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ASSET PURCHASE AGREEMENT
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By and Between
POWER EFFICIENCY CORPORATION
(A Delaware corporation)
PURCHASER
and
PERFORMANCE CONTROL, LLC
(a Michigan limited liability company)
SELLER
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Dated August 7, 2000
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THIS AGREEMENT (the "Agreement"), made and entered into as of the 7th day of
August 2000, by and between Power Efficiency Corporation, a Delaware corporation
(the "Purchaser"), with an office at 0000 Xxxxxxx Xxxxx, Xxxxx X, Xxx Xxxxx, XX
00000, and Performance Control, LLC, a Michigan limited liability company (the
"Seller"), having an address 0000 Xxxxxxx Xxxxx, Xxxxx X, Xxx Xxxxx, XX 00000.
W I T N E S S E T H:
WHEREAS, the Seller is engaged in the assembly and distribution of
motor controller products and energy management related electrical components
(the "Business"); and
WHEREAS, Seller desires to sell, and Purchaser desires to purchase, all
of Seller's assets employed in the Business as more fully described in Section 1
hereof;
NOW, THEREFORE, in consideration of the premises and mutual covenants,
agreements, representations and warranties contained in this Agreement, the
parties agree as follows:
SECTION 1
Assets to be Purchased
Subject to the terms and conditions of this Agreement, the Seller
hereby agrees to sell, assign, transfer and deliver to Purchaser, and the
Purchaser agrees to purchase, acquire and accept from the Seller, at the Closing
(as hereinafter defined) provided for herein, the following described assets,
properties and rights (collectively the "Assets") on the Closing Date (as
hereinafter defined), including any additions thereto or replacements thereof
between the date hereof and the Closing Date, free and clear of any and all
liens, claims, charges, restrictions and encumbrances, except as expressly set
forth herein:
1.1 Certain Contracts. Those contracts described on Schedule 1.1.
1.2 Current Product and Inventory. All of Sellers current product and
inventory, including those described on Schedule 1.2. (Items designated by
Seller as obsolete may be transferred, but shall be assigned no dollar value.)
1.3 Permits. All of Seller's right, title and interest in and to all
state and municipal permits, certificates, registrations, licenses and
authorizations to operate the Business as described on Schedule 1.3 (the
"Permits).
1.4 Books and Records. All of Seller's files, documents, records and
books of accounts, including, but not limited to, engineering drawings, plans
and artwork, relating to the Assets and the Business for at least the last seven
(7) years (the "Books
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and Records"). Books and Records shall include without limitation all notes,
papers, drawings, plans, calculations, formulations, bills of material for all
research and development and products relating to the Business, whether in
conceptual phase, pre- development, development, presently marketed, or formerly
marketed.
1.5 Other Contracts. Any other contracts or agreements relating to the
operation of the Assets or the Business, including, without limitation, all
options, contracts to purchase and other rights in and to property held or used
by Seller, service agreements, maintenance agreements, as described on Schedule
1.5 (the "Other Contracts").
1.6 Intellectual Property. All right, title and interest of Seller, if
any, in and to any patents, trademarks, copyrights, registrations (and
applications for the foregoing), trade names, licenses and service marks owned
by Seller or in which Seller has rights and licenses, as described on Schedule
1.6 (the "Intellectual Property"). The trade names shall include, but not
limited to, the names "Performance Controller@ and "Precis Energy" (the "Trade
Names").
1.7 Goodwill. All of Seller's goodwill with respect to the Business.
1.8 Accounts Receivable. All accounts receivable of Seller with respect
to the Business existing as of the Closing Date (the "Accounts Receivable"). The
Accounts Receivable are evidenced by Schedule 1.8 .
1.9 Prepaid Expenses. All prepaid expenses ("Prepaid Expenses") of
Seller with respect to the Business existing as of the Closing Date, except as
set forth to the contrary on Schedule 1.9 annexed hereto.
1.10 Furniture, Fixtures and Equipment. All furniture, fixtures and
equipment (collectively the "Fixtures") owned by Seller as of the Closing Date
with respect to the Business except as set forth on Schedule 1.10 annexed
hereto.
1.11 Customer Lists. Contact information regarding all customers of
Seller within the last seven (7) years with respect to the Business, including
addresses, telephone numbers and contact names for each customer (the "Customer
Lists") as described on Schedule 1.11 annexed hereto.
1.12 Website. All rights, title and interest, including all copyrights,
in and to all content contained in the Internet web site located at
xxx.xxxxxxxxxxxxxxxxxx.xxx and attached as Schedule 1.12, including but not
limited to all graphics, graphical interfaces, designs, layouts, text, source
code and object code related thereto.
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SECTION 2
Purchase Price
2.1 Purchase Price. The Purchase Price for the Assets to be sold,
transferred and conveyed to Purchaser by Seller, shall be an aggregate of
1,112,245 authorized but unissued shares of the Purchaser's common stock, $.001
par value per share (the "Common Stock"), which the Seller hereby accepts as
fair, just and reasonable compensation for the Assets (the "Shares"). The
Shares, which may hereinafter be referred to as the "Purchase Price", shall be
issued and delivered at the Closing on the Closing Date and represented by
certificates registered in the names of the Seller and those Members referred to
in Section 2.3 subject to the requirement to deliver 50,000 Shares to the Escrow
Agent pursuant to Section 17.1 hereof.
2.2 Seller's Right to Terminate. In the event the Purchaser has not
consummated the sale of a minimum of $300,000 worth of its securities for cash
in the Private Offering (as that term is defined in the next sentence) on or
before July 28, 2000, the Seller has retained the right, on ten days prior
written notice to the Purchaser, to terminate this Agreement with the Purchaser.
In this regard, and in order to finance the business combination between the
parties, the Purchaser has undertaken to implement a private offering of a
minimum of $300,000 and a maximum of $1,000,000 of the Purchaser's securities
(the "Private Offering"). The Private Offering shall consist of a minimum of 12
and a maximum of 40 units offered at $25,000 per unit. Each unit to be comprised
of 25,000 shares of the Purchaser's Common Stock, offered at $1.00 per share,
and a five year warrant to purchase 25,000 shares of the Purchaser's Common
Stock at $3.00 per share during the first year, $4.00 per share during the
second year and $5.00 per share during the third year. Until July 28, 2000, the
Seller shall not (i) solicit or encourage any offer or enter into any agreement
for the sale, transfer or other disposition of any of the Assets to or with any
other entity or person, other than sales of assets by Seller in the ordinary
course of its business, (ii) entertain or pursue any unsolicited offer for any
such sale, transfer or other disposition, or (iii) furnish to any person or
entity (other than the Purchaser, and its authorized agents and representatives)
any nonpublic information concerning Seller or its business, financial affairs
or prospects for the purpose or with the intent of permitting such person or
entity to evaluate a possible acquisition of any of the Assets.
2.3 Use of the Shares. The Seller shall utilize an aggregate of 28,500
Shares to satisfy $114,000 in notes payable to Members and an aggregate of
73,745 Shares to satisfy $294,978 in accrued salaries payable to Members and
employees of the Seller. Seller's obligations under this Agreement are
conditioned upon its receipt from the holders of the various notes payable, and
the persons entitled to receive their accrued salaries, of settlement agreements
from those persons, in which they agreed to accept such number of shares in full
satisfaction of their claims (which condition Seller may waive in whole or in
part). At Seller's request, Seller may return the share certificates issued
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pursuant to this Section 2.3 in the name of Xxxxxx Xxxxxxxxx (or his heirs)
and/or Xxx Xxxxxxxx, to the Purchaser, whereupon the Purchaser shall reissue
such share certificates in the name of Seller (and in such event, Seller's
liability to Xxxxxx Xxxxxxxxx and/or Xxx Xxxxxxxx shall be Excluded
Liabilities).
SECTION 3
Closing
3.1 The closing of the transactions contemplated hereby (the
"Closing") shall be held within two business days of satisfaction of the
conditions to closing set forth in Sections 8 and 9 hereof, but in no event
later than August 7, 2000 (the "Closing Date"), and shall be held at the offices
of Xxxxxx Xxxxxxxxxxx, Esq., 0000 Xxxxxxxx, Xxxxx 000, Xxx Xxxx 00000, or such
other place as the parties shall mutually agree upon in writing.
SECTION 4
Assumption of Liabilities
4.1 Assumption of Certain Liabilities. Purchaser shall assume and
agrees to pay, perform and discharge when due, and to indemnify and hold Seller
harmless from, only the following liabilities and obligations of Seller
(individually, an "Assumed Liability" or collectively, the "Liabilities"), and
no other liabilities of Seller, which relate to and arise during the period
subsequent to the Closing:
(i) All liabilities and obligations of Seller arising from or
under Seller's accounts payable listed on Schedule 4.1(i)
attached hereto;
(ii) All liabilities and obligations of Seller arising from or
under the equipment leases identified on Schedule 4.1(ii)
attached hereto, including postage meter;
(iii) All liabilities and obligations of Seller arising from or
under the Contracts, the Other Contracts and the Intellectual
Property;
(iv) All liabilities and obligations of Seller arising from or
under all written agreements, leases and licenses, existing and
holdover, held by Seller for the use of real estate on which the
Business is operated, including those described on Schedule
4.1(iv) (the "Leases"); and
(v) All liabilities and obligations of Seller arising from or
under the software leases listed on Schedule 4.1(v) attached
hereto.
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(vi) Unknown product warranty claims.
