Asset Purchase Agreement dated April 17, 2007

EX-10.1 2 exh10-1_041707.htm ASSET PURCHASE AGREEMENT DATED APRIL 17, 2007 Asset Purchase Agreement dated April 17, 2007

Exhibit 10.1

ASSETS PURCHASE AGREEMENT

THIS IS AN AGREEMENT made as of the 17th day of April, 2007 by and among:

HOST AMERICA CORPORATE DINING, INC.

a Connecticut corporation

with a place of business at

147 Ledge Drive

Berlin, CT 06037 ("Buyer")

and

HOST AMERICA CORPORATION

a Colorado corporation

with a place of business at

2 Broadway, Hamden, CT 06518 ("Seller")

and

TIMOTHY HAYES

of 147 Lodge Drive

Berlin, CT 06037 (“Hayes”)

WHEREAS, the Seller owns and operates a business which specializes in the management of corporate dining rooms and cafeterias and such ancillary services as special event catering and office coffee service to various business and industry accounts (the "Business"); and

WHEREAS, the Seller desires to sell certain of the personal property assets of the Business, tangible and intangible, including without limitation all rights to the name "Host America" (but excluding the Excluded Assets as hereinafter defined); and

WHEREAS, the Buyer is willing to purchase said assets on the terms and subject to the conditions hereinafter set forth; and

WHEREAS, neither the Seller nor the Buyer intends that the Buyer shall assume any Seller's liabilities or obligations of any kind, except as set forth herein.

NOW, THEREFORE, IN VIEW OF THE FOREGOING AND IN CONSIDERATION OF THE MUTUAL PROMISES HEREINAFTER SET FORTH, THE PARTIES HERETO DO HEREBY REPRESENT, WARRANT, COVENANT AND AGREE AS FOLLOWS:

(reference being hereby made to Appendix I for the definition of certain capitalized terms.)

1. Sale and Purchase of Certain Assets.

On the terms and subject to the conditions contained herein, at the Closing, the Seller will sell, transfer, assign, convey and deliver to the Buyer, and the Buyer will purchase from the Seller, for the consideration hereinafter set forth, certain of the Seller’s assets relating to the Business, tangible and intangible, of every kind, nature and description, wherever located and whether or not recorded on the books of Seller, in connection with the operation of the Business, as described below:

(a) the Business as a going concern;

(b) all of Seller's inventory (including food and non-food inventory) relating to the Business as shall exist on the Closing Date (the “Inventory”);

(c) all of Seller's machinery, equipment, furniture, vehicles, fixtures (excluding any fixtures located at 2 Broadway, Hamden, Connecticut), computer equipment (excluding any computer equipment located at 2 Broadway, Hamden, Connecticut and any computer equipment at locations that are leased by Seller), and other personal property which is related to the Business, all as described on Schedule 1(c) attached hereto (all such assets being hereinafter referred to as the "Other Tangible Assets");

(d) Other than any accounts receivable or any Indebtedness owing to Seller, Seller's rights in respect of orders, contracts and agreements for the purchase or sale of goods, services, including, without limitation, any existing service agreements (including all agreements to provide refreshment vending through third party vendors which are in force at the Closing), customer accounts, and work in process, all of which specifically relate to the Business (all such assets being hereinafter referred to as the "Purchased Contracts");

(e) all of Seller's good will, prospect sales lists, sales reports, costs sheets, processes, relations with customers, customer lists, relations with suppliers, supplier lists, know-how and copyrights, all of which are specifically related to the Business and the rights of Seller to the trademarks, service marks, copyrights, copyrightable materials and trade names relating to “Host America” (all such assets being hereinafter referred to as the "Intangible Assets"); and

(f) the leases for capital equipment relating to the Business as set forth on Schedule 1(f) (the “Assumed Capital Leases”); and

((a) - (f) being hereinafter collectively referred to as the "Purchased Assets")

(g) Anything to the contrary in this Section 1 notwithstanding, the Purchased Assets shall not include the following assets of the Seller (the "Excluded Assets"): (i) any cash or cash equivalents; (ii) any accounts receivable and any other Indebtedness owing to Host, allowances and/or credits other than amounts billed to customers of the Business for services not performed as of the Closing Date (“Prebillings”); (iii) deferred Taxes, and the right to receive any refunds of Taxes paid by Seller prior to the Closing; (iv) any and all net operating loss carryforwards; (v) any refunds of unearned insurance premiums; (vi) any and all employee pension, retirement, profit sharing, bonus, incentive, deferred compensation or other employee benefit plans, and any related trust or assets thereof; (vii) the rights of Seller under this Agreement and any agreement entered into pursuant hereto; (viii) all assets, rights and properties of Seller relating to its corporate governance and administration, including corporate minute books, corporate seals and stockholder records; (ix) Seller's Tax records and Tax returns; (x) any tangible assets located at 2 Broadway, Hamden, Connecticut; and (xi) any other item not specifically listed in (a) through (f) above.

