EXHIBIT 10.10
ALLOCATION AND INDEMNITY AGREEMENT
This Allocation and Indemnity Agreement (this "Agreement") made as of
the 24th day of January 2002 by and among Stratus Services Group, Inc., a
Delaware corporation ("Parent"), Xxxxxxx Holdings LLC, a limited liability
company formed under the laws of the state of New Jersey ("Xxxxxxx LLC"), and
Xxxxxxx Xxxxxxx,, living at 0 Xxxxxxxxxx Xxx, Xxxxxx Xxxxxxxx, XX 00000 (the
"Executive"), (Xxxxxxx LLC, the Executive and Parent are hereinafter referred to
collectively as the "Vendors" and individually as a "Vendor");.
WHEREAS, the Vendors along with SEP, LLC, a company formed under the
laws of the state of New Jersey (the "Company"), have entered into an Asset
Purchase Agreement dated as of January 24, 2002 (the "Asset Purchase Agreement")
pursuant to which the Company has agreed to sell to SEA Consulting Services
Corporation, a corporation incorporated under the laws of the state of Delaware
("Purchaser"), substantially all of the Company's assets (the transaction
referenced by the Asset Purchase Agreement shall be referenced herein as the
"Sale Transaction"); and
WHEREAS, Xxxxxxx LLC and the Parent are the sole members of the
Company; and
WHEREAS, Xxxxxxx LLC and Parent wish to establish a fair and equitable
manner of sharing the proceeds from the Sale Transaction; and
WHEREAS, the Vendors have joint and several indemnification obligations
accruing under the Asset Purchase Agreement and wish to equitably allocate the
same by placing the ultimate liability risk on the party having the knowledge
and/or responsibility for providing the required information to Purchaser;
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties made herein and of the mutual benefits to be
derived herefrom, the parties hereