EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made as of the 27th day of
July, 2001, by and between STRATUS SERVICES GROUP, INC., a Delaware corporation
(the "Buyer") with its principal business offices located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, and SOURCE ONE PERSONNEL, INC., a New
Jersey corporation with its principal business offices located at ▇ ▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (the "Seller") and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, sole stockholder of Source One Personnel, Inc., residing at ▇▇ ▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") (collectively "Seller).
WHEREAS, the Buyer desires to purchase from the Seller, and the Seller
desires to sell to the Buyer substantially all of the properties, rights, assets
and business of the Seller involving light industrial and clerical temporary
services conducted primarily out of the offices listed on SCHEDULE 2.9 as well
as the employees listed on SCHEDULE 2.19, currently working at the offices on
SCHEDULE 2.9 (collectively, the "Acquired Business")all upon and subject to the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and for other good and valuable consideration, the receipt of which are
hereby acknowledged, the parties hereto agree as follows:
1. PURCHASE AND SALE AND DELIVERY OF THE ASSETS.
1.1. PURCHASE AND SALE AND DELIVERY OF THE ASSETS.
(a) PURCHASED ASSETS. Subject to and upon the terms and
conditions of this Agreement and excluding the assets of the Acquired Business
retained by the Seller as set forth in Section 1.1(b) herein and in SCHEDULE
1.1(A) AND THE PREPAIDS IN SCHEDULE 1.1(B) attached hereto, at the "Closing" (as
defined in Section 1.5 below) of the transactions contemplated by this
Agreement, the Seller shall sell, transfer, convey, assign and deliver to the
Buyer, and the Buyer shall purchase from the Seller, free and clear of all liens
and encumbrances, all of the properties, rights, assets and business as a going
concern, of every kind and nature, real, personal or mixed, tangible or
intangible, wherever located, which are owned, leased, licensed or used by
Seller in connection with the operation of the Acquired Business (collectively,
the "Assets"), including, without limitation, the following Assets:
(i) all office supplies and similar materials which
exist on the "Closing Date" (as defined in Section 1.5 below) and are used in
the Acquired Business (the "Supplies");
(ii) all contracts, agreements, leases, arrangements
and/or commitments of any kind, whether oral or written, relating to the
Acquired Business as set forth on SCHEDULE 2.11 attached hereto (the
"Contracts");
(iii) all customer lists, files, records and documents
(including credit information) relating to customers and vendors of the Acquired
Business and all other business, financial and employee books, records, files,
documents, reports and correspondence relating to the Assets or the Acquired
Business (collectively, the "Records");
(iv) all rights of the Seller, if any, under express or
implied warranties from the suppliers of the Seller in connection with the
Acquired Business;
(v) all furnishings, furniture, fixtures, tools,
machinery, equipment and leasehold improvements owned by the Seller and used in
the Acquired Business, whether or not reflected as capital assets in the
accounting records of the Seller (collectively, the "Fixed Assets"), as set
forth on SCHEDULE 2.7; and
(vi) all computers, computer programs, computer
databases, hardware and software owned or licensed by the Seller and used in the
Acquired Business;
(vii) all municipal, state and federal franchises,
licenses, authorizations and permits of the Seller which are necessary to
operate or are used in the Acquired Business;
(viii) all claims and rights of Seller related to or
arising from the Acquired Business or the Assets; and
(ix) all of the goodwill of the Acquired Business.
(b) RETAINED ASSETS. Notwithstanding anything to the contrary
set forth in this Agreement, the following items of the Acquired Business are
not included in the sale of Assets contemplated hereby: (i) the cash and cash
equivalents, accounts receivable, prepaid sums and fees and deposits, (ii) the
Purchase Price (as hereinafter defined) and the other rights of the Seller under
or relating to this Agreement, (iii) the corporate minute books, stock records,
qualification to conduct business as a foreign corporation, and other documents
relating to the incorporation, maintenance or existence as a corporation of the
Seller, except that Seller agrees that it will provide copies of any such
document from the corporate minute books as reasonably requested by the Buyer
which the Buyer and Seller agree are necessary for the operation of the Acquired
Business after the Closing, (iv) any real property owned by the Seller, and (v)
the name Source One Personnel (collectively, the "Retained Assets"). Except
that, Buyer shall have the non-exclusive right to use the name "Source One
Personnel" for a period not exceeding 120 days after the Closing.
1.2. PURCHASE PRICE. The purchase price for the Assets shall be
Three Million, Four Hundred Thousand and 00/100 Dollars ($3,400,000.00) (the
"Purchase Price") payable in accordance with Paragraphs (a) through (d) plus the
adjustments set forth in Paragraphs (e) through (g):
(a) the Buyer shall pay to the Seller on the Closing Date the
sum of Two Hundred Thousand and 00/100 Dollars ($200,000.00) by wire transfer of
immediately available funds to Seller's designated account(s) (the "Closing
Payment");
(b) the Buyer shall execute and deliver to Seller on the
Closing Date a promissory note, in the form attached hereto as EXHIBIT A-1 (the
"$600K Note"). The Buyer shall pay to the Seller six (6) months after the
Closing Date the sum of Six Hundred Thousand and 00/100 Dollars ($600,000.00) at
a seven percent (7%) annual interest rate. The $600K Note shall be secured by a
security interest in all of the Assets purchased by Buyer hereunder pursuant to
the terms of a security agreement executed by the parties as of the Closing Date
in substantially the form attached hereto as EXHIBIT B-1 (the "$600K Security
Agreement "). The $600K Note and the security interest granted pursuant to the
Security Agreement shall be subordinated to the Buyer's present and future bank
and other financial institution debt and other senior debt set forth in SCHEDULE
1.2(B) incurred or to be incurred by the Buyer (the "Senior Debt");
(c) the Buyer shall execute and deliver to Seller on the
Closing Date a promissory note, in the form attached hereto as EXHIBIT A-2 (the
"$1.8M Note"). The $1.8M Note shall be in the principal amount of One Million,
Eight Hundred Thousand and 00/100 Dollars ($1,800,000.00)
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and be amortized and payable over a four-year period at a seven percent (7%)
annual interest rate with payments due quarterly, the first payment beginning
one hundred twenty (120) days after the Closing Date. The $1.8M Note shall be
secured by a security interest in all of the Assets purchased by Buyer hereunder
pursuant to the terms of a security agreement executed by the parties as of the
Closing Date in substantially the form attached hereto as EXHIBIT B-2 (the
"$1.8M Security Agreement "). The $1.8M Note and the security interest granted
pursuant to the Security Agreement shall be subject to the terms of a certain
Subordination/Intercreditor Agreement dated of even date herewith.
(d) Buyer will issue Four Hundred Thousand (400,000) shares of
Stratus Services Group, Inc. common stock for the remainder of the Purchase
Price (the "Shares"). The Shares will carry an option that entitles Seller to
sell the Shares back to the Buyer at Two and 00/100 Dollars ($2.00) per Share
during the period between twenty-four (24) months from the Closing Date and the
final payment on the $1.8M Note (the "Put Option") but not less than 48 months.
Seller must follow the instructions and use the form at SCHEDULE 1.2(D) to
execute the Put Option. Upon the occurrence of an Event of Default, Seller will
be entitled to demand registration rights and request Buyer to immediately
register the Shares for resale at Buyer's sole expense;
(e) Seller will receive a twenty-five percent (25%) commission
on all permanent placements made during the 36-month period, based on Placement
Date, paid monthly, based on collection and expiration guarantee period being
met, after the Closing calculated according to the commission program then in
effect for the Buyer.
(f) Seller will receive twenty-five percent (25%) of the
increase in earnings before taxes (EBT) of the Acquired Business for each of the
three full fiscal years, ending September 30th, subsequent to the closing. The
increase will be calculated by comparing each fiscal year to the year ended
December 31, 2000. EBT is defined as pretax earnings of the Acquired Business
included in the Seller's fiscal year statement of operations, exclusive of
revenues and direct costs related to permanent placements and will be calculated
utilizing the form located at SCHEDULE 1.2(F). EBT of new accounts generated by
Seller, the Acquired Business, its employees and offices, for which revenue is
reported by Buyer's other branches, will be included in Seller's EBT. The EBT of
those accounts will be computed by deducting the supporting branches fiscal year
selling, general and administrative expenses percentage of revenues from the
gross margin of those accounts. The amount payable under this paragraph will be
paid within seventy-five (75) days after the Buyer's fiscal year end.
(g) The note described in paragraph (c) above shall contain a
provision that in the event Buyer secures financing in excess of Five Million
and 00/100 Dollars, Buyer shall make a principal payment of One Hundred Thousand
and 00/100 Dollars ($100,000.00) and the term of the note shall be adjusted to
three (3) years from the Closing Date.
(h) Seller shall be entitled to access to the books and
records of the Buyer and the right to receive certified financial statements
upon demand in order to verify and enforce Seller's rights under this Agreement.
1.3. ASSUMPTION OF LIABILITIES.
(a) ASSUMED LIABILITIES. Effective as of the Closing, the
Buyer agrees to assume and to pay, perform and discharge the liabilities and
obligations accruing under the Contracts after the Closing with respect to the
operation of the Acquired Business by the Buyer after the Closing, as well as
obligations for vacation time/pay and sick leave owed to the Employees listed in
Schedule 2.19, as of the Closing Date (the "Assumed Liabilities"). To the extent
that any personal property included as part of the Assets is leased by Seller as
of the Closing Date and the Buyer and Seller agree that the lease agreement
cannot be formally assigned to the Buyer, the Buyer will thereafter pay the
rental charge or
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lease payment for same to the Seller, and the Seller shall be required to make
such payments directly to the lessor.
(b) LIABILITIES RETAINED BY THE BUYER. Except for the Assumed
Liabilities, the Buyer shall not assume, be liable for or pay, and none of the
Assets shall be subject to, and the Seller, as the case may be, shall retain, be
unconditionally liable for and pay, any liability or obligation (whether known
or unknown, matured or unmatured, stated or unstated, recorded or unrecorded,
fixed or contingent, currently existing or hereafter arising) of the Seller, as
the case may be, including, without limitation, the following:
(i) any obligation or liability of Seller arising out of
this Agreement, any agreement entered into in connection herewith or the
transactions contemplated hereby or thereby;
(ii) any obligation or liability of Seller for the fees
and expenses of its counsel, accountants and other experts and all other
expenses incurred by Seller incident to the negotiation, preparation and
execution of this Agreement and any agreement entered into in connection
herewith and the performance by Seller of its obligations hereunder or
thereunder;
(iii) any obligation or liability of Seller and their
directors, officers, employees, consultants and other representatives, arising
out of or resulting from any business, activity, course of conduct, action or
omission before, on or after the Closing Date;
(iv) all accounts payable of the Seller;
(v) any liability or obligation under or in connection
with the Retained Assets.
(vi) any federal, state, local or other foreign tax
payable by the Seller whether such tax is due and payable prior to or after the
Closing;
(vii) any indebtedness of the Seller for borrowed money;
(viii) all liabilities of the Seller with respect to any
claim, litigation or proceeding accruing with respect to, or arising from or
relating to any business, activity, course of conduct, action or omission
before, on or after the Closing, including, without limitation, those matters
set forth on SCHEDULE 2.8, whether such claim, litigation or proceeding is
presented or instituted prior to or after the Closing;
(ix) all liabilities accruing and payable to employees
of the Seller who become employed by the Buyer after the Closing, ("Transferring
Employee") with respect to any period before the Closing, (a) accruing and
payable to all former employees of the Seller whose employment terminated before
the Closing, or (b) accruing and payable pursuant to any employee benefit plans
(including pension plans) of the Seller or under federal and state laws
governing such plans, whether before or after the Closing.
(x) all warranty liability of the Seller, including
without limitation, for claims which arise out of events occurring prior to the
Closing, whether such claims are presented prior to or after the Closing.
1.4. OTHER AGREEMENTS.
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As further consideration for the transactions contemplated hereby, as of
the Closing Date, the Seller (a) will enter into a non-competition agreement
with Buyer prohibiting the Seller from competing against the Buyer for eighteen
(18) months, in the New Jersey, Eastern Pennsylvania and Delaware and
prohibiting Seller from soliciting clients or employees of the Buyer, including,
without limitation, the clients and employees of the Acquired Business, for
forty-eight (48) months, and (b) shall cause ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ to enter into an
Employment Agreement, as attached hereto as EXHIBIT C-1 AND C-2, RESPECTIVELY.
1.5. CLOSING. Subject to and after fulfillment or waiver of the
conditions set forth in Sections 8 and 9 of this Agreement, the closing (the
"Closing") shall take place at the offices of the Buyer in Manalapan, New
Jersey, at 9:00 a.m. Eastern Time, on July 25, 2001, or such other time or date
or such other location as the parties may mutually agree (the "Closing Date").
1.6. ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated among the various Assets by mutual agreement of the parties as set
forth on SCHEDULE 1.6. The parties covenant and agree with each other that this
allocation was arrived at by arm's length negotiation and that none of them will
take a position on any income tax return, before any governmental agency charged
with the collection of any income tax or in any judicial proceeding that is in
any manner inconsistent with the terms of this Section 1.6 without the written
consent of the other parties to this Agreement. Each of Buyer and Seller
covenant and agree to execute and timely file U.S. Treasury Form 8594 consistent
with SCHEDULE 1.6, and upon a party's reasonable request the other party shall
execute and file such other documents as may be necessary to document such
allocation.
2. REPRESENTATIONS OF THE SELLER. The Seller represents and warrants to
the Buyer as follows:
2.1. ORGANIZATION. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of New Jersey
and is duly qualified to do business in, and is in good standing under the laws
of, the States of New Jersey, Pennsylvania and Delaware. The Seller is not
required to be qualified or licensed to do business as a foreign corporation or
other organization in any other jurisdiction, except such jurisdictions, if any,
in which the failure to be so qualified or licensed will not have a material
adverse effect on the conduct of its business or use of any of its properties or
assets. The Seller has delivered to the Buyer complete and correct copies of the
Seller's Articles of Incorporation or Articles of Formation and By-Laws or other
operating agreements as in effect on the date hereof. The Seller is in default
under or in violation of any provision of its Articles of Incorporation or
Articles of Formation or By-Laws or other operating agreement. The Seller has
all requisite power and authority (corporate and other) to execute and deliver
this Agreement and the documents, instruments and agreements contemplated
herein, and to consummate the transactions contemplated hereby and thereby.
2.2. AUTHORIZATION. The Seller has the power to enter into this
Agreement and to carry out its obligations hereunder. The execution, delivery
and performance of this Agreement, and the agreements provided for herein by the
Seller, and the consummation by the Seller of all transactions contemplated
hereby and thereby, have been duly authorized by all requisite corporate action.
This Agreement and all such other agreements and obligations entered into and
undertaken in connection with the transactions contemplated hereby to which the
Seller is a party constitute the valid and legally binding obligations of the
Seller, enforceable against the Seller in accordance with their respective
terms, except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and general equitable principles, regardless of
whether such enforceability is considered in a proceeding at law or in equity.
2.3. NO VIOLATION. Neither the execution, delivery or performance of
this Agreement and the agreements provided for herein, nor the consummation of
any of the transactions contemplated hereby or thereby (i) will violate or
conflict with the Articles of Organization or By-Laws of Seller, or (ii)
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conflict with, result in any breach of, constitute (with or without due notice
or lapse of time or both) a default under, or result in the acceleration of,
create in any party the right to accelerate, terminate, modify or cancel, or
require notice, consent or waiver under any provision of any contract or
agreement of any kind to which the Seller is a party or by which the Seller is
bound (including, without limitation, the Contracts) or to which any property or
asset (including, without limitation, the Assets) of any of them is subject,
(iii) is prohibited by or requires the Seller to obtain or make any consent,
authorization, approval, registration or filing under any statute, law,
ordinance, regulation, rule, judgment, decree or order of any court or
governmental agency, board, bureau, body, department or authority, or of any
other person, (iv) will cause any acceleration of maturity of any note,
instrument or other obligation to which Seller is a party or by which Seller is
bound or with respect to which Seller is an obligor or guarantor, or (v) will
result in the creation or imposition of any lien, claim, charge, restriction,
equity or encumbrance of any kind whatsoever upon or give to any other person
any interest or right (including any right of termination or cancellation) in or
with respect to any of the properties, assets (including, without limitation,
the Assets), business, agreements or contracts (including, without limitation,
the Contracts) of Seller.
2.4. FINANCIAL STATEMENTS. Seller has delivered or will deliver
within a reasonable period of time to Buyer the following financial statements
(the "Financial Statements"):
(i) The audited statements of net assets acquired and
liabilities assumed of Seller as of December 31, 1999 and 2000 and audited
statements of operations of Seller for the years ended December 31, 1998, 1999
and 2000, cost to be split equally between Buyer and Seller; and
(ii) The unaudited statements of net assets acquired and
liabilities assumed of Seller as of June 30, 2001 and unaudited statement of
operations of Seller for the six months ended June 30, 2001.
The Financial Statements have been prepared in accordance with generally
accepted accounting principals (GAAP) applied on a consistent basis during the
periods involved and fairly present the financial position of Seller as of the
dates thereof and the results of its operations and cash flows for the periods
indicated.
2.5. NO UNDISCLOSED LIABILITIES. Since June 30, 2001 except for the
transactions contemplated by this Agreement and except as set forth in SCHEDULE
2.5, Seller has not incurred any material liability or obligation (absolute,
accrued, contingent or otherwise) of any nature, other than liabilities and
obligations incurred in the ordinary course of business, that would properly be
reflected or reserved against in a balance sheet prepared in conformity with
GAAP, applied on a basis consistent with that used in the preparation of the
Financial Statements;
2.6. ABSENCE OF CERTAIN CHANGES. Since June 30, 2001 except for the
execution and delivery of this Agreement and except as set forth in SCHEDULE
2.6, Seller have not (i) had any change in its condition (financial or
otherwise), operations (present or prospective), business (present or
prospective), assets or liabilities, other than changes in the ordinary course
of business, none of which has been materially adverse; (ii) incurred or agreed
to incur any indebtedness for borrowed money; (iii) paid or obligated itself to
pay in excess of ten thousand dollars ($10,000) in the aggregate for Fixed
Assets; (iv) suffered any substantial loss or waived any substantial right; (v)
agreed to sell, transfer or otherwise dispose any of the Assets; (vi) mortgaged,
pledged or subjected to any charge, lien, claim or encumbrance, or agreed to
mortgage, pledge or subject to any charge, lien, claim or encumbrance, any of
the Assets; (vii) made or permitted any material amendment or termination of any
Contract, license or permit to which it is a party other than in the ordinary
course of business; (viii) had any labor trouble or knows of any impending or
threatened labor trouble; (ix) made any change in its accounting methods or
practices with respect to its condition, operations, business, properties,
assets or liabilities; or (x) entered into any transaction not in the ordinary
course of the business.