(h) Seller will wire transfer to the Buyer the actual amounts collected after the Closing for Prebillings. Such transfer will take place after the receipt of such Prebilling amounts by Seller and upon the clearing of such amounts in the Seller’s bank account.

2. Consideration.

(a) Purchase Price. In consideration for the Purchased Assets to be sold to the Buyer hereunder, and the other covenants and provisions hereof to be performed by the Seller and subject to the adjustments and set-offs provided for hereunder, Buyer shall pay $1,200,000to the Seller (as the same may be adjusted as described herein, "Purchase Price") at the Closing upon fulfillment of all conditions as described herein.

(b) Adjustments.

(i) The Purchase Price has been agreed upon based on the Seller transferring the rights to operate dining and related services to twenty-four (24) locations as described on Schedule 2(b)(i) attached hereto (“Purchased Contracts”). On the day that is two (2) business days prior to the Closing, the Seller shall deliver to Buyer a listing of the Closing Date Purchased Contracts. The Purchase Price to be paid by the Buyer on the Closing Date pursuant to Section 2(a) above shall be (a) increased by $0.05 for each $1.00 of annual revenue for new accounts that are listed on the Closing Date Purchased Contracts and are not listed on the Purchased Contracts and (b) decreased, for each account on the Purchased Contracts but not on the Closing Date Purchased Contracts (each a “Terminated Contract”), by the Purchase Price Adjustment amount for each Terminated Contract that is listed on Schedule 2(b)(i), but not below the Valuation determined pursuant to paragraph 2(c) below.

(ii) In the event the Closing Inventory exceeds the average Inventory, as measured on the same day of the month as the day of the month that is the Closing Date for the period prior to Closing commencing on January 1, 2007 and ending March 31, 2007, which the parties have agreed is in the amount of $205,801.00, the Purchase Price will be adjusted by $1.00 for every $1.00 of Inventory in excess ofsuch amount.

(c) Valuation. Prior to the Closing, Seller will have an independent valuation of the Business conducted in order to determine the fairness of the Purchase Price. In the event such Valuation places a value on the Business in excess of the Purchase Price, then the Purchase Price shall be increased to such value.

3. Closing.

The Closing of the sale and purchase of the Purchased Assets hereunder shall be held at the offices of Rogin, Nassau, Caplan, Lassman & Hirtle, LLC, 195 Church Street, New Haven, Connecticut or at such other location as may be reasonably required by Buyer’s Lender at 10:00 a.m. on the last Friday in the month after the fulfillment of the condition precedent set forth in Section 9(e) below, or at such other place, time or date as the Buyer and the Seller may mutually agree (such closing herein called the "Closing" and such date on which the Closing actually takes place is herein called the "Closing Date"), time being of the essence of this Agreement. In any event, the Closing Date shall be as early as practicable.

(a) Deliveries by Buyer at the Closing:

1. The Purchase Price in U.S. Dollars, wired to the Seller in accordance with the Seller’s instructions.

2. A Good Standing Certificate of the Buyer.

3. A Certificate of the Buyer, dated as of the Closing Date, certifying in such detail as Seller may reasonably request to the fulfillment of the conditions set forth in Section 9;

(b) Deliveries by Seller at the Closing:

1. Good Standing Certificates of Seller in their respective states of incorporation.

2. A Certificate of Seller, dated as of the Closing Date, certifying in such detail as Buyer may reasonably request to the fulfillment of the conditions set forth in Section 8.

3. the Non-Compete Agreements.

4. Warranty bills of sale and other good and sufficient instruments of transfer, assignment and conveyance as shall be effective to transfer to and vest in the Buyer good and marketable fee simple title to the Purchased Assets, free and clear of any and all liens, claims and encumbrances of any kind, nature and description, all in form satisfactory to counsel for the Buyer.

5. Any and all records relating to any and all of the Purchased Assets and the Business, including without limitation any and all customer lists, supplier lists, purchase orders, employee records and such other records and documents as Buyer shall reasonably require.

6. If available, originally signed or copies of all the contracts or similar type items evidencing the Purchased Contracts.

(c) Buyer and Seller shall deliver to the other such other documents, including certified resolutions of their Board of Directors (and or shareholders) , as applicable, authorizing the transactions contemplated hereunder, and take such other action as may be provided for herein or contemplated hereby.

(d) Buyer and Seller shall execute and deliver to one another such other instruments and documents as shall be necessary and proper to carry out this Agreement, including, but no limited to, an assignment and assumption agreement(s) in form, substance and content reasonably satisfactory to the parties, fully executed by Buyer and Seller to which Buyer assumes and Seller assigns, as of the Closing Date, the future payment and performance of the Assumed Obligations and the Assumed Capital Leases.

