EXHIBIT 10.5
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made and entered into as
of the 24th day of May, 1999 by and between Marino Electric, Inc., an Illinois
corporation ("Seller" or "Company"), Electric City Corp., a Delaware
corporation, ("Buyer") and Mr. Xxxxxx Xxxxxx ("Xxxxxx").
RECITALS
WHEREAS, the Seller is a manufacturer, supplier and installer of
electrical panels and other electrical equipment and related materials (the
"Business").
WHEREAS, the Seller is desirous of selling and buyer is desirous
purchasing all of the assets of the Seller.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Purchase and Sale of Assets.
1.1 Sale of Assets to Buyer. At the Closing referred to in
Section 4, the Seller shall sell and assign to the Buyer, and the Buyer shall
purchase and acquire from the Seller, all of the equipment, materials, work in
progress, finished goods, telephone numbers, customer lists, goodwill, and all
of Seller's right, title and interest in any and all of the other assets used in
connection with the Business, including but not limited to, all tradenames,
trademarks, (the "Purchased Assets"), free and clear of any claims, liens or
encumbrances, except for those that are non-substantial in character and that do
not otherwise materially interfere with the present or proposed use of the
Purchased Assets, as the Purchased Assets exist as of the Closing.
2. Purchase Price for Purchased Assets.
2.1 Cash. At the Closing Buyer shall pay to Seller ONE MILLION
FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($1,500,000.00) in lawful currency of
the United States of America. (collectively with the ECC Shares and Inventory,
as hereinafter defined, the "Purchase Price")
2.2 Stock. At the Closing Buyer shall also distribute EIGHT
HUNDRED THOUSAND SHARES (800,000) of the common stock of Buyer (the "ECC
Shares") to Marino. The name of the certificate shall be "Xxxxxx Xxxxxx".
3. Purchase Price for Inventory.
3.1 Purchase of Inventory. In addition to the Purchased
Assets, the Seller shall sell and assign to the Buyer, and the Buyer shall
purchase and acquire from the Seller, the inventory ("Inventory") of Seller up
to and including May 24, 1999.
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3.2 Price for Inventory. At the Closing, and in addition to
the amounts paid for the Purchased Assets, Buyer shall pay to Seller TWO HUNDRED
NINETY-TWO THOUSAND AND 00/100 DOLLARS ($292,000.00) in lawful currency of the
United States of America for the Inventory.
4. Closing.
4.1 Closing. The closing of this Agreement shall take place at
the offices of Xxxxxx & Xxxxx, Ltd., 000 Xxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx
00000, on the ___ day of ______, 1999 or at such other time/location as the
parties hereto shall agree upon (the "Closing"). At the Closing, Seller shall
pay to Buyer the Purchase Price and Seller shall deliver to Buyer the Purchased
Assets, free and clear of all liens, options, encumbrances and security
interests, and the Inventory as set forth elsewhere in this Agreement.
4.2 Conveyance. On the Closing Date, subject to the terms and
conditions set forth in this Agreement, Seller shall sell, assign and deliver
(or cause the sale, assignment and delivery of) the Purchased Assets and
Inventory to Buyer, and Buyer shall purchase and take delivery of the Purchased
Assets and Inventory. Seller shall execute and deliver (or cause to be executed
and delivered) such documents of conveyance and take such other action as may be
necessary or reasonably desirable to transfer all interests therein to Buyer and
put Buyer in actual possession and operating control of the Purchased Assets and
Inventory. Seller agrees that such sale, assignment and delivery shall be
effected by such , bills of sale, endorsements, assignments and such other
instruments of transfer and conveyance as Buyer shall reasonably request and as
shall be sufficient to convey all the right, title and interest of Seller in and
to the Purchased Assets and Inventory.
5. Seller's and Company's Representations and Warranties.
5.1 Seller's Representations. Seller represents and warrants
to Buyer that each of the following statements are true and correct upon
execution of this Agreement and at all times through Closing and thereafter:
(a) Organization and Good Standing. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation and has all requisite corporate and other
power and all necessary permits, certificates, licenses, approvals and other
authorizations required to carry on its business in the manner in which such
business is presently carried on. The Company is qualified to do business and is
in good standing in every state or jurisdiction in which either the ownership or
use of its properties, or the nature of the activities conducted by it, requires
such qualification or the lack thereof would have a material adverse effect on
the Company.
