ASSET PURCHASE AGREEMENT
Exhibit
2.13
This
Asset Purchase Agreement ("Agreement") is made as of the 8th
day of
June, 2005, by and between ALS,
LLC,
a
Florida limited liability company ("Buyer") with its principal business offices
located c/o Advantage Services Group, 0000 Xxxxxx Xxx, Xxxxx 000, Xxxxxxxx,
Xxxxxxx 00000, and Stratus
Services Group, Inc.,
a
Delaware corporation ("Seller") with its principal business offices located
at
000 Xxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, Xxx Xxxxxx 00000.
WHEREAS,
the Buyer desires to purchase from the Seller, and the Seller desires to sell
to
the Buyer certain of the properties, rights, assets and business of the Seller,
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 is 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
retained by the Seller as set forth in Section 1.1(b) herein, as of the
“Effective Date” (as defined in Section 1.5 below), 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 (except for
Permitted Liens as defined in Section 2.8), 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 the conduct of its business at its California
offices located in the cities of Cotati, Fairfield, Hayward, Napa, Roseville
and
Sacramento (collectively the “Northern California Offices”) and which exist on
the “Effective Date” (as defined in Section 1.5 below) (collectively, the
"Purchased Assets"), including, without limitation, the following
assets:
(i) all
office supplies and similar materials (the "Supplies");
(ii) all
contracts, agreements, leases, arrangements and/or commitments of any kind,
whether oral or written, relating solely to the Purchased Assets, and limited
to
the geographic area serviced by the Northern California Offices as set forth
on
Schedule 2.12 attached hereto (the "Contracts");
(iii) all
customer lists, files, records and documents (including credit information)
relating solely to customers and vendors of the Purchased Assets and limited
to
the geographic area serviced by the Northern California Offices and all other
business, financial and employee books, records, files, documents, reports
and
correspondence relating to the Purchased Assets, but excluding records relating
to accounts receivable, except to the extent required by Sections 2.22 and
7.2(d) herein (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 Purchased Assets;
(v) all
furnishings, furniture, fixtures, tools, machinery, equipment and leasehold
improvements owned by the Seller and related to the Purchased Assets, whether
or
not reflected as capital assets in the accounting records of the Seller
(collectively, the "Fixed Assets"), as set forth on Schedule 2.8;
and
(vi) all
computers, computer programs, computer databases, hardware and software owned
or
licensed by the Seller and used in connection with the Purchased Assets, but
not
to include any proprietary software of Seller (notwithstanding the foregoing
limitation, ALS shall at all times have full access to any ALS information
residing on any Stratus proprietary software);
(vii) the
right
to use any forms, processes and solutions developed by and for Stratus and
employed by Stratus, prior to the date of Closing, in operating the Northern
California Offices;
(viii) all
municipal, state and federal franchises, licenses, authorizations and permits
of
the Seller which are necessary to operate or are related to the Purchased
Assets;
(ix) all
prepaid charges, deposits,
sums and fees of
Seller
relating to the Purchased Assets;
(x) all
claims and rights of Seller related to or arising from the Purchased Assets;
and
(xi) all
of
the goodwill.
(b) Retained
Assets.
Notwithstanding anything to the contrary set forth in this Agreement, the
following assets of the Seller are not included in the sale of Purchased Assets
contemplated hereby: (i) the cash and cash equivalents, accounts receivable,
prepaid security deposits on Real Property Leases (as defined in Section 2.10)
and deposits or prepaid expenses related to insurance contracts, (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 formation, 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 believes are necessary for the use and operation of the
Purchased Assets after the Effective Date, and (iv) motor vehicles.
1.2. Purchase
Price.
