assets and
businesses as set forth on the attached SCHEDULE 2.20. SCHEDULE 2.20 lists
the insurance coverage carried by the Company, 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 2.20, the Company (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 2.21 ACCOUNTS RECEIVABLE; SELLER NOTES. The accounts
receivable and other debts due or recorded in the respective records and
books of account of the Company as being due to the Company as of the
Effective Date, all of which are set forth on SCHEDULE 2.21, arose in the
ordinary course of business of the Company, are not subject to any
counterclaim or set-off and are fully collectible within 90 days after the
Effective Date
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without resort to litigation and without offset or counterclaim. All notes
payable to the Seller by the Company and all notes receivable to the Company
from the Seller have been paid in full.
SECTION 2.22 OUTSTANDING CONTRACTS. SCHEDULE 2.22 sets forth a
description of all existing contracts, agreements, leases, commitments,
licenses and franchises, which involve obligations or commitments by the
Company of $10,000 or more and are not cancelable by the Company without
penalty within 30 days (collectively "Contracts"), whether written or oral,
relating to the Company. The Seller has delivered or made available to the
Buyer true, correct and complete copies of all of the Contracts specified on
SCHEDULE 2.22 which are in writing, and such schedule sets 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 2.22, the Company
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 Company 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
Company is a party. Except as set forth on SCHEDULE 2.22, 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 2.22, there
exists no actual or, to the best knowledge of the Seller, threatened
termination, cancellation or limitation of the business relationship of the
Company by any party to any of the Contracts.
SECTION 2.23 OUTSTANDING LEASES. SCHEDULE 2.23 sets forth a
description of each agreement by which the Company 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 2.23. 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 2.23, the Company
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 Company 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
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2.23, 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 Company with any party to any of the
Leases.
SECTION 2.24 INTELLECTUAL PROPERTIES. SCHEDULE 2.24 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 Company in
the operation of the Business (collectively the "Intellectual Property").
Except as set forth on SCHEDULE 2.24 and except for commercial software
licensed for use on personal computers, the Company owns the entire right,
title and interest in and to the Intellectual Property, trade secrets and
technology used in the operation of its business and each item constituting
part of the Intellectual Property and trade secrets and technology which is
owned by the Company has been, to the extent indicated in SCHEDULE 2.24, 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 2.24 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 Company 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 upon the
Intellectual Property.
11
SECTION 2.25 PROPRIETARY INFORMATION OF THIRD PARTIES.
Except as disclosed on SCHEDULE 2.25, 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 Company ("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 Company which
suggests that such a claim might be contemplated. Except as disclosed on
SCHEDULE 2.25, 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 product or
service of the Company, and the Seller has no reason to believe there will be
any such employment or violation.
SECTION 2.26 TRANSACTIONS WITH AFFILIATES. Except as set forth on
SCHEDULE 2.26, to the best knowledge of each Seller, no director, officer or
shareholder of the Company, 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
Company, 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 2.27 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 2.27, the Company 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 Company of any liability or obligation not fully reflected or
reserved against in the Balance Sheet.
(b) The Company 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 Company.
SECTION 2.28 TAXES. The Company has timely filed a valid election to be
12
treated as an S corporation in accordance with the provisions of Section 1361
of the Code, effective for its tax year beginning January 1, 1992 and ending
December 31, 1992, and has qualified and shall continue to qualify as an S
corporation for all years and periods thereafter until the Effective Time.