Purchaser and Seller agree that the Assumed Liabilities shall not exceed
$438,888.20 (which is $452,666.20 less $13,786.00). The parties agree that for
purposes of determining whether the Assumed Liabilities exceed this dollar
limit, amounts which may be due for periods on or after the Closing Date under
various contracts of Seller that are assumed by the Purchaser shall not be taken
into account (for example, without limiting the foregoing, rent under the
Seller's Lease for periods on or after the Closing Date shall not be counted as
part of the dollar cap in this section). To the extent that Purchaser may
satisfy the Assumed Liabilities by payment of less than $438,880.20 (either
because the Assumed Liabilities on Seller's books and records do not aggregate
that amount, or because the holder of such liabilities are willing to accept
lesser amounts, or for any other reason), then Purchaser agrees to assume so
much of the Seller's Excluded Liabilities as is equal to the difference between
$438,880.20 and the amount actually paid by Purchaser to satisfy the Assumed
Liabilities. Seller shall designate which of its Excluded Liabilities shall be
paid pursuant to this paragraph. (To illustrate the foregoing, if Purchaser is
able to satisfy the Assumed Liabilities in full by payment of an aggregate
$338,880.20, then Purchaser will agree to assume an additional $100,000 of
Seller's Excluded Liabilities.) Purchaser shall make its books and records
relating to the Assumed Liabilities available for inspection by the Seller from
time to time after the Closing on reasonable advance notice to verify the amount
of payment made by Purchaser with respect to such Assumed Liabilities.
4.2 Control by Purchaser. From and after the Closing Date, a committee
of the Purchaser's Board of Directors comprised of Xxxxxxxx Xxxxxxxx and Xxxxxx
Xxxxxxx, shall by unanimous consent, have complete control over the payment,
settlement or other disposition of the Assumed Liabilities and the right to
commence, conduct and control all negotiations and proceedings with respect
thereto. Seller shall notify Purchaser promptly of any claim made against Seller
with respect to any Assumed Liability and shall not, except with Purchaser's
prior written consent, voluntarily make any payment of, settle or offer to
settle, or consent to any compromise or admit liability with respect to any
Assumed Liability. Seller shall cooperate with Purchaser in any reasonable
manner requested by Seller in connection with any negotiations or proceedings
involving any Assumed Liability. Purchaser hereby indemnifies and holds harmless
Seller and Seller's Members, officers, and agents, from and against any claim
arising out of Purchaser's failure to pay the Assumed Liabilities.
4.3 Excluded Liabilities. Purchaser shall be obligated to pay any
Assumed Liability only to the extent that it constitutes a valid and legally
enforceable claim against Seller, and nothing herein shall prevent Purchaser
from contesting any Assumed Liability in good faith. Any other provision of this
Agreement to the contrary notwithstanding (except for the last four sentences of
Section 4.1), Purchaser shall not and does not assume any of the following
liabilities or obligations of Seller:
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(i) those not included in Section 4.1 or relating to assets of
Seller which are not included in the Assets;
(ii) those liabilities or obligations not set forth in Schedules
4.1(i) or 4.1(ii) relating directly to the operation of the
Assets accrued, due and payable as of the Closing Date;
(iii) any matter for which Purchaser is entitled to
indemnification by Seller under Section 12 hereof;
(iv) any liability or obligation incurred by Seller on or after
the Closing Date including any liability of Seller pursuant to
Section 20.13;
(v) any liability or obligation involving the payment of any
federal, state or local taxes on or measured by income or any
comparable tax imposed under any other tax statutes or interest
or penalties relating thereto unless they are specifically
enumerated on Schedule 4.1;
(vi) any liability or obligation incurred in connection with the
operation of the Assets arising prior to the Closing Date unless
they are specifically enumerated on Schedule 4.1;
(vii) obligations to Seller's employees (including pension
liabilities, stay bonuses, severance and all of Seller's
contracts, if any with employees pertaining to the Business of
Seller) unless they are specifically enumerated on Schedule 4.1.
(viii) taxes payable by Seller and/or its shareholders or
affiliates arising out of the transactions contemplated by this
Agreement;
(ix) pending litigation, threatened litigation or claims made or
threatened;
(x) inter-company obligations;
(xi) known tort liabilities;
(xii) environmental liabilities of any kind whether incurred by
Seller or Seller's predecessors; and
(xiii) known product warranty claims.
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SECTION 5
Representations and Warranties of Seller
Seller represents and warrants to Purchaser, which representations and
warranties shall be true as of the date hereof and shall survive the Closing for
a period of one year, as follows:
5.1 Organization and Standing. Seller is a limited liability company
duly organized under the laws of the State of Michigan and is in good standing
under such laws. Seller is duly qualified to do business as a foreign
corporation in, and is in good standing in each state in which the nature of its
business or the ownership or leasing of its property makes such qualification
necessary, except where the failure to so qualify would not have a material
adverse effect on Seller or any of its businesses, properties or assets. Seller
has all requisite power and authority necessary to own, lease and operate its
properties and to carry on its business as same is presently being conducted;
and Seller lawfully holds all franchises, licenses, and permits necessary and/or
required therefor.
5.2 No Defaults. Except as set forth in this Agreement, neither Seller
nor, to the best of Seller's knowledge, any third party is in default in any
respect under any of the contracts, leases or other items set forth or described
in the Schedules referred to herein to which Seller is a party or by which
Seller or the Assets or the Business may be bound or affected, and there has not
occurred any event which with the lapse of time or giving of notice or both
would constitute such a default; to the best of Seller's knowledge, such
contracts, leases, insurance policies and other items are legal, valid and
binding obligations of the respective parties thereto enforceable in accordance
with their terms; and, to the best of Seller's knowledge, there are no defenses,
offsets or counterclaims thereto which may be made by parties thereto nor has
Seller waived any rights thereunder.
5.3 Noncontravention. The execution, delivery, and performance by
Seller of this Agreement and compliance therewith including (i) the execution of
the Xxxx of Sale annexed hereto as Exhibit 10.1(iii) and (ii) the Assignment and
Assumption Agreement, annexed hereto as Exhibit 10.1(iv) and (iii) the execution
and delivery of any other document, certificate or agreement to be delivered
hereunder in connection herewith, will not (a) result in any violation of and
will not conflict with, or (b) result in a breach of any of the terms of, or
constitute a default under, or (c) constitute an event which with notice or the
passage of time or both would constitute a default under, or (d) result in the
imposition of any lien or any other encumbrance on or with respect to any of the
Assets as a result of any provision of, or (e) result in the acceleration of any
provision of, any law of any type whatsoever to which Seller is subject,
Seller's Operating Agreement or similar governing document, as amended, or
By-Laws, as amended, or any mortgage, indenture, agreement (written or oral),
instrument, judgment, decree, order, rule or regulation or other restriction to
which Seller is a party or by which it or any of its business, properties or
assets, is or
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may be bound or affected.
5.4 No Consents. Except with respect to any consents to assignments
required pursuant to Section 8.6 hereof, no consent, approval, qualification,
order or authorization of, or filing with, any governmental authority or any of
Sellers' members, lenders or other creditors is required in connection with
Seller's valid execution, delivery and performance of this Agreement and all
other agreements, instruments and documents to be delivered hereunder in
connection herewith. Notwithstanding the foregoing (or anything else to the
contrary in this Agreement or the Schedules or ancillary agreements), Purchaser
acknowledges that consents to the transactions contemplated by this Agreement
are required from Heritage Bank (with respect to the Seller's bank financing),
Highland Industrial Properties, L.L.C. (with respect to the Seller's lease of
its Varsity Drive, Ann Arbor, Michigan premises), and the U.S. Department of
Defense (with respect to Seller's contract with the Defense Department), and
that none of such consents will be obtained from those parties, Purchaser hereby
expressly waiving any requirement that Seller obtain such consents and waiving
any claim against the Seller arising out of the failure to obtain such consents.
5.5 Due Authorization. Seller has full legal right, power and
authority to enter into and perform this Agreement and all other agreements,
instruments and documents to be delivered hereunder in connection herewith, and
the execution and delivery hereof by Seller and the consummation of the
transaction contemplated hereby have been duly authorized and approved by the
Managers and Members and constitute the legal, valid and binding obligations of
Seller enforceable against Seller in accordance with their terms. Certified
copies of the resolutions of Seller's Managers regarding the foregoing are
attached hereto as Exhibit 10.1(v). Such resolutions have not been altered,
amended, modified, rescinded or revoked.
5.6 Brokers or Finders. Seller represents that neither Seller nor any
of Seller's officers, directors, agents or employees has taken any action to
cause Purchaser to incur any liability whatsoever to any party for any brokerage
commission, finder's fee, agent's commission or similar fee in connection with
this Agreement or any transaction contemplated hereby.
5.7 Financial Statements. Annexed hereto as Schedule 5.7 are copies of
a balance sheet of Seller dated as of June 30, 2000 and statements of accounts
payable dated as of July 31, 2000 and accounts receivable dated as of June 30,
2000. The foregoing financial statements are hereinafter referred to as the
"Financial Statements". The fiscal year pertaining to the Financial Statements
is the calendar year. Pursuant to Section 8.10 of this Agreement, Seller's Chief
Financial Officer or Member of equivalent rank and function shall certify, and
the Seller hereby represents and warrants, that to the best of Seller's
knowledge:
(i) Each of the Financial Statements, together with the notes
thereto
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(A) is in agreement with the books, records and accounting methods of Seller,
(B) is complete and correct and presents fairly the financial position, results
of operations and changes in financial position of the Business as of the dates
and for the periods indicated, and (C) have been prepared in accordance with
accounting principles consistently applied throughout the periods involved. The
books of account of Seller fully and fairly reflect all of the transactions of
Seller and are complete and correct;
(ii) Since June 30, 2000, there has not been any material
adverse change in the financial condition, results of operations or in the
business, properties or assets of Seller; and
(iii) At June 30, 2000, the Seller did not have any material
obligation or liability, absolute or contingent, which had accrued at that date,
or had arisen out of transactions effected prior to that date or was
attributable to periods prior to that date or to action taken or omitted to be
taken during such periods, other than such obligations and liabilities as are
shown or provided for on Seller's balance sheet as of said date, included in the
Financial Statements, together with the notes thereto, or as are set forth in
the Schedules referred to herein.
