ASSET PURCHASE AGREEMENT BY AND AMONG GROVE POWER, INC., RB GROVE, INC. and THE SHAREHOLDER OF RB GROVE, INC. DATED AS OF JUNE 11, 2009
BY
AND AMONG
GROVE
POWER, INC.,
▇▇
▇▇▇▇▇, INC.
and
THE
SHAREHOLDER OF ▇▇ ▇▇▇▇▇, INC.
DATED
AS OF JUNE 11, 2009
THIS
ASSET PURCHASE AGREEMENT (“Agreement”), dated June 11, 2009 and effective June
1, 2009, is by and among Grove Power, Inc., a Florida corporation (“Buyer”), ▇▇
▇▇▇▇▇, Inc. a Florida corporation (the “Seller”) and a wholly owned subsidiary
of Titan Energy Worldwide, Inc. a Nevada corporation, and ▇▇▇ ▇▇▇▇▇, the sole
shareholder of Seller (the “Shareholder”).
WITNESSETH:
WHEREAS,
the Seller is engaged in marketing, selling, distributing and servicing back-up
and emergency power equipment in the State of Florida and certain other
territories;
WHEREAS,
the Seller has divided its operations into five distinct wholly owned
divisions, including but not limited to, an Industrial Division (the “Industrial
Division”) and a Service Division (the “Service Division”,) which such two divisions are collectively referred to
herein as the “Business”);
WHEREAS,
the Shareholder owns all of the outstanding
capital stock of the Seller; and
WHEREAS,
the Seller desires to sell to the Buyer, and the Buyer desires to purchase from
the Seller, the Assets (as defined in Section 1.1 hereof) of the Business,
pursuant to the terms and conditions of this Agreement;
NOW,
THEREFORE, in consideration of the premises and the covenants and agreements set
forth herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE
I
TRANSFER
OF ASSETS
1.1.
Purchase and Sale of Assets. Subject to the terms and
conditions set forth herein, the Seller hereby sells, assigns, transfers and
delivers to the Buyer, and the Buyer hereby purchases, acquires and accepts from
the Seller, the Assets, free and clear of all mortgages, pledges, encumbrances,
encroachments, liens (statutory or other), options, deeds of trust, easements,
charges, or security interests, of any kind (“Liens”), except for any
encumbrance set forth in Section 1.1 of the Disclosure Schedule (the “Permitted
Encumbrances”). The assets, properties and rights sold by the Seller
and purchased by the Buyer under this Agreement which relate to or are used in
connection with the operation of the Business in a manner consistent with its
historic operation (collectively, the “Assets”) are:
(a) All
fixed assets (the “Fixed Assets”) used in the Business, including, without
limitation, all equipment, computer hardware and software (including software
licenses) and other personal property of the Seller set forth in Section 1.1(a)
of the Disclosure Schedule hereto;
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(b) All
of the following items used by the Seller in the conduct and operation of the
Business: (i) customer and contact lists, including, without limitation, names,
addresses and telephone numbers, (ii) sales, product and promotional data,
catalogs, brochures, literature, forms, mailing lists, art work, photographs and
advertising materials, (iii) vendor lists, including, without limitation, names,
addresses and the names of their representatives, (iv) product specifications
and plans and drawings related thereto, (v) the names and trade names set forth
on Section 1.1(b) of the Disclosure Schedule and all right, title and interest
in said names, (vi) all computer software and information technology (including
all improvements thereof), and (vii) all other Intellectual Property (as
hereinafter defined);
(c) All
of the Seller’s rights under the Contracts (as defined in Section
4.13(b));
(d) All
orders, contracts and commitments for the delivery of services by the Seller in
the conduct of the Business, including, without limitation, all work-in-process
and all rights for compensation and accounts receivable for services performed
and to be performed, including, without limitation, those specified in Section
1.1(d) (the Accounts Receivable) of the Disclosure Schedule;
(e) All
licenses, permits, franchises, registrations, authorizations, operating rights
and authorities, applications, filings, notices, qualifications, waiver of any
of the foregoing or approvals of any federal, state, local or foreign government
or governmental regulatory body or any of their respective subdivisions,
agencies, instrumentalities, authorities, courts or tribunals (each, a
“Governmental Authority”) that are held by the Seller and related to or
necessary to conduct the Business, including, without limitation, those
specified in Section 1.1(e) of the Disclosure Schedule, to the extent assignable
(the “Licenses and Permits”);
(f) All
inventory, materials and supplies owned by the Seller relating to the Business
and all rights of the Seller to warranties received from its suppliers with
respect to the foregoing (to the extent assignable), and related claims,
credits, and rights of recovery with respect thereto, including, without
limitation, that which is set forth in Section 1.1(f) of the Disclosure Schedule
hereto (collectively, the “Inventory”).
1.2. Retained Assets. Notwithstanding the
foregoing, all assets of the Seller, other than
those used, or specifically held for use in connection with the Business and
identified in Section 1.1 above, including any cash, cash equivalents,
prepaid expenses and certain other assets, as set forth in Section 1.2 of the
Disclosure Schedule, shall be retained by the
Seller (the “Retained
Assets”).
1.3. Instruments
of Transfer and Assignment. At the Closing (defined in Section 6.1),
the Seller shall deliver or cause to be delivered to the Buyer duly executed
bills of sale, licenses and such other instruments of transfer and assignment as
may be necessary or desirable to vest in the Buyer, subject to Section 1.4 and
the Assumed Liabilities (as hereinafter defined), good and valid title to, and
all of the Seller’s right, title and interest in and to, the Assets, free and
clear of all Liens other than the Permitted Encumbrances, which bills of sale,
licenses and other instruments of transfer and assignment are in form and
substance satisfactory to the Buyer.
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1.4. Consents
to Assignments. Nothing in this Agreement or the documents to be
executed and delivered at the Closing shall be deemed to constitute an
assignment or an attempt to assign any License and Permit, Contract or other
agreement to which the Seller is a party, if the attempted assignment thereof
without the consent of the other party to such License and Permit, Contract or
other agreement would constitute a breach thereof or affect in any way the
rights of the Seller thereunder. Notwithstanding the foregoing, at or
prior to the Closing Date (defined in Section 6.1), the Seller and the
Shareholder shall obtain all of the consents necessary to assign any such
License and Permit, Contract or other agreement used in the Business to the
Buyer; provided, however, no modification of any License and Permit, Contract or
other agreement to be assigned to the Buyer shall be made without the Buyer’s
prior written consent.
1.5. Subsequent
Documentation. At any time and from time to time after the Closing
Date, the Seller and the Shareholder shall, upon the request of the Buyer, and
the Buyer shall, upon the request of the Seller, promptly execute, acknowledge,
and deliver, or cause to be executed, acknowledged, and delivered, such further
instruments and other documents, and perform or cause to be performed such
further acts, as may be reasonably necessary or desirable to evidence or
effectuate the sale, conveyance, transfer, assignment, and delivery hereunder of
the Assets, the assumption by the Buyer of the Assumed Liabilities, the
performance by the parties of any of their other respective obligations under
this Agreement and any of the applicable Ancillary Agreements (as hereinafter
defined), and to carry out the purposes and intent of this Agreement and any of
the applicable Ancillary Agreements.
1.6. Prorations. All
sales taxes and personal property taxes and assessments which are past due or
have become due upon any of the Assets on or before the Closing Date will be
paid by Seller, together with any penalty or interest
thereon. Current personal property taxes will be prorated and
adjusted between Buyer and Seller as of the Closing Date on a due date basis as
if paid in arrears. If current tax bills are unavailable at the
Closing, the prior year’s tax bills will be used for proration purposes and
taxes will be re-prorated between Buyer and Seller when the current year’s tax
bills are received. Any amounts owed by either Buyer or Seller with
respect to such re-proration will be paid to the other party within thirty (30)
days of the determination of such re-proration.
ARTICLE
II
PURCHASE
PRICE
2.1.
Purchase Price. In addition to the assumption of the Assumed Liabilities, the
purchase price (the “Purchase Price”) for the Assets shall be equal to Eight
Hundred Eighteen Thousand Four Hundred and Forty Two Dollars ($818,442.00) as
set forth in Schedule
2.1, (the “Purchase Price Calculation”), payable as follows:
(a) A
prepaid deposit of $50,000.00 (the “Deposit”) which was paid to Seller prior to the date hereof and
which Seller hereby acknowledges receipt thereof;
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(b) Subject to adjustment prior to Closing, Five Hundred
Twenty One Thousand Five
Hundred and Ten Dollars
($521,510.00) which Buyer shall pay to MTU/Katolight on Seller’s
behalf in satisfaction of all accounts payable and other amounts owed by Seller
to MTU/Katolight set forth in Section 2.1(b) of the Disclosure Schedule (the MTU
Liability); and
(c) One Hundred Forty-Four Thousand Eight Hundred And Twenty
Seven Thousand Dollars ($144,827.00), which shall be paid by Buyer to Seller at
Closing (the “Closing Payment”); and
(d)
Eighty Six Thousand Six Hundred Twelve Dollars ($86,612.00) shall be paid by
Buyer to Seller on the date that is twenty-four (24) months after Closing (the
“Final Payment”). Provided that if the
payment to MTU/Katolight is greater than the amount described in Section 2.1(b)
at the Closing, the Final Payment shall be reduced on a dollar-for-dollar basis
by an amount equal to such excess set forth on Section 2.1(b) of the Disclosure
Schedule (the MTU Liability); Buyer shall deliver to Seller, at the
Closing, a Promissory Note in the amount of the Final Payment, in the form
agreed by the parties (the “Promissory Note”), and attached hereto as Exhibit
C. The amount of the Final Payment shall accrue simple interest at
the rate of eight percent (8%) per annum. Interest shall accrue on
the Final Payment from and after the Closing Date and shall be calculated on the
basis of a 365-day year. Buyer may prepay the Final Payment in full
or in part at any time without any prepayment charge.
(e) Two
Hundred Thousand (200,000) Warrants with terms and conditions as set forth in
the Warrant.
(f) A
payment of Twenty Thousand Dollars ($20.000.00) for legal fees upon completion
and delivery of all required schedules, disclosures and other required documents
by Seller.
2.2. Fair
Consideration. The parties acknowledge and agree that the Purchase
Price provided for in this Article II represents fair consideration and
reasonable equivalent value for the sale and transfer of the Assets and the
transactions, covenants, and agreements set forth in this Agreement, which
consideration was agreed upon as the result of arm’s-length good-faith
negotiations among the parties and their respective
representatives.
2.3. Allocation
of Consideration. Prior to the Closing, the Seller and the Buyer
shall agree upon an allocation of the Purchase Price among the Assets and the
Assumed Liabilities on the basis set forth on Section 2.3 of the Disclosure
Schedule and in accordance with Section 1060 of the Internal Revenue Code of
1986, as amended (the “Code”). The Buyer and the Seller shall file,
in accordance with Section 1060 of the Code, an Asset Allocation Statement on
Form 8594 (which reflects such allocation) with its federal income Tax Return
for the Tax year in which the Closing Date occurs and shall contemporaneously
provide the other party with a copy of the Form 8594 being
filed. Each party agrees not to assert, in connection with any Tax
Return, audit or other similar proceeding, any allocation of the Purchase Price
that differs from the allocation set forth herein. Seller and the Shareholder
acknowledge and agree that a portion of the Purchase Price equal to Twenty-Five
Thousand Dollars ($25,000.00) represents consideration for the restrictive
covenants contained in Section 8.1 of this Agreement.
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ARTICLE
III
ASSUMPTION
OF LIABILITIES
3.1. Assumed Liability.
(a)
The Buyer agrees to assume the accounts payable of
the Seller due as of the May 31, 2009 from Seller to MTU OnSite, which shall not
exceed the amounts set forth in Section 3.1 of the Disclosure Schedule (the “MTU
Liabilities”).
(b)
Other than those liabilities set forth in Section 3.1, the Buyer is not assuming
or agreeing to assume or discharge any liability or obligation of the Seller
whatsoever, whether now existing or hereafter incurred, including, without
limitation, any liability or obligation relating to the Assets, excepting only
those liabilities and obligations of the Seller to be discharged or performed
after the Closing Date related to future performance under the Contracts (with the liability disclosed in Section 3.1(a),
the “Assumed Liabilities”) for”) for which Buyer hereby agrees to assume
and be solely responsible for after consummation of the transactions
contemplated herein.
3.2. Assumption
Agreement. Buyer and Seller shall enter into an Assumption Agreement
in the form attached hereto as Exhibit A pursuant to which Seller shall assign,
and Buyer shall assume, the Assumed Liabilities.
3.3. Retained
Liabilities. Except as expressly assumed pursuant to Section 3.1 hereof, Buyer
shall not assume and Seller shall remain liable for and discharge all
liabilities, claims and obligations of Seller as of the Closing Date of any and
every kind and nature whatsoever (collectively, the “Retained Liabilities”),
including, without limitation, the following:
(a) Any
debt, liability or obligation of Seller for any foreign, federal, state or local
income or other Taxes (as hereinafter defined) which relate to periods ending
prior to or as of the Closing Date;
(b) Any
debt, liability or obligation with respect to products manufactured or products
sold, or services performed, by Seller prior to the Closing Date (including,
without limitation, any debt, liability, obligation or other responsibility for
or with respect to any product warranty or product liability
matters);
(c) Any
accounts payable, accrued expenses and accrued liabilities of the Seller;
and
(d) Any
debt, liability or obligation with respect to any employee of the Seller or
arising under any of the Employee Benefit Plans (as hereinafter defined);
and
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3.4. Right
to Contest. The assumption and agreement by Buyer to pay, perform and
discharge the Assumed Liabilities shall not prohibit Buyer from contesting with
a third party, in good faith and at the expense of Buyer, the amount, validity
or enforceability of any thereof.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES
OF
THE SELLER AND THE SHAREHOLDER
As a
material inducement to the Buyer to enter into this Agreement and to consummate
the transactions contemplated hereby, the Seller and the Shareholder, jointly
and severally, hereby represent and warrant to the Buyer as
follows:
4.1. Ownership. The
capital structure of the Seller is set forth in Section 4.1 of the Disclosure
Schedule. The Shareholder constitutes the sole owner of all of the
outstanding capital stock of the Seller.
4.2. Organization
and Qualification. The Seller is a corporation duly organized and
validly existing under the Laws of the State of Florida. The Seller
is qualified to do business and is in good standing in Florida and each other
jurisdiction in which the character and location of the assets or the nature of
the Business transacted by it makes such qualification necessary and where the
failure to qualify would have a short-term or long-term material adverse effect
on the Assets, operations, business, or financial condition of the Business
conducted by the Seller immediately prior to the Closing, either individually or
taken as a whole (“Material Adverse Effect”). The Seller has the
requisite corporate power and authority to own or lease and operate its Assets
and conduct its Business and to consummate the transactions contemplated
hereby. Except as set forth on Section 4.2 of the Disclosure
Schedule, the Seller has no subsidiaries.