SCHEDULE 2.28 lists all the states and localities with respect to which the
Company is required to file any corporate, income and/or franchise tax
returns and sets forth whether the Company is treated as the equivalent of an
S corporation by or with respect to each such state or locality. The Company
has not engaged in any activity which would disqualify its treatment as an S
corporation for those tax purposes. Except as set forth on SCHEDULE 2.28,
all federal, state, local and foreign tax returns and tax reports required to
be filed by the Company 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 and social security taxes) which
have become due or payable or are required to be collected by the Company or
are otherwise attributable to any periods ending on or before the Effective
Time and all interest and penalties thereon, whether disputed or not, have
been paid or will be paid in full on or prior to the Closing Date or are
adequately reflected on the Balance Sheet or the Company's books and records
in accordance with GAAP. Except as set forth on SCHEDULE 2.28, all deposits
required by law to be made by the Company with respect to employees'
withholding taxes have been duly made, and as of the Effective Time all such
deposits due will have been made. The Company has delivered to the Buyer
true and complete copies of all of the Company's federal and state income 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 2.28, no examination of any tax return of the Company
is currently in progress. There are no outstanding agreements or waivers
extending the statutory period of limitations applicable to any such tax
return.
SECTION 2.29 LITIGATION. Except as set forth on SCHEDULE 2.29, there
is no (i) action, suit, claim, proceeding or investigation pending or, to the
best knowledge of the Seller, threatened against or affecting the Company
(whether or not such Company 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 Company or (iii) governmental inquiry pending or threatened
against or involving the Company, and there is no basis for any of the
foregoing. The Company 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 Company. There are no outstanding orders, writs, judgments, injunctions
or decrees served upon the Company by any court, governmental agency or
arbitration tribunal against the Company. 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 Company or the transactions contemplated hereby.
The Company is not in
13
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 2.29,
there is no action or suit by the Company pending or threatened against
others.
SECTION 2.30 ENVIRONMENTAL MATTERS.
(a) COMPLIANCE. The Company 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 2.30, the Company has not received notice of, nor does the Seller
has knowledge of, any past, present or future events, conditions,
circumstances, activities, practices, incidents, actions or plans of the
Company or the Company'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 used in this Section 2.30, 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
other 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 Company, 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"):
(A) the handling, storage, use, transportation or disposal of
any Substances in or near or from the Leased Parcels;
14
(B) the handling, storage, use, transportation or disposal of
any Substances by the Company or its predecessors which
Substances were a product, by-product or otherwise
resulted from the operations conducted by or on behalf of
the Company or its predecessors;
(C) 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 Company or its predecessors; or
(D) the presence of any toxic or hazardous building materials
(including but not limited to friable asbestos or similar
substances) in any facilities of the Company, 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 Company 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 Company
of the Leased Parcels, the discharge or emission of Substances by the Company
from the Leased Parcels or the generation, treatment, storage,
transportation, or disposal of any such Substances by the Company. Such
Environmental Permits, which are described on SCHEDULE 2.30, are currently
effective and sufficient for the operation of the Leased Parcels and the
business of the Company as currently conducted and intended to be conducted.
The Company 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 contained
in any regulation, code, plan, order, decree, judgment, notice or demand
letter issued, entered, promulgated or approved thereunder and applicable to
the Company.
(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 Leased 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 2.31 BROKER'S OR FINDER'S FEES. No agent, broker, person or
firm acting on behalf of the Seller or the Company is, or will be, entitled
to any commission or broker's or finder's fees from the Seller or the
Company, or from any person controlling, controlled by or under common
control with the Seller or the Company, in connection with
15
any of the transactions contemplated herein.
SECTION 2.32 INVENTORY. All inventory of the Company, 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. 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 Company.
SECTION 2.33 YEAR-2000 COMPLIANCE.
(a) SCHEDULE 2.33 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 2.33.
(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 the Company 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 the
Company, 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 the Company which are licensed, sold,
distributed, or otherwise transferred by the Company 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,
16
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.