(b) Valid and Binding Agreement. The Company has full power
and authority to execute, deliver and perform this Agreement and all other
documents and instruments to be executed by the Company pursuant to this
Agreement without the consent of any other person or entity. This Agreement
constitutes a valid and binding agreement of the Company, enforceable against it
in accordance with its terms. Neither the execution and delivery of this
Agreement or the purchase and sale of the Purchased Assets and Inventory (i)
violates or will violate any statute or law or any rule, regulation, or order of
any court or governmental authority applicable to Company, or (ii) violates or
will violate, or conflicts with or will conflict with, or constitutes a default
under or will constitute a default under, any contract, commitment, agreement
understanding or restriction of any kind to which the Company is a party or may
be bound.
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(c) Stock Options. None of the shares of the capital stock of
the Company is subject to any stock option, stock warrant, stock right or
agreement. The Company has not issued any securities convertible into stock or
made offers on commitments or incurred any obligation to issue shares of stock
or securities convertible into stock at any future time. Furthermore, the
Company is not a party to any agreement which offers or grants to any person or
entity the right to purchase or acquire any shares of the capital stock of the
Company.
(d) Absence of Undisclosed Liabilities. The Company has no
material liabilities or obligations of any nature, whether accrued, absolute,
contingent or otherwise, including without limitation tax liabilities or the
guarantee of third party obligations, which are not reflected or accounted for
in the Financial Statements other than current liabilities incurred in the
ordinary course of business since the respective dates thereof. The Company does
not owe any money to any subsidiary other then as reflected in the latest
Financial Statement provided to Buyer under this Agreement.
(e) No Material Adverse Change. Since the date of the most
recent Financial Statements, there has not been (i) any material adverse change
in the financial condition or in the operations, businesses, prospects,
properties or assets of the Company considered as a whole from that shown in
such Financial Statements, and no event has occurred or circumstances exists
that may result in such a material adverse change; (ii) payment or increase by
the Company of any bonuses, salaries, or other compensation to any stockholder,
director, officer or, except in the ordinary course of business, employee or
entry into any employment, severance or similar contract with any director,
officer or employee; (iii) material change in the methods of accounting used by
the Company; (iv) sale (other than the sale of inventory in the ordinary course
of business), lease, or other disposition of any asset or property of the
Company or mortgage, pledge or imposition of any lien or other Encumbrance on
any material asset or property of the Company; or (v) agreement, whether oral or
written, by the Company to do any of the foregoing.
(f) Tax Returns and Payments; Tax Status. The Company has duly
filed all federal, state and local tax returns required to be filed and has duly
paid in full all taxes and other governmental charges upon the Company or its
properties, assets, income and sales and has delivered copies of the Company's
last three (3) years tax returns to Buyer. The charges, accruals, and reserves
with respect to taxes on the books of the Company are adequate. All taxes that
the Company is or was required by law, ordinance or rule to withhold or collect
have been duly withheld or collected and, to the extent required, have been paid
to the proper governmental authority.
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(g) Legal Proceedings. There are no actions, suits,
proceedings or claims pending or, to the knowledge of the Company, threatened,
with respect to or in any manner affecting the Company or the Purchased Assets.
(h) Financial Statements. (i) The Sellers have previously
delivered to Buyer the Financial Statements. (ii) The Financial Statements
present fairly the financial condition and the results of operation, changes in
stockholders' equity, and cash flow of the Company as at the respective dates
set forth therein.
(i) Employees. The Company does not now maintain or make
contributions to, and has not in the past maintained or made contributions to,
any employee pension plan or employee benefit plan, as such terms are defined
under the Employee Retirement Income Security Act of 1974, as amended.
(j) Insurance. The Company carries insurance, which. is
adequate in character and amount, with reputable insurers, covering all of its,
assets, properties and, business, and it has provided all required performance
or other surety bonds.