5.8 Exclusive Contracts. Except as set forth on Schedule 5.8, the
Seller has entered into no oral written or other agreements with former,
existing or future customers, sales representatives or other parties which
provide any exclusive rights to such party for the sale, purchase, marketing or
distribution of any of the products of the Business.
5.9 Effective Permits; Transferability. Annexed hereto as Schedule 5.9
are photocopies of all Permits. The Permits are transferable to Purchaser.
Except as set forth on Schedule 1.3, and to the best of the Seller's knowledge,
there is a Permit for all aspects of the Business and Assets requiring a Permit.
Each Permit is in full force and effect, is not in default, all fees payable in
connection therewith have been paid and Seller has received no notice that it
has not complied with the material terms of the Permits.
5.10 Other Contracts. Schedule 5.10 contains photocopies of all Other
Contracts, which Other Contracts are assignable to Purchaser. Except as set
forth on Schedule 1.5, to the best of Seller's knowledge, Seller is not a party
to any agreement not entered into in the ordinary course of business, or to any
indenture, mortgage, deed of trust, lease or other agreement.
5.11 Title to Assets. To the best of the Seller's knowledge, the
Seller (and no other person) has good and marketable title to all the Assets,
free and clear of any and all (i) restrictions on or conditions to transfer or
assignment, and (ii) mortgages, liens, pledges, charges, encumbrances, claims,
and other covenants, conditions or restrictions except as set forth on Schedule
5.11. Except as otherwise represented herein, to the best of Seller's knowledge,
Seller is not party to, nor are the Assets bound by any agreement,
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restriction or condition which is adverse to the Assets or Seller's business,
properties or financial condition. To the best of Seller's knowledge, there are
no undisclosed liabilities or obligations with respect to the Assets, either
accrued, absolute, direct, contingent or otherwise, which would materially
impair the value of the Assets, except as set forth on Schedule 5.11.
5.12 Certain Defaults and Violations. Except as set forth to the
contrary in this Agreement, the Certain Contracts and Other Contracts
(collectively "the Agreements") all are in full force and effect on all parties
thereto, and Seller has received no written notice that Seller has not fully
complied with all terms and conditions therein. To the best of Seller's
knowledge, except as set forth on Schedule 5.12, there exists no fact which,
with the passage of time or the giving of notice, would constitute a default
thereunder or entitle any other party to terminate or amend any of such
Agreements. Except as set forth on Schedule 5.12, Seller has received no notice
that any party to any of the Agreements intends to cancel or terminate any of
them or to exercise or not to exercise any options thereunder.
5.13 Trademarks and Similar Rights. Schedule 1.6 annexed hereto
contains a brief description of (i) all trademarks, trade names and copyrights,
or applications therefor, and all of the trade secrets, processes, formulas,
technical information and know-how, of every kind and description which are used
or relate to the Business and Assets, including, without limitation, those owned
by or registered in the name of Seller or in which Seller has any right, title
or interest (ii) all license agreements to which Seller is a party, either as
licensor or licensee, with respect to any trademarks, trade names or copyrights,
and (iii) all claims alleging that in the conduct of Seller's business as now
conducted Seller is infringing any patents, trademarks, trade names or
copyrights of others.
5.14 Compliance with Laws; Licenses. Except as set forth on Schedule
5.14, and to the best of the Seller's knowledge, (i) Seller has complied with
all laws, regulations, ordinances, licensing requirements and orders to which it
is subject (collectively, "Laws"), including without limitation, all zoning
Laws, applicable to its Assets and the Business, the breach or violation of
which could have a material adverse effect on the Assets or Business; (ii)
Seller has filed with the proper authorities all statements and reports required
by the Laws; (iii) Seller possesses all necessary licenses, franchises and
permits to conduct the Business in the manner in which and in the jurisdictions
and places where such Business are now conducted; and (iv) operations of the
Business is a permitted use under applicable Laws. Except as set forth on
Schedule 5.14, Seller has not, within the past three (3) years, received any
notice (oral or written) from any federal, state, county or municipal
governmental authority alleging a violation of any Law in connection with the
Business or the Assets.
5.15 Litigation. Schedule 5.15 annexed hereto contains a true and
correct list of all civil, criminal, administrative, arbitration or other
actions, suits, proceedings
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(including, without limitation, condemnation or proposed condemnation
proceedings) or investigations pending, or to the best of Seller's knowledge,
threatened against or affecting Seller, the Assets or the Business, at law or in
equity or admiralty or before or by any court or federal, state, municipal or
other governmental department, commission, board, agency or instrumentality,
domestic or foreign. Except to the extent indicated in Schedule 5.15, none of
such actions, suits, proceedings or investigations, either (i) involves a claim
for an amount exceeding the amount recoverable by Seller from insurance, subject
to the deductible amounts under said policies, or (ii) would, if adversely
determined, result in any material adverse change in the condition, financial or
other, of the Assets or the Business. Seller is not subject to any continuing
court or administrative order, writ, injunction or decree, applicable to it or
the Assets or the Business, and is not in default with respect to any order,
writ, injunction or decree, of any court or federal, state, municipal or other
governmental or quasi-governmental department, commission, board, agency or
instrumentality, domestic or foreign.
5.16 Taxes Paid; Etc.
(i) Seller has filed all federal, state and local tax
returns required to be filed, and has paid all federal, state
and local taxes which are due and payable as shown on such
returns, and any assessments received by Seller have been
paid.
(ii) There are no pending or, to Seller's knowledge,
threatened tax examinations, claims, liens, assessments,
deficiencies or liabilities to which the assets, business or
properties of Seller may be subject.
(iii) Seller has not consented to extend the
limitations period for the assertion of any claim for any
federal, state or local tax liability.
5.17 No Material Changes. Since April 30, 2000, except as set forth
herein or in any Schedule referred to herein, and to the best of the Seller's
knowledge, Seller has not (i) incurred or become subject to, or agreed to incur
or become subject to, any obligation or liability, absolute or contingent,
except for obligations entered into in the ordinary course of business; (ii)
granted any increases in the wages or salaries of employees of the Business
except in the ordinary course of business and consistent with past practice;
(iii) paid any bonus or made any similar payment; (iv) canceled or agreed to
cancel any debts or claims of the Business except in the ordinary course of
business; (v) suffered any extraordinary losses or waived any rights of
substantial value; (vi) directly or indirectly paid or made a commitment to pay
any severance or termination pay to any officer or executive employee of the
Business; (vii) made any material change in its mode of management or operation
or method of accounting; (viii) made any capital expenditures or entered into
commitments therefor with respect to the Business, other than expenditures or
commitments not exceeding $5,000 in the aggregate; (ix) entered into any other
transaction except in the ordinary course of business; or (x) entered into any
Contract
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which requires a payment more than one (1) month in advance, nor accepted any
payments under any contract more than one (1) month in advance.
5.18 Books and Records; Customer Lists. Schedule 5.18 annexed hereto
contains a list of all of the material books and records of Seller pertaining to
the Assets and the Business, including, without limitation, lists, telephone
directory listings, credit records and information, purchase and sales records
and information, advertising records, information and materials, sales promotion
records and information, market research data, records and information as to
meeting competition and all other contracts, files, instruments, literature and
other documents pertaining to the Business.
5.19 Labor Matters; Benefit Plans. There is no strike or other labor
dispute involving Seller pending or threatened which would adversely affect the
Assets or the Business, properties, rights or goodwill of Seller. All employees
of Seller are employees at will. Seller acknowledges that Purchaser shall not be
obligated to hire any employees of Seller.
5.20 Receivables. To the best of Seller's knowledge: The accounts and
other receivables shown on the balance sheets included in the Financial
Statements, and the receivables that will exist on the Closing Date, are and
will be bona fide receivables, without claim or set-off, except for the set-off
rights regarding the receivables from the Purchaser which, to the best of
Seller's knowledge, will be paid in accordance with their terms.
5.21 Easements, Etc. Schedule 5.21 annexed hereto sets forth all of the
easements, licenses or rights of way held or used by Seller not otherwise set
forth herein.
5.22 Disclosure. Neither this Agreement (including the Exhibits and
Schedules referred to herein and each of the Financial Statements and notes
thereto) nor any documents furnished pursuant hereto by Seller (collectively the
"Documents"), contains any false or misleading statements respecting Seller, the
Assets or the Business.
5.23 Environmental Matters. To the best of the Seller's knowledge:
(i) Seller is in compliance with all applicable Federal,
state and local laws and ordinances, including, but not limited
to, the Resource Conservation Recovery Act (42 U.S.C. 6901, et
Seq.), the Comprehensive Environmental Responsibility and
Liability Act (42 U.S.C. 9601 et seq.) and the Federal
Insecticide, Fungicide and Rodenticide Act (7 U.S.C. 136 et
seq.).
(ii) There have been no claims, litigation, administrative
proceedings, whether actual or threatened, or judgments or
orders, relating to any hazardous substances, hazardous wastes,
discharges, emissions or
13
other forms of pollution relating in any way to the operation of
the Business or to any real estate owned or, to Seller's
knowledge, leased by Seller (collectively, "Real Estate").
