Exhibit 10.1

 

ASSET PURCHASE AGREEMENT

 

THIS ASSET PURCHASE AGREEMENT (the “Agreement”) is made and entered into this
31st day of May, 2003, by and among ELECTRIC CITY CORP., a Delaware corporation
(“ECC”), SWITCHBOARD APPARATUS, INC., a Delaware corporation (the “Seller”),
HOPPENSTEADT ACQUISITION CORP., an Illinois corporation (herein called
“Purchaser”);

 

WITNESSETH:

 

WHEREAS, ECC and its subsidiaries are engaged in the business of providing,
among other things, energy management services and the sale and manufacture of
electric distribution devices and equipment; and,

 

WHEREAS, ECC owns and operates Seller as a wholly owned subsidiary, which
subsidiary is engaged in the business of selling and manufacturing of electrical
distribution devices and equipment (the “Switchgear Business”); and,

 

WHEREAS, ECC and the Seller have determined that they no longer desire to own
and operate the Switchgear Business and that they desire to sell and dispose of
the Switchgear Business; and,

 

WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to purchase
from Seller, all of the assets, properties and business of Seller and the
Switchgear Business, except for the assets and properties expressly specified
herein as excluded, in accordance with all the terms and subject to all of the
conditions herein set forth, including Purchaser assuming certain liabilities
and obligations of Seller; and,

 

WHEREAS,  DALE HOPPENSTEADT (“Hoppensteadt”) is and has been since September,
2000 the President and Chief Operating Officer of Seller and is also the
President, a director and a shareholder of the Purchaser.

 

NOW, THEREFORE, in consideration of the premises hereof (which the parties agree
are hereby incorporated into and made a part of their agreement herein) and of
the mutual covenants and agreements herein set forth, it is hereby agreed as
follows:

 

1.                                      Definitions

 

“Agreement” shall mean this Asset Purchase Agreement.

 

“Assumed Contracts” shall mean all agreements and contracts listed on Schedule
4.9.

 

--------------------------------------------------------------------------------

 

“Assumed Liabilities” shall mean collectively all of the liabilities and
obligations of Seller set forth or described on Schedule 3.1.

 

“Contract Date” shall mean the date of this Agreement.

 

“Closing” shall mean the act of completion of the closing of the transactions
contemplated by this Agreement on the Closing Date as set forth in Article 9
hereof.

 

“Closing Date” shall mean the date on which the Closing takes place as set forth
in paragraph 9.1 hereof.

 

“Excluded Assets” shall mean collectively all of the assets and properties of
Seller specifically excluded from the Sale Assets as provided in paragraph 2.2
hereof.

 

“Financial Information” shall mean the financial information as of March 31,
2003 regarding the Seller as set forth on Exhibit “A”.

 

“Hazardous Substances” shall mean any and all pollutants, contaminants,
hazardous or toxic materials, substances or wastes, including petrochemical
products and wastes, including without limitation those defined in the
Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”),
the Superfund Amendments Reauthorization Act of 1986 (“SARA”), or under any
other applicable federal, state or local law, statute, regulation, order or
decree regulating substances threatening or potentially threatening to life,
health, welfare, public safety or the environment.

 

“Sale Assets” shall mean collectively all of the assets, properties and business
of Seller to be sold, transferred, conveyed and assigned to Purchaser hereunder
as provided in paragraph 2.1 hereof.

 

2.                                      Assets, Properties and Business Being
Sold

 

2.1                               SALE ASSETS.  ON THE TERMS AND SUBJECT TO THE
CONDITIONS HEREIN SET FORTH, AT THE CLOSING, SELLER SHALL SELL, ASSIGN, TRANSFER
AND CONVEY TO PURCHASER, AND PURCHASER SHALL PURCHASE AND ACQUIRE, ALL OF THE
PROPERTIES, ASSETS AND CHOOSES IN ACTION, RIGHTS, LICENSES, PERMITS, FRANCHISES
AND INTERESTS OF EVERY KIND AND DESCRIPTION, REAL, PERSONAL AND MIXED, TANGIBLE
AND INTANGIBLE, WHEREVER LOCATED, OWNED BY SELLER (EXCLUDING THE EXCLUDED
ASSETS), AS A GOING CONCERN, TOGETHER WITH ANY GOODWILL ASSOCIATED THEREWITH.
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE SALE ASSETS SHALL INCLUDE
THE FOLLOWING:

 

2.1.1                                                ALL RECEIVABLES OF EVERY
KIND AND CHARACTER, INCLUDING WITHOUT LIMITATION ALL OF SELLER’S TRADE ACCOUNTS
AND CUSTOMER NOTES RECEIVABLE, DRAFTS AND LETTERS OF CREDIT AND GUARANTEES OF
ANY OF THE FOREGOING (HEREIN CALLED COLLECTIVELY “RECEIVABLES”), BUT EXCLUDING
THOSE RECEIVABLES SET FORTH IN PARAGRAPH 2.2.4 HEREOF.

 

2

--------------------------------------------------------------------------------

 

2.1.2                                                ALL OF SELLER’S
INVENTORIES, IF ANY, OF EVERY KIND AND CHARACTER, WHEREVER LOCATED, INCLUDING
WITHOUT LIMITATION ALL RAW MATERIALS, PURCHASED PARTS, MANUFACTURED PARTS AND
COMPONENTS, WORK IN PROCESS AND FINISHED GOODS (HEREIN CALLED COLLECTIVELY
“INVENTORY”).

 

2.1.3                                                ALL OF SELLER’S FIXED
ASSETS, INCLUDING, WITHOUT LIMITATION, ALL MACHINERY AND EQUIPMENT, ACCESSORIES,
ATTACHMENTS AND PARTS THEREFOR, LEASEHOLD IMPROVEMENTS, OFFICE FURNITURE AND
EQUIPMENT, COMPUTERS AND COMPUTER EQUIPMENT, FIXTURES (HEREIN CALLED
COLLECTIVELY “FIXED ASSETS”).

 

2.1.4                                                ALL OF SELLER’S FORMS,
OFFICE SUPPLIES, CATALOGS AND WAREHOUSE AND OTHER SUPPLIES, INCLUDING WITHOUT
LIMITATION PALLETS, STRAPPING AND OTHER PACKAGING, PRODUCTION AND MANUFACTURING
SUPPLIES AND MAINTENANCE SUPPLIES (HEREIN CALLED COLLECTIVELY “SUPPLIES”).

 

2.1.5                                                ALL OF SELLER’S PREPAID
EXPENSES AND DEPOSITS (HEREIN CALLED COLLECTIVELY “PREPAID ITEMS”).

 

2.1.6                                                ALL OF SELLER’S BOOKS,
RECORDS, COMPUTER TAPES AND DISCS, COMPUTER SOFTWARE, FILES AND OTHER PAPERS AND
DOCUMENTS OF SELLER, INCLUDING WITHOUT LIMITATION ALL PRICE LISTS, SALES
RECORDS, SALES CORRESPONDENCE, LEDGERS, JOURNALS, STATEMENTS, BILLS, INVOICES,
CUSTOMER AND SUPPLIER LISTS, FILES AND RECORDS, DATA PROCESSING RECORDS AND
PAYROLL AND EMPLOYMENT RECORDS (HEREIN CALLED COLLECTIVELY “BOOKS AND RECORDS”);
PROVIDED, HOWEVER, THAT ECC SHALL BE ENTITLED TO KEEP COPIES OF SUCH BOOKS AND
RECORDS TO THE EXTENT REASONABLY REQUIRED FOR ECC TO COMPLY WITH ANY AND ALL
APPLICABLE LAWS AND REGULATIONS TO WHICH ECC AND/OR SELLER MAY BE SUBJECT TO AND
FOR NO OTHER PURPOSES.

 

2.1.7                                                ALL OF SELLERS PATENTS,
TRADENAMES, TRADEMARKS, TRADEMARK REGISTRATIONS AND APPLICATIONS, KNOW HOW,
COPYRIGHTS AND COPYRIGHT REGISTRATIONS, LABEL FILINGS; BRAND NAMES, LOGOS AND
APPLICATIONS THEREFOR, INVENTIONS, TECHNICAL EXPERTISE, RESEARCH DATA, TRADE
SECRETS, PATTERNS, INDUSTRIAL DESIGNS, ALL OTHER INTELLECTUAL PROPERTY RIGHTS,
AND THE GOODWILL SYMBOLIZED THEREBY, AND ALL RIGHTS TO RECOVER FOR ANY PAST
INFRINGEMENT THEREOF, AND ALL RIGHT, TITLE AND INTEREST OF SELLER TO THE NAME
“SWITCHBOARD APPARATUS, INC.” AND ALL VARIANTS WHETHER OWNED BY, LICENSED TO,
USED IN THE SWITCHBOARD BUSINESS OR IN WHICH SELLER HAVE ANY RIGHTS.

 

2.1.8                                                ALL OF SELLER’S RIGHT,
TITLE AND INTEREST IN AND UNDER THE ASSUMED CONTRACTS.

 

2.1.9                                                ALL OF SELLER’S OTHER
ASSETS, PROPERTIES AND RIGHTS SPECIFICALLY SET FORTH IN THIS AGREEMENT AS BEING
SOLD, TRANSFERRED OR ASSIGNED TO, OR PURCHASED BY, PURCHASER.

 

2.2                               EXCLUDED ASSETS. SUBJECT TO THE TERMS,
PROVISIONS AND CONDITIONS OF PARAGRAPH 7.6 HEREOF, THE ONLY ASSETS AND
PROPERTIES THAT SELLER SHALL RETAIN AND SHALL NOT TRANSFER TO PURCHASER, AND
WHICH ARE SPECIFICALLY EXCLUDED FROM THE SALE ASSETS, ARE THE FOLLOWING:

 

3

--------------------------------------------------------------------------------

 

2.2.1                                                ALL RIGHTS OF SELLER UNDER
OR IN CONNECTION WITH THIS AGREEMENT.

 

2.2.2                                                THE ORIGINALS OF MINUTE
BOOKS AND STOCK TRANSFER RECORDS OF SELLER.

 

2.2.3                                                ALL OF SELLER’S CASH AND
CASH EQUIVALENTS ON HAND AND IN BANKS, INCLUDING CHECKS DEPOSITED FOR
COLLECTION.

 

2.2.4                                                THE ACCOUNTS RECEIVABLE DUE
SELLER FROM EACH OF DIAMAC ELECTRIC AND ELECTRIC CITY OF SOUTHERN CALIFORNIA.

 

2.2.5                                                THE RETAINED RECORDS AS
PROVIDED IN PARAGRAPH 9.5 HEREOF.

 

2.2.6                                                ALL FEDERAL, STATE, LOCAL
AND FOREIGN INCOME AND OTHER TAX REFUNDS TO THE EXTENT THAT SUCH REFUNDS ARE
ATTRIBUTABLE TO ANY PERIOD PRIOR TO THE CLOSING DATE.

 

2.3                               CONSENTS. SELLER SHALL USE ITS COMMERCIALLY
REASONABLE EFFORTS, AND PURCHASER SHALL COOPERATE THEREWITH, TO OBTAIN ALL
NECESSARY CONSENTS TO THE ASSIGNMENT OF EVERY UNFILLED CUSTOMER ORDER, UNFILLED
PURCHASE ORDER, AND ASSUMED CONTRACTS FOR WHICH ASSIGNMENT TO PURCHASER IS
PROVIDED IN THIS AGREEMENT, TO THE EXTENT THAT SAME ARE NOT ASSIGNABLE WITHOUT
THE CONSENT OF A THIRD PARTY.  IN THE EVENT THAT, NOTWITHSTANDING SUCH
COMMERCIALLY REASONABLE EFFORTS, SELLER IS UNABLE TO OBTAIN ANY SUCH CONSENT,
THIS AGREEMENT SHALL NOT REQUIRE OR CONSTITUTE AN ASSIGNMENT OR ATTEMPTED
ASSIGNMENT THEREOF IF SUCH ASSIGNMENT OR ATTEMPTED ASSIGNMENT WOULD CONSTITUTE A
BREACH THEREOF.  IN SUCH EVENT, AND NOTWITHSTANDING THE ABSENCE OF SUCH CONSENT,
PURCHASER AS AN AGENT FOR SELLER, AT ITS OPTION, MAY ELECT TO PERFORM AND
DISCHARGE SELLER’S OBLIGATIONS THEREUNDER ARISING SUBSEQUENT TO THE CLOSING
DATE, AS PROVIDED HEREIN, AND PURCHASER SHALL, IF AND TO THE EXTENT THAT IT DOES
SO PERFORM AND DISCHARGE SELLER’S OBLIGATIONS, BE ENTITLED TO ALL OF THE
BENEFITS ARISING THEREFROM OR THEREUNDER SUBSEQUENT TO THE CLOSING DATE IN THE
SAME MARINER AS THOUGH SUCH CONSENT HAD BEEN OBTAINED.  THE FOREGOING
NOTWITHSTANDING, SELLER SHALL BE REQUIRED TO OBTAIN A LOAN PAYOFF LETTER AND AN
AGREEMENT TO RELEASE ANY AND ALL SECURITY AND COLLATERAL INTERESTS FROM AMERICAN
CHARTERED BANK (“ACB”) WITH RESPECT TO ANY INTEREST WHICH ACB MAY HAVE IN OR TO
THE SALE ASSETS AS A CONDITION OF THE CLOSING.

 

3.                                      Consideration and Assumption of Specific
Liabilities by Purchaser

 

3.1                               CONSIDERATION.  AS AND FOR CONSIDERATION OF
THE SALE, TRANSFER AND ASSIGNMENT BY SELLER TO PURCHASER OF THE SALE ASSETS SET
FORTH IN PARAGRAPH 2 ABOVE (EXCLUDING ANY EXCLUDED ASSETS AS SET FORTH IN
PARAGRAPH 2.2), PURCHASER AGREES (I) TO ASSUME, SATISFY AND DISCHARGE THE
ASSUMED LIABILITIES, AS THEY BECOME DUE AND PAYABLE; AND (II) TO PAY TO THE
SELLER, IN CASH, THE SUM OF $798,000.00 (THE “CASH PAYMENT”).  THE CASH PAYMENT
AND THE ASSUMED LIABILITIES MAY HEREINAFTER BE COLLECTIVELY REFERRED TO AS THE
“PURCHASE PRICE”.

 

3.2                               SELLER’S SPECIFIC REPRESENTATIONS REGARDING
ASSUMED LIABILITIES.  WITH RESPECT TO SELLER AND THE SWITCHGEAR BUSINESS, SELLER
REPRESENTS, WARRANTS AND

 

4

--------------------------------------------------------------------------------

 

COVENANTS TO PURCHASER THAT THE FOLLOWING STATEMENTS ARE TRUE AND CORRECT AS OF
THE CONTRACT DATE, AND WILL BE TRUE AND CORRECT ON THE CLOSING DATE:

 

3.2.1                                                SET FORTH ON SCHEDULE 3.1
IS A TRUE AND CORRECT LIST OF ALL BANK AND CAR LOANS TO WHICH SELLER IS A
PARTY.  SELLER HAS PERFORMED IN ALL MATERIAL RESPECTS ITS OBLIGATIONS UNDER THE
LOANS, AND THERE IS NO DEFAULT OR EVENT WHICH WITH THE GIVING OF NOTICE, THE
PASSAGE OF TIME OR BOTH, WOULD RESULT IN A BREACH OR DEFAULT ON THE PART OF
SELLER UNDER ANY SUCH LOAN.  SELLER HAS NOT ASSIGNED ITS INTEREST UNDER THE
LOANS.  THE LOAN AMOUNTS FOR THE LOANS AS SET FORTH ON SCHEDULE 3.1 IS TRUE AND
CORRECT.  WITH RESPECT TO SUCH BANK LOANS, SELLER REPRESENTS AND WARRANTS THAT
SELLER’S ASSETS HAVE BEEN PLEDGED AS PART OF THE COLLATERAL FOR SUCH BANK LOANS.

 

3.3                               LIABILITIES NOT ASSUMED BY PURCHASER.  EXCEPT
FOR THE ASSUMED LIABILITIES SET FORTH ON SCHEDULE 3.1, SELLER SHALL RETAIN ALL
OF ITS OTHER LIABILITIES AND OBLIGATIONS (“EXCLUDED LIABILITIES”).

 

3.4                               SELLER TO PAY LIABILITIES NOT ASSUMED.  SELLER
SHALL PAY AND DISCHARGE, AS THEY BECOME DUE AND PAYABLE, AND PERFORM IN
ACCORDANCE WITH THEIR RESPECTIVE TERMS ALL EXCLUDED LIABILITIES PURCHASER IS NOT
ASSUMING AND PURCHASER SHALL NOT BE LIABLE FOR EXCLUDED LIABILITIES.

 

3.5                               WAIVER OF COMPLIANCE WITH BULK SALES LAWS. 
THE PARTIES HEREBY WAIVE COMPLIANCE WITH ALL APPLICABLE LAWS RELATING TO OR
AFFECTING BULK TRANSFERS AND SALES, INCLUDING WITHOUT LIMITATION NOTIFYING THE
ILLINOIS DEPARTMENT OF REVENUE PURSUANT TO SECTION 902(D) OF THE ILLINOIS INCOME
TAX ACT (35 ILCS 5/902(D)), AND SECTION 5J OF THE ILLINOIS RETAILERS OCCUPATION
TAX ACT (35 ILCS 120/5J).

 

3.6                               ALLOCATION OF THE PURCHASE PRICE.  THE
PURCHASE PRICE SHALL BE ALLOCATED FOR TAX PURPOSES AMONG THE SALE ASSETS AS
DETERMINED BY THE PURCHASER SUBJECT TO THE REASONABLE CONSENT OF SELLER.  THE
FINAL AGREED UPON ALLOCATION SHALL BE BINDING ON THE PARTIES HERETO, AND THE
PARTIES HERETO SHALL FILE THEIR RESPECTIVE TAX RETURNS, INCLUDING FILING WITH
THE INTERNAL REVENUE SERVICE FORM 8594 AND ALL OTHER INFORMATION AS MAY BE
REQUIRED BY SECTION 1060 OF THE INTERNAL REVENUE CODE AND REGULATIONS
PROMULGATED THEREUNDER, IN ACCORDANCE WITH SUCH ALLOCATION.

 

4.                                      Representations, Warranties and
Covenants of ECC and Seller.   ECC and Seller, jointly and severally, represent,
warrant and covenant to Purchaser that the following statements are true and
correct as of the Contract Date, and will be true and correct on the Accounting
Date and on the Closing Date:

 

4.1                               ORGANIZATION.  ECC IS A CORPORATION DULY
ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE STATE OF
DELAWARE.  SELLER IS A CORPORATION DULY ORGANIZED, VALIDLY EXISTING AND IN GOOD
STANDING UNDER THE LAWS OF THE STATE OF DELAWARE.  SELLER HAS ALL REQUISITE
CORPORATE POWER AND AUTHORITY TO OWN, LEASE AND OPERATE ITS PROPERTIES AND TO
CARRY ON ITS BUSINESS AS NOW CONDUCTED AND TO ENTER INTO THIS AGREEMENT AND
PERFORM ITS OBLIGATIONS HEREUNDER.  ECC AND SELLER ARE EACH DULY LICENSED OR
QUALIFIED AS A FOREIGN CORPORATION AND IN GOOD STANDING IN THE STATE OF
ILLINOIS.

 

5

--------------------------------------------------------------------------------

 

4.2                               AUTHORITY AND BINDING OBLIGATION.  ALL
CORPORATE ACTION NECESSARY TO AUTHORIZE THE EXECUTION AND DELIVERY BY ECC AND
SELLER OF THIS AGREEMENT AND THE OTHER DOCUMENTS REQUIRED TO BE EXECUTED BY ECC
AND SELLER HEREUNDER AND THE PERFORMANCE OF THEIR RESPECTIVE OBLIGATIONS
HEREUNDER AND THEREUNDER HAVE BEEN DULY TAKEN. THE EXECUTION AND DELIVERY OF
THIS AGREEMENT AND THE OTHER DOCUMENTS REQUIRED TO BE EXECUTED BY ECC AND SELLER
HEREUNDER AND THE PERFORMANCE OF ECC’S AND SELLER’S COVENANTS AND AGREEMENTS
HEREIN AND THEREIN CONTAINED DO NOT AND WILL NOT CONSTITUTE OR RESULT IN ANY
MATERIAL BREACH OF ANY OF THE TERMS, CONDITIONS OR PROVISIONS OF, OR CONSTITUTE
A DEFAULT UNDER, ANY PROVISION OF LAW KNOWN TO ECC OR SELLER OR ANY INDENTURE,
AGREEMENT OR OTHER INSTRUMENT OF WHICH ECC OR SELLER IS A PARTY OR BY WHICH
EITHER OF THEM MAY BE BOUND, OR ANY ORDER, DECREE, JUDGMENT OR REGULATION OF ANY
ARBITRATOR, COURT OR GOVERNMENTAL BODY HAVING JURISDICTION OVER ECC OR SELLER OR
ANY OF THE SALE ASSETS, OR RESULT IN THE CREATION OF ANY LIEN, CHARGE OR
ENCUMBRANCE UPON ANY OF THE SALE ASSETS.  THIS AGREEMENT IS A LEGAL, VALID AND
BINDING OBLIGATION OF ECC AND SELLER, ENFORCEABLE IN ACCORDANCE WITH ITS TERMS,
EXCEPT AS THE ENFORCEABILITY HEREOF MAY BE LIMITED BY BANKRUPTCY, INSOLVENCY,
REORGANIZATION OR OTHER LAWS AFFECTING THE ENFORCEMENT OF CREDITORS’ RIGHTS
GENERALLY OR THE AVAILABILITY OF EQUITABLE REMEDIES.

 

4.3                               COMPLIANCE WITH LAWS.

 

4.3.1                                                ECC HAS NOT WITH RESPECT TO
SELLER RECEIVED ANY NOTICE THAT  SELLER IS A POTENTIALLY RESPONSIBLE PARTY FOR A
FEDERAL, STATE, MUNICIPAL OR LOCAL CLEANUP SITE OR CORRECTIVE ACTION UNDER ANY
ENVIRONMENTAL LAW, STATUTE, REGULATION, ORDINANCE OR ORDER.

 

4.3.2                                                ECC HAS NOT RECEIVED ANY
NOTICE OF NONCOMPLIANCE NOT PREVIOUSLY CORRECTED WITH REFERENCE TO SELLER’S
OPERATIONS OR THE SALE ASSETS.

 

4.3.3                                                ECC HAS NOT HAD AN
ENVIRONMENTAL AUDIT CONDUCTED WITH RESPECT TO SELLER’S OPERATIONS OR ANY
LOCATION AT WHICH SELLER OPERATES ITS BUSINESS, WHICH HAS NOT BEEN MADE
AVAILABLE PRIOR TO THE DATE OF THIS AGREEMENT TO HOPPENSTEADT. FOR PURPOSES
HEREOF, AN ENVIRONMENTAL AUDIT SHALL MEAN ANY EVALUATION, ASSESSMENT, STUDY OR
TEST PERFORMED BY OR AT THE REQUEST OF ECC OR SELLER OR AT THE REQUEST OF OR ON
BEHALF OF ANY FEDERAL, STATE, MUNICIPAL OR LOCAL ADMINISTRATIVE, REGULATORY OR
GOVERNMENTAL AGENCY OR AUTHORITY.

 

4.4                               TAXES.  EXCEPT FOR THE TAXES WHICH ARE ASSUMED
LIABILITIES, SELLER WILL PAY OR CAUSE TO BE PAID ALL FEDERAL, STATE, LOCAL AND
FOREIGN INCOME TAXES AND OTHER TAXES OF SELLER WHICH ARE THEN DUE OR BECOME DUE
FROM SELLER WITH RESPECT TO ANY PERIOD ENDING ON OR BEFORE THE CLOSING DATE OR
EVENTS THAT OCCURRED ON OR BEFORE THE CLOSING DATE.

 

4.5                               TITLE TO TRANSFERRED ASSETS.  SUBJECT TO THE
ASSUMED LIABILITIES, AT THE CLOSING, SELLER WILL HAVE GOOD AND MARKETABLE TITLE,
FREE AND CLEAR OF ANY CLAIM, LIABILITY, TAX LIEN, SECURITY INTEREST,
ENCUMBRANCE, RESTRICTION, OR ADVERSE RIGHT OF USE OR OWNERSHIP TO ALL OF THE
SALE ASSETS, OTHER THAN THE SECURITY INTEREST OF AMERICAN CHARTERED BANK, WHICH
SECURITY INTEREST SHALL BE RELEASED AT CLOSING.

 

6

--------------------------------------------------------------------------------

 

4.6                               CUSTOMER ORDERS.  BETWEEN THE CONTRACT DATE
AND THE CLOSING DATE, SELLER WILL NOT ACCEPT ANY CUSTOMER ORDER OR COMMITMENT
OTHER THAN IN THE USUAL AND ORDINARY COURSE OF BUSINESS AND IN ACCORDANCE WITH
SELLER’S PAST PRACTICES FOR SUCH CUSTOMER OR WITH THE EXPRESS CONSENT AND
APPROVAL OF DALE HOPPENSTEADT ON BEHALF OF PURCHASER.

 

4.7                               PURCHASE ORDERS.  BETWEEN THE CONTRACT DATE
AND THE CLOSING DATE, SELLER WILL NOT ISSUE ANY PURCHASE ORDER OR PURCHASE
COMMITMENT OTHER THAN IN THE USUAL AND ORDINARY COURSE OF BUSINESS OR WITH THE
EXPRESS CONSENT AND APPROVAL OF  HOPPENSTEADT ON BEHALF OF PURCHASER.

 

4.8                               LEASES.  BETWEEN THE CONTRACT DATE AND THE
CLOSING DATE, SELLER WILL NOT ENTER INTO ANY LEASE OR SUBLEASE WITHOUT THE PRIOR
WRITTEN CONSENT OF HOPPENSTEADT ON BEHALF OF PURCHASER.

 

4.9                               CONTRACTS.  BETWEEN THE CONTRACT DATE AND THE
CLOSING DATE, SELLER WILL NOT ENTER INTO ANY CONTRACT, OTHER THAN IN THE
ORDINARY COURSE OF BUSINESS OR WITH THE PRIOR WRITTEN CONSENT OF HOPPENSTEADT ON
BEHALF OF PURCHASER.

 

4.10                        INTENTIONALLY DELETED.

 

4.11                        PROPRIETARY RIGHTS.  SET FORTH ON SCHEDULE 4.11 IS A
TRUE AND CORRECT LIST OF ALL UNITED STATES, STATE AND FOREIGN PATENTS, PATENT
APPLICATIONS, TRADEMARKS, TRADEMARK APPLICATIONS, TRADE NAMES, SERVICE MARKS,
LABEL FILINGS, COPYRIGHTS, ROYALTY RIGHTS, BRAND NAMES, LOGOS, APPLICATIONS
THEREFOR AND REGISTRATIONS THEREOF AND INVENTIONS OWNED OR USED (PURSUANT TO
LICENSE AGREEMENTS OR OTHERWISE) BY SWITCHBOARD IN THE CONDUCT OF ITS BUSINESS
(HEREIN CALLED COLLECTIVELY THE “PROPRIETARY RIGHTS”), AND THE VALIDITY OF SUCH
ITEMS HAS NOT BEEN CHALLENGED OR QUESTIONED IN ANY PRIOR, PENDING OR THREATENED
LITIGATION OR CLAIM. WITH RESPECT TO THE PROPRIETARY RIGHTS

 

4.11.1                                          SELLER HAS THE SOLE, EXCLUSIVE
AND UNENCUMBERED RIGHT TO USE THE PROPRIETARY RIGHTS (INCLUDING APPLICATIONS FOR
ANY THEREOF), AND NONE OF ITS PAST OR PRESENT EMPLOYEES, OFFICERS, DIRECTORS OR
SHAREHOLDERS, OR ANYONE ELSE, HAS ANY RIGHTS WITH RESPECT THERETO.

 

4.11.2                                          THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT IN NO WAY ALTER OR IMPAIR SELLER’S RIGHT TO THE PROPRIETARY
RIGHTS.

 

4.11.3                                          SELLER AND/OR ECC HAS RECEIVED
NO NOTICE OR CLAIM OF INFRINGEMENT, OR ANY CLAIM CHALLENGING OR QUESTIONING THE
VALIDITY OR EFFECTIVENESS, OF ANY OF THE PROPRIETARY RIGHTS AND SELLER AND/OR
ECC DOES NOT KNOW OF ANY VALID BASIS FOR ANY SUCH CLAIM.

 

4.11.4                                          NEITHER SELLER OR ECC IS LIABLE,
NOR HAS EITHER SELLER OR ECC MADE ANY CONTRACT OR ARRANGEMENT WHEREBY IT IS OR
MAY BECOME LIABLE, TO ANY PERSON FOR ANY ROYALTY OR OTHER COMPENSATION FOR USE
OF ANY OF THE PROPRIETARY RIGHTS.

 

7

--------------------------------------------------------------------------------

 

4.12                        ACCOUNTS RECEIVABLE.  AS OF THE CLOSING DATE AND
EXCLUDING THOSE TWO (2) RECEIVABLES SET FORTH IN PARAGRAPH 2.2.4 ABOVE, SELLER
WILL PROVIDE TO PURCHASER A LIST OF ALL SELLER’S RECEIVABLES KNOWN TO ECC. 
NEITHER ECC NOR THE SELLER IS GUARANTEEING OR MAKING ANY REPRESENTATIONS OR
WARRANTIES AS TO THE CREDIT WORTHINESS OR ANY ACCOUNTS RECEIVABLE OBLIGOR OR THE
COLLECTABILITY OF PAYMENTS DUE UNDER ANY RECEIVABLE, OR THE COMPLETENESS OR
ACCURACY OF SUCH LIST.

 

4.13                        LITIGATION.  EXCEPT AS SET FORTH IN SCHEDULE 4.13
HERETO, THERE IS NO LEGAL ACTION, SUIT, ARBITRATION, OR OTHER LEGAL,
ADMINISTRATIVE OR GOVERNMENTAL PROCEEDING PENDING, OR TO THE KNOWLEDGE OF ECC,
THREATENED AGAINST OR RELATING TO SELLER OR ANY OF THE SALE ASSETS AT LAW, IN
EQUITY, OR BEFORE ANY GOVERNMENTAL DEPARTMENT, COMMISSION, BOARD OR AGENCY, NOR
IS ECC AWARE THAT THERE IS A BASIS FOR ANY OF THE FOREGOING.  ECC DOES NOT KNOW
OF ANY DEFAULT WITH RESPECT TO ANY JUDGMENT, INJUNCTION, ORDER OR DECREE OF ANY
COURT OR ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY BY WHICH IT OR ANY OF THE
SALE ASSETS IS BOUND OR SUBJECT.  NO SUCH JUDGMENT, INJUNCTION, ORDER OR DECREE
IS NOW IN EFFECT WHICH IN ANY WAY RESTRAINS OR LIMITS SELLER IN THE CONDUCT OF
ITS BUSINESS.

 

4.14                        INTENTIONALLY DELETED.

 

4.15                        LABOR CONTRACTS AND CONTROVERSIES.  ECC DOES NOT
KNOW OF ANY COLLECTIVE BARGAINING AGREEMENT WITH ANY LABOR UNION OR ANY LOCAL OR
SUBDIVISION THEREOF TO WHICH SELLER IS A PARTY EXCEPT AS SET FORTH ON SCHEDULE
4.15 HEREOF.

 

4.16                        RETIREMENT AND BENEFIT PLANS.  SET FORTH ON SCHEDULE
4.16 IS A COMPLETE LIST OF ALL MEDICAL, HEALTH, HOSPITALIZATION, LIFE INSURANCE
AND OTHER EMPLOYEE BENEFIT PLANS, POLICIES AND PROGRAMS IN EFFECT PERTAINING TO
ANY OF THE EMPLOYEES OF SELLER OF WHICH ECC HAS KNOWLEDGE.

 

4.17                        INTENTIONALLY DELETED.

 

4.18                        INTENTIONALLY DELETED.

 

4.19                        SUPPLIERS.  EXCEPT AS SET FORTH ON SCHEDULE 4.19,
ECC HAS NO KNOWLEDGE OF ANY IMPENDING TERMINATION, CANCELLATION, LIMITATION,
MODIFICATION OR ADVERSE CHANGE MATERIAL TO SELLER’S RELATIONSHIP WITH ANY
SUPPLIER OR VENDOR.

 

4.20                        INTENTIONALLY DELETED.

 

4.21                        TRANSACTIONS WITH RELATED PARTIES.  NEITHER ECC, THE
SELLER NOR ANY OF THEIR RESPECTIVE OFFICERS OR DIRECTORS (OTHER THAN
HOPPENSTEADT AND MIKE STELTER), OR ANY PERSON CLOSELY RELATED TO ANY OF THEM
OWNS ANY EQUITY INTEREST, DIRECTLY OR INDIRECTLY, IN ANY PROPRIETORSHIP, FIRM,
COMPANY, CORPORATION, PARTNERSHIP OR OTHER BUSINESS ENTITY (OTHER THAN EQUITY
INTERESTS IN ECC) WHICH (I) IS A COMPETITOR OF SELLER, (II) IS A CUSTOMER OR
SUPPLIER OF SELLER, OR (III) HAS ANY CONTRACTUAL OR BUSINESS RELATIONSHIP WITH
SELLER; PROVIDED THAT THE FOREGOING DOES NOT APPLY TO THE OWNERSHIP BY ANY OF
THEM OF NOT MORE THAN TWO PERCENT (2%) OF THE OUTSTANDING SECURITY OF ANY
CORPORATION OR PARTNERSHIP

 

8

--------------------------------------------------------------------------------

 

LISTED ON A NATIONAL SECURITIES EXCHANGE OR AN OVER-THE-COUNTER SECURITY TRADED
ON NASDAQ.

 

4.22                        INTENTIONALLY DELETED.

 

 

4.23                        NO BROKERS OR FINDERS.  NO PERSON, FIRM OR
CORPORATION HAS OR WILL HAVE AS A RESULT OF ANY ACTION OF SELLER, SELLER’S
EMPLOYEES, AGENTS OR REPRESENTATIVE ANY RIGHT, INTEREST OR VALID CLAIM FOR ANY
COMMISSION, FEE OR OTHER COMPENSATION AS A FINDER OR BROKER, OR FOR ACTING IN
ANY SIMILAR CAPACITY IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS
PROVIDED FOR HEREIN.

 

5.                                      Representations, Warranties and
Covenants of Purchaser

 

Purchaser represents, warrants and, covenants to Seller that the following
statements are true and correct as of the Contract Date, arid will be true and
correct on the Closing Date:

 

5.1                               ORGANIZATION, GOOD STANDING AND POWER. 
PURCHASER IS A CORPORATION DULY ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING
UNDER THE LAWS OF THE STATE OF ILLINOIS, AND HAS ALL REQUISITE CORPORATE POWER
AND AUTHORITY TO OWN, LEASE AND OPERATE ITS PROPERTIES, TO CARRY ON ITS BUSINESS
A NOW BEING CONDUCTED, AND TO ENTER INTO THIS AGREEMENT AND PERFORM ITS
OBLIGATIONS HEREUNDER. PURCHASER IS AUTHORIZED TO DO BUSINESS AND IS IN GOOD
STANDING IN ALL JURISDICTIONS WHERE THE NATURE OF ITS BUSINESS OR THE PROPERTY
OWNED, LEASED OR OPERATED BY IT SO REQUIRES AND FAILURE TO BE SO QUALIFIED WOULD
HAVE A MATERIAL ADVERSE EFFECT UPON IT.

 

5.2                               AUTHORITY AND BINDING OBLIGATION.  ALL
CORPORATE ACTION NECESSARY TO AUTHORIZE THE EXECUTION AND DELIVERY BY PURCHASER
OF THIS AGREEMENT AND THE OTHER DOCUMENTS REQUIRED TO BE EXECUTED BY PURCHASER
HEREUNDER, AND THE PERFORMANCE OF ITS OBLIGATIONS HEREUNDER AND. THEREUNDER HAVE
BEEN DULY TAKEN. THE EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE OTHER
DOCUMENTS REQUIRED TO BE EXECUTED BY PURCHASER HEREUNDER AND THE PERFORMANCE OF
PURCHASER’S COVENANTS AND AGREEMENTS HEREIN AND THEREIN CONTAINED DO NOT AND
WILL NOT CONSTITUTE OR RESULT IN ANY MATERIAL BREACH OF ANY OF THE TERMS,
CONDITIONS OR PROVISIONS OF, OR CONSTITUTE A DEFAULT UNDER, ANY PROVISION OF LAW
KNOWN TO PURCHASER OR ANY INDENTURE, AGREEMENT OR OTHER INSTRUMENT OF WHICH
PURCHASER IS A PARTY OR BY WHICH IT MAY BE BOUND, OR ANY ORDER, DECREE,
JUDGMENT, REGULATION OR LAW OF ANY COURT OR GOVERNMENTAL BODY HAVING
JURISDICTION OVER PURCHASER AND DO NOT AND WILL NOT REQUIRE THE CONSENT OR
APPROVAL OF ANY OTHER PERSON, COURT OR GOVERNMENTAL AUTHORITY. THIS AGREEMENT IS
A LEGAL, VALID AND BINDING OBLIGATION OF PURCHASER, ENFORCEABLE IN ACCORDANCE
WITH ITS TERMS, EXCEPT AS THE ENFORCEABILITY HEREOF MAY BE LIMITED BY
BANKRUPTCY, INSOLVENCY, REORGANIZATION OR OTHER LAWS AFFECTING THE ENFORCEMENT
OF CREDITORS’ RIGHTS GENERALLY OR THE AVAILABILITY OF EQUITABLE REMEDIES.

 

5.3                               NO BROKERS OR FINDERS.  NO PERSON, FIRM OR
CORPORATION HAS OR WILL HAVE AS A RESULT OF ANY ACTION BY PURCHASER OR
PURCHASER’S EMPLOYEES AGENTS OR REPRESENTATIVES ANY RIGHT, INTEREST OR VALID
CLAIM FOR ANY COMMISSION, FEE OR OTHER

 

9

--------------------------------------------------------------------------------

 

COMPENSATION AS A FINDER OR BROKER, OR FOR ACTING IN ANY SIMILAR CAPACITY, IN
CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS PROVIDED FOR HEREIN.

 

5.4                               Purchaser’s Knowledge.  Purchaser acknowledges
that Hoppensteadt has been the President and Chief Operating Officer of Seller
since ECC acquired Seller in September, 2000, and prior to that time
Hoppensteadt was President and Chief Executive Officer of Seller’s predecessor,
Switchboard Apparatus, Inc., an Illinois corporation.  Purchaser further
acknowledges that Hoppensteadt will continue to serve in such capacity until the
Closing hereunder.  Purchaser further acknowledges and agrees that Hoppensteadt
has unique and comprehensive knowledge of Seller’s business and operations and
the Switchboard Business and Purchaser agrees that such knowledge shall be
attributed to Purchaser for all purposes of this Agreement.  Purchaser further
acknowledges that the principle purpose of the representations and warranties of
ECC and Seller contained in Section 4 of this Agreement is to obtain disclosure
from ECC of any events, facts or matters which are known to ECC but not known to
Hoppensteadt (if any) which relate to the Sale Assets or the Switchboard
Business.  Accordingly,

 

5.4.1                                                                       
Purchaser represents and warrants to ECC and Seller that neither Purchaser nor
Hoppensteadt has actual knowledge of any events, facts or matters which are
inconsistent with the representations and warranties of ECC and Seller contained
in this Agreement, and that Hoppensteadt has not withheld or failed to disclose
to ECC and Seller any material fact about the business or affairs of Seller; and

 

5.4.2                                                                       
Purchaser covenants and agrees that neither ECC nor Seller shall be (or be
deemed to be) in breach of any representation or warranty as to which the
foregoing clause (5.4.1) is false or inaccurate in any material respect.

 

5.5                               Special Covenant.  Purchaser, for itself and
Hoppensteadt, agrees that Hoppensteadt will not, in his capacity as an employee
and officer of Seller during the period from the date of this agreement through
the Closing, take, or authorize to be taken or consent to the taking of by any
employee of Seller, any action which would cause ECC or Seller to be in breach
of any covenant of either of them hereunder, and Purchaser agrees that neither
ECC nor Seller shall be (or be deemed to be) in default of any obligation
hereunder by reason of any action which is taken or permitted to be taken by or
on behalf of Seller by Hoppensteadt or with his consent or approval.

 

6.                                      Additional Representations and
Covenants.

 

6.1                               ACCESS TO INFORMATION.  ECC AND SELLER AGREE
THAT SELLER WILL MAKE AVAILABLE TO PURCHASER AND ITS AUTHORIZED REPRESENTATIVES
DURING NORMAL BUSINESS HOURS THROUGHOUT THE PERIOD PRIOR TO THE CLOSING DATE ALL
SUCH INFORMATION CONCERNING THE AFFAIRS OF SELLER, INCLUDING ALL PROPERTIES,
BOOKS, RECORDS, ACCOUNTS AND OTHER DOCUMENTS, FOR THEIR INSPECTION AND REVIEW
AND SUCH ACCESS TO SELLER’S OFFICERS AND EMPLOYEES, AND AGENTS AND
REPRESENTATIVES OF SELLER, INCLUDING SELLER’S ACCOUNTANTS, AT THEIR RESPECTIVE
OFFICES, AS PURCHASER MAY REASONABLY REQUEST FROM TIME TO TIME.  PURCHASER
COVENANTS

 

10

--------------------------------------------------------------------------------

 

AND AGREES THAT IT WILL HOLD AND CAUSE ITS AUTHORIZED REPRESENTATIVES TO HOLD IN
STRICT CONFIDENCE ALL INFORMATION SO OBTAINED, AND IF THE TRANSACTIONS HEREIN
PROVIDED FOR ARE NOT CONSUMMATED AS CONTEMPLATED HEREIN, PURCHASER WILL RETURN
AND CAUSE THEIR AUTHORIZED REPRESENTATIVES TO RETURN ALL SUCH INFORMATION AND
MATERIALS AS ECC OR SELLER MAY REQUEST, AND WILL NOT DISCLOSE OR DIVULGE TO OR
USE FOR ITS BENEFITS OR THE BENEFIT OF ANY OTHER PERSON, FIRM OR CORPORATION, OR
ALLOW ITS AUTHORIZED TO DO SO, ANY PORTION OF ANY SUCH DATA OR INFORMATION,
PROVIDED THAT PURCHASER SHALL NOT BE OBLIGATED TO TREAT AS CONFIDENTIAL ANY
INFORMATION WHICH SELLER DOES NOT TREAT AS CONFIDENTIAL, OR OF WHICH PURCHASER
HAD SPECIFIC KNOWLEDGE PRIOR HERETO OR WHICH IS OR BECOMES PUBLICLY KNOWN OR
AVAILABLE OTHER THAN BY VIOLATION HEREOF.  PURCHASER ACKNOWLEDGES THAT ECC IS A
REPORTING COMPANY UNDER THE FEDERAL SECURITIES LAWS AND ACCORDINGLY THAT
PURCHASER MAY NOT OFFER TO PURCHASE OR SELL, OR PURCHASE OR SELL, ANY SECURITIES
OF ECC AT ANY TIME WHEN PURCHASER IS IN POSSESSION OF MATERIAL NON-PUBLIC
INFORMATION CONCERNING ECC, AND THAT INFORMATION CONCERNING SELLER WHICH IS MADE
AVAILABLE TO PURCHASER HEREUNDER MAY CONSTITUTE MATERIAL NON-PUBLIC INFORMATION
CONCERNING ECC.  PURCHASER FURTHER AGREES THAT HOPPENSTEADT HAS BEEN AND MAY BE
NOW OR HEREAFTER IN POSSESSION OF INFORMATION CONCERNING SELLER WHICH IS
MATERIAL NON-PUBLIC INFORMATION CONCERNING ECC AND THAT ALL SUCH KNOWLEDGE OF
HOPPENSTEADT IS ATTRIBUTED TO PURCHASER FOR PURPOSES HEREOF.  PURCHASER, FOR
ITSELF AND HOPPENSTEADT, AGREES TO KEEP ALL SUCH MATERIAL NON-PUBLIC INFORMATION
CONFIDENTIAL AND TO REFRAIN FROM PURCHASING OR SELLING, OR OFFERING TO PURCHASE
OR SELL, ANY SECURITIES OF ECC AT ANY TIME WHEN ANY SUCH MATERIAL NON-PUBLIC
INFORMATION IS KNOWN TO HOPPENSTEADT.

 

6.2                               CONDUCT OF BUSINESS.  SELLER REPRESENTS,
COVENANTS AND AGREES THAT FROM AND AFTER THE CONTRACT DATE AND THROUGH THE
CLOSING DATE, EXCEPT AS DISCLOSED IN THIS AGREEMENT OR THE EXHIBITS AND
SCHEDULES HERETO, SELLER WILL CONDUCT ITS BUSINESS IN A MANNER NOT MATERIALLY
DIFFERENT FROM ITS PAST PRACTICES AND ONLY IN THE USUAL AND ORDINARY COURSE, AND
CONSISTENT THEREWITH SELLER WILL USE ITS COMMERCIALLY REASONABLE EFFORTS TO:

 

6.2.1                                                PRESERVE INTACT THE PRESENT
BUSINESS ORGANIZATION, KEEP AVAILABLE THE SERVICES OF ITS PRESENT EMPLOYEES, AND
PRESERVE ITS RELATIONSHIPS WITH ITS CUSTOMERS AND SUPPLIERS.

 

6.2.2                                                MAINTAIN ALL OF ITS ASSETS
AND PROPERTIES IN CUSTOMARY REPAIR, ORDER AND CONDITION, REASONABLE WEAR AND USE
AND DAMAGE BY FIRE OR UNAVOIDABLE CASUALTIES EXCEPTED, AND WILL ALSO CONTINUE TO
CARRY AND KEEP IN EFFECT ITS EXISTING INSURANCE POLICIES OR SUBSTITUTE POLICIES
PROVIDING SUBSTANTIALLY EQUIVALENT COVERAGE, SUBJECT TO VARIATION IN AMOUNT
REQUIRED BY THE ORDINARY OPERATION OF ITS BUSINESS.

 

6.2.3                                                MAINTAIN ITS BOOKS,
ACCOUNTS AND RECORDS IN THE USUAL AND REGULAR MANNER ON A BASIS CONSISTENT WITH
PRIOR YEARS.

 

6.2.4                                                COMPLY WITH ALL LAWS AND
REGULATIONS APPLICABLE TO ITS BUSINESS.

 

6.3                               NEGATIVE COVENANTS.  BETWEEN THE CONTRACT DATE
AND THE CLOSING DATE, ECC AND SELLER COVENANT AND AGREE THAT SELLER WILL NOT, AS
IT RELATES SOLELY TO

 

11

--------------------------------------------------------------------------------

 

SWITCHBOARD, WITHOUT OBTAINING THE PRIOR CONSENT OF PURCHASER, WHICH CONSENT
WILL NOT UNREASONABLY BE WITHHELD:

 

6.3.1                                                ISSUE OR SELL, OR ISSUE ANY
RIGHTS TO PURCHASE OR SUBSCRIBE TO, OR SUBDIVIDE OR OTHERWISE CHANGE, ANY SHARES
OF ITS STOCK OF ANY CLASS.

 

6.3.2                                                DECLARE, SET ASIDE, OR PAY
ANY DIVIDENDS ON, OR MAKE ANY DISTRIBUTION IN RESPECT OF, SELLER’S STOCK OF ANY
CLASS.

 

6.3.3                                                PURCHASE, REDEEM OR
OTHERWISE ACQUIRE, DIRECTLY OR INDIRECTLY, ANY OF SELLER’S STOCK OF ANY CLASS.

 

6.3.4                                                MERGE OR CONSOLIDATE WITH
OR INTO ANY OTHER CORPORATION, SELL ALL OR SUBSTANTIALLY ALL OF ITS ASSETS AND
PROPERTIES, OR CHANGE IN ANY MATERIAL MANNER THE RIGHTS OF ITS SHARES OF CAPITAL
STOCK OR THE CHARACTER OF ITS BUSINESS.

 

6.3.5                                                ENCUMBER, MORTGAGE OR
PLEDGE ANY OF THE SALE ASSETS.

 

6.3.6                                                SELL, ASSIGN OR OTHERWISE
DISPOSE OF ANY INTEREST IN ANY OF THE SALE ASSETS, EXCEPT IN THE ORDINARY COURSE
OF BUSINESS, EXCEPT FOR WRITE-DOWNS AND WRITE-OFFS OF ACCOUNTS RECEIVABLE TO
REFLECT UNCOLLECTIBLE AMOUNTS.

 

6.3.7                                                MAKE OR PROMISE ANY
INCREASE IN SALARIES OR OTHER COMPENSATION, OTHER REMUNERATION OR EMPLOYMENT
BENEFITS OF ANY OFFICER, DIRECTOR OR OTHER EMPLOYEE; EXCEPT FOR ROUTINE
ADJUSTMENTS MADE IN THE ORDINARY COURSE OF BUSINESS.

 

6.3.8                                                INSTITUTE, SETTLE OR AGREE
TO SETTLE ANY ACTION OR PROCEEDING MATERIALLY AFFECTING ANY OF THE SALE ASSETS
BEFORE ANY COURT OR OTHER BODY.

 

6.4                               EMPLOYEES.  EFFECTIVE IMMEDIATELY AFTER THE
CLOSING DATE, THE SELLER SHALL BE DEEMED TO HAVE TERMINATED ALL OF SWITCHBOARD’S
EMPLOYEES LISTED ON SCHEDULE 6.4 AND THE PURCHASER SHALL BE DEEMED TO HAVE
OFFERED EMPLOYMENT TO EACH OF THE INDIVIDUALS SET FORTH ON SCHEDULE 6.4.  WITH
RESPECT TO ALL OF SWITCHBOARD’S EMPLOYEES ACTUALLY HIRED BY PURCHASER, PURCHASER
SHALL BE SOLELY RESPONSIBLE FOR ALL OF ITS OBLIGATIONS TO SUCH EMPLOYEES
ACCRUING FROM AND AFTER THE CLOSING DATE.  ON THE CLOSING DATE, PURCHASER SHALL
ASSUME AS AN ASSUMED LIABILITY ALL OF THE SELLER’S OBLIGATIONS FOR PERIODS AFTER
THE CLOSING DATE UNDER AND IN RESPECT OF SELLER’S EXISTING COLLECTIVE BARGAINING
AGREEMENT WITH LOCAL NO. 134, INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS.

 

6.5                               RECEIVABLES.  ANY AMOUNTS COLLECTED AFTER THE
CLOSING DATE BY ECC OR SELLER WITH RESPECT TO ANY RECEIVABLE WHICH IS PART OF
THE SALE ASSETS SHALL BE PROMPTLY TRANSMITTED TO PURCHASER IN THE FORM RECEIVED.

 

6.6                               INSURANCE PROCEEDS AND CLAIMS.  IN THE EVENT
THAT BETWEEN THE CONTRACT DATE AND THE CLOSING DATE ANY OF THE SALE ASSETS SHALL
HAVE SUFFERED ANY DESTRUCTION OR DAMAGE BY FIRE, ACCIDENT OR OTHER CASUALTY OR
ACT OF GOD WHICH EITHER DOES NOT

 

12

--------------------------------------------------------------------------------

 

MATERIALLY AND ADVERSELY AFFECT THE CONDUCT OF THE BUSINESS OF SELLER OR THE
SALE ASSETS AS A WHOLE OR WITH RESPECT TO WHICH PURCHASER WAIVES IN WHOLE OR IN
PART THE CONDITION PRECEDENT PROVIDED IN PARAGRAPH 7.3 HEREOF, AT THE CLOSING AT
THE SELLER’S OPTION EITHER (A) ALL PROCEEDS OF INSURANCE PERTAINING TO SUCH
DAMAGES OR DESTROYED PROPERTY AND ALL RIGHTS AND CLAIMS OF EVERY KIND ARISING AS
A RESULT OF SUCH DAMAGE OR DESTRUCTION SHALL BECOME THE PROPERTY OF PURCHASER,
AND SELLER AND/OR CAUSE ECC TO ASSIGN, TRANSFER AND DELIVER TO PURCHASER ALL
SAID INSURANCE PROCEEDS, RIGHTS AND CLAIMS, OR (B) THE CASH PAYMENT SHALL BE
REDUCED BY THE AMOUNT OF SUCH INSURANCE PROCEEDS.

 

7.                                      Conditions Precedent to Obligations to
Purchaser.  All of the obligations of Purchaser hereunder are subject to the
following express conditions precedent (all or any of which may be waived in
whole or in part by Purchaser), having been fulfilled on or before the Closing
Date:

 

7.1                               REPRESENTATIONS AND WARRANTIES.  THE
REPRESENTATIONS AND WARRANTIES OF ECC AND SELLER CONTAINED HEREIN SHALL BE TRUE
AND CORRECT IN ALL MATERIAL RESPECTS ON AND AS OF THE CLOSING DATE WITH THE SAME
FORCE AND EFFECT AS THOUGH MADE ON AND AS OF THE CLOSING DATE, EXCEPT FOR SUCH
CHANGES THEREIN AS ARE EXPRESSLY REQUIRED OR PERMITTED BY THE TERMS OF THIS
AGREEMENT OR CONSENTED TO IN WRITING BY PURCHASER.

 

7.2                               PERFORMANCE; CERTIFICATE.  ECC SHALL PERFORM
AND OBSERVE AND CAUSE SELLER TO PERFORM AND OBSERVE IN ALL MATERIAL RESPECTS ALL
OBLIGATIONS AND CONDITIONS HEREIN REQUIRED TO BE PERFORMED OR OBSERVED BY THEM
OR EITHER OF THEM ON OR PRIOR TO THE CLOSING DATE; AND ECC SHALL DELIVER TO
PURCHASER A CERTIFICATE DATED THE CLOSING OF THE CHIEF EXECUTIVE OFFICE OF ECC,
CERTIFYING AS TO THE CORRECTNESS OF ALL REPRESENTATIONS AND WARRANTIES OF ECC
AND SELLER AS OF SUCH DATE AND AS TO COMPLIANCE WITH PARAGRAPH 7.1 AND THIS
PARAGRAPH 7.2.

 

7.3                               ABSENCE OF MATERIAL CHANGES.  SINCE THE
CONTRACT DATE, THERE SHALL NOT HAVE BEEN ANY MATERIAL ADVERSE CHANGE IN THE
BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS OF SELLER OR IN ITS
PROPERTIES, ASSETS, REVENUES, EARNINGS, INVENTORY, RELATIONSHIPS WITH SUPPLIERS
AND CUSTOMERS, LABOR RELATIONS OR PROSPECTS, AND NONE OF THE SALE ASSETS SHALL
HAVE SUFFERED ANY DESTRUCTION OR DAMAGE BY FIRE, ACCIDENT OR OTHER CASUALTY OR
ACT OF GOD, WHETHER OR NOT COVERED BY INSURANCE, WHICH MATERIALLY AND ADVERSELY
AFFECTS THE CONDUCT OF THE BUSINESS OF SELLER OR THE SALE ASSETS AS A WHOLE.

 

7.4                               NO LITIGATION.  EXCEPT AS DISCLOSED BY
SELLER’S DISCLOSURE SCHEDULES, NO CLAIM, PROCEEDING, INVESTIGATION OR
LITIGATION, EITHER ADMINISTRATIVE OR JUDICIAL, SHALL BE THREATENED OR PENDING
AGAINST ANY OF THE PARTIES HERETO WHICH, IN THE REASONABLE OPINION OF COUNSEL
FOR PURCHASER, PRESENTS A REASONABLE POSSIBILITY THAT THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT WOULD BE ENJOINED OR PREVENTED, OR THAT THE RIGHT
OF PURCHASER TO ACQUIRE, RETAIN OR USE THE SALE ASSETS OR CONTINUE IN THE SAME
MANNER THE OPERATIONS AND BUSINESS OF SELLER, IF AND WHEN THE SAME ARE ACQUIRED,
WITHOUT ADDITIONAL COSTS WOULD BE MATERIALLY AND ADVERSELY AFFECTED.

 

7.5                               CONSENTS.  WRITTEN CONSENT TO THE ASSIGNMENT
OF ALL OF ASSUMED CONTRACTS WHICH ARE MATERIAL SHALL HAVE BEEN OBTAINED FROM THE
APPROPRIATE PARTY.

 

13

--------------------------------------------------------------------------------

 

7.6                               Financial Condition of Switchboard.  On the
Closing Date, Seller will not have a net asset value of less than $868,949.00,
which net asset value shall be calculated based upon the Financial Information
attached to this Agreement in Exhibit “A” in the manner provided for in Exhibit
“B” attached hereto and made a part hereof.  To the extent that the net asset
value of Seller on the Closing Date shall be less (or more) than $868,949.00 on
the Closing Date, the Cash Payment shall be reduced (or increased).  Seller and
Purchaser acknowledge and agree that as of the Closing Date that the value of
the inventory shall be estimated and that within ten (10) days of the Closing
Date Purchaser and Seller shall jointly prepare and agree on an inventory list
as of the Closing Date as being a true, complete and accurate inventory as of
the Closing Date and both Purchaser and Seller shall signify their respective
approval of the inventory list by signing a copy thereof.  Within ten (10) days
after Purchaser and Seller have completed, accepted and approved such inventory
list, Purchaser and Seller shall jointly calculate any adjustment to the net
asset value, as herein defined, and the party which may owe any sum or sums to
the other shall pay such sum or sums within ten (10) days of the agreed upon
adjustment to the net asset value.

 

8.                                      Conditions Precedent to Obligations of
Seller.  All of the obligations of ECC and Seller hereunder are subject to the
following express conditions precedent (all or any of which may be waived in
whole or in part by Seller) having been fulfilled on or before the Closing Date:

 

8.1                               REPRESENTATIONS AND WARRANTIES. THE
REPRESENTATIONS AND WARRANTIES OF PURCHASER CONTAINED HEREIN SHALL BE TRUE ON
AND AS OF THE CLOSING DATE WITH THE SAME FORCE AND EFFECT AS THOUGH MADE ON AND
AS OF THE CLOSING DATE, EXCEPT FOR SUCH OTHER CHANGES THEREIN AS ARE EXPRESSLY
REQUIRED OR PERMITTED BY THE TERMS OF THIS AGREEMENT OR CONSENTED TO IN WRITING
BY SELLER.

 

8.2                               PERFORMANCE; CERTIFICATE.  PURCHASER SHALL
HAVE PERFORMED AND OBSERVED ALL COVENANTS, OBLIGATIONS AND CONDITIONS HEREIN
REQUIRED TO BE PERFORMED OR OBSERVED BY IT ON OR PRIOR TO THE CLOSING DATE; AND
PURCHASER SHALL HAVE DELIVERED TO ECC AND SELLER A CERTIFICATE DATED THE CLOSING
DATE OF PURCHASER’S CHIEF EXECUTIVE OFFICER CERTIFYING AS TO THE CORRECTNESS OF
ALL REPRESENTATIONS AND WARRANTIES OF PURCHASER AS OF SUCH DATE AND AS TO
COMPLIANCE WITH PARAGRAPH 8.1 AND THIS PARAGRAPH 8.2.

 

8.3                               NO LITIGATION:  NO CLAIM, PROCEEDING,
INVESTIGATION OR LITIGATION, EITHER ADMINISTRATIVE OR JUDICIAL, SHALL BE
THREATENED OR PENDING AGAINST ANY OF THE PARTIES HERETO WHICH, IN THE REASONABLE
OPINION OF COUNSEL FOR ECC AND SELLER, PRESENTS A REASONABLE POSSIBILITY THAT
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT WOULD BE ENJOINED OR PREVENTED.

 

8.4                               Hoppensteadt Closing Agreement.   Purchaser
and Hoppensteadt shall have delivered to Seller and ECC the written agreement,
in form and substance satisfactory to ECC and Seller, of Hoppensteadt stating
that, as a material inducement to ECC and Seller to close the transactions
contemplated hereby, Hoppensteadt acknowledges that he is familiar with this
Agreement (including paragraphs 5.4 and 5.5 hereof) and further stating that:

 

14

--------------------------------------------------------------------------------

 

(a)                                  Hoppensteadt has no knowledge of any
events, facts or matters which are inconsistent with the representations and
warranties of ECC and Seller contained in this Agreement;

 

(b)                                 Hoppensteadt has not, in his capacity as an
employee and officer of Seller during the period from the date of this Agreement
through the Closing, taken, or authorized to be taken or consented to the taking
of by any employee of Seller, any action which caused or resulted in ECC or
Seller being in breach of any covenant of either of them hereunder; and

 

(c)                                  agreeing to indemnify ECC and Seller for
any Damages (as defined in paragraph 10.4 hereof) sustained by either of them as
a result of any breach of or inaccuracy in the foregoing statements in clauses
(a) and (b) of this paragraph 8.4.

 

9.                                      Closing

 

9.1                               CLOSING DATE.  THE CLOSING SHALL TAKE PLACE ON
MAY 31, 2003 AT THE OFFICES OF BURKE, WARREN, MACKAY & SERRITELLA, P.C., 330 N.
WABASH AVE., 22 FLOOR, CHICAGO, ILLINOIS 60611, AT 10:00 A.M., LOCAL TIME, OR AT
SUCH OTHER DATE, TIME AND PLACE AS SHALL BE FIXED IN WRITING BY THE MUTUAL
CONSENT OF SELLER AND PURCHASER.  THE CLOSING SHALL BE DEEMED TO BE EFFECTIVE AS
OF THE CLOSE OF BUSINESS ON THE CLOSING DATE.

 

9.2                               PURCHASER’S DELIVERIES.  AT THE CLOSING,
PURCHASER SHALL EXECUTE AND DELIVER, OR CAUSE TO BE EXECUTED AND DELIVERED, THE
FOLLOWING:

 

9.2.1                                                CERTIFIED COPY OF THE
APPROPRIATE PROCEEDINGS OF THE BOARD OF DIRECTORS OF PURCHASER AUTHORIZING AND
APPROVING THIS AGREEMENT AND THE TRANSACTIONS AND DOCUMENTS CONTEMPLATED HEREIN.

 

9.2.2                                                INSTRUMENT(S) OF ASSUMPTION
EXECUTED BY PURCHASER AS OF THE CLOSING DATE OF ALL OF THE ASSUMED LIABILITIES
INCLUDING THE ASSIGNMENT AND ASSUMPTION AGREEMENT IN THE FORM OF EXHIBIT “C”.

 

9.2.3                                                CERTIFICATES OF GOOD
STANDING FOR PURCHASER FROM THE SECRETARY OF STATE OF THE STATE OF ILLINOIS
DATED WITHIN FIVE (5) DAYS PRIOR TO THE CLOSING DATE.

 

9.2.4                                                OFFICERS’ CERTIFICATE, DULY
EXECUTED BY THE REQUIRED OFFICERS OF PURCHASER, AS PROVIDED IN PARAGRAPH 8.2
HEREOF.

 

9.2.5                                                SUCH OTHER DOCUMENTS AS
SELLER’S COUNSEL MAY REASONABLY REQUEST TO MORE EFFECTIVELY CARRY OUT THE TERMS
AND PROVISIONS OF THIS AGREEMENT.

 

15

--------------------------------------------------------------------------------

 

9.3                               SELLER’S DELIVERIES.  AT THE CLOSING, SELLER
SHALL EXECUTE AND DELIVER, OR CAUSE TO BE EXECUTED AND DELIVERED, THE FOLLOWING:

 

9.3.1                                                CERTIFIED COPY OF THE
APPROPRIATE RESOLUTIONS OF THE BOARD OF DIRECTORS AND SHAREHOLDERS OF SELLER AND
OF THE BOARD OF DIRECTORS OF ECC AUTHORIZING AND APPROVING THIS AGREEMENT AND
THE TRANSACTIONS AND DOCUMENTS CONTEMPLATED HEREIN.

 

9.3.2                                                BILLS OF SALE, ASSIGNMENTS,
TITLE DOCUMENTS AND OTHER INSTRUMENTS OF CONVEYANCE AS MAY BE NECESSARY OR
APPROPRIATE TO TRANSFER, ASSIGN AND CONVEY TO PURCHASER AS OF THE CLOSING DATE
GOOD AND MARKETABLE TITLE TO ALL OF THE SALE ASSETS, AND TO EFFECT SUCH OTHER
ASSIGNMENTS AND CONVEYANCES, AS PROVIDED IN THIS AGREEMENT, IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO COUNSEL FOR PURCHASER.

 

9.3.3                                                AN EXECUTED COPY OF THE
OPINION OF SELLER’S COUNSEL.

 

9.3.4                                                CERTIFICATE OF GOOD
STANDING FOR SELLER AND ECC FROM THE SECRETARY OF STATE OF DELAWARE AND
ILLINOIS, DATED WITHIN FIVE (5) DAYS PRIOR TO THE CLOSING DATE.

 

9.3.5                                                OFFICERS’ CERTIFICATE, DULY
EXECUTED BY THE REQUIRED OFFICERS OF SELLER AND ECC, AS PROVIDED IN PARAGRAPH
7.2 HEREOF.

 

 

9.3.6                                                APPROPRIATE LIEN RELEASES
(OR AGREEMENTS TO RELEASE LIEN SATISFACTORY TO PURCHASER) FROM WITH RESPECT TO
THE LOAN DESCRIBED IN ITEM 2 ON SCHEDULE 3.1 ATTACHED.

 

9.4                               POSSESSION.  UPON THE CLOSING, POSSESSION OF
ALL OF THE SALE ASSETS AND ALL OF SELLER’S LEASED REAL AND PERSONAL PROPERTY
BEING ASSIGNED TO PURCHASER HEREUNDER SHALL BE DELIVERED TO PURCHASER.

 

9.5                               BOOKS AND RECORDS.  UPON THE CLOSING, EXCEPT
FOR FINANCIAL, TAX AND ACCOUNTING RECORDS OF SELLER THAT ECC REASONABLY DEEMS
NECESSARY TO RETAIN FOR THE PURPOSE OF PREPARING ITS TAX RETURNS AND SEC FILINGS
AND REPORTS, SELLER SHALL DELIVER TO PURCHASER POSSESSION OF THE FILES, RECORDS,
COMPUTER PRINTOUTS, CONTENTS OF DATA BASES AND OTHER DOCUMENTS AND PAPERS THAT
ARE INCLUDED IN THE SALE ASSETS AND ARE NOT EXCLUDED ASSETS (HEREIN COLLECTIVELY
CALLED THE “RECORDS”). SELLER SHALL RETAIN POSSESSION OF ALL SUCH FINANCIAL, TAX
AND ACCOUNTING RECORDS AND ANY OTHER FILES, RECORDS AND DATA NOT DELIVERED TO
PURCHASER HEREUNDER (HEREIN COLLECTIVELY CALLED THE “RETAINED RECORDS”). AFTER
THE CLOSING, ECC AND SELLER AND THEIR REPRESENTATIVES SHALL HAVE THE RIGHT OF
ACCESS TO SAID RECORDS RELATING TO ANY PERIOD ENDING ON OR PRIOR TO THE CLOSING
DATE, AT ALL REASONABLE TIMES DURING BUSINESS HOURS AND TO MAKE COPIES THEREOF
AT THEIR EXPENSE, AND PURCHASER AND ITS REPRESENTATIVES SHALL HAVE THE RIGHT OF
ACCESS TO SAID RETAINED RECORDS RELATING TO ANY PERIOD ENDING ON OR PRIOR TO THE
CLOSING DATE, AT ALL REASONABLE TIMES DURING BUSINESS HOURS AND TO MAKE COPIES
THEREOF AT THEIR EXPENSE. IN THE EVENT THAT PURCHASER, WITHIN A PERIOD OF FIVE
(5) YEARS AFTER THE CLOSING DATE, DESIRES TO DISPOSE OF ANY OF THE RECORDS,
PURCHASER SHALL GIVE ECC AND SELLER AT LEAST THIRTY

 

16

--------------------------------------------------------------------------------

 

(30) DAYS’ PRIOR WRITTEN NOTICE THEREOF AND ECC AND SELLER SHALL HAVE THE RIGHT
TO TAKE POSSESSION OF ANY OF SAID RECORDS THAT PURCHASER DESIRES TO DISPOSE OF
WITHIN SAID 30-DAY PERIOD. IN THE EVENT THAT ECC OR SELLER, WITHIN A PERIOD OF
FIVE (5) YEARS AFTER THE CLOSING DATE, DESIRES TO DISPOSE OF ANY OF THE RETAINED
RECORDS OR MOVE ANY OF THE RETAINED RECORDS OUTSIDE OF THE CHICAGO, ILLINOIS
AREA, ECC OR SELLER SHALL GIVE PURCHASER AT LEAST THIRTY (30) DAYS’ PRIOR
WRITTEN NOTICE THEREOF, AND PURCHASER SHALL HAVE THE RIGHT TO TAKE POSSESSION OF
ANY OF SAID, RETAINED RECORDS THAT SELLER DESIRES TO DISPOSE OF OR MOVE WITHIN
SAID 30-DAY PERIOD, PURCHASER WILL USE DUE CARE IN TAKING CARE OF THE RECORDS
WHILE THEY ARE IN ITS POSSESSION, AND ECC AND SELLER WILL USE DUE CARE TAKING
CARE OF THE RETAINED RECORDS WHILE THEY ARE IN THEIR POSSESSION.

 

10.                               Indemnification and Survival

 

10.1                        SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF ECC
AND SELLER.  THE REPRESENTATIONS AND WARRANTIES OF ECC AND SELLER IN THIS
AGREEMENT SHALL SURVIVE AND REMAIN IN FULL FORCE AND EFFECT ONLY UNTIL THE FIRST
ANNIVERSARY OF THE CLOSING.

 

10.2                        SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF
BUYER.  THE REPRESENTATIONS AND WARRANTIES OF THE BUYER IN THIS AGREEMENT SHALL
SURVIVE AND RETAIN IN FULL FORCE AND EFFECT ONLY UNTIL THE FIRST ANNIVERSARY OF
THE CLOSING.

 

10.3                        CLAIMS FOR BREACH OF REPRESENTATIONS AND
WARRANTIES.  TO PRESERVE A CLAIM FOR A BREACH OF A REPRESENTATION OR WARRANTY,
THE PARTY CLAIMING THE BREACH SHALL BE OBLIGATED TO NOTIFY IN WRITING THE PARTY
CLAIMED TO BE IN BREACH OF ANY SUCH BREACH, OR FACTS THAT CAN REASONABLY BE
EXPECTED TO GIVE RISE TO SUCH BREACH, WHILE SUCH REPRESENTATION AND WARRANTY IS
STILL IN FULL FORCE AND EFFECT; FAILURE TO DO SO SHALL BAR A PARTY’S CLAIM OF
BREACH WITH RESPECT TO SUCH REPRESENTATION OR WARRANTY FOREVER.

 

10.4                        SELLER INDEMNIFICATION.  SUBJECT TO THE EXPRESS
LIMITATIONS AND CONDITIONS SET FORTH IN THIS ARTICLE 10, ECC AND THE SELLER
SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS THE BUYER AND ITS AFFILIATES FROM,
AGAINST AND IN RESPECT OF ANY AND ALL DAMAGES, CLAIMS, LOSSES AND COSTS (THE
“DAMAGES”) ARISING OUT OF, RESULTING FROM OR IN ANY WAY RELATED TO:  (I) ANY
BREACH OF ANY REPRESENTATION OR WARRANTY MADE BY ECC OR SELLER IN THIS AGREEMENT
OR IN ANY CERTIFICATE OR DOCUMENT REQUIRED TO BE DELIVERED BY ECC OR SELLER
PURSUANT HERETO; (II) ANY FAILURE TO PERFORM OR SATISFY ANY OF THE COVENANTS OR
AGREEMENTS MADE BY ECC OR SELLER IN THIS AGREEMENT OR IN ANY CERTIFICATE OR
DOCUMENT REQUIRED TO BE DELIVERED BY ECC OR SELLER PURSUANT HERETO; (III) ANY
FAILURE TO PERFORM OR SATISFY ANY OF THE COVENANTS AND AGREEMENTS MADE BY ECC OR
SELLER IN THIS AGREEMENT OR IN ANY CERTIFICATE OR DOCUMENT REQUIRED TO BE
DELIVERED BY ECC OR SELLER PURSUANT HERETO; (IV) THE EXCLUDED ASSETS; AND/OR (V)
EXCLUDED LIABILITIES.

 

10.5                        BUYER INDEMNIFICATION.  SUBJECT TO THE EXPRESS
LIMITATIONS AND CONDITIONS SET FORTH IN THIS ARTICLE 10, THE BUYER SHALL
INDEMNIFY, DEFEND AND HOLD HARMLESS ECC AND THE SELLER FROM, AGAINST AND IN
RESPECT OF ANY AND ALL DAMAGES ARISING OUT OF, RESULTING FROM OR IN ANY WAY
RELATED TO:  (I) ANY BREACH OF ANY REPRESENTATION OR WARRANTY MADE BY THE BUYER
OR HOPPENSTEADT IN THIS AGREEMENT OR IN ANY CERTIFICATE OR DOCUMENT REQUIRED TO
BE DELIVERED BY BUYER OR HOPPENSTEADT PURSUANT HERETO; (II) ANY FAILURE TO

 

17

--------------------------------------------------------------------------------

 

PERFORM OR SATISFY ANY OF THE COVENANTS OR AGREEMENTS MADE BY THE BUYER OR
HOPPENSTEADT IN THIS AGREEMENT OR IN ANY CERTIFICATE OR DOCUMENT REQUIRED TO BE
DELIVERED BY BUYER PURSUANT HERETO AND/OR (III) THE ASSUMED LIABILITIES.

 

10.6                        PROCEDURE.  PROMPTLY AFTER THE ASSERTION BY ANY
THIRD PARTY OF ANY CLAIM, DEMAND OR NOTICE (A “THIRD PARTY CLAIM”) AGAINST ANY
PERSON OR PERSONS ENTITLED TO INDEMNIFICATION UNDER THIS ARTICLE IX (THE
“INDEMNIFIED PARTIES”) THAT RESULTS OR COULD REASONABLY BE EXPECTED TO RESULT IN
THE INCURRENCE BY SUCH INDEMNIFIED PARTIES OF ANY DAMAGES FOR WHICH THE
INDEMNIFIED PARTY WOULD BE ENTITLED TO INDEMNIFICATION PURSUANT TO THIS
AGREEMENT, SUCH INDEMNIFIED PARTIES SHALL PROMPTLY NOTIFY THE PARTIES FROM WHOM
SUCH INDEMNIFICATION COULD BE SOUGHT (THE “INDEMNIFYING PARTIES”) OF SUCH THIRD
PARTY CLAIM; PROVIDED, HOWEVER, THAT ANY FAILURE TO GIVE SUCH NOTICE SHALL NOT
WAIVE ANY RIGHTS OF AN INDEMNIFIED PARTY EXCEPT TO THE EXTENT THE RIGHTS OF THE
INDEMNIFYING PARTY ARE ACTUALLY PREJUDICED OR TO THE EXTENT THAT ANY APPLICABLE
PERIOD CONTEMPLATED BY SECTION 10.3 HEREOF HAS EXPIRED WITHOUT NOTICE BEING
GIVEN.  THEREUPON, THE INDEMNIFYING PARTIES SHALL HAVE THE RIGHT, UPON WRITTEN
NOTICE (THE “DEFENSE NOTICE”) TO THE INDEMNIFIED PARTIES WITHIN 30 DAYS AFTER
RECEIPT BY THE INDEMNIFYING PARTIES OF NOTICE OF THE THIRD PARTY CLAIM (OR
SOONER IF SUCH CLAIM SO REQUIRES) (“DEFENSE NOTICE DEADLINE”) TO CONDUCT, AT
THEIR OWN EXPENSE, THE DEFENSE AGAINST THE THIRD PARTY CLAIM IN THEIR OWN NAMES
OR, IF NECESSARY, IN THE NAME OF THE INDEMNIFIED PARTIES.  THE DEFENSE NOTICE
SHALL SPECIFY THE COUNSEL THE INDEMNIFYING PARTIES SHALL APPOINT TO DEFEND SUCH
THIRD PARTY CLAIM (THE “DEFENSE COUNSEL”), AND THE INDEMNIFIED PARTIES SHALL
HAVE THE RIGHT TO APPROVE THE DEFENSE COUNSEL, WHICH APPROVAL SHALL NOT BE
UNREASONABLY WITHHELD.  IN THE EVENT THE INDEMNIFIED PARTIES AND THE
INDEMNIFYING PARTIES CANNOT AGREE ON SUCH COUNSEL WITHIN 10 DAYS AFTER THE
DEFENSE NOTICE IS GIVEN, THEN THE INDEMNIFYING PARTIES SHALL PROPOSE AN
ALTERNATE DEFENSE COUNSEL, WHICH SHALL BE SUBJECT AGAIN TO THE INDEMNIFIED
PARTIES’ APPROVAL, WHICH APPROVAL SHALL NOT BE UNREASONABLY WITHHELD.  ANY
INDEMNIFIED PARTY SHALL HAVE THE RIGHT TO EMPLOY SEPARATE COUNSEL IN ANY SUCH
THIRD PARTY CLAIM AND/OR TO PARTICIPATE IN THE DEFENSE THEREOF, BUT THE FEES AND
EXPENSES OF SUCH COUNSEL SHALL NOT BE INCLUDED AS PART OF ANY DAMAGES INCURRED
BY THE INDEMNIFIED PARTY UNLESS (A) THE INDEMNIFYING PARTIES SHALL HAVE FAILED
TO GIVE THE DEFENSE NOTICE WITHIN THE PRESCRIBED PERIOD, (B) THE INTEREST OF THE
INDEMNIFIED PARTY AND THE INDEMNIFYING PARTIES WITH RESPECT TO THE THIRD PARTY
CLAIM ARE SUFFICIENTLY ADVERSE TO PROHIBIT THE REPRESENTATION BY THE SAME
COUNSEL OF BOTH PARTIES UNDER APPLICABLE LEGAL REQUIREMENTS, ETHICAL RULES OR
EQUITABLE PRINCIPLES, OR (C) THE EMPLOYMENT OF SUCH COUNSEL AT THE EXPENSE OF
THE INDEMNIFYING PARTIES HAS BEEN SPECIFICALLY AUTHORIZED BY THE INDEMNIFYING
PARTIES.  THE PARTY OR PARTIES CONDUCTING THE DEFENSE OF ANY THIRD PARTY CLAIM
SHALL KEEP THE OTHER PARTIES APPRISED OF ALL SIGNIFICANT DEVELOPMENTS.

 

10.7                        SETTLEMENT AND COMPROMISE.

 

(i)                                     At no time prior to the expiration of
the Defense Notice Deadline shall an Indemnified Party admit any liability with
respect to or settle, compromise or discharge any Third Party Claim without the
prior written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed.

 

18

--------------------------------------------------------------------------------

 

(ii)                                  Upon receipt of a Defense Notice, the
Indemnified Party shall not admit any liability with respect to, or settle,
compromise or discharge any Third Party Claim without the prior written consent
of the Indemnifying Party, which consent shall not be unreasonably withheld or
delayed.

 

(iii)                               In the event that the Indemnifying Party has
not provided to the Indemnified Party a Defense Notice with respect to Third
Party Claim within the Defense Notice Deadline, then the Indemnified Party may
admit liability with respect thereto, defend, settle, compromise and discharge
such Third Party Claim without in any way relieving the Indemnifying Party of
its obligations hereunder.

 

11.                               Seller Covenant Not to Compete.  Seller and
ECC hereby covenant and agree that for a period of five (5) years following the
Closing Date, neither ECC nor Seller will:

 

(a)                                  alone or in conjunction with any other
corporation, firm, partnership, person, venture or other entity, directly or
indirectly, engage in the design, manufacture, sale or distribution of any
products of the type presently being designed, manufactured, sold or distributed
by Seller in any geographical area in which Seller was engaged in such business
on the Closing Date; provided, however, that neither ECC nor Seller will be
deemed to be in violation of this clause (a) by reason of any activities of any
entity or person (or affiliate or subsidiary thereof) which, after the Closing
Date, acquires control of ECC or Seller or with which ECC or Seller is merged or
consolidated after the Closing Date;

 

(b)                                 induce any employee, customer or supplier of
Purchaser to terminate his, her or its employment or business relationship with
Purchaser; and

 

(c)                                  use or reveal any secret or confidential
information relating to the Switchboard Business acquired by Purchaser,
provided, however, that the foregoing shall not apply (i) to any information
which, following the Closing Date, is received by ECC or Seller from a third
person other than Purchaser who is lawfully in possession of such information
and not in the violation of any contractual or legal obligation to Purchaser
with respect to such information, or which is public knowledge or within the
public domain other than as a result of disclosures by ECC or Seller after the
Closing Date, or (ii) to any disclosure of any such information pursuant to
requirements of law or legal proceedings or in any dispute proceeding between
the parties hereto.  In the event that ECC or Seller believes that it may be
necessary or appropriate to make disclosure of any such confidential information
pursuant to clause (c)(ii) preceding, if possible it will provide Purchaser with
reasonable advance notice of the applicable circumstances in order to permit
Purchaser the opportunity to seek an appropriate protective order or similar
ruling if Purchaser so desires.

 

It is the desire and intent of the parties that the terms and provisions of this
Article 11 be enforced to the fullest extent permissible under the law and
public policy applied by any jurisdiction in which enforcement is sought. 
Accordingly, if and to the extent that any portion of this Article 11 shall be
adjudicated to be invalid or unenforceable because it covers too extensive a
geographical area or too long a period of time, then said portion

 

19

--------------------------------------------------------------------------------

 

shall be deemed reformed to the least extent necessary to make such portion
valid and enforceable.

 

12.                               Intentionally Deleted.

 

13.                               Assignment.  Neither this Agreement nor the
rights or obligations contained herein shall be assignable by any party except
with the written consent of all of the other parties hereto. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, executors, personal representatives, successors and assigns,
subject to the foregoing sentence.

 

14.                               Notices.  All notices, requests, demands and
other communications hereunder shall be in writing, and shall be deemed to have
been given when delivered in person or received by first class, registered or
certified U.S. mail, return receipt requested, postage and registration or
certification fees prepaid, or delivered by reliable overnight delivery service,
providing a receipt evidencing delivery, or by facsimile with a copy also
delivered by any of the foregoing means:

 

If to Purchaser, to:

 

Hoppensteadt Acquisition Corp.

 

 

2820 South 19th Avenue

 

 

Broadview, Illinois  60155

 

 

Attention:  Dale Hoppensteadt, President

 

 

Telephone:  (708) 450-0990

 

 

Facsimile:  (708) 450-1032

 

 

 

with copies to:

 

Burke, Warren, MacKay & Serritella, P.C.

 

 

330 North Wabash Avenue, 22nd Floor

 

 

Chicago, Illinois  60611

 

 

Attention:  Thomas W. Murphy, Esq.

 

 

Telephone:  (312) 840-7000

 

 

Facsimile:  (312) 840-7900

 

 

 

 

 

and

 

 

 

 

 

Goschi & Goschi, Ltd.

 

 

120 South LaSalle Street

 

 

Chicago, Illinois  60603

 

 

Attention:  Peter E. Goschi, Esq.

 

 

Telephone:  (312) 641-3070

 

 

Facsimile:  (312) 641-3002

 

 

 

If to Seller, to:

 

Electric City Corp.

 

 

1280 Landmeier Road

 

 

Elk Grove Village, Illinois  60007

 

 

Attention:  Jeff Mistarz

 

 

Telephone:  (847) 437-1666

 

 

Facsimile:  (847) 437-4969

 

20

--------------------------------------------------------------------------------

 

with a copy to:

 

Schwartz Cooper Greenberger & Krauss, Chtd.

 

 

180 North LaSalle Street, Suite 2700

 

 

Chicago, Illinois  60601

 

 

Attention:  Andrew H. Connor, Esq.

 

 

Telephone:  (312) 845-5118

 

 

Facsimile:   (312) 782-8416

 

or at such other address as hereafter shall be furnished by a notice sent in
like manner by such addressee to the others.