4.3. Authorization
of Agreement. The Seller has all requisite organizational power and
authority to enter into this Agreement and all applicable Ancillary Agreements
and to carry out its obligations hereunder and thereunder. The
Shareholder represents and warrants that Shareholder has the power and authority
to enter into this Agreement and all applicable Ancillary Agreements and to
carry out its obligations hereunder and thereunder. The execution,
delivery and performance of this Agreement and all applicable Ancillary
Agreements by the Seller and the consummation of the transactions contemplated
hereby and thereby have been duly and effectively authorized by the shareholders
of the Seller and no other organizational proceedings will be necessary to
authorize this Agreement and all applicable Ancillary Agreements and the
transactions contemplated hereby and thereby. This Agreement and all
applicable Ancillary Agreements have been duly and validly executed and
delivered by the Seller and the Shareholder and constitute the legal, valid and
binding obligation of the Seller and the Shareholder, enforceable in accordance
with their terms, except that such enforcement may be limited by (a) bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors’ rights
generally, and (b) general principles of equity, regardless of whether
enforcement is sought in a proceeding in equity or at law.
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4.4. No
Conflict or Violation. The execution, delivery and performance of
this Agreement and all applicable Ancillary Agreements by the Seller and the
Shareholder and the consummation by the Seller and the Shareholder of the
transactions contemplated hereby and thereby will not, with or without the
giving of notice or the lapse of time, or both, (a) violate any provision of any
federal, state, local or foreign law, ordinance, order, rule, regulation,
license or permit, and any order, writ, judgment, award, injunction, or decree
of any court or arbitrator or any Governmental Authority of the United States of
America, any state or political subdivision thereof or any foreign Governmental
Authority (each a “Law”) to which the Seller or Shareholder is subject, (b)
violate any judgment, order, writ or decree of any Governmental Authority
applicable to the Seller or Shareholder, (c) have any Material Adverse Effect
on, or be a violation of, any of the Licenses and Permits relating to the
Business or the ability of the Buyer to make use of such Licenses and Permits,
or (d) result in a breach of or conflict with any term, covenant, condition or
provision of, result in a modification or termination of, constitute a default
under, or result in the creation or imposition of any Lien upon any of the
Assets (other than Permitted Encumbrances and the Assumed Liabilities) pursuant
to the Articles of Incorporation, Bylaws or other organizational documents,
commitment or Contract or other agreement or instrument to which the Seller or
Shareholder is a party or by which any of the Assets are or may be bound or
affected or from which the Seller or Shareholder derives benefits with respect
to the Business.
4.5. Consents
and Approvals. Except as set forth in Section 4.5 of the Disclosure
Schedule, no License and Permit, application, notice, transfer, consent,
approval, order, qualification, waiver from, or authorization of, or
declaration, filing or registration with, any Governmental Authority is required
for the execution and delivery by the Seller or Shareholder of this Agreement or
any Ancillary Agreements or the consummation by the Seller or Shareholder of the
transactions contemplated hereby or thereby and no consent of any individual,
corporation, partnership, joint venture, association, limited liability company,
joint stock company, trust, or unincorporated association, or any Governmental
Authority (each, a “Person”) is required to consummate any of the transactions
contemplated hereby or thereby.
4.6. No
Undisclosed Liabilities, Claims, Etc. Except as set forth in Section
4.6 of the Disclosure Schedule hereto or as disclosed in the Financial
Statements (or incurred in the ordinary course of business following the latest of the Financial
Statements), the Seller does not have any outstanding liabilities or
obligations, whether accrued, absolute, contingent or otherwise, relating to the
Business.
4.7. Litigation. Except
as set forth in Section 4.7 of the Disclosure Schedule hereto, there is no
claim, action, suit, proceeding, arbitration, hearing or notice of hearing, or
investigation, pending or, to the knowledge of the Seller and the Shareholder,
threatened, against the Seller, or any of the Assets or the Business or with
respect to the transactions contemplated by this Agreement or any of the
applicable Ancillary Agreements. No such claim, action, suit,
proceeding, arbitration, investigation or hearing will prevent the Closing of
this Agreement or the consummation of the transaction contemplated
hereby. There are no unsatisfied judgments against the Seller, the
Business or the Assets.
4.8. Taxes. Except
as set forth in Section 4.8 of the Disclosure Schedule:
(a) The
Seller has timely filed all returns, statements, declarations, estimates,
reports, information returns, schedules, forms, exhibits, coupons and any other
documents (including all affiliated, consolidated, combined or unitary versions
of the same) including all related or supporting information filed or required
to be filed with any Governmental Authority, in connection with the
determination, assessment, reporting, payment, collection, or administration of
any Taxes (as hereinafter defined), and including any amendment thereof (“Tax
Returns”) that are required to be filed with respect to all tax periods that end
on or before the Closing Date, and all such Tax Returns are true, correct and
complete.
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(b) All
federal, foreign, state, local or other income, net income, payroll, sales, use,
ad valorem, withholding, employment, unemployment, excise, severance, single
business tax, and any other taxes, fees, assessments or charges of any kind
whatsoever, together with any interest, penalties and additions imposed or
charged by any Governmental Authority with respect to such amounts (“Taxes”),
that are due and payable by the Seller with respect to all tax periods that end
on or before the Closing Date have been paid. All Taxes that have
accrued but are not yet due and payable as of the Closing Date, and all Taxes
with respect to any tax period that begins before the Closing Date and ends
thereafter, to the extent such Taxes are attributable to the portion of such
period ending on the Closing Date, are reflected as liabilities on books and
records of the Seller (and notice of which has been delivered to Buyer in
writing at or prior to the Closing).
(c) There
is no tax deficiency or claim assessed, proposed, pending or, to the knowledge
of Seller and the Shareholder, threatened (whether orally or in writing) against
the Seller to assess any additional Taxes for any period ending on or before the
Closing Date, except to the extent that adequate liabilities or reserves with
respect thereto are accrued by the Seller in accordance with GAAP and as set
forth on the books and records of the Seller (and notice of which has been
delivered to Buyer in writing at or prior to the Closing).
(d) The
Seller has made all withholding of Taxes required to be made under all
applicable Laws, including withholding with respect to sales and use Taxes and
compensation paid to any employee, independent contractor, creditor, shareholder
or other Person and the amounts withheld have been properly and timely paid over
to the appropriate Governmental Authorities.
(e) There
are no Liens for Taxes upon the Assets of the Seller except Liens for current
Taxes not yet due and payable.
(f) The
Seller is not a party to a Tax allocation or sharing agreement of any kind or a
party to any consolidated return which would give rise to any liability for the
Taxes of any Person under treasury regulation Section 1.1502-6 (or any similar
provision of state, local or foreign Law) including, without limitation,
liability under any consolidated, combined, unitary or any other Tax Return, or
as a transferee or successor, by contract or otherwise.
(g) The
Seller is not a “foreign person” within the meaning of Section 1445(f)(3) of the
Code.
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4.9. Work-In-Process. The
work in process reflected on the books and records of the Seller as of the
Closing Date has been determined on a basis consistent with and utilizing the
same methodology as that utilized in the Financial Statements.