SECTION 2.34 PURCHASE FOR INVESTMENT; RESTRICTED SECURITIES. The
Seller represents and warrants (a) that he is acquiring shares of Buyer
Common Stock, as hereinafter defined, for investment and not with a present
view toward, or for sale in connection with, any distribution thereof, nor
with any present intention of distributing or selling the shares of Buyer
Common Stock so acquired; (b) that he has no present plan or intention to
sell, exchange or otherwise dispose of any of the shares of Buyer Common
Stock that may be received in connection with the Earn-Out Payments; and (c)
he acknowledges that (i) the shares of Buyer Common Stock are not and will
not be registered under the Securities Act of 1933, as amended (the "1933
Act"), and (ii) that the Buyer does not file periodic reports with the
Securities and Exchange Commission pursuant to the requirements of Section 12
or 15(d) of the Securities Exchange Act of 1934, as amended.
SECTION 2.35 DISCLOSURE. All Documents delivered or to be delivered by
or on behalf of the Seller or the Company 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 Company or its properties or assets, which has not
been set forth in the Documents.
ARTICLE III. 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 ORGANIZATION. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is duly qualified to transact business as a foreign corporation in each
jurisdiction in which the failure to so qualify would have a material adverse
impact on the Buyer's ability to purchase the Common Stock pursuant to this
Agreement and perform its obligations under this Agreement.
SECTION 3.2 CORPORATE POWER AND AUTHORITY. The Buyer has the
corporate power and authority to execute, deliver and perform this Agreement
and the other Documents. The execution, delivery and performance of the
Documents contemplated hereby and the consummation of the transactions
contemplated hereby and thereby have been duly authorized and approved by all
necessary corporate action of the Buyer. The Documents to be executed and
delivered by the Buyer have been duly executed and delivered by, and
constitute the legal, valid and binding obligation of the Buyer enforceable
against the Buyer in accordance with their
17
terms.
SECTION 3.3 VALIDITY, ETC. Neither the execution and delivery by the
Buyer of this Agreement and the other Documents, the consummation by the
Buyer of the transactions contemplated hereby or thereby, nor the performance
by the Buyer of this Agreement and such other agreements in compliance with
the terms and conditions hereof and thereof 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
Buyer, (ii) violate, conflict with or result in a breach of or default (or
give rise to any right of termination, cancellation or acceleration) under
any law, rule or 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 to which
the Buyer is a party, or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Buyer.
SECTION 3.4 CAPITAL STOCK. The authorized capital stock of the Buyer
consists of (a) 100,000,000 shares of of $.001 par value common stock ("Buyer
Common Stock"), of which 13,464,918 shares were issued and outstanding as of
August 4, 1998 and (b) 50,000,000 shares of $.001 par value preferred stock
("Buyer Preferred Stock"), of which 1,701,000 shares were issued and
outstanding as of August 6, 1998 (collectively, Buyer Common Stock and Buyer
Preferred Stock are referred to as "Buyer Capital Stock"). All of the issued
and outstanding shares of Buyer Capital Stock are, and all of the shares of
Buyer Common Stock to be issued pursuant to SCHEDULE 1.2, when issued in
accordance with the terms of this Agreement, will be, duly and validly issued
and outstanding and fully paid and nonassessable. None of the outstanding
shares of Buyer Capital Stock has been, and none of the shares of Buyer
Common Stock to be issued in connection with this transaction will be, issued
in violation of any preemptive rights of the current or past shareholders of
the Buyer.
SECTION 3.5 DISCLOSURE STATEMENT. The Buyer's Disclosure Statement,
dated June 25, 1998, which has been previously delivered to the Seller is
true, complete and correct in all material respects.
SECTION 3.6 ACQUISITION OF STOCK FOR INVESTMENT. The Buyer is
acquiring the shares of Common Stock for investment and not with a view
toward, or for sale in connection with, any distribution thereof, nor with
any present intention of distributing or selling such shares of Common Stock.
The Buyer agrees that such shares of Common Stock may not be sold,
transferred, offered for sale, pledged, hypothecated or otherwise disposed of
without registration under the Securities Act of 1933, as amended, except
pursuant to an exemption from registration available under such Act. The
Buyer will not sell, offer to sell or solicit offers to buy any of the shares
of Common Stock in violation of the Securities Act of 1933 or the securities
law of any state. The Buyer understands that the shares of Common Stock have
not been registered under federal or any state's securities laws.