(k) Environmental. (i) The Company has not transported,
stored, treated or disposed, nor has it arranged for or, to the knowledge of the
Company, allowed any third Person to transport, store, treat or dispose waste to
or at: (i) any location other than a site lawfully permitted to receive such
waste for such purposes, or (ii) any location designated for remedial action
pursuant to the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 ("CERCLA") or any similar federal or state statute; nor has it
performed, arranged for or allowed by any method or procedure such
transportation or disposal in contravention of any laws or regulations or in any
manner which may result in liability for contamination of the environment. The
Company has not disposed, nor has it allowed or arranged for any third parties
to dispose of waste upon property owned or leased by it, except as permitted by
law.
(l) Brokers or Finders. The Company nor its respective agents
have incurred any obligation or liability, contingent or otherwise, for
brokerage or finders' fees or agents' commissions or other similar payment in
connection with this Agreement.
5.2 Buyer's Representations and Warranties. Buyer represents
and warrants to Seller that each of the following statements are true and
correct upon execution of this Agreement and at all times through Closing and
thereafter:
(a) Organization and Good Standing. The Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
state of its incorporation and has all requisite corporate and other power and
all necessary permits, certificates, licenses, approvals and other
authorizations required to carry on its business in the manner in which such
business is presently carried on. The Buyer is qualified to do business and is
in good standing in every state or jurisdiction in which either the ownership or
use of its properties, or the nature of the activities conducted by it, requires
such qualification or the lack thereof would have a material adverse effect on
the Buyer.
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(b) Authority. Buyer has full corporate power and authority to
execute, deliver and perform this Agreement and all other documents and
instruments to be executed by Buyer pursuant to this Agreement without the
consent of any other person or entity. This Agreement and the transactions
contemplated by it, have been validly approved and authorized by the Board of
Directors of Buyer, and its officer or officers executing this Agreement have
been duly authorized for that purpose.
(c) Valid and Binding Agreement. This Agreement constitutes a
valid and binding agreement of Buyer, enforceable against it in accordance with
its terms. Neither the execution and delivery of this Agreement nor the purchase
of the Purchased Assets and Inventory (i) violates or will violate any statute
or law or any rule, regulation or order of any court or governmental authority
applicable to Buyer, or (ii) violates or will violate, or conflicts with or will
conflict with, or constitutes a default under or will constitute a default
under, any contract, commitment or agreement to which Buyer is a party or by
which Buyer is bound.
(d) No Broker. Buyer has entered into no agreement to which a
party thereto is entitled to any brokerage or commission fee as a result of the
transactions contemplated hereby.
6. Conditions Precedent to Closing.
6.1 Conditions Precedent. All obligations of the parties under
this Agreement are subject to the fulfillment prior to or at the Closing of each
of the following conditions:
(a) Representations and Warranties True at Closing. Buyer's
and Seller's representations and warranties contained in this Agreement shall be
true at the time of Closing as though such representations and warranties were
made at such time.
(b) Performance. Each party shall have performed and complied
with all agreements and conditions required by this Agreement to be performed or
complied with by such party prior to or at the Closing.
(c) Purchase Price. Buyer shall have delivered to Marino the
ECC Shares and the $1,792,000 in lawful currency of the United States of
America.
(d) Appraisal. Seller and/or the Company shall have received
an appraisal regarding the Company which substantially supports the Purchase
Price being paid hereunder.
(e) Board Approval. Buyer's Board of Directors shall have
approved the transactions contemplated hereby. Failure of Buyer's Board to
approve this Agreement shall render this Agreement null and void.
(f) Other Documents. Buyer shall have received such other
documents as Buyer may reasonably request for the purpose of (i) evidencing the
accuracy of any of Seller's representations and warranties, (ii) evidencing the
performance by Seller of, or the compliance by Seller with, any covenant or
obligation required to be performed or complied with by Seller, (iii) evidencing
the satisfaction of any condition referred to in this Section 7(c), or (iv)
otherwise facilitating the consummation or performance of any of the
transactions contemplated herein.
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7. Indemnification.