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2.7. TITLE; OWNERSHIP, CONDITION AND ADEQUACY OF THE ASSETS. Seller
has good and marketable title to all of their respective properties and assets
included in the Assets, and valid leasehold interests in all such Assets leased
by them under any personal property lease, in each case free and clear and not
subject to any mortgage, pledge, conditional sales contract, lien, security
interest, right of possession in favor of any third party, claim or other
encumbrance, except as shall be released at Closing or as soon thereafter as
practicable. The Fixed Assets are in good operating condition and repair,
subject only to the ordinary wear and tear. SCHEDULE 2.7 sets forth an accurate,
correct and complete list of all of the Fixed Assets owned or used by the Seller
with respect to the Acquired Business. Any Asset which is owned or leased by
Seller is not in violation of any applicable ordinance, regulation or building,
zoning, environmental or other law in respect thereof of which the Seller has
knowledge.
2.8. LITIGATION. Except as set forth in SCHEDULE 2.8,there are no
actions, suits, proceedings or investigations, either at law or in equity, or
before any commission or other administrative authority in any United States or
foreign jurisdiction, of any kind now pending or, to the best of Seller's
knowledge, threatened or proposed in any manner, or, to the best of the Seller's
knowledge, any circumstances which should or could reasonably form the basis of
any such action, suit, proceeding or investigation, involving Seller that (i) if
asserted and decided adversely to Seller, could materially and adversely affect
the operations (present or prospective) of the Acquired Business (present or
prospective), or (ii) questions the validity of this Agreement or the other
agreements to be entered into in connection herewith, or (iii) seeks to delay,
prohibit or restrict in any manner any action taken or contemplated to be taken
by the Seller under this Agreement or the other agreements to be entered into in
connection herewith. Except as set forth in SCHEDULE 2.8, there is no
arbitration proceeding pending or threatened or proposed in any manner under any
collective bargaining agreement or other agreement or otherwise. Neither Seller
nor any of the Assets are subject to any judicial or administrative judgment,
order, decree or restraint.
2.9. REAL PROPERTY; LEASES. Seller does not own any real property
used in connection with the Acquired Business SCHEDULE 2.9, attached hereto sets
forth a true, correct and complete list as of the date hereof of all leases of
real property to which the Seller is a party in connection with the Acquired
Business (collectively, the "Real Property Leases"). True, correct and complete
copies of the Real Property Leases, and all amendments and modifications
thereof, have previously been delivered by the Seller to the Buyer. The Real
Property Leases are in full force and effect, valid and enforceable in
accordance with their terms and have not been modified or amended since the date
of delivery to the Buyer. The legality, validity and enforceability of any Real
Property Lease will not be affected in any manner by, and each Real Property
Lease shall be legal, valid, binding, enforceable and in full force and effect
in accordance with the terms thereof as in effect immediately prior to the
Closing, upon the consummation of the transactions contemplated by this
Agreement. No party to any Real Property Lease has sent written notice to the
other claiming that such other party is in default thereunder, which alleged
default remains uncured.
2.10. TAX MATTERS. All federal, state, local and foreign tax and
information returns required to have been filed prior to the date of this
Agreement by Seller have been duly filed, and each such return correctly
reflects the income, franchise or other tax liability and all other information
required to be reported thereon, and the Seller has paid or accrued all income,
franchise and other taxes due by them as reflected on said returns. There are
not pending, nor to the knowledge of Seller, threatened, any audits,
examinations, investigations or other proceedings in respect of taxes or tax
matters and there are not, to the knowledge of Seller, any unresolved questions
or claims concerning Seller's tax liability. Seller has no liability with
respect to taxes in excess of the amounts accrued in respect thereof that are
reflected on its consolidated balance sheet as of June 30, 2001.
2.11. CONTRACTS. SCHEDULE 2.11 contains a true and complete list of
all Contracts. The Seller has made available to the Buyer a true and complete
copy of each such written Contract and a true,
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correct and complete written description of each such oral Contract. Neither the
Seller, nor, to the knowledge of the Seller, any other party, is in default
under or in breach or in violation of any Contract, nor has an event occurred
that (with or without notice, lapse of time, or both) would constitute a
default, breach or violation by the Seller, or, to the knowledge of the Seller,
by any other party, under any Contract. Each Contract is legal, valid, binding,
enforceable and in full force and effect. The legality, validity and
enforceability of any Contract will not be affected in any manner by, and each
Contract shall be legal, valid, binding, enforceable and in full force and
effect in accordance with the terms thereof as in effect immediately prior to
the Closing, upon the consummation of the transactions contemplated by this
Agreement.
2.12. COMPLIANCE WITH AGREEMENTS AND LAWS. To the best of Seller's
knowledge and belief, Seller has complied with and is in compliance with all
federal, state, local and foreign statutes, laws, ordinances, regulations,
rules, permits, judgments, orders or decrees applicable to them, and there does
not exist any basis for any claim of default under or violation of any such
statute, law, ordinance, regulation, rule, judgment, order or decree except such
defaults or violations, if any, that in the aggregate do not and will not
materially and adversely affect the Assets or the operation, financial condition
or prospects of the Acquired Business. Seller has not received any opinion or
memorandum or legal advice from any legal counsel to the effect that the Seller
is exposed to any liability or disadvantage that is or may be material to them.
Seller is in compliance with, (i) all applicable requirements of the
Occupational Safety and Health Act of 1970 within the United States and
comparable workplace-safety laws of all other jurisdictions and all rules,
regulations and orders thereunder, and (ii) all applicable laws and related
rules and regulations of all United States and foreign jurisdictions affecting
labor union activities, civil rights or employment, including without
limitation, in the United States, the Civil Rights Act of 1964, the Age
Discrimination in Employment Act of 1967, the Equal Employment Opportunity Act
of 1972, the Employee Retirement Income Security Act of 1974, the Equal Pay Act
and the National Labor Relations Act.
2.13. GOVERNMENTAL AUTHORIZATIONS AND REGULATIONS. SCHEDULE 2.13
lists all licenses, franchises, permits and other governmental authorizations
held by Seller material to the conduct of the Acquired Business. Such licenses,
franchises, permits and other governmental authorizations are valid, and Seller
has not received any notice that any governmental authority intends to cancel,
terminate or not renew any such license, franchise, permit or other governmental
authorization. Seller holds all licenses, franchises, permits and other
governmental authorizations, the absence of any of which could have a material
adverse effect on the Acquired Business.
2.14. ACCOUNTING PRACTICES. The Seller makes and keeps accurate
books and records reflecting their assets and maintain internal accounting
controls that provide reasonable assurance that (i) transactions are executed
with management's authorization, (ii) transactions are recorded as necessary to
permit preparation of Seller's consolidated financial statements and to maintain
accountability for the assets of Seller, (iii) access to the assets of Seller is
permitted only in accordance with management's authorization, and (iv) the
reported accountability of the assets of Seller is compared with existing assets
at reasonable intervals.
2.15. MINUTE BOOKS. Seller has provided the Buyer with complete
copies of the minute books of the Seller. The minute books of the Seller contain
complete and accurate records of their directors, officers and shareholders.
2.16. INSURANCE. SCHEDULE 2.16 contains a true and complete list of
all policies of fire, liability, workers' compensation and other forms of
insurance owned by or held by Seller, and Seller has made available for
inspection by the Buyer true and complete copies of all of such policies. All
such policies are in full force and effect, all premiums with respect thereto
covering all periods to the date of this Agreement have been paid, and no notice
of cancellation or termination has been received with
8
respect to any such policy. Such policies (i) are sufficient for compliance with
all requirements of law and all agreements to which Seller is a party, (ii) are
valid, outstanding and enforceable policies, (iii) will remain in full force and
effect through the Closing Date, and (iv) will not in any way be affected by, or
terminate or lapse by reason of, the transactions contemplated by this
Agreement. Except as set forth in SCHEDULE 2.16, Seller has not made any
material claims under such insurance policies.
2.17. LABOR MATTERS. Seller is not the subject of any proceeding
asserting that it has committed an unfair labor practice or is seeking to compel
it to bargain with any labor union or labor organization nor is there pending
or, to the Seller's knowledge, threatened, nor has there been for the past five
years, any labor strike, dispute, walkout, work stoppage, slow-down or lockout
involving it.
2.18. RECEIVABLES. SCHEDULE 2.18 sets forth an aging schedule of
Seller's accounts receivable as of the Closing Date. All of the accounts
receivable reflected in SCHEDULE 2.18 (i) arose from bona fide transactions,
(ii) represent bona fide indebtedness of the respective debtors, (iii) are valid
and do not have original payment terms in excess of forty-five (45) days, and
(iv) are not subject to any defense or offset.
2.19. EMPLOYEES. SCHEDULE 2.19 contains a complete list of the name,
position, salary, length of service and location of all persons employed by
Seller in the Acquired Business who are Transferring Employees including persons
who are temporarily absent from active employment by Seller. To the best of the
Seller's knowledge and belief, no Transferring Employee is, or is now expected
to be, in violation of any term of any employment contract, patent disclosure
agreement, non-competition agreement, or any other contract or agreement or any
restrictive covenant or any other common law obligation to a former employer
relating to the right of any such employee to be employed by the Seller because
of the nature of the Acquired Business or to the use of trade secrets or
proprietary information of others, and to the best of Seller's knowledge and
belief, the employment of such employees of the Seller does not subject the
Seller to any liability. There is neither pending nor, to Seller's knowledge and
belief, threatened any action, suit, proceeding or claim, or to its knowledge
any basis therefor, with respect to any contract, agreement, covenant or
obligation referred to in the preceding sentence. To the knowledge and belief of
Seller, no Transferring Employee has any present intention of terminating his or
her employment with the Seller, and Seller has no present intention of
terminating such employment.