SECTION 3.7 BROKER'S OR FINDER'S FEES. No agent, broker, person or firm
acting
18
on behalf of the Buyer is, or will be, entitled to any commission or broker's
or finder's fees from the Buyer, or from any person controlling, controlled
by or under common control with the Buyer, in connection with any of the
transactions contemplated herein.
SECTION 3.8 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 Buyer of this Agreement.
SECTION 3.9 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 IV. COVENANTS AND AGREEMENTS
SECTION 4.1 BEST EFFORTS. The Seller and the Buyer shall each use
their 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 Company's
Business after the Closing Date. Prior to the Closing Date, the Seller will
use his best efforts to preserve the Company's relationships with its
employees, customers and others having business relationships with the
Company.
SECTION 4.2 TAX RETURNS. The Seller shall cause the Company to
prepare and timely file, at his sole expense, all of the Company's 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 INVESTIGATIONS. The Seller shall give the Buyer and its
employees, accountants, attorneys and other authorized representatives full
access during all reasonable times to all the premises, properties, books and
records, and furnish the Buyer with such financial and operating data,
analyses and other information of any kind respecting the Company's business
and properties as the Buyer shall from time to time request. Any
investigation shall be conducted in a manner which does not unreasonably
interfere with business operations.
19
SECTION 4.4 PRESERVATION OF BUSINESS. The Seller shall cause the
Company to use its best efforts to preserve the possession and control of all
of its assets and Business, to preserve the goodwill of its customers and
others with whom it has business relations, and to do nothing to impair its
ability to keep and preserve its Business as it exists on the date of this
Agreement.
SECTION 4.5 SECTION 338(h)(10) ELECTION. The Buyer and the Seller
shall make a simultaneous joint election (the "Election") under Section
338(h)(10) of the Code for the Company on Internal Revenue Service Form 8023
in accordance with the instructions to the form and any similar state law
provisions in all applicable states, with respect to the sale and purchase of
the Company's shares pursuant to this Agreement, and each party shall provide
to the others all necessary information to permit such election to be made.
Such election shall be made not later than the 15th day of the ninth month
beginning after the month in which the Closing Date occurs. The Buyer and
the Seller shall, as promptly as practicable following the Closing Date, take
all actions necessary and appropriate (including filing such forms, returns,
schedules and other documents as may be required) to effect and preserve a
timely election. All taxes attributable to the election made pursuant to
this Section 4.5 shall be the liability of the Seller; provided. however,
that the Buyer shall pay the Seller on or before April 15, 1999, the amount
that the Seller's Federal income tax due in connection with the sale of the
Common Stock and the Election is greater than the amount of Federal income
tax that would have been due in connection with the sale of the Common Stock
if the Election had not been made. In connection with such election, within
sixty (60) days following the Closing Date, the Buyer and the Seller shall
act together in good faith to determine and agree upon the "deemed sale
price" to be allocated to each asset of the Company in accordance with
Treasury Regulation Section 1.338(h)(10)-1(f) and the other regulations under
Section 338 of the Code.
SECTION 4.6 LANDLORDS' CONSENTS. The Seller shall cause, on or
before the expiration of thirty (30) days after the Closing Date, the Company
to obtain from its landlords (to the extent required under the pertinent
premises leases) written consent to the assignment of said leases to the
Buyer which assignment is deemed to have resulted from the transactions
contemplated by this Agreement.
SECTION 4.7 AUDITED FINANCIAL STATEMENTS. The Seller shall furnish
to the Buyer, as soon as practical and at the Seller's expense, audited
financial statements of the Company for the three (3) fiscal years ending
December 31, 1997, 1996 and 1995.