 

15.                               Termination

 

15.1                        THIS AGREEMENT MAY BE TERMINATED ANY TIME PRIOR TO
THE CLOSING DATE: (I) BY THE MUTUAL WRITTEN CONSENT OF THE PARTIES; OR (II) BY
ECC AND SELLER IF ANY OF THE CONDITIONS PROVIDED FOR IN ARTICLE 8 HEREOF SHALL
NOT HAVE BEEN SATISFIED, COMPLIED WITH OR PERFORMED BY JUNE 30, 2003, AND ECC
AND SELLER SHALL NOT HAVE WAIVED SUCH FAILURE OF SATISFACTION, NONCOMPLIANCE OR
NONPERFORMANCE; OR (III) BY PURCHASER IF ANY OF THE CONDITIONS PROVIDED FOR IN
ARTICLE 7 HEREOF SHALL NOT HAVE BEEN SATISFIED, COMPLIED WITH OR PERFORMED BY
JUNE 30, 2003, AND PURCHASER SHALL NOT HAVE WAIVED SUCH FAILURE OF SATISFACTION,
NONCOMPLIANCE OR NONPERFORMANCE; OR (IV) OTHERWISE AS EXPRESSLY PROVIDED IN THIS
AGREEMENT.

 

15.2                        IN THE EVENT THAT THE CLOSING SHALL NOT TAKE PLACE
ON OR BEFORE JUNE 30, 2003, EITHER PARTY SHALL HAVE THE RIGHT, EXERCISABLE UPON
GIVING WRITTEN NOTICE TO THE OTHER PARTY WITHIN FIVE (5) DAYS AFTER SAID DATE,
TO TERMINATE THIS AGREEMENT, UNLESS SUCH FAILURE OF CLOSING SHALL BE DUE TO THE
BREACH DEFAULT OR INTENTIONAL DELAY OF THE PARTY SO SEEKING TO TERMINATE THIS
AGREEMENT.

 

15.3                        EXCEPT FOR A TERMINATION PURSUANT TO CLAUSE (I) OF
SUBPARAGRAPH 15.1 HEREOF, AND EXCEPT OTHERWISE AS EXPRESSLY PROVIDED IN THIS
AGREEMENT, THE RIGHT OF ANY PARTY TO TERMINATE THIS AGREEMENT AS PROVIDED IN
THIS ARTICLE 15 SHALL BE IN ADDITION TO, AND NOT IN SUBSTITUTION FOR, ANY AND
ALL OTHER RELIEF TO WHICH SUCH PARTY MAY BE ENTITLED, EITHER AT LAW, IN EQUITY
OR BY AGREEMENT.

 

16.                               Miscellaneous

 

16.1                        SEVERABILITY.  EVERY PROVISION OF THIS AGREEMENT IS
INTENDED TO BE SEVERABLE, AND, IF ANY TERM OR PROVISION IS DETERMINED TO BE
ILLEGAL OR INVALID FOR ANY REASON WHATSOEVER, SUCH ILLEGALITY OR INVALIDITY
SHALL NOT AFFECT THE LEGALITY OR VALIDITY OF THE REMAINDER OF THIS AGREEMENT.

 

16.2                        EXHIBITS, SCHEDULES AND HEADINGS.  THE EXHIBITS AND
SCHEDULES TO THIS AGREEMENT ARE HEREBY MADE A PART HEREOF AND SHALL BE CONSTRUED
WITH AND AS AN INTEGRAL PART OF THIS AGREEMENT. THE HEADINGS OF THE VARIOUS
ARTICLES AND PARAGRAPHS OF THIS AGREEMENT HAVE BEEN INSERTED FOR CONVENIENCE
ONLY, ARE NOT A PART OF THIS

 

21

--------------------------------------------------------------------------------

 

AGREEMENT, AND SHALL NOT BE DEEMED IN ANY MANNER TO MODIFY, EXPLAIN, ENLARGE, OR
RESTRICT ANY OF THE PROVISIONS OF THIS AGREEMENT.

 

16.3                        EXPENSES.  EXCEPT WHERE OTHERWISE EXPRESSLY PROVIDED
FOR IN THIS AGREEMENT, EACH OF THE PARTIES HERETO SHALL PAY THEIR OWN EXPENSES,
INCLUDING WITHOUT LIMITATION THE FEES AND EXPENSES OF THEIR RESPECTIVE ATTORNEYS
AND ACCOUNTANTS, IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED HEREIN, WHETHER OR NOT THE CLOSING TAKES PLACE. SELLER SHALL PAY
ALL SALES AND USE TAXES, IF ANY, REQUIRED ON ACCOUNT OF THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED HEREBY.

 

16.4                        WAIVER.  FAILURE OR DELAY ON THE PART OF ANY OF THE
PARTIES HERETO TO EXERCISE ANY RIGHT, POWER OR PRIVILEGE HEREUNDER, OR UNDER ANY
INSTRUMENT EXECUTED PURSUANT HERETO, SHALL NOT OPERATE AS A WAIVER THEREOF, NOR
SHALL ANY SINGLE OR PARTIAL EXERCISE OF ANY RIGHT, POWER OR PRIVILEGE PRECLUDE
ANY OTHER OR FURTHER EXERCISE THEREOF OR OF ANY OTHER RIGHT, POWER OR PRIVILEGE.
ALL WAIVERS HEREUNDER MUST BE IN WRITING.

 

16.5                        FURTHER ASSURANCES. FOLLOWING THE CLOSING, THE
PARTIES, WITHOUT FURTHER CONSIDERATION OF ANY KIND, SHALL EACH EXECUTE AND
DELIVER, OR CAUSE TO BE EXECUTED AND DELIVERED, SUCH OTHER INSTRUMENTS, AND
TAKE, OR CAUSE TO BE TAKEN, SUCH OTHER ACTION, AS SHALL REASONABLY BE REQUESTED
BY ANOTHER PARTY HERETO TO MORE EFFECTIVELY ASSIGN, TRANSFER AND CONVEY THE SALE
ASSETS TO PURCHASER OR TO MORE EFFECTIVELY CARRY OUT THE OTHER TERMS AND
PROVISIONS OF THIS AGREEMENT. SELLER SHALL USE REASONABLE EFFORTS TO ASSIST
PURCHASER IN EFFECTING A SMOOTH TRANSITION IN OWNERSHIP AND OPERATION OF THE
SALE ASSETS AFTER THE CLOSING DATE, BUT SELLER SHALL NOT BE REQUIRED TO INCUR
ANY COST OR EXPENSE OTHER THAN AS SPECIFICALLY PROVIDED HEREIN.

 

16.6                        ENTIRE AGREEMENT.  THIS AGREEMENT (INCLUDING THE
EXHIBITS HERETO AND OTHER DOCUMENTS REFERRED TO HEREIN AS HAVING BEEN DELIVERED
OR FURNISHED BY EITHER PARTY TO THE OTHER) CONSTITUTES THE ENTIRE AGREEMENT AND
SUPERSEDES ALL PRIOR AGREEMENTS AND UNDERSTANDINGS, ORAL AND WRITTEN, BETWEEN
THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF.

 

16.7                        AMENDMENTS.  THIS AGREEMENT MAY NOT BE MODIFIED OR
CHANGED EXCEPT BY AN INSTRUMENT OR INSTRUMENTS IN WRITING SIGNED BY BOTH OF THE
PARTIES HERETO.

 

16.8                        GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS
WITHOUT REGARD TO ITS CONFLICTS OF LAW PROVISIONS.

 

16.9                        GENDER AND NUMBER.  WHENEVER THE CONTEXT REQUIRES OR
PERMITS, WORDS USED IN THE SINGULAR SHALL BE CONSTRUED TO MEAN OR INCLUDE THE
PLURAL AND VICE VERSA, AND PRONOUNS OF ANY GENDER OR, NEUTER, SHALL BE DEEMED TO
MEAN OR INCLUDE ANY OTHER GENDER AND NEUTER.

 

16.10                 COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED IN AS MANY
COUNTERPARTS AS MAY BE DEEMED NECESSARY OR CONVENIENT, EACH OF WHICH WHEN SO
EXECUTED SHALL BE DEEMED AN ORIGINAL, BUT ALL SUCH COUNTERPARTS SHALL CONSTITUTE
ONE AND THE SAME INSTRUMENT.

 

22

--------------------------------------------------------------------------------

 

16.11                 PUBLIC ANNOUNCEMENT.  THE PARTIES WILL COOPERATE AS TO AND
JOINTLY APPROVE THE CONTENTS OF A GENERAL PUBLIC ANNOUNCEMENT OF THIS
TRANSACTION UPON THE EXECUTION AND DELIVERY OF THIS AGREEMENT.

 

16.12                 INTENTIONALLY DELETED.

 

16.13                 FAX COPIES.  PURCHASER, ECC AND SELLER AGREE THAT
“FACSIMILE” TRANSMISSIONS OF SIGNED DOCUMENTS SHALL BE REGARDED AND ACCEPTED AS
IF THEY BORE ORIGINAL SIGNATURES. PROMPTLY AFTER SUCH FACSIMILE TRANSMISSION THE
ORIGINAL DOCUMENTS BEARING THE ORIGINAL SIGNATURES SHALL BE PROVIDED TO THE
OTHER PARTY.

 

16.14                 ARBITRATION.  EXCEPT AS OTHERWISE PROVIDED IN THIS
AGREEMENT, ANY CONTROVERSY, DISPUTE OR CLAIM BETWEEN THE PARTIES ARISING OUT OF,
RELATED TO OR IN CONNECTION WITH THIS AGREEMENT OR THE PERFORMANCE OR BREACH
HEREOF SHALL BE SUBMITTED TO AND SETTLED BY ARBITRATION CONDUCTED BY THE
AMERICAN ARBITRATION ASSOCIATION IN CHICAGO, ILLINOIS, IN ACCORDANCE WITH ITS
COMMERCIAL ARBITRATION RULES AS THEN IN EFFECT; PROVIDED THAT THE ARBITRATION
SHALL BE BY A SINGLE ARBITRATOR MUTUALLY SELECTED BY PURCHASER AND SELLER, AND
IF THE PARTIES DO NOT AGREE WITHIN TWENTY (20) DAYS AFTER THE DATE OF
NOTIFICATION OF A REQUEST FOR SUCH ARBITRATION MADE BY EITHER OF THE PARTIES,
THE SELECTION OF THE SINGLE ARBITRATOR SHALL BE MADE BY THE AMERICAN ARBITRATION
ASSOCIATION IN ACCORDANCE WITH SAID RULES. IN ADDITION TO, AND NOT IN
SUBSTITUTION FOR ANY AND ALL OTHER RELIEF IN LAW OR EQUITY THAT MAY BE GRANTED
BY THE ARBITRATOR, THE ARBITRATOR MAY GRANT EQUITABLE RELIEF AND SPECIFIC
PERFORMANCE TO COMPEL COMPLIANCE HEREUNDER. THE DETERMINATION OF THE ARBITRATOR
SHALL BE ACCOMPANIED BY A WRITTEN OPINION OF THE ARBITRATOR AND SHALL BE FINAL,
BINDING AND CONCLUSIVE ON THE PARTIES, AND JUDGMENT ON THE ARBITRATOR’S AWARD,
INCLUDING WITHOUT LIMITATION EQUITABLE RELIEF AND SPECIFIC PERFORMANCE, MAY BE
ENTERED IN AND ENFORCED BY ANY COURT HAVING JURISDICTION THEREOF. FEES AND
EXPENSES OF THE AMERICAN ARBITRATION ASSOCIATION AND OF THE ARBITRATOR SHALL BE
BORNE AS SHALL BE DETERMINED BY THE ARBITRATOR, AND THE ARBITRATOR MAY IN HIS
DISCRETION AWARD ATTORNEYS’ FEES AND EXPENSES IN ADDITION TO ANY OTHER REMEDY
THAT IS ALLOWED AND REGARDLESS OF WHETHER SUCH REMEDY INCLUDES AN AWARD OF
DAMAGES.

 

IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.

 

 

 

 

SELLER:

 

 

 

ELECTRIC CITY CORP.,
a Delaware corporation

 

SWITCHBOARD APPARATUS, INC.,
a Delaware corporation

 

 

 

 

 

 

By:

/s/ Jeffrey Mistarz

 

By:

/s/ Jeffrey Mistarz

Name:

Jeffrey Mistarz

 

Name:

Jeffrey Mistarz

Title:

CFO & Treasurer

 

Title:

Vice President

 

 

 

PURCHASER:

 

 

 

 

 

HOPPENSTEADT ACQUISITION CORP.,
an Illinois corporation

 

 

 

 

 

 

 

 

 

By:

/s/ Dale Hoppensteadt

 

 

 

Name:

Dale Hoppensteadt

 

 

 

Title:

President

 

24

--------------------------------------------------------------------------------