(e) Personal property Taxes, deposits, prepayments and/or payments under Assumed Obligations (hereinafter defined), employee benefits and vacation pay, and all other continuing items relating to the operation of the Business being purchased as set forth herein shall be adjusted at the Closing as of the Closing Date in accordance with the local custom in New Haven County, Connecticut. All Taxes relating to the transfer of the Purchased Assets, including without limitation sales, use, conveyancing, and all other governmental or municipal fees or charges shall be paid by the Buyer.

(f) On the day of the Closing Date, representatives of Seller and Buyer shall prepare a Schedule (Schedule 3(f)) to this Agreement which shall be executed by Seller and Buyer and which shall establish the final Purchase Price as adjusted as described herein. Such Schedule 3(f) shall be appended hereto, shall be a part hereof and shall represent the final determination of the Purchase Price for purposes of the Closing.

(g) In connection with the Closing, Seller shall take or cause to be taken all actions as may reasonably be required by Buyer to take actual possession and control of the Purchased Assets. Buyer shall be solely responsible for any costs it incurs which are associated with the physical removal and delivery of the Purchased Assets to Buyer and shall be responsible for any

costs or damages associated with such physical removal or delivery of the Purchased Assets which are incurred by Seller and which are not the result of Seller’s negligence.

(h) Buyer and Seller shall execute mutual releases of all obligations each has to the other except those arising on and after the Closing Date.

4. Access.

Between the date hereof and the Closing Date, Seller will (a) provide, to the officers and other authorized representatives of Buyer, full access, during normal business hours, to any and all premises, properties, files, books, records, documents, and other information of the Business and will cause its officers to furnish to Buyer and its authorized representatives any and all financial, technical and operating data and other information pertaining to the Business and properties of the Business and (b) make available for inspection and copying by Buyer true and complete copies of any documents relating to the foregoing.

5. Liabilities.

Except for the Assumed Capital Leases and the Assumed Obligations, Buyer does not assume any liabilities or obligations of Seller, including without limitation any liabilities relating to the Purchased Assets or relating to the Business operated with the Purchased Assets, whatsoever. Attached hereto as Schedule 5 is a listing of the Purchased Contracts and other items which Buyer shall assume (the "Assumed Obligations"). The Assumed Obligations and the Assumed Capital Leases shall be the only liabilities or obligations of Seller which are assumed hereunder by Buyer. Any and all obligations of Seller, or related to the Assets, which are not Assumed Capital Leases or Assumed Obligations, shall remain the liabilities and obligations of the Seller, and Seller shall remain solely responsible for their payment and performance when due. The Buyer agrees to honor the Seller’s obligations under the Assumed Obligations and the Assumed Capital Leases in accordance with the terms of such items.

6. Assumed Obligations.

It is the intent of the parties hereto that Buyer and Hayes shall assume the responsibility to perform services with respect to the Assumed Obligations and the Assumed Capital Leases as of the Closing Date.

(a) Buyer shall be entitled to all revenue generated from the rendering of services with respect to Assumed Obligations on and after the Closing Date and shall be responsible for all expenses related to the Assumed Obligations on and after the Closing Date. Any payments respecting such services received by Seller for any period after the Closing Date shall be promptly remitted in kind, by Seller to Buyer. Any expenses incurred in connection with the Assumed Obligations or the Assumed Capital Leases prior to the Closing Date shall be paid by Seller.

(b) Seller shall be entitled to all revenue generated from the rendering of services with respect to Assumed Obligations prior to the Closing Date and shall be responsible for all expenses related to the Assumed Obligations prior to the Closing Date. Any payments respecting such services received by Buyer for any period prior to the Closing Date shall be promptly remitted, in kind, by Buyer and/or Hayes to Seller. Any expenses incurred in connection with the Assumed Obligations or the Assumed Capital Leases on and after the Closing Date shall be paid by Buyer and/or Hayes.

7. Seller’s Employees.

It is anticipated that in connection with the consummation of the transactions contemplated by this Agreement, Buyer will employ all employees of Seller in connection with the Business. Buyer will be responsible for all obligations to such employees arising after the Closing Date.

8. Conditions Precedent to Buyer's Obligations.

Buyer's obligation to close the transactions described herein are expressly conditioned upon the fulfillment of each and all of the following:

(a) All obligations of Seller hereunder shall have been fully performed to the satisfaction of Buyer.

(b) The Business being operated between the date hereof and the Closing Date in the ordinary course and there having occurred since February 1, 2006, it being acknowledged however that the shareholders of Buyer will continue to operate the Business as an employee of Seller until the Closing shall have been consummated.

(c) All warranties and representations hereinafter of the Seller set forth being true when made and being true on the Closing Date as though made at and respecting each such time and all of Seller’s covenants having been fully performed on such date.

(d) Neither Seller, nor the Business nor any of the Purchased Assets being subject to any material litigation and no such litigation being in any way pending or threatened.

(e) All other parties to any of the Assumed Obligations having consented to Buyer's assuming the Assumed Obligations and agreeing to Buyer's performance thereunder from and after the Closing Date.

(f) All actions to be taken by the Seller in connection with consummation of each of the transactions contemplated hereby and all documents, instruments or agreements required to effect the transactions contemplated hereby will be satisfactory in form and substance to the Buyer.

(g) Buyer shall have completed a due diligence review of the Purchased Assets and the Business, the results of which shall be reasonably satisfactory to Buyer.

(h) Buyer shall have received a commitment for financing in the amount of at least $1,000,000 upon generally available market terms.

(i) Buyer and Seller shall have received and approved SEC Form 8K prepared by Seller with respect to the transactions described herein.

(j) In the event Buyer has not provided notice to Seller that any such condition has not been fulfilled within 45 days after the date hereof, all conditions described above shall be deemed to be fulfilled.

9. Conditions Precedent to Seller’s Obligations.

(a) All obligations of Buyer hereunder shall have been fully performed to the satisfaction of Seller.

(b) All warranties and representations of the Buyer hereinafter set forth being true when made and being true on the Closing Date as though made at and respecting each such time and all of Seller’s covenants having been fully performed on such date.

(c) The Buyer not being subject to any material litigation and no such litigation being in any way pending or threatened.

(d) All actions to be taken by the Buyer in connection with consummation of each of the transactions contemplated hereby and all documents, instruments or agreements required to effect the transactions contemplated hereby will be satisfactory in form and substance to the Seller.

(e) Seller shall have received the authorization of its board of directors and shareholders and of the United States Securities and Exchange Commission and any other governmental authority having jurisdiction over Seller or Parent to consummate the transactions contemplated by this Agreement and amend its certificate of incorporation such that Seller shall change its corporate name.

(f) Buyer and Seller shall have received and approved SEC Form 8K prepared by Seller with respect to the transactions described herein.

(g) In the event Seller has not provided notice to Buyer that any such condition has not been fulfilled within 45 days after the date hereof, all conditions described above shall be deemed to be fulfilled. This time limitation shall not apply to Section 9(e) above.

10. Representations and warranties of the Seller.

Seller represents and warrants to and agrees with the Buyer as follows:

(a) Seller is a corporation duly organized and validly existing under the laws of the State of Colorado with full authority to conduct its business as presently conducted. Seller has all licenses and permits required by any governmental authority to own and operate its properties and to carry on the Business activities as presently conducted in all states in which it conducts business.

(b) The execution and delivery of this Agreement has been duly authorized by all necessary corporate action of Seller (including without limitation the consent of Seller's Board of Directors.) and does not, and the performance of the transactions contemplated hereby will not, materially breach or materially violate any of the provisions of Seller's Articles of Incorporation, By-Laws, code of ethics, or any material agreement, judgment or law respecting which Seller is a party or is bound or affected.

(c) No Tax which is or may result in a lien on any of the Purchased Assets that is due at the time of Closing will be unpaid at the time of Closing.

(d) To Seller’s knowledge, there is no legal action, suit or governmental proceeding or investigation pending or threatened against or affecting the Purchased Assets and no Seller is subject to any order, writ, injunction or decree of any court or governmental authority with respect to the Purchased Assets. The Seller’s conduct of the Business is in compliance with all laws, ordinances, rules, regulations or orders that are applicable to it or them and that would affect the Business. Schedule 10(d) lists all permits, consents, approvals, licenses and other like instruments issued under health, safety or environmental protection laws which are currently held by Seller relating to the Business. In extension of the foregoing, certain class action litigation currently pending against Seller will not in any way affect the transactions contemplated hereby nor constitute a lien on any of the Purchased Assets and Seller will indemnify and hold harmless Buyer against any claims arising out of any such actions.

(e) No representation or warranty of Seller contained herein, or information with respect to Seller contained herein or in any Schedule hereto or in any statement, certificate or other document furnished or to be furnished to the Buyer by Seller pursuant hereto or in connection with the transactions contemplated hereby, contains or will contain any untrue statement of material fact or omits or will omit to state any material fact necessary to make the statements herein and the Schedules hereto not false or misleading.

(f) The Seller has good and marketable title to all of the Purchased Assets free and clear of all tile defects, liens, claims or other encumbrances. All the Purchased Assets are in good operating condition (reasonable wear and tear excepted) and are adequate for their use in the Business as presently conducted. Any Equipment (as defined in the Connecticut Uniform Commercial Code) which is part of the Purchased Assets is sold “As Is”, and where is, and without

representation of any kind, including without limitation warranties as to merchantability or fitness for a particular purpose.

(g) No other party has any right to or interest in any of the Purchased Assets or any right to acquire any interest in the Business or any of the Purchased Assets.

(i) To Seller’s knowledge, there is no labor strike, grievance, procedure, arbitration proceeding or organizational drive pending or threatened against Seller.

