ASSET PURCHASE AGREEMENT
This
Asset Purchase Agreement ("Agreement") is made December 7, 2005, by and between
Source
One Personnel, Inc.,
a New
Jersey corporation (together with any nominee or nominees, "Buyer") with its
principal business offices located at 0 Xxxxxxxx Xxxx, Xxxxxxxxxxxxx, Xxx Xxxxxx
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 (which retained
assets include, without limitation, all accounts receivable for services
rendered by Seller to its customers prior to the Effective Time), as of the
Effective Time (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 the Purchased
Offices (as defined below) and the On-Site Business (as defined below) and
which
exist at the Effective Time (collectively, the "Purchased Assets"), including,
without limitation, the following assets:
(i) all
office supplies and similar materials (the "Supplies");
(ii) all
contracts, agreements, personal property 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 Purchased Offices and the
On-Site Business, as set forth on Schedule
2.12
attached
hereto (the "Contracts");
(iii) all
Real
Property Leases (as defined in Section 2.10);
(iv) the
motor
vehicles described on Schedule
1.1(a)(iv)
(the
“Motor Vehicles”);
(v) 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 Purchased Offices the On-Site Business
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(f) herein (collectively, the "Records");
(vi) all
rights of the Seller, if any, under express or implied warranties from the
suppliers of the Seller in connection with the Purchased Assets;
(vii) 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
(viii) 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;
(ix) 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 Purchased
Offices and the On-Site Business;
(x) 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;
(xi) all
prepaid charges, deposits,
sums and fees of
Seller
relating to the Purchased Assets, as set forth on Schedule
1.1(a)(xi);
(xii) all
claims and rights of Seller related to or arising from the Purchased Assets;
and
(xiii) all
of
the goodwill of the Purchased Offices and the On-Site Business.
(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,
chattel papers (including electronic chattel paper), instruments (including
promissory notes), all of Seller’s rights to receive payments from any source
and for any reason (whether characterized as accounts, accounts receivable,
chattel paper, choses-in-action, contract rights, general intangibles,
instruments, securities, notes or otherwise) including, without limitation,
Seller’s right to receive payments for services rendered, whether or not earned
by performance or recognized or billed by Seller, (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 Time, and (iv) all properties, rights, assets and services related
to the conduct of Seller’s business at all of its offices nationwide other than
the NJ/DE/PA Offices and the On-Site Business and all information, documents
and
files relative thereto (collectively, the “Retained Assets”).
(c) Certain
Definitions.
(i) “NJ/PA/DE
Offices” means Seller’s offices located in Cherry Hill, New Jersey, New
Brunswick, New Jersey, Mount Royal/Paulsboro, New Jersey (soon to be Woodbury
Heights, New Jersey), Pennsauken, New Jersey, Norristown, Pennsylvania, Fairless
Hills, Pennsylvania, and New Castle, Delaware, which include, without
limitation, the former Freehold, New Jersey profit center.
(ii) “Earn
Out
Offices” means Seller’s offices located in Deer Park, New York, Leominster,
Massachusetts, Lowell, Massachusetts, and Athol, Massachusetts.
(iii) “Purchased
Offices” means the NJ/PA/DE Offices and the Earn Out Offices.
(iv) “Earn
Out
On-Site Business” means the business of Seller conducted at certain facilities
of certain Customers, namely: the Setco facility in Cranbury, New Jersey; the
Record facility in Hackensack, New Jersey; the UPS-MI (formerly RMX) facility
in
Long Island, New York; the UPS-MI (formerly RMX) facility in the State of
Connecticut; the UPS-MI (formerly RMX) facility in the State of Ohio; and the
APX facility in Clifton, New Jersey.
(v) “On-Site
Business” means the Earn Out On-Site Business and the business of Seller
conducted at the following additional Customer facilities: the Burlington Coat
Factory facility in Burlington, New Jersey; the Burlington Coat Factory facility
in Edgewater Park, New Jersey; and the UPS-MI (formerly RMX) facility in
Paulsboro, New Jersey.
1.2. Purchase
Price.
The
purchase price for the Purchased Assets (the "Purchase Price") shall be the
sum
of the amounts described in this Section 1.2, and shall be payable as set forth
herein.
(a) At
the
Closing, in exchange for the Purchased Assets, the Buyer shall pay in full
all
monies due and owing for any and all debt and other financial obligations,
as of
the Effective Time, from the Seller to the Buyer, as reflected on the books
of
Buyer, including, without limitation, those amounts; all sums due under that
certain Promissory Note between Buyer and Seller dated July 27, 2001, in the
original principal amount of $600,000; all sums due under that certain
Promissory Note between Buyer and Seller dated July 27, 2001, in the original
principal amount of $1,800,000; all sums due under that certain Demand
Promissory Note between Buyer and Seller dated September 30, 2002 in the
original principal amount of $215,000; and all sums due to Buyer pursuant to
Seller’s exercise of its put rights with respect to 400,000 shares of Seller’s
common stock. In connection therewith, at Closing, both of the July 27, 2001
Notes and the Demand Promissory Note will be deemed paid and marked cancelled
and all liens related thereto will be released.
(b) For
a
period of three (3) years commencing as of the Effective Time (the “Earn Out
Period”), the Buyer shall make Earn Out Payments in accordance with this Section
1.2(b). “Earn Out Payments” shall mean: (i) for the first year of the Earn
Out Period, two percent (2%) of Buyer’s sales (but not including any taxes on
sales) from the Earn Out Offices and the Earn Out On-Site Business; and
(ii) for the second and third years of the Earn Out Period, one percent
(1%) of Buyer’s sales (but not including any taxes on sales) from the Earn Out
Offices and the Earn Out On-Site Business. The Earn Out Payments shall be
payable weekly, beginning on the date that is one week after the Effective
Time,
and shall be remitted to Seller, or to Capital on behalf of Seller, in
accordance with wire instructions provided by Seller.
1.3. Assumption
of Liabilities.
(a) Assumed
Liabilities.
Effective as of the Effective Time, the Buyer agrees to assume and to pay,
perform and discharge all liabilities and obligations arising on and after
the
Effective Time (i) under only those Contracts to which any Customer
is a
party (collectively, “Customer Contracts”), the Employee Contracts (as defined
in Section 2.23), and the Real Property Leases, and (ii) with respect
to
the use and operation of the Purchased Assets by the Buyer after the Effective
Time. In addition, the Buyer agrees to assume (x) the obligation to
allow
each Employee to carry over his or her accrued and unused vacation time (the
“Assumed Vacation”), to be utilized in a manner consistent with each such
Employee’s prior employment with the Seller, and (y) one half of the
Employee Commissions (as defined in Section 1.3(c)). The liabilities and
obligations described in this Section 1.3(a) are referred to herein as the
“Assumed Liabilities.”
(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;
(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 Time;
(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 Time;
(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 Time,
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 Time;
(ix) all
liabilities, obligations, payments, benefits, costs and expenses including,
without limitation, any salary, wage, vacation (other than the Assumed
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 Time with respect to any period
before the Effective Time, (b) accruing and payable to all other employees
of the Seller with respect to any period before or after the Effective Time,
(c) accruing and payable to all former employees of the Seller whose
employment terminated before the Effective Time, (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 Time, 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
Time;
(x) all
warranty liability of the Seller, including without limitation, for claims
which
arise prior to the Effective Time, whether such claims are presented prior
to or
after the Effective Time; and
(xi) all
liabilities and obligations of the Seller under all Contracts other than the
Customer Contracts, the Employee Contracts and the Real Property Leases,
including, without limitation, any equipment or other personal property
leases.
(c) Set
Off of Commissions.
If,
after sixty (60) days following the Closing Date, the Seller has not paid at
least one half of all commissions accruing and payable to staff employees of
the
Seller who became employed by the Buyer after the Effective Time with respect
to
any period before the Effective Time (the “Employee Commissions”), the Buyer
shall have the right to pay such amounts (up to one half of such commissions)
to
the respective employees and set off the aggregate of such amounts against
the
Earn Out Payments.
1.4. Other
Agreements.
As
further consideration for the transactions contemplated hereby, the Seller
will
enter into a Non-Compete and Non-Solicitation Agreement attached hereto as
Exhibit
C-1,
and
will obtain from Xxxxxxx X. Xxxxxxx a Non-Solicitation Agreement, 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 December 7, 2005, and the transactions
contemplated hereby shall be deemed to occur at 12:01 a.m., Eastern Time, on
November 28, 2005 (the "Effective Time"). 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. [Intentionally
left blank.]
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”).
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.
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, and unaudited financial statements, for the nine months
ended June 30, 2005, 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.
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;
(ii) liens or encumbrances relating to the Assumed Liabilities which do not
individually or in the aggregate materially detract from the value, or
materially impair the use, of the Purchased Assets; and (iii) statutory and
contractual landlord’s liens under the Real Property Leases.
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.
2.13. Compliance
with Agreements and Laws.
Except
as set forth in Schedule 2.13,
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.
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 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
2.18,
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.]
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. Accounts
Receivable.
Schedule
2.22
contains
a true and complete aging report of Seller’s accounts receivable relative to the
Purchased Assets as of December 5, 2005.
2.23. Employees. Schedule
2.23
contains
a complete list of the name, position, and salary, of all staff employees of
Seller employed at the Purchased Offices and in connection with the On-Site
Business, including persons who are temporarily absent from active employment
by
Seller (the “Employees”). 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
Employee (the “Employee Contracts”). To the knowledge and belief of Seller, no
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.
2.25. Customers. The
accounts receivable aging report attached hereto as Schedule
2.22
lists
all current customers of the Seller’s Purchased Offices and the On-Site Business
(the “Customers”). 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 intends to discontinue or to reduce significantly purchases
of
such goods or services or default under or terminate any Customer 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 TempFunds, a division of Capital
Factors LLC (“Capital”) 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.
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:
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 New Jersey 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
Certificate 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
Certificate 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.
Except
for the consent of the Buyer’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.
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, each of the following
documents:
(a) this
Agreement, duly executed by Seller;
(b) a
Xxxx of
Sale in the form attached hereto as Exhibit
A,
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
B
(the
"Assignment and Assumption Agreement");
(d) the
Non-Competition Agreement and Non-Solicitation Agreements in the form attached
hereto as Exhibits
C-1
and
C-2;
(e) the
Records;
(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
Time;
(g) cross
receipt executed by the Seller, in the form of Exhibit
D
("Cross
Receipt");
(h) 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;
(i) A
UCC-3
partial release, authorized by Seller’s lender, Capital, relative to the
Purchased Assets only;
(j) titles
to
the Motor Vehicles, endorsed for transfer;
(k) a
consent
from each landlord under a Real Property Lease, consenting to the assignment
of
such Real Property Lease to Buyer; and
(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
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
B),
executed by Buyer;
(c) the
Cross
Receipt, executed by the Buyer;
(d) 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;
(e) 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 New Jersey,
and
certificates of an officer of the Buyer with respect to directors’ resolutions,
by-laws and other matters;
(f) The
original Promissory Note between the Buyer and Seller dated July 27, 2001,
in
the original principal amount of $600,000, marked paid and cancelled; the
original Promissory Note between the Buyer and Seller dated July 27, 2001 in
the
original principal amount of $1,800,000, marked paid and cancelled; and the
original Demand Promissory Note between the buyer and Seller dated September
30,
2005 in the original principal amount of $215,000, marked paid and cancelled;
and
(g) A
UCC-3
release, authorized by Buyer, releasing the collateral securing the obligations
described in Section 4.2(g) above.
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 following the Closing 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 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 Time.
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 Time; 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.
(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.
(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 Closing 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 Closing Date, Seller has not paid or obligated
itself to pay, any compensation, commission or bonus to any Employee. Seller
agrees to notify Buyer of the departure or pending departure of any Employee
prior to the Closing Date.
6.2. Conduct
of Business.
From the
date of this Agreement through the Closing 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 Closing 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 Closing 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 Closing Date. From
the date of this Agreement through the Closing 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 Closing 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 Closing Date.
6.3. 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, agree 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, 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 Closing 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 Closing 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 Closing 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 Time 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
up to the Effective Time.
(d) Each
party 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 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. In
order, however, to provide Buyer the full realization and value of every
approval, agreement, contract, lease, or other commitment included in the
Purchased Assets, Seller agrees that on and after the Closing, it will, at
the
request of Buyer, in its name or otherwise, take all commercially reasonable
actions and do or cause to be done all commercially reasonable things necessary
or proper (i) to assure that its rights under such approvals, agreements,
contracts, leases, or other commitments be preserved for the benefit of Buyer
and (ii) to facilitate receipt of the consideration to be received in and under
every such approval, agreement, contract, lease, or other commitment, which
consideration shall be held for the benefit of and delivered to
Buyer.