The
purchase price for the Purchased Assets (the "Purchase Price") shall be payable
as follows:
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(a) the
Buyer
shall pay in exchange for the Purchased Assets, the sum of $3,392,507.00, which
represents the balance of all monies due from Stratus to ALS outstanding as
of
close of business on May 13, 2005, less $600,000. The remaining $600,000
receivable due from Stratus to ALS will be subordinated to Capital Temp Funds,
a
division of Capital Factors, LLC, as successor in interest to Capital Temp
Funds, Inc. (“Capital”) per the terms of a Subordination Agreement between and
among ALS, Stratus and Capital. On the Effective Date, $3,392,507.00 of debt
from Stratus to ALS shall be paid and cancelled. ALS and Capital will also
enter
into a transaction pursuant to which ALS will contribute $600,000 in exchange
for a junior participation interest in the Capital loan to Stratus. ALS will
also pay to Stratus $600,000 as contingent purchase price, which shall be paid
to Stratus, or offset against the balance remaining of the $600,000 receivable
due from Stratus to ALS, when the junior participation interest has been
returned to ALS and all other monies due from Stratus to ALS are current and
paid in full. Thus, upon Closing, only $600,000 of the $3,392,507 debt due
from
Stratus to ALS shall remain, along with any unpaid balance of Stratus’ payrolls
for week endings worked subsequent to 05/08/05 but all other balances due from
ALS to Stratus and Stratus to ALS as of 05/13/05 shall be considered paid in
full. In connection therewith, at Closing, the Note dated August 22, 2003,
due
and payable from ALS to Stratus with respect to the Miami offices will be deemed
paid and marked cancelled and all liens related thereto will be released.
1.3. Assumption
of Liabilities.
(a) Assumed
Liabilities.
Effective as of the Effective Date, the Buyer agrees to assume and to pay,
perform and discharge all liabilities and obligations arising under the
Contracts on and after the Effective Date and with respect to the use and
operation of the Purchased Assets by the Buyer after the Effective Date (the
“Assumed Liabilities”). To the extent that any personal property or real
property included as part of the Purchased Assets is leased by Seller as of
the
Effective Date and the Buyer and Seller agree that the equipment lease agreement
or real property lease agreement cannot be formally assigned to the Buyer,
the
Buyer will thereafter pay the rental charge or lease payment for same to the
Seller, and the Seller shall be required to make such payments directly to
the
Lessor. If at any time, Seller, in its sole discretion, chooses to pay off
the
lease liability of any such asset in one lump sum, Buyer shall reimburse Seller
for such payment and title to such asset shall pass to Buyer.
(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 Purchased Assets shall be subject to, and the Seller 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, 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;
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(ii) except
as
otherwise provided herein, 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) except
as
otherwise provided herein, any obligation or liability of Seller and its
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 Effective 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 Effective Date;
(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 Effective Date,
including, without limitation, those matters set forth on Schedule 2.9, whether
such claim, litigation or proceeding is presented or instituted prior to or
after the Effective Date;
(ix) all
liabilities, obligations, payments, benefits, costs and expenses including,
without limitation, any salary, wage, vacation, bonus, severance, expense
reimbursement or other benefit: (a) accruing and payable to staff and part--time
employees of the Seller who become employed by the Buyer after the Effective
Date with respect to any period before the Effective Date as set forth in
Schedule 1.3 attached hereto, (b) accruing and payable to all other employees
of
the Seller with respect to any period before or after the Effective Date, (c)
accruing and payable to all former employees of the Seller whose employment
terminated before the Effective Date, (d) 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 Effective
Date,
including, without limitation, in connection with the termination of
participation under such plan by a staff or part-time employee; or (e) accruing
and payable in connection with the termination of any such employee benefit
plan
of the Seller, whether before or after the Effective Date.
(x) all
warranty liability of the Seller, including without limitation, for claims
which
arise prior to the Effective Date, whether such claims are presented prior
to or
after the Effective Date.
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1.4. Other
Agreements.
As
further consideration for the transactions contemplated hereby, the Seller
and
Xxxxxxx Xxxxxxx will enter into a Non-Competition Agreement and a
Non-Solicitation and Confidentiality Agreement attached hereto as Exhibit
C-1 and Exhibit C-3, respectively,
and the
Buyer will enter into a Non-Competition Agreement, as attached hereto
as
Exhibit C-2.
1.5. Closing.
The
closing (the “Closing”) shall take place at the offices of the Seller in
Manalapan, New Jersey, at 3:00 PM EST, or at such other time or date or such
location as the parties may mutually agree (the "Closing Date"), but the Closing
shall take place no later than June 7, 2005, and the transactions contemplated
hereby shall be deemed to occur at 12:01 a.m., Eastern Time, on June 5, 2005
(the "Effective Date"). At the Closing the parties will exchange facsimile
executed documents and they will promptly send each other original signature
pages by overnight mail. The parties are executing this Asset Purchase Agreement
now, but all Exhibits and Schedules hereto will be delivered at the
Closing.