(j) Neither Seller nor the other parties to the Purchased Contracts are in default thereof and all such Purchased Contracts are valid and in effect. No Seller has received notice of default under any Purchased Contracts, and knows of no event that has occurred or that is expected to occur which (after notice and lapse of time or both) would become a breach or default under any such Purchased Contract.

11. Representations and Warranties of the Buyer and Hayes.

Buyer represents and warrants to and agrees with Seller as follows:

(a) Buyer has all requisite power and authority to own, lease and operate its properties, to carry on its business as now being conducted and to execute, deliver and perform this Agreement and all writings relating hereto.

(b) The execution and delivery of this Agreement has been duly authorized by all necessary action of Buyer and does not, and the performance of the transactions contemplated hereby will not, materially breach or materially violate any material agreement, judgment or law respecting which any Buyer is a party or is bound or affected.

(c) Buyer has been provided with adequate opportunities to review contracts, assess the Purchased Assets and otherwise satisfy itself with the value of the Purchased Assets.

(d) Buyer has all necessary licenses, permits and other approvals necessary to conduct its affairs and operate the Business post-Closing.

(e) To Buyer’s knowledge, there is no legal action, suit or governmental proceeding or investigation pending or threatened against or affecting the Purchased Assets and Buyer is mot subject to any order, writ, injunction or decree of any court or governmental authority with respect to the Purchased Assets.

(f) Buyer acknowledges that it has operated the Business on a day-to-day basis as an employee of Seller. Buyer has no knowledge of any breach of the representations of Seller contained in Sections 10(d), (i) or (j) above.

12. Conduct of Business.

(a) From the date hereof until the Closing Date, the Seller and Hayes will: (i) conduct the Business only in the ordinary course; (ii) maintain the general character of the Business; (iii) maintain the Purchased Assets in good repair and condition, ordinary wear and tear alone excepted; (iv) maintain in all material respects all necessary insurance coverage and all necessary licenses and permits, governmental or otherwise; (v) use its best efforts to preserve its good will and the good will of its suppliers, customers and others having business re1ationships with it; (vi) provide the Buyer with all such information concerning its business, affairs, products and the like, as the Buyer may reasonably request; and (vii) permit the Buyer and its representatives to examine its books, records and properties, and its auditor's work papers associated with and supporting its financial statements, at all reasonable times, provided reasonable notice shall have been given to the Seller.

(b) From the date hereof until the Closing, the Seller will not: (i) mortgage, pledge or borrow or subject to lien or other encumbrance any of the Purchased Assets that will not be fully paid and discharged on the Closing Date; (ii) sell or otherwise dispose of any of the Purchased Assets, except Inventory in the ordinary course of business; and (iii) in connection with the Business, enter into any agreement, contract, or commitment other than in the ordinary course of business.

13. Confidentiality.

(a) Confidentiality Obligations of Seller

(1) Seller acknowledges and agrees that it possesses confidential information related to the Buyer, the Business and the Purchased Assets, the improper disclosure or misuse of which would materially adversely affect the ability of Buyer to make use of the Purchased Assets.

(2) Other than as may be required by any applicable law, rule or regulation, Seller, and any agent or representative of it, shall not, without prior written consent of the Buyer, disclose any proprietary information relating to the Buyer, the Business or the Purchased Assets (“Confidential Information"). Confidential Information shall not include information that becomes publicly available through no act of the disclosing party, is received rightfully from a third party without duty of confidentiality, is disclosed under operation of law, or is disclosed with the prior written permission of the Buyer.

(3) Other than in connection with the Business, Seller agrees that it will not at any time or in any manner, either directly or indirectly, use any Confidential Information for their own benefit, and that they will protect such information and treat it as strictly confidential. Buyer shall be entitled to an injunction to restrain Seller from disclosing, in whole or in part, any Confidential Information, or from providing any services to any party to whom such information has been disclosed or may be disclosed. Buyer shall not be prohibited by this provision from pursuing other remedies, including claims for losses or damages.

(b) Confidentiality Obligations of Buyer and Hayes

(1) Buyer will hold in confidence, and will not use to the detriment of Seller, any data and information obtained from Seller in connection with this Agreement. Upon termination of this Agreement for any reason, Buyer shall return promptly to Seller all printed information received by Buyer from Seller in connection with the proposed transaction and deliver to Seller or destroy all copies of such printed material which may have been made by Buyer or its representatives.

(2) In the event Buyer does not purchase the Purchased Assets, Buyer shall not, unless required by any applicable law, rule or regulation, without prior permission of Seller, disclose any proprietary information relating to Seller, the Business or the Purchased Assets (collectively, "Seller's Confidential Information"). Seller's Confidential Information shall not include any other information that becomes publicly available through no act of the disclosing party, is received rightfully from a third party without duty of confidentiality, is disclosed under operation of law, or is disclosed with the prior written permission of the Seller.

(3) Buyer agrees that it will not at any time or in any manner, either directly or indirectly, use any of Seller's Confidential Information for its own benefit, and that it will protect such information and treat it as strictly confidential. Seller shall be entitled to an injunction to restrain Buyer from disclosing, in whole or in part, Seller’s Confidential Information, or from providing any services to any party to whom such information has been disclosed or may be disclosed. Buyer shall not be prohibited by this provision from pursuing other remedies, including claims for losses or damages.

14. Disclosure.

The parties mutually agree not to disclose the terms of this Agreement except only in a form mutually agreed to in writing, in advance by the parties, or as required by any applicable laws, regulations, rules, or in accordance with any the rules and regulations of any exchange on which any capital stock of Seller is listed, or except as required by court order. If disclosure is required, the disclosing party agrees to notify the other party in advance of the content of the information being disclosed and to whom the disclosure is being made.

15. Termination.

(a) At any time prior to the Closing, the Buyer may terminate this Agreement and all liability of the Buyer hereunder in the event:

(i) the Buyer, in its reasonable discretion shall determine that there has

been a material misrepresentation and/or breach of warranty on the part of Seller or the Parent and/or the nonfulfillment of any condition precedent or covenant required to be fulfilled by Seller or the Parent under this Agreement;

(iii) the transaction contemplated herein is not closed by sixty (60) days after the date hereof unless full approval of the transaction by all governmental and regulatory authorities having jurisdiction over any activities of Parent shall not have been unconditionally obtained, in which event the Closing may be postponed until all such approvals have been obtained, or unless caused by the act or failure to act of Buyer.

(b) Seller may terminate this Agreement if:

(i) the transaction contemplated herein is not closed by sixty (60) days after the date hereof unless full approval of the transaction by all governmental and regulatory authorities having jurisdiction over any activities of Parent shall not have been unconditionally obtained, in which event the Closing may be postponed until all such approvals have been obtained, or unless caused by the act or failure to act of Seller;

(ii) Seller, in its reasonable discretion, shall determine that there has been a material misrepresentation or breach of warranty on the part of the Buyer and/or the nonfulfillment of any condition precedent or covenant required to be fulfilled by the Buyer under this Agreement.

16. Brokerage and Other Expenses.

The parties hereto represent to each other that neither of their representatives has incurred any liability for any broker's, finders or similar fee in connection with this Agreement and the transactions contemplated hereby. Each of the parties hereto shall pay such party's respective expenses, including, without limitation, attorney's fees, in connection with this Agreement and the transactions contemplated hereby, and neither of the parties hereto shall in anyway be liable for such expenses of the other.

17. Survival of Representations, Warranties and Covenants; Indemnification.

(a) Survival Period. Except as described in this Section 17, the representations, warranties, covenants and agreements of the parties in this Agreement shall survive the execution and delivery of this Agreement and the Closing but only until the date one (1) year after the Closing Date (except for claims in respect thereof pending at such time, which shall survive until finally resolved or settled). Except as set forth in Section 17(e), no action may be commenced with respect to any representation, warranty, covenant or agreement in this Agreement, or in any writing delivered pursuant hereto, unless written notice, setting forth in reasonable detail the claimed breach thereof, shall be delivered pursuant to Section 21 to the party or parties against whom liability for the claimed breach is charged on or before the termination of the survival period specified in this Section 17 for such representation, warranty, covenant or agreement.

(b) Threshold and Cap. Notwithstanding anything to the contrary herein, in no event shall the Buyer be liable to Seller or any of its Affiliates nor shall Seller be liable to Buyer or any of its Affiliates, pursuant to this Section 17 or otherwise, nor shall Buyer, or any of its Affiliates be liable to Seller, nor Seller or any of its Affiliates be liable to Buyer, for any matter related in any way to this Agreement until the total amount of Damages to either of such parties exceeds $100,000 (the “Threshold Amount”), and then only to the extent such Damages exceed the Threshold Amount. Furthermore, in no event shall: (i) Seller be liable to Buyer, or any of its Affiliates pursuant to this Section 17 or otherwise, for any matter related in any way to this Agreement in an amount in excess of $1,000,000, or (ii) Buyer, or any of its Affiliates, be liable to Seller, pursuant to this Section 17 or otherwise, for any matter related in any way to this Agreement in an amount in excess of $1,000,000.

(c) Mitigation. In computing any Damages under this Section 17, the amount of any insurance proceeds (including title insurance proceeds), Tax benefits, and any indemnity, contribution or other similar payment from any third party to which any party is entitled with respect to any matter shall be deducted from such Damages. Such party shall also be required to take all necessary and desirable steps to mitigate any Damages for which any claims under this Section 17 may be brought upon and after becoming aware of any event that could reasonably be expected it to give rise to any such Damages, including taking all commercially reasonable efforts to collect any amounts available under any applicable insurance coverage or from any third party.

(d) Limited Remedies. Notwithstanding anything to the contrary in this Agreement, the remedies described in this Section 17 shall be the sole and exclusive remedies available to any party for any Damages a party may incur. Furthermore, anything in this Agreement to the contrary notwithstanding, in no event shall any party have any liability for any consequential, incidental, lost profits, punitive or exemplary damages, howsoever caused, arising out of, or relating to this Agreement, even if such party has been advised to the possibility of any such damages or losses.

(e) Exceptions to Survival Period. Nothing contained in this Section 17 shall be deemed to limit any party’s right to enforce any of the other parties’ covenants under Sections 5-6 (Liabilities and Assumed Obligations), 13 (Confidentiality), 14 (Disclosure), 20 (Allocation), 22 (Arbitration) and 23 (Covenant of Further Assurances).

18. Successors and Assigns.

This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and nominees, as applicable.

19. Non-Compete Agreements.

In furtherance of the sale to Buyer of the Purchased Assets, Seller and David Murphy will enter into agreements (the "Non-Compete Agreements") whereby each of Seller and David Murphy agrees that for a period of five (5) years after the Closing Date it shall not, and David Murphy shall

not: (a) compete, directly or indirectly, with the Business as conducted as of the Closing Date; (b) communicate with or contact any of the customers of Buyer for the purpose of soliciting such customers to purchase any goods, products or services of the type being manufactured, offered or sold by the Business as of the Closing Date; (c) use or disclose to others any trade secrets or other confidential information relating to the Purchased Assets or Business. The Non-Compete Agreements shall be in the forms attached hereto as Schedule 19.

20. Allocation.

The Buyer and the Seller shall use reasonable commercial efforts to agree on a reasonable and fair allocation of the Purchase Price among the Purchased Assets, which shall value Inventory, the Other Tangible Assets, the Assumed Capital Leases and the Purchased Contracts at their estimated fair market values as of the Closing Date, and shall allocate the remainder of the Purchase Price to the Intangible Assets. The Buyer and the Seller agree that each party shall report the transactions contemplated by this Agreement for income Tax purposes in accordance with the agreed-upon allocation of the Purchase Price, pursuant to Section 1060 of the Federal Internal Revenue Code and the regulations thereunder, and agree not to take, in any filing with or accompanying any Tax return reporting any part of the transaction undertaken herein, a position inconsistent with such allocations; provided, however, that if the Buyer and the Seller are unable in good faith to reach an agreement with respect to the allocation of the Purchase Price consistent with the foregoing, each such party may allocate the Purchase Price among the Purchased Assets as it deems appropriate but generally consistent with the foregoing.

21. Notices.

Any notice, demand, request or other communication made, given, required or permitted pursuant to this Agreement shall be (a) in writing, (b) delivered personally, transmitted by facsimile, delivered by a commercial overnight courier service or mailed by certified or registered United States first class mail, return receipt requested, postage prepaid, and (c) addressed to the party for whom intended, as follows:

(a) If to Seller, addressed to:

David Murphy, CEO

Host America Corporation

2 Broadway

Hamden, CT 06518

Copy to:

Steven A. Berman, Esq.

Rogin, Nassau, Caplan, Lassman & Hirtle, LLC

185 Asylum Street

22^nd Floor

Hartford, CT 06103

(b) If to the Buyer, addressed to:

Host America Corporate Dining, Inc.

147 Ledge Drive

Berlin, CT 06037

Attn: Timothy Hayes

Copy to:

Richard Hartley, Esq.

Kane Hartley & Kane

972 New London Tpke

Glastonbury, CT 06033

Any party may change the address or telecopier number to which notices hereunder are to be sent to it by giving written notice of such change as herein provided. Any notice given hereunder shall be deemed given on the date of hand delivery, transmission by telecopier, deposit with the U.S. Postal Service or delivery to a courier service, as appropriate.

22. Arbitration of Disputes. It is acknowledged by the parties that a quick and efficient resolution of all claims, disputes and other matters in question under this Agreement after the Closing ("Disputes") is critical to the implementation of the terms of this Agreement. In order to effectuate such intent, the parties do hereby establish this Dispute procedure for use during the term of this Agreement. All Disputes shall be subject to this Section 22, it being the intention of the parties that all such Disputes be subject hereto regardless of any specific reference or absence of such reference to arbitrability herein. Prior to submission of any Dispute for resolution in accordance with this Section 22, the parties will negotiate in good faith to resolve such Dispute. Only if such parties cannot reach agreement within ten (10) days of written notice by any party to the other party that a Dispute exists, the Dispute will be submitted for resolution in accordance with the American Arbitration Association in Hartford, Connecticut. Upon such Dispute being submitted to the American Arbitration Association for resolution, the arbitrators shall assume exclusive jurisdiction over the Dispute and the decisions of such arbitrators shall be binding upon the parties hereto and may be entered in any court of competent jurisdiction.

23. Covenant of Further Assurances. The parties hereto shall execute such other and further instruments and/or documents as shall be necessary to implement and carry out the intents and purposes of this Agreement. Without limiting the foregoing, in the event of any modification to the terms hereof as shall be mutually agreed upon by such parties, the parties shall execute and deliver an amendment to this Agreement.

24. Complete Agreement.

This Agreement contains the complete agreement between the parties hereto with respect to the sale and purchase of the Purchased Assets and other transactions contemplated hereby and supersedes all prior agreements and understandings between the parties with respect to such sale and purchase and such other transactions.

25. Governing Law.

This Agreement is being executed and delivered and is being closed in the State of Connecticut. This Agreement shall be construed and enforced under the applicable procedural, statutory and common law of the State of Connecticut. The parties hereto hereby consent and submit themselves to the jurisdiction of the Courts of the State of Connecticut with respect to any controversy arising under or relating to this Agreement. Service of process may be effected on any party hereto which is not a resident of the State of Connecticut by certified or registered United States Mail, postage prepaid, addressed to such party at the address described in Section 21 hereof.

26. Counterparts.

This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original but all of which shall constitute but one instrument.

27. Headings.

The various section and subsection headings and titles are for convenience only and shall be subject to no independent substantive interpretation or meaning.

28. Calculation of Time. Whenever in this Agreement a period of time is stated as a number of days, it shall be construed to mean calendar days; provided, however, that when any period of time so stated would end upon a Saturday, Sunday or legal holiday, such period shall be deemed to end upon the next day following which is not a Saturday, Sunday or legal holiday. For the purposes of this Agreement, a "legal holiday" is any day on which banks are legally closed for business in the State of Connecticut.

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

BUYER

By: /s/ TIMOTHY HAYES

Name: Timothy Hayes

Title: President

SELLER

HOST AMERICA CORPORATION

By: /s/ DAVID MURPHY

Name: David Murphy

Title: CEO

APPENDIX OF DEFINITIONS

Affiliate: with reference to any Person, any director, officer or employee of such Person, any corporation, association, firm or other entity in which such Person has a direct or indirect controlling interest or by which such Person is directly or indirectly controlled or is under direct or indirect common control with such Person.

Assumed Capital Leases: the meaning set forth in Section 1(f).

Assumed Obligations: the meaning set forth in Section 5.

Business: the meaning set forth in the Recitals.

Buyer: the meaning set forth on Page 1 of this Agreement.

Closing: the meaning set forth in Section 3.

Closing Date: the meaning set forth in Section 3.

Damages: any and all losses, claims, assessments, demands, damages, liabilities, obligations, costs and expenses, including without limitation, reasonable fees and disbursements of counsel, and other out-of-pocket costs and expenses incurred in connection with investigating, preparing or defending or preventing any action, suit or proceeding, commenced or threatened, or any claim whatsoever.

GAAP: United States generally accepted accounting principles and practices consistently applied from accounting period to accounting period.

Indebtedness: (a) all items which in accordance with generally accepted accounting principles and practices would be included in determining total liabilities as shown on the liability side of a balance sheet of such Person as at the date of which indebtedness is to be determined, (b) all indebtedness secured by any mortgage, pledge, lease, lien or conditional sale or other title retention agreement existing on any property or asset owned or held by such Person subject thereto, whether or not such indebtedness shall have been assumed, and (c) all indebtedness of others which such Person has directly or indirectly guaranteed, endorsed, discounted or agreed (contingently or otherwise) to purchase or repurchase or otherwise acquire, or in respect of which such Person has agreed to supply or advance funds (whether by way of loan, stock purchase, capital contribution or otherwise) or otherwise to become liable directly or indirectly with respect thereto.

Intangible Assets: the meaning set forth in Section 1(e).

Inventory: the meaning set forth in Section 1(b).

Non-Compete Agreements: the meaning set forth in Section 19.

Other Tangible Assets: the meaning set forth in Section 1(c).

Person: any natural person or legal entity.

Purchase Price: the meaning set forth in Section 2(a).

Purchased Assets: the meaning specified in Section 1.

Purchased Contracts: the meaning set forth in Section 1(d).

Seller: the meaning set forth on Page 1.

Taxes: federal, state, local, foreign and provincial income, capital gains, property transfer, payroll, withholding, excise, sales, use, use and occupancy, mercantile, real estate, personal property, value added, capital stock, franchise, controlling interest transfer or other taxes, easements or charges and estimated taxes relating thereto, and any and all interest, penalties and additions to tax on any of the foregoing.

SCHEDULE OF SCHEDULES

Schedule

Reference Section Description

1(c) 1(c) Other Tangible Assets

1(f) 1(f) Assumed Capital Leases

2(b)(i) 2(b)(i) Purchased Contracts

3(a)(2) 3(a)(2) Form of Assumption Agreement

3(f) 3(f) Adjustment to Purchase Price

5 5 Assumed Obligations

10(d) 10(d) Permits

19 19 Form of Non-Compete Agreements