ASSET PURCHASE AGREEMENT
This
Asset Purchase Agreement (“Agreement”) is made as of December __, 2005, by and
between Tri-State
Employment Service, Inc.,
a New
York corporation (“Buyer”) with its principal business offices located at 000
Xxxxxxxx, 00xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx 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 “Closing
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 offices located in Bellflower,
California and West Covina, California (collectively, the “CA Branch Offices”)
and which exist on the “Closing Date” (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 to the geographic area serviced by the CA
Branch Offices as set forth on Schedule 2.12 attached hereto (the
“Contracts”);
(iii) all
customer lists, files, records and documents (including credit information)
relating to the geographic area serviced by the CA Branch Offices and all other
business, financial and employee books, records, files, documents, reports
and
correspondence relating to the Purchased Assets, including records relating
to
accounts receivable (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;
(vii) the
right
to use any forms, processes and solutions developed by and for Seller and
employed by Seller, on or prior to the Closing Date, in operating the CA Branch
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;
(xi) all
accounts receivable and other receivables, whether or not billed;
(xii) all
telephone and facsimile numbers; and
(xiii) all
of
the goodwill of the CA Branch Offices.
(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, chattel papers
(including electronic chattel paper), instruments (including promissory notes),
(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 Closing Date, (iv) motor vehicles, (v) all
properties, rights, assets and services related to the conduct of Seller’s
business at all of its other offices nationwide and all information, documents
and files relative thereto; and (vi) all properties, rights, assets and services
related to the conduct of Seller’s business at any of its other offices and
locations throughout the United States.
1.2. Purchase
Price and Other Payments.
(a) The
purchase price for the Purchased Assets (the “Purchase Price”) shall be paid by
Buyer to Seller as an earnout as follows: (i) two percent (2%) of sales of
the
CA Branch Offices for the first twelve months from the Closing Date; (ii) one
percent (1%) of sales of the CA Branch Offices for the second twelve months
from
the Closing Date; and (iii) one percent (1%) of sales of the CA Branch Offices
for the third twelve months from the Closing Date. The earnout on collected
sales will be based on the sales to existing customers of the CA Branch Offices
as of the Closing Date set forth on Schedule 2.25 hereto.
(b) Such
payments pursuant to clause (a) above shall be paid as follows: (i) the first
such payment shall be made with respect to the payroll period ended on the
December 4, 2005 and payroll period ending on December 18, 2005 (ii) through
January 29, 2006, payments shall be made with respect to bi-weekly periods;
and
(iii) thereafter on a weekly basis. All payments shall be made in immediately
available funds within 5 days following the end of the applicable period. All
payments will be accompanied by a certificate of an officer of Buyer certifying
that all information which formed the basis for calculating the remittance
to
Seller is true and correct.
(c) Notwithstanding
anything herein to the contrary, the aggregate amount payable pursuant to clause
(a) above with respect to any period for any existing client shall equal 2%
or
1%, as the case may be, of sales to such clients as provided in clause (a)
above, but in no event for purposes of this calculation, shall the aggregate
annual sales to such clients exceed $25 million.
(d) On
or
before April 15, 2006, Buyer shall prepare a reconciliation reflecting
collections from accounts receivable included in the Purchased Assets. To the
extent collections for such accounts receivable are less than invoiced sales,
Buyer will be entitled to offset against future payments to Seller an amount
equal to 2% or the amount of such shortfall. If, after April 15, 2006 Buyer
collects any amounts reflected on its reconciliation as being uncollected,
Buyer
will remit to Seller 2% of such additional collections.
(e) At
reasonable times and upon reasonable notice, Seller shall have access to Buyer’s
records solely for the purpose of reviewing Buyer’s sales and its computation of
the remittances of Purchase Price as described in this Section 1.2.
1.3. Assumption
of Liabilities.
(a) Assumed
Liabilities.