2.20. ERISA.
(a) A copy of each bonus, deferred compensation, pension,
retirement, profit-sharing, thrift, savings, employee stock ownership, stock
bonus, stock purchase, restricted stock, stock option, employment, termination,
severance, compensation, medical, health or other plan, agreement, policy or
arrangement that covers employees, officers, directors, former employees, former
officers or former directors of the Seller (collectively, the "Benefit Plans")
and any trust agreements or insurance contracts forming a part of such Benefit
Plans has been made available to Buyer prior to the date hereof and each such
Benefit Plan is listed on SCHEDULE 2.20.
(b) All of the Benefit Plans are in substantial compliance
with all applicable law, including the Internal Revenue Code of 1986, as amended
(the "Code") and the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). None of the Benefit Plans is a defined benefit plan (as defined in
Section 3(35) of ERISA) or a multi-employer plan (as defined in Section 3(37) of
ERISA). Each of the Benefit Plans that is an "employee pension benefit plan"
within the meaning of Section 3(2) of ERISA (a "Pension Plan") and that is
intended to be qualified under Section 401(a) of the Code has received a
favorable determination letter from the Internal Revenue Service (the "IRS"),
and the Seller is not aware of any circumstances likely to result in revocation
of any such favorable determination letter. There is no pending or, to the
knowledge of the Seller, any threatened litigation relating to its Benefit
Plans. The Seller has not engaged in a transaction with respect to any of its
Benefit Plans that,
9
assuming the taxable period of such transaction expired as of the date hereof,
would subject it to a material tax or penalty imposed by either Section 4976 of
the Code or Section 502 of ERISA.
(c) As of the date hereof, no liability under Subtitle C or D
of Title IV of ERISA (other than the payment of prospective premium amounts to
the Pension Benefit Guarantee Corporation in the normal course) has been or is
expected to be incurred by the Seller with respect to any ongoing, frozen or
terminated "single-employer plan", within the meaning of Section 4001(a)(15) of
ERISA, currently or formerly maintained by the Seller, or the single-employer
plan of any entity which is considered one employer with the Seller under
Section 4001 of ERISA or Section 414 of the Code (its "ERISA Affiliate") (each
such single-employer plan, its "ERISA Affiliate Plan"). The Seller and its ERISA
Affiliates have not contributed, or been obligated to contribute, to a
multiemployer plan under Subtitle E or Title IV of ERISA. No notice of a
"reportable event", within the meaning of Section 4043 of ERISA for which the
30-day reporting requirement has not been waived, has been required to be filed
for any of the Company's Pension Plans or any of its ERISA Affiliate Plans
within the 12-month period ending on the date hereof or will be required to be
filed in connection with the transactions contemplated by this Agreement.
(d) All contributions required to be made under the terms of
any of the Benefit Plans as of the date hereof have been timely made or have
been reflected on its most recent balance sheet delivered by it to the Seller
Neither any of the Seller's Pension Plans nor any of any of its ERISA Affiliate
Plans have an "accumulated funding deficiency" (whether or not waived) within
the meaning of Section 412 of the Code or Section 302 of ERISA. The Seller has
not provided, and is not required to provide, security to any of its Pension
Plans or to any of its ERISA Affiliate Plans pursuant to Section 401(a)(29) of
the Code.
(e) Under each of the Seller's Pension Plans which is a
single-employer plan and each of its ERISA Affiliate Plans, as of the last day
of the most recent plan year ended prior to the date hereof, the actuarially
determined present value of all "benefit liabilities", within the meaning
Section 4001(a)(16) of ERISA (as determined on the basis of the actuarial
valuation), did not exceed the then current value of the assets of such Pension
Plan or ERISA Affiliate Plan and there has been no material change in the
financial condition of such Pension Plan or ERISA Affiliate Plan since the last
day of the most recent plan year.
(f) Seller has no obligations for retiree health and life
insurance benefits under any of its Benefit Plans, except as required by
applicable law.
(g) The consummation of the transactions contemplated by this
Agreement or other agreements contemplated hereby will not (x) entitle any of
the Seller's employees, officers or directors to severance pay, directly or
indirectly, upon termination of employment, (y) accelerate the time of payment
or vesting or trigger any payment or trigger any payment of compensation or
benefits under, increase the amount payable or trigger any other material
obligation pursuant to, any of its Benefit Plans, or (z) result in any breach or
violation of, or a default under, any of the Benefit Plans.
2.21. CUSTOMERS. SCHEDULE 2.21 lists all customers of the Acquired
Business of the Seller to which the Seller sold goods or services in excess of
$25,000 during the period from July 1, 2000 until June 30, 2001 (the "Customer
Period"). Seller has not received any written threat or written notice that any
one or more customers who in the aggregate purchased goods or services in excess
of $25,000 from them during the Customer Period intend to discontinue or to
reduce significantly purchases of such goods or services or default under or
terminate any Contract whether as a result of the transactions contemplated by
this Agreement or otherwise. Seller has not received any notice of, nor is it
aware of any basis for, any material dispute between a customer and the Acquired
Business of Seller, whether with respect to payment due, workmanship or
otherwise.
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2.22. CERTAIN PAYMENTS. Since the inception of the Seller, neither
the directors of the Seller, or any officer, agent, or employee of the Seller,
has directly or indirectly made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback, or other payment to any person or entity, private
or public, regardless of form, whether in money, property or services (i) to
obtain favorable treatment in securing business, (ii) to pay for favorable
treatment for business secured, or (iii) to obtain special concessions or for
special concessions already obtained, for or in respect of the Seller or the
Acquired Business.
2.23. NO UNTRUE STATEMENTS. No statement by any Party contained in
this Agreement and no written statement contained in any certificate or other
document required to be furnished by any Party, any member, or any officer, or
other agent of Seller to Buyer pursuant to this Agreement, contains or will
contain any untrue statement of a material fact, or omits or will omit to state
a material fact necessary in order to make the statements therein contained not
misleading.
2.24. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby
represents and warrants to Buyer that:
(a) Seller is acquiring the Stratus shares for its own account
as principal, for investment purposes only, and not for or with a view to the
resale, distribution or granting of a participation therein, in whole or in
part, in violation of the Securities Act.
(b) Seller acknowledges its understanding that the offering
and sale of the Stratus shares has not been registered under the Securities Act,
on the basis of the exemption in Section 4(2) thereof relating to transactions
not involving a public offering, or any state securities laws. Seller
understands that Stratus' reliance on the Section 4(2) exemption is based on the
representations herein made by Seller. Seller is an "Accredited Investor" as
that term is defined in Regulation D under the Securities Act.
(c) Seller acknowledges that it is familiar with the
limitations which are imposed by the Securities Act on any transfer of an
interest in the Stratus shares. Seller understands and acknowledges that it may
have to bear the economic risk of its investment in the Stratus shares for an
indefinite period of time unless the Stratus shares are subsequently registered
under the Securities Act or an exemption therefrom is available. Seller hereby
agrees that the Stratus shares will not be transferred other than (i) pursuant
to a registration under the Securities Act or pursuant to an exemption therefrom
and (ii) in compliance with any applicable state securities laws.
(d) Seller has been given access to all information regarding
Stratus and the business, condition and operations of Stratus that Seller has
requested in order to evaluate its investment in the Stratus shares. Seller has
been given the opportunity to ask questions of, and to receive answers from
representatives of Stratus concerning the terms and conditions of the offering
of the Stratus shares and other matters pertaining to such Seller's investment
in the Stratus shares.
(e) Seller understands that the Stratus shares will initially
bear the following legend:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS. THIS SECURITY
MAY NOT BE OFFERED, SOLD OR TRANSFERRED EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS
OF (ii) AN APPLICABLE EXEMPTION FROM REGISTRATION THEREUNDER AND
UNDER APPLICABLE STATE
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SECURITIES LAWS AS TO WHICH AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY SHALL HAVE BEEN DELIVERED TO STRATUS."
3. REPRESENTATIONS OF THE BUYER. The Buyer represents and warrants to the
Seller as follows:
3.1. ORGANIZATION AND AUTHORITY. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has requisite power and authority (corporate and other) to own its
properties and to carry on its business as now being conducted. The Buyer has
full power to execute and deliver this Agreement and all other documents,
instruments and agreements to be delivered by it hereunder and to consummate the
transactions contemplated hereby and thereby. The Buyer has delivered to the
Seller complete and correct copies of the Buyer's Articles of Incorporation and
By-Laws as in effect on the date hereof. The Buyer is not in default under or in
violation of any provision of its Articles of Incorporation or By-Laws. The
Buyer has all requisite power and authority (corporate and other) to execute and
deliver this Agreement and the documents, instruments and agreements
contemplated herein, and to consummate the transactions contemplated hereby and
thereby.
3.2. AUTHORIZATION. The execution and delivery of this Agreement by
the Buyer, and the agreements provided for herein, and the consummation by the
Buyer of all transactions contemplated hereby and thereby, have been duly
authorized by all requisite corporate action. This Agreement and all such other
agreements and written obligations entered into and undertaken in connection
with the transactions contemplated hereby constitute the valid and legally
binding obligations of the Buyer, enforceable against it in accordance with
their respective terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and general equitable principles,
regardless of whether such enforceability is considered in a proceeding at law
or in equity.