7.1 Indemnification of Buyer. Subject to the limitations
contained in this Section 7, Seller agrees to indemnify, defend and hold
harmless Buyer and each of its affiliates and their respective directors,
officers, employees, successors and assigns from and against any and all losses,
liabilities (including punitive or exemplary damages and fines or penalties and
any interest thereon), expenses (including reasonable fees and disbursements of
counsel and expenses of investigation and defense), claims, liens or other
obligations of any nature whatsoever (hereinafter individually, a "Loss" and
collectively, "Losses") which, directly or indirectly, arise out of, result from
or relate to (a) any inaccuracy in or any breach of any representation and
warranty which survived the Closing pursuant to Section 5.1 hereof, or any
breach of any covenant or agreement of Seller contained in this Agreement.
7.2 Indemnification of Seller. Subject to the limitations
contained in this Section 7, Buyer agrees to indemnify, defend and hold harmless
Seller, its affiliates and their respective directors, officers, employees,
successors and assigns from and against any and all Losses including reasonable
attorney's fees and costs which, directly or indirectly, arise out of, result
from or relate to (a) any inaccuracy in or any breach of any representation and
warranty, or any breach of any covenant or agreement, of Buyer contained in this
Agreement or in any document or other papers delivered by Buyer pursuant to this
Agreement.
7.3 Method of Asserting Claims. The party making a claim under
this Section 7 is referred to as the "Indemnified Party" and the party against
whom such claims are asserted under this Section 7 is referred to as the
"Indemnifying Party". All claims by any Indemnified Party under this Section 7
shall be asserted and resolved as follows:
(a) In the event that any claim or demand for which
an Indemnifying Party would be liable to an Indemnified Party hereunder
is asserted against or sought to be collected from such Indemnified
Party by a third party, said Indemnified Party shall with reasonable
promptness notify in writing the Indemnifying Party of such claim or
demand, specifying the basis for such claim or demand, and the amount
or the estimated amount thereof to the extent then determinable (which
estimate shall not be conclusive of the final amount of such claim and
demand; the "Claim Notice"); provided, however, that any failure to
give such Claim Notice will not be deemed a waiver of any rights of the
Indemnified Party except to the extent the rights of the Indemnifying
Party are actually prejudiced by such failure. The Indemnifying Party,
upon request of the Indemnified Party, shall retain counsel (who shall
be reasonably acceptable to the Indemnified Party) to represent the
Indemnified Party and shall pay the reasonable fees and disbursements
of such counsel with regard thereto; provided, however, that any
Indemnified Party is hereby authorized prior to the date on which it
receives written notice from the Indemnifying Party designating such
counsel, to retain counsel, whose fees and expenses shall be at the
expense of the Indemnifying Party, to file any motion, answer or other
pleading and take such other action which it reasonably shall deem
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necessary to protect its interests or those of the Indemnifying Party
until the date on which the Indemnified Party receives such notice from
the Indemnifying Party. After the Indemnifying Party shall retain such
counsel, the Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party unless (x) the Indemnifying Party and
the Indemnified Party shall have mutually agreed to the retention of
such counsel or (y) the representation of both parties by the same
counsel (in the opinion of such counsel) would be inappropriate due to
actual or potential differing interests between them, in which case
such fees shall be paid by the Indemnifying Party. The Indemnifying
Party shall not, in connection with any proceedings or related
proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one such firm for the Indemnified Party (except
to the extent the Indemnified Party retained counsel to protect its (or
the Indemnifying Party's) rights prior to the selection of counsel by
the Indemnifying Party). If requested by the Indemnifying Party, the
Indemnified Party agrees to cooperate with the Indemnifying Party and
its counsel in contesting any claim or demand which the Indemnifying
Party defends. A claim or demand may not be settled by the Indemnifying
Party without the prior written consent of the Indemnified Party (which
consent will not be unreasonably withheld) unless, as part of such
settlement, the Indemnified Party shall receive a full and
unconditional release reasonably satisfactory to the Indemnified Party.
(b) In the event any Indemnified Party shall have a
claim against any Indemnifying Party hereunder which does not involve a
claim or demand being asserted against or sought to be collected from
it by a third party, the Indemnified Party shall send a Claim Notice
with respect to such claim to the Indemnifying Party.