1.6. Allocation
of Purchase Price.
The
Purchase Price shall be allocated among the various Purchased 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 and is duly organized, validly existing and in good
standing under the laws of the State of 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 and By-laws as in effect on the date hereof.
The Seller is not in default under or in violation of any provision of its
Articles of Incorporation or By-laws. 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. Affiliates
and Other Equity Investments.
The
Seller does not own, directly or indirectly, any shares of capital stock of
any
corporation or any equity investment in any partnership, limited liability
company, association or other business organization, other than a fifty percent
(50%) interest in Stratus Technology Services, LLC (“STS”).
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2.3. 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. Seller is,
per
Paragraph 4.1(k) hereof, delivering at the Closing, an opinion of Seller’s
outside counsel that shareholder’s approval is not required for the
transaction.
2.4. No
Violation.
Except
as set forth in Schedule 2.4, 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 Incorporation or By-laws of Seller, or (ii)
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 Purchased 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, (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 Purchased Assets), business, agreements or contracts
(including, without limitation, the Contracts) of Seller.
2.5. Financial
Statements.
Seller
has delivered to Buyer audited financial statements, for the annual period
ended
September 30, 2004, for the Seller’s operations as a whole. Such financial
statements fairly present the financial position of Seller as of the date
thereof and the results of its operations and cash flows for the period
indicated.
2.6. No
Undisclosed Liabilities.
As of
the Closing Date, except for the transactions contemplated by this Agreement
and
except as set forth in Schedule 2.6, 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.
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2.7. Absence
of Certain Changes.
As of
the Closing Date, except for the execution and delivery of this Agreement and
except as set forth in Schedule 2.7, Seller has 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
Purchased 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 Purchased 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)
experienced any shortage or difficulty in obtaining qualified personnel to
meet
customer orders, demands and requirements; (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.
2.8. Title;
Ownership, Condition and Adequacy of the Assets.
Except
with respect to Purchased Assets that are leased and except as set forth in
Schedule 2.8, Seller has good and marketable title to all of its respective
properties and assets included in the Purchased Assets, and valid leasehold
interests in all such Purchased Assets leased by it 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 for Permitted
Liens. The Fixed Assets are in good operating condition and repair, subject
only
to the ordinary wear and tear. Schedule 2.8 sets forth an accurate, correct
and
complete list of all of the Fixed Assets owned or used by the Seller with
respect to the Purchased Assets. As used herein, the term “Permitted Liens”
means (i) liens or encumbrances for taxes not yet due or which are being
contested in good faith and by appropriate proceedings if adequate reserves
with
respect thereto are maintained on the books of Seller; (ii) carrier’s,
warehousemen’s, mechanic’s, materialmen’s, repairmen’s or other like liens or
encumbrances arising in the ordinary course of business which are not overdue
for a period of more than thirty (30) days or which are being contested in
good
faith and by appropriate proceedings, if adequate reserves with respect thereto
are maintained on the books of Seller; and (iii) those liens or encumbrances
described on Schedule 2.8 attached hereto.
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2.9. Litigation.
Except
as set forth in Schedule 2.9, 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 involving
Seller that (i) if asserted and decided adversely to Seller, could materially
and adversely affect the use or operations of the Purchased Assets (in a manner
consistent with Seller’s past practices), 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 2.9, there is no arbitration proceeding pending or, to Seller’s
knowledge, threatened or proposed in any manner under any collective bargaining
agreement or other agreement or otherwise. Neither Seller nor any of the
Purchased Assets are subject to any judicial or administrative judgment, order,
decree or restraint.
2.10. Real
Property; Leases.
Seller
does not own any real property used in connection with the Purchased Assets.
Schedule 2.10 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 Purchased Assets (collectively, the "Real Property Leases").
Except as set forth on Schedule 2.10, 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
have not been modified or amended since the date of delivery to the Buyer.
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.
2.11. 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 it
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.
2.12. Contracts.
Schedule
2.12 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, correct and complete written description of each such oral Contract.
Except as set forth as Schedule 2.12, 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.
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2.13. Compliance
with Agreements and Laws.