(iii) There have been no hazardous substances or hazardous
wastes, as defined by the Resource Conservation and Recovery Act
(42 U.S.C. Subsection 6901, et seq.) and the Comprehensive
Environmental Responsibility Compensation and Liability Act 42
(U.S.C. Subsection 9601, et seq.), generated, manufactured,
refined, transported, treated, stored, handled or disposed of on
the Real Estate by Seller or, to Seller's knowledge, any lessor,
previous owner or occupant of the Real Estate or any other
person.
(iv) There have been no discharges, spillages or disposals
of hazardous substances or hazardous wastes (as defined in
Section 5.23 (ii) above) on the Real Estate by Seller, or, to
Seller's knowledge, any lessor or previous owner or occupant of
the Real Estate or any other person.
5.24 No Severance. All of the Seller's employees are currently serving
without the benefit of written employment agreements and are therefore deemed to
be at will employees under Michigan law. The Seller is under no legal obligation
to pay severance pay to any of the Seller's employees.
5.25 Certain Indebtedness. Set forth on Schedule 5.25 annexed hereto
is a list of all secured indebtedness and other secured liabilities to which the
Assets are subject (the "Indebtedness"), including the respective names and
addresses of the obligors and obligees, the amount of and security for the
Indebtedness. All such Indebtedness, except for the Indebtedness of Michigan
Heritage Bank, which the Purchaser has agreed to assume on its existing terms
and conditions, shall be satisfied and discharged by the Seller at or before the
Closing.
5.26 Investment Representations. The Seller shall cause itself, and
each Member and Manager to execute the form of investment letter annexed hereto
as Schedule 5.26 wherein each shall acknowledge, accept and/or represent that:
(i) the Shares will be "restricted securities" as that term is defined under the
Act; (ii) the Shares will be acquired solely for investment purposes and without
a view towards the resale or distribution thereof; (iii) the Shares will be held
for the applicable one year holding period proscribed by Rule 144 under the Act;
(iv) the holding period of the Shares may be voluntarily extended upon the
request of the Purchaser's investment banker, so long as all other existing
Shareholders of the Purchaser agree to a similar holding period; (v) any sale of
the Shares will be accomplished only in accordance with the Act or the rules and
regulations of the SEC adopted thereunder; (vi) a standard form of restrictive
legend shall be imprinted on all certificates representing the Shares; and (vii)
a standard form of stop transfer order shall be imposed against the Shares on
the books and records of the
14
Company's transfer agent.
5.27 No Retail Sales. Seller does not make sales at retail to end users
and therefore is not required by law to collect or remit sales tax to any
governmental authority.
SECTION 6
Representations, Warranties and Covenants of Purchaser
Purchaser represents and warrants to Seller the following, which shall
be true as of the date hereof, and which representations and warranties shall
survive the Closing:
6.1 Organization and Standing. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full power and authority to enter into this Agreement and to
carry out the transactions contemplated hereby.
6.2 Due Authorization. The execution, delivery and performance of this
Agreement and the transactions contemplated hereby have been duly authorized by
all necessary corporate action on the part of Purchaser and this Agreement
(together with all documents and instruments executed by Purchaser in connection
herewith) constitutes the valid, legal and binding obligation of Purchaser,
enforceable in accordance with its terms.
6.3 Certain Documents. Purchaser acknowledges that it has received
copies of and reviewed the Financial Statements set forth on Schedule 5.7.
6.4 Brokers or Finders. Purchaser represents that neither Purchaser
nor any of Purchaser's officers, directors, agents or employees has taken any
action to cause Seller to incur any liability whatsoever to any party for any
brokerage commission, finder's fee, agent's commission or similar fee in
connection with this Agreement or any transaction contemplated hereby.
6.5 Confidentiality. The Purchaser hereby covenants and agrees to keep
confidential any and all information concerning the Seller that the Purchaser
learned or acquired pursuant to the Purchaser's due diligence investigation of
the Seller under and pursuant to Section 7.1 of this Agreement.
6.6 Capitalization. As of the date of this Agreement the authorized
capitalization of the Purchaser is comprised of 9,000,000 shares of Common
Stock, $.001 par value per share ("Common Shares"), and 500,000 shares of "blank
check" preferred stock, $.001 par value (the "Preferred Shares"). Similarly, the
Purchaser's issued and outstanding capitalization consists of: (i) 4,383,600
Common Shares and no Preferred Shares; (ii) five year options to purchase an
aggregate of 463,640 Common Shares at $5.00 per Common Share expiring on October
31, 2001; (iii) five year options to purchase
15
an aggregate of 36,360 Common Shares at $5.50 per Common Share expiring on
October 31, 2001; (iv) five year Warrant issued to Telpac Corporate Services
pursuant to the Term Sheet between the Purchaser and the Seller dated May 6,
2000 to purchase 50,000 shares at $2.00 per common share; and (v) underwriter's
warrants to purchase an aggregate of 36,720 Common Shares at $5.50 per Common
Share. As of the date of this Agreement the Purchaser's fully diluted
capitalization is comprised of 4,970,320 Common Shares.
6.7 Proposed Financing. As of the date of this Agreement, the Purchaser is
engaged in a private offering of a minimum of 12 ($300,000) and a maximum of 40
($1,000,000) units offered at $25,000 per unit (the "Units"). Each Unit consists
of 25,000 shares of the Purchaser's Common Stock, offered at $1.00 per share and
a five year warrant to purchase 25,000 shares of the Purchaser's Common Stock at
$3.00 per share during the first year, $4.00 per share during the second year
and $5.00 per share during the third year (the "Financing"). The Purchaser is
conducting the Financing solely to "accredited investors" under and pursuant to
the provisions of Rule 506 of Regulation D under the Securities Act of 1933, as
amended so as to be exempt from registration thereunder.
6.8 Acknowledgment of Debt. The Purchaser acknowledges and agrees
that it is indebted to the Seller in the aggregate amount of $54,751.91 and is
holding 485 controller boards (inventory) belonging to the Seller valued at $346
per board. In the event the Financing is not consummated as hereinabove provided
in Section 6.7, and the Seller has elected to terminate this Agreement, the
$54,751.91 in indebtedness shall be paid by the Purchaser to the Seller within
60 days from the Seller's notice of cancellation, and the 485 controller boards
shall be returned to the Seller.
6.9 Payment of Seller's Delinquent Rent and Other Obligations. The
Purchaser acknowledges and agrees that upon the Closing, it shall deliver to the
Seller $29,168.36 of the net proceeds derived from the Financing, to repay
monies advanced on the Seller's behalf for delinquent rent ($15,382.18), and for
the payment of certain other accrued payables ($13,786.18) of Seller.
6.10 Offering Memorandum. Purchaser represents and warrants that the
information contained in the Offering Memorandum attached hereto as Schedule
6.10 is true and correct in all material respects.
SECTION 7
Covenants of Seller
7.1 Access. Seller covenants and agrees that throughout the period
prior, up to and including the Closing Date, it shall allow Purchaser and
Purchaser's accountants and other representatives reasonable access, during
normal business hours throughout
16
the period prior to the Closing Date, to all of Seller's properties, facilities,
contracts, commitments, undertakings, books, records and files and will furnish
to Purchaser and/or Purchaser's representatives all such information concerning
the affairs of Seller as Purchaser or its representatives reasonably may
request.
7.2 Operations in Ordinary Course. Seller covenants and agrees that
throughout the period prior, up to and including the Closing Date, it shall:
(i) Continue to operate the Business in accordance with
current industry practices, and to preserve for Purchaser the
goodwill of the suppliers and customers of Seller and others
having business relations with Seller;
(ii) Not enter into any contract, commitment or arrangement
or take any of the actions of the types prohibited in Section
5.17 hereof other than in the ordinary course of the Seller's
business;
(iii) Continue to maintain the existing insurance on the
Assets.
7.3 No Settlements. Seller covenants and agrees that throughout the
period prior, up to and including the Closing Date, it shall not enter into any
material compromise or settlement of any litigation, proceeding or governmental
investigation relating to the Business or the Assets, unless Seller shall have
first consulted with Purchaser regarding such compromise or settlement.
7.4 Certain Renewals. Seller covenants and agrees that throughout the
period prior to, up to and including the Closing Date, it shall not terminate
its current lease for office space without first consulting with the Purchaser.
7.5 Accounts Receivable. From and after the Closing Date, any Accounts
Receivable (as defined in Section 1.8) shall be promptly remitted to Purchaser.
This Section 7.5 shall survive the Closing.
7.6 No Public Statements. From and after the date of this Agreement,
Seller and Seller's Members, employees and agents agree to make no public
statements regarding the execution or terms of this Agreement. Seller's
obligations pursuant to this Section 7.6 shall continue until the date the
Purchaser publishes a press release or makes any other public announcement.
7.7 Disputed Writing. Seller warrants, covenants and agrees that,
provided that this transaction closes according to its terms, Seller shall not
view a certain disputed prior writing characterized by the Seller as an asset
purchase agreement by and between the Purchaser and Seller dated December 31,
1998 (the "Disputed Writing") as a legally enforceable contract and Seller
irrevocably waives pursuing any claims or actions
17
against Purchaser based on or arising out of the Disputed Writing. Seller
further warrants, covenants and agrees that the Agreement is the final and
controlling asset purchase agreement by and between Purchaser and Seller. This
Section 7.7 shall survive the Closing.
7.8 No Seller Interference. From and after the date of this Agreement,
the Seller (and each of its Members) shall refrain from engaging in any act
which in any manner whatsoever interferes with the rights of the Purchaser under
the Certain Contracts, the Permits, the Books and Records, the Other Contracts,
the Intellectual Property or any other asset included in the Assets. This
section shall not apply to any act or omission taken by Xxxxx Xxxxxxx.
