ASSIGNMENT AND INTERIM OPERATING AGREEMENT BY AND AMONG SOLAR POWER, INC., DALE STICKNEY CONSTRUCTION, INC. AND DALE RENEWABLE CONSULTING, INC.
BY
AND AMONG
▇▇▇▇
▇▇▇▇▇▇▇▇ CONSTRUCTION, INC.
AND
▇▇▇▇
RENEWABLE CONSULTING, INC.
This
Assignment and Interim Operating Agreement (this "Agreement") is entered
into as
of August 20, 2006 (the "Effective Date"), by and among Solar Power, Inc.,
a
California corporation (“SPI”); ▇▇▇▇ ▇▇▇▇▇▇▇▇ Construction, Inc. a California
corporation ("DSCI"); and ▇▇▇▇ Renewable Consulting, Inc., a California
corporation (“DRCI"). SPI, DSCI, and DRCI are referred to individually herein as
a "Party" and collectively herein as the “Parties.”
RECITALS
WHEREAS,
SPI and DRCI have entered into an Agreement and Plan of Merger dated as of
even
date herewith whereby DRCI shall merge with and into SPI and SPI shall become
the surviving company (the “Merger”);
WHEREAS,
under the Agreement and Plan of Merger, SPI granted certain franchise operating
rights to certain DRCI stockholders;
WHEREAS,
DRCI is an Affiliate (as defined hereunder) of DSCI and beneficiary of certain
contracts owned by DSCI, and DSCI desires to assign and transfer, and DRCI
agrees to assume such contracts; and
WHEREAS,
pursuant to the Agreement and Plan of Merger, SPI will assume operational
control of DRCI pending consummation of the Merger, and provide all management
services, including payables and revenues, management, budgeting, and advisory
services as provided herein.
AGREEMENT
Now,
therefore, in consideration of the premises and the mutual promises herein
made,
and in consideration of the representations, warranties, and covenants herein
contained, the Parties agree as follows.
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1.
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Definitions
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“Adverse
Consequences” means all actions, suits, proceedings, hearings, investigations,
charges, complaints, claims, demands, injunctions, judgments, orders, decrees,
rulings, damages, dues, penalties, fines, costs, amounts paid in settlement,
liabilities, obligations, taxes, liens, losses, expenses, and fees, including
court costs and reasonable attorneys’ fees and expenses.
“Affiliate”
shall have the meaning set forth in Rule 12b-2 of the regulations promulgated
under the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
“Best
Efforts” means the efforts that a prudent person desirous of achieving a result
would use in similar circumstances to ensure that such result is achieved
as
expeditiously as possible.
“Business”
means any installation, integration and sales related to the photovoltaic
business.
“Closing
Date” means the date the Merger transaction is consummated.
“Confidential
Information” means all information regarding DRCI, its activities, business or
clients that is the subject of reasonable efforts by DRCI to maintain its
confidentiality and that is not generally disclosed by practice or authority
to
persons not employed by DRCI, but that does not rise to the level of a Trade
Secret. “Confidential Information” shall include, but is not limited to, DRCI 's
customer and client lists, DRCI’s financial statements, budgets and forecast,
confidential information provided by customers and prospective customers,
DRCI
's business strategies and plans (including any merger or acquisition plans),
DRCI 's operational methods, DRCI 's compensation information on employees,
DRCI
's fee arrangements with customers and vendors, DRCI 's market studies and
marketing plans and any of DRCI 's product development techniques or plans.
“Confidential Information” shall not include information that has become
generally available to the public by the act of one who has the right to
disclose such information without violating any right or privilege of DRCI.
This
definition shall not limit any definition of “confidential information” or any
equivalent term under state or federal law.
1
"Continuing
Business" means, for the purpose of tracking the revenue and operational
profits, the Business of DRCI from the Measurement Date until its termination
pursuant to this Agreement.
“Effective
Time” means the date the Merger becomes effective with the Secretary of State of
the State of California.
“Future
Franchise Area” means that area in Northern California comprised of three
proposed future SPI franchise territories, as more specifically described
in the
Agreement and Plan of Merger, which is incorporated herein by reference.
“Interim
Operating Period” means the period from the Measurement Date until the Closing
Date.
"Law"
means any federal, state, local, foreign, multinational, stock exchange or
securities market statute, law, ordinance, regulation, rule, code, governmental
order, governmental approval, decree, treaty, decision, constitution or other
requirement or rule of law.
“Measurement
Date” means June 1, 2006.
“Ordinary
Course of Business” means the ordinary course of business consistent with past
custom and practice (including with respect to quantity and frequency) as
it
relates to the business and operations of DRCI.
“PV”
means photovoltaic.
“Restricted
Period” means a period of two (2) years following the Effective
Time.
“Security
Interest” means any mortgage, pledge, lien, encumbrance, charge, or other
security interest, other than (a) mechanic’s, materialman’s, and similar liens,
(b) liens for taxes not yet due and payable, and (c) purchase money liens
and
liens securing rental payments under capital lease arrangements.
“Territory”
means California and northern Nevada.
