Exhibit 2.8
Certain confidential information has been omitted from this Exhibit 2.8 pursuant
to a confidential treatment request filed separately with the Securities and
Exchange Commission. The omitted information is indicated by the symbol "***" at
each place in this Exhibit 2.8 where the omitted information appeared in the
original.
ASSET PURCHASE AGREEMENT
AMONG
SEP, LLC,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ HOLDINGS LLC,
STRATUS SERVICES GROUP, INC.
AND
SEA CONSULTING SERVICES CORPORATION
INDEX
ARTICLE
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1. DEFINITIONS
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2. SALE AND PURCHASE
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3. PURCHASE PRICE
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4. PAYMENT OF THE PURCHASE PRICE
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5. PURCHASE OF ASSETS, ASSUMPTION OF CERTAIN LIABILITIES AND PAYMENT
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6. REPRESENTATIONS AND WARRANTIES
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7. CERTAIN EMPLOYEE MATTERS
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8. MANAGEMENT AND COVENANTS OF AND RESPECTING THE COMPANY
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9. ANNOUNCEMENTS TO THIRD PARTIES
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10. NOTICES
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11. WAIVER OF RIGHT TO DISSOLUTION
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12. COSTS
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13. NON COMPETITION AND OUTSIDE INVESTMENT
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14. ENTIRE AGREEMENT
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15. APPLICABLE LAW AND CHOICE OF FORUM
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EXHIBITS
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Exhibit 1 : Earn Out Profit calculation
Exhibit 2 : Representations and Warranties
Exhibit 3 : Management Charter
Exhibit 4 : Reporting Documents
Exhibit 5 : Form of Proprietary Information and Inventions Agreement
Exhibit 6 : Forms of Legal Opinion
Exhibit 7 : Intentionally Omitted
Exhibit 8 : List of Assets and Business Description
Exhibit 9 : Form of ▇▇▇▇ of Sale
Exhibit 10 : Assumed Liabilities
Exhibit 11 : Form of Assignment and Assumption Agreement
Exhibit 12 : Form of License Agreement
Exhibit 13 : Allocation Agreement
Exhibit 14 : Asset Valuation
i
ASSET PURCHASE AGREEMENT
------------------------
AMONG:
SEP, LLC, a limited liability company formed under the laws of the state of New
Jersey having a business address of ▇▇▇▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ (the "COMPANY");
▇▇▇▇▇▇▇ HOLDINGS LLC, a limited liability company formed under the laws of New
Jersey ("▇▇▇▇▇▇▇ LLC");
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, living at ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and with
an United States passport N(degree) ▇▇▇▇▇▇▇▇▇ (the "EXECUTIVE");
Stratus Services Group, Inc., a company incorporated under the laws of the State
of Delaware ("PARENT");
the Company, ▇▇▇▇▇▇▇ LLC, the Executive and Parent are hereinafter referred to
collectively as the "VENDORS" and individually as a "VENDOR"; and
SEA Consulting Services Corporation, a corporation incorporated under the laws
of the State of Delaware, duly represented by a duly elected officer hereinafter
referred to as "PURCHASER".
WHEREAS:
(A) The Company is engaged in the business of providing engineering
services and consulting services;
(B) The Company is willing to sell, convey and transfer all of the assets
and properties used in and constituting the Business as described on
EXHIBIT 8 attached hereto (hereinafter referred to as the "ASSETS") to
Purchaser under the terms and conditions set forth in this agreement,
hereinafter referred to as the "AGREEMENT";
(C) The Purchaser is willing to buy and acquire all of the Assets and
assume certain liabilities from the Company upon the terms and subject
to the conditions set forth herein;
(D) The Vendors hereby acknowledge that this Agreement has been signed by
the Executive in his individual capacity and that the ability and
willingness of the Executive and the commitment of the Executive, as
described herein to work for the Purchaser on an exclusive basis and to
devote 100% of his working time to the management of the Purchaser for
no less than five years following the closing of the transactions
contemplated by this Agreement constitutes a decisive factor without
which this Agreement would not have been executed, it being recognized
and accepted by the Purchaser that the Executive's continuing
participation as a member
1
of the Board of Directors of Parent will not be considered a factor in
contravention of this commitment;
(E) The terms of the offer contained herein are only valid on the condition
that this Agreement has been executed by all parties hereto on or
before January __, 2002 and if not executed this Agreement shall be
null and void thereafter without either party being entitled to any
indemnification whatsoever unless such date is expressly extended by
written agreement of the parties hereto;
THE VENDORS AND THE PURCHASER HEREBY AGREE AS FOLLOWS:
ARTICLE 1 DEFINITIONS
The following definitions shall apply in this Agreement and in the exhibits
hereto:
"ANNUAL ACCOUNT": the audited and unconditionally approved consolidated annual
accounts based on generally accepted accounting principles as used historically
and consistently applied in accordance with past practice of the Business for
the relevant financial year;
"ASSUMED LIABILITIES": those liabilities and obligations of the Company set
forth on EXHIBIT 10 attached hereto;
"BUSINESS": has the meaning given thereto in EXHIBIT 8;
"CLOSING": has the meaning given thereto in Article 2.1;
"CLOSING DATE": the date of transfer of the Assets;
"CURRENT ACCOUNT": any loan, unreimbursed expense, deferred compensation or any
other form of indebtedness for money (including all accrued and unpaid interest
thereon), borrowed from the Company by one or more of the other Vendors or
affiliates of the Vendors or loaned to the Company by one or more of the Vendors
or affiliates of the Vendors ;
"DID": has the meaning given thereto in Article 8.2(d);
"DOLLARS": All dollar amounts referenced herein are United States Dollars,
unless otherwise specified.
"DUE DILIGENCE INVESTIGATION": has the meaning given thereto in Article
5.1.1(c);
"EARN OUT PROFIT": has the meaning given thereto in EXHIBIT 1;
"EXCLUDED ASSETS": any accounts receivable of the Company and the Company's
corporate documents and records and income tax returns;
"EXCLUDED LIABILITIES": any liabilities of the Company including, but not
limited to, any accounts payable of the Company and any Current Account and
excluding the Assumed Liabilities;
2
"FIRST PAYMENT": has the meaning given thereto in Article 3.1 (a);
"INDEMNIFICATION": has the meaning given thereto in Article 6A.2;
"LIEN": means any debt, mortgage, pledge, assignment, charge, security interest,
restriction, claim, rights of refusal, encumbrance, lien (statutory or other),
conditional sale or other title retention agreement, preference, or other
security agreement of any kind or nature whatsoever;
"MANAGEMENT TEAM": Executive and any other person designated as such by the
Purchaser;
"NET EFFECT": means in relation to any determination hereunder, the net result
of such determination, taking into account positive or negative effects of
corporate tax;
"PAYMENT": First, Second, Third and Subsequent Payments, cumulatively or either
one of them as applicable;
"PERMANENT DISABILITY": for purposes hereof shall mean as to the Executive the
certification of an independent medical doctor (selected by mutual agreement of
the Executive or his representatives and the Purchaser or, failing such
agreement, selected by the agreement of a medical doctor selected by the
Executive or his representatives and a medical doctor selected by the Purchaser)
that the Executive has been mentally or physically incapacitated or disabled in
a manner which has rendered or renders him unable to perform his duties to the
Company and responsibilities under this Agreement for a continuous period of
three (3) consecutive months or for shorter periods aggregating one hundred and
twenty (120) days or more during any period of twelve (12) successive months.
"PROXY MATERIALS": has the meaning given thereto in Article 8.4.7 to this
Agreement.