Effective as of the Closing Date, the Buyer agrees to assume and to pay, perform
and discharge all liabilities and obligations arising under the Contracts on
and
after the Closing Date, and with respect to the use and operation of the
Purchased Assets by the Buyer after the Closing Date (the “Assumed
Liabilities”). The Buyer hereby agrees that it shall pay all payroll
obligations, including withholding taxes and workers compensation insurance
premiums, for all persons employed at the CA Branch Offices from and after
December 6, 2005, and such obligations shall be deemed to be included in 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 Closing Date
and
the Buyer and Seller agree that such personal property lease agreement or real
property lease agreement cannot be formally assigned to the Buyer as of the
Closing Date, 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; provided that Buyer shall use commercially reasonable
efforts to cause each such lease to be formally assigned to Seller following
the
Closing. Assumed Liabilities shall also include liabilities to employees for
accrued, unpaid compensation, including but not limited to vacation, paid time
off and sick pay in excess of $20,000.00.
(b) Liabilities
Retained by the Seller.
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 before the Closing Date;
(iv) all
accounts payable of the Seller;
(v) any
liability or obligation under or in connection with the Retained
Assets;
(vi) any
federal, state, local or other foreign tax payable by the Seller whether such
tax is due and payable prior to or after the Closing Date, including but not
limited to the obligations to the State of California, Employment Development
Department (the “California Liabilities”) in respect of state unemployment taxes
in the approximate amount of $1,450,000. The California Liabilities are
guaranteed by Xxxxxx Xxxxxxx, Xx. and Xxxxxxx Xxxxxxxx and pursuant to separate
agreement, ALS, LLC has agreed to remit up to $1 million to satisfy the
California Liabilities;
(vii) any
indebtedness of the Seller for borrowed money;
(viii) all
liabilities of the Seller with respect to any claim, litigation or proceeding
accruing with respect to, or arising from or relating to any business, activity,
course of conduct, action or omission before, on or after the Closing 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 Closing Date;
(ix) all
warranty liability of the Seller, including without limitation, for claims
which
arise prior to the Closing Date, whether such claims are presented prior to
or
after the Closing Date; and
(x) liabilities
to employees for accrued, unpaid compensation, including, without limitation,
vacation, paid time off and sick pay in the amount of $20,000 payable by credit
to Buyer which credit will taken by Buyer in 2 equal installments of $10,000
against the amounts payable pursuant to the terms of Section 1.2 (a) hereof
for
the months of January 2006 and February 2006.
1.4. Other
Agreements
.
As
further consideration for the transactions contemplated hereby, the Seller
will
enter into a Non-Competition, Non-Solicitation and Confidentiality Agreement
attached hereto as Exhibit C-1, and the Buyer will enter into a Non-Competition
Non-Solicitation and Confidentiality 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, concurrently with the execution and delivery of this
Agreement (the “Closing Date”). At the Closing the parties will exchange
facsimile executed documents and they will promptly send each other
originals.
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.
1.7. Payment
to the Buyer
.
On or
before April 15, 2005, Seller shall pay to Buyer an amount equal to the Seller’s
(and its affiliates) including interest and/or discount fee to obtain and carry
the financing obtained by Buyer to refinance, purchase or otherwise satisfy
the
obligations of the Buyer to Capital TempFunds, a division of Capital Factor
L.L.C. (“Capital”), with respect to the CA Branch Offices. This payment shall be
made by Seller within ten days after delivery by Buyer of a statement of such
financing costs.
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 duly qualified
or licensed to do business as a foreign corporation or other organization in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its activities makes such qualification
necessary, 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 all
requisite, power and authority (corporate and other) to carry on its business
as
now conducted and to own, lease and operate its properties. 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 by Seller
in connection with the transactions contemplated hereby constitute the valid
and
legally binding obligations of the Seller, enforceable against the Seller in
accordance with their respective terms.
2.4. No
Violation
.
Except
as set forth in Schedule 2.4, neither the execution, delivery or performance
of
this Agreement and the documents, instruments and 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
Seller 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
.
Since
September 30, 2004, 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
.
Since
September 30, 2004, 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. Seller is the sole owner or the sole lessee of all the Purchased Assets.
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 set forth on Schedule 2.8 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.
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,
injunction, decree or restraint.