Except
as set forth in Schedule 2.15, Seller has complied in all material respects
with
all federal, state, local and foreign statutes, laws, ordinances, regulations,
rules, permits, judgments, orders or decrees applicable to it, and to Seller’s
knowledge 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 Purchased Assets or the
operation, financial condition or prospects of the Purchased Assets.
2.14. Environmental
Matters.
Except
for such matters that, alone or in the aggregate, are not reasonably likely
to
have a material adverse effect on the Seller, to its knowledge: (i) Seller
has
complied with all applicable “Environmental Laws” (as defined below); (ii)
Seller has not received any notice, demand, letter, claim or request for
information alleging that it may be in violation of or liable under any
Environmental Law; and (iii) Seller is not subject to any orders, decrees,
injunctions or other arrangements with any governmental entity relating to
liability under any Environmental Law or relating to Hazardous
Substances.
For
purposes of this Agreement, the term "Environmental Law" means any law relating
to pollution (or the clean up of the environment), or the protection of air,
surface water, groundwater, drinking water, land (surface or subsurface), human
health, the environment or any other natural resource or the use, storage,
recycling, treatment, generation, processing, handling, production or disposal
of Hazardous Materials, including the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 USC §§9601 et seq. And 40
CFR §§302.1 et seq., and regulations thereunder; the Federal Clean Air Act, as
amended, 42 USC §§7401 et seq., and regulations thereunder; the Resource
Conservation and Recovery Act, 42 USC §§6901 et seq., as amended and regulations
thereunder; and the Federal Water Pollution Control Act, 33 USC §§1251 et seq.,
as amended, and regulations thereunder.
For
purposes of this Agreement, the term "Hazardous Substance" means any asbestos
containing materials, mono- and polychlorinated biphenyls, urea formaldehyde
products, radon, radioactive materials, any "hazardous substance", "hazardous
waste", "pollutant", "toxic pollutant", "oil" or "contaminant" as used in,
or
defined pursuant to any Environmental Law, and any other substance, waste,
pollutant, contaminant or material, including petroleum products and
derivatives, the use, transport, disposal, storage, treatment, recycling,
handling, discharge, release, threatened release, discharge or emission of
which
is regulated or governed by any Environmental Law.
2.15. Governmental
Authorizations and Regulations.
Schedule
2.15 lists all licenses, franchises, permits and other governmental
authorizations held by Seller material to the use of the Purchased Assets.
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. Except as set forth on Schedule 2.15, Seller holds
all licenses, franchises, permits and other governmental authorizations, the
absence of any of which could have a material adverse effect on the use of
the
Purchased Assets.
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2.16. Accounting
Practices.
The
books and accounts of Seller are complete and correct, and fully and fairly
reflect the assets and transactions of the Company.
2.17. [Intentionally
left blank].
2.18. Insurance.
Schedule
2.18 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 respect to any such policy. Except as set forth in Schedule 2.18,
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
Effective 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 2.18, Seller has not made any material claims under such
insurance policies.
2.19. 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.
2.20. [Intentionally
left blank].
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2.21. Intellectual
Property Rights.
Schedule
2.21 contains an accurate and complete description of all domestic and foreign
patents, trademarks, trademark registration, service marks, service marks
registration, logos, trade names, assumed names, copyrights and copyright
registrations and all applications therefor, presently owned or held by Seller
or under which Seller owns or holds any license, or in which Seller owns or
holds any direct or indirect interest, and no others are necessary for the
use
of the Purchased Assets. To the knowledge of Seller, no products sold or
services provided by Seller, nor any patents, formulae, know-how, secrets,
trademarks, trademark registrations, service marks, service marks registration,
logos, trade names, assumed names, copyrights, copyright registrations, or
designation used or licensed for use in connection with the Purchased Assets,
infringe on any patents, trademarks, licenses, or copyrights, or any other
rights, of any person. Seller is the sole owner of, has the sole and exclusive
right to use, has the right and power to sell, and has taken all reasonable
measures to maintain and protect, the patents, trademarks, trademark
registrations, logos, trade names, assumed names, copyrights, copyright
registrations, service marks and service xxxx registrations listed in Schedule
2.21. Except as set forth in Schedule 2.21, no claims have been asserted against
Seller in writing by any person and received by it challenging the use of any
such patents, trademarks, trademark registrations, service marks, service xxxx
registrations, logos, trade names, assumed names, copyrights and copyright
registrations or challenging or questioning the validity or effectiveness of
any
such license or agreement, or the use of any formula, know-how or secrets used
in connection with the Purchased Assets and, to the knowledge of the Seller,
there is no valid basis for any such claim. Except as set forth in Schedule
2.21, to Seller’s knowledge, no other party is infringing on the patents,
trademarks, trademark registrations, logos, tradenames, assumed names,
copyrights copyright registrations, service marks and service xxxx registrations
listed in Schedule 2.21.
2.22. Receivables.
Seller
has delivered to Buyer a true and complete aging report of Seller’s accounts
receivable relative to the Purchased Assets as of May 31, 2005.
2.23. Employees.
Schedule
2.23 contains a complete list of the name, position, and salary, of all staff
employees of Seller, including persons who are temporarily absent from active
employment by Seller. Attached
to Schedule 2.23 are all employment agreements, patent disclosure agreements,
non-compete agreements, or any other written contract or agreement relating
to
the right of any such staff employee to be employed by Seller. To the knowledge
and belief of Seller, no staff employee has any present intention of terminating
his or her employment with the Seller, and Seller has no present intention
of
terminating such employment.
2.24. ERISA.
The only
employee benefit plans of Seller are group medical and dental insurance
policies.
10
2.25. Customers. The
accounts receivable aging report delivered pursuant to Section 2.22 lists all
current customers of the Seller. Except as set forth in Schedule 2.25 the 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 $10,000
from it during the twelve months ended September 30, 2004 intends 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 and the Seller has not received any written
notice of, nor is it aware of any basis for, any material dispute between any
such customer and the Seller, whether with respect to payment due, workmanship
or otherwise.
2.26. No
Untrue Statements.
No
statement by Seller contained in this Agreement and no written statement
contained in any certificate or other document required to be furnished by
Seller, 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.
2.27. Consents.
Except
for the consent of the Seller’s Lender, Capital Temp Funds, Inc. and the
Seller’s Board of Directors, which shall be obtained by the Closing Date, 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 and the Seller of the transactions contemplated hereby. Seller is, per
Paragraph 4.1(k) hereof, delivering at the Closing, an opinion of Seller’s
outside counsel that shareholder’s approval is not required for the
transaction.
2.28. No
Brokers.
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 and in such manner as not to give rise to any valid claim
against any of the parties for any finder's fee, brokerage commission or like
payment.
3. Representations
of the Buyer.
The
Buyer represents and warrants to the Seller as follows:
11
3.1. Organization
and Authority.
The
Buyer is a limited liability company duly organized, validly existing and in
good standing under the laws of the State of Florida 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 Organization and Operating Agreement as in effect on
the date hereof. The Buyer is not in default under or in violation of any
provision of its Articles of Organization and Operating Agreement. 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
entity 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.
Except
for the consent of the Buyer’s Lender, First
Third Bank
and the
Buyer’s Managing Member, which shall be obtained by the Closing Date, 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 and the Seller of the transactions contemplated hereby.
12
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.
3.6. No
Brokers.
All
negotiations relative to this Agreement and the transactions contemplated hereby
have been carried on by Buyer directly with Seller and without the intervention
of any other person and in such manner as not to give rise to any valid claim
against any of the parties for any finder's fee, brokerage commission or like
payment.
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.
4. Closing
Deliveries.
4.1. By
Seller.
The
Seller shall deliver to the Buyer at the Closing or, if so indicated, on the
Effective Date, each of the following documents:
(a) this
Agreement, duly executed by Seller;
(b) a
Xxxx of
Sale in the form attached hereto as Exhibit
B,
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
D
(the
"Assignment and Assumption Agreement");
(d) the
Non-Competition Agreement and Non-Solicitation Agreement in the forms attached
hereto as Exhibit
C-1 and Exhibit C-3, respectively;
(e) the
Records, on the Effective Date;
(f) copies
of
the general ledgers and books of account of the Seller pertaining to the
Purchased Assets for the period September 30, 2004, to the Effective Date,
on
the Effective Date.
(g) cross
receipt executed by the Seller, in the form of Exhibit
F
("Cross
Receipt");
13
(h) a
certificate executed by the President 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 authorizing the sale of the
Purchased Assets and providing incumbency information for the individual signing
this Agreement on behalf of the Seller;
(j) A
UCC-3
partial release, authorized by Seller’s Lender, Capital Temp Funds, Inc.,
relative to the Purchased Assets only;
(k) An
opinion of Seller’s outside counsel that shareholders approval is not required
for the transaction;
(l) 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 Secretary of State of Delaware, and
certificates of the Officers 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.
4.2. By
the
Buyer.
The
Buyer shall deliver to the Seller at the Closing or, if so indicated, on the
Effective Date, each of the following documents:
(a) this
Agreement, executed by the Buyer;
(b) the
Assignment and Assumption Agreement (Exhibit
D),
executed by Buyer;
(c) on
the
Effective Date, the amount of $21,142.31
representing
deposits under the Real Property Leases and the Equipment Leases and one month
rent for the Offices, by check or wire transfer to be held in escrow until
the
deposit holder has consented in writing that such deposit will be payable to
ALS;
(d) the
Non-Competition Agreement in the form attached hereto as Exhibit
C-2;
(e) the
Cross
Receipt, executed by the Buyer;
(f) a
certificate executed by the Chief Executive Officer/Managing Member 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; and
14
(g) a
certificate of the secretary of the Buyer authorizing the purchase of the
Purchased Assets and providing incumbency information for the individual signing
this Agreement on behalf of the Buyer.
(h) A
consent
of Buyer’s lender to the transaction;
(i) 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 Florida, and
certificates of an officer of the Buyer with respect to directors’ resolutions,
by-laws and other matters.
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
three
(3) years (or the date of final payment on the Note, whichever is sooner),
following the Effective Date 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, its
affiliates and its respective 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:
any
misrepresentation or breach of any warranty of Seller or Xx. Xxxxxx contained
in
this Agreement or in any schedule of Seller or any certificate delivered by
Seller pursuant to this Agreement;
any
breach of any covenant of Seller contained in this Agreement;
any
debt,
liability or obligation of Seller other than the Assumed Liabilities; and
the
operations of the Purchased Assets prior to the Effective Date.
15
5.3. By
the
Buyer.
The
Buyer shall indemnify and hold harmless the Seller and its affiliates and its
respective directors, officers, shareholders, employees, agents, representatives
and successors (the “Seller Indemnitees”) from and against any 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:
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 pursuant
to
this Agreement;
any
breach of any covenant of Buyer contained in this Agreement;
any
of
the Assumed Liabilities;
the
use
or operation of the Purchased Assets after the Effective Date; and
the
failure to obtain any of the Real Property Lease consents and releases described
in Section 7.6(a).
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) If
an
Indemnitee believes that it has suffered or incurred any Loss, such Indemnitee
shall so notify the Indemnifying Party promptly in writing describing such
Loss,
the amount thereof, if known, and the method of computation of such Loss, all
with reasonable particularity and containing a reference to the provisions
of
this Agreement or other agreement, instrument or certificate delivered pursuant
hereto in respect of which such Loss shall have occurred. In the event that
any
claim or demand in respect of which an Indemnitee may seek recovery of a Loss
under this Section 5 is asserted against or sought to be collected from such
Indemnitee by a third party, the Indemnitee shall notify the Indemnifying Party
promptly in writing as soon as practicable but in any event within 30 days
following receipt of notice of such third party claim or demand.
16
(b) 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.
(c) With
respect to a claim as to which the Indemnifying Party (i) does not have the
right to assume the defense under Section (b) 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 shall be at its own expense. Notwithstanding the foregoing,
the Indemnitee shall not be required to defend any claim under this Section
(c)
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.
17
(d) If
the
Indemnitee assumes the defense of a claim pursuant to Section (c) above, 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.
(e) 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. Exclusive
Remedy.
The
parties hereto agree that the indemnification provisions set forth in this
Section 5 are the exclusive remedy for any indemnifiable Loss.
5.7. Set-Off.
Buyer
may offset any Loss indemnifiable by Seller under this Agreement against any
amounts payable to Seller or any heir, beneficiary or assign by Buyer at or
after the Effective Date pursuant to this Agreement, the Non-Competition
Agreement or otherwise, whether or not Seller continues to be the holder or
beneficiary of such obligations of Buyer upon the determination of the amount
of
such Loss in accordance with the final judgment of a court of competent
jurisdiction or as finally agreed by the parties.
6. Other
Agreements.
6.1. Transferring
Employees.
From the
date of this Agreement until the Effective Date, Seller has not paid or
obligated itself to pay, any compensation, commission or bonus to any staff
employee or independent contractor as such, except for the regular compensation,
accrued benefits and commissions payable to such staff 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 staff employee prior
to the Effective Date.
18
6.2. Conduct
of Business.
From the
date of this Agreement through the Effective Date, Seller will use its best
efforts to preserve the Purchased Assets 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 the Purchased Assets. From the date
of
this Agreement through the Effective Date, the Seller shall carry on its
business of the Purchased Assets 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 Effective Date, all of the Purchased 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 Effective Date.
From the date of this Agreement through the Effective Date, the Seller will
not,
and will not obligate itself to, sell or otherwise dispose of or pledge or
otherwise encumber any of the Purchased 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 its
ownership of the Purchased Assets or the use of the Purchased Assets and will
perform and comply with all of the Contracts and other commitments and
obligations by which it is bound. Seller will continue to carry all of its
existing insurance until the Effective Date. Seller agrees to notify and consult
with Buyer with respect to all decisions outside of the ordinary course relating
to the Purchased Assets until the Effective Date.
6.3. Keep
Informed.
From the
date hereof through the Effective 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 and Xx. Xxxxxx contained herein to be incomplete or untrue as of
the
Effective 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 Effective Date.
7. Post-Closing
Agreements.
The
Seller and the Buyer, as the case may be, agree that from and after the Closing
Date:
7.1. Proprietary
Information.
19
(a) The
Seller shall hold in confidence, and use its best efforts to have all of the
officers, managers, members, directors, employees, other personnel and agents
of
the Seller to hold in confidence, all knowledge and information of a secret
or
confidential nature with respect to the Purchased Assets 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
Seller agrees that the remedy at law for any breach of this Section 7.1 may
be
inadequate and that the Buyer shall be entitled to seek injunctive relief in
addition to any other remedy it may have upon breach of any provision of this
Section 7.1.
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 Buyer'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 Purchased 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 Effective Date, the Seller
shall, to the extent applicable, authorize the release to the Buyer of all
files
pertaining to the Purchased Assets held by any federal, state, county or local
authorities, agencies or instrumentalities. The Seller and the Buyer will
cooperate in communications with suppliers and customers to accomplish the
transfer of the Purchased Assets to the Buyer.
(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 Effective Date, the parties shall mutually
agree on the pro-ration as of the Effective Date of rent, utilities and
telephone relative to the Purchased Assets, 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. Seller will pay
the
premiums for the health benefits of Seller’s employees to be employed by Buyer
through May 31, 2005.
20
(d) Each
party shall have the right, for a period of three (3) years following the
Effective 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 in the possession of the other party
to
the extent that any of the foregoing relates to the Purchased Assets and is
needed by such party in order to comply with its obligations under applicable
securities, tax, environmental, employment or other laws and
regulations.
(e) Notwithstanding
anything in this Agreement to the contrary, this Agreement shall not constitute
an agreement to assign any approval, agreement, contract, lease, or other
commitment included in the Purchased Assets if an attempted assignment thereof
without the consent of a party thereto would constitute a breach
thereof.
(f) Within
ten (10) days of the Effective Date Seller shall deliver to Buyer an aging
schedule of Seller’s accounts receivable as of May 29, 2005.
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
use of the Purchased Assets prior to the Effective 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.
(a) 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 Effective Date. The Seller shall not
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 Effective Date. The Buyer shall not, and shall
not permit its employees, officers, directors, independent contractors or agents
to, directly or indirectly, encourage any customer of Seller not to make payment
on any accounts receivable of Seller or commit any action which could reasonably
lead or cause any customer not to make such a payment and the Buyer shall
otherwise cooperate with Seller and its designees (and cause its personnel
and
accountants to cooperate) in Seller’s collection efforts.
21
(b) Both
parties agree, as expeditiously as possible, to notify the Customers set forth
on Exhibit 2.25, of the sale of the Northern California Offices, and to instruct
such Customers that any monies due on invoices for service periods prior to
the
Effective Date shall be paid to Seller/Capital via the Capital lockbox
mechanism, and all monies due on invoices for service periods subsequent to
the
Effective Date shall be paid to Buyer. The parties agree that in the event
payments are received by either of the parties on accounts receivable from
customers who are customers of both of the Buyer and Seller, and in the event
that the customer has not provided instructions on the face of the
remittance or any accompanying documentation or correspondence, the party
receiving such payment shall contact the Customer to ascertain how the payment
is to be applied. In the event such inquiry is unsuccessful, then such payments
shall be applied first to the oldest outstanding invoice(s). In the
event
that either party receives proceeds of accounts receivable which belong to
the
other party, such party will immediately remit such proceeds, in kind, to the
other party; provided, however, that, in the case of monies being received
by
Buyer and due to Seller, such proceeds shall be remitted to the Capital
lockbox.
7.5. Consents.
Seller
and Buyer will use their commercially reasonable best efforts to obtain by
the
Effective Date,
(a) consents
in the form of Exhibit
E
attached
hereto from each landlord relating to all Real Property Leases identified on
Schedule 2.10 attached hereto, consenting to the assumption of each such Real
Property Lease by the Buyer and the release of Seller from all obligations
and
liabilities under such Real Property Leases and any related guarantees, and
any
other consents required under any Contract or otherwise in connection with
the
transactions contemplated by this Agreement; and
(b) Buyer
shall pay all costs and fees payable to landlords in connection with obtaining
the consents related to the Real Property Leases and Equipment Leases. If a
consent is not obtained with respect to any Real Property Lease by the Effective
Date, Buyer shall continue to pay Seller, when and as the same becomes due,
the
monthly rental due pursuant to such Real Property Lease and Equipment
Lease.
8. 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 Buyer 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 Purchased Assets hereunder.
9. 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:
22
|
To
the Buyer:
|
|
|
Xx.
Xxxxxxx X. X’Xxxxxxx
|
|
|
ALS,
LLC
|
|
|
c/o
Advantage Services Group
|
|
|
0000
Xxxxxx Xxx, Xxxxx 000
|
|
|
Xxxxxxxx,
XX 00000
|
|
To
the Seller:
|
With
a copy to:
|
|
Xx.
Xxxxxx X. Xxxxxxx
|
Xxxxxxx
Xxxxxxx Xxxxxxx, Esq.
|
|
President
& CEO
|
General
Counsel
|
|
Stratus
Services Group, Inc.
|
Stratus
Services Group, Inc.
|
|
000
Xxxxx Xxxx, Xxxxx 000
|
000
Xxxxx Xxxx, Xxxxx 000
|
|
Xxxxxxxxx,
XX 00000
|
Xxxxxxxxx,
XX 00000
|
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.
10. 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.
11. Entire
Agreement; Amendments; Attachments.
11.1. 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. The Buyer and the Seller, by the consent of their respective Boards
of
Directors, Members 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.
11.2. Attachments.
If the
provisions of any schedule or exhibit 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.
12. Expenses.
Except
as otherwise provided herein, each party hereto shall pay its own expenses
in
connection with this Agreement and the transactions contemplated
hereby.
13. Intentionally
left blank.
23
14. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of California, without regard to conflicts of law principles.
15. 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.
16. 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.
17. 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.
18. 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 18 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.
19. WARN
Act.For
a
period of at least forty-five (45) days from and after the Effective Date,
Buyer
shall employ substantially all, but in no event less than 70%, of the full-time
employees associated with the Purchased Assets and shall not terminate more
than
50 full time employees who were employed by the Seller as of the Effective
Date.
Buyer shall be liable and responsible for any obligations under the Worker
Adjustment and Retraining Notification Act, as amended (the “WARN
Act”),
arising out of Buyer’s breach of this Section 19 with respect to the employees
associated with the Purchased Assets.
IN
WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
as
of the date first above written.
|
SELLER:
|
|
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STRATUS
SERVICES GROUP, INC.
|
|
|
By:
/s/
Xxxxxx X. Xxxxxxx
|
|
|
Xxxxxx
X. Xxxxxxx
|
|
|
CEO
|
24
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BUYER:
|
|
|
ALS,
LLC
|
|
|
By:
/s/
Xxxxxxx X. X’Xxxxxxx
|
|
|
Xxxxxxx
X. X’Xxxxxxx
|
|
|
Managing
Member
|
25