SECTION 8
Conditions Precedent to the Obligations of Purchaser
The obligations of Purchaser to consummate the transactions under this
Agreement at the Closing are, at the option of Purchaser, subject to the
fulfillment to its satisfaction on or before the Closing Date of the following
conditions:
8.1 Representations and Warranties Correct. All representations and
warranties of Seller contained in this Agreement shall be true and correct in
all material respects on and as of the Closing Date with the same force and
effect as if such representations and warranties had been made on and as of the
Closing Date.
8.2 Performance. All of the terms, covenants and conditions of this
Agreement to be complied with and performed by the Seller on or before the
Closing Date, shall have been complied with and performed in all material
respects.
8.3 Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall be reasonably satisfactory in
form and substance to Purchaser and its counsel.
8.4 Delivery of All Exhibits and Schedules. Seller shall have delivered
all certificates, Exhibits, and Schedules required pursuant to this Agreement in
form and substance reasonably satisfactory to Purchaser and its counsel.
8.5 No Actions Pending. There shall be no action or proceeding before
any court or governmental body pending or threatened wherein an unfavorable
judgment, decree or order would: (i) prevent the carrying out of this Agreement
or any of the transactions or events contemplated hereby; (ii) declare unlawful
or invalid transactions or events contemplated by this Agreement; (iii) cause
such transactions to be rescinded; (iv) require Purchaser to divest itself of
any of the Assets; (v) adversely and materially
18
affect the right of Purchaser after the Closing Date to own, operate or control
any of the Assets; or (vi) require Purchaser to pay damages as a result of any
of the transactions contemplated by this Agreement.
8.6 Consents, Waivers, Etc. All consents, waivers, approvals, licenses
or authorizations of third parties or governmental authorities or any amendments
or modifications to existing agreements with third parties required as a
pre-condition to the consummation of the transactions contemplated hereby, shall
have been duly obtained.
8.7 Sales Tax Lien Clearance. Seller shall have filed with the State
of Michigan any and all notices as shall be required under applicable law and
received any such written evidence so as to insure that the State of Michigan
has no possible claim for or lien against any of the Assets for or with respect
to any tax on or relating to the Assets or the Business of the Seller. In the
event that the State of Michigan shall be unable to provide clearance pursuant
to the foregoing sentence, and instead notifies the Seller of the existence of a
possible claim for tax, the Purchaser shall thereupon place into escrow such
number of Shares comprising the Purchase Price and for such time as shall be
required by the State of Michigan in satisfaction of any tax liability shown to
be due to the State of Michigan.
8.8 Notification of Creditors. [intentionally deleted]
8.9 Opinion of Counsel. Purchaser shall have received an opinion (the
"Opinion of Seller's Counsel") of Seyburn, Kahn, Xxxx, Xxxx and Xxxxxx, P.C.
("Seller's Counsel"), dated the Closing Date, in form and substance reasonably
satisfactory to Purchaser, to the effect that:
(i) the Seller is a limited liability company duly organized
and validly existing under the laws of the State of Michigan;
(ii) each of the Agreement and all other agreements,
instruments and documents to be delivered in connection
therewith, have been duly authorized by Seller and is the legal,
valid and binding obligation of Seller, enforceable in accordance
with its terms, except as the same may be limited by bankruptcy,
insolvency and other laws of general application now or hereafter
in effect relating to the rights and remedies of creditors,
subject to the available laws of equitable remedies;
(iii) the delivery to Purchaser of the documents of transfer
contemplated by this Agreement transfers to the Purchaser
whatever title the Seller owns in the Assets;
(iv) Seller's Counsel does not know of any action, suit,
proceeding, investigation or claim pending or threatened, against
or affecting Seller or
19
any assets, business, property or rights of Seller except as set
forth in Schedule 5.15 hereto;
(v) The sale by Seller to Purchaser on the Closing Date of
the Assets pursuant to the terms of this Agreement and the
consummation of the transactions contemplated hereby will not (i)
violate any provision of law; or (ii) to the best of counsel's
knowledge result in any breach of, or constitute a default under,
or constitute an event which with notice or lapse of time, or
both, would constitute a default under, or result in the creation
of any lien, security interest, charge or encumbrance upon any
property of Seller under any lease, indenture or other agreement
(written or oral) or other instrument to which Seller is a party
or by which Seller or the Assets or the Business may be bound or
affected; and
(vi) Seller has taken all action required on its part to
consummate the transactions contemplated by this Agreement. No
filing with any federal, state or local governmental authority
(including, without limitation, any taxing authorities) is
required in connection with the consummation of the transactions
contemplated by this Agreement.
(vii) The "bulk sales law" has been repealed in the State of
Michigan, and no other Michigan law requires a Seller of
substantially all of its assets to give notice to its creditors
of such sale.
8.10 Payment of Indebtedness. [Intentionally deleted]
8.11 Certification of Seller's CFO. The Seller's Chief Financial
Officer or Member of equivalent rank and function shall certify:
(i) As required by paragraph 5.7 with respect to the
Financial Statements;
(ii) Seller has filed all federal, state and local tax
returns required to be filed, and all federal, state and local
taxes which are due and payable, and any assessments received by
Seller have been paid.
(iii) There are no pending or, to Seller's knowledge,
threatened tax examinations, claims, liens, assessments,
deficiencies or liabilities to which the assets, business or
properties of Seller may be subject.
(iv) Seller has not consented to extend the limitations
period for the assertion of any claim for any federal, state or
local tax liability.
8.12 Shareholders Agreement. Execution of Shareholder Agreement by
Seller,
20
certain members of Seller, Purchaser and certain stockholders of Purchaser.
SECTION 9
Conditions Precedent to the Obligations of the Seller
The obligations of Seller to consummate the transactions under this Agreement at
the Closing are, at the option of the Seller, subject to the fulfillment to its
satisfaction on or before the Closing Date of the following conditions:
9.1 Performance. All of the terms, covenants and conditions of this
Agreement to be complied with and performed by Purchaser on or before the
Closing Date shall have been complied with and performed in all material
respects.
9.2 Representations and Warranties Correct. All representations and
warranties of Purchaser contained in this Agreement shall be true and correct in
all material respects on and as of the Closing Date with the same force and
effect as though such representations and warranties had been made on and as of
the Closing Date.
9.3 Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall be reasonably satisfactory in
form and substance to Seller and its counsel.
9.4 Opinion of Purchaser's Counsel. Seller shall have received an
opinion (the "Opinion of Purchaser's Counsel") of Xxxxxx Xxxxxxxxxxx, Esq.
("Purchaser's Counsel"), dated the Closing Date, in form and substance
reasonably satisfactory to Seller, to the effect that:
(i) the corporate existence and good standing of Purchaser
are as represented and warranted in Section 6.1;
(ii) this Agreement is the legal, valid and binding
obligation of Purchaser, enforceable in accordance with its
terms, except as the same may be limited by bankruptcy,
insolvency and other laws of general application now or hereafter
in effect relating to the rights and remedies of creditors,
subject to the available laws of equitable remedies;
(iii) Purchaser's Counsel does not know of any action, suit,
proceeding, investigation or claim pending or threatened, against
or affecting Purchaser or any assets, business, property or
rights of Purchaser; and
(iv) When issued and delivered to the Members and Managers
of the Seller, the Shares will be duly and validly issued, fully
paid and non- assessable with no personal liability attaching to
the ownership thereof.
9.5 Financing Contingency. In the event that Purchaser has not sold a
minimum of $300,000 worth of units in the Private Offering on or before July 28,
2000, and all other conditions for Closing are satisfied, the Purchaser shall
have the right to terminate this Agreement.
9.6 Consents, Waivers, Etc. All consents, waivers, approvals, licenses
or authorizations of third parties or governmental authorities or any amendments
or modifications to existing agreements with third parties required as a
pre-condition to the consummation of the transactions contemplated hereby, shall
have been duly obtained.
SECTION 10
Closing Documents; Documents of Transfer
10.1 Seller's Deliveries. At the Closing, Seller shall deliver or cause
to be delivered or made available to Purchaser:
(i) All original Certain Contracts, Other Contracts and Site
Leases in Seller's possession or obtainable by Seller.
(ii) The original Permits.
(iii) A duly executed xxxx of sale, in the form of Exhibit
10.1(iii) annexed hereto, for the Assets.
(iv) A duly executed assignment and assumption agreement
(the "Assignment"), in the form of Exhibit 10.1(iv) annexed
hereto, to Purchaser of all of Seller's title and rights in the
Permits, the Certain Contracts, the Other Contracts, the
Intellectual Property, the Accounts Receivable and the Prepaid
Expenses.
(v) An executed and certified resolution of Seller's
Managers, in the form of Exhibit 10.1(v) hereto, authorizing the
execution, delivery and performance of this Agreement.
(vi) Such consents of third parties as are required to
transfer any of the Assets to Purchaser.
(vii) The Books and Records.
(viii) The Opinion of Seller's Counsel.
21
(ix) A list of the Accounts Receivable and Prepaid Expenses
existing as of the Closing Date.
(x) Any and all necessary UCC-3 Statements of Release and
all other discharges and releases necessary to delivery the
Assets free and clear of all liens, claims and encumbrances
(except as specifically excepted in this Agreement and the
Schedules and Exhibits annexed hereto), together with evidence of
the satisfaction of all Indebtedness.
(xi) Such other documents as counsel for Purchaser or its
title company shall reasonably request.
(xii) Updated Schedules, if any.
(xiii) The Certification of Seller's Chief Financial Officer
required under Section 8.11 of this Agreement.
10.2 Purchaser's Deliveries. On or before the Closing Date, Purchaser
shall deliver or cause to be delivered to Seller:
(i) The Purchase Price set forth in Section 2.1 hereof.
