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SALES AGREEMENT

Sales Agreement

SALES AGREEMENT | Document Parties: Huttig Building Products, Inc.  | Builder Resource Supply Corporation You are currently viewing:
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Huttig Building Products, Inc. | Builder Resource Supply Corporation

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Title: SALES AGREEMENT
Governing Law: Maryland     Date: 3/14/2005
Industry: Constr. - Supplies and Fixtures    

SALES AGREEMENT, Parties: huttig building products  inc.  , builder resource supply corporation
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Exhibit 10.25

 

SALES AGREEMENT

 

1.

PARTIES . This contract is made this          day of November,      2004 between Huttig Building Products, Inc. (“Seller”), 555 Maryville University Drive, Suite 400, St. Louis, MO 63141, and Builder Resource Supply Corporation, (“Buyer”). Builder Resource Supply Corporation is a Maryland Sub-Chapter S Corporation owned by Gary Allshouse (“Allshouse”).

 

2.

AGREEMENT TO SELL . Seller shall sell to Buyer, and Buyer shall buy from Seller, on or about December 6, 2004, or such other date as the parties shall mutually agree to in writing (the “Closing Date”), all of the goods, wares, and merchandise, including inventory, belonging to Seller and now located at 7453 Shipley Avenue, Hanover, Maryland 21076 (the “Facility”), together with all fixed assets owned and used by Seller in the conduct of its business at the Facility, except for leasehold improvements and the name change on the trailers. Title to the purchased assets shall be conveyed by bills of sale, assignments, transfers, and other instruments of transfer and delivery in such form as Buyer shall reasonably request.

 

3.

WAREHOUSE CLOSED FOR INVENTORY . Upon execution and delivery of this contract, properly executed by all necessary parties, an inventory will be taken at a time to be agreed upon between Seller and Buyer prior to closing and the warehouse shall be closed temporarily. Seller will give the same inventory inspection rights to Buyer as provided to Buyer’s bank.

 

4.

INVOICE VALUATION . The goods, wares and merchandise shall be valued at Seller’s cost less either accumulated depreciation or obsolescence reserves, or both. Buyer shall purchase all inventory, including amounts reserved for as excess and obsolete. Seller will be responsible for removing obsolete goods, wares and merchandise it wishes to keep.

 

5.

SELLER FINANCING . Seller agrees to finance the cost of the inventory according to the closing balance sheet at the time of closing for a period of five (5) years with a simple interest loan at an annual interest rate of 6%. No down payment will be required on the part of Buyer for the inventory. Buyer agrees to make quarterly payments of principal and interest during the term of the loan commencing six months from the date of closing. During the first six months after closing, the loan shall accrue interest and Buyer will make quarterly payments of interest only to Seller (with such payments due on March 6, 2005 and June 6, 2005, respectively); thereafter, the quarterly payments of both principal and interest shall commence and become due and payable on the following schedule:

 

 

 

 

DATE


 

    

QUARTERLY PAYMENTS


 

March 6, 2005

    

Interest only payment

June 6, 2005

    

Interest only payment

September 6, 2005

    

First payment of principal (plus interest)

 

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                     Initials


 

 

 

December 6, 2005

    

Second payment of principal (plus interest)

March 6, 2006

    

Third payment of principal (plus interest)

June 6, 2006

    

Fourth payment of principal (plus interest)

 

 

September 6, 2006

    

Fifth payment of principal (plus interest)

December 6, 2006

    

Sixth payment of principal (plus interest)

March 6, 2007

    

Seventh payment of principal (plus interest)

June 6, 2007

    

Eighth payment of principal (plus interest)

 

 

September 6, 2007

    

Ninth payment of principal (plus interest)

December 6, 2007

    

Tenth payment of principal (plus interest)

March 6, 2008

    

Eleventh payment of principal (plus interest)

June 6, 2008

    

Twelfth payment of principal (plus interest)

 

 

September 6, 2008

    

Thirteenth payment of principal (plus interest)

December 6, 2008

    

Fourteenth payment of principal (plus interest)

March 6, 2009

    

Fifteenth payment of principal (plus interest)

June 6, 2009

    

Sixteenth payment of principal (plus interest)

 

 

September 6, 2009

    

Seventeenth payment of principal (plus interest)

December 6, 2009

    

Eighteenth payment of principal (plus interest)

 

There shall be no penalty for early payment. Buyer will provide the same financial statements and personal guarantees to Seller as provided to Buyer’s bank. Any default by Buyer on a payment due to Buyer’s bank shall be construed as a default on Seller’s loan as well and must be reported to Seller by Buyer within 10 days of such default. Seller reserves the right to foreclose the loan and seize inventory and/or accounts receivable (with secondary lien position to Buyer’s bank as described in paragraph 11, below) upon notice of default. Any late payment shall be charged an additional 12% annual rate of interest for each day late. The amounts due according to the payment schedule in this paragraph and the terms of the financing set forth in this Section 5 shall be set forth in a form of promissory note made by Buyer as maker and to Seller as payee and to be attached as Schedule 5-1 at time the portion of the purchase price is agreed to and allocated to inventory. Buyer agrees to execute and deliver such additional instruments, agreements and other documents as may be necessary for Seller to perfect its security interest in the collateral identified in paragraph 11 below.

 

6.