"PURCHASER": has the meaning given thereto in the preamble to the Agreement;
"PURCHASER DESIGNEE": person nominated by the Purchaser to the Supervisory
Committee;
"SECOND PAYMENT": has the meaning given thereto in Article 3.1 (b);
"SPECIFICATION": has the meaning given thereto in Article 4.3;
"SUBSEQUENT PAYMENT": has the meaning given thereto in Article 3.1 (d);
"SUBSIDIARY": means any corporation in which a 50% or greater interest is
directly and/or indirectly held by another corporation;
"SUPERVISORY COMMITTEE": a committee comprising the Management Team and the
Purchaser Designee;
"THIRD PAYMENT": has the meaning given thereto in Article 3.1(c).
ARTICLE 2 SALE AND PURCHASE
3
2.1 Vendors agree hereby to sell, convey and transfer on the
Closing Date (the "CLOSING") to Purchaser all right, title and
interest of the Company in the Assets other than Excluded
Assets free and clear of all Liens and Purchaser agrees hereby
to purchase the Assets and assume from the Company at the
Closing the Assumed Liabilities.
2.2 The Company shall transfer and Purchaser shall accept transfer
of the Assets and shall assume the Assumed Liabilities at the
Closing as contemplated herein. Purchaser agrees to ratify or
pay all of such Assumed Liabilities on a timely basis except
for reasonable objection thereto on a timely basis.
2.3 Purchaser shall not be obliged to complete the purchase of any
of the Assets unless the purchase of all of the Assets is
completed free and clear of all Liens at the same time except
for (A) Liens for taxes not yet due and payable, or (B)
statutory Liens of landlords, carriers, warehousemen,
mechanics and material men, and other Liens imposed in the
ordinary course of business for sums not yet due or
delinquent, and easements, rights of way, and other similar
encumbrances not interfering in any material respect with the
ordinary course of the Business and, as to property affected
by such Lien, not interfering with the use or intended use of
that property (collectively, "Permitted Liens"); provided,
however, that the purchase of Assets with Permitted Liens
shall not relieve the Vendors of their obligations to pay the
liability which gave rise to such Permitted Lien except to the
extent such liability is an Assumed Liability.
ARTICLE 3 PURCHASE PRICE
3.1 Subject to and upon the terms and conditions of this
Agreement, in full consideration for the transfer of Assets
free and clear of all Liens, Purchaser will pay and/or deliver
or cause to be delivered a purchase price as follows:
(a) A first payment of $2,200,000 (written two million
two hundred thousand dollars), as adjusted in
accordance with this Article 3.1(a) (the "FIRST
PAYMENT"). This payment includes payment of the
Excluded Liabilities including the Current Account of
the Vendors in the Company as of the date of Closing
and all transaction expenses of the Vendors (it being
understood and agreed by the Vendors that the Current
Account shall thereafter be reduced to and remain at
zero and all transaction expenses of the Vendors
shall be the liability solely of the Vendors). This
assumes that the net equity position of the Assets
(including Assumed Liabilities) and Business being
transferred at Closing is $200,000 and the net asset
value of the Assets being transferred at Closing is
$200,000. Should such net equity or such net assets
differ either positively or negatively from $200,000,
a dollar for dollar adjustment will be made to the
Second Payment based on the difference between (i)
the lesser of the actual net equity or actual net
asset position, and (ii) $200,000.
(b) A second payment of $1,000,000 (written one million
dollars), as adjusted in accordance with this Article
3.1(b) (the "SECOND PAYMENT"), based upon the Earn
Out Profit for the six months ended June 30, 2002,
provided however that if the Earn Out Profit for such
4
period differs either positively or negatively from
$600,000, a dollar for dollar adjustment will be made
to the Second Payment.
(c) A third payment of $1,000,000 (written one million
dollars), as adjusted in accordance with this Article
3.1(c) (the "THIRD PAYMENT") based upon the Earn Out
Profit for the six months ended December 31, 2002,
provided however that if the Earn Out Profit for such
period differs either positively or negatively from
$600,000, a dollar for dollar adjustment will be made
to the Third Payment.
(d) Subsequent payments for the financial years, being
the five calendar years closed between January 1,
2003 and December 31, 2007, (the "SUBSEQUENT
PAYMENT") are determined as follows:
***
3.2 Each Payment shall be calculated on the basis of the Annual
Accounts of the Company or the Purchaser, as the case may be,
for the relevant financial year taking into account the
adjustment of EXHIBIT 1 concerning the calculation of the Earn
Out Profit.
3.3 30% of the Subsequent Payments to the Vendor, shall be used by
such Vendor to invest in shares of the affiliate of the
Purchaser specified in writing by the Purchaser to the Vendor.
Such investment shall be made each time, within one month
after receipt of any such payment made by Purchaser. The
acquired shares shall not be sold by the Vendor during a
period of at least two years after purchase thereof and be
retained in a restricted account for that matter. The Vendor
shall provide Purchaser with a certificate of a bank proving
compliance with the aforementioned.
3.4 Non-fulfillment of the requirements in Article 3.3 shall
entitle Purchaser to retain future payments until proof has
been received as to compliance with respect to all payments
made.
ARTICLE 4 PAYMENT OF THE PURCHASE PRICE
4.1 For each Payment, the Company will receive an amount equal to
the result of the calculation of Article 3.1, and, subject to
Article 4.5 below, the Company will distribute such amounts in
accordance with the Allocation Agreement attached hereto as
EXHIBIT 13.
4.2 The First Payment is to be paid at the Closing.
4.3 The Second Payment, Third Payment and each Subsequent Payment
is to be paid one month after the receipt and acceptance of
the Annual Account and the specification, in compliance with
this Agreement by Purchaser's ultimate shareholder, setting
out the calculation of the Earn Out Profit and the calculation
of the Second Payment, Third Payment, or the relevant
Subsequent Payment in respect of the relative financial year
(the "SPECIFICATION");
-----------------
*** Confidential portions of this agreement omitted pursuant to a confidential
treatment request filed separately with the Securities and Exchange Commission.
5
provided, however, that acceptance of the Annual Account and
Specification by Purchaser's ultimate shareholder shall be
based on their determination (i) as to compliance with U.S.
generally accepted accounting principles ("GAAP") and the
provisions of EXHIBIT 1 of the Annual Account or
Specification, and (ii) as to the accuracy and completeness of
the Annual Account or Specification. The Annual Account and
Specification shall be sent to Purchaser's ultimate
shareholder by registered letter, FedEx or other recognized
courier service and shall be computed in accordance with GAAP.
4.4 Subject to Articles 4.5 and 4.6, all Payments pursuant to this
Article 4 shall be paid by or on behalf of the Purchaser for
the benefit of the Company into a bank account designated by
the Company.
4.5 If for any reason, the Executive ceases to be employed by the
Purchaser, then no Subsequent Payments shall be due and the
portion of the Second and Third Payments due to ▇▇▇▇▇▇▇ LLC as
set forth in the Allocation Agreement shall not be due;
provided however, in the event that such cessation of
employment is due solely to the Executive's death or Permanent
Disability prior to December 31, 2003, the Second Payment and
the Third Payment shall still be due to ▇▇▇▇▇▇▇ LLC in
accordance with the terms of this Agreement.
4.6 Purchaser can withhold a Payment if Vendors do not comply with
the terms and conditions of this Agreement and do not cure
such non-compliance within 30 days after delivery of a notice
from Purchaser thereof.
4.7 In the event the Purchaser shall sell substantially all of the
Assets, all of the stock of the Purchaser or the Business
prior to the expiration of its payment obligations under
Article 3.1 hereof, including, but not limited to, any
Subsequent Payments, the payment obligations of the Purchaser,
if not assumed, shall survive.
ARTICLE 5 PURCHASE OF ASSETS, ASSUMPTION OF CERTAIN LIABILITIES AND PAYMENT
5.1 Conditions precedent:
5.1.1 Notwithstanding any provisions to the contrary
contained herein, the Purchaser shall be released
from its obligation towards the Vendors to close the
transactions contemplated in this Agreement in the
following cases:
(a) If a force majeure (Act of God) or other
event with or beyond the control of the
parties occurs between the date hereof and
the Closing Date which has a material
adverse effect on the Assets, net value,
financial position or commercial prospects
of the Company.
(b) If a Lien of any kind, other than Permitted
Liens, exists on any of the Assets
(including goodwill) of the Company at the
Closing Date.
6
(c) If since the date of this Agreement, there
shall have been any material adverse change
in the business, properties, assets,
liabilities, prospects or condition
(financial or otherwise) or results of
operations of the Company, the Business or
the Assets due to any cause whatsoever, or
any place of business of the Business shall
have suffered a substantial fire or other
casualty loss or damage.
(d) The failure or inability of the Vendors,
prior to April 20, 2002, to obtain the
approval of the transactions contemplated
hereby of the Shareholders of the Parent.
(e) The failure of any of the Vendors to satisfy
all conditions and deliveries applying to
them, under this Agreement.
(f) The institution or threat by a third party
of litigation or an injunction against the
implementation of the transactions
contemplated herein.
(g) As of Closing, the failure of 90% or more of
the employees of the Business as of the date
hereof to indicate their acceptance, in
writing, of the offer letter of Purchaser
for at-will employment by the Purchaser.
5.1.2 Notwithstanding any provisions to the contrary
contained herein, the Vendors shall be released from
their respective obligations towards the Purchaser to
Close the transaction contemplated in this Agreement,
in the following cases:
(a) The failure of the Purchaser to satisfy all
conditions and deliveries applying to it
under this Agreement.
(b) The institution or threat by a third party
of litigation or an injunction against the
implementation of the transactions
contemplated herein.
5.1.3 The Closing shall take place at the offices of
Golenbock, Eiseman, Assor, ▇▇▇▇ & Peskoe, ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m., New
York City time, at a closing five business days after
Parent's shareholders approve the transactions
contemplated hereby, but in no event later than April
20, 2002. At the Closing, the Company will deliver to
Purchaser the Assets and the closing deliveries set
forth in Article 5.2, against delivery by the
Purchaser to the Company of the First Payment.
5.2 The following shall take place on the Closing Date:
7
(a) The Company shall deliver ▇▇▇▇(s) of sale in
the form of EXHIBIT 9 and deeds for all of
the Assets duly executed by the Company with
evidence that all Liens thereon have been
released;
(b) The Company and Purchaser shall deliver an
assignment and assumption agreement in the
form of EXHIBIT 11 for the Assumed
Liabilities duly executed by the Purchaser
and the Company;
(c) Parent shall deliver a license agreement in
the form of EXHIBIT 12 for the royalty free,
perpetual, world-wide, exclusive use of the
name "Stratus Engineering" duly executed by
the Purchaser, Parent and the Company;
(d) Purchaser shall pay the First Payment to
Vendors in immediately available funds, and
the Company shall deliver to Purchaser an
acknowledgement of receipt of this First
Payment;
(e) Vendors shall deliver to Purchaser evidence
of all necessary approvals in connection
with the sale of the Assets to Purchaser,
and copies of all relevant documents;
(f) Vendors shall deliver to Purchaser copies of
executed non-competition, non-solicitation
and proprietary agreements from the
Executive and the employees of the Company
designated by the Purchaser or Purchaser's
direct or indirect shareholders to the
satisfaction of Purchaser;
(g) The President and another executive officer
of the Company shall execute and deliver a
certificate (I) as to compliance with the
Company's covenants contained in this
Agreement, (II) that no action, suit,
proceeding or investigation shall have been
instituted against any of the Vendors or the
Purchaser in, by or before any court,
tribunal or governmental body or agency, or
have been threatened, and be unresolved, to
restrain or prevent, or to obtain damages by
reason of, or challenging or contesting in
any manner, any of the transactions
contemplated hereby, and (III) that the
representations and warranties of the
Vendors, contained in this Agreement, any
schedules and exhibits and/or any
agreements, certificates or documents
delivered in connection with this Agreement
shall be true and correct when made, and
shall also be true and correct at the time
of the Closing, with the same force and
effect as through such representations and
warranties were made at that time;
(h) The President and another executive officer
of the Parent shall execute and deliver a
certificate (I) as to compliance with the
Parent's covenants contained in this
Agreement, (II) that no action, suit,
proceeding or investigation shall have been
instituted against any of the Vendors or the
Purchaser in, by or before any court,
tribunal or governmental body or agency, or
have been threatened, and be unresolved, to
restrain or prevent, or to obtain damages by
reason of, or challenging or contesting in
any manner, any of the transactions
contemplated hereby, (III) that the
shareholders of Parent have approved the
sale of the assets and all of the
transactions contemplated
8
by this Agreement at a meeting duly called
and held, and (IV) that the representations
and warranties of the Vendors, contained in
this Agreement, any schedules and exhibits
and/or any agreements, certificates or
documents delivered in connection with this
Agreement shall be true and correct when
made, and shall also be true and correct at
the time of the Closing, with the same force
and effect as through such representations
and warranties were made at that time;
(i) Vendors shall deliver a fairness opinion in
form and substance reasonably satisfactory
to Purchaser;
(j) Vendors shall deliver legal opinions in the
form of Exhibit 6 from their respective
counsel including, but not limited to, an
opinion that all necessary shareholder
approvals have been obtained;
(k) the delivery by Vendors of all consents and
waivers of third parties and governmental
agencies and entities which are necessary or
required to be obtained in connection with
the transactions contemplated by this
Agreement shall have been obtained by the
Vendors, and there shall have been delivered
to the Purchaser executed counterparts
reasonably satisfactory in form and
substance to the Purchaser of such consents
and waivers;
(l) Vendors shall deliver (A) general releases
in favor of the Company and Purchaser from
each of the Vendors other than the Company
releasing the Company from any liability or
obligation it may have to any Vendor through
the Closing Date, whether on account of an
inter company matter or otherwise, other
than the rights to distributions of the
Company as provided in its limited liability
company operating agreement and the
Allocation Agreement and (B) an executed
copy of the Allocation Agreement in the form
of EXHIBIT 13; and
ARTICLE 6 REPRESENTATIONS AND WARRANTIES
6.1 Except with respect to Section 2 of Exhibit 2, Vendors jointly
and severally represent and warrant to the Purchaser that the
statements made by any of Vendors as set forth in EXHIBIT 2
are true and complete now.
6.2 The representations, warranties and covenants made herein or
in any certificates or documents executed in connection
herewith shall survive the execution and delivery hereof and
thereof.