SECTION 4.8 POST-CLOSING MATTERS. The Buyer agrees to use its best
efforts to cause Norwest Bank, North Dakota, N.A. to release the personal
guarantees of the Seller in connection with certain of the Company's debts
obligations on or before the expiration of sixty (60) days after the Closing
Date. The Seller agrees to cause employees ("North Country Participants") of
North Country Thermal Line, Inc. ("North Country") to cease to be
participants in the Xxxxxxxx Siding and Window, Inc. 401(k) Profit Sharing
Plan (the "Xxxxxxxx Plan") on or before December 31, 1998. The Seller agrees
to cause North Country to take all steps necessary and appropriate to
establish a successor 401(k) retirement plan for the North Country
20
Participants and to transfer the account balances of the North Country
Participants from the Xxxxxxxx Plan to such successor plan.
ARTICLE V. CONDITIONS TO THE BUYER'S OBLIGATIONS
The obligation of the Buyer to make deliveries to the Seller pursuant to
Section 1.2 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 INTRA-COMPANY DEBT. All indebtedness of the Seller and
all other directors, officers and employees of the Company to the Company
shall have been repaid in full and the Seller shall have delivered to the
Buyer a certificate, dated the Closing Date, to such effect.
SECTION 5.2 CONSENTS. Except for the consents of the landlords
provided for in Section 4.6 above and except as set forth on SCHEDULE 5.2,
all requisite governmental approvals 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.
SECTION 5.3 NON-COMPETITION AGREEMENT. The Seller shall have entered
into a Non-Competition Agreement with the Buyer in substantially the form
attached hereto as EXHIBIT B (the "Non-Competition Agreement").
SECTION 5.4 OPINION OF COUNSEL TO THE SELLER. The Buyer shall have
received from Xxxxxx Xxxxxx Xxxx & Kranda, 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 Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of North Dakota. The
Company is qualified to do business as a foreign corporation and is in good
standing in the states set forth on SCHEDULE 2.4. The nature of the Business
does not require the Company to be licensed or qualified in any other
jurisdiction. The Company has the corporate power and authority to own,
lease, operate and hold its properties and to carry on its business as now
conducted;
(b) The Seller has full legal power, capacity and authority to
execute and deliver this Agreement and the other Documents and to consummate
the transactions contemplated hereby and thereby, and this Agreement and the
other Documents have been duly
21
and validly executed and delivered by the Seller and constitute the legal,
valid and binding obligation of the Seller, enforceable against the Seller in
accordance with their terms;
(c) The Company has authorized capital consisting of 25,000 shares
of common stock, with par value of $4.00 per share, of which 24,408 shares
are issued and outstanding and no shares are held as treasury stock. All of
the outstanding shares of the Company have been duly authorized and validly
issued and are fully paid and nonassessable. None of the outstanding shares
of the Company have been issued in violation of any preemptive right. There
are no outstanding options, warrants, rights, calls, commitments, conversion
rights, rights of exchange, plans or other agreements of any character
providing for the purchase, issuance or sale of any shares of capital stock
of the Company, other than as contemplated by this Agreement;
(d) The Company 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;
(e) 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;
(f) There is no (i) action, suit, claim, proceeding or
investigation pending or, to the best knowledge of the Seller's counsel,
threatened against or affecting the Company (whether or not such Company 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 Company or (iii) governmental
inquiry pending or threatened against or involving the Company, and, to the
best knowledge of the Seller's counsel, there is no basis for any of the
foregoing. The Company 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 Company. There are no outstanding orders, writs, judgments, injunctions
or decrees served upon the Company by any court, governmental agency or
arbitration tribunal against the Company. To the best knowledge of the
Seller's 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
Company or the transactions contemplated hereby. The Company 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
Company pending or threatened against others;
(g) The Non-Competition Agreement has been duly executed and
delivered by, and constitutes the legal, valid and binding obligation of the
Seller, enforceable against him in
22
accordance with its terms; and
(h) 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, to the best knowledge of counsel, (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
Company, (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 Company or increase or otherwise affect the obligations of the Company
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 Company 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,
or (iii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Company.