(ii) An executed and certified resolution of Purchaser's
Board of Directors, in the form of Exhibit 10.2(ii) annexed
hereto, authorizing the execution, delivery and performance of
this Agreement.
(iii) The Opinion of Purchaser's Counsel.
(iv) Evidence of the funding of the Escrow Fund (as
hereinafter defined) by Purchaser.
(v) Such other documents as counsel for Seller shall
reasonably request.
SECTION 11
Adjustments and Prorations
11.1 All Accounts Receivable existing as of the Closing Date shall,
upon the Closing, become the property of Purchaser. If any Accounts Receivable
are remitted to Seller after the Closing, such remittances shall immediately be
forwarded to Purchaser pursuant to Section 7.5 hereof.
11.2 If, as of the Closing Date there shall be more than Four Hundred
Thirty- Eight Thousand Eight Hundred Eighty Dollars and Twenty Cents
($438,880.20) of Assumed Liabilities, then if Purchaser assumes such excess
Assumed Liabilities and actually pays them the Purchaser shall decrease the
Purchase Price (through an adjustment to the escrowed shares) by one Share for
each Two Dollars and Fifty Cents ($2.50) of excess Assumed Liabilities.
SECTION 12
Indemnification
12.1 Indemnification by Seller. Seller shall, and hereby agrees to,
indemnify, defend and hold Purchaser harmless from, against and in respect of
the following up to an aggregate maximum of $125,000 for all such claims:
(i) Any and all liabilities, obligations, damages,
losses, costs or expenses of Purchaser resulting from any
misrepresentation, breach of warranty, or nonfulfillment of
any covenant or agreement on the part of Seller under this
Agreement, or from any misrepresentation in, or omission from,
any certificate or other instrument furnished or to be
furnished by Seller to Purchaser under this Agreement;
(ii) Any and all liabilities, obligations, damages,
losses, costs or expenses of Purchaser arising out of or
resulting from (A) the failure of Seller to satisfy or perform
any Excluded Liability, (B) all tax liabilities or obligations
of Seller existing at the Closing Date, and (C) claims of
third parties asserted against Purchaser by reason of acts or
omissions of Seller or employees, agents, servants,
representatives or independent contractors of Seller occurring
prior to the Closing Date; and
(iii) All claims, actions, suits, proceedings,
demands, assessments, judgments, expenses (including
reasonable attorneys' fees) and costs (collectively, "Costs")
incident to any of the foregoing.
12.2 Procedure. Should any Cost be asserted against Purchaser,
Purchaser shall notify Seller of such Cost and give Seller an opportunity to
defend same and settle same without any cost to Purchaser, and Purchaser shall
fully cooperate with Seller in connection with such defense, which shall be at
Seller's expense. In the event that Seller fails to defend the same within a
reasonable length of time, Purchaser shall be entitled to assume the defense
thereof, and Seller shall be liable to repay Purchaser for all its expenses
incurred in connection with said defense (including attorneys' fees and
settlement payments).
12.3 Basket. Purchaser shall not be entitled to recover any damages
under this indemnification Section 12 unless and until the Purchaser's aggregate
claims for
22
indemnification exceed $25,000, at which time the Purchaser shall be entitled to
recover all such damages (up to the aggregate amount in Section 12.1).
12.4 Indemnification by Purchaser. Purchaser shall, and hereby agrees
to, indemnify, defend and hold harmless Seller from and against, and in respect
of:
(i) Any and all liabilities, obligations, damages,
losses, costs or expenses of Seller resulting from any
misrepresentation, breach of warranty, or nonfulfillment of
any covenant or agreement on the part of Purchaser under this
Agreement, or from any misrepresentation in, or omission from,
any certificate or other instrument furnished or to be
furnished by Purchaser to Seller under this Agreement; and
(ii) Any and all liabilities, obligations, damages,
losses, costs or expenses of Seller arising out of or
resulting from (A) the failure of Purchaser to satisfy or
perform any Assumed Liability; (B) all tax liabilities or
obligations of Purchaser from and after the Closing Date and
which are not Seller's responsibility hereunder; and (C)
claims of third parties asserted against Seller by reason of
acts or omissions of Purchaser or employees, agents, servants,
representatives or independent contractors of Purchaser
occurring after the Closing Date; and
(iii) All claims, actions, suits, proceedings,
demands, assessments, judgments, expenses (including
reasonable attorneys' fees) and costs (collectively, "Costs")
incident to any of the foregoing.
(iv) Notwithstanding anything to the contrary in this
Section 12.4, Purchaser's liability under this Section 12.4
shall not exceed an aggregate maximum of $125,000 for all such
claims (excepting claims arising out of Purchaser's failure to
pay any of the Assumed Liabilities, and claims arising out of
the representations and warranties made in Section 6.6, 6.7
and 6.9 hereof); furthermore Seller shall not be entitled to
recover any damages under this Section 12.4 unless and until
the Seller's aggregate claims for indemnification exceed
$25,000 (excepting claims relating to: payment of the purchase
price, assumption of liabilities, or, payments of the sums in
Section 6.9 hereof), at which time the Seller shall be
entitled to recover all such damages (up to the aggregate
amount in this Section 12.4(iv)).
12.5 Procedure. Should any Cost be asserted against Seller then Seller
shall notify Purchaser of such Cost and give Purchaser an opportunity to defend
the same and settle same without any cost to Seller, and the Seller shall fully
cooperate with Purchaser in connection with such defense, which shall be at
Purchaser's expense. In the event that Purchaser fails to defend the same within
a reasonable time, Seller shall be entitled to assume the defense thereof, and
Purchaser shall be liable to repay Seller for
23
all its expenses incurred in connection with said defense (including attorneys'
fees and settlement payments).
12.6 This Section 12 shall survive the Closing of this Agreement for a
period of one year.
SECTION 13
Intentionally Omitted
SECTION 14
Notification of Creditors
Intentionally Omitted
SECTION 15
Risk of Loss
15.1 The risk of loss or damage to the Assets, by fire or otherwise,
until the Closing Date, shall be borne by Seller and after Closing by Purchaser.
During such period of time that Seller bears the risk of loss or damage to the
Assets, Seller shall be entitled to all proceeds of applicable insurance.
SECTION 16
Condemnation
16.1 In the event of receipt, prior to Closing, of written notice (a
"Condemnation Notice") by Seller that a governmental agency, body, commission,
bureau or other authority desires to acquire any portion of the Assets by
condemnation or eminent domain proceedings (a "Taking"), Seller shall
immediately notify Purchaser in writing. In no event shall Seller agree to
terminate, sell or transfer its interest in the Assets without the prior written
consent of Purchaser. In the event that all or any portion of the Assets be
taken or transferred in the aforesaid proposed eminent domain or condemnation
proceedings before the Closing Date, Purchaser shall have the right either to
terminate this Agreement, in which event all monies deposited by Purchaser
hereunder shall be returned to it, together with any interest earned thereon,
whereupon this Agreement shall be null and void and neither party shall have any
rights against the other, or to elect to proceed hereunder and receive credit
against the Purchase Price for the amount received by Seller, when determined
finally from the condemning authority; provided, however, that if the amount of
compensation by reason of said Taking shall not have then been finally
determined and Purchaser elects to proceed hereunder, Purchaser shall pay the
Purchase
24
Price as herein provided, and any sums so received by Seller for the Assets
subject to the Taking shall be paid to Purchaser. Seller warrants and represents
to Purchaser that no Taking has occurred within the past three (3) years, nor
has Seller received any Condemnation Notice within the past three (3) years with
respect to the Business or the Assets.
SECTION 17
Post-Closing Escrow Fund
17.1 At the Closing hereof, an aggregate of 50,000 Shares or the
equivalent of One Hundred Twenty-Five Thousand ($125,000.00) Dollars in value of
Shares computed at $2.50 per Share (the "Escrow Fund") shall be deposited with
an escrow agent (the "Escrow Agent") in accordance with paragraph 2.1 hereof.
The Escrow Agent shall be Continental Stock Transfer & Trust Company. Said
Escrow Fund shall be held by the Escrow Agent for a period not to exceed one (1)
year from the Closing Date (the "Escrow Period"), subject to the terms hereof.
17.2 In the event that, at any time during the Escrow Period,
Purchaser shall claim that Seller has breached any of its representations,
warranties or covenants hereunder, or any claim is made against Purchaser by a
creditor of Seller with respect to a liability of Seller or the Business
accruing prior to the Closing Date other than the Assumed Liabilities, or if
Purchaser shall incur any Cost (as defined in Paragraph 12.2(iii))
(collectively, a "Claim"), it shall provide notice thereof to Seller, with a
copy to the Escrow Agent, such notice to set forth with particularity the
specifics of any such Claim, and Seller shall have the right to cure same in
accordance with the provisions of Paragraph 17.5 hereof or to dispute or contest
any such Claim. In the event that Seller does not dispute or contest any such
Claim and/or fails to cure same pursuant to Paragraph 17.5 hereof, Purchaser may
thereafter furnish to the Escrow Agent a duly executed and notarized affidavit
setting forth the specifics of any such Claim, including, without limitation,
the amount thereof and basis therefor, the date of the notice thereof to Seller
and a certification that Seller has not disputed or contested same or has failed
to cure same within the time provided for herein. Unless Seller has paid to
Purchaser the amount of such Claim within ten (10) days after receipt by Escrow
Agent of the notice and certification of Seller, the Escrow Agent shall on the
10th day after receipt promptly deliver to Purchaser from the Escrow Fund, such
number of Shares as shall equal the amount of such Claim divided by $2.50. In
the event, however, that Seller shall elect to dispute or contest any such
Claim, he shall be required, within ten (10) days of Purchaser's notice
hereunder, to provide notice thereof to Purchaser, with a copy to the Escrow
Agent, which notice shall set forth with particularity the specifics of any such
dispute or contest as between the parties hereto or their successors or
representatives. In the event of any such dispute or contes, Purchaser and
Seller hereby agree that any such dispute or contest shall be settled in the
City of Pittsburgh, State of Pennsylvania, by a single arbitrator appointed in
accordance with the commercial rules then in force of the American Arbitration
Association, the decision of which shall be deemed to be final, and judgment
25
upon any award or decision rendered thereby may be entered in any court having
jurisdiction thereof. Purchaser and Seller hereby submit to the in personam
jurisdiction of the American Arbitration Association in the City of Pittsburgh,
State of Pennsylvania and agree that any process in any arbitration proceeding
hereunder may be personally served upon either of them within or outside of the
City of Pittsburgh, State of Pennsylvania. The Escrow Agent shall retain the
portion of the Escrow Fund covered by any such dispute until its receipt of a
certified copy of any such arbitration decision or award in favor of Purchaser
(the "Award"). The parties acknowledge that the Escrow Agreement provides for
arbitration in New York, New York at the request of the Escrow Agent. However,
the parties to this Agreement agree that if an escrow claim can be resolved
without the active participation of the Escrow Agent, then they shall resolve
such claim in Pittsburgh, Pennsylvania pursuant to this Section.