ARTICLE 6A INDEMNIFICATION
6A.1 (a) Except as otherwise specifically provided in this
Agreement, Vendors agree jointly and severally to save,
indemnify and hold harmless Purchaser, its affiliates and
shareholders and their respective directors, officers,
shareholders, agents, successors, assigns and affiliates, from
and against any and all loss, liability, damages and expenses
resulting from or arising out of or in connection with, and
shall be liable to Purchaser for damages and expenses
resulting from or arising out of or in connection with (i) the
existence of any
9
Lien (including any Permitted Liens which arise other than
from an Assumed Liability) on the Assets, (ii) any breach or
non-fulfilment of one or more of the representations and
warranties by the Vendors; (ii) a breach or non-fulfilment of
any covenant or agreement to be performed or complied with by
any of the Vendors under this Agreement prior to or at the
Closing, (iii) a breach or non-fulfilment of any agreement,
certificate, document, or instrument executed by any of the
Vendors and delivered pursuant to or in connection with this
Agreement prior to or at the Closing; (iv) any matter or thing
occurring prior to Closing; or (v) any and all actions, suits,
proceedings, claims, demands, assessments, judgements, costs
and expenses, incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the
imposition thereof, or in enforcing any indemnity under this
Article 6.A.1(a); or (b) each Vendor agrees severally to save,
indemnify and hold harmless Purchaser, its affiliates and
shareholders and their respective directors, officers,
shareholders, agents, successors, assigns and affiliates from
and against any and all loss, liability, damages and expenses
resulting from or arising out of or in connection with and
shall be severally liable to Purchaser for damages and
expenses resulting from or arising out of or in connection
with (i) a breach or non-fulfillment of any post-Closing
covenant or agreement to be performed or complied with by such
Vendor under this Agreement or (ii) any and all actions,
suits, proceedings, claims, demands, assessments, judgements,
costs and expenses, incident to any of the foregoing or
incurred in investigating or attempting to avoid the same or
to oppose the imposition thereof, or in enforcing any such
indemnity under this Article 6A.1(b) (along with breaches
under Article 6.A.1(a), (a "BREACH");
6A.2 Purchaser shall be liable to the Vendors for damages and
expenses resulting from or arising out of or in connection
with (i) a breach of any of its covenants; or (ii) any and all
actions, suits, proceedings, claims, demands, assessments,
judgements, costs and expenses, incident to any of the
foregoing or incurred in investigating or attempting to avoid
the same or to oppose the imposition thereof, or in enforcing
any such indemnity (a "PURCHASER BREACH").
6A.3. All amounts due pursuant to a Breach or a Purchaser Breach (an
"INDEMNIFICATION") shall be payable by the appropriate
indemnifying party to the indemnified party promptly and not
later than one month after notification given by registered
letter, FedEx or other recognised courier service.
6A.4 Such Indemnification is subject (in the case of legal or
administrative proceedings of any type which may result in a
request for indemnification pursuant hereto) to the right of
the indemnifying party to participate, intervene or lead such
legal action, at their own expense, through a common
representative chosen by the indemnifying parties and assisted
if necessary by legal counsel. However, if any settlement is
for less than $10,000 and requires no admission of wrong doing
by the indemnifying party, then the indemnified party can
settle such claim without the indemnifying parties' consent
for the indemnifying parties' account.
6A.5. The Purchaser shall be entitled to set off the amount of an
Indemnification claim against any amounts, other than base
fixed salary, which may be due
10
from the Purchaser to the Vendors on any account whatsoever.
This set-off may be made with the next Payment due under this
Agreement.
6A.6. The liability set out in this Article 6A shall be limited as
follows:
(a) No liability shall exist as to a breach of a
representation or warranty set forth in Articles 1.2,
1.6, 1.7, 1.8, 1.9, 1.11, 1.12, 1.13, 1.18, 1.19,
1.20, 1.21, 1.22, 1.24, 1.25, 1.26 and 1.27 unless
the incorrectness or incompleteness is notified in
writing to the Vendors prior to the third anniversary
of the Closing. No liability shall exist as to any
breach of any other representation or warranty unless
the incorrectness or incompleteness is notified in
writing to any of the Vendors prior to the later of
(i) the applicable statute of limitations period or
(ii) sixth anniversary of the Closing;
(b) No liability shall exist unless the total of the
amount which can be claimed in connection with the
incorrectness or incompleteness of one or more of the
representations and warranties exceeds $37,000
(written thirty seven thousand dollars); in the event
that the sum of all claims exceeds such amount,
Vendors shall be liable for the total amount back to
the first dollar;
(c) The Vendors are obliged to inform the Purchaser
without any delay of any Breach. The survival period
pursuant to this Article 6A.6 shall be extended for
each day that the Vendors shall fail to notify the
Purchaser of an event or claim for which
indemnification could be sought by the Purchaser from
the Vendors but for the failure of the Purchaser to
make a claim in a timely manner as a result of the
Vendors' failure to so notify the Purchaser.
ARTICLE 7 CERTAIN EMPLOYEE MATTERS
7.1 Certain Employee Matters. Purchaser shall offer at-will
employment which is terminable at any time by the Purchaser or
employee, effective as of the Closing, to such employees of
the Company and at the salary and with benefits as shall be
determined by the Purchaser and the Executive. All employees
who accept their respective offers of employment with
Purchaser shall immediately be and become at-will employees of
Purchaser. The employees are not third party beneficiaries
under this Agreement.
7.2 Purchaser shall establish for the benefit of the employees of
the Purchaser such health and medical care benefits and/or
coverage as Purchaser shall determine (collectively the
"PURCHASER HEALTH PLANS") to cover those employees of the
Company who become employees of Purchaser. Until such time as
Purchaser institutes this coverage, Parent shall provide such
coverage under its plans at Purchaser's cost. The 401(k) plan
covering said employees shall be rolled over to Purchaser by
the Vendors.
7.3 The Purchaser agrees that the Executive shall have an annual
salary commencing as of the closing of $175,000 in
consideration of his full-time employment by the Business
(except that the Executive shall be entitled to
11
serve on the Board of Directors of Parent as specifically
provided in Article 8.1 of this Agreement) subject to the
rights of the Purchaser under Article 8.
7.4 In addition, during the Executive's employment by the
Purchaser, the Executive shall be entitled to, but not
obligated to accept, a bonus of $25,000 on each of June 30 and
December 31, provided, that as of such date the Purchaser
shall have a cumulative Earn Out Profit for the six-month
period, in the case of June 30, or twelve-month period, in the
case of December 31, than ended of no less than zero (0). The
calculation for the Earn Out Profit shall be based upon the
monthly reports required under Article 8.3(b) and determined
in accordance with Exhibit 1. In the event no bonus shall be
earned for any such period, the obligation of the Purchaser to
pay such bonus with respect to such period shall cease.
ARTICLE 8 MANAGEMENT AND COVENANTS OF AND RESPECTING THE COMPANY
8.1 The Executive acknowledges and agrees:
(a) The Executive agrees to work for the Purchaser and
its affiliates and shareholders on an exclusive basis
and in accordance with all applicable employment
agreements and this Agreement. Purchaser acknowledges
that the Executive will be continuing to serve as a
member of the Board of Directors of Parent, and that
such service will not constitute a violation of the
Executive's commitments hereunder. Such service will
not require more than attendance at regular Board and
subcommittee meetings and shall not effect the
Executive's ability to successfully fulfil his duties
as an officer of the Purchaser.
(b) In the event that the Executive terminates his
employment agreement, a notice period of one year has
to be taken into account. During the notice period,
the Executive will assist in the training of his
successor or successors.
(c) The Executive has accepted to join Purchaser fully
aware of and based upon the recognized efficiency of
Purchaser's affiliates in the implementation of their
management tools. The Executive will use his best
efforts to see that the management team successfully
implements these management tools as early as
possible.
(d) The Executive will provide Purchaser and/or its
affiliates with evidence of the implementation as per
(c) above.
8.2 ***
8.3 The Executive undertakes to have the management team:
-------------------
*** Confidential portions of this agreement omitted pursuant to a confidential
treatment request filed separately with the Securities and Exchange Commission.
12
(a) organise and participate in a monthly Supervisory
Committee meeting, alternating each month between the
European headquarters of Purchaser's affiliates and
the headquarters of the Purchaser in the United
States;
(b) fulfil monthly the internal reporting of Purchaser's
affiliates as shown in EXHIBIT 4 on a timely basis
but no later than one week before the Supervisory
Meeting;
(c) open a bank account in a bank designated by
Purchaser's affiliates in order to benefit from the
centralized management of cash and in order to
facilitate the management of cash surpluses
conforming to the regulations of Purchaser's
affiliates;
(d) hold a meeting in the United States between every
employee resigning from the Purchaser and a member of
the Department for Individual Development ("DID") of
Purchaser's ultimate shareholders; organise an annual
meeting among a member of the DID and key personnel
of the Purchaser, including Human Resource Managers,
Marketing Managers, Business Managers and others;
(e) inform employees of the Purchaser about the
possibility of having a meeting with a member of the
DID in the United States whenever an employee deems
it necessary;
(f) inform the Purchaser Designee one month prior to
telling a Business Manager that they intend to
dismiss that employee, except in cases where more
immediate separation is judged to be beneficial to
the employee and/or the Purchaser;
(g) adopt, develop and pursue the Business Manager
concept (as previously described to Executive);
(h) adopt the Management Charter, a copy of which is
attached hereto as EXHIBIT 3;
(i) organise an annual meeting in the United States
between the employees and the Supervisory Committee;
(j) implement the management tools of Purchaser's
affiliates, (as previously delivered to Executive);
and
(k) work exclusively for the Purchaser and Purchaser's
affiliates it being acknowledged that the Executive's
responsibilities as a member of the Board of
Directors of Parent shall not constitute a violation
of this provision.
All services used and/or ordered from or for companies affiliated with Purchaser
are billed and paid at normal conditions, provided that the Executive is advised
in advance of the charges, and elects to utilize the services.
13
8.3.1 ***
8.3.2 ***
8.4 The Vendors covenant and agree that:
8.4.1 Conduct of business: During the period from the date
of this Agreement to and including the Closing Date,
the Company shall conduct its operations in the
ordinary and usual course of business and consistent
with past practices. The Vendors will not take any
action or permit any action to be taken which would
make any of the representations and warranties
inaccurate or untrue on the Closing Date. Without
limiting the foregoing, prior to the Closing, the
Company will not without the prior written consent of
the Purchaser:
(a) dissolve, liquidate, merge or consolidate or
sell or otherwise dispose of all or any
substantial portion of its assets or
obligate itself to do so;
(b) sell, transfer, lease or otherwise dispose
of any assets or properties, other than in
the ordinary course of business on standard
terms, conditions and operating procedures
customarily used by the Company;
(c) amend, modify, change, alter, terminate,
rescind or waive any rights or benefits
under any contract, agreement or commitment
required to be listed, or enter into any
contract, agreement or commitment which, if
in existence as of the date of this
Agreement would have been required to be
listed under Article 1.12 of EXHIBIT 2
hereto;
(d) amend, modify, change, alter or accelerate
any billing procedure or billing cycle or
rescind or waive any financial commitment or
payment due;
(e) incur any indebtedness without the consent
and approval of the Purchaser; or
(f) perform, take any action or incur or permit
to exist (except where such existence could
not be eliminated by the application of
Vendor's best efforts to so eliminate such
existence) any of the acts, transactions,
events or occurrences out of the ordinary
course.
------------------
*** Confidential portions of this agreement omitted pursuant to a confidential
treatment request filed separately with the Securities and Exchange Commission.
*** Confidential portions of this agreement omitted pursuant to a confidential
treatment request filed separately with the Securities and Exchange Commission.
14
8.4.2 Changes in information. During the period from the
date of this Agreement to and including the Closing
Date, the Vendor shall give the Purchaser prompt
written notice of any change in, or any of the
information contained in, the representations and
warranties made in or pursuant to this Agreement or
of any event or circumstance which, if it had
occurred on or prior to the date hereof, would cause
any of such representations or warranties not to be
true and correct.
8.4.3 Access to information. For the purposes of conducting
the Due Diligence Investigation, during the period
from the date of this Agreement to and including the
Closing Date, the Purchaser and their counsel,
accountants and other representatives shall be given
full access during normal business hours to all of
the facilities, properties, books, tax returns and
records of the Company and the Parent and all
personnel of the Company and all relevant information
in respect of the Business, Assets and the properties
of the Company shall be made available to them. The
Purchaser or its representatives shall have the right
to examine all papers and documents of the Company
(and to make copies thereof, on condition that such
copies are returned or destroyed in the event the
contemplated sale is not completed). The Purchaser
and they shall be furnished with such documents and
information with respect to the affairs of the
Company and the Parent as they may from time to time
reasonably be requested. The Purchaser or its
representative shall have the right to make direct
contact with any customer of the Company in order to
verify the financial balance of the contracts entered
into.
8.4.4 No shop. The Vendors agree that, except in accordance
with this Agreement, from after the date hereof and
until the Closing, or if the Closing does not occur,
then until ninety (90) days after the date of this
Agreement, neither the Company nor any of the Vendors
(or any person or entity acting on behalf of the
Vendors) will sell, transfer or otherwise dispose of
any capital stock or assets of or related to the
Company, or any of its businesses (except for
dispositions of assets in the ordinary course of
business as expressly permitted elsewhere in this
Agreement), and neither the Company nor any of the
Vendors (or any person or entity acting on behalf of
the Vendors) will respond to inquiries or proposals,
or enter into, pursue or participate in any
discussions, provide any information in respect of or
enter into any agreements (oral or written) with
respect to, the issuance, sale or purchase of any
capital stock of or beneficial interests in the
Company, any security convertible into or
exchangeable for such stock or interests, or any
option or warrant with respect to such stock or
interests, or the merger, consolidation, sale, lease
or other disposition of all or any portion of the
assets or business of the Company. Without limiting
or providing an exception to the foregoing, if the
Company or any of the Vendors shall receive any such
inquiry or proposal, whether oral or written, the
Company and/or the Vendors shall immediately
15
advise the Purchaser of such inquiry or proposal and
the identity of any such proposal, or if such
proposal was not written, a written description of
the material terms thereof.
8.4.5 No billing. Vendors shall not ▇▇▇▇ any customer nor
solicit any payment from any customer with respect to
work performed by the Company after the end of the
last completed monthly billing cycle prior to the
Closing Date. Vendors have not and, during the period
from the date of this Agreement to the Closing Date
will not accelerate the billing procedure for
work-in-progress. All billing of work-in-progress
from the date of this Agreement to the Closing Date
shall be performed in the ordinary course of business
in a manner consistent with the historical practice
of the Business. Any payments nonetheless received
from a customer by the Company or Parent on account
of work-in-process shall be retained by or delivered
to the Company and included in the Assets transferred
to the Purchaser and Purchaser shall receive notice
within 5 days of the receipt of any payment on
account of work-in-process.
8.4.6 Shareholder Consent. The Parent covenants that it
will deliver to Purchaser, for its review, the proxy
materials to be mailed to each of Parent's
shareholders (the "PROXY MATERIALS") soliciting such
shareholders' approval of the transactions
contemplated by this Agreement and other matters at
least five (5) business days prior to the earlier of
(i) the submission of the Proxy Materials to the
Securities and Exchange Commission, and (ii) the
distribution of the Proxy Materials.