SECTION 5.5 CLOSING DOCUMENTS. The Seller shall have delivered all
of the resolutions, certificates, documents and instruments required by this
Agreement.
SECTION 5.6 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 their
performance hereunder, and all other related matters, shall be reasonably
satisfactory as to form and substance to the Buyer and its counsel.
ARTICLE VI. CONDITIONS TO THE SELLER'S OBLIGATIONS
The obligation of the Seller to transfer the Common Stock 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 his sole discretion:
SECTION 6.1 OPINION OF XXXXXX & XXXXXXXX. The Seller shall have
received from Xxxxxx & Xxxxxxxx, counsel to the Buyer, an opinion dated as of
the Closing Date, in form and substance reasonably satisfactory to the
Seller, and to the following effect:
(a) The Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and is duly
qualified to transact business as a foreign corporation in each jurisdiction
in which the failure to so qualify would have a material adverse impact on
the Buyer's ability to pay its obligations under this Agreement;
23
(b) The Buyer 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 and validly executed and delivered by the Buyer and constitute the
legal, valid and binding obligations of the Buyer enforceable against the
Buyer in accordance with their terms; and
(c) The execution and delivery of the 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 Buyer will
not (i) violate, conflict with or result in any breach of any trust
agreement, certificate of incorporation, bylaw, judgment, decree, order,
statute or regulation applicable to the Buyer, (ii) violate, conflict with or
result in a breach of or default (or give rise to any right of termination,
cancellation or acceleration) under any law, rule or 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 to which the Buyer is a party, or (iii) violate
any order, writ, injunction, decree, statute, rule or regulation applicable
to the Buyer.
SECTION 6.2 CLOSING DOCUMENTS. The Buyer shall have delivered all of
the resolutions, certificates, documents and instruments required by this
Agreement.
SECTION 6.3 APPROVAL OF THE SELLER AND HIS 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 his
counsel.
ARTICLE VII. 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 at the offices of Xxxxxx Xxxxxx Xxxx & Kranda, P.L.L.P.,
Xxxxxxx Avenue and Main Street, Mandan, North Dakota on the date hereof (the
"Closing Date"). The transactions contemplated by this Agreement shall be
effective as of the close of business (the "Effective Time") on August 14,
1998 (the "Effective Date").
SECTION 7.2 DELIVERIES BY THE SELLER. At the Closing, the Seller
will deliver or cause the Company to deliver to the Buyer the following:
(a) Stock certificates representing all of the issued and outstanding
shares
24
of Common Stock owned by the Seller, accompanied by stock powers duly
executed in favor of the Buyer or duly executed instruments of transfer and
any other documents that are necessary to transfer to the Buyer good and
marketable title to all issued and outstanding shares of Common Stock;
(b) The stock books, stock ledgers, minute books, and other
corporate records of the Company;
(c) Resignations dated the Closing Date of all of the directors
and officers of the Company as designated by the Buyer;
(d) All required consents of third parties to the sale conveyance,
transfer, assignment and delivery of the Common Stock or any assets of the
Company hereunder;
(e) A certificate of the Secretary of the Company certifying as of
the Closing Date (i) a true, correct, and complete copy of the Articles of
Incorporation of the Company and all amendments thereto as in effect on the
Closing Date; (ii) a true, correct, and complete copy of the bylaws of the
Company and all amendments thereto as in effect on the Closing Date; and
(iii) Certificates of Good Standing from the North Dakota and South Dakota
Secretaries of State;
(f) The affidavit of the Seller certifying as to his non-foreign
status in accordance with Section 1445(b)(2) of the Code;
(g) The Non-Competition Agreement required by Section 5.3 above;
(h) The Opinion of the Seller's Counsel required by Section 5.4
above;
(i) A General Release from the Seller which releases the Company
from any and all claims, known or unknown, contingent or direct, which he may
have against the Company as of the Closing Date, other than claims arising
under this Agreement and the other Documents and the transactions
contemplated hereby; and
(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:
(a) The consideration required by Section 1.2 above;
(b) The Contingent Promissory Note required by Section 1.2 above;
25
(c) The Opinion of the Buyer's Counsel required by Section 6.1
above;
(d) A certificate of an officer of the Buyer certifying as of the
Closing Date (i) a true, correct, and complete copy of the Certificate of
