ASSET PURCHASE AGREEMENT
This
Agreement (“Agreement") is made and entered into as of
this 14 th
day of February, 2008, by and between BLUE EARTH SOLUTIONS,
INC., a Delaware corporation ("Buyer”), 8306 Tibet
Butler Drive, Windermere, Florida 34786 and PARLIAMENT
CONSULTING LLC, a Florida Limited Liability Company, 1885 SW
4th Ave., Delray Beach, FL 33444, and CLAUDIA and NICHOLAS
IOVINO, 6364 Amberwoods Drive, Boca Raton, Florida 33433
(collectively "SELLER") (the parties to this Agreement are
hereinafter referred to as the "PARTIES")
RECITALS
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A.
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Seller
is engaged in the business (the "Business") of recycling styrofoam
waste, owns and markets a flat tire prevention compound, and owns
technology relating to a silver, bronze, chrome, copper, and brass
plating compounds and other technologies (the "Technologies")
and
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B.
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Seller
desires to sell substantially all of the assets relating to the
Business (the "Assets") To Buyer, including but not limited to all
intellectual rights to the Technologies whether covered by patents,
patent applications, trade secrets, trademarks, trade names,
service marks, proprietary data or otherwise, and Buyer desires to
purchase the Assets on the terms and subject to the conditions
hereinafter set forth;
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NOW,
THEREFORE, in consideration of the premises and the respective
warranties, representations, covenants and agreements
hereinafter set forth, Seller and Buyer hereby mutually agree
as follows:
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1.
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Assets . Seller agrees to
sell, assign, transfer and deliver to Buyer, and Buyer agrees to
purchase from - Seller, on the Closing Date (as defined in section
4 hereunder), all of the right, title and interest of Seller in and
to all of the Assets as listed on Schedule A hereto free and clear
of all security interests, liens, claims and other encumbrances not
established by this Agreement.
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The
Assets shall not include, and Seller shall retain, all of its
cash, certificates of deposit and marketable
securities.
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2.
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Liabilities Not Assumed by Buyer . Buyer and Seller
understand that Buyer shall not assume, nor shall Buyer in any way
be responsible for, any liability, obligation, claim or commitment,
contingent, actual or otherwise, known or unknown, of Seller except
for accrued payables not to exceed $150,000, it being expressly
understood that Seller shall continue to be responsible for any and
all other liabilities, obligations, claims or commitments of Seller
or the Business entered into on or prior to the Closing Date. The
accrued payables in question shall be listed on Schedule "
B " hereto
by payee and amount and Buyer shall, at closing, deliver to Seller
the required cash.
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3.
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Purchase Price and Payment. The purchase price (the
"Purchase Price") for the Assets shall be equal to the sum of Seven
Million Dollars ($7,000,000). The Purchase Price shall be payable
as follows:
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(a) $200,000
in cash (the "Cash") at the Funding as hereinafter
defined.
(b) $200,000
in the form of a promissory note in the usual form (the
"Note") payable six months from the Funding.
(c) $6,600,000
in the form of convertible Series A Preferred Stock of the
Buyer. The stock shall have the characteristics and legal
consequences described in Schedule "B" hereto. The preferred
stock is non- dilutive until $1.5 million of capital net of
Seller's payment of $150,000 for accrued payables, $400,000
payments directly to Seller and, if required, up to 10%
commission and 3% unaccountable expenses of a licensed
investment banker is infused into the company. Seller has the
right preserve its percentage of ownership through the
purchase of 20% of any future capital placements until the
first dividend is paid.
(d) A
royalty of one-half of one percent of the gross sales price of
all products related to patents or proprietary formulations
purchased in this agreement, sold by Buyer for a period of
twenty years from the date of execution of this agreement.
Such royalty shall be paid on an annual basis with payment due
on
March
15 of each year for the previous fiscal year. Royalties shall
be accounted for by Buyer in full with each payment.
Furthermore, sales figures shall be subject to review and
analysis by Seller at any reasonable time personally or
through professionals employed for such purpose. In the event
of a shortfall of ten (10%) percent or more, Buyer shall be
responsible for the cost of any professional so
employed.
4.
Closing
Date.
a. The
Closing shall take place as soon as practicable and may occur
simultaneously with the execution hereof by all parties. All
deliveries by Seller (see subparagraph (b)) shall be in escrow
to be delivered by the escrow agent when and only when Buyer
shall have completed its proposed private placement and
thereby raised and funded the Buyer with not less than
$1,500,000.00 net of payment to the Seller of $150,000 for
accrued payables, $400,000 payments directly to Seller and, if
required, up to 10% commission and 3% unaccountable expenses
of a licensed investment banker, in available funds, free and
clear of any claim, charge, reduction, diminution, offset or
allowance for fees, costs or commissions of any kind incurred
by Buyer, except those described above. The receipt of these
funds shall be termed the "Funding" and shall occur no later
than March 20, 2008, failing which, the escrow agent is
instructed and required to return all transfers, assignments,
powers of attorney, bills of sale and any other documents
delivered to him to the Seller and this agreement shall be
terminated.
b. At
the Closing, Seller shall deliver to Buyer the
following:
(i) such
bill of sale or other good and sufficient instruments of
assignment, transfer and conveyance as Buyer shall reasonably
request, to convey and to transfer to Buyer all right, title
and interest of Seller in the Assets to Buyer, free and clear
of all security interests, liens, claims and encumbrances. The
physical transfer of the patents will begin immediately upon
issuance of the Class A Preferred Stock and funding of the
public entity. It typically is a 90 day process to do the
physical transfer;
(ii) All
appropriate instruments granting to Buyer the right to the use
of any trade names and trademarks owned or used by Seller in
connection with the Business;
(iii) such
other instrument or instruments of transfer, if any, as shall
be necessary or appropriate to vest in Buyer good and
marketable title to the Assets;
(iv) Delivery
of Required Consents (as defined in section 7(b);
and
(v) Delivery
of all UCC-3 termination statements and all other documents
and instruments necessary to release and discharge all liens,
claims, security interests and other encumbrances on the
Assets, if any.
(vi) Deliver
powers of attorney on all patents in the name of the
Company.
c. At
the Closing, Buyer shall deliver to Seller the following:
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(i) The
cash for payables.
(ii) The
Note; and
(iii) An
irrevocable commitment for the preferred stock or the shares
themselves if the public company shall by then have been
acquired; or, if not, shares representing a twenty (20%)
interest in Buyer.
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5.
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Representations, Warranties and Covenants of Seller . Seller
hereby represents and warrants, and from and after this date,
covenants to Buyer as follows:
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(a)
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Organization and Authority . Seller is a corporation, duly
organized, validly existing, and in good standing under the laws of
the State of Delaware and has all requisite corporate power and
authority to carry on its business as it is presently being
conducted, to enter into this Agreement, and to carry out and
perform the transactions contemplated hereby. The execution,
delivery and performance of this Agreement by Seller has been duly
authorized and approved by its sole shareholder and its Board of
Directors, and will not violate its Articles of Incorporation,
By-Laws, or any agreement to which it is a party or by which it is
bound or any law, rule, regulation or court order. This Agreement,
and all other instruments, documents and agreements to be delivered
by Seller in connection therewith, are the legal, valid and binding
obligation of Seller enforceable in accordance with its, and their,
terms.
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(b)
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Title. Seller has good and marketable title to all of the
Purchased Assets, free and clear of any liabilities, obligations,
claims, security interest, liens or encumbrances.
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(c)
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Assets. The Assets comprise all of the assets which are
necessary to conduct the Business in the manner that it has been
previously conducted.
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6.
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Representations, Warranties and Covenants of Buyer. Buyer
hereby represents and warrants covenants to Seller as
follows:
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Organization and Authority. Buyer is a corporation, duly
organized, validly existing, and in good standing under the laws of
the State of Delaware and has all requisite corporate power and
authority to carry on its business as it is presently being
conducted, to enter into this Agreement, and to carry out and
perform the transactions contemplated hereby. The execution,
delivery and performance of this Agreement by Buyer has been duly
authorized and approved by its shareholders and its Board of
Directors, and will not violate its Articles of Incorporation,
By-Laws, or any agreement to which it is a party or by which it is
bound or any law, rule, regulation or court order. This Agreement,
and all other instruments, documents and agreements to be delivered
by Buyer in connection therewith, are the legal, valid and binding
obligation of Buyer enforceable in accordance with its, and their,
terms.
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7.
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Actions Prior to the Closing Date. The Parties covenant to
take the following actions between the date hereof and the Closing
Date:
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(a)
Investigation of
Seller by Buyer . Seller shall afford to the officers,
employees and authorized representatives (including, without
limitation, independent public accountants and attorneys) of
the Buyer a full and complete opportunity to conduct and
complete its acquisition review and analysis of the Purchased
Assets and Assumed Liabilities (the "Acquisition Review"),
including a review of Seller's books and records, financial
information, contracts and agreements (including all
non-competition and non-solicitation covenants binding on
Seller or its employees), inspection and review of the
physical operations of the Seller's business, and the right to
contact and communicate with Seller's vendors, creditors,
customers, employees, independent contractors and others
having a business relationship with Seller. Buyer agrees that
it will keep and maintain any and all information obtained by
it, its ag
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