4.10. Absence
of Certain Changes or Events. Except as set forth in Section 4.10 of
the Disclosure Schedule hereto, since December 31, 2008, the Seller has
conducted the Business only in the ordinary course consistent with past
practices and the Seller has not:
(a) Suffered
any damage, destruction or loss of any of the Assets, whether or not covered by
insurance;
(b) Suffered
any change in the Assets, operations, business, financial condition or any other
event or condition of any character which individually or in the aggregate had
or has a Material Adverse Effect;
(c) Paid,
discharged or satisfied any claims, liabilities or obligations (absolute,
accrued, contingent or otherwise) of, or relating to, the Seller, the Assets or
the Business, except in each case in the ordinary course of
business;
(d) Waived
any claims or rights of substantial value of the Seller taken as a whole, except
in each case in the ordinary course of business;
(e) Pledged
or permitted the imposition of any Lien on (other than Permitted Encumbrances)
or sold, assigned, transferred or otherwise disposed of any of the Assets,
except in the ordinary course of business;
(f) Made
any change in any accounting method or practices;
(g) Granted
any general increase in the compensation payable or to become payable to its
directors, officers, those employees or agents whose annual compensation exceeds
Fifty Thousand Dollars ($50,000) (including any such increase pursuant to any
bonus, pension, profit-sharing or other plan or commitment) or any special
increase in the compensation payable or to become payable to any such director,
officer, employee or agent, or made any bonus payments or any payment of
management fees to its directors, officers, employees or agents, except, in any
such case, in the ordinary course of business;
(h) Suffered
any adverse change in the condition of the Assets, operations, Business or
financial condition of the Seller;
(i) Executed
and delivered any amendment, cancellation, or termination of any Contract,
License, Permit or other instrument, except in the ordinary course of business;
(j) Failed
to pay or discharge any obligation or liability or to pay any wages, salaries or
benefits to which any employee of the Seller is entitled;
(k) Entered
into any written employment agreements with any employees;
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(l) Declared,
set aside or paid any dividends or distributions in respect of any outstanding
securities, any redemption, purchase, or other acquisition of the Seller’s
outstanding securities, or any other payments to its shareholders or directors,
including the payment of any amounts due on obligations of the Seller to its
shareholders or directors;
(m) Incurred
indebtedness for borrowed money or any commitment to borrow money by the Seller,
or any loans made or agreed to be made by the Seller, or any guarantee,
assumption, endorsement of, or other assumption of any obligation by the Seller
with respect to any liabilities or obligations of any other Person;
(n) Made
capital commitments on behalf of or relating to the Business in excess of Ten
Thousand Dollars ($10,000) in the aggregate;
(o) Failed
to pay accounts payable in the ordinary course of business consistent with past
practice; or
(p) Agreed,
whether in writing or otherwise, to take any action described in this Section
4.10.
4.11. Contracts.
(a) Except
as set forth in Section 4.11(a) of the Disclosure Schedule, (i) all of the
Contracts are in full force and effect and enforceable against the other parties
thereto in accordance with their terms; and (ii) no event has occurred or
circumstance exists which, with the giving of notice or the lapse of time or
both, would constitute a default or an event of default by the Seller under any
of the Contracts, and to the knowledge of the Seller and the Shareholder, no
event has occurred or circumstance exists that, with the giving of notice or the
lapse of time or both, would constitute a default or an event of default under
any of the Contracts by any other party thereto.
(b) Section
4.11(b) of the Disclosure Schedule contains a complete and accurate list of all
contracts, agreements and commitments, whether written or oral, which are
material to and relate to the Business (collectively, the “Contracts”),
including, without limitation, all:
(i) Employment,
consulting, bonus, profit-sharing, percentage compensation, deferred
compensation, pension, welfare, retirement, stock purchase or stock option plans
and agreements with any employees, officers, directors, agents or affiliates,
excluding agreements terminable by the Seller on not more than 30 days’ notice
without liability or penalty;
(ii) Notes,
mortgages, contracts, agreements, and commitments for the repayment or borrowing
of money by the Seller in excess of Ten Thousand Dollars ($10,000) in any one
case, or for a line of credit including borrowings by the Seller in the form of
guarantees of, indemnification for, or agreements to acquire any obligations of
others, and all security or pledge agreements related thereto;
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(iii) Contracts,
agreements, and commitments relating to any joint venture, partnership,
strategic alliance, or sharing of profits or losses with any Person to which the
Seller is a party or is bound;
(iv) Contracts,
agreements, and commitments containing covenants purporting to limit the freedom
of the Seller or any of its employees to compete in any business or in any
geographic area;
(v) Contracts,
agreements, and commitments requiring payments or distributions to any
shareholders or directors of the Seller, or any relative or affiliate of any
such person;
(vi) Contracts,
agreements, and commitments with any vendors, suppliers, designers or sales
representatives or agents;
(vii) Contracts,
agreements, and commitments not disclosed in any other Section of the Disclosure
Schedule to this Agreement and which involve the payment or receipt by the
Seller (whether in payment of a debt, as a result of a guarantee or
indemnification, for goods or services, or otherwise) of more than Ten Thousand
Dollars ($10,000) per year or Twenty Thousand Dollars ($20,000) over the initial
term thereof, or are otherwise material to the Business;
(viii) Contracts
not made in the ordinary course of business; and
(ix)
Contracts, agreements and commitments which are material to the
Business.
The
Seller has made true and complete copies of all the written Contracts available
to the Buyer.
4.12. OSHA. Except
as set forth on Section 4.12 of the Disclosure Schedule, the Seller has not
received any written notice from a Governmental Authority that its operations or
Assets have been in the preceding five (5) fiscal years or are presently not in
compliance with the Occupation Safety and Health Act of 1970, as amended
(“OSHA”), or any applicable similar or related state Law provisions, and the
Assets and operations of the Seller related to the Business are in compliance
with OSHA and any similar or related applicable state Law
provisions.
4.13. Customers
and Vendors. There are no outstanding disputes with any customer or
vendor and no customer or vendor has refused to continue to do business with the
Seller in the past year or has stated in writing to the Seller its intention not
to continue to do business with the Seller or to significantly reduce the amount
of business it currently does with the Seller following the
Closing. To the knowledge of Seller and the Shareholder, no customer
or vender intends to discontinue doing business with the Seller or to
significantly reduce the amount of business it currently does with the Seller
following the Closing, other than statements made from time to time by various
service contract subscribers threatening to cancel their contracts by reason of
some miscellaneous service complaints, none of which have been reduced to
writing.
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4.14. Broker
or Finder’s Fee. Except as set forth on Section 4.14 of the
Disclosure Schedule, there is no Person that is entitled to a finder’s fee or
any type of commission in relation to or in connection with the transactions
contemplated by this Agreement or any of the Ancillary Agreements as a result of
any agreement or understanding with the Seller or Shareholder.
4.15. Sufficiency
of Assets. Except for the Retained Assets, the Assets transferred by
the Seller under this Agreement include all of the Seller’s assets, including
fixed assets, intangible assets, Licenses and Permits, Inventory, Contracts and
rights that relate to, arise from, are used or held by the Seller in the
operation of the Business and are necessary to the conduct of the Business in
the manner in which it historically has been conducted.
4.16. Licenses
and Permits. The Seller has all Licenses and Permits or other
authorizations from any Governmental Authority required for the operation of the
Business in the manner presently conducted, each of which is in full force and
effect on the Closing Date. A list of all Licenses and Permits held
by the Seller and used in the Business is set forth in Section 1.1(e) of the
Disclosure Schedule. The Seller is in compliance with all terms,
conditions, and requirements of all Licenses and Permits, and no proceeding is
pending or, to the knowledge of the Seller and the Shareholder, threatened
relating to the revocation or limitation of any of the Licenses or
Permits.
4.17. Compliance
with Applicable Laws. The Seller is in compliance with all applicable
Laws, including those applicable to discrimination in employment, occupational
safety and health, trade practices, competition and pricing, product warranties,
zoning, building, sanitation, employment, retirement, labor relations, product
advertising, and all Environmental Requirements. The Seller is not in
default with respect to any order, writ, judgment, award, injunction, or decree
of any Governmental Authority applicable to it.