“Trade
Secrets” means all secret, proprietary or confidential information regarding
DRCI or DRCI activities that fits within the definition of “trade secrets” under
the California Uniform Trade Secrets Act, including but not limited to all
information, without regard to form, such as, technical or nontechnical data,
a
formula, a pattern, a compilation, a program, a device, a method, a technique,
a
drawing, a process, financial data, financial plans, product plans, distribution
lists or a list of actual or potential customers, advertisers or suppliers
which
is not commonly known by or available to the public and which information:
(A) derives economic value, actual or potential, from not being generally
known to, and not being readily ascertainable by proper means by, other persons
who can obtain economic value from its disclosure or use; and (B) is the
subject of efforts that are reasonable under the circumstances to maintain
its
secrecy. “Trade Secrets” shall not include information that has become generally
available to the public by the act of one who has the right to disclose such
information without violating any right or privilege of DRCI. This definition
shall not limit any definition of “trade secrets” or any equivalent term under
the California Uniform Trade Secrets Act or any other state, local or federal
law.
2
2. Operations,
Accounting, Management and Project Management.
Except
as set forth below, SPI shall not be responsible for any expenses related
to
DRCI or DSCI unless approved by SPI in writing.
(a) Operating
Expenses.
During
the Interim Operating Period, SPI shall be responsible for the following
operating expenses:
(i) Payroll
for the following employees of DRCI: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and any other DRCI staff hired during the Interim
Operating Period with the written consent of SPI.
(ii) All
DRCI
expenses associated with PV inventory, including panels, inverters, racking
and
related Balance of System (BOS) equipment.
(b) Purchase
Procedures.
All PV
inventory purchasing by or on behalf of DSCI or DRCI will be coordinated
with
and arranged through SPI and shall be initiated by SPI with a purchase
order.
(c) Revenue
Allocation.
All PV
contract revenues shall be allocated as follows:
(i) PV
contract revenue received by DSCI between the Measurement Date and the Effective
Date for work performed after the Measurement Date and before the Effective
Date, shall be credited to or otherwise distributed by DSCI to SPI at the
Closing Date.
(ii) PV
contract revenue received by DSCI after the Effective Date for work performed
after the Measurement Date shall be distributed by DSCI to SPI. DSCI shall
use
best efforts to forward all such revenues within two (2) business days of
receipt; provided, however, all such revenues shall be forwarded from DSCI
to
DRCI no later than five (5) business days of receipt by DSCI.
(d) Payables
Management.
All PV
contract payables shall be allocated as follows:
(i) Except
for solar panels and BOS purchases, which shall be directly paid for by SPI
in
accordance with supply contract or purchase order terms, PV contract payables
incurred between the Measurement Date and the Effective Date that are due
and
payable for work performed after the Measurement Date shall be paid by DSCI
and
debited against or otherwise collected from SPI at the Closing
Date.
(ii) PV
contract payables invoices received by DSCI for expenses incurred for solar
panels and BOS purchases after the Measurement Date shall be forwarded to
SPI
within two (2) business days of receipt for direct payment by SPI in accordance
with supply contract or purchase order terms.
(e) Work-Related
DSCI Expenses and Reimbursements.
Except
as otherwise stated herein, SPI shall pay DSCI for all “Actual Costs” incurred
by DSCI for PV installation activities during the term of this Agreement.
“Actual Costs” shall mean costs actually and reasonably incurred by DSCI in its
performance of PV installation contract work, including any work required
by
change orders approved by DSCI and SPI.
3
(i) Notwithstanding
any contrary installation contract terms, DSCI shall perform and be compensated
by SPI for the direct labor cost component of all contract terms to which
it is
or will become signatory during the Interim Operating Period at a rate
of Actual
Costs plus ten percent (10%). All other costs (insurance, etc.) shall be
reimbursed at cost and indirect labor and general overhead will not be
reimbursed.
(ii) Actual
mileage costs associated with DSCI vehicles used on PV installation projects
during the term of this Agreement will be reimbursed at the current Internal
Revenue Service allowable rate plus $0.20 per mile. Mileage reimbursement
requests must be properly documented on mileage reimbursement forms that
satisfy
Internal Revenue Service audit requirements.
(iii)
All
extraordinary travel-related expenses expected to exceed pre-approved project
budget, must be pre-approved by SPI. Lodging, meal and incidental expenses
for
travel will be reimbursed at actual costs in accordance with existing DSCI
protocols. All other necessary travel expenses will be reimbursed at actual
costs after prior written approval by SPI.
(iv)
All
DSCI
expense reimbursement requests for contract work performed during the term
of
this Agreement shall be submitted to SPI by the Wednesday following each
week in
which such expenses have been incurred for payment processing. Such costs
reimbursement requests shall be submitted to ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇)
on
behalf of SPI. Any DRCI or SPI questions or disputed cost reimbursement
requests
shall be addressed in writing to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇)
within three (3) business days of SPI receipt of DSCI reimbursement requests.
(v) SPI
payments to DSCI for PV installation work performed shall be made by the
earlier
of thirty (30) days from the date of DSCI’s billing or job cost accounting, as
delivered to SPI no less than monthly, or within ten (10) days of project
owner
payment for such DSCI work.
(f) Insurance.
SPI
shall secure necessary insurance for DRCI upon DRCI obtaining a California
Contractor’s license. If not already in place, DSCI shall immediately add DRCI
as a “named insured” party for all PV contracts as provided herein.
(g) Accounting
and Reconciliation.
(i) SPI
shall
properly account for DRCI financial transactions during the term of this
Agreement, and shall provide to ▇▇▇▇ ▇/▇ ▇▇▇▇▇, ▇/▇ Aging, and Job Cost
Summary
reports for DRCI, and such others as DSCI may request, on or before the
15th
of each
month for the preceding month. A joint review of the reports will be conducted
within five (5) days of delivery to DSCI and the parties shall endeavor
to
resolve any reconciliation discrepancies or disputes by the 25th
of each
reporting month.
(ii) In
the
event this Agreement is terminated, prior to reconciliation of the monthly
accounting period for any reason other than the expiration of the Interim
Operating Period, one hundred ten percent (110%) of the projected net amount
to
be owed to DSCI for the corresponding period will be held by SPI in escrow
until
a final accounting addressing such period has been approved by the affected
parties. If a final accounting cannot be agreed upon within 30 days after
the
Closing Date, the parties agree to resolve any related disputes through
binding
arbitration under the commercial rules of the American Arbitration Association
in Sacramento County, California under a single arbitrator.
(iii)
All
contract work in progress or completed during the term of this Agreement
will be
jointly reviewed by the parties hereto, with a preceding month job-cost
report
prepared and discussed by the 15th
of each
month. Such report shall be prepared by DRCI with the assistance of DSCI,
and
distributed to DSCI by the 10th
of every
month.
4
(h) Ongoing
Communication.
During
the term of this Agreement, the parties agree to communicate regularly
and in
good faith.
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(i)
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DRCI
Points of Contact:
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§
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Operations:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇: ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
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§
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Financial:
▇▇▇ ▇▇▇▇▇▇▇▇▇: ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
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§
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Construction:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇: ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
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§
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Purchasing:
▇▇▇▇▇ ▇▇▇▇▇▇: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
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(ii)
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SPI
Point of Contact:
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§
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Operations:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇: ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
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§
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Financial:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇: ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
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(iii)
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DSCI
Points of Contact:
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§
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Operations:
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
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§
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Financial:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇,
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§
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Construction:
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
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§
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Purchasing
and Onsite Construction: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
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(iv)
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or their respective designees will be present
at a
weekly conference call scheduled for Mondays at 11:00 a.m., or at such
other
mutually agreed upon time. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or his designee will distribute
a
proposed meeting agenda on the previous business day.
(v) The
parties agree to respond in a constructive manner to requests for information
or
approvals within 48 hours of receipt of such a request. Unless as indicated,
all
correspondence shall be in writing and transmitted via electronic mail
or
facsimile to the attention of the herein identified contact representatives
for
each party, as appropriate.
(i) Security
Interest in Operating Advances.
Any
working capital advances made by SPI, for the benefit of DRCI or DSCI,
in the
Ordinary Course of Business to be conducted by DRCI or DSCI, shall be secured
against all of the assets, receivables, contracts, rights and other assets
of
DRCI, including future rights and proceeds of such rights, and DRCI and
DSCI
grant SPI power of attorney to prepare and file all evidences of such Security
Interest as deemed advisable by SPI to secure all such working capital
advances.
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3.
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Representations
and Warranties.
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(a)
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Corporate
Existence and Power.
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(i) DSCI
is a
corporation duly incorporated, validly existing and in good standing under
the
laws of the State of California and has all corporate power and authority
required to carry on the Business as now conducted. DSCI is duly qualified
to do
business as a foreign corporation in each jurisdiction where the character
of
the property owned or leased by it or the nature of its activities make
such
qualification necessary to carry on the Business as now conducted, except
for
those jurisdictions where failure to be so qualified has not had, and may
not
reasonably be expected to have, a Material Adverse Effect. DSCI has previously
provided to SPI true and complete copies of the charter and bylaws of DSCI
as
currently in effect.
5
(ii) DRCI
is a
corporation duly incorporated, validly existing and in good standing under
the
laws of the State of California and has all corporate power and authority
required to carry on the Business as now conducted. DRCI is duly qualified
to do
business as a foreign corporation in each jurisdiction where the character
of
the property owned or leased by it or the nature of its activities make
such
qualification necessary to carry on the Business as now conducted, except
for
those jurisdictions where failure to be so qualified has not had, and may
not
reasonably be expected to have, a Material Adverse Effect. DRCI has previously
provided to SPI true and complete copies of the character and bylaws of
DRCI as
currently in effect.
(iii)
SPI
is a
corporation duly incorporated, validly existing and in good standing under
the
laws of the State of California and has all corporate power and authority
required to carry on its business. SPI is duly qualified to do business
as a
foreign corporation in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities make such qualification
necessary to carry on its business, except for those jurisdictions where
failure
to be so qualified has not had, and may not reasonably be expected to have,
a
Material Adverse Effect. SPI has previously provided to DSCI and DRCI true
and
complete copies of the charter and bylaws of SPI as currently in
effect.
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(b)
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Corporate
Authorization.
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(i) The
execution, delivery and performance by DSCI of each of this Agreement to
which
it is a party and the consummation by DSCI of the transactions contemplated
hereunder are within its powers and have been duly authorized by all necessary
action. This Agreement to which DSCI is a party constitutes a legal, valid
and
binding agreement of DSCI, enforceable against it in accordance with its
terms.
DSCI has provided SPI with at true and correct copy of the resolutions
of the
board of directors of DSCI approving this Agreement and the transactions
contemplated hereunder.
(ii) The
execution, delivery and performance by DRCI of each of this Agreement to
which
it is a party and the consummation by DRCI of the transactions contemplated
hereunder are within its powers and have been duly authorized by all necessary
action. This Agreement to which DRCI is a party constitutes a legal, valid
and
binding agreement of DRCI, enforceable against it in accordance with its
terms.
DRCI has provided SPI with a true and correct copy of the resolutions of
the
board of directors of DRCI approving this Agreement and the transactions
contemplated hereunder.
(iii)
The
execution, delivery and performance by SPI of each of this Agreement to
which it
is a party and the consummation by SPI of the transactions contemplated
hereunder are within its powers and have been duly authorized by all necessary
action. This Agreement to which DRCI is a party constitutes a legal, valid
and
binding agreement of DRCI, enforceable against it in accordance with its
terms.
SPI has provided DSCI and DRCI with a true and correct copy of the resolutions
of the board of directors of SPI approving this Agreement and the transactions
contemplated hereunder.
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(c)
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Non-Contravention.
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(i) The
execution, delivery and performance of this Agreement by DSCI does not
and will
not, with or without the passage of time, (A) contravene or conflict with
the
charter or bylaws of DSCI, (B) contravene or conflict with, or constitute
a
violation of, any provisions of any Laws binding upon DSCI, or (C) conflict
with
or constitute a breach or default under, or give rise to any right of
termination, cancellation or acceleration of, or to a loss of any benefit
under,
any judgment, court order, consent decree or any agreement, indenture,
contract,
note, bond, or other instrument binding upon DSCI, or by which any of the
PV
Contracts is or may be bound, or any license, franchise, permit or similar
authorization held by DSCI, or (ii) result in the creation or imposition
of any
encumbrances on any PV Contract. Except as provided herein, there are no
DSCI
loan agreements, credit agreements, guarantees, notes, mortgages, deeds
of
trust, subordination agreements, pledges, powers of attorney, consents
or
arrangements by which the PV Contracts are bound or in any way
affected.
6
(ii) The
execution, delivery and performance of this Agreement by DRCI does not
and will
not, with or without the passage of time, (A) contravene or conflict with
the
charter or bylaws of DRCI, (B) contravene or conflict with, or constitute
a
violation of, any provisions of any Laws binding upon DRCI, or (C) conflict
with
or constitute a breach or default under, or give rise to any right of
termination, cancellation or acceleration of, or to a loss of any benefit
under,
any judgment, court order, consent decree or any agreement, indenture,
contract,
note, bond, or other instrument binding upon DRCI, or by which any of the
PV
Contracts is or may be bound, or any license, franchise, permit or similar
authorization held by DRCI, or (ii) result in the creation or imposition
of any
encumbrances on any PV Contract. There are no DRCI loan agreements, credit
agreements, guarantees, notes, mortgages, deeds of trust, subordination
agreements, pledges, powers of attorney, consents or arrangements by which
the
PV Contracts are bound or in any way affected.
(iii)
The
execution, delivery and performance of this Agreement by SPI does not and
will
not, with or without the passage of time, (A) contravene or conflict with
the
charter or bylaws of SPI, (B) contravene or conflict with, or constitute
a
violation of, any provisions of any Laws binding upon SPI, or (C) conflict
with
or constitute a breach or default under, or give rise to any right of
termination, cancellation or acceleration of, or to a loss of any benefit
under,
any judgment, court order, consent decree or any agreement, indenture,
contract,
note, bond, or other instrument binding upon SPI.
(d) Consents.
Except
as set forth on Exhibit
A,
no
consent or approval of any court, governmental entity or other public authority,
or of any other person is required as a condition to the validity or
enforceability of this Agreement or any other instruments to be executed
by DSCI
to effectuate this Agreement, or the completion or validity of any of the
transactions contemplated hereunder, including the contribution, transfer
and
assignment by DSCI of the PV Contracts to DRCI.
(e) Contracts.
Exhibit
B
sets
forth a true, correct and complete list of all PV Contracts (“PV Contracts”).
Except
as
provided herein, each PV Contract is a legal, valid and binding obligation
of
DSCI enforceable against DSCI in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting creditors’ rights generally, including the effect of
statutory and other laws regarding fraudulent conveyances and preferential
transfers, and subject to the limitations imposed by general equitable
principles regardless of whether such enforceability is considered in a
proceeding at law or in equity), and DSCI is not in default and has not
failed
to perform any obligation thereunder, and there does not exist any event,
condition or omission which would constitute a breach or default (whether
by
lapse of time or notice or both) by any other person. Except as disclosed
in
Exhibit
B,
DSCI
has not received any notice of the intention of any party to terminate
any PV
Contract.
(f) Licenses
and Permits.
DSCI
has all licenses, franchises, permits and other similar authorizations
affecting, or relating in any way to, the Business required by Law to be
obtained by DSCI to permit DSCI to conduct its Business in substantially
the
same manner as its Business has heretofore been conducted.
(g) Compliance
with Laws.
The
operation of the Business and condition of the PV Contracts have not violated
or
infringed, and, do not violate or infringe, in any respect any Law or any
order,
writ, injunction or decree of any governmental entity. DSCI has not received
any
written or oral communications from any governmental entity that alleges
that
its Business is not in compliance in any respect with any Law.
7
(h) Product
Warranties.
The PV
Contracts contain all of the product and service warranties and guarantees
extended by DSCI currently in effect with respect to its Business. Except
as set
forth in Exhibit
A,
there
have not been any amendments to or deviations from such warranties and
guarantees contained in the PV Contracts. There are no written claims,
or claims
threatened in writing, exist against DSCI with respect to product warranties
and
guarantees on products or services provided in its Business or related
to the PV
Contracts.
(i) Customer
and Supplier Relations.
DSCI
maintains good relations with each of its PV Contract customers and no
event has
occurred that would adversely affect DSCI ’s relations with any such customer.
No PV Contract customer (or former customer) during the last 12 months
has
canceled, terminated or made any threat to cancel or otherwise terminate
its
contract, or to decrease its usage of DSCI’s services or products. DSCI has not
received any notice to the effect that any current customer or supplier
may
terminate or alter its business relations with DSCI, either as a result
of the
transactions contemplated by this Agreement or otherwise.
(j) SPI
Representation.
SPI
represents that it has the financial resources, expertise and PV industry
sales
and marketing experience required to perform as set forth in this
Agreement.
(k) DSCI
Disclosure.
No
representation, warranty or covenant made by DSCI in this Agreement contains
an
untrue statement of a fact or omits to state a fact required to be stated
herein
or therein or necessary to make the statements contained herein or therein
not
misleading.
(l) DRCI
Disclosure.
No
representation, warranty or covenant made by DRCI in this Agreement contains
an
untrue statement of a fact or omits to state a fact required to be stated
herein
or therein or necessary to make the statements contained herein or therein
not
misleading.
(m)
SPI
Disclosure.
No
representation, warranty or covenant made by SPI in this Agreement contains
an
untrue statement of a fact or omits to state a fact required to be stated
herein
or therein or necessary to make the statements contained herein or therein
not
misleading.
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4.
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Covenants; Conditions
to Obligation to Provide Operating Working Capital.
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(a)
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Assignment
of Contracts.
|
(i) During
the term of this Agreement, except as otherwise provided herein, DSCI
shall
transfer and assign all its right, title and interest in its existing
and
subsequent PV Contracts to DRCI immediately upon DRCI obtaining a valid
California Contractor license and required insurance. In the event any
PV
contract contains non-assignment or non-transfer provisions, DSCI shall
notify
SPI immediately and use Best Efforts to negotiate a transfer and assignment
to
DRCI upon DRCI obtaining a valid California Contractor license.
(ii) Except
as
provided in Section 4(a)(iii), all new PV work secured by DRCI or SPI
within the
Future Franchise Area during the Interim Operating Period shall be put
into
contract under DRCI’s name if DRCI has been properly licensed and otherwise
becomes qualified to serve as the general contractor or first tier
subcontractor. In the event certain new PV work is contracted under DSCI’s
license and name, DSCI shall ensure that such contract terms allow for
transfer
and assignment by DSCI to its affiliates without consent of the other
contracting party, and shall contain standard DSCI contract terms. If
upon the
Closing Date, SPI desires to have any PV Contracts or PV contracts executed
during the Interim Operating Period by DSCI transferred and assigned
to SPI, and
if SPI is then licensed and otherwise qualified to serve as the contractor
or
first tier subcontractor, any such contracts not explicitly excluded
herein
shall then be so transferred and assigned.
8
(iii)
Upon
DRCI
obtaining a valid California Contractor license, all new PV work during
the term
of this Agreement shall be contracted under DRCI’s license and name; provided,
however, DSCI shall have three (3) business days to review and approve
all new
contract proposals, which consent shall not be unreasonably withheld.
(iv)
DSCI
shall not take any or omit to take any action, or cause others to take
any or
omit to take any action that results in the termination of any current
unassigned DSCI or DRCI PV contract or future assigned DRCI PV contract.
(v) During
the Interim Operating Period, for PV installation work secured by DRCI
or SPI
within the Future Franchise Area, DSCI shall be offered the exclusive
opportunity to subcontract for such work. For PV installation work presently
in
contract by DSCI within the Future Franchise Area, DSCI may elect to
become
DRCI’s or SPI’s installation sub-contractor upon transfer and assignment of such
contracts by terms of this Agreement. In both such cases, unless the
parties
agree otherwise, DSCI shall be paid actual costs plus reimbursable expenses
as
provided in Section
2(e)
hereof,
and enter into a mutually agreed upon sub-contract agreement.
(b) Warranty
by DSCI.
All
DSCI warranty obligations as of the Effective Date will continue to be
performed
by DSCI. DSCI warrants that all work performed shall be in a workmanlike
manner
consistent with the Contractors State License Board and California Energy
Commission warranty procedures in effect at the time of completion for
each
project. DSCI will satisfactorily respond to and act to satisfactorily
address
all warranty issues claimed within five (5) business days after receiving
written notification as follows:
(i) Acknowledge
in writing to claimant of receipt of warranty claim.
(ii) Contact
the claimant and endeavor to resolve the problem within five (5) business
days,
or schedule a visit to diagnose the problem within five (5) business
days of
receipt of notice unless mutually agreed in writing by DSCI and the claimant.
(iii) In
the
event DSCI is unable to resolve the problem within five (5) business
days or
while on site, DSCI will endeavor to resolve the remaining warranty claims
at
the earliest practicable time.
(iv)
In
the
event DSCI fails to address a warranty claims of which it had been notified
as
provided above, and following written notice of intent to so proceed,
SPI or
DRCI may take reasonable steps to attempt to resolve the claim at DSCI’s
expense, exclusive of any costs covered from any obligated manufacturer.
(c) Conditions
to Obligation of SPI.
The
obligation of SPI to advance operating funds to consummate existing and
new
business, and to provide general and administrative support for the Continuing
Business is subject to satisfaction of the following conditions:
(i) All
covenants set forth in Section 3(a)-(c) shall have been performed in
all
material respects;
(ii) No
action, suit, or proceeding shall be pending or threatened against DRCI
or DSCI
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator.
9
(d) No
Assumption of Liabilities.
Except
as otherwise expressly stated in this Agreement, neither DRCI nor SPI
assumes
any obligation or liability for any liabilities associated with DSCI’s Business
and all such DSCI liabilities and obligations shall remain the responsibility
of
DSCI. Except as otherwise expressly stated in this Agreement, DSCI assumes
no
obligation or liability for any liabilities associated with DRCI’s and SPI’s
Business, and all such liabilities and obligations shall remain the
responsibilities of those entities, respectively.
(e) Subcontracting.
DSCI
will retain existing PV installation contracts for DRCI but will subcontract
with DRCI for installation services on all existing and future PV projects
except for those related to: Segue Construction, ▇▇▇▇▇▇▇; Advent Construction,
Lancaster; Lassen View, LLC, Red Bluff; River City Construction, Redding;
and
Point West Properties, Redding.
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5.
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Remedies
for Breaches of This Agreement.
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(a) Survival
of Representations and Warranties.
Unless
expressly stated otherwise herein, all of the representations, warranties
and
covenants of the Parties contained in this Agreement shall survive the
termination hereunder (even if the damaged Party knew or had reason to
know of
any misrepresentation or breach of warranty or covenant at the time of
Closing)
and shall continue in full force and effect for a period of three (3)
years from
the date of termination.
(b) Indemnification
by DSCI and DRCI.
In
the
event DSCI or DRCI breaches any of their respective representations,
covenants
or warranties, then DSCI and DRCI agree to jointly indemnify SPI from
and
against the entirety of any Adverse Consequences SPI may suffer resulting
from
the breach (or the alleged breach). In addition, DRCI and DSCI agree
to jointly
indemnify SPI from and against the entirety of any Adverse Consequences
SPI may
suffer resulting from, arising out of, relating to, in the nature of,
or caused
by the operations of DRCI
prior to the Closing, including those resulting from DSCI or DRCI actions
for
contracts performed or entered into during the term of this Agreement,
but only
to the extent of DSCI’s or DRCI’s negligent actions.
(c) Indemnification
by SPI. In
the
event SPI breaches any of its representations, covenants or warranties,
then SPI
agrees to indemnify DSCI and DRCI from and against the entirety of any
Adverse
Consequences DSCI or DRCI may suffer resulting from the breach (or the
alleged
breach). In addition, SPI agrees to indemnify DSCI and DRCI from and
against the
entirety of any Adverse Consequences DSCI or DRCI may suffer from SPI
actions
resulting from, arising out of, relating to, in the nature of, or caused
by
SPI’s operations of DRCI after the Effective Date, but only to the extent
of
SPI’s negligent actions.
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6.
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Termination.
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(a) Termination
of Agreement.
This
Agreement will terminate on the earlier of the Plan of Merger transaction
Closing Date or as provided below:
(i) the
Parties may terminate this Agreement by mutual written consent at any
time;
(ii) SPI
may
terminate this Agreement by giving written notice to DSCI and DRCI (A)
in the
event DSCI has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, SPI has notified
DSCI of
the breach, and the breach has continued without cure for a period of
three (3)
business days after the notice of breach, or (B) if the closing of the
contemplated Merger shall not have occurred, for any reason.
10
(iii)
DSCI
may
terminate this Agreement by giving written notice to DRCI and SPI (A)
in the
event DRCI and SPI has breached any material representation, warranty,
or
covenant contained in this Agreement in any material respect, DSCI has
notified
DRCI and SPI of the breach, and the breach has continued without cure
for a
period of three (3) business days after the notice of breach, or (B)
if the
closing of the contemplated Merger shall not have occurred, for any
reason.
(iv)
DRCI
may
terminate this Agreement by giving written notice to DSCI and SPI (A)
in the
event DSCI and SPI has breached any material representation, warranty,
or
covenant contained in this Agreement in any material respect, DRCI has
notified
DSCI and SPI of the breach, and the breach has continued without cure
for a
period of three (3) business days after the notice of breach, or (B)
if the
closing of the contemplated Merger shall not have occurred, for any
reason.
(b) Effect
of Termination.
Upon
termination of this Agreement any monies owed or owing to any party by
any other
party or parties shall be promptly paid. The provisions of Sections 1,
3, 4, 5,
6, 7 and 8 shall survive the termination of this Agreement.
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7.
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Restrictive
Covenants.
|
(a) Confidentiality
and Trade Secret Protection.
At all
times during the Restricted Period, DSCI and SPI will keep in confidence
and
trust all Confidential Information, and will not use or disclose any
Confidential Information without the written consent of DRCI. Further,
at all
times, during the Restricted Period, DSCI and SPI will keep in confidence
and
trust and maintain the secrecy of all of DRCI’s Trade Secrets, for so long as
such information remains a Trade Secret as defined herein, and DSCI and
SPI will
not use or disclose any such Trade Secrets without the written consent
of
DRCI.
(b) Non-Solicitation
of Customers.
Except
as may be permitted in the Agreement and Plan of Merger, at all times
during the
Restricted Period, DSCI hereby expressly covenants and agrees that it
will not,
on its own behalf or on behalf of any other person, company, partnership,
corporation or other entity, solicit, divert, take away or accept Business
from
any Customer of DRCI for the purpose of engaging in any business that
is
competitive with DRCI’s Business. For purposes of this covenant, the term
“Customer” means (i) any person or entity that was a customer of DRCI or DSCI
during the last twenty-four (24) months prior to the Effective Time;
and (ii)
any customer of SPI during the Restricted Period.
(c) Non-Solicitation
of Employees.
(i) At
all times during the Restricted Period, DSCI will not directly or indirectly,
on
its own behalf or on behalf of any other person, company, partnership,
corporation or other entity, solicit or induce, or attempt to solicit
or induce,
any employee of DRCI or SPI, to terminate his or her relationship with
DRCI or
SPI and/or to enter into an employment or agency relationship with DSCI
or with
any other person or entity with whom DRCI is affiliated; (ii) At all
times
during the Restricted Period, if the Merger does not close for any reason
except
for breach by DSCI, its officers or shareholders, SPI will not directly
or
indirectly, on its own behalf or on behalf of any other person, company,
partnership, corporation or other entity, solicit or induce, or attempt
to
solicit or induce, any employee of DSCI, to terminate his or her relationship
with DSCI and/or to enter into an employment or agency relationship with
SPI or
with any other person or entity with whom SPI is affiliated.
(d) Acknowledgments.
DSCI
acknowledges and agrees that the restrictions set forth in this Section
7, where
applicable, are intended to protect SPI and DRCI’s interest in its Confidential
Information and Trade Secrets and its commercial relationships and goodwill
(with its customers, prospective customers, vendors, consultants and
employees),
including, without limitation, Confidential Information, Trade Secrets,
commercial relationships and goodwill acquired by SPI and DRCI through
any
acquisitions or mergers or otherwise developed, and are reasonable and
appropriate for these purposes.
11
(e) Disclosure
of Agreement.
During
the Restricted Period, DSCI agrees to immediately inform SPI of any employment
or affiliation by DSCI with any company other than SPI that provides
services
related to the Business.
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(f)
|
Injunction
and Attorney’s Fees for Restrictive Covenants.
|
(i) DSCI
acknowledges and agrees that the non-competition, non-disclosure,
non-solicitation and non-recruitment covenants contained in this Section
7 of
this Agreement, where applicable, are a reasonable means of protecting
SPI from
unfair competition by DSCI. DSCI further agrees that any breach of any
of these
covenants will result in irreparable damage and injury to the SPI and
that SPI
will be entitled to injunctive relief in any court of competent jurisdiction
without the necessity of posting any bond. DSCI also agrees that it shall
be
responsible for all damages incurred by SPI due to any breach of the
restrictive
covenants contained in this Agreement if so ordered by the Court and
that the
prevailing party may seek an award of attorneys’ fees and costs arising out of
any litigation or arbitration under this paragraph.
(ii) SPI
acknowledges and agrees that the non-competition, non-disclosure,
non-solicitation and non-recruitment covenants contained in this Section
7 of
this Agreement, where applicable, are a reasonable means of protecting
DSCI and
DRCI from unfair competition by SPI. SPI further agrees that any breach
of any
of these covenants will result in irreparable damage and injury to DSCI
or DRCI
and that those will be entitled to injunctive relief in any court of
competent
jurisdiction without the necessity of posting any bond. SPI also agrees
that it
shall be responsible for all damages incurred by DSCI or DRCI due to
any breach
of the restrictive covenants contained in this Agreement if so ordered
by the
Court and that the prevailing party may seek an award of attorneys’ fees and
costs arising out of any litigation or arbitration under this
paragraph.
(g) Severability.
The
parties agree that if any provisions of this Section 7 shall be adjudicated
to
be invalid or unenforceable, such provision shall be deleted from the
Agreement,
but such deletion is to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is
made, and
the validity or enforceability of any other provision hereof shall not
be
affected thereby. The parties further agree that to the extent any provision
hereof is deemed unenforceable by virtue of its scope in terms of area
or length
of time or for any other reason, but may be made enforceable by limitations
thereon, such provision shall be enforceable to the fullest extent permissible
under the laws and public policies applied in the jurisdiction in which
enforcement is sought.
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(h)
|
Non-Disparagement.
|
(i) DSCI
shall not at any time prior to or after the Effective Time whether in
writing or
orally, criticize, disparage, or otherwise demean in any way the DRCI,
SPI or
their affiliates or their respective products, services, reputation,
officers,
directors, employees or shareholders.