FIXED ASSETS . Seller agrees to sell all equipment, fixtures, machinery, and owned vehicles to Buyer for the book value of all such fixed assets at time of closing. Buyer shall pay the book value of all fixed assets at time of closing with the exception of the fixed asset costs associated with any leasehold improvements and the name change on the trailers. If book value of fixed assets bought by Buyer is over $175,000 at time of closing, Buyer may finance the cost of the fixed assets in excess of $175,000 under the same financing terms as are used in the inventory sale and described in paragraph 5 of this agreement.

 

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                     Initials


7.

LEASED VEHICLES AND EQUIPMENT . To the extent allowed, Seller agrees to transfer all leases on vehicles and equipment that Buyer wishes to keep. Should the vehicle or equipment lessor not be willing to transfer the lease to Buyer, then Seller will allow Buyer to use any leased vehicles or equipment needed for a period not to exceed 6 months or the duration of the existing lease, whichever period is shorter. Seller will charge the Buyer the same amount of lease expense as incurred by Seller from lessor. . Seller will also allow Buyer to purchase any vehicles from Seller at the lease buy-out rate at time of closing. Seller may, at its option, add the purchase price of the leased vehicles or equipment to the principal of the five-year note contemplated in paragraph 5 of this agreement. Buyer shall indemnify, defend, and hold Seller harmless from and against any loss, liability, cost, expense or damage resulting from Buyer’s use of any such vehicles or equipment, or both.

 

8.

LEASED PROPERTY . Subject to the terms of the Lease between Bench Bros. Realty LLP, Landlord and Huttig Sash & Door Company (now known as Huttig Building Products, Inc.), Tenant dated May 29, 1998, a copy of which is attached as Schedule 8-1 (the “Current Lease”), including its provisions limiting the transferability of the lease by Seller, Seller agrees to sub-lease the Facility until the expiration of the current lease on May 31, 2005 in accordance with the terms of the sublease attached as Schedule 8-2 .

 

9.

POST-CLOSING SUPPORT . Seller agrees to support the existing Trend computer system for a period not to exceed six (6) months after closing. Seller agrees to run parallel with Buyer’s new computer system 30 days prior to conversion and will provide two years of historical data regarding the business conducted at the Facility for downloading into Buyer’s new system. The framework for the technology support and additional equipment list with costs that Seller will provide to Buyer is attached to this agreement and identified as Schedule 9-1 .

 

Seller also agrees to provide administrative support for the processing and application or payment of customer receivables and vendor invoices in accordance with the terms and conditions set forth on Schedule 9-1 .

 

10.

SUPPLY CHAIN . Seller agrees to establish Buyer as a sub-distributor for ThermaTru products. All ThermaTru products ordered on a direct basis will be handled at 0% markup through 2005 and 5% mark-up through 2006. After 2006, Seller and Buyer shall have the option to negotiate a markup or, if no markup is agreed to, terminate the sub-distributorship. Payment terms will be the standard Seller terms.

 

Seller agrees to sell Buyer ThermaTru fill-in parts out of Seller’s Fredericksburg, Virginia, warehouse. All such purchases, including labor, will be marked up 15% until the end of 2005. Freight will not be charged as long as orders exceed $400. If an order does not exceed this minimum amount, Fredericksburg branch will charge standard freight prices. After 2005 Seller and Buyer shall have the option to negotiate a new markup.

 

Page 3 of 12

                     Initials


Pre-hung ThermaTru doors purchased from the Fredericksburg branch on a non-direct basis are subject to standard branch markup.

 

11.

CONDITIONS OF SALE . This agreement is subject to Buyer’s diligent application for and final approval of a $1,500,000 operating line of credit as proposed by K Bank of 7F Gwynns Mill Court, P.O. Box 429, Owings Mill, Maryland, or other comparable lender (the “Bank”). Seller agrees to take a 2 nd lien position behind the Bank. In consideration of 2 nd lien position Buyer agrees to allow Seller to hold 2 nd lien position on all assets. Seller agrees to negotiate an intercreditor agreement with the Bank or other lender if required. Buyer will provide Seller with a personal guarantee that is similar in form and substance to the personal guarantee required by the Bank and will execute financing agreements reasonably necessary to perfect the foregoing security interest of Seller

 

 

a.

Seller shall assume responsibility for any and all liabilities to include warranty claims for the period in which it owned the business prior to closing. Should any such claims arise, Buyer shall notify Seller immediately and upon notification (written, fax or phone) shall resolve the issue in accordance with the terms of their existing contract with the customers on a case-by-case basis.

 

 

b.

In consideration of the Purchase Price, Seller will not directly engage in any business or activity similar to or competitive with Buyer’s business for a period of five (5) years from closing within a twenty-five (25) mile radius of Buyer’s location. Competing is construed as Seller’s knowingly and intentionally acquiring, operating, or purchasing any One-Step Distribution business that competes with Buyer within the time stated in this paragraph.

 

 

c.

AGREEMENT TO HIRE SELLER’S EMPLOYEES . Buyer shall offer full-time employment to all of Seller’s employees identified on Schedule 11.c.-1 attached hereto (the “Employees”). Buyer shall determine the terms and conditions of such employment in its sole and absolute discretion. Seller will be responsible for all compensation, benefits, bonuses or other amounts payable that accrue before the Closing Date and are related to the services provided by the Employees as employees of Seller. Buyer will be responsible for all compensation, benefits, bonuses or other amounts payable that accrue after the Closing Date and are related to the services provided by the Employees as employees of Buyer. As successor employer, Buyer assumes all liability for any claims for wages, benefits,


 
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