4.18. Title
to Assets, Absence of Liens and Encumbrances, Etc. The Seller
owns all right, good and marketable title and interest in and to the Assets,
free and clear of all Liens, other than the Permitted Encumbrances and those
Liens which Seller will cause to be discharged at the Closing as set forth on
Section 4.18 of the Disclosure Schedule (the “Discharged Liens”).
4.19. Inventory. All
Inventory included in the Assets consists of a quality and quantity useable in
the ordinary course of business and is valued at the lower of cost or
market. All Inventory is located at the locations set forth on
Section 4.19 of the Disclosure Schedule.
4.20. Affiliate
Transactions. Except as set forth in Section 4.20 of the Disclosure
Schedule, there are no transactions relating to the Business presently pending
or planned or initiated or completed between the Seller, Shareholder, director,
officer or any relative or affiliate of any such person, or any employees of the
Seller, including any contract, agreement, or other arrangement (i) providing
for the furnishing of services by or to the Seller, (ii) providing for the
rental of real or personal property by or to the Seller, or (iii) otherwise
requiring payments from the Seller (other than compensation for services as
officers, directors or employees of the Seller in the ordinary course of
business consistent with past practice) to any such person in which any such
person has a substantial interest as a shareholder, officer, director, trustee
or partner.
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4.21. Vehicle
Disclosures. Without limiting the generality of Section 4.18
above, the Seller has good, marketable and transferable title to, or a valid and
transferable lease agreement for, all vehicles included in the Assets being
transferred to Buyer hereunder. Except as set forth in Section 4.21
of the Disclosure Schedule, there have been no vehicular accidents or other
material traffic violations, including, without limitation, any violations or
alleged violations for driving under the influence of drugs or alcohol, by the
Seller or its employees during the past three (3) calendar years. The
Seller and the Shareholder have no knowledge of any facts or circumstances that
could reasonably cause the Seller or, following the Closing, the Buyer to be
unable to obtain automobile insurance (similar to the Buyer’s current automobile
insurance, if any) for of such vehicles or employees operating such vehicles.
Transfer fees, if any, shall be paid by the Buyer.
4.22. All
Material Information. The Seller and the Shareholder have not
withheld from the Buyer any material facts relating to the Assets, the Business,
the operations of the Seller, or the financial condition of the
Seller. No representation or warranty made by the Seller or
Shareholder herein contains an untrue statement of a material fact or omits to
state any material fact necessary in order to make any representation, warranty,
or other statement not misleading.
4.23. No
Other Agreements to Sell Assets. The Seller has no obligation,
absolute or contingent, to any other Person to sell any of the Assets (other
than in the ordinary course of Bbusiness) or any of the equity interests in the
Seller, or to effect any merger, consolidation, or other reorganization of the
Seller, or to enter into any agreement with respect thereto.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF THE BUYER
As a
material inducement to the Seller to enter into this Agreement and to consummate
the transactions contemplated hereby, the Buyer hereby represents and warrants
to the Seller as follows:
5.1. Organization,
Etc. The Buyer is a corporation duly organized and validly existing
under the laws of the State of Florida and is a wholly owned subsidiary of Titan
Energy Worldwide, Inc., a Nevada corporation. The Buyer has the
requisite organizational power and authority to conduct its business and to
consummate the transactions contemplated hereby.
5.2. Authorization
of Agreement. The Buyer has all requisite organizational power and
authority to enter into this Agreement and all applicable Ancillary Agreements
and to carry out its obligations hereunder and thereunder. The
execution, delivery and performance of this Agreement and the applicable
Ancillary Agreements by the Buyer and the consummation of the transactions
contemplated hereby and thereby have been duly and effectively authorized by the
organizational and governing documents of the Buyer and no other organizational
proceedings will be necessary to authorize this Agreement and the applicable
Ancillary Agreements and the transactions contemplated hereby and
thereby. This Agreement and all applicable Ancillary Agreements have
been duly and validly executed and delivered by the Buyer and constitutes the
legal, valid and binding obligation of the Buyer enforceable in accordance with
their terms, except that such enforcement may be limited by (a) bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors’ rights
generally, and (b) general principles of equity, regardless of whether
enforcement is sought in a proceeding in equity or at law.
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5.3. Approvals. Except
as set forth in Section 5.3 of the Disclosure Schedule, no consent or approval
is required of any Person for the execution, delivery and performance of this
Agreement and the applicable Ancillary Agreements and the documents to be
delivered at the Closing by the Buyer, and the execution, delivery or
performance, nor the consummation of the transactions contemplated herein or
therein, do not breach any provision of the Buyer’s organizational documents or
any Law that would have a material adverse effect on the Buyer’s ability to
perform its obligations hereunder or thereunder.
5.4. Broker
or Finder’s Fee. There is no Person that is entitled to a finder’s
fee or any type of commission in relation to or in connection with the
transactions contemplated by this Agreement or any of the Ancillary Agreements
as a result of any agreement or understanding with the Buyer.
5.5. Effect
of Agreement, Etc. The execution, delivery and performance of this
Agreement and each of the applicable Ancillary Agreements by the Buyer and
consummation by the Buyer of the transactions contemplated hereby and thereby
will not, with or without the giving of notice and the lapse of time, or both,
(a) violate any provision of Law to which the Buyer is subject, (b) violate any
judgment, order, writ or decree of any Governmental Authority applicable to the
Buyer, or (c) result in the breach of or conflict with any term, covenant,
condition or provision of, result in the modification or termination of,
constitute a default under, or result in the creation or imposition of any Lien
upon any of its assets pursuant to the organizational documents of the Buyer, or
any commitment, contract or other agreement or instrument to which the Buyer is
a party or by which any of the Assets is or may be bound or affected or from
which the Buyer derives benefit.
ARTICLE
VI
CLOSING
6.1. Closing. The
closing of the transactions contemplated hereby (the “Closing”) shall occur on
the date the MTU Approval is received in writing
by Buyer and the parties have the deliveries described in Sections 6.2 and 6.3
below (the “Closing Date”) and shall take place at the offices of the
Seller or at such other place as the parties mutually agree. All
proceedings to be taken and all documents to be executed and delivered by all
parties at the Closing shall be deemed taken and executed simultaneously, and no
proceedings shall be deemed taken nor any documents executed or delivered until
all have been taken, executed and delivered, but shall be effective as of June
1, 2009.
6.2. Deliveries
by the Shareholder and the Seller. At the Closing, the Seller shall
deliver possession of all of the Assets to the Buyer, and the Seller and the
Shareholder shall deliver (or cause to be delivered) to the Buyer originals or
copies, if specified, of the following agreements, documents and other
items:
(a) A
▇▇▇▇ of Sale and Assignment in a form reasonably satisfactory to the parties,
executed by the Seller transferring all of the Assets to the
Buyer;
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(b) Copies
of all the resolutions adopted by the Board of Directors of the Seller and the
shareholders of the Seller authorizing and approving the execution and delivery
of this Agreement and each of the applicable Ancillary Agreements and the
consummation of the transactions contemplated hereby and thereby, certified to
be true, complete, correct and in full force and effect by the Secretary of the
Seller;
(c) A
counterpart of the Assumption Agreement executed by the Seller;
(d) Copies
of each consent, waiver, authorization and approval required for the assignment
of the Contracts to the Buyer as contemplated herein;
(e) A
Certificate of good standing dated within ten (10) days before the Closing Date
from the Secretary of State of Florida certifying that the Seller is validly
existing under the laws of the State of Florida;
(f)
A counterpart to the Promissory note, executed by the Seller;
(g) A
counter part to the Security Agreement, executed by the Seller;
(h) A
counterpart to a release executed by Seller and the Shareholder in form
acceptable to Buyer in its sole discretion (the “Release”);
(i)
A counterpart to a Sublease Agreement between Buyer, on the one hand, and
Seller and/or the Shareholder or their affiliates, on the other hand (the
“Sublease”), which shall be in a form acceptable to the Buyer in its sole
discretion, executed by the Seller and/or Shareholder or their affiliates, as
applicable.