2.10. Real
Estate.
All
real property leased by the Seller as tenant or lesseee with respect or in
connection with the CA Branch Offices is identified on Schedule 2.10. Such
real
properties constitute all of the physical locations necessary to operate and
use
the Purchased Assets as presently used by the Seller. Each lease (whether
written or oral, expired or otherwise) with respect to each such property is
set
forth on Schedule 2.10. The Seller has made available to the Buyer a true and
correct copy of each written lease and a true, correct and complete written
description of each oral lease is set forth on Schedule 2.10. Except as set
forth on Schedule 2.10, (i) each such lease is in full force and effect and
neither the Seller nor, to the best knowledge of the Seller, any other party
thereto, is in default under or in breach or in violation of any such lease,
and
all rent due and payable thereunder has been paid to date, and (ii) no
circumstances presently exist which (with or without notice, lapse of time
or
both), would constitute a default, breach or violation by Seller, or, to the
best knowledge of the Seller, by any other party thereto.
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 is set forth on Schedule 2.12. 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 best knowledge of
the
Seller, by any other party, under any Contract.
2.13. Compliance
with Agreements and Laws
.
Except
as set forth in Schedule 2.15, 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, use, 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 or any of the Purchased Assets,
(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 and following the consummation of the transactions
contemplated by this Agreement, the Seller will continue to be covered under
such policies for events occurring on or prior to the Effective Date. Except
as
set forth in Schedule 2.18, Seller has not made any material claims under such
insurance policies.
2.19. Employee
and Labor Matters
.
Seller
is not a party to any collective bargaining agreement or labor contract. Seller
has not engaged in any unfair labor practice with respect to any persons
employed by or otherwise performing services for Seller. 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. Seller is not the subject of any
proceeding against or affecting Seller relating to the alleged violation of
any
legal requirement pertaining to employment matters, including any charge or
complaint filed by an employee with the Equal Employment Opportunity Commission,
the Department of Labor or any comparable state or federal agency. Seller has
complied with all legal requirements relating to employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, the payment of social security and similar taxes, occupational
safety and health, and plant closing. Seller is not liable for the payment
of
any compensation, damages, taxes, fines, penalties or other amounts, however
designated, for failure to comply with any of the foregoing legal
requirements.
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. Receivables
.
Seller
has delivered to Buyer a true and complete aging report of Seller’s accounts
receivable relative to the Purchased Assets as of December 2, 2005. All such
accounts receivable are bona fide receivables, represent sales actually made
or
services actually performed, and are valid and legally enforceable obligations
of the respective debtor, subject to no counterclaims, setoffs or
recoupments.
2.23. Employees.
(a) 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. No employee of Seller is a party to any employment
or other agreement that entitles him or her to compensation or other
consideration upon the acquisition by any person of control of Seller.
(b) For
a
period of ninety (90) days before and on the Effective Date, Seller has not
laid
off or terminated for lack of work any of the full-time employees associated
with the Purchased Assets.
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 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 $1,000
from it during the period commencing on September 1, 2005 and ending on December
2, 2005 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
.
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, except for such
consents, approvals or authorizations obtained on or prior to the date hereof,
which remain in full force and effect. Seller has obtained all necessary
approvals of Capital and Seller’s board of directors to the execution, delivery
and performance of this Agreement and the agreements provided for
herein.
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.
2.29. No
Bankruptcy or Bankruptcy Intent
.
Seller
and the Purchased Assets are not, and will not be as of the Closing, the subject
of any Debtor Proceeding (as hereinafter defined). Seller does not have any
intent (a) to file any voluntary petition under any chapter of the Bankruptcy
Code (as hereinafter defined), or in any manner to seek any other Debtor
Proceeding or to file any other Debtor Proceeding at any subsequent time, or
(b)
directly or indirectly to cause, or acquiesce or consent to any involuntary
petition under any chapter of the Bankruptcy Code to be filed, or (c) directly
or indirectly to cause any of the Purchased Assets or any portion or any
interest of Seller therein to become the property of any bankruptcy estate
or
the subject of any Debtor Proceeding at any subsequent time. “Debtor Proceeding”
means any proceeding for relief, protection, reorganization, liquidation,
dissolution, or similar relief for debtors under any local, state, federal
or
other insolvency law or laws providing relief for debtors, including but not
limited to, Title 11 of the United States Code (the “Bankruptcy
Code”).