(f) Within
ten (10) days of the Closing Date Seller shall deliver to Buyer an aging
schedule of Seller’s accounts receivable as of the Effective Time.
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 Time (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 generated by the Purchased Offices and the On-Site
Business as of the Effective Time. 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 Time. 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.
(b) Both
parties agree, as expeditiously as possible, to notify the Customers of the
sale
of the Purchased Offices and the On-Site Business, and to instruct such
Customers that any monies due on invoices for service periods prior to the
Effective Time shall be paid to Seller/Capital via the Capital lockbox
mechanism, and all monies due on invoices for service periods subsequent to
the
Effective Time shall be paid to Buyer under terms agreed upon between Buyer
and
Capital. 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
Closing Date, any consents required under any Contract or otherwise in
connection with the transactions contemplated by this Agreement.
7.6. Audit.
Buyer
shall keep complete, true and accurate books of account and records for the
purpose of determining the Earn Out Payments. Such books and records will be
open for inspection during the Earn Out Period and for a period of sixty (60)
days thereafter by Seller and its representatives, solely for the purpose of
verifying the Earn Out Payments hereunder. Such inspections may be made no
more
than once each calendar year, at reasonable times and on reasonable notice.
Inspections conducted under this Section 7.6 shall be at the expense of Seller
unless the inspection reveals a variation or error producing an increase in
Earn
Out Payments exceeding ten percent (10%) of the amount stated for any period
covered by the inspection, whereupon all reasonable costs relating to the
inspection and any unpaid amounts discovered will be paid or reimbursed by
Buyer.
8. [Intentionally
left blank.]
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:
To
the
Buyer: With
a
copy to:
Source
One Personnel, Inc. Xxxxxx
Xxxxxxxx LLP
0
Xxxxxxxx Xxxx 000
Xxxxxxxxx Xxxx
Xxxxxxxxxxxxx,
XX 00000 Xxxxxxxxx,
XX 00000-0000
Attn.:
Xxxxx Xxxxxxx Attn.:
Xxxxxxx X. Xxxx, Esq.
To
the
Seller:
Xx.
Xxxxxx X. Xxxxxxx
President
& CEO
Stratus
Services Group, Inc.
000
Xxxxx
Xxxx, Xxxxx 000
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, including, without limitation, Source One Staffing Solutions, LLC, a
New
Jersey limited liability company, 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.]
14. 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.
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.
C:\Documents
and Settings\Xxxxx Xxxxxxxx\Local Settings\Temporary Internet Files\OLKF\#582791
v7 - SOURCE ONE Stratus branch asset purchase agreement FINAL.doc
IN
WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
as
of the date first above written.
SELLER:
STRATUS
SERVICES GROUP, INC.
By:_______________________________
Xxxxxx
X.
Xxxxxxx
CEO
BUYER:
SOURCE
ONE PERSONNEL, INC.
By:_______________________________
Xxxxx
X.
Xxxxxxx
President
C:\Documents
and Settings\Xxxxx Xxxxxxxx\Local Settings\Temporary Internet Files\OLKF\#582791
v7 - SOURCE ONE Stratus branch asset purchase agreement
FINAL.doc
LIST
OF EXHIBITS AND SCHEDULES
Exhibit
A - Xxxx
of
Sale
Exhibit
B - Assignment
and Assumption of Contracts and Liabilities
Exhibit
C-1 - Stratus
Non-Compete and Non-Solicitation Agreement
Exhibit
C-2 - Xxxxxxx
X. Xxxxxxx Non-Solicitation Agreement
Exhibit
D - Cross
Receipt
Schedule
1. 1(a)(iv) - Motor
Vehicles
Schedule
1.1(a)(xi) - Security
Deposits
Schedule
2.4 - Violations
Schedule
2.6 - Undisclosed
Liabilities
Schedule
2.7 - Absence
of Certain Changes
Schedule
2.8 - Fixed
Assets and Liens
Schedule
2.9 - Litigation
Schedule
2.10 - Real
Property Lease
Schedule
2.12 - Contracts
Schedule
2.13 - Compliance
with Agreements and Laws
Schedule
2.15 - Permits
Schedule
2.18 - Insurance
Schedule
2.21 - Intellectual
Property Rights
Schedule
2.22 - Accounts
Receivable
Schedule
2.23 - Employees
Schedule
2.25 - Customers