17.3 The Escrow Agent shall then convert the Award into Shares by
dividing the Award by $2.50. The resultant number of Shares shall be deducted
from the Escrow Fund and, upon written notice to the Seller, returned to the
Purchaser for restoration to authorized but unissued status or to be held as
treasury stock. Any Shares constituting the remaining balance in the Escrow
Fund, shall be returned to the Seller without further notice to Purchaser or
Seller hereunder, upon the expiration of the Escrow Period.
17.4 The parties to this Agreement, other than the Escrow Agent,
acknowledge and agree that the Escrow Agent shall not be liable for any error or
judgment or for any mistake of fact, law or for anything which it may do or
refrain from doing in connection herewith, except its own gross negligence or
willful misconduct. Seller and Purchaser agree to indemnify, hold harmless and
defend the Escrow Agent from any loss, damage, claim, liability, judgment,
expense (including reasonable attorneys' fees) or other charge incurred or
sustained by it by reason of any act or omission performed or omitted hereunder,
but this indemnity shall not be applicable to any loss, liability, damage,
claim, judgment, expense or other charge resulting from the gross negligence or
willful misconduct of the Escrow Agent.
17.5 In the event of a Claim after the Closing ("Event of Default"),
Purchaser shall give Seller written notice thereof and Seller shall have thirty
(30) days from receipt of any such notice to cure the same. In the event that
any Event of Default cannot reasonably be cured within such time period, the
same shall not be deemed an Event of Default if Seller commences such cure
within such period and diligently pursues and completes such cure within sixty
(60) days of the receipt of any notice of Claim (provided, however, that all
such cures must be completed by the conclusion of the Escrow Period, or if not
cured by such time, the Escrow Period shall be extended for an additional sixty
(60) days with respect to that Claim only (and the balance of the Escrowed
Shares shall be released to the Seller), and if not cured by such additional 60
day period of time shall be considered a Claim not subject to cure).
17.6 The Escrow Agent shall have the right to rely conclusively upon
the
26
notices delivered hereunder, and shall be under no obligation to ascertain the
authenticity of such notices, nor to determine the factual accuracy thereof.
17.7 The Escrow Agent is acting as a stakeholder only with respect to
the Escrow Fund. If there is any dispute as to whether the Escrow Agent is
obligated to deliver to Escrow Fund (or any portion thereof) and/or to whom it
should be delivered, the Escrow Agent shall not make any delivery, but in such
event the Escrow Agent shall hold the Escrow Fund until receipt by the Escrow
Agent of an authorization in writing signed by all parties having an interest in
such dispute, directing the disposition of same, or in the absence of such
authorization the Escrow Agent shall hold the Escrow Fund until the final
determination of the rights of the parties in an appropriate proceeding. If such
written authorization is not given, or proceedings for such determination are
not begun within a reasonable period of time and diligently continued, the
Escrow Agent shall have the right, at any time thereafter, to commence an action
or proceeding, at the sole cost and expense of Seller and Purchaser, in the
nature of interpleader in any court having jurisdiction thereof, and to deposit
the Escrow Fund with such court, and thereupon, be discharged from any and all
further liability hereunder.
SECTION 18
Severance
18.1 Purchaser is not obligated to hire any employees of Seller
("Seller Employees").
SECTION 19
Specific Performance
19.1 If Seller shall default in its obligations under this Agreement
to consummate the transactions provided herein, or to perform any of its other
obligations hereunder or to deliver any of the Closing documents required to be
delivered by Seller, then, in addition to any other rights and remedies which
Purchaser may have, whether under this Agreement or at law or equity, Purchaser
shall also have the right to specifically enforce this Agreement against Seller.
SECTION 20
Miscellaneous Provisions
20.1 Remedies. The remedies provided herein shall be cumulative and
shall not preclude the assertion by Seller or Purchaser of any other rights or
the seeking of any other remedies against the other.
27
20.2 Severability. The invalidity or unenforceability of any provision
of this Agreement pursuant to any applicable law or court of competent
jurisdiction shall not affect the validity or enforceability of the remaining
provisions hereof, but this Agreement shall be construed as if not containing
the provision held invalid or unenforceable in the jurisdiction in which so
held.
20.3 Expenses. Except as otherwise stated herein, Seller shall pay its
own attorneys fees and other expenses and Purchaser shall pay its own attorneys
fees and other expenses in connection with this Agreement and the consummation
of the transactions contemplated hereby.
20.4 Notices. All notices, requests demands, instructions and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if given by prepaid
telegram, or mailed by overnight mail or by first-class, postage prepaid,
registered or certified mail, return receipt requested, to the respective
parties as follows:
(a) If to Purchaser, to: Power Efficiency Corporation
--------------------------------------------------------------------------------
0000 Xxxxxxx Xxxxx, Xxxxx X
Xxx Xxxxx, Xxxxxxxx 00000
Attn: Xxxxxxxx Xxxxxxxx, President
--------------------------------------------------------------------------------
With a copy to: Xxxxxx Xxxxxxxxxxx, Esq.
0000 Xxxxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
--------------------------------------------------------------------------------
(b) If to Seller: Performance Control, Inc.
--------------------------------------------------------------------------------
0000 Xxxxxxx Xxxxx, Xxxxx X
Xxx Xxxxx, Xxxxxxxx 00000
Attn: Xxxxxx Xxxxxxxx, Member
--------------------------------------------------------------------------------
With a copy to: Seyburn, Kahn, Xxxx, Xxxx and Xxxxxx
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxxxx, Esq.
--------------------------------------------------------------------------------
Any party hereto may change the address or addresses to which
such communications are to be directed to it by giving written notice to the
other parties hereto of such change in the manner above provided.
28
20.5 Successors and Assigns; Third Party Rights. This Agreement shall
be binding upon and shall inure solely to the benefit of the parties hereto and
their respective successors and permitted assigns. Nothing in this Agreement,
express or implied, is intended to and shall not under any circumstances create
any enforceable right or benefit in any other person whatsoever, nor shall any
other person whatsoever be entitled to have any claim, cause of action or right
based upon or arising out of the existence of this Agreement or the consummation
of the transactions contemplated hereby.
20.6 Assignment. This Agreement shall not be assigned by either party
without the prior written consent of the other party.
20.7 Captions. The paragraph headings contained in this Agreement are
for reference purposes only and shall not affect the meaning or interpretation
of this Agreement.
20.8 Entire Agreement; Amendments; Waiver. This Agreement constitutes
the entire agreement between the parties hereto and supersedes all prior
agreements and understandings, oral and written, between the parties hereto with
respect to the subject matter hereof. This Agreement may be amended, modified,
superseded or canceled, and any of the terms, covenants, representations,
warranties or conditions hereof may be waived, only by a written instrument
executed by Purchaser on the one hand, and Seller, on the other hand, or, in the
case of a waiver, by the party waiving compliance. The failure of any party at
any time or times to require performance of any provision hereof shall in no
manner affect the right of such party at a later time to enforce the same. No
waiver by any party of any condition, or of the breach of any provision term,
covenant, representation or warranty contained in this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed to be or
construed as a further or continuing waiver of any such condition or of the
breach of any other provision, term, covenant, representation or warranty of
this Agreement.
20.9 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Pennsylvania, without giving effect to the
conflict laws of the State of Pennsylvania.
20.10 Further Assurances. After the Closing Date, each party shall do
all such further acts and shall execute, acknowledge and deliver all such
instruments, documents and assurances, as may be necessary to perfect or
evidence consummation of the transactions contemplated hereby.
20.11 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and which
counterparts together shall constitute one and the same Agreement of the parties
hereto. Telecopied signatures shall be binding as originals.
29
20.12 Gender. Whenever the masculine gender is used in this Agreement,
and whenever required by the context, the same shall include the feminine and
neuter genders.
20.13 Taxes. Seller shall pay all sales, use, income and/or transfer
taxes applicable to the conveyance or transfer of the Assets which are payable
under applicable law, together with all interest and penalties thereon, if any,
to the extent such interest and penalties are attributable to the actions or
inactions of Seller. To the extent applicable law or regulation imposes upon
Purchaser the obligation to report or to pay such taxes, interest or penalties,
Seller shall promptly reimburse Purchaser therefor upon receipt of Purchaser's
invoice for the amount of such taxes, and Seller shall also reimburse Purchaser
for any interest and penalties imposed thereon to the extent attributable to the
actions or inactions of Seller with respect thereto.
30
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
Power Efficiency Corporation
By:
--------------------------------------
Xxxxxxxx Xxxxxxxx, President
By:
--------------------------------------
Xxxxxxx Xxxxxx, Chairman
Performance Control, LLC
By:
--------------------------------------
Xxxxxx Xxxxxxx, Manager
As to Paragraph 17 Only:
Escrow Agent:
------------
Continental Stock Transfer & Trust Company
By:
--------------------------------------
Xxxxx X. Birnhammer, Vice President
31
INDEX OF
SCHEDULES AND EXHIBITS
1.1 Certain Contracts
--------------------------------------------------------------------------------
1.2 Inventory
--------------------------------------------------------------------------------
1.3 Permits
--------------------------------------------------------------------------------
1.5 Other Contracts
--------------------------------------------------------------------------------
1.6 Intellectual Property
--------------------------------------------------------------------------------
1.8 Accounts Receivable
--------------------------------------------------------------------------------
1.9 Prepaid Expenses
--------------------------------------------------------------------------------
1.10 Furniture, Fixtures and Equipment
--------------------------------------------------------------------------------
1.11 Customer Lists
--------------------------------------------------------------------------------
1.12 Web Site Copyrights
--------------------------------------------------------------------------------
4.1 Assumed Liabilities
--------------------------------------------------------------------------------
5.7 Financial Statements
--------------------------------------------------------------------------------
5.8 Exclusive Contracts
--------------------------------------------------------------------------------
5.9 Permits (copies)
--------------------------------------------------------------------------------
5.10 Other Contracts (copies)
--------------------------------------------------------------------------------
5.11 Title to Assets
--------------------------------------------------------------------------------
5.12 Defaults
--------------------------------------------------------------------------------
5.14 Compliance With Laws
--------------------------------------------------------------------------------
5.15 Litigation
--------------------------------------------------------------------------------
5.18 Books and Records; Customer Lists
--------------------------------------------------------------------------------
5.21 Easements
--------------------------------------------------------------------------------
5.25 Secured Indebtedness
--------------------------------------------------------------------------------
5.26 Investment Letter
--------------------------------------------------------------------------------
6.10 Offering Memorandum
--------------------------------------------------------------------------------
EXHIBIT TITLE
------- -----
10.1 (ii) Xxxx of Sale
--------------------------------------------------------------------------------
10.1 (iv) Assignment
--------------------------------------------------------------------------------
10.1 (v) Certified Seller's Resolutions
--------------------------------------------------------------------------------
10.1 (viii) Opinion of Seller's Counsel
--------------------------------------------------------------------------------
10.1 (xiii) Certification of Seller's Chief Financial Officer
--------------------------------------------------------------------------------
32
10.2 (ii) Certified Purchaser's Resolutions
--------------------------------------------------------------------------------
10.2(iii) Opinion of Purchaser's Counsel
--------------------------------------------------------------------------------
33
EXHIBIT 10.1(ii)
XXXX OF SALE
WHEREAS, Performance Control, LLC, a Michigan limited
liability company (the "Seller"), is the owner of certain assets (the "Assets"),
all as more fully described in the Agreement (as hereinafter defined); and
WHEREAS, Seller and Power Efficiency Corporation, a Delaware
corporation (the "Purchaser"), entered into an asset purchase agreement, dated
August, 2000 (the "Agreement"), pursuant to which Seller has agreed to sell and
Purchaser has agreed to purchase the Assets on the terms and conditions set
forth therein; and
WHEREAS, terms defined herein shall have the same meaning as
terms defined in the Agreement, unless the context requires otherwise;
KNOW ALL MEN BY THESE PRESENTS that Seller, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound, has granted, bargained, sold,
conveyed, transferred, assigned and delivered, and by these presents does hereby
grant, bargain, sell, convey, transfer, assign and deliver to the Purchaser, its
successors and assigns, all of the right, title and interest of the Seller in
and to all of the Assets .
TO HAVE AND TO HOLD unto the Purchaser, its successors and
assigns, forever.
Seller hereby represents and warrants to the Purchaser that:
(i) the Seller has good and marketable title to all of the Assets, free and
clear of any and all liens, charges, security interests or encumbrances of any
nature whatsoever; (ii) the Seller will warrant and defend said title against
the claims of any and all other persons, firms, corporations or other entities,
whatsoever; (iii) the Seller has the right to transfer the Assets hereunder;
(iv) the Seller will execute and deliver all such other and further instruments
of assignment or transfer and otherwise as may be requested by the Purchaser to
effect, evidence and complete the aforesaid sale and transfer of the Assets to
the Purchaser pursuant hereto; (v) the Assets are being sold "as is, where is"
except for the express representations and warranties of the Seller contained in
the Agreement; and (vi) the Seller hereby disclaims any and all implied
warranties of merchantability or fitness for a particular purpose with respect
to the Assets.
34
IN WITNESS WHEREOF, Seller has executed and delivered this
Xxxx of Sale as of the day of August, 2000.
Performance Control, LLC
By:
-------------------------------
Xxxxxx Xxxxxxx, Manager
EXHIBIT 10.1(iv)
ASSIGNMENT AND ASSUMPTION AGREEMENT
WHEREAS, Performance Control, LLC, a Michigan limited
liability company (the "Seller"), is the owner of certain assets (the "Assets"),
all as more fully described in the Agreement (as hereinafter defined); and
WHEREAS, Seller and Power Efficiency Corporation., a Delaware
corporation (the "Purchaser"), entered into an asset purchase agreement, dated
August ,2000 (the "Agreement"), pursuant to which Seller has agreed to sell and
Purchaser has agreed to purchase the Assets on the terms and conditions set
forth therein; and
WHEREAS, terms defined herein shall have the same meaning as
terms defined in the Agreement, unless the context requires otherwise.
KNOW ALL MEN BY THESE PRESENTS that the Seller, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound, has granted, bargained, sold,
conveyed, transferred, assigned and delivered, and by these presents does hereby
grant, bargain, sell, convey, transfer, assign and deliver to the Purchaser, its
successors and assigns, all of the right, title and interest of the Seller in
and to the Assets, including, without limitation, the Contracts, Intellectual
Property, Accounts Receivables, Prepaid Expenses, Permits and Other Contracts.
TO HAVE AND TO HOLD unto Purchaser, its successors and
assigns, forever.
Seller hereby represents and warrants to the Purchaser that
the Seller has good and marketable title to all of the Assets, free and clear of
any and all liens, charges, security interests or encumbrances of any nature
whatsoever; that it will warrant and defend said title against the claims of any
and all other persons, firms, corporations or other entities, whatsoever; that
it has the right to grant, transfer and assign the Assets; and that it will
execute and deliver all such other and further
35
instruments of assignment or transfer and otherwise as may be requested by the
Purchaser to effect, evidence and complete the aforesaid sale and transfer of
the Assets to the Purchaser pursuant hereto.
From and after the date hereof, Purchaser hereby agrees to
assume and perform all of Seller's obligations with respect to the Assets to the
extent required under the Agreement.
IN WITNESS WHEREOF, the Seller and Purchaser have executed and
delivered this Assignment as of the day of August, 2000.
Power Efficiency Corporation Performance Control, LLC
By: By:
------------------------------ --------------------
Xxxxxxxx Xxxxxxxx, President Xxxxxx Xxxxxxx, Manager
By:
-----------------------------
Xxxxxxx Xxxxxx, Chairman
36
EXHIBIT 10.1(v)
CERTIFIED SELLER'S RESOLUTIONS
37
EXHIBIT 10.1(vii)
OPINION OF SELLER'S COUNSEL
EXHIBIT 10.2(ii)
CERTIFIED PURCHASER'S RESOLUTIONS
UNANIMOUS WRITTEN CONSENT IN LIEU OF A SPECIAL MEETING
OF ALL THE DIRECTORS OF
POWER EFFICIENCY CORPORATION
The undersigned, being all the directors of Power Efficiency
Corporation, a Delaware corporation (the "Corporation") do hereby authorize and
consent to the adoption of the following resolutions:
WHEREAS, Performance Control, LLC, a Michigan Limited
Liability Company (the "Seller"), is the owner of certain assets (the "Assets),
all as more fully described in the Agreement (as hereinafter defined); and
WHEREAS, it is in the best interest of the Corporation to
execute, deliver and perform the terms, covenants and conditions of a certain
Asset Purchase Agreement (the "Agreement"), dated as of May , 2000, between the
Corporation and the Seller, pursuant to which the Corporation shall purchase and
acquire from the Seller, and the Seller shall sell, assign and transfer to the
Corporation, the Assets (as defined in the Agreement), upon the terms and
subject to the conditions set forth in the Agreement, a copy of which Agreement
is annexed hereto as an exhibit;
NOW, THEREFORE, IT IS RESOLVED, that the Corporation execute,
deliver and perform the terms, covenants and conditions of the Agreement; and it
is further
RESOLVED, that all the directors and the appropriate officers
of the Corporation be, and they hereby are, authorized, empowered and directed
to do any and all things necessary and proper to effectuate the foregoing
resolutions.
38
IN WITNESS WHEREOF, the undersigned have executed this Consent
as of the day of August, 2000.
----------------------------------------
----------------------------------------
----------------------------------------
I hereby certify that the following resolutions were duly
adopted by the Board of Directors of Power Efficiency Corporation, a Delaware
corporation, effective as of August __, 2000, and that the same is still in full
force and effect as of the date hereof.
POWER EFFICIENCY CORPORATION
By:
--------------------------------
Xxxxxxxx Xxxxxxxx, President
[SEAL]
39
EXHIBIT 10.2(ii)
40