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 York and has requisite power and authority
(corporate and other) to own its properties and to carry on its business as
now
being conducted. The Buyer has full power to execute and deliver this Agreement
and all other documents, instruments and agreements to be delivered by it
hereunder and to consummate the transactions contemplated hereby and thereby.
The Buyer has delivered to the Seller complete and correct copies of the Buyer’s
Articles of Incorporation and By-Laws as in effect on the date hereof. The
Buyer
is not in default under or in violation of any provision of its Articles of
Incorporation or By-Laws. The Buyer has all requisite power and authority
(corporate and other) to execute and deliver this Agreement and the documents,
instruments and agreements contemplated herein, and to consummate the
transactions contemplated hereby and thereby.
3.2. Authorization
.
The
execution and delivery of this Agreement by the Buyer, and the agreements
provided for herein, and the consummation by the Buyer of all transactions
contemplated hereby and thereby, have been duly authorized by all requisite
corporate action. This Agreement and all such other agreements and written
obligations entered into and undertaken by Buyer 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.
3.3. No
Violation
.
The
execution, delivery and performance of this Agreement and the agreements
provided for herein, and the consummation by the Buyer of the transactions
contemplated hereby and thereby, will not, with or without the giving of notice
or the passage of time or both, (a) violate the provisions of any law, rule
or
regulation applicable to the Buyer; (b) violate the provisions of the
Buyer’s Articles of Incorporation or By-Laws; (c) violate any judgment, decree,
order or award of any court, governmental body or arbitrator; or (d) conflict
with or result in the breach or termination of any term of provision of, or
constitute a default under, or cause any acceleration under, or cause the
creation of any lien, charge or encumbrance upon the properties or assets of
the
Buyer pursuant to, any indenture, mortgage, deed of trust or other agreement
or
instrument to which it or its properties is a party or by which the Buyer is
or
may be bound.
3.4. Consents
.
No
consent, approval, authorization or other action by, or filing with, any
governmental authority or any third party is required in connection with the
execution, delivery and performance by the Buyer of its obligations under this
Agreement and the agreements provided for herein, and the consummation by the
Buyer and the Seller of the transactions contemplated hereby, except for such
consents, approvals or authorizations obtained on or prior to the date hereof,
which remain in full force and effect.
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 concurrently herewith 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 Agreements in the form attached
hereto as Exhibits
C-1
and
C-2;
(e) the
Records;
(f) Intentionally
omitted;;
(g) cross
receipt executed by the Seller, in the form of Exhibit
F
(“Cross
Receipt”);
(h) a
certificate from the secretary of the Seller certifying as to (i) the
Certificate of Incorporation and by-laws of the Seller, (ii) the resolutions
adopted by the directors of the Seller authorizing the sale of the Purchased
Assets and (iii) the 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) an
assignment by Capital to Buyer’s lender, Xxxxx Fargo Bank, of Seller’s security
interest in the Seller’s accounts receivable with respect to the CA Branch
Offices in form and substance satisfactory to Xxxxx Fargo Bank; and
(k) 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) the
Non-Competition Agreement and Non-Solicitation Agreements in the form attached
hereto as Exhibits C-1 and C-2;
(d) the
Cross
Receipt, executed by the Buyer;
(e) a
certificate of the secretary of the Buyer certifying as to (i) the Certificate
of Incorporation and by-laws of the Buyer, (ii) the resolutions adopted by
the
directors of the Buyer authorizing the purchase of the Purchased Assets and
(iii) the incumbency information for the individual signing this Agreement
on
behalf of the Buyer; and
(f) 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 York, 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 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:
(i) any
misrepresentation or breach of any warranty of Seller contained in this
Agreement or in any schedule of Seller or any other agreement, instrument,
document or certificate delivered by Seller pursuant to this
Agreement;
(ii) any
breach of any covenant of Seller contained in this Agreement or any other
agreement, instrument, document or certificate delivered by Seller pursuant
to
this Agreement;
(iii) any
debt,
liability or obligation of Seller other than the Assumed Liabilities; and
(iv) the
use
or operations of the Purchased Assets prior to the Closing Date.
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:
(i) any
misrepresentation or breach of warranty of Buyer contained in this Agreement
or
in any schedule of Buyer or any other agreement, instrument, document or
certificate delivered by Buyer pursuant to this Agreement;
(ii) any
breach of any covenant of Buyer contained in this Agreement or any other
agreement, instrument, document or certificate delivered by Seller pursuant
to
this Agreement;
(iii) any
of
the Assumed Liabilities; and
(iv) the
use
or operation of the Purchased Assets after the Closing Date.
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.
Nothing herein shall be deemed to require any party hereto to make or file
any
claim under its insurance policies.
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, provided that
the failure so to provide any such notice shall not relieve an Indemnifying
Party from any liability hereunder (except and only to the extent that such
Indemnifying Party has been damaged thereby).
(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 or delayed; 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. Set-Off
.
Buyer
may offset or recoup any Loss indemnifiable by Seller under this Agreement
against any amounts payable to Seller on 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.
6. Intentionally
Deleted
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 Closing 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
December 6, 2005.
(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. To
the
extent that any of the Purchased Assets are non-assignable or non-transferable
to Buyer, or non-assignable or non-transferable without the consent of a third
party, or shall be subject to any option in any third party by virtue of a
request for permission to assign or transfer by reason of or pursuant to this
Agreement or the transactions contemplated hereby, this Agreement shall not
constitute a contract to assign or transfer the same if an attempted assignment
or transfer would (i) constitute a breach thereof or (ii) create rights in
others not desired by Buyer. If Seller shall have failed to procure consent
to
any assignment or transfer or waiver of such option prior to the Closing, Seller
shall use commercially reasonable efforts to obtain such consent, cooperate
with
Buyer in any lawful arrangements designed to provide the benefits (including
without limitation, the payment to Buyer of any monies received by Seller)
of
such Purchased Asset so long as Buyer cooperates with Seller in such
arrangements, and enforce at the request of Buyer and at the expense and for
the
account of Buyer, any rights of Seller arising from such Purchased Asset against
the other party or parties thereto.
(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 Closing Date.
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 Closing Date (other than litigation
arising out of the transactions contemplated by this Agreement). The party
requesting such cooperation shall pay the out-of-pocket expenses (including
legal fees and disbursements) of the party providing such cooperation and of
its
officers, directors, employees, other personnel and agents reasonably incurred
in connection with providing such cooperation, but shall not be responsible
to
reimburse the party providing such cooperation for such party’s time spent in
such cooperation or the salaries or costs of fringe benefits or similar expenses
paid by the party providing such cooperation to its officers, directors,
employees, other personnel and agents while assisting in the defense or
prosecution of any such litigation or proceeding.
(a) Accounts
Receivable.
Both
parties agree, as expeditiously as possible, to notify the Customers set forth
on Exhibit 2.25, of the sale of the CA Branch Offices, and to instruct such
Customers that any monies due on outstanding invoices shall be paid to Buyer
and/or its lender, Xxxxx Fargo Bank, via such mechanism as the Buyer may
determine.
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:
|
To
the Buyer:
Tri-State
Employment Service, Inc.
000
Xxxxxxxx, 00xx
Xxxxx
Xxx
Xxxx, XX 00000
Attention:
Xxx Xxxxxxxx, Esq,
Fax:
000-000-0000
|
|
|
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 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, 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.
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; provided, however, Buyer shall not be
liable or responsible for any obligations under the WARN Act arising from
Seller’s termination of full-time employees prior to or on the Effective Date,
or arising out of Seller’s breach of the warranties and representations in
Section 2.23(b).
[Signature
Page Follows]
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:
TRI-STATE
EMPLOYMENT SERVICE, INC.
By:
Name:
Title:
