ASSETS PURCHASE AGREEMENT
Exhibit
10.1
THIS
IS AN AGREEMENT made as of the 17th day of April, 2007 by and among:
HOST
AMERICA CORPORATE DINING, INC.
a
Connecticut corporation
with
a place of business at
000
Xxxxx Xxxxx
Xxxxxx,
XX
00000
("Buyer")
and
HOST
AMERICA CORPORATION
a
Colorado corporation
with
a place of business at
0
Xxxxxxxx, Xxxxxx, XX
00000
("Seller")
and
XXXXXXX
XXXXX
of
000 Xxxxx Xxxxx
Xxxxxx,
XX
00000 (“Xxxxx”)
WHEREAS,
the Seller owns and operates a business which specializes in the management
of
corporate dining rooms and cafeterias and such ancillary services as special
event catering and office coffee service to various business and industry
accounts (the "Business");
and
WHEREAS,
the Seller desires to sell certain of the personal property assets of the
Business, tangible and intangible, including without limitation all rights
to
the name "Host America" (but excluding the Excluded Assets as hereinafter
defined); and
WHEREAS,
the Buyer is willing to purchase said assets on the terms and subject to the
conditions hereinafter set forth; and
WHEREAS,
neither the Seller nor the Buyer intends that the Buyer shall assume any
Seller's liabilities or obligations of any kind, except as set forth herein.
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NOW,
THEREFORE, IN VIEW OF THE FOREGOING AND IN CONSIDERATION OF THE MUTUAL PROMISES
HEREINAFTER SET FORTH, THE PARTIES HERETO DO HEREBY REPRESENT, WARRANT, COVENANT
AND AGREE AS FOLLOWS:
(reference
being hereby made to Appendix
I
for the definition of certain capitalized terms.)
1. Sale
and Purchase of Certain Assets.
On
the terms and subject to the conditions contained herein, at the Closing, the
Seller will sell, transfer, assign, convey and deliver to the Buyer, and the
Buyer will purchase from the Seller, for the consideration hereinafter set
forth, certain of the Seller’s assets relating to the Business, tangible and
intangible, of every kind, nature and description, wherever located and whether
or not recorded on the books of Seller, in connection with the operation of
the
Business, as described below:
(a) the
Business as a going concern;
(b) all
of Seller's inventory (including food and non-food inventory) relating to the
Business as shall exist on the Closing Date (the “Inventory”);
(c) all
of Seller's machinery, equipment, furniture, vehicles, fixtures (excluding
any
fixtures located at 0 Xxxxxxxx, Xxxxxx, Xxxxxxxxxxx), computer equipment
(excluding any computer equipment located at 0 Xxxxxxxx, Xxxxxx, Xxxxxxxxxxx
and
any computer equipment at locations that are leased by Seller), and other
personal property which is related to the Business, all as described on
Schedule
1(c) attached
hereto (all such assets being hereinafter referred to as the "Other
Tangible Assets");
(d) Other
than any accounts receivable or any Indebtedness owing to Seller, Seller's
rights in respect of orders, contracts and agreements for the purchase or sale
of goods, services, including, without limitation, any existing service
agreements (including all agreements to provide refreshment vending through
third party vendors which are in force at the Closing), customer accounts,
and
work in process, all of which specifically relate to the Business (all such
assets being hereinafter referred to as the "Purchased
Contracts");
(e) all
of Seller's good will, prospect sales lists, sales reports, costs sheets,
processes, relations with customers, customer lists, relations with suppliers,
supplier lists, know-how and copyrights, all of which are specifically related
to the Business and the rights of Seller to the trademarks, service marks,
copyrights, copyrightable materials and trade names relating to “Host America”
(all such assets being hereinafter referred to as the "Intangible
Assets");
and
(f) the
leases for capital equipment relating to the Business as set forth on
Schedule
1(f)
(the “Assumed
Capital Leases”);
and
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((a)
- (f) being hereinafter collectively referred to as the "Purchased
Assets")
(g) Anything
to the contrary in this Section 1 notwithstanding, the Purchased Assets shall
not include the following assets of the Seller (the "Excluded
Assets"):
(i) any cash or cash equivalents; (ii) any accounts receivable and any other
Indebtedness owing to Host, allowances and/or credits other than amounts billed
to customers of the Business for services not performed as of the Closing Date
(“Prebillings”); (iii) deferred Taxes, and the right to receive any refunds of
Taxes paid by Seller prior to the Closing; (iv) any and all net operating loss
carryforwards; (v) any refunds of unearned insurance premiums; (vi) any and
all
employee pension, retirement, profit sharing, bonus, incentive, deferred
compensation or other employee benefit plans, and any related trust or assets
thereof; (vii) the rights of Seller under this Agreement and any agreement
entered into pursuant hereto; (viii) all assets, rights and properties of Seller
relating to its corporate governance and administration, including corporate
minute books, corporate seals and stockholder records; (ix) Seller's Tax records
and Tax returns; (x) any tangible assets located at 0 Xxxxxxxx, Xxxxxx,
Xxxxxxxxxxx; and (xi) any other item not specifically listed in (a) through
(f)
above.
(h) Seller
will wire transfer to the Buyer the actual amounts collected after the Closing
for Prebillings. Such transfer will take place after the receipt of such
Prebilling amounts by Seller and upon the clearing of such amounts in the
Seller’s bank account.
(a) Purchase
Price.
In consideration for the Purchased Assets to be sold to the Buyer hereunder,
and
the other covenants and provisions hereof to be performed by the Seller and
subject to the adjustments and set-offs provided for hereunder, Buyer shall
pay
$1,200,000to the Seller (as the same may be adjusted as described herein,
"Purchase
Price")
at the Closing upon fulfillment of all conditions as described herein.
(b) Adjustments.
(i)
The Purchase Price has been agreed upon based on the Seller transferring the
rights to operate dining and related services to twenty-four (24) locations
as
described on Schedule
2(b)(i)
attached hereto (“Purchased Contracts”). On the day that is two (2) business
days prior to the Closing, the Seller shall deliver to Buyer a listing of the
Closing Date Purchased Contracts. The Purchase
Price to be paid by the Buyer on the Closing Date pursuant to Section 2(a)
above
shall be (a) increased by $0.05 for each $1.00 of annual revenue for new
accounts that are listed on the Closing Date Purchased Contracts and are not
listed on the Purchased Contracts and (b) decreased, for each account on the
Purchased Contracts but not
on the Closing Date Purchased Contracts (each a “Terminated Contract”), by the
Purchase Price Adjustment amount for each Terminated Contract that is listed
on
Schedule
2(b)(i),
but not below the Valuation determined pursuant to paragraph 2(c)
below.
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(ii)
In the event the Closing Inventory exceeds the average Inventory, as measured
on
the same day of the month as the day of the month that is the Closing Date
for
the period prior to Closing commencing on January 1, 2007 and ending March
31,
2007, which the parties have agreed is in the amount of $205,801.00, the
Purchase Price will be adjusted by $1.00 for every $1.00 of Inventory in excess
ofsuch amount.
(c) Valuation.
Prior to the Closing, Seller will have an independent valuation of the Business
conducted in order to determine the fairness of the Purchase Price. In the
event
such Valuation places a value on the Business in excess of the Purchase Price,
then the Purchase Price shall be increased to such value.
3. Closing.
The
Closing of the sale and purchase of the Purchased Assets hereunder shall be
held
at the offices of Rogin, Nassau, Xxxxxx, Xxxxxxx & Xxxxxx, LLC, 000 Xxxxxx
Xxxxxx, Xxx Xxxxx, Xxxxxxxxxxx or at such other location as may be reasonably
required by Buyer’s Lender at 10:00 a.m. on the last Friday in the month after
the fulfillment of the condition precedent set forth in Section 9(e) below,
or
at such other place, time or date as the Buyer and the Seller may mutually
agree
(such closing herein called the "Closing"
and such date on which the Closing actually takes place is herein called the
"Closing
Date"),
time being of the essence of this Agreement. In any event, the Closing Date
shall be as early as practicable.
(a) Deliveries
by Buyer at the Closing:
1. The
Purchase Price in U.S. Dollars, wired to the Seller in accordance with the
Seller’s instructions.
2. A
Good Standing Certificate of the Buyer.
3. A
Certificate of the Buyer, dated as of the Closing Date, certifying in such
detail as Seller may reasonably request to the fulfillment of the conditions
set
forth in Section 9;
(b)
Deliveries
by Seller at the Closing:
1. Good
Standing Certificates of Seller in their respective states of
incorporation.
2. A
Certificate of Seller, dated as of the Closing Date, certifying in such detail
as Buyer may reasonably request to the fulfillment of the conditions set forth
in Section 8.
3. the
Non-Compete Agreements.
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4. Warranty
bills of sale and other good and sufficient instruments of transfer, assignment
and conveyance as shall be effective to transfer to and vest in the Buyer good
and marketable fee simple title to the Purchased Assets, free and clear of
any
and all liens, claims and encumbrances of any kind, nature and description,
all
in form satisfactory to counsel for the Buyer.
5. Any
and all records relating to any and all of the Purchased Assets and the
Business, including without limitation any and all customer lists, supplier
lists, purchase orders, employee records and such other records and documents
as
Buyer shall reasonably require.
6. If
available, originally signed or copies of all the contracts or similar type
items evidencing the Purchased Contracts.
(c) Buyer
and Seller shall deliver to the other such other documents, including certified
resolutions of their Board of Directors (and or shareholders) , as applicable,
authorizing the transactions contemplated hereunder, and take such other action
as may be provided for herein or contemplated hereby.
(d) Buyer
and Seller shall execute and deliver to one another such other instruments
and
documents as shall be necessary and proper to carry out this Agreement,
including, but no limited to, an assignment and assumption agreement(s) in
form,
substance and content reasonably satisfactory to the parties, fully executed
by
Buyer and Seller to which Buyer assumes and Seller assigns, as of the Closing
Date, the future payment and performance of the Assumed Obligations and the
Assumed Capital Leases.
(e) Personal
property Taxes, deposits, prepayments and/or payments under Assumed Obligations
(hereinafter defined), employee benefits and vacation pay, and all other
continuing items relating to the operation of the Business being purchased
as
set forth herein shall be adjusted at the Closing as of the Closing Date in
accordance with the local custom in New Haven County, Connecticut. All Taxes
relating to the transfer of the Purchased Assets, including without limitation
sales, use, conveyancing, and all other governmental or municipal fees or
charges shall be paid by the Buyer.