Incorporation of the Buyer and all amendments thereto as in effect on the
Closing Date; (ii) a true, correct, and complete copy of the bylaws of the
Buyer 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 Board of Directors of the Buyer authorizing the transactions contemplated
herein; (iv) Certificate of Good Standing from the Delaware Secretary of
State; and (v) the incumbency of the duly authorized officers of the Buyer;
and
(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 VIII. [INTENTIONALLY OMITTED]
ARTICLE IX. SURVIVAL; INDEMNIFICATION AND OFFSET
SECTION 9.1 SURVIVAL. All representations and warranties in this
Agreement and the other Documents shall survive the Closing of the purchase
of the Common Stock 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 2.28 or Section 2.30,
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 Company and the
Buyer and the respective officers, directors, and employees of the foregoing,
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
26
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 him under this
Agreement;
(c) Reliance by the Buyer on any books or records of the Company
or written information furnished to the Buyer pursuant to this
Agreement by or on behalf of the Seller or the Company 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 Company
or 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 Company existing at or prior to the
Closing Date, including but not limited to matters set forth
on SCHEDULE 2.29, whether or not such liabilities, obligations
or claims were known on such date, excluding only liabilities
set forth in the Balance Sheet and liabilities and obligations
incurred since the date thereof in the ordinary course of
business and consistent with past practice.
(e) Damages relating to, or arising out of any and all corrections
of operational defects of the Xxxxxxxx Plan.
Provided, however, the Seller's Indemnitees shall not be entitled to
indemnification or offset hereunder until Damages in total exceed $10,000 and
then only to the extent of aggregate Damages in excess of $10,000; provided
further, however, this limitation or "basket" shall not apply to any Damages
arising in connection with the representations and warranties as set forth in
Sections 2.1, 2.2, 2.28, 2.29, and 2.30 and 9.2(e) hereof, respectively.
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 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
27
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 his heirs, executors, and legal
representatives (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; or
(d) The operation of the Business subsequent to the Closing Date.
Provided, however, the Buyer's Indemnitees shall not be entitled to
indemnification hereunder until Damages in total exceed $10,000 and then only
to the extent of aggregate damages in excess of $10,000.
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 his 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.
28
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 Common Stock 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 2.28 or
Section 2.30, 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 9, the term "Year-2000 Indemnification Obligations" shall
mean the 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 2.33.
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 such Seller under Sections 1.2 and 1.3 hereof, at
the Buyer's sole option.
ARTICLE X. 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 he has made due
and diligent inquiry of the Company's President and other officers as to the
matters that are the subject of such representations and warranties.
SECTION 10.2 KNOWLEDGE OF THE BUYER. Where any representation or
warranty contained in this Agreement is expressly qualified by reference to
the best 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
29
certified mail, return receipt requested, postage prepaid.
If to the Buyer:
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
0000 Xxxxx Xxxxx, Xxx 000
Xxxxxx, Xxxxx Xxxxxx 00000
Fax No:
---------------
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, Esq.
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
30
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 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, jointly, 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
31
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 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.
32
IN WITNESS WHEREOF, the Buyer has caused this Agreement to be executed
by its duly authorized officer and the Seller has executed this Agreement all
as of the day and year first above written.
BUYER:
THERMOVIEW INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------------
Xxxxxxx X. Xxxxxxxx, President
SELLER:
/s/ Xxxxx X. Xxxxxxxx
-----------------------------------------------
Xxxxx X. Xxxxxxxx
33