3.3. NO VIOLATION. The execution, delivery and performance of this
Agreement and the agreements provided for herein, and the consummation by the
Buyer of the transactions contemplated hereby and thereby, will not, with or
without the giving of notice or the passage of time or both, (a) violate the
provisions of any law, rule or regulation applicable to the Buyer; (b) violate
the provisions of the Buyer's Articles of Incorporation or By-Laws; (c) violate
any judgment, decree, order or award of any court, governmental body or
arbitrator; or (d) conflict with or result in the breach or termination of any
term of provision of, or constitute a default under, or cause any acceleration
under, or cause the creation of any lien, charge or encumbrance upon the
properties or assets of the Buyer pursuant to, any indenture, mortgage, deed of
trust or other agreement or instrument to which it or its properties is a party
or by which the Buyer is or may be bound.
3.4. CONSENTS. No consent, approval, authorization or other action
by, or filing with, any governmental authority or any third party is required in
connection with the execution, delivery and performance by the Buyer of its
obligations under this Agreement and the agreements provided for herein, and the
consummation by the Buyer of the transactions contemplated hereby.
3.5. LITIGATION. No action, investigation, audit, review, claim,
suit or proceeding by any governmental authority or third party is pending or,
to the knowledge of the Buyer, threatened against the Buyer which seeks to delay
or prevent the consummation of the transactions contemplated by this Agreement,
or which may adversely affect or restrict the Buyer's ability to consummate the
transactions contemplated hereby. The Buyer is not bound by any outstanding
judgment, order, injunction or decree of any governmental authority or any third
party which would prevent the Buyer from consummating the transactions
contemplated by this Agreement.
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3.6. BROKERS. Except for ▇.▇. ▇▇▇▇▇ Consulting, all negotiations
relative to this Agreement and the transactions contemplated hereby have been
carried on by Seller directly with Buyer and without the intervention of any
other person. Any valid claim against any of the parties for any finder's fee,
brokerage commission or like payment will be paid by the Seller.
3.7. NO UNTRUE STATEMENTS. No statement by the Buyer contained in
this Agreement and no written statement contained in any certificate or other
document required to be furnished by any officer, or other agent of Buyer to
Seller pursuant to this Agreement, contains or will contain any untrue statement
of a material fact, or omits or will omit to state a material fact necessary in
order to make the statements therein contained not misleading.
3.8. RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the Securities and Exchange
Commission (the "SEC") that may permit the sale of the Four Hundred Thousand
(400,000) shares of Stratus Services Group, Inc. common stock delivered in
accordance with paragraph 1.2(d) of this Agreement (the "Unregistered Stock") to
the public without registration, Buyer hereby covenants: (i) to make and keep
public information available, as those terms are understood ands defined in Rule
144 under the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (the "Securities Act"); (ii) to use its best efforts to
file with the SEC in a timely manner all reports and other documents required of
Buyer under the Securities Act and the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder (the "Exchange
Act"); and (iii) to furnish to Seller forthwith upon request, a written
statement by Buyer as to its compliance with the foregoing clauses (i) and (ii).
3.9. LIENS. The Senior Debt set forth in Schedule 1.2(b) is the only
secured lien on the assets of the Buyer.
4. CLOSING DELIVERIES.
4.1. BY SELLER. The Seller shall deliver to the Buyer at the
Closing, or as soon thereafter as available, each of the following documents:
(a) this Agreement, duly executed by Seller;
(b) a ▇▇▇▇ of Sale in the form attached hereto as EXHIBIT D,
duly executed by Seller;
(c) an Assignment and Assumption of Contracts and Liabilities
executed by the Seller evidencing the Seller's assignment and the Buyer's
assumption of the Assumed Liabilities contemplated by SECTION 1.3 hereof in the
form attached hereto as EXHIBIT E (the "Assignment and Assumption Agreement");
(d) the Employment Agreement in the form attached hereto as
EXHIBIT C-2 duly executed by ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇;
(e) the Records;
(f) consents, in the form of EXHIBIT F attached hereto from
each lessor relating to all Real Property Leases identified on SCHEDULE 2.9
attached hereto, consenting to the assumption of each such Real Property Lease
by the Buyer and any other consents required under any Contract or otherwise in
connection with the transactions contemplated by this Agreement;
13
(g) the cross receipt executed by the Seller, in the form of
EXHIBIT G ("Cross Receipt");
(h) a certificate executed by the Chief Executive Officer of
the Seller that all representations and warranties made herein by Seller are
true and correct and that all terms, conditions and provisions of this Agreement
have been performed and complied with at the time of Closing;
(i) a certificate from the secretary of the Seller attesting
to the accuracy of resolutions to be attached thereto approved by the Board of
Directors of the Seller authorizing the sale of the Assets and providing
incumbency information for the individual signing this Agreement on behalf of
the Seller;
(j) any required UCC-3 Termination Statements necessary to
remove any security interests from the acquired assets.
(k) The legal opinion of Seller's counsel as provided for in
Section 9.5.
4.2. BY THE BUYER. The Buyer shall deliver to the Seller at the
Closing each of the following documents:
(a) this Agreement, executed by the Buyer;
(b) the Assignment and Assumption Agreement (EXHIBIT E),
executed by Buyer;
(c) payment of the Closing Payment;
(d) the Notes (EXHIBIT A-1 AND A-2), executed by the Buyer;
(e) the Security Agreements (EXHIBIT B-1 AND B-2), executed by
the Buyer;
(f) evidence of the issuance to the Seller of 400,000 shares
of common stock of Stratus Services Group, Inc.
(g) a UCC-1 financing statement, executed by the Buyer;
(h) the Cross Receipt, EXHIBIT G, executed by the Buyer;
(i) a certificate executed by the President of the Buyer that
all representations and warranties made herein are true and correct and that all
terms, conditions and provisions of this Agreement have been performed and
complied with at the time of Closing;
(j) a certificate of the secretary of the Buyer attesting to
the accuracy of the resolutions of the Board of Directors of the Buyer
authorizing the purchase of the Assets and providing incumbency information for
the individual signing this Agreement on behalf of the Buyer; and
(k) assignment of leases from Buyer to Seller to be held in
escrow attached hereto as Exhibit J.
(l) certificate of insurance setting forth the Seller as
additional insured;
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(m) corporate resolution of Buyer's Board of Directors
approving the acquisition of the Acquired Business, pursuant to the terms of
this Agreement, the issuance of the Shares and the making and delivery of the
Notes, certified as true and accurate by the Secretary; and
(n) The legal opinion of Seller's counsel.
4.3. POST-CLOSING DELIVERIES.
(i) copies of the general ledgers and books of account
of the Seller pertaining to the Assets of the Acquired Business for the past
three years and audited annual and unaudited interim financial statements
satisfaction of Rule 3.05(c) of Regulation S-X and for the required periods of
Form 8-K, it being understood and agreed by the Buyer that any cost and expense
charged by Seller's auditors to produce such Statements will be equally split
between Buyer and Seller with the Seller's portion to be paid within fifteen
(15) days of demand from Buyer.
(ii) share certificate in the name of Source One
Personnel, Inc. for 400,000 shares of Stratus Service Group, Inc. common stock.
5. INDEMNIFICATION.
5.1. SURVIVAL OF REPRESENTATIONS. All representations and warranties
made by the parties herein or in any instrument or document furnished in
connection herewith shall survive for a period of thirty (30) months, following
the Closing and any investigation at any time made by or on behalf of the
parties hereto.
5.2. BY THE SELLER. The Seller hereby agrees to indemnify and hold
harmless each of the Buyer, and its directors, officers, employees, agents and
representatives (the "Buyer Indemnitees") from and against any and all actions,
claims, liabilities (whether known or unknown, matured or unmatured, stated or
unstated, fixed or contingent), obligations, damages of any kind (including,
without limitation, general, special, incidental and consequential damages),
judgments, liens, injunctions, charges, orders, decrees, rulings, demands,
losses, dues, assessments, taxes, fines, fees, penalties, amounts paid in
settlement, costs or expenses (including, without limitation, reasonable
attorney's and expert fees and expenses in connection with investigating,
defending or settling any action or threatened action) (each, a "Loss" and
collectively, "Losses") that any of the Buyer Indemnitees may incur, or to which
it, he or she may become subject, arising out of, resulting from or relating to:
(i) any material misrepresentation or breach of any warranty
of Seller or ▇▇▇▇▇ ▇▇▇▇▇▇▇ contained in this Agreement or in any schedule of
Seller or any certificate delivered by Seller at the Closing;
(ii) any breach of any covenant of Seller contained in this
Agreement;
(iii) any debt, liability or obligation of Seller other than
the Assumed Liabilities; and
(iv) the operations of the Acquired Business prior to the
Closing.
5.3. BY THE BUYER. The Buyer shall indemnify and hold harmless the
Seller, and its directors, officers, employees, agents and representatives (the
"Seller Indemnitees") from and against any
15
and all Losses that any of the Seller Indemnitees may incur, or to which it, he
or she may become subject, arising out of, resulting from or relating to:
(i) any misrepresentation or breach of warranty of Buyer
contained in this Agreement or in any schedule of Buyer or in any certificate
delivered by Buyer at the Closing;
(ii) any breach of any covenant of Buyer contained in this
Agreement;
(iii) any of the Assumed Liabilities; and
(iv) the operations of the Acquired Business after the
Closing.
5.4. REDUCTION FOR INSURANCE PROCEEDS. To the extent that any Buyer
Indemnitee or Seller Indemnitee shall receive payment under any insurance
policies on account of claims arising under Section 5.2 or Section 5.3 hereof,
the amount (if any) payable by the indemnifying party on account of such claims
shall be reduced by the amount of such payment or, if the Buyer Indemnitee or
Seller Indemnitee shall have already collected on such claims from the
indemnifying party, then the Buyer Indemnitee or Seller Indemnitee shall repay
to the indemnifying party the amount of such payment.
5.5. PROCEDURE FOR INDEMNIFICATION CLAIMS. For purposes of this
Agreement, each of Seller and Buyer may be referred to as an "Indemnifying
Party" in connection with their indemnification obligations herewith. For
purposes of this Agreement, Buyer Indemnitees and Seller Indemnitees may be
referred to individually as an "Indemnitee" or collectively as "Indemnitees."
The procedures to be followed with respect to indemnification claims based upon
or arising out of any claim, action or proceeding by any person not a party to
this Agreement, shall be as follows:
(a) Unless in the reasonable judgment of Indemnitee (i) there
is a conflict between the positions of the Indemnifying Party and the Indemnitee
in conducting the defense of such claim or (ii) legitimate business
considerations would require the Indemnitee to defend or respond to such claim
in a manner different from that recommended by the Indemnifying Party, the
Indemnifying Party shall, by giving notice thereof to the Indemnitee confirming
the Indemnifying Party's obligation under this Section 5 to indemnify the
Indemnitee in respect of such claim, be entitled to assume and control such
defense with counsel chosen by it. The Indemnitee shall be entitled to
participate therein after such assumption, but the costs of such participation
(other than the costs of providing witnesses or documents at the request of the
Indemnifying Party or in response to legal process) following such assumption
shall be at the expense of the Indemnitee. Upon assuming such defense, the
Indemnifying Party shall have full right to enter into any compromise or
settlement which is dispositive of the matter involved; provided that except for
the settlement of a claim that involves no obligation of the Indemnitee other
than the payment of money for which indemnification is provided hereunder, the
Indemnifying Party shall not settle or compromise any claim without the prior
written consent of the Indemnitee, which consent will not be unreasonably
withheld; and provided, further, the Indemnifying Party may not consent to entry
of any judgment or enter into any settlement in respect of a claim which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to the Indemnitee of a release from all liability in respect of such
claim.
(b) With respect to a claim as to which the Indemnifying Party
(i) does not have the right to assume the defense under Section (a) or (ii)
shall not have exercised its right to assume the defense, the Indemnitee shall
assume and control the defense of and contest such claim with counsel chosen by
it and the Indemnifying Party shall be obligated to pay all reasonable
attorneys' fees and expenses of the Indemnitee incurred in connection with such
defense. The Indemnifying Party shall be entitled to participate in the defense
of such claim, but the cost of such participation to be as its own expense.
Notwithstanding the foregoing, the Indemnitee shall not be required to defend
any claim under
16
this Section (b) unless the Indemnifying Party confirms its obligation under
this Section 5 to indemnify the Indemnitee in respect of such claim by written
notice to the Indemnitee. If the Indemnitee is not required to defend any claim
under the immediately preceding sentence, it shall owe no duties to the
Indemnifying Party with respect to such claim and may defend, fail to defend or
settle such claim without affecting its right to indemnity hereunder.
(c) The Indemnitee may compromise or settle any claim against
it at any time; provided, however, that the Indemnitee shall not settle or
compromise any claim without the prior written consent of the Indemnifying
Party, which consent will not be unreasonably withheld; provided, further, that
if in the reasonable judgment of the Indemnitee it would be materially harmed or
otherwise prejudiced by not entering into a proposed settlement or compromise
and the Indemnifying Party withholds consent to such settlement or compromise,
the Indemnitee may enter into such settlement or compromise and such settlement
or compromise shall not be conclusive as to, or otherwise be used to establish,
the existence or amount of the liability of the Indemnifying Party to the
Indemnitee or any third party. The Indemnitee may not consent to entry of any
judgment or enter into any settlement or compromise with respect to a claim
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to the Indemnifying Party of a release from all liability
in respect of such claim.
(d) Both the Indemnifying Party and the Indemnitee shall
cooperate fully with one another in connection with the defense, compromise or
settlement of any claim, including without limitation making available to the
other all pertinent information and witnesses within its control at reasonable
intervals during normal business hours.
5.6. SET-OFF. Buyer and Seller may offset any Loss indemnifiable by
the other party under this Agreement against any amounts payable to the other
party or any heir, beneficiary or assign by Buyer at or after the Closing
pursuant to this Agreement, the Notes, or otherwise, whether or not Seller
continues to be the holder or beneficiary of such obligations of Buyer.
5.7. LIMITATION ON INDEMNIFICATION. In no event shall the
indemnification by Seller under this Agreement exceed the monies to be paid by
Buyer to Seller.
5.8. Notwithstanding anything contained herein to the contrary,
Seller shall have no obligation for any breaches under any provision of this
Agreement until the aggregate of all claims for which Seller is responsible
exceeds $50,000, with the Seller only responsible for any excess amount over the
$50,000.
6. PRE-CLOSING AGREEMENTS.
6.1. TRANSFERRING EMPLOYEES. As a condition of the Closing and their
employment by the Buyer, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇ will enter into
employment, confidentiality and non-solicitation agreements in the form attached
hereto as Exhibit C-2 and EXHIBIT H, RESPECTIVELY, and, to the extent that
existing employment agreements are not assignable, the other Transferring
Employees will enter into employment agreements and confidential information and
non-solicitation agreements in the sample form attached hereto as EXHIBIT I. The
Seller will make a good faith effort in encouraging the Transferring Employees
to enter into such agreements with Buyer. From the date of this Agreement
through the Closing, Seller will not pay or obligate itself to pay any
compensation, commission or bonus to any Transferring Employee or independent
contractor as such, except for the regular compensation and commissions payable
to such Transferring Employee or independent contractor at the rate in effect on
the date of this Agreement. Seller agrees to notify Buyer of the departure or
pending departure of any Transferring Employee.
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6.2. CONDUCT OF BUSINESS. From the date of this Agreement through
the Closing, Seller will use its best efforts to preserve the Acquired Business
intact, to keep available to Buyer the services of its employees and independent
contractors and to preserve for Buyer its relationships with suppliers,
licensees, distributors and customers and others having business relationships
with it. From the date of this Agreement through the Closing, the Seller shall
carry on the Acquired Business substantially in the same manner as heretofore
and shall not make or institute any unusual or new methods of purchase, sale,
performance, lease, management, accounting or operation. From the date of this
Agreement through the Closing, all of the Assets shall be used, operated,
repaired and maintained by the Seller in a normal business manner consistent
with past practice. Unless instructed otherwise by the Buyer in writing, the
Seller will accept customer requests for services in the ordinary course of
business and consistent with past practice for all services offered by the
Seller but expected to be performed by the Buyer after the Closing. The Seller
and the Buyer will cooperate in communications with suppliers and customers to
accomplish the transfer of the Assets to the Buyer at the Closing. From the date
of this Agreement through the Closing, the Seller will not, and will not
obligate itself to, sell or otherwise dispose of or pledge or otherwise encumber
any of the Assets except in the ordinary course of business and Seller will
maintain the Fixed Assets and its facilities in good operating condition and
repair, subject only to ordinary wear and tear. The Seller will comply with all
laws and regulations which are applicable to their ownership of the Assets or to
the conduct of the Acquired Business and will perform and comply with all of the
Contracts and other commitments and obligations by which any of them are bound.
Seller will continue to carry all of its existing insurance. Seller agrees to
notify and consult with Buyer with respect to all decisions outside of the
ordinary course relating to the Acquired Business.
6.3. ACCESS TO MANAGEMENT, PROPERTIES AND RECORDS. From the date of
this Agreement, the Seller shall afford the officers, attorneys, accountants and
other authorized representatives of the Buyer reasonable access upon reasonable
notice and during normal business hours to all management personnel, and books
and records of the Seller relating to the Acquired Business. The Buyer shall be
permitted to make abstracts from, or copies of, all such books and records. The
Seller shall furnish to the Buyer such financial and operating data and other
information as to the Assets and the Acquired Business as the Buyer shall
reasonably request and cause its management personnel to cooperate with the
Buyer and to be available at the reasonable request of the Buyer so as to
provide the Buyer's agents with any and all information concerning the Assets
and the Acquired Business that may reasonably be required to close the
transactions contemplated hereby.
6.4. APPROVAL BY SELLER'S SHAREHOLDERS. Seller will cause a meeting
of its shareholders to be called and held for the purpose of voting upon this
Agreement and the transactions contemplated hereby. Seller shall recommend to
its shareholders the approval of, and shall otherwise use its best efforts to
cause its shareholders to approve, this Agreement and the consummation of the
transactions contemplated hereby.
6.5. CONSENTS, APPROVALS AND NOTICES. Seller shall give prior to the
Closing the notice required by or under, and shall use its best efforts to
obtain prior to the Closing all consents, authorizations and approvals required
by or under, all statutes, laws, ordinances, regulations, rules, judgments,
decrees and orders of any court or governmental agency, board, bureau, body,
department or authority or of any other person, including, without limitation,
required by or under any Contract, required to be obtained by Seller in
connection with the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby.
6.6. NO SOLICITATION OF OFFERS. Seller shall not, directly or
indirectly, through any officer, director, employee, agent or otherwise, (i)
solicit, initiate or encourage the submission of proposals or offers from any
person relating to any acquisition or purchase of all or a material amount of
the assets of, or any equity interest in, or any merger, consolidation or
business combination with Seller (an "Acquisition Proposal"), or (ii)
participate in any discussion or negotiation regarding, or furnish to
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any other person any information with respect to, or otherwise cooperate in any
way with or assist, facilitate or encourage, any Acquisition Proposal by any
other person.