(f) On
the day of the Closing Date, representatives of Seller and Buyer shall prepare
a
Schedule (Schedule
3(f))
to this Agreement which shall be executed by Seller and Buyer and which shall
establish the final Purchase Price as adjusted as described herein. Such
Schedule
3(f) shall
be appended hereto, shall be a part hereof and shall represent the final
determination of the Purchase Price for purposes of the Closing.
(g) In
connection with the Closing, Seller shall take or cause to be taken all actions
as may reasonably be required by Buyer to take actual possession and control
of
the Purchased Assets. Buyer shall be solely responsible for any costs it incurs
which are associated with the physical removal and delivery of the Purchased
Assets to Buyer and shall be responsible for any
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costs
or damages associated with such physical removal or delivery of the Purchased
Assets which are incurred by Seller and which are not the result of Seller’s
negligence.
(h) Buyer
and Seller shall execute mutual releases of all obligations each has to the
other except those arising on and after the Closing Date.
4. Access.
Between
the date hereof and the Closing Date, Seller will (a) provide, to the officers
and other authorized representatives of Buyer, full access, during normal
business hours, to any and all premises, properties, files, books, records,
documents, and other information of the Business and will cause its officers
to
furnish to Buyer and its authorized representatives any and all financial,
technical and operating data and other information pertaining to the Business
and properties of the Business and (b) make available for inspection and copying
by Buyer true and complete copies of any documents relating to the
foregoing.
5. Liabilities.
Except
for the Assumed Capital Leases and the Assumed Obligations, Buyer does not
assume any liabilities or obligations of Seller, including without limitation
any liabilities relating to the Purchased Assets or relating to the Business
operated with the Purchased Assets, whatsoever. Attached hereto as Schedule
5
is a listing of the Purchased Contracts and other items which Buyer shall assume
(the "Assumed
Obligations").
The Assumed Obligations and the Assumed Capital Leases shall be the only
liabilities or obligations of Seller which are assumed hereunder by Buyer.
Any
and all obligations of Seller, or related to the Assets, which are not Assumed
Capital Leases or Assumed Obligations, shall remain the liabilities and
obligations of the Seller, and Seller shall remain solely responsible for their
payment and performance when due. The Buyer agrees to honor the Seller’s
obligations under the Assumed Obligations and the Assumed Capital Leases in
accordance with the terms of such items.
6. Assumed
Obligations.
It
is the intent of the parties hereto that Buyer and Xxxxx shall assume the
responsibility to perform services with respect to the Assumed Obligations
and
the Assumed Capital Leases as of the Closing Date.
(a) Buyer
shall be entitled to all revenue generated from the rendering of services with
respect to Assumed Obligations on and after the Closing Date and shall be
responsible for all expenses related to the Assumed Obligations on and after
the
Closing Date. Any payments respecting such services received by Seller for
any
period after the Closing Date shall be promptly remitted in kind, by Seller
to
Buyer. Any expenses incurred in connection with the Assumed Obligations or
the
Assumed Capital Leases prior to the Closing Date shall be paid by
Seller.
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(b) Seller
shall be entitled to all revenue generated from the rendering of services with
respect to Assumed Obligations prior to the Closing Date and shall be
responsible for all expenses related to the Assumed Obligations prior to the
Closing Date. Any payments respecting such services received by Buyer for any
period prior to the Closing Date shall be promptly remitted, in kind, by Buyer
and/or Xxxxx to Seller. Any expenses incurred in connection with the Assumed
Obligations or the Assumed Capital Leases on and after the Closing Date shall
be
paid by Buyer and/or Xxxxx.
7. Seller’s
Employees.
It
is anticipated that in connection with the consummation of the transactions
contemplated by this Agreement, Buyer will employ all employees of Seller in
connection with the Business. Buyer will be responsible for all obligations
to
such employees arising after the Closing Date.
8. Conditions
Precedent to Buyer's Obligations.
Buyer's
obligation to close the transactions described herein are expressly conditioned
upon the fulfillment of each and all of the following:
(a) All
obligations of Seller hereunder shall have been fully performed to the
satisfaction of Buyer.
(b) The
Business being operated between the date hereof and the Closing Date in the
ordinary course and there having occurred since February 1, 2006, it being
acknowledged however that the shareholders of Buyer will continue to operate
the
Business as an employee of Seller until the Closing shall have been consummated.
(c) All
warranties and representations hereinafter of the Seller set forth being true
when made and being true on the Closing Date as though made at and respecting
each such time and all of Seller’s covenants having been fully performed on such
date.
(d) Neither
Seller, nor the Business nor any of the Purchased Assets being subject to any
material litigation and no such litigation being in any way pending or
threatened.
(e) All
other parties to any of the Assumed Obligations having consented to Buyer's
assuming the Assumed Obligations and agreeing to Buyer's performance thereunder
from and after the Closing Date.
(f) All
actions to be taken by the Seller in connection with consummation of each of
the
transactions contemplated hereby and all documents, instruments or agreements
required to effect the transactions contemplated hereby will be satisfactory
in
form and substance to the Buyer.
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(g) Buyer
shall have completed a due diligence review of the Purchased Assets and the
Business, the results of which shall be reasonably satisfactory to Buyer.
(h) Buyer
shall have received a commitment for financing in the amount of at least
$1,000,000 upon generally available market terms.
(i) Buyer
and Seller shall have received and approved SEC Form 8K prepared by Seller
with
respect to the transactions described herein.
(j) In
the event Buyer has not provided notice to Seller that any such condition has
not been fulfilled within 45 days after the date hereof, all conditions
described above shall be deemed to be fulfilled.
9. Conditions
Precedent to Seller’s Obligations.
(a) All
obligations of Buyer hereunder shall have been fully performed to the
satisfaction of Seller.
(b) All
warranties and representations of the Buyer hereinafter set forth being true
when made and being true on the Closing Date as though made at and respecting
each such time and all of Seller’s covenants having been fully performed on such
date.
(c) The
Buyer not being subject to any material litigation and no such litigation being
in any way pending or threatened.
(d) All
actions to be taken by the Buyer in connection with consummation of each of
the
transactions contemplated hereby and all documents, instruments or agreements
required to effect the transactions contemplated hereby will be satisfactory
in
form and substance to the Seller.
(e) Seller
shall have received the authorization of its board of directors and shareholders
and of the United States Securities and Exchange Commission and any other
governmental authority having jurisdiction over Seller or Parent to consummate
the transactions contemplated by this Agreement and amend its certificate of
incorporation such that Seller shall change its corporate name.
(f) Buyer
and Seller shall have received and approved SEC Form 8K prepared by Seller
with
respect to the transactions described herein.
(g) In
the event Seller has not provided notice to Buyer that any such condition has
not been fulfilled within 45 days after the date hereof, all conditions
described above shall be deemed to be fulfilled. This time limitation shall
not
apply to Section 9(e) above.
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10. Representations
and warranties of the Seller.
Seller
represents and warrants to and agrees with the Buyer as follows:
(a) Seller
is a corporation duly organized and validly existing under the laws of the
State
of Colorado with full authority to conduct its business as presently conducted.
Seller has all licenses and permits required by any governmental authority
to
own and operate its properties and to carry on the Business activities as
presently conducted in all states in which it conducts business.
(b) The
execution and delivery of this Agreement has been duly authorized by all
necessary corporate action of Seller (including without limitation the consent
of Seller's Board of Directors.) and does not, and the performance of the
transactions contemplated hereby will not, materially breach or materially
violate any of the provisions of Seller's Articles of Incorporation, By-Laws,
code of ethics, or any material agreement, judgment or law respecting which
Seller is a party or is bound or affected.
(c)
No Tax which is or may result in a lien on any of the Purchased Assets that
is
due at the time of Closing will be unpaid at the time of Closing.
(d) To
Seller’s knowledge, there is no legal action, suit or governmental proceeding or
investigation pending or threatened against or affecting the Purchased Assets
and no Seller is subject to any order, writ, injunction or decree of any court
or governmental authority with respect to the Purchased Assets. The Seller’s
conduct of the Business is in compliance with all laws, ordinances, rules,
regulations or orders that are applicable to it or them and that would affect
the Business. Schedule
10(d)
lists all permits, consents, approvals, licenses and other like instruments
issued under health, safety or environmental protection laws which are currently
held by Seller relating to the Business. In extension of the foregoing, certain
class action litigation currently pending against Seller will not in any way
affect the transactions contemplated hereby nor constitute a lien on any of
the
Purchased Assets and Seller will indemnify and hold harmless Buyer against
any
claims arising out of any such actions.
(e) No
representation or warranty of Seller contained herein, or information with
respect to Seller contained herein or in any Schedule hereto or in any
statement, certificate or other document furnished or to be furnished to the
Buyer by Seller pursuant hereto or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of material
fact or omits or will omit to state any material fact necessary to make the
statements herein and the Schedules hereto not false or misleading.
(f) The
Seller has good and marketable title to all of the Purchased Assets free
and
clear of all tile defects, liens, claims or other encumbrances. All the
Purchased Assets are in good operating condition (reasonable wear and tear
excepted) and are adequate for their use in the Business as presently conducted.
Any Equipment (as defined in the Connecticut Uniform Commercial Code) which
is
part of the Purchased Assets is sold “As
Is”,
and where is, and without
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representation
of any kind, including without limitation warranties as to merchantability
or
fitness for a particular purpose.
(g) No
other party has any right to or interest in any of the Purchased Assets or
any
right to acquire any interest in the Business or any of the Purchased Assets.
(i) To
Seller’s knowledge, there is no labor strike, grievance, procedure, arbitration
proceeding or organizational drive pending or threatened against Seller.
(j) Neither
Seller nor the other parties to the Purchased Contracts are in default thereof
and all such Purchased Contracts are valid and in effect. No Seller has
received notice of default under any Purchased Contracts, and knows of no event
that has occurred or that is expected to occur which (after notice and lapse
of
time or both) would become a breach or default under any such Purchased
Contract.
11. Representations
and Warranties of the Buyer and Xxxxx.