(j)
A counterpart to a Warehousing and Parts Agreement between Buyer and
Seller (the “Warehousing and Parts Agreement”), which shall be in a form
acceptable to Buyer in its sole discretion, executed by the Seller.
(k) All
agreements, documents and instruments required to be delivered by the Seller
and/or the Shareholder pursuant to any of the Ancillary Agreements executed by
the Seller and/or the Shareholder, as applicable;
(l)
A counterpart of an Assignment of Contracts in a form reasonably satisfactory to
the parties, executed by Seller (the “Assignment of Contracts”);
(m) Approval
to permit Buyer to use the name “Grove Power”, if necessary;
(n) The
Asset Allocation Statement on Form 8594 pursuant to Section 2.3 of this
Agreement; and
The
documents described in subsections (a) – (l) above are referred to herein as the
“Ancillary Agreements.”
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6.3. Deliveries
by the Buyer. At the Closing, the Buyer shall deliver (or shall cause
to be delivered) to the Seller originals, or copies if specified, of the
following agreements, documents and other items:
(a) Copies
of all the resolutions adopted by the Board of Directors of the Buyer
authorizing and approving the execution and delivery of this Agreement and all
agreements contemplated hereby and the consummation of the transactions
contemplated hereby and thereby, certified to be true, complete, correct and in
full force and effect by the Secretary of the Buyer;
(b) The
Closing Payment;
(c) MTU
Approval (when provided by MTU)
(d) A
counterpart of the Promissory Note;
(e) A
counter part to the Security Agreement
(f) A
counterpart of the Assumption Agreement executed by the Buyer;
(g) All
agreements, documents and instruments required to be delivered by the Buyer
pursuant to any of the Ancillary Agreements executed by the Buyer;
and
(h) A
counterpart of the Assignment of Contracts executed by Buyer;
(i) A
counterpart of the Sublease executed by Buyer;
(j) A
counterpart of the Warehousing and Parts Agreement executed by
Buyer;
(k) The
Asset Allocation Statement on Form 8594 pursuant to Section 2.3 of this
Agreement;
(l) A
payment of Twenty Thousand Dollars ($20,000) for legal expenses incurred in
connection with the purchase of the Assets;
(m) A
payment for estimated reimbursement of expenses related to the continued
operation of the Industrial Division and Service Division incurred by Seller in
the normal and ordinary course of its business on and between June 1, 2009 and
the Closing Date (“Estimated Expense Payment”). An itemized list of
the total reimbursable expenses (the “Reimbursable Expenses”) shall be provided
by Seller to Buyer no later than 30 (thirty) days following the Closing
Date. In the event the Reimbursable Expenses exceed the Estimated
Expense Payment, Buyer shall pay the difference between (x) the Reimbursable Expenses
and (y) the Estimated
Expense Payment to Seller within ten (10) days of receipt of the itemized list
of Reimbursable Expenses. In the alternative, in the event the
Estimated Expense Payment exceeds the Reimbursable Expenses, Seller shall tender
the difference between (y) the Estimated Expense
Payment and (x) the
Reimbursable Expenses to Buyer within ten (10) days of delivery of the list of
Reimbursable Expenses. Reimbursable Expenses may include but are not
necessarily limited to the following: payroll, payroll expenses, and,
sales commissions; employee benefits including health insurance; employee
expenses; office expenses including rent, utilities, insurance, taxes, phone,
and supplies; warehouse rent and related services; parts services; vehicle lease
and operating expenses; equipment leases, purchases and repairs; shipping and
postage; and
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(m) Offer letters stating intent to hire
current employees of the Business in substantially the same positions and at the
wages and compensation rates currently in place with the Seller, with current
health plan coverage, sick, vacation and personal day policies, 401(k) and other
benefits offered by the Buyer to its employees.
6.4. Possession
of Assets. Immediately following the Closing on the Closing Date, the
Seller shall take or cause to be taken all actions which are reasonably required
or requested by the Buyer to put the Buyer in full possession and control of all
of the Assets.
ARTICLE
VII
INDEMNIFICATION
7.1.
Indemnification by the Shareholder and the
Seller. The Shareholder and the Seller, jointly and severally, shall
indemnify and hold harmless the Buyer and its successors, shareholders,
managers, directors, officers, employees, agents and representatives and their
successors, heirs and legal representatives from and against any and all
damages, losses, obligations, liabilities, claims, encumbrances, penalties,
fines, costs, and expenses, including reasonable attorneys’ fees (and costs and
reasonable attorneys’ fees in respect of any suit or arbitration proceeding to
enforce this provision) (each, an “Indemnity Loss”) arising out of or with
respect to:
(a) Any
Retained Liability;
(b) Any
Retained Assets;
(c) Any
inaccuracy, misrepresentation or breach of any of the representations,
warranties, covenants or agreements made by the Seller or Shareholder in this
Agreement;
(d) any
noncompliance with any bulk sales Laws or fraudulent transfer Law in respect of
the transactions contemplated hereby; or
(e) Any
claim, suit, investigation, proceeding, demand, assignment or litigation
resulting from any matter indemnified under this Section 7.1.
7.2. Indemnification
by the Buyer. The Buyer and Titan Energy Worldwide, Inc. shall
indemnify and hold harmless the Seller and the Shareholder and their respective
successors, directors, officers, employees, agents and representatives and their
successors, heirs and legal representatives, from and against any and all
Indemnity Losses, arising out of or with respect to:
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(a) the
Assumed Liabilities;
(b) Any
inaccuracy, misrepresentation or breach of any of the representations,
warranties, covenants or agreements made by the Buyer in this Agreement;
or
(c) Any
claim, suit or litigation resulting from any matter indemnified under this
Section 7.2.
7.3. Notice. If
an indemnified party (the “Claimant”) believes that it has suffered or incurred
any Indemnity Loss, it shall promptly notify the party hereto which the Claimant
believes has an obligation to indemnify (the “Indemnifying Party”) pursuant to
this Article VII in writing describing such loss or expense, the amount thereof,
if known, and the method of computation of such loss or expense, all with
reasonable particularity, and enclosing all relevant documents relating thereto
(the “Indemnification Notice”). If any action at law, suit in equity,
or administrative action is instituted by or against a third party with respect
to which the Claimant intends to claim any liability or expense as an Indemnity
Loss under this Article VII, it shall promptly (and in any event within fifteen
(15) days after the service of any complaint or summons) notify the Indemnifying
Party in writing of such action or suit describing such loss or expenses, the
amount thereof, if known, and the method of computation of such loss or expense,
all with reasonable particularity, and enclosing all relevant documents relating
thereto (the “Litigation Notice”) in lieu of an Indemnification Notice;
provided, however, that the failure of any Claimant to give timely notice shall
not affect rights to indemnification hereunder if (i) such failure to give
timely notice does not materially affect the ability or right of the
Indemnifying Party to participate in the defense of such claim and the
Indemnifying Party is not otherwise materially prejudiced thereby, and (ii)
actual notice is given to the Indemnifying Party within a reasonable
time.
7.4. Arbitration.
(a) If
the Indemnifying Party does not agree that the Claimant is entitled to full
reimbursement for the amount specified in the Indemnification Notice or
Litigation Notice, as the case may be, the Indemnifying Party shall notify the
Claimant (the “Disagreement Notice”) within twenty (20) days of its receipt of
the Indemnification Notice or Litigation Notice, as the case may
be. Failure to deliver a Disagreement Notice in a timely manner shall
be considered an acknowledgement by the Indemnifying Party of its agreement with
the Claimant with respect to the Indemnity Loss set forth in the Indemnification
Notice or the Litigation Notice, as the case may be. At any time
after delivery of the Disagreement Notice, either the Claimant or the
Indemnifying Party may notify the other that the determination as to whether and
in what amount the Claimant is entitled to indemnification from the Indemnifying
Party shall then be made by an arbitration tribunal (the “Arbitration
Notice”). The arbitration tribunal shall consist of three
arbitrators, one to be selected by the Claimant, one to be selected by the
Indemnifying Party, and the third arbitrator to be selected by the other two
arbitrators. The arbitrators shall each be independent of the parties
and reasonably experienced in conducting arbitration proceedings relating to
similar matters and all arbitrators shall be selected within thirty (30) days of
the delivery of the Arbitration Notice. An arbitration hearing shall
then be held in Minneapolis, Minnesota, within thirty (30) days of the selection
of the third arbitrator, and the arbitration tribunal shall render its
determination in writing as to whether and in what amount the Claimant is
entitled to indemnification within thirty (30) days of such
hearing. All procedures with respect to the arbitration proceeding
provided for in this Section 7.4(a) shall be in accordance with the rules of the
American Arbitration Association, except as otherwise specifically set forth in
this Agreement.
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(b) The
parties hereby irrevocably consent to be bound by the decision of the
arbitration tribunal with respect to indemnification
determinations.
7.5. Defense
of Claims. The Indemnifying Party shall have twenty (20) Business
Days after receipt of the Litigation Notice to notify the Claimant that it
acknowledges its obligation to indemnify and hold harmless the Claimant with
respect to the Indemnity Loss set forth in the Litigation Notice and/or that it
elects to conduct and control any legal or administrative action or suit with
respect to an indemnifiable claim (the “Election Notice”). If the
Indemnifying Party does not give the foregoing Election Notice, then, unless and
until the Indemnifying Party does give the foregoing Election Notice, the
Claimant shall have the right to defend, contest, settle, or compromise such
action or suit; provided, however, the Claimant shall not compromise or settle
any such action or suit without the consent of the Indemnifying Party (which
consent shall not be unreasonably withheld) and provided, further, that the
right of Claimant to indemnification hereunder shall not be conclusively
established thereby. If the Indemnifying Party gives the foregoing
Election Notice, the Indemnifying Party shall have the right to undertake,
conduct, and control, through counsel of its own choosing and at its sole
expense, the conduct and settlement of such action or suit, and the Claimant
shall cooperate with the Indemnifying Party in connection therewith; provided,
however, that (i) the Indemnifying Party shall not thereby consent to the
imposition of any injunction against the Claimant without the written consent of
the Claimant; (ii) the Indemnifying Party shall permit the Claimant to
participate in such conduct or settlement through counsel chosen by the
Claimant, but the fees and expenses of such counsel shall be borne by the
Claimant; (iii) upon a final determination of such action or suit, subject to
Section 7.4 hereof, the Indemnifying Party shall promptly reimburse the
Claimant, to the extent required under this Article VII, for the full amount of
any Indemnity Loss incurred by the Claimant except fees and expenses of counsel
that the Claimant incurred after the assumption of the conduct and control of
such action or suit by the Indemnifying Party in good faith; (iv) the Claimant
shall have the right to pay or settle any such action or suit; provided,
however, that in such event the Claimant shall waive any right to indemnity
therefor by the Indemnifying Party and no amount in respect thereof shall be
claimed as an Indemnity Loss under this Article VII. In the event of
a settlement under this Section 7.5, the Claimant shall also reimburse the
Indemnifying Party for fees and costs incurred by the Indemnifying Party prior
to the settlement.
7.6. Payment
of Losses. The Indemnifying Party shall pay to the Claimant in cash
the amount to which the Claimant is entitled by reason of the provisions of this
Article VII, such payment to be made within fifteen (15) Business Days after
such amount is finally determined either by mutual agreement of the parties or
pursuant to the arbitration proceeding described in Section 7.4 of this
Agreement or, in the case of an Indemnity Loss described in a Litigation Notice,
the date on which both such amount and Claimant’s obligation to pay such amount
have been determined by a final judgment of the Governmental Authority having
jurisdiction over such proceeding and a final determination is made pursuant to
the arbitration proceeding described in Section 7.4. In addition to
and without waiver of the foregoing, the Buyer shall have the right, but shall
not be obligated, to set-off any amounts due from an Indemnifying Party under
this Agreement against any other amounts due Seller under this Agreement (or any
other agreement or instrument), including, without limitation, all amounts
payable under Section 2.1 hereof.
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7.7. Survival. The
representations and warranties, and covenants and agreements that are set forth
in this Agreement or in any certificate or instrument delivered in connection
herewith shall be continuing and shall survive the Closing for the period of the
applicable statute of limitations.
ARTICLE
VIII
MISCELLANEOUS
8.1. Mutual
Covenant Not to Compete. From and after Closing, Seller and
Shareholder and Buyer covenants and agrees as follows:
(a) Restricted
Period. The term “Restricted Period” means until the third (3rd)
anniversary of the Closing Date.
(b) Non-Competition;
Non-Solicitation by Seller. Except for those exceptions listed in
Section 8.1(b)(v) below, the Seller and the Shareholder shall not, at any time
during the Restricted Period, directly or indirectly, acting alone or as a
member of a partnership or as a holder of any security of any class, or as an
employee, consultant to or representative of, any corporation or other business
entity:
(i) engage
in, continue in or carry on any business which competes with the Buyer, Titan
Energy or their affiliates in the business of
purchasing, selling, servicing and distributing standby electrical generators
similar to in size and capability to the MTU/Katolight line of generators (the
"Industrial Generators"), including owning or controlling any financial
interest in any corporation, partnership, firm or other form of business
organization which is so engaged in the marketing and sale of Industrial
Generators;
(ii) solicit
any customers of Buyer, Titan Energy or their Affiliates for purposes of
offering products that are competitive with the Industrial Generators offered by
the Buyer, Titan Energy or their Affiliates;
(iii) solicit
any supplier of the Buyer, Titan Energy or their Affiliates for purposes of
supplying products that are competitive with the Industrial Generators;
or
(iv) hire,
offer to hire, or solicit for employment any employee of Buyer, Titan Energy or
their Affiliates, without the prior consent of Buyer, until such employee has
been separated from employment by Buyer, Titan Energy or their Affiliates for at
least one year.
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(v) Exceptions
for Seller. Seller and Shareholder shall have the right to continue
in the business of fuel filtrating and polishing; as well as to market and sell
portable generators of any make or manufacturer of 20 kW and below in
size.
(vi) In
the event Buyer materially breaches or materially defaults in performance of
this Agreement or the Promissory Note, which such breach or default shall remain
uncured or remedied thirty (30) days following receipt of written notice by
Buyer of the same from Seller, the restrictions of this Section 8.1(b) shall
terminate.