6.7. KEEP INFORMED. From the date hereof through the Closing Date,
Seller shall promptly notify Buyer of (i) any changes to the information
disclosed on any schedule hereto, including changes occurring after the date
hereof (although such disclosure shall not in any way amend or supplement any
schedule) and (ii) any condition, circumstance, fact or other information that
may cause the representations and warranties of the Seller contained herein to
be incomplete or untrue as of the Closing Date as if made on and as of such time
or cause the Seller to be unable to perform its covenants contained herein that
it is required to perform on or before the Closing Date.
7. POST-CLOSING AGREEMENTS. The Seller and the Buyer, as the case may be,
agreed that from and after the Closing Date:
7.1. PROPRIETARY INFORMATION.
(a) The Seller shall hold in confidence and use its best
efforts to have all of the officers, directors, employees, other personnel and
agents of the Seller hold in confidence, all knowledge and information of a
secret or confidential nature with respect to the Acquired Business and shall
not disclose, publish or make use of the same without the consent of the Buyer,
except (i) to the extent that such information shall have become public
knowledge other than through the act of Seller, or any of its officers,
directors and personnel except as would be permitted under (ii) and (iii) of
this Section 7.1(a), (ii) as may be required to enforce any of Seller's rights
against Buyer, or (iii) as may be required by applicable law or legal process.
(b) The Buyer and Seller agree that the remedy at law for any
breach of Section 7.1 and 7.5 may be inadequate and that the Buyer or Seller, as
the case may be, shall be entitled to seek injunctive relief in addition to any
other remedy it may have upon breach of any provision of this Agreement.
7.2. FURTHER ASSURANCES AND DATA.
(a) At any time and from time to time after the Effective
Date, at the Buyer's reasonable request and without further consideration, the
Seller shall execute and deliver such instruments of sale, transfer, conveyance,
assignment and confirmation, and take such other action, all at the Seller's
sole cost and expense, as the Buyer may reasonably request to more effectively
transfer, convey and assign to the Buyer, and to confirm the Buyer's title to,
all the Assets, to put the Buyer in actual possession and operating control
thereof, to assist the Buyer in exercising all rights with respect thereto, and
to carry out the purpose and intent of this Agreement. Immediately after the
Closing, the Seller shall, to the extent applicable, authorize the release to
the Buyer of all files pertaining to the Assets or the Acquired Business held by
any federal, state, county or local authorities, agencies or instrumentalities.
(b) The parties agree that from and after the Effective Date,
as to any monies received that rightfully belong to the other party, they shall
remit such monies promptly to the other party.
(c) Within fifteen (15) business days after the Closing Date,
the parties shall mutually agree on the pro-ration as of the Effective Date of
rent, utilities and telephone for the Acquired Business, and the party obligated
to pay the net amount of such prorated items to the other party will make such
payment ten (10) days after the agreement on pro-rations is consummated.
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(d) The Buyer shall have the right, for a period of three (3)
years following the Closing Date, to have reasonable access to those books,
records and accounts, including financial and tax information, correspondence,
employment records and other records that may, at that time, be retained by the
Seller to the extent that any of the foregoing relates to the Acquired Business
and is need by the Buyer in order to comply with its obligations under
applicable securities, tax, environmental, employment or other laws and
regulations.
7.3. COOPERATION IN LITIGATION. Each party hereto will reasonably
cooperate with the other in the defense or prosecution of any litigation or
proceeding already instituted or which may be instituted hereafter against or by
such party relating to or arising out of the conduct of the Acquired Business
prior to the Closing Date (other than litigation arising out of the transactions
contemplated by this Agreement). The party requesting such cooperation shall pay
the out-of-pocket expenses (including legal fees and disbursements) of the party
providing such cooperation and of its officers, directors, employees, other
personnel and agents reasonably incurred in connection with providing such
cooperation, but shall not be responsible to reimburse the party providing such
cooperation for such party's time spent in such cooperation or the salaries or
costs of fringe benefits or similar expenses paid by the party providing such
cooperation to its officers, directors, employees, other personnel and agents
while assisting in the defense or prosecution of any such litigation or
proceeding.
7.4. ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE. The Seller agrees
that it will utilize normal collection efforts consistent with past business
practices of the Seller in collecting the outstanding Accounts Receivable of the
Seller as of the Closing Date. Seller shall undertake any formal collection
action (whether legal action, referral to a collection agency or otherwise) with
respect to any such account receivable without first consulting with the Buyer.
The Seller agrees to pay in a manner consistent with past business practice of
the Seller, the outstanding accounts payable of the Seller as of the Closing
Date. On or before the Closing, the Seller shall identify in writing to the
Buyer any disputed accounts payable of the Seller as of the Closing Date.
7.5. NON-SOLICITATION OF EMPLOYEES OF SELLER BY BUYER. Buyer
covenants and agrees that during the forty-eight (48) months after the Asset
Purchase Agreement it will not, directly or indirectly, contact, solicit,
divert, take away or attempt to contact, solicit, divert or take away any staff
employee or temporary personnel, from Seller in the Non-Acquired Business,
either for Buyer's own benefit or some other person or entity, and will not aid
or assist any other person or entity to engage in any such activities.
7.6. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO SELL THE ASSETS.
The obligations of Seller to sell the Assets is subject to the fulfillment prior
to or at the Closing of the following conditions:
7.7. BUYER'S PERFORMANCE. There shall not be any material error,
misstatement or omission in the representations and warranties made by Buyer in
this Agreement; all representations and warranties by Buyer contained in this
Agreement or in any written statement delivered by Buyer to Seller pursuant to
this Agreement shall be true in all material respects at and as of the Closing
as though such representations and warranties were made at and as of said time
(except (i) as contemplated by this Agreement and (ii) to the extent, if any,
Seller shall waive the same); and Buyer shall have performed and complied with
all the terms, provisions and conditions of this Agreement to be performed and
complied with by Buyer at or before the Closing.
7.8. TRANSACTION AGREEMENTS. Buyer shall have executed and delivered
this Agreement, all related transaction agreements contemplated herein, and all
other documents identified in Section 4.2 of this Agreement.
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7.9. PURCHASE PRICE. Buyer shall pay to Seller the Closing Payment
by wire transfer to such account in accordance with written instructions given
by Seller to Buyer.
7.10. CHARTER DOCUMENTS AND CERTIFICATES. Buyer shall have delivered
such certificates or other documents as may be reasonably requested by Seller,
including, without limitation, certificates of legal existence, good standing
and certified charter documents from the Secretary of State of Delaware, and
certificates of an officer of the Buyer with respect to directors' resolutions,
by-laws and other matters.
7.11. CONSENTS AND APPROVALS. Buyer shall have provided all notices
and obtained all consents, authorizations and approvals under all statutes,
laws, ordinances, regulations, rules, judgments, decrees and orders of any court
or governmental agency, board, bureau, body, department or authority or of any
other person required to be provided or obtained by Buyer, in connection with
the execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby.
8. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO PURCHASE THE ASSETS. The
obligation of Buyer to purchase the Assets is subject to the fulfillment prior
to or at the Closing of the following conditions:
8.1. SELLER'S PERFORMANCE. There shall not be any material error,
misstatement or omission in the representations and warranties made by Seller in
this Agreement; all representations and warranties by Seller contained in this
Agreement or in any written statement delivered by Seller to Buyer pursuant to
this Agreement shall be true in all material respects at and as of the Closing
as though such representations and warranties were made at and as of said time
(except (i) as contemplated by this Agreement and (ii) to the extent, if any,
Buyer shall waive the same); and Seller shall have performed and complied with
all the terms, provisions and conditions of this Agreement to be performed and
complied with by Seller at or before the Closing.
8.2. TRANSACTION DOCUMENTS. Seller shall have executed and delivered
this Agreement, and Seller shall have executed and delivered, or caused to be
executed and delivered, all related transaction agreements contemplated herein
and all other documents set forth in Section 4.1 of this Agreement.
8.3. CHARTER DOCUMENTS AND CERTIFICATES. Seller shall have delivered
such certificates or other documents as may be reasonably requested by Buyer,
including, without limitation, certificates of legal existence, good standing
and certified charter documents from the Secretaries of State of the States of
New Jersey, Pennsylvania and Delaware, and certificates of the Chief Executive
Officer of the Seller with respect to minutes, resolutions, by-laws and any
other relevant matters concerning the Seller in connection with the transactions
contemplated by this Agreement.
8.4. ACCOUNTANTS' LETTER. Buyer shall have received a letter, dated
no earlier than a date ten days preceding the Closing Date, from Seller's
independent accountants, satisfactory in form and substance to Buyer, stating
that, based upon:
(a) a reading of the latest available unaudited interim
consolidated Financial Statements of Seller, and
(b) discussions with officials of Seller and its consolidated
subsidiaries responsible for financial and accounting matters,
nothing has come to their attention which, in their judgment, would lead them to
believe that the unaudited, interim consolidated Financial Statements of Seller
are not fair presentations of the financial
21
position, results of operations and changes in financial position of Seller or,
except as set forth in the notes to such Financial Statements, have not been
prepared in accordance with GAAP applied on a basis consistent with that of the
audited Financial Statements.
8.5. OPINION OF SELLER'S COUNSEL. Buyer shall have received an
opinion, dated the Closing Date, from counsel for Seller, as to the matters
addressed in the form attached hereto as EXHIBIT ___.
8.6. CONSENTS AND APPROVALS. Seller shall have provided notice and
obtained all consents, authorization and approvals under all statutes, laws,
ordinances, regulations, rules, judgments, decrees and orders of any court or
governmental agency, board, bureau, body, department or authority or of any
other person including, without limitation, as required by or under any
Contract, required to be provided or obtained by Seller, as the case may be, in
connection with the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby.
8.7. ASSETS; MATERIAL ADVERSE CHANGE. There shall have occurred no
material damage to or destruction or loss of (whether or not covered by
insurance) any of the Assets, nor any material adverse change in the business,
financial condition, operating results or prospects of Seller with respect to
the Acquired Business.
8.8. EMPLOYMENT CONTRACTS. Each of the Key Employees shall have
entered into an employment contract with Buyer in the form of EXHIBIT H.
8.9. EMPLOYEES. Each of the other Transferring Employees as of the
date hereof shall have agreed to continue his or her employment with Buyer, and
shall have entered into the confidential information, non-solicitation agreement
with Buyer in the form of EXHIBIT I.
8.10. RELEASE OF LIENS. Any lien or encumbrance on the Assets shall
have been released.
9. TRANSFER AND SALES TAX. Notwithstanding any provisions of law imposing
the burden of such taxes on the Seller or the Buyer, as the case may be, the
Seller shall be responsible for and shall pay (a) all sales, bulk sales, use and
transfer taxes, and (b) all governmental charges, if any, upon and due in
connection with the sale or transfer of any of the Assets hereunder. If the
Seller shall fail to pay such amounts on a timely basis, the Buyer may pay such
amounts to the appropriate governmental authority or authorities, and the Seller
shall promptly reimburse the Buyer for any amounts so paid by the Buyer.
10. Events of DEFAULT. Failure of Buyer to comply with the terms,
conditions and covenants of this Agreement or any obligations under the Notes
shall constitute an Event of Default after notice from Seller and thirty (30)
days to cure.
11. REMEDIES. Upon occurrence of an Event of Default, Seller shall have
the following remedies:
11.1. Seller may force Buyer to register for resale (Demand
Registration) the shares issued pursuant to paragraph 1.2(d).
11.2. Accelerate all amounts owed under the Notes.
11.3. Declare that the Non-Compete/Non-Solicitation Agreement
(Exhibit C-1) and the restrictive covenant provisions contained in the
Employment Agreement of ▇▇▇▇▇▇▇ (Exhibit C-2) shall become null and void and the
non-compete of the employees of the Acquired Business as well as that of
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▇▇▇▇ ▇▇▇▇▇▇▇ and the restrictive covenants provisions contained in his
Employment Agreement (Exhibit H) shall become null and void. Further, it is
agreed that, upon the occurrence of an Event of Default, all existing contracts
between Buyer and its customers in the Acquired Business or operations of the
Acquired Business shall thereafter become null and void. Further, no claim of
contractual interference shall be brought by Seller against Buyer regarding the
solicitation or in re-obtaining the then existing or former customers or
employees, whether temporary employees or permanent employees.
11.4. Notify the escrow agent (▇▇▇▇▇▇-▇▇▇▇▇▇▇▇) to release to Seller
the assignment of leases which are being held in escrow.
11.5. Exercise any and all remedies available under the Notes and
the Security Agreements or under any other documents or agreement between Buyer
and Seller.
11.6. Upon the occurrence of an Event of Default that is uncurable
or that remains uncured beyond the applicable cure period, if any, Seller may
request Buyer to register under the Securities Act for resale all of the shares
of Unregistered Stock held by Seller. Buyer shall use its best efforts to have
the registration statement for the Unregistered Stock declared effective as soon
as practicable, to register or qualify the Unregistered Stock under the
securities or "blue sky" laws of such jurisdictions as Seller shall request, and
list the Unregistered Stock with any securities exchange on which the common
stock of Buyer is then listed. Buyer shall pay all expenses associated with
registration hereunder, including Seller's reasonable expenses in connection
with the registration.
Notwithstanding the foregoing, and providing no Event of Default has
occurred and is continuing during the 30-months after the Closing Date of this
Agreement, Paragraphs 11.1 and 11.3, as set forth above, shall become null and
void; provided, however, that if an Event of Default occurs after such thirty
(30) month period, the restrictive covenant provisions contained in the
Employment Agreement of ▇▇▇▇▇▇▇ (Exhibit C-2), as well as that of ▇▇▇▇ ▇▇▇▇▇▇▇
(Exhibit H) shall become null and void. All other remedies shall remain in full
force and effect.
12. BROKERS. The Seller will be responsible for the investment
banker/broker fee due to ▇. ▇. ▇▇▇▇▇ Consulting.
13. NOTICES. Any notices or other communications required or permitted
hereunder shall be in writing and shall be sufficiently given if delivered
personally or sent by facsimile (with transmission confirmed), Federal Express,
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows or to such other address or facsimile number of which the
parties may have given notice:
To the Seller: With a copy to:
-------------- ---------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esquire
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
Suite 201 300 ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
To the Buyer: With a copy to:
------------- ---------------
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇, Esquire
President & CEO Secretary and General Counsel
Stratus Services Group, Inc. Stratus Services Group, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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Unless otherwise specified herein, such notices or other communications shall be
deemed received (a) on the date delivered, if delivered personally, by facsimile
or by Federal Express; or (b) three business days after being sent, if sent by
registered or certified mail.
14. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, successors and
assigns, except that neither party may assign its obligations hereunder without
the prior written consent of the other parties hereto; PROVIDED, HOWEVER, that
the Buyer may assign Buyer's rights hereunder to a subsidiary or affiliate of
Buyer, PROVIDED that the Buyer shall remain liable for its obligations
hereunder. Any assignment in contravention of this provision shall be null and
void. No assignment shall release the Buyer from any obligation or liability
under this Agreement.
15. ENTIRE AGREEMENT; AMENDMENTS; ATTACHMENTS.
15.1. ENTIRE AGREEMENT; AMENDMENT. This Agreement, all schedules and
exhibits hereto, and all agreements and instruments to be delivered by the
parties pursuant hereto represent the entire understanding and agreement between
the parties hereto with respect to the subject matter hereof and supersede all
prior oral and written, and all contemporaneous oral negotiations, commitments
and understandings between such parties including, without limitation, the
letter of intent, dated June 13, 2001, executed by the parties. The Buyer and
the Seller, by the consent of their respective Boards of Directors or officers
authorized by such Boards, may amend or modify this Agreement, in such manner as
may be agreed upon, by a written instrument executed by the Buyer and the
Seller.
15.2. ATTACHMENTS. If the provisions of any schedule or exhibits to
this Agreement are inconsistent with the provisions of this Agreement, the
provisions of this Agreement shall prevail. The exhibits and schedules attached
hereto or to be attached hereafter are hereby incorporated as integral parts of
this Agreement.
16. EXPENSES. Except as otherwise provided herein, each party hereto shall
pay its own expenses in connection with this Agreement and the transactions
contemplated hereby.
17. LEGAL FEES. In the event that legal proceedings are commenced by any
party hereto against any other party hereto in connection with this Agreement or
the transactions contemplated hereby, the party which does not prevail in such
proceedings shall pay the reasonable attorneys' fees and costs incurred by the
prevailing party in such proceedings.
18. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of
New Jersey, without regard to conflicts
of law principles. The parties hereto agree to be subject to the exclusive
jurisdiction and venue shall reside in the courts of the State of
New Jersey
located in Monmouth County,
New Jersey and in the courts of the United States of
America located in the State of
New Jersey for the purpose of adjudicating any
dispute relating to or arising out of this Agreement.
19. SECTION HEADINGS. The section headings are for the convenience of the
parties and in no way alter, modify, amend, limit, or restrict the contractual
obligations of the parties.
20. SEVERABILITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
21. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which, when
taken together, shall be one and the same document.
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22. PUBLIC DISCLOSURE. Neither party shall make any public statement
about, nor issue any press release concerning this Agreement or the transactions
contemplated hereby without first consulting with the other party hereto as to
the form and substance of any such press release or public disclosure; provided,
however, that nothing in this Section 21 shall be deemed to prohibit any party
hereto from making any disclosure that its counsel deems necessary or advisable
in order to satisfy such party's disclosure obligation imposed by law.
23. TERMINATION. This Agreement may be terminated at any time prior to or
on the Closing Date:
(a) by mutual written consent of the Buyer and the Seller; or
(b) by Buyer who may, without liability to Seller, terminate
this Agreement by notice to Seller (i) at any time prior to the Closing if
default shall be made by Seller in the observance or in the due and timely
performance of any of the terms hereof to be performed by Seller that cannot be
cured at or prior to the Closing, (ii) at the Closing if any of the conditions
precedent to the performance of Buyer's obligations at the Closing shall not
have been fulfilled; or
(c) by Seller who may, without liability to Buyer, terminate
this Agreement by notice to Buyer (i) at any time prior to the Closing if
default shall be made by Buyer in the observance or in the due and timely
performance of any of the terms hereof to be performed by Buyer that cannot be
cured at or prior to the Closing, or (ii) at the Closing if any of the
conditions precedent to the performance of Seller's obligations at the Closing
shall not have been fulfilled.
24. REMEDIES CUMULATIVE. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy confirmed hereby, or by law or equity upon
such party, and the exercise by a party of any remedy will not preclude the
exercise of any other remedy.
[Remainder of This Page Intentionally Left Blank]
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IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the date first above written.
SOURCE ONE PERSONNEL, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Print Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
STRATUS SERVICES GROUP, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Print Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and CEO
26