Buyer
represents and warrants to and agrees with Seller as follows:
(a) Buyer
has all requisite power and authority to own, lease and operate its properties,
to carry on its business as now being conducted and to execute, deliver and
perform this Agreement and all writings relating hereto.
(b) The
execution and delivery of this Agreement has been duly authorized by all
necessary action of Buyer and does not, and the performance of the transactions
contemplated hereby will not, materially breach or materially violate any
material agreement, judgment or law respecting which any Buyer is a party or
is
bound or affected.
(c) Buyer
has been provided with adequate opportunities to review contracts, assess the
Purchased Assets and otherwise satisfy itself with the value of the Purchased
Assets.
(d) Buyer
has all necessary licenses, permits and other approvals necessary to conduct
its
affairs and operate the Business post-Closing.
(e)
To Buyer’s knowledge, there is no legal action, suit or governmental
proceeding or investigation pending or threatened against or affecting
the Purchased Assets and Buyer is mot subject to any order, writ, injunction
or
decree of any court or governmental authority with respect to the Purchased
Assets.
(f) Buyer
acknowledges that it has operated the Business on a day-to-day basis as an
employee of Seller. Buyer has no knowledge of any breach of the representations
of Seller contained in Sections 10(d), (i) or (j) above.
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12. Conduct
of Business.
(a) From
the date hereof until the Closing Date, the Seller and Xxxxx will: (i) conduct
the Business only in the ordinary course; (ii) maintain the general character
of
the Business; (iii) maintain the Purchased Assets in good repair and condition,
ordinary wear and tear alone excepted; (iv) maintain in all material respects
all necessary insurance coverage and all necessary licenses and permits,
governmental or otherwise; (v) use its best efforts to preserve its good will
and the good will of its suppliers, customers and others having business
re1ationships with it; (vi) provide the Buyer with all such information
concerning its business, affairs, products and the like, as the Buyer may
reasonably request; and (vii) permit the Buyer and its representatives to
examine its books, records and properties, and its auditor's work papers
associated with and supporting its financial statements, at all reasonable
times, provided reasonable notice shall have been given to the Seller.
(b) From
the date hereof until the Closing, the Seller will not: (i) mortgage, pledge
or
borrow or subject to lien or other encumbrance any of the Purchased Assets
that
will not be fully paid and discharged on the Closing Date; (ii) sell or
otherwise dispose of any of the Purchased Assets, except Inventory in the
ordinary course of business; and (iii) in connection with the Business, enter
into any agreement, contract, or commitment other than in the ordinary course
of
business.
13. Confidentiality.
(a) Confidentiality
Obligations of Seller
(1) Seller
acknowledges and agrees that it possesses confidential information related
to
the Buyer, the Business and the Purchased Assets, the improper disclosure or
misuse of which would materially adversely affect the ability of Buyer to make
use of the Purchased Assets.
(2)
Other than as may be required by any applicable law, rule or regulation, Seller,
and any agent or representative of it, shall not, without prior written consent
of the Buyer, disclose any proprietary information relating to the Buyer, the
Business or the Purchased Assets (“Confidential
Information").
Confidential Information shall not include information that becomes publicly
available through no act of the disclosing party, is received rightfully from
a
third party without duty of confidentiality, is disclosed under operation of
law, or is disclosed with the prior written permission of the Buyer.
(3) Other
than in connection with the Business, Seller agrees that it will not at any
time
or in any manner, either directly or indirectly, use any Confidential
Information for their own benefit, and that they will protect such information
and treat it as strictly confidential. Buyer shall be entitled to an injunction
to restrain Seller from disclosing, in whole or in part, any Confidential
Information, or from providing any services to any party to whom such
information has been disclosed or may be disclosed. Buyer shall not be
prohibited by this provision from pursuing other remedies, including claims
for
losses or damages.
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(b) Confidentiality
Obligations of Buyer and Xxxxx
(1) Buyer
will hold in confidence, and will not use to the detriment of Seller, any data
and information obtained from Seller in connection with this Agreement. Upon
termination of this Agreement for any reason, Buyer shall return promptly to
Seller all printed information received by Buyer from Seller in connection
with
the proposed transaction and deliver to Seller or destroy all copies of such
printed material which may have been made by Buyer or its representatives.
(2) In
the event Buyer does not purchase the Purchased Assets, Buyer shall not, unless
required by any applicable law, rule or regulation, without prior permission
of
Seller, disclose any proprietary information relating to Seller, the Business
or
the Purchased Assets (collectively, "Seller's
Confidential Information").
Seller's Confidential Information shall not include any other information that
becomes publicly available through no act of the disclosing party, is received
rightfully from a third party without duty of confidentiality, is disclosed
under operation of law, or is disclosed with the prior written permission of
the
Seller.
(3) Buyer
agrees that it will not at any time or in any manner, either directly or
indirectly, use any of Seller's Confidential Information for its own benefit,
and that it will protect such information and treat it as strictly confidential.
Seller shall be entitled to an injunction to restrain Buyer from disclosing,
in
whole or in part, Seller’s Confidential Information, or from providing any
services to any party to whom such information has been disclosed or may be
disclosed. Buyer shall not be prohibited by this provision from pursuing other
remedies, including claims for losses or damages.
14. Disclosure.
The
parties mutually agree not to disclose the terms of this Agreement except only
in a form mutually agreed to in writing, in advance by the parties, or as
required by any applicable laws, regulations, rules, or in accordance with
any
the rules and regulations of any exchange on which any capital stock of Seller
is listed, or except as required by court order. If disclosure is required,
the
disclosing party agrees to notify the other party in advance of the content
of
the information being disclosed and to whom the disclosure is being made.
15. Termination.
(a) At
any time prior to the Closing, the Buyer may terminate this Agreement and all
liability of the Buyer hereunder in the event:
(i) the
Buyer, in its reasonable discretion shall determine that there has
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been
a material misrepresentation and/or breach of warranty on the part of Seller
or
the Parent and/or the nonfulfillment of any condition precedent or covenant
required to be fulfilled by Seller or the Parent under this Agreement;
(iii) the
transaction contemplated herein is not closed by sixty (60) days after the
date
hereof unless full approval of the transaction by all governmental and
regulatory authorities having jurisdiction over any activities of Parent shall
not have been unconditionally obtained, in which event the Closing may be
postponed until all such approvals have been obtained, or unless caused by
the
act or failure to act of Buyer.
(b) Seller
may terminate this Agreement if:
(i) the
transaction contemplated herein is not closed by sixty (60) days after the
date
hereof unless full approval of the transaction by all governmental and
regulatory authorities having jurisdiction over any activities of Parent shall
not have been unconditionally obtained, in which event the Closing may be
postponed until all such approvals have been obtained, or unless caused by
the
act or failure to act of Seller;
(ii) Seller,
in its reasonable discretion, shall determine that there has been a material
misrepresentation or breach of warranty on the part of the Buyer and/or the
nonfulfillment of any condition precedent or covenant required to be fulfilled
by the Buyer under this Agreement.
16. Brokerage
and Other Expenses.
The
parties hereto represent to each other that neither of their representatives
has
incurred any liability for any broker's, finders or similar fee in connection
with this Agreement and the transactions contemplated hereby. Each of the
parties hereto shall pay such party's respective expenses, including, without
limitation, attorney's fees, in connection with this Agreement and the
transactions contemplated hereby, and neither of the parties hereto shall in
anyway be liable for such expenses of the other.
17. Survival
of Representations, Warranties and Covenants; Indemnification.
(a) Survival
Period.
Except as described in this Section 17, the representations, warranties,
covenants and agreements of the parties in this Agreement shall survive the
execution and delivery of this Agreement and the Closing but only until the
date
one (1) year after the Closing Date (except for claims in respect thereof
pending at such time, which shall survive until finally resolved or settled).
Except as set forth in Section 17(e), no action may be commenced with respect
to
any representation, warranty, covenant or agreement in this Agreement, or in
any
writing delivered pursuant hereto, unless written notice, setting forth in
reasonable detail the claimed breach thereof, shall be delivered pursuant to
Section 21 to the party or parties against whom liability for the claimed breach
is charged on or before the termination of the survival period specified in
this
Section 17 for such representation, warranty, covenant or agreement.
13
(b) Threshold
and Cap.
Notwithstanding anything to the contrary herein, in no event shall the Buyer
be
liable to Seller or any of its Affiliates nor shall Seller be liable to Buyer
or
any of its Affiliates, pursuant to this Section 17 or otherwise, nor shall
Buyer, or any of its Affiliates be liable to Seller, nor Seller or any of its
Affiliates be liable to Buyer, for any matter related in any way to this
Agreement until the total amount of Damages to either of such parties exceeds
$100,000 (the “Threshold
Amount”),
and then only to the extent such Damages exceed the Threshold Amount.
Furthermore, in no event shall: (i) Seller be liable to Buyer, or any of its
Affiliates pursuant to this Section 17 or otherwise, for any matter related
in
any way to this Agreement in an amount in excess of $1,000,000, or (ii) Buyer,
or any of its Affiliates, be liable to Seller, pursuant to this Section 17
or
otherwise, for any matter related in any way to this Agreement in an amount
in
excess of $1,000,000.
(c) Mitigation.
In computing any Damages under this Section 17, the amount of any insurance
proceeds (including title insurance proceeds), Tax benefits, and any indemnity,
contribution or other similar payment from any third party to which any party
is
entitled with respect to any matter shall be deducted from such Damages. Such
party shall also be required to take all necessary and desirable steps to
mitigate any Damages for which any claims under this Section 17 may be brought
upon and after becoming aware of any event that could reasonably be expected
it
to give rise to any such Damages, including taking all commercially reasonable
efforts to collect any amounts available under any applicable insurance coverage
or from any third party.
(d) Limited
Remedies.
Notwithstanding anything to the contrary in this Agreement, the remedies
described in this Section 17 shall be the sole and exclusive remedies available
to any party for any Damages a party may incur. Furthermore, anything in this
Agreement to the contrary notwithstanding, in no event shall any party have
any
liability for any consequential, incidental, lost profits, punitive or exemplary
damages, howsoever caused, arising out of, or relating to this Agreement, even
if such party has been advised to the possibility of any such damages or
losses.