(c) Non-Competition;
Non-Solicitation by Buyer. Except for those exceptions listed in
Section 8.1(c)(v), the Buyer, Titan Energy and their Affiliates shall not, at
any time during the Restricted Period, directly or indirectly, acting alone or
as a member of a partnership or as a holder of any security of any class, or as
an employee, consultant to or representative of, any corporation or other
business entity:
(i) engage
in, continue in or carry on any business which competes with Seller's business of selling or servicing
electrical generators used or intended for use in vessels and watercraft of all
types and kinds ("Marine Generators"), including owning or controlling
any financial interest in any corporation, partnership, firm or other form of
business organization which is so engaged in the marketing and sale of Marine
Generators;
(ii) solicit
any customers of Seller, Shareholder or their Affiliates for purposes of
offering products that are competitive with the Marine Generators offered by the
Seller, Shareholder or its Affiliates;
(iii) solicit
any suppliers of Seller, Shareholder or their Affiliates for purposes of
offering products that are competitive with the Marine Generators offered by the
Seller, Shareholder or their Affiliates;
(iv) hire,
offer to hire, or solicit for employment any employee of Seller, Shareholder or
their Affiliates, without the prior consent of Seller, until such employee has
been separated from employment by Seller, Shareholder or their Affiliates for at
least one year.
(v)
Exceptions for Buyer. Buyer shall have the right to market, sell or service
electrical generators of more than 100 kW used or intended for use in vessels
and watercraft of all types and kinds ("Marine Generators") and of more than 170
horsepower for Marine propulsion products (“Marine Propulsion
Products”).
(vi) In
the event Seller or Shareholder materially breaches or materially defaults this
Agreement, which such breach or default shall remain uncured or remedied thirty
(30) days following receipt of written notice by Seller of the same from Buyer,
the restrictions of this Section 8.1(d) shall terminate.
(e) Severability; Reformation;
Equitable Relief. Seller and Shareholder acknowledges that if the
scope of the covenants set forth in this Section 8.1 is deemed to be too broad
in any court proceeding, the court may reduce the scope as it deems reasonable
under the circumstances. Buyer would not have any adequate remedy at
law for the breach or threatened breach by Seller, Shareholder or any of its or
his respective Affiliates of the covenants and agreements set forth in this
Section 8.1 and, accordingly, Buyer may, in addition to the other remedies which
may be available to it hereunder, file suit in equity to enjoin Seller,
Shareholder or any of its or his respective Affiliates from such breach or
threatened breach and Seller consent to the issuance of injunctive relief
hereunder. The act of Buyer in entering into this Agreement, and
Buyer’s covenants and payments hereunder, constitute sufficient consideration
for Seller and Shareholder to agree not to compete against Buyer as set out in
this Section 8.1.
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8.2 Expenses. Other
than as set forth in this Section 8.2, each of the parties hereto shall pay
their own respective expenses and the fees and expenses of their respective
counsel and accountants and other experts incurred in connection with this
Agreement and the transactions contemplated hereby. Upon completion
and delivery of all required disclosures and other required documents, Buyer
shall deliver Twenty Thousand Dollars ($20,000) to Seller, or Third Party
designated by Seller, for legal fees incurred in connection with the purchase of
the Assets.
8.3 Waivers. The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent breach. The
waiver by any party hereto at or before the Closing Date of any condition to its
obligations hereunder which is not fulfilled shall preclude such party from
seeking redress from the other party hereto for breach of any representation,
warranty, covenant or agreement contained in this Agreement related to such
waiver.
8.4 Binding
Effect; Benefits; Assignment. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns, heirs and legal
representatives. Except as otherwise set forth herein, nothing in
this Agreement, express or implied, is intended to confer on any person other
than the parties hereto or their respective successors and permitted assigns,
heirs and legal representatives any rights, remedies, obligations, or
liabilities under or by reason of this Agreement. Except as provided
below, no party may assign its rights hereunder without the prior written
consent of the other parties. The Buyer may assign at any time its
rights hereunder to any affiliate of the Buyer, or any third party in connection
with a sale of substantially (i) all of the Buyer’s assets or (ii) all of the
equity interests in the Buyer.
8.5 Notices. All
notices, requests, demands and other communications which are required to be or
may be given under this Agreement shall be in writing and shall be deemed to
have been duly given when delivered in person or transmitted by facsimile or
three (3) days after deposit by certified or registered first class mail,
postage prepaid, return receipt requested, to the party to whom the same is so
given or made:
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If
to the Buyer to:
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Grove
Power, Inc.
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Attention: ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, CFO and Chairman
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Fax: (▇▇▇)
▇▇▇-▇▇▇▇
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With
a copy to:
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▇▇▇▇▇▇▇▇▇▇
& ▇▇▇▇▇, P.A.
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Attention: ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
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Fax: (▇▇▇)
▇▇▇-▇▇▇▇
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If
to the Seller or Shareholder, to:
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▇▇
▇▇▇▇▇, Inc.
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▇▇▇▇
▇▇ ▇▇▇▇
▇▇▇▇▇▇
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▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇
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Attention: ▇▇▇
▇▇▇▇▇
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Fax
(▇▇▇) ▇▇▇-▇▇▇▇
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With
a copy to:
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▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
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or to such other address or facsimile
number as such party shall have specified by notice to the other party
hereto.
8.6 Entire
Agreement. This Agreement (including the Disclosure Schedule and the
Exhibits attached hereto) and the Ancillary Agreements constitute the entire
agreement between the parties hereto and supersedes all prior agreements and
understandings, whether oral or written, between the parties hereto with respect
to the subject matter hereof. No representations or warranties,
express or implied, are made with respect to the Business, the Seller, or the
Assets except as expressly set forth herein.
8.7 Headings. The
Section and Article headings contained in this Agreement are for reference
purposes only and shall not be deemed to be a part of this Agreement or to
affect the meaning or interpretation of this Agreement.
8.8. Governing
Law. This Agreement shall be construed as to both validity and
performance and enforced in accordance with and governed by the Laws of the
State of Minnesota, without giving effect to the choice of law principles
thereof.
8.9 Amendments. This
Agreement may not be modified or changed except by an instrument or instruments
in writing signed by the party against whom enforcement of any such modification
or amendment is sought.
8.10 Severability. The
invalidity of all or any part of any representation, warranty, covenant or
indemnification section of this Agreement shall not render invalid the remainder
of this Agreement or the remainder of such section. If any
representation, warranty, covenant or indemnification section of this Agreement
or portion thereof is so broad as to be unenforceable, it shall be interpreted
to be only so broad as is enforceable.
8.11 Press
Releases. No party shall, without the prior written approval of the
other parties, issue any press release or written statement for general
circulation relating to the transactions contemplated hereby, except as required
by law or the regulation of any stock exchange (but each party shall still
endeavor to allow the other party reasonable opportunity to review and comment
to the extent feasible).
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8.12 Counterparts. This
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same
instrument. However, in making proof hereof it shall be necessary to
produce only one copy hereof signed by the party to be
charged. Signature pages delivered by facsimile to this Agreement or
any document delivered in connection herewith or at the Closing shall be binding
to the same extent as an original.
8.13 Remedies. In
the event of any breach of this Agreement by any party, the non-breaching party
shall, in addition to any other remedy provided herein or by law or in equity,
be entitled to specific enforcement of the terms hereof, including, without
limitation, appropriate injunctive relief in any court of competent
jurisdiction, and no bond or other security shall be required in connection
therewith.
8.14 Schedules
and Exhibits. All Exhibits and Schedules referred to herein are
intended to be and hereby are specifically made a part of this
Agreement.
[SIGNATURE
PAGES TO FOLLOW]
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed in
their respective names by an officer thereunto duly authorized, as applicable,
on the date first above written.
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“BUYER”
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GROVE
POWER, INC.
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By:
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/s/
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, CFO and Chairman
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“SELLER”
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▇▇
▇▇▇▇▇, INC.
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By:
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/s/
▇▇▇ ▇▇▇▇▇
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▇▇▇
▇▇▇▇▇, President
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“SHAREHOLDER”
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| /s/ ▇▇▇ ▇▇▇▇▇ | |||
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