(c) After delivery of a Claim Notice, so long as any
right to indemnification exists pursuant to this Section 7 the affected
parties each agree to retain all Books and Records related to such
Claim Notice. In each instance, the Indemnified Party shall have the
right to be kept fully informed by the Indemnifying Party and its legal
counsel with respect to any legal proceedings. Any information or
documents made available to any party hereunder and designated as
confidential by the party providing such information or documents and
which is not otherwise generally available to the public and not
already within the knowledge of the party to whom the information is
provided (unless otherwise covered by the confidentiality provisions of
any other agreement among the parties hereto, or any of them), and
except as may be required by applicable Law, shall not be disclosed to
any third Person (except for the representatives of the party being
provided with the information, in which event the party being provided
with the information shall request its representatives not to disclose
any such information which it otherwise required hereunder to be kept
confidential).
8. Assignment.
8.1 Assignment and Amendments. This Agreement shall not be
assignable by any of the parties hereto, except that Buyer may, without the
prior written consent of Seller, assign this Agreement and any or all of its
rights and/or its obligations hereunder (i) to any one or more of its affiliated
companies prior to Closing or (ii) to one or more of its lenders as collateral
for a loan at any time. No assignment will relieve the assigning party of any of
its obligations hereunder. This Agreement cannot be altered or otherwise amended
except pursuant to an instrument in writing signed by all parties.
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9. Miscellaneous.
9.1 Survival. All representations, warranties, covenants and
agreements made by either party or pursuant hereto, except as otherwise
expressly stated, shall survive Closing.
9.2 Releases. Upon execution of this Agreement, Buyer shall
cause Marino to be released from any and all personal guarantees of the
obligations of Marino Electric Company or in connection with the Business of the
Company.
9.3 Cooperation in Litigation. In the event and for so long as
any party is contesting, pursuing or defending against any charge, complaint,
action, suit, proceeding, hearing, investigation, claim or demand or pursuing
any claim in connection with (i) any transaction contemplated under this
Agreement or (ii) any fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure to act,
or transaction on or prior to the Closing involving the Business (the
"Litigating Party"), the other party (the "Cooperating Party") shall use its
commercially reasonable efforts to cooperate fully with the Litigating Party and
its counsel in the contest, pursuit or defense, make available its personnel,
and provide such testimony, information and access to its books and records as
shall be necessary or reasonably desirable in connection with the contest,
pursuit or defense. The Litigating Party shall pay or reimburse the Cooperating
Party for reasonable travel and meal charges of the employees and other
reasonable out-of-pocket expenses of the Cooperating Party incurred in
connection therewith (unless the Litigating Party is entitled to indemnification
therefor, or is required to bear additional expenses, under Section 7).
9.4 Benefit. This Agreement shall be binding upon and inure to
the benefit of the successors and assigns of Seller and Buyer.
9.5 Third Party Rights. The provisions of this Agreement are
intended for the sole benefit of the parties and shall not inure to the benefit
of any other person or entity (other than permitted assigns of the parties or as
reflected in section 9.4 above.)
9.6 Governing Law. This Agreement is being delivered and is
intended to be performed in the State of Illinois and shall be construed and
enforced in accordance with the laws thereof.
9.7 Counterparts and Headings. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original and all
of which together shall constitute one and the same instrument. All headings in
this Agreement are inserted for convenience of reference only and shall not
affect its meaning or interpretation.
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9.8 Severability. Should any term, provision or section hereof
be held to be invalid, such invalidity shall not affect any other provisions or
sections hereof or thereof which can be given effect without such invalid
provision or section, all of which shall remain in full force and effect.
9.9 Further Assurances. The parties shall execute such further
documents, and perform such further acts, as may be necessary to consummate the
transactions herein.
9.10 Variations in Pronouns. All pronouns and any variations
thereof refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person or persons may require.
9.11. Entire Agreement. This Agreement represents the entire
agreement and understanding of the parties hereto and all prior and concurrent
agreements, understandings, representations and warranties in regard to the
subject matter hereof are and have been merged herein.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement the day and year first above written.
SELLER:
/s/Xxxxxx Xxxxxx
------------------------
Marino Electric Inc., by
Xxxxxx Xxxxxx its President
XXXXXX XXXXXX:
/s/Xxxxxx Xxxxxx
-----------------------
Xxxxxx Xxxxxx, individually
BUYER:
/s/Xxxxx XxXxxxxx
------------------------
ELECTRIC CITY CORP. by,
Xxxxx XxXxxxxx, its Secretary
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