8.5 Nonassignability. Notwithstanding anything to the contrary
herein or in any document or instrument provided for herein or
contemplated hereby, to the extent that any assumed agreement,
lease, contract, license, agreement, sales or purchase order,
commitment, property interest or other asset included in the
Assets, or any claim, right or benefit arising thereunder or
resulting therefrom (each a "Contract Interest") is not
capable of being sold, assigned, transferred or conveyed
without the approval, consent or waiver of the issuer thereof
or the other party thereto or any other third person, this
Agreement, absent such approval, consent or waiver, shall not
constitute a sale, assignment, transfer or conveyance thereof
and the Company shall not be obligated to sell, assign,
transfer or convey to Purchaser any of its rights or
obligations in or to any of such Contract Interests without
first obtaining all such necessary approvals, consents or
waivers. The Company will request, and Purchaser shall
cooperate with the Company to obtain, approvals, consents or
waivers necessary to convey to Purchaser any material Contract
Interests. To the extent that any of the approvals, consents
or waivers referred to in this Article 8.5 shall not have been
obtained as of the Closing, the Company shall act in good
faith, with all costs related thereto to be borne by it, to
cooperate with Purchaser in any reasonable and lawful
arrangements designed to provide the benefits of such Contract
Interests to Purchaser.
16
8.6 Allocation Agreement. The Vendors covenant that all
distributions will be made either (i) in accordance with the
Allocation Agreement, or (ii) with the prior written consent
of the Purchaser.
8.7 Purchase Price Allocation. Purchaser and the Vendors agree
that the value of the Company's assets for use in allocating
the purchase price, any Company liabilities, and other
relevant items among the assets of the Company for tax and
other purposes shall be as set forth in EXHIBIT 14. Purchaser
and the Company will file all tax returns and information
reports, including IRS Form 8594, in a manner consistent with
the values described in the preceding sentence.
8.8 Vendors must at all times be able to promptly provide evidence
at Purchaser's first request, of Vendors' conformity to all
points described in this Article 8.
8.9 Parent shall obtain the approval of the holders of not less
than 50.1% of the shares of Parent common stock to the
transactions contemplated by this Agreement.
8.10 After the Closing, Purchaser shall arrange for the provision
to the Business of a line of credit of up to $1,500,000 to
fund the operations of Purchaser after the Closing.
8.11 The Company will take any and all actions necessary to ensure
that the Purchaser has the right to use the name "Stratus
Engineering" and/or any other similar name or any derivative
thereof in accordance with subclause (iii) of EXHIBIT 8.
ARTICLE 9 ANNOUNCEMENTS TO THIRD PARTIES
9.1 None of Purchaser, Purchaser's affiliates or any of the
Vendors shall provide information to the press, or make any
public announcements or otherwise disclose any information
with respect to this Agreement other than to its advisors,
except with the prior written approval of the Purchaser or
except in so far as is required by law or stock exchange or
other rules it being acknowledged by the parties that certain
information but not documentation will be required to be
disclosed to shareholders and that prior to such disclosure
Purchaser shall be given an opportunity to review and comment
upon any such disclosure.
9.2 The Purchaser agrees to consider confidential all information
regarding the Company, its business and its customers which it
may become aware of in connection with this Agreement and not
to disclose or use such information for any purposes
whatsoever in the event the contemplated sale is not completed
except as required by law or regulation.
9.3 The Vendors agree to consider confidential all information
regarding Purchaser's affiliates or the Purchaser, their
businesses and customers which they may become aware of in
connection with this Agreement and not to disclose or use such
information for any purposes whatsoever except as required by
law or regulation; provided, however, that the non-disclosing
parties shall be entitled to notice of such intended
disclosure and have the right to seek an injunction or to take
such other action to prevent or limit such
17
disclosure. In addition, except as required by law or
regulation and then only with the prior written approval of
the Purchaser, the Vendors agree to keep the terms and
conditions of this Agreement and the negotiations between
Purchaser, on the one hand, and the Vendors, on the other
hand, with respect to the transactions contemplated hereby,
confidential.
9.4 Except as otherwise agreed to in writing by the Purchaser, the
Vendors shall use their best efforts to cause the Securities
and Exchange Commission ("SEC") to treat this Agreement as
confidential and proprietary. In the event that the SEC or any
other governmental entity requires the disclosure of any such
information in any public filing, and Purchaser withholds
consent to such disclosure and terminates this Agreement,
neither the Vendors nor the Purchaser shall have any liability
to the other party as a result of such termination.
9.5 The Vendors agree to keep the names, identities or any
information regarding any of the direct and indirect
shareholders of the Purchaser (or officers or directors
thereof) confidential and shall not disclose such information
to any party without the prior written consent of the
Purchaser.
18
ARTICLE 10 NOTICES
10.1 Except as otherwise required by law, all announcements,
notices, summons and other communications pursuant to this
Agreement shall be delivered to the addresses stated hereunder
(or to such other address as a party has communicated to the
other party or parties in accordance with this Article) by
recognized international courier, or by registered mail with
return receipt, or by express mail or by telegram or
facsimile:
(a) if directed to a Vendor: to its address set forth
above.
(b) if directed to the Management Team: to the Purchaser
address.
(c) if directed to Purchaser:
SEA Consulting Services Corporation
Cranbury Plaza
▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy sent to:
Golenbock, Eiseman, Assor, ▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Tel. ▇-(▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(d) if directed to the Company:
SEP, LLC
▇/▇ ▇▇▇▇▇▇▇ Services Group, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Tel. (▇▇▇) ▇▇▇-▇▇▇▇
(e) if directed to the Parent:
Stratus Services Group, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Tel. (▇▇▇) ▇▇▇-▇▇▇▇
10.2 Notices sent as follows shall be deemed to have been received
at the following times :
(a) if sent by courier or express mail: on the earlier of
delivery by the courier or express mail to the
addressee or two business days following delivery to
the courier or express mail office properly
addressed;
19
(b) if sent by registered letter: on the date noted on
the return receipt; or
(c) if sent by facsimile: on the date on which the notice
is sent.
10.3 Any notices to Purchaser, shall not be deemed received until
the copy of such notice is received by Golenbock, Eisemen,
Assor, ▇▇▇▇ & ▇▇▇▇▇▇.
ARTICLE 11 WAIVER OF RIGHT TO DISSOLUTION
11.1 Parties hereby waive any and all rights to annulment,
cancellation or recission of this Agreement, the deed of
transfer, and the transactions contemplated thereby on account
of any default, breach or non-fulfilment by any other party
hereto of any obligation, covenant or liability under or
resulting from this Agreement and/or deed of transfer.
11.2 Parties in interest; assignment. Except as set forth below, no
party hereunder may assign any interest herein without the
prior written consent of the other parties hereto. All
covenants, agreements, representations, warranties and
undertakings contained in this Agreement by and on behalf of
any of the parties hereto shall bind and inure to the benefit
of the respective successors and permitted assigns of the
parties hereto, whether so expressed or not. Purchaser shall
have the unrestricted right to assign all or a portion of this
Agreement and to sell, assign, transfer or negotiate all or
any part of the Assets to an affiliate of Purchaser.
11.3 Specific performance. The Vendors and Company hereby agree
that the Assets are unique property that cannot be readily
obtained on the open market and that the Purchaser will be
irreparably injured if this Agreement is not specifically
enforced. Therefore, the Purchaser shall have the right
specifically to enforce the performance of the Vendors and the
Company under this Agreement without the necessity of posting
any bond or other security, and the Vendors and the Company
hereby waive the defence in any such suit that the Purchaser
has an adequate remedy at law and agree not to interpose any
opposition, legal or otherwise, as to the propriety of
specific performance as a remedy. The remedy of specifically
enforcing any or all of the provisions of this Agreement in
accordance with this Article shall not be exclusive of any
other rights which the Purchaser may have to terminate this
Agreement or of any other rights or remedies which the
Purchaser may otherwise have under this Agreement or
otherwise, all of which rights and remedies shall be
cumulative.
11.4 Further assurances. At any time and from time to time after
the date hereof, at Purchaser's request and without further
consideration, the Vendors will execute and deliver such other
instruments of sale, transfer, conveyance, assignment and
confirmation and take such action as Purchaser may reasonably
deem necessary in order more effectively to transfer, convey
and assign to Purchaser, and to confirm Purchaser's title to,
the Assets and to assist Purchaser in exercising all rights
with respect thereto or to which it shall be entitled
hereunder.
20
ARTICLE 12 COSTS
12.1 The Vendors and the Purchaser shall each pay their own costs
arising out of and in relation to this Agreement and the
transactions contemplated hereby.
ARTICLE 13 NON COMPETITION AND OUTSIDE INVESTMENT
13.1 (A) The Executive and each of the other Vendors, except for
the Parent, hereby agree that, commencing as of the date
hereof, and with respect to the Executive during the term of
his employment with the Purchaser (including any period for
which the Executive shall act as a consultant to the
Purchaser), and for a period of three years thereafter, none
of the Vendors shall, without the prior written approval of
Purchaser, directly or indirectly, through any other person,
firm or corporation, whether for himself, itself or as agent
on behalf of any other person or entity, and whether as
employee, consultant, agent, principal, lender, partner,
officer, director, investor, stockholder or otherwise, with or
without compensation provided however, that the foregoing
shall not preclude passive ownership of not more than 1% of
the listed shares of any publicly traded company:
(i) Sell, lease, license, assist or participate in the
development of products or provide, lease, license,
assist or participate in the provision of services
which are competitive with the businesses, products
or services of the Company, the Purchaser of the
Business or the business, products or services which
(in the case of the Executive, at the time of
termination of employment with the Purchaser or in
the case of another Vendor, at any time) are under
development by the Company, the Purchaser or
affiliates of the Purchaser (the "COMPANY BUSINESS"),
or promote, market, sell, lease, license, become or
acquire an interest in, or associate in a business
relationship with, or aid or assist any other person,
corporation, firm, partnership or other entity
whatsoever who is engaged in any line of business
competitive with the Company Business;
(ii) become an employee, consultant, agent, principal,
lender, partner, officer, director, stockholder or
otherwise provide services to or on behalf of any
entity (A) which the Purchaser reasonably determines
is or could become a competitor of the Company
Business or (B) which as of the date of this
Agreement is a business partner or contractual party
with the Company;
(iii) solicit or refer, directly or indirectly, any clients
or prospective client (a prospective client being one
to whom the Company or the Purchaser has made or
submitted a presentation, with whom the Company or
the Purchaser has had contact or discussed a
proposal, or which was included on a list of specific
prospects within the past twelve months), of any
services and/or products offered by the Company or
the Purchaser (or which are competitive with those
offered by the Company or the Purchaser) to any other
provider of such services, or encourage, entice or
cause any client, online or other user, registrant or
subscriber to cease to do, or to reduce the amount or
frequency of,
21
business or other interaction which such person has
customarily done or contemplates doing with the
Company or the Purchaser;
(iv) employ, solicit, raid, entice, induce or assist any
person who presently is, or any time during the five
years preceding such employment, solicitation, raid,
enticement, inducement or assistance shall have been,
an employee of the Company, the Purchaser or any of
the Subsidiaries of either, to become employed or
retained by any other person or entity; or
(v) promote, market, assist or participate in the
development, sale, lease or licensing of any services
and/or products competitive with those provided by
the Company Business to, for or with any person,
corporation, firm, partnership or other entity
whatsoever; or
(vi) participate in any activity in competition with the
activities of any of Purchaser's affiliates, i.e.,
consulting and/or services in or to the technological
and/or management business.
13.2 For a period of three (3) years from the Effective Date of
this Agreement (the "PARENT NONCOMPETITION PERIOD"), Parent,
or its successor and affiliates, will not, without prior
written approval of Purchaser, directly or indirectly,
individually or as an owner, partner, shareholder, joint
venturer, corporate officer, director, employee, consultant,
principal, agent, trustee or licensor, or in any other similar
capacity whatsoever of or for any person, firm, partnership,
company or corporation, (a) own, manage, operate, sell,
control or participate in the ownership, management,
operation, sales or control of any business that solicits for
the provision of or provides engineering consulting services
similar to or competitive with the services currently provided
by the Company or Business ("ENGINEERING CONSULTING SERVICES")
to any party, including, but not limited to, any past or
current customer of the Company or the predecessor division
previously operated by Parent identified on Schedule A hereto
(each a "Customer" and collectively the "Customer"), or any
other services offered by the Company as of the date hereof;
(b) accept employment or engagement to provide Engineering
Consulting Services to any third party, including, but not
limited to a Customer of the Company or the Purchaser; or (c)
request or advise any of the Customers, suppliers or other
business contacts of Company with which Parent had contact
while an owner of the Company to withdraw, curtail, cancel or
not increase their business with Purchaser. Notwithstanding
the foregoing, (i) Parent is permitted to own as a passive
investor up to a one percent (1%) interest in the listed
shares of any publicly traded entity, and (ii) nothing
contained herein shall prohibit Parent from providing staff
augmentation services or placing third party engineers on a
temporary basis under circumstances in which Parent does not
provide engineering consulting services ("ENGINEERING
STAFFING"), provided that, Parent shall not provide
Engineering Staffing to any of the Customers without the prior
written consent of the Purchaser.
13.3 Recognizing that the Executive's and other Vendors' knowledge,
information and relationship with existing or prospective
clients, licensees, customers, suppliers, accounts, agents,
brokers and representatives of the Company, the Purchaser, the
Company Business and the Subsidiaries of the Company or the
22
Purchaser, and their knowledge of the business, methods,
systems, plans and policies of the Company, the Purchaser, the
Company Business and the Subsidiaries of the Company or the
Purchaser, which each of them has heretofore and shall
hereafter establish, receive or obtain as an employee, owner,
officer or affiliate of the Company or the Purchaser or in
connection with services performed for the Company, or the
Purchaser or any such Subsidiary of the Company or the
Purchaser, are valuable and unique assets of the Purchaser,
the Executive and other Vendors agree that (except with
respect to the Executive, only to the extent required to
fulfil his duties to the Purchaser), they shall not directly
or indirectly, use, divulge, furnish or make accessible to
anyone, without the prior written consent of the Purchaser,
any such knowledge or information pertaining to the Company,
the Purchaser, the Company Business or the Subsidiaries of the
Company or the Purchaser or the business, shareholders,
personnel, methods, systems, plans or policies thereof, to any
person, firm or corporation or other entity, for any reason or
purpose whatsoever.
13.4 The Purchaser shall be deemed and entitled to own all of the
results and proceeds of the services of the Executive, other
than results which are unrelated to Purchaser's Business and
were created on Executive's personal time without the use of
any Purchaser resources or assets, including all right, title
and interest in and to any and all creations, inventions,
franchises, products, processes, concepts, methods, ideas,
designs and/or systems (including, without limitation, all
those of an advertising, marketing or promotional nature), and
any improvement thereon, which may be developed, created or
devised by the Executive during the term of his employment by
the Parent, the Company or Purchaser. The Executive will, at
the request of the Purchaser, and without further compensation
other than that for which provision is made in this Agreement,
execute such assignments, certificates or other instruments as
the Purchaser may from time to time deem necessary or
desirable to evidence, establish, maintain, perfect, protect,
enforce or defend the Purchaser's right, title and interest in
or to any of the foregoing. Without limiting the generality of
the previous sentences, the Executive acknowledges and agrees
that all memoranda, notes, records, customer lists and other
documents made or compiled by him or made available to him
during the term of his employment by the Parent, the Company
or Purchaser concerning the Business, shall be the property of
the Purchaser and shall be delivered by the Executive to the
Purchaser upon termination of his employment by the Purchaser
or at any other time on the Purchaser's request.