(e) Exceptions
to Survival Period.
Nothing contained in this Section 17 shall be deemed to limit any party’s right
to enforce any of the other parties’ covenants under Sections 5-6 (Liabilities
and Assumed Obligations), 13 (Confidentiality), 14 (Disclosure), 20
(Allocation), 22 (Arbitration) and 23 (Covenant of Further
Assurances).
18. Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns and nominees, as applicable.
19. Non-Compete
Agreements.
In
furtherance of the sale to Buyer of the Purchased Assets, Seller and Xxxxx
Xxxxxx will enter into agreements (the "Non-Compete
Agreements")
whereby each of Seller and Xxxxx Xxxxxx agrees that for a period of five (5)
years after the Closing Date it shall not, and Xxxxx Xxxxxx shall
14
not:
(a) compete, directly or indirectly, with the Business as conducted as of the
Closing Date; (b) communicate with or contact any of the customers of Buyer
for
the purpose of soliciting such customers to purchase any goods, products or
services of the type being manufactured, offered or sold by the Business as
of
the Closing Date; (c) use or disclose to others any trade secrets or other
confidential information relating to the Purchased Assets or Business. The
Non-Compete Agreements shall be in the forms attached hereto as Schedule
19.
20. Allocation.
The
Buyer and the Seller shall use reasonable commercial efforts to agree on a
reasonable and fair allocation of the Purchase Price among the Purchased Assets,
which shall value Inventory, the Other Tangible Assets, the Assumed Capital
Leases and the Purchased Contracts at their estimated fair market values as
of
the Closing Date, and shall allocate the remainder of the Purchase Price to
the
Intangible Assets. The Buyer and the Seller agree that each party shall report
the transactions contemplated by this Agreement for income Tax purposes in
accordance with the agreed-upon allocation of the Purchase Price, pursuant
to
Section 1060 of the Federal Internal Revenue Code and the regulations
thereunder, and agree not to take, in any filing with or accompanying any Tax
return reporting any part of the transaction undertaken herein, a position
inconsistent with such allocations; provided, however, that if the Buyer and
the
Seller are unable in good faith to reach an agreement with respect to the
allocation of the Purchase Price consistent with the foregoing, each such party
may allocate the Purchase Price among the Purchased Assets as it deems
appropriate but generally consistent with the foregoing.
21. Notices.
Any
notice, demand, request or other communication made, given, required or
permitted pursuant to this Agreement shall be (a) in writing, (b) delivered
personally, transmitted by facsimile, delivered by a commercial overnight
courier service or mailed by certified or registered United States first class
mail, return receipt requested, postage prepaid, and (c) addressed to the party
for whom intended, as follows:
(a) If
to Seller, addressed to:
Xxxxx
Xxxxxx, CEO
Host
America Corporation
0
Xxxxxxxx
Xxxxxx,
XX 00000
Copy
to:
Xxxxxx
X. Xxxxxx, Esq.
Rogin,
Nassau, Xxxxxx, Xxxxxxx & Xxxxxx, LLC
000
Xxxxxx Xxxxxx
00xx
Xxxxx
Xxxxxxxx,
XX 00000
15
(b) If
to the Buyer, addressed to:
Host
America Corporate Dining, Inc.
000
Xxxxx Xxxxx
Xxxxxx,
XX 00000
Attn:
Xxxxxxx Xxxxx
Copy
to:
Xxxxxxx
Xxxxxxx, Esq.
Xxxx
Xxxxxxx & Xxxx
000
Xxx Xxxxxx Xxxx
Xxxxxxxxxxx,
XX 00000
Any
party may change the address or telecopier number to which notices hereunder
are
to be sent to it by giving written notice of such change as herein provided.
Any
notice given hereunder shall be deemed given on the date of hand delivery,
transmission by telecopier, deposit with the U.S. Postal Service or delivery
to
a courier service, as appropriate.
22. Arbitration
of Disputes.
It is acknowledged by the parties that a quick and efficient resolution of
all
claims, disputes and other matters in question under this Agreement after the
Closing ("Disputes")
is critical to the implementation of the terms of this Agreement. In order
to
effectuate such intent, the parties do hereby establish this Dispute procedure
for use during the term of this Agreement. All Disputes shall be subject to
this
Section 22, it being the intention of the parties that all such Disputes be
subject hereto regardless of any specific reference or absence of such reference
to arbitrability herein. Prior to submission of any Dispute for resolution
in
accordance with this Section 22, the parties will negotiate in good faith to
resolve such Dispute. Only if such parties cannot reach agreement within ten
(10) days of written notice by any party to the other party that a Dispute
exists, the Dispute will be submitted for resolution in accordance with the
American Arbitration Association in Hartford, Connecticut. Upon such Dispute
being submitted to the American Arbitration Association for resolution, the
arbitrators shall assume exclusive jurisdiction over the Dispute and the
decisions of such arbitrators shall be binding upon the parties hereto and
may
be entered in any court of competent jurisdiction.
23. Covenant
of Further Assurances.
The parties hereto shall execute such other and further instruments and/or
documents as shall be necessary to implement and carry out the intents and
purposes of this Agreement. Without limiting the foregoing, in the event of
any
modification to the terms hereof as shall be mutually agreed upon by such
parties, the parties shall execute and deliver an amendment to this
Agreement.
16
24. Complete
Agreement.
This
Agreement contains the complete agreement between the parties hereto with
respect to the sale and purchase of the Purchased Assets and other transactions
contemplated hereby and supersedes all prior agreements and understandings
between the parties with respect to such sale and purchase and such other
transactions.
25. Governing
Law.
This
Agreement is being executed and delivered and is being closed in the State
of
Connecticut. This Agreement shall be construed and enforced under the applicable
procedural, statutory and common law of the State of Connecticut. The parties
hereto hereby consent and submit themselves to the jurisdiction of the Courts
of
the State of Connecticut with respect to any controversy arising under or
relating to this Agreement. Service of process may be effected on any party
hereto which is not a resident of the State of Connecticut by certified or
registered United States Mail, postage prepaid, addressed to such party at
the
address described in Section 21 hereof.
26. Counterparts.
This
Agreement may be executed in two (2) or more counterparts, each of which shall
be deemed an original but all of which shall constitute but one instrument.
27. Headings.
The
various section and subsection headings and titles are for convenience only
and
shall be subject to no independent substantive interpretation or
meaning.
28. Calculation
of Time.
Whenever in this Agreement a period of time is stated as a number of days,
it
shall be construed to mean calendar days; provided, however, that when any
period of time so stated would end upon a Saturday, Sunday or legal holiday,
such period shall be deemed to end upon the next day following which is not
a
Saturday, Sunday or legal holiday. For the purposes of this Agreement, a "legal
holiday" is any day on which banks are legally closed for business in the State
of Connecticut.
17
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first above written.
BUYER
By:
/s/ XXXXXXX XXXXX
Name:
Xxxxxxx Xxxxx
Title:
President
SELLER
HOST
AMERICA CORPORATION
By:
/s/ XXXXX XXXXXX
Name:
Xxxxx Xxxxxx
Title:
CEO
18
APPENDIX
OF DEFINITIONS
Affiliate:
with reference to any Person, any director, officer or employee of such Person,
any corporation, association, firm or other entity in which such Person has
a
direct or indirect controlling interest or by which such Person is directly
or
indirectly controlled or is under direct or indirect common control with such
Person.
Assumed
Capital Leases:
the meaning set forth in Section 1(f).
Assumed
Obligations:
the meaning set forth in Section 5.
Business:
the meaning set forth in the Recitals.
Buyer:
the meaning set forth on Page 1 of this Agreement.
Closing:
the meaning set forth in Section 3.
Closing
Date:
the meaning set forth in Section 3.
Damages:
any and all losses, claims, assessments, demands, damages, liabilities,
obligations, costs and expenses, including without limitation, reasonable fees
and disbursements of counsel, and other out-of-pocket costs and expenses
incurred in connection with investigating, preparing or defending or preventing
any action, suit or proceeding, commenced or threatened, or any claim
whatsoever.
GAAP:
United States generally accepted accounting principles and practices
consistently applied from accounting period to accounting period.
Indebtedness:
(a) all items which in accordance with generally accepted accounting principles
and practices would be included in determining total liabilities as shown on
the
liability side of a balance sheet of such Person as at the date of which
indebtedness is to be determined, (b) all indebtedness secured by any mortgage,
pledge, lease, lien or conditional sale or other title retention agreement
existing on any property or asset owned or held by such Person subject thereto,
whether or not such indebtedness shall have been assumed, and (c) all
indebtedness of others which such Person has directly or indirectly guaranteed,
endorsed, discounted or agreed (contingently or otherwise) to purchase or
repurchase or otherwise acquire, or in respect of which such Person has agreed
to supply or advance funds (whether by way of loan, stock purchase, capital
contribution or otherwise) or otherwise to become liable directly or indirectly
with respect thereto.
Intangible
Assets:
the meaning set forth in Section 1(e).
Inventory:
the meaning set forth in Section 1(b).
19
Non-Compete
Agreements:
the meaning set forth in Section 19.
Other
Tangible Assets: the
meaning set forth in Section 1(c).
Person:
any natural person or legal entity.
Purchase
Price:
the meaning set forth in Section 2(a).
Purchased
Assets:
the meaning specified in Section 1.
Purchased
Contracts:
the meaning set forth in Section 1(d).
Seller:
the meaning set forth on Page 1.
Taxes:
federal, state, local, foreign and provincial income, capital gains, property
transfer, payroll, withholding, excise, sales, use, use and occupancy,
mercantile, real estate, personal property, value added, capital stock,
franchise, controlling interest transfer or other taxes, easements or charges
and estimated taxes relating thereto, and any and all interest, penalties and
additions to tax on any of the foregoing.
20
SCHEDULE
OF SCHEDULES
Schedule
Reference
Section Description
1(c)
1(c)
Other
Tangible Assets
1(f)
1(f)
Assumed
Capital Leases
2(b)(i) 2(b)(i)
Purchased
Contracts
3(a)(2)
3(a)(2)
Form
of Assumption Agreement
3(f)
3(f)
Adjustment
to Purchase Price
5 5
Assumed
Obligations
10(d) 10(d)
Permits
19
19
Form
of Non-Compete Agreements
21