(ii) DRCI
shall not at any time prior to or after the Effective Time whether in
writing or
orally, criticize, disparage, or otherwise demean in any way DSCI, SPI
or their
affiliates or their respective products, services, reputation, officers,
directors, employees, or shareholders.
(iii)
SPI
shall
not at any time prior to or after the Effective Time whether in writing
or
orally, criticize, disparage, or otherwise demean in any way DRCI, DSCI
or their
affiliates or their respective products, services, reputation, officers,
directors, employees, or stockholders.
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8.
|
Miscellaneous.
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12
(a) No
Third-Party Beneficiaries.
Except
as otherwise provided in this Agreement, this Agreement shall not confer
any
rights or remedies upon any person other than the Parties and their respective
successors and permitted assigns.
(b) Entire
Agreement.
This
Agreement (including the documents referred to herein) constitutes the
entire
agreement among the Parties and supersedes any prior understandings,
agreements,
or representations by or among the Parties, written or oral, to the extent
they
related in any way to the subject matter hereof.
(c) Succession
and Assignment.
Except
as otherwise provided in this Agreement, this Agreement shall be binding
upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement
or
any of its rights, interests, or obligations hereunder without the prior
written
approval of the other Parties.
(d) Counterparts.
This
Agreement may be executed in one or more counterparts (including by means
of
facsimile), each of which will be deemed an original but all of which
together
will constitute one and the same instrument. The signature page of any
counterpart may be detached therefrom without impairing the legal effect
of the
signature(s) thereon provided such signature page is attached to any
other
counterpart identical thereto having additional signature pages executed
by the
other Parties.
(e) Headings.
The
section headings contained in this Agreement are inserted for convenience
only
and shall not affect in any way the meaning or interpretation of this
Agreement.
(f) Notices.
All
notices, requests, demands, claims, and other communications hereunder
will be
in writing. Any notice, request, demand, claim, or other communication
hereunder
shall be deemed duly given if (and then two business days after) it is
sent by
registered or certified mail, return receipt requested, postage prepaid,
and
addressed to the intended recipient as set forth below:
|
If
to DSCI or DRCI:
|
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇
|
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Telephone: (▇▇▇)
▇▇▇-▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
E-Mail:
▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
|
Copy
to:
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
|
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Telephone: (▇▇▇)
▇▇▇-▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
E-Mail:
▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
|
If
to SPI:
|
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
13
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Copy
to:
|
Bullivant
▇▇▇▇▇▇ ▇▇▇▇▇▇
|
▇▇▇▇
▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇ ▇ ▇▇▇
Any
Party
may send any notice, request, demand, claim, or other communication hereunder
to
the intended recipient at the address set forth above using any other
means
(including personal delivery, expedited courier, messenger service, telecopy,
telex, ordinary mail, or electronic mail), but no such notice, request,
demand,
claim, or other communication shall be deemed to have been duly given
unless and
until it actually is received by the intended recipient. Any Party may
change
the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties
notice
in the manner herein set forth.
(g) Governing
Law.
This
Agreement shall be governed by and construed in accordance with the domestic
laws of the State of California without giving effect to any choice or
conflict
of law provision or rule that would cause the application of the laws
of any
jurisdiction other than the State of California.
(h) Amendments
and Waivers.
No
amendment of any provision of this Agreement shall be valid unless the
same
shall be in writing and signed by all of the Parties. No waiver by any
Party of
any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or
subsequent
default, misrepresentation, or breach of warranty or covenant hereunder
or
affect in any way any rights arising by virtue of any prior or subsequent
such
occurrence.
(i) Severability.
Any
term or provision of this Agreement that is invalid or unenforceable
in any
situation in any jurisdiction shall not affect the validity or enforceability
of
the remaining terms and provisions hereof or the validity or enforceability
of
the offending term or provision in any other situation or in any other
jurisdiction.
(j) Construction.
The
Parties have participated jointly in the negotiation and drafting of
this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the
Parties
and no presumption or burden of proof shall arise favoring or disfavoring
any
Party by virtue of the authorship of any of the provisions of this Agreement.
Any reference to any federal, state, local, or foreign statute or law
shall be
deemed also to refer to all rules and regulations promulgated thereunder,
unless
the context otherwise requires. The word “including” shall mean including
without limitation.
(k) Further
Assurances.
All
parties agree that on and after the Effective Date, they shall take all
appropriate action and execute any documents and instruments or conveyances
of
any kind which may be reasonable necessary or advisable to carry out
the
provisions of this Agreement.
(Signature
Page Follows Immediately)
14
IN
WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date
first above written.
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a
California corporation
|
|
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By:__________________________
|
|
|
Name:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
|
|
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Title:
Chief Executive Officer
|
|
|
▇▇▇▇
▇▇▇▇▇▇▇▇ CONSTRUCTION, INC.
|
|
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A
CALIFORNIA CORPORATION
|
|
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By:__________________________
|
|
|
Name:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
|
|
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Title:
Chief Financial Officer
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▇▇▇▇
RENEWABLE CONSULTING, INC.
|
|
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A
CALIFORNIA CORPORATION
|
|
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By:__________________________
|
|
|
Name:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
|
|
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Title:
Chief Executive Officer
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