13.5 The Executive and such employees of the Company, the Purchaser
or the Business as shall be specified by Purchaser shall each
execute and deliver to and for the benefit of the Purchaser a
Proprietary Information and Inventions Agreement substantially
in the form of EXHIBIT 5 hereto, pertaining to, among other
matters, proprietary information, inventions and
confidentiality obligations, the provisions of which shall be
deemed incorporated herein by reference as if set forth
herein.
13.6 The provisions of this Article 13 shall survive the
termination or expiration of this Agreement, irrespective of
the reason therefor, including under any circumstances in
which a Management Team member continues thereafter in the
employ of the Purchaser.
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13.7 Each Vendor acknowledges that the services to be rendered by
the Executive are of a special, unique and extraordinary
character and, in connection with such services, the Executive
will have access to confidential information vital to the
business of the Purchaser and its affiliates. By reason of the
foregoing, each Vendor consents and agrees that, if any of
them violates any of the provisions of this Article 13, the
Purchaser and its affiliates and shareholders would sustain
irreparable harm and, therefore, in addition to any other
remedies which the Purchaser and its affiliates and
shareholders may have under this Agreement or otherwise, the
Purchaser and its affiliates and shareholders shall be
entitled to apply (without the necessity of posting any bond)
to any court of competent jurisdiction for an injunction
restraining such Vendor or any other party from committing or
continuing any such violation (or participating therein) of
this Agreement, and such Vendor shall not object to any such
application.
13.8 In case of breach of the aforementioned obligations contained
in this Article 13, by a Vendor, the parties hereto
acknowledging that the actual damages resulting from any
breach being difficult to ascertain, the Vendor who is in
breach, shall be severally liable to pay to Purchaser an
amount, as an estimate of actual damages, equal to 100% of the
pre-tax amounts received by such Vendor directly or indirectly
in connection with this Agreement. The compensation for this
undertaking is included in the fixed part of the price as
specified in article 3.1.(a) of this Agreement.
13.9 In the event that any provisions of this Article 13 would be
held to be invalid, prohibited or unenforceable in any
jurisdiction for any reason (including, but not limited to,
any provisions which would be held to be unenforceable because
of the scope, duration or area of its applicability), unless
narrowed by construction, this Article 13 shall, as to such
jurisdiction only, be construed as if such invalid, prohibited
or unenforceable provision had been more narrowly drawn so as
not to be invalid, prohibited or unenforceable (or if such
language cannot be drawn narrowly enough, the court making any
such determination shall have the power to modify such scope,
duration or area or all of them, but only to the extent
necessary to make such provision or provisions enforceable in
such jurisdiction, and such provision shall then be applicable
in such modified form in such jurisdiction only). If,
notwithstanding the foregoing, any provision of this Article
13 would be held to be invalid, prohibited or unenforceable in
any jurisdiction, such provision shall be ineffective to the
extent of such invalidity, prohibition or unenforceability,
without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
ARTICLE 14 ENTIRE AGREEMENT
14.1 The attached EXHIBITS 1 through 14 are an integral part of
this Agreement. This Agreement and the Exhibits can only be
amended or supplemented by all parties in writing.
14.2 This Agreement contains all of the agreements between the
parties with respect to the present transaction and supersedes
all earlier written and/or oral agreements which parties may
have made, including but not limited to the Letter of Intent.
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14.3 The index, headings and any descriptive notes are for ease of
reference only and shall not affect the construction or
interpretation of this Agreement.
ARTICLE 15 APPLICABLE LAW AND CHOICE OF FORUM
15.1 This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York,
without regard to principles of conflict of laws and
regardless of where actually executed, delivered or performed.
15.2 The Vendors and Purchaser agree that, except as provided in
Article 15.3 below, any dispute relating to or arising from
this Agreement or the transactions contemplated hereby shall
be resolved only in the Courts of the State of New York
sitting in the County of New York or the United States
District Court for the Southern District of New York and the
appellate courts having jurisdiction of appeals in such
courts, and the parties hereto hereby irrevocably submit to
the exclusive jurisdiction of such courts in any such action
or proceeding, agree to accept service by mail, and
irrevocably waive the defense of an inconvenient forum to the
maintenance of any such action or proceeding, that the venue
of the suit, action or proceeding is improper or that this
Agreement or the subject matter hereof may not be enforced by
such courts.
15.3 (i) The Vendors each agrees that in the event of any
breach by any of them of this Agreement, the remedies
available to the Purchaser at law would be inadequate
and that such obligations under this Agreement may be
specifically enforced. By reason of the foregoing,
each Vendor consents and agrees that, if any of them
violates any of the provisions of this Agreement, the
Purchaser and Purchaser's affiliates and shareholders
would sustain irreparable harm and, therefore, in
addition to any other remedies which the Purchaser
and Purchaser's affiliates and shareholders may have
under this Agreement or otherwise, the Purchaser and
its affiliates and shareholders shall be entitled to
apply (without the necessity of posting any bond) to
any court of competent jurisdiction for an injunction
restraining such Vendor or any other party from
committing or continuing any such violation (or
participating therein) of this Agreement, and such
Vendor shall not object to any such application.
(ii) Except for matters for which the Purchaser seeks
specific performance, each dispute, difference,
controversy or claim arising in connection with or
related or incidental to, or question occurring
under, this Agreement or the subject matter hereof
shall be finally settled under the Commercial Rules
of the American Arbitration Association (the "AAA")
by an arbitral tribunal composed of three
arbitrators, at least one of whom shall be an
attorney experienced in corporate transactions,
appointed by mutual agreement of the parties in
accordance with said Rules. In the event the parties
fail to agree upon a panel of arbitrators from the
first list of potential arbitrators proposed by the
AAA, the AAA will submit a second list in accordance
with said Rules. In the event the parties shall have
failed to agree upon a full panel of arbitrators from
said second list, any remaining arbitrators to be
selected shall be appointed by the AAA in accordance
with said
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Rules. If, at the time of the arbitration, the
parties agree in writing to submit the dispute to a
single arbitrator, said single arbitrator shall be
appointed by agreement of the parties in accordance
with the foregoing procedure, or, failing such
agreement, by the AAA in accordance with said Rules.
The foregoing arbitration proceedings may be
commenced by any party by notice to all other
parties. The venue of such arbitration shall be New
York, New York and no other place unless agreed to in
writing by Purchaser. The arbitrator may award the
prevailing party its costs and expenses of the
arbitration. Each party may be represented by counsel
if it chooses.
(ii) The parties intend that this Agreement to arbitrate
be valid, enforceable and irrevocable. The parties
consent to the jurisdiction of the arbitrator and to
the jurisdiction of any court in which judgment upon
the arbitration award may be entered, including,
without limitation, the federal or state courts
located in the City of New York, New York. The
decision of the arbitrator, which shall be rendered
no later than three (3) months after the date the
hearing begins, shall be final and binding upon the
parties hereto. The judgment on an arbitration award
may be entered and enforced by any party hereto in
any court or judicial body, domestic or foreign,
situated anywhere in the world, having jurisdiction
over the person or property of the party against whom
such award is sought to be enforced.
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Signed in at .
SEP, LLC ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------- ---------------
STRATUS SERVICES GROUP, INC. ▇▇▇▇▇▇▇ HOLDINGS LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------- --------------------
SEA CONSULTING SERVICES
CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------
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