ASSET PURCHASE AGREEMENT
Exhibit
2.2
This
Asset Purchase Agreement ("Agreement") is made as of December 5, 2005, by and
between Accountabilities, Inc., a Delaware corporation
("Buyer") with its principal business offices located at 00 Xxxx Xxxx,
Xxxxxxxxx, Xxxxxxxxxxxxx 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.
(i) all
office supplies and similar materials (the "Supplies");
(ii) all
contracts, agreements, leases, arrangements and/or commitments of any kind,
whether oral or written, relating solely to the Purchased Assets, and limited
to
the geographic area serviced by the Purchased Assets as set forth on Schedule
2.12 attached hereto (the "Contracts");
(iii) all
customer lists, files, records and documents (including credit information)
relating solely to customers and vendors of the Purchased Assets and limited
to
the geographic area serviced by the Purchased Assets and all other business,
financial and employee books, records, files, documents, reports and
correspondence relating to the Purchased Assets, but excluding records relating
to accounts receivable, except to the extent required by Sections 2.22 and
7.2(d) herein (collectively, the "Records");
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(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 Stratus
and
employed by Stratus, prior to the date of Closing, in operating the Purchased
Assets;
(viii) all
municipal, state and federal franchises, licenses, authorizations and permits
of
the Seller which are necessary to operate or are related to the Purchased
Assets;
(ix) all
prepaid charges, deposits, sums and
fees of Seller relating to the Purchased
Assets;
(x) all
claims and rights of Seller related to or arising from the Purchased Assets;
and
(xi) all
of the goodwill of the Purchased Assets.
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rights,
assets and services related to the conduct of Seller’s business at any of its
other offices and locations throughout the United States.
(a) the
Buyer shall pay to Seller an earnout in exchange for the Purchased Assets,
which
is based upon two percent (2%) of the sales of the Purchased Assets for the
first twelve months from the Effective Date; one percent (1%) of the sales
of
the Purchased Assets for the second twelve months from the Effective Date;
and
one percent (1%) of the sales of the Purchased Assets for the third twelve
months from the Effective Date. The payments will be made by wire
transfer to Seller on a weekly basis each Friday, beginning the first week
from
the Effective Date of this Agreement. A schedule of sales by customer
shall be delivered by Buyer to Seller via fax or email no later than Friday
each
week. Such schedule is to be certified by an officer of Buyer as to
be true and complete. The earnout on sales will be based on the sales
of existing customers of the Purchased Assets as of the Effective Date of this
Agreement set forth on Schedule 2.25 hereto.
(b) all
sums due under that certain Demand Subordinated Promissory Note between Buyer
and Seller dated September 15, 2005, in the original principal amount of
$125,000. In connection therewith, at Closing, the September 15, 2005
Demand Subordinated Promissory Note will be deemed paid and marked cancelled
and
all liens related thereto will be released.
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(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 Date;
(iv) all
accounts payable of the Seller;
(v) any
liability or obligation under or in connection with the Retained
Assets.
(vi) any
federal, state, local or other foreign tax payable by the Seller whether such
tax is due and payable prior to or after the Effective Date;
(vii) any
indebtedness of the Seller for borrowed money;
(viii) all
liabilities of the Seller with respect to any claim, litigation or proceeding
accruing with respect to, or arising from or relating to any business, activity,
course of conduct, action or omission before, on or after the Effective Date,
including, without limitation, those matters set forth on Schedule 2.9, whether
such claim, litigation or proceeding is presented or instituted prior to or
after the Effective Date;
(ix) all
liabilities, obligations, payments, benefits, costs and expenses including,
without limitation, any salary, wage, vacation, bonus, severance, expense
reimbursement or other benefit: (a) accruing and payable to staff and part-time
employees of the Seller who become employed by the Buyer after the Effective
Date with respect to any period before the Effective Date as set forth in
Schedule 1.3 attached hereto; (b) accruing and payable to all other employees
of
the Seller with respect to any period before or after the Effective Date; (c)
accruing and payable to all former employees of the Seller whose employment
terminated before the Effective Date; (d) accruing and payable pursuant to
any
employee benefit plans (including pension plans) of the Seller or under federal
and state laws governing such plans, whether before or after the Effective
Date,
including, without limitation, in connection with the termination of
participation under such plan by a staff or part-time employee; or (e) accruing
and payable in connection with the termination of any such employee benefit
plan
of the Seller, whether before or after the Effective Date;
(x) all
warranty liability of the Seller, including without limitation, for claims
which
arise prior to the Effective Date, whether such claims are presented prior
to or
after the Effective Date.
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1.5. 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 __, 2005, and the transactions
contemplated hereby shall be deemed to occur at 12:01 a.m., Eastern Time, on
November 28, 2005 (the "Effective Date"). At the Closing the parties
will exchange facsimile executed documents and they will promptly send each
other original signature pages by overnight mail. The parties are
executing this Asset Purchase Agreement now, but all Exhibits and Schedules
hereto will be delivered at the Closing.
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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 Sec.Sec.9601 et
seq.
And 40 CFR Sec.Sec.302.1 et seq., and regulations thereunder; the Federal Clean
Air Act, as amended, 42 USC Sec.Sec.7401 et seq., and regulations thereunder;
the Resource Conservation and Recovery Act, 42 USC Sec.Sec.6901 et seq., as
amended and regulations thereunder; and the Federal Water Pollution Control
Act,
33 USC Sec.Sec.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.
2.17. [Intentionally
left blank].
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2.20. [Intentionally
left blank].
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(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, on the Effective Date;
(f) copies
of the general ledgers and books of account of the Seller pertaining to the
Purchased Assets for the period September 30, 2004, to the Effective
Date, on the Effective Date.
(g) cross
receipt executed by the Seller, in the form of Exhibit F ("Cross
Receipt");
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(h) a
certificate executed by the President of the Seller that all representations
and
warranties made herein by Seller are true and correct and that all terms,
conditions and provisions of this Agreement have been performed and complied
with at the time of Closing;
(i) a
certificate from the secretary of the Seller authorizing the sale of the
Purchased Assets and providing incumbency information for the individual signing
this Agreement on behalf of the Seller;
(j) A
UCC-3 partial release, authorized by Seller’s Lender, Capital, relative to the
Purchased Assets only;
(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.
(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 executed by the Chief Executive Officer/Managing Member of the
Buyer
that all representations and warranties made herein are true and correct and
that all terms, conditions and provisions of this Agreement have been performed
and complied with at the time of Closing; and
(f) 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.
(g) such
certificates or other documents as may be reasonably requested by Seller,
including, without limitation, certificates of legal existence, good standing
and certified charter documents from the Secretary of State of Delaware, and
certificates of an officer of the Buyer with respect to directors’ resolutions,
by-laws and other matters.
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(i) 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;
(ii) any
breach of any covenant of Seller contained in this Agreement;
(iii) any
debt, liability or obligation of Seller other than the Assumed Liabilities;
and
(iv) the
operations of the Purchased Assets prior to the Effective Date.
(i) any
misrepresentation or breach of warranty of Buyer contained in this Agreement
or
in any schedule of Buyer or in any certificate delivered by
Buyer pursuant to this Agreement;
(ii) any
breach of any covenant of Buyer contained in this Agreement;
(iii) any
of the Assumed Liabilities;
(iv) the
use or operation of the Purchased Assets after the Effective Date;
and
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(v) the
failure to obtain any of the Real Property Lease consents and releases described
in Section 7.6(a).
(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
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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.
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(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.
(a) At
any time and from time to time after the Effective Date, at the Buyer's
reasonable request and without further consideration, the Seller shall execute
and deliver such instruments of sale, transfer, conveyance, assignment and
confirmation, and take such other action, all at the Buyer's sole cost and
expense, as the Buyer may reasonably request to more effectively transfer,
convey and assign to the Buyer, and to confirm the Buyer's title to, all the
Purchased Assets, to put the Buyer in actual possession and operating control
thereof, to assist the Buyer in exercising all rights with respect thereto,
and
to carry out the purpose and intent of this Agreement. Immediately
after the Effective Date, the Seller shall, to the extent applicable, authorize
the release to the Buyer of all files pertaining to the Purchased Assets held
by
any federal, state, county or local authorities, agencies or
instrumentalities. The Seller and the Buyer will cooperate in
communications with suppliers and customers to accomplish the transfer of the
Purchased Assets to the Buyer.
(b) The
parties agree that from and after the Effective Date, as to any monies received
that rightfully belong to the other party, they shall remit such monies promptly
to the other party.
(c) Within
fifteen (15) business days after the Effective Date, the parties shall mutually
agree on the pro-ration as of the Effective Date of rent, utilities and
telephone relative to the Purchased Assets, and the party obligated to pay
the
net amount of such prorated items to the other party will make such payment
ten
(10) days after the agreement on pro-rations is consummated. Seller
will pay the premiums for the health benefits of Seller’s employees to be
employed by Buyer through November 30, 2005.
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(d) Each
party shall have the right, for a period of four (4) years following the
Effective Date, to have reasonable access to those books, records and accounts,
including financial and tax information, correspondence, employment records
and
other records that may, at that time, be in the possession of the other party
to
the extent that any of the foregoing relates to the Purchased Assets and is
needed by such party in order to comply with its obligations under applicable
securities, tax, environmental, employment or other laws and
regulations.
(e) Notwithstanding
anything in this Agreement to the contrary, this Agreement shall not constitute
an agreement to assign any approval, agreement, contract, lease, or other
commitment included in the Purchased Assets if an attempted assignment thereof
without the consent of a party thereto would constitute a breach
thereof.
(f) Within
ten (10) days of the Effective Date Seller shall deliver to Buyer an aging
schedule of Seller’s accounts receivable as of November 21, 2005.
(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 Assets as of the Effective
Date. The Seller shall not undertake any formal collection action
(whether legal action, referral to a collection agency or otherwise) with
respect to any such Account Receivable without first consulting with the
Buyer. The Seller agrees to pay, in a manner consistent with past
business practice of the Seller, the outstanding accounts payable of the Seller
as of the Effective Date. The Buyer shall not, and shall not permit
its employees, officers, directors, independent contractors or agents to,
directly or indirectly, encourage any customer of Seller not to make payment
on
any accounts receivable of Seller or commit any action which could reasonably
lead or cause any customer not to make such a payment and the Buyer shall
otherwise cooperate with Seller and its designees (and cause its personnel
and
accountants to cooperate) in Seller’s collection efforts.
(b) Both
parties agree, as expeditiously as possible, to notify the Customers set forth
on Exhibit 2.25, of the sale of the Purchased Assets, and to instruct such
Customers that any monies due on invoices for service periods prior to the
Effective Date shall
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be
paid to Seller/Capital via the
Capital lockbox mechanism, and all monies due on invoices for service periods
subsequent to the Effective Date shall be paid to Buyer. The parties
agree that in the event payments are received by either of the parties on
accounts receivable from customers who are customers of both of the Buyer and
Seller, and in the event that the customer has not provided instructions on
the face of the remittance or any accompanying documentation or correspondence,
the party receiving such payment shall contact the Customer to ascertain how
the
payment is to be applied. In the event such inquiry is unsuccessful,
then such payments shall be applied first to the oldest outstanding
invoice(s). In the event that either party receives proceeds of accounts
receivable which belong to the other party, such party will immediately remit
such proceeds, in kind, to the other party; provided, however, that, in the
case
of monies being received by Buyer and due to Seller, such proceeds shall be
remitted to the Capital lockbox.
(a) consents
in the form of Exhibit E attached hereto from the landlord relating to
all Real Property Leases identified on Schedule 2.10 attached hereto, consenting
to the assumption of such Real Property Leases by the Buyer and the release
of
Seller from all obligations and liabilities under such Real Property Leases
and
any related guarantees, and any other consents required under any Contract
or
otherwise in connection with the transactions contemplated by this Agreement;
and
(b) Buyer
shall pay all costs and fees payable to landlords in connection with obtaining
the consents related to the Real Property Leases and Equipment
Leases. If a consent is not obtained with respect to any Real
Property Leases by the Effective Date, Buyer shall continue to pay Seller,
when
and as the same becomes due, the monthly rental due pursuant to such Real
Property Leases and Equipment Leases.
To
the
Buyer: With
a copy to:
Accountabilities,
Inc.
00
Xxxx
Xxxx
Xxxxxxxxx,
XX 00000
Attention: Xxxxx
Xxxxxxx, President
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To
the
Seller: With
a copy to:
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.
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.
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SELLER: | STRATUS SERVICES GROUP, INC. | ||
Date:
|
By:
|
/s/ Xxxxxx X. Xxxxxxx | |
Name: Xxxxxx X. Xxxxxxx | |||
Title: Chief Executive Officer | |||
BUYER: | ACCOUNTABILITIES, INC. | ||
Date:
|
By:
|
/s/ Xxxxx Xxxxxxx | |
Name: Xxxxx Xxxxxxx | |||
Title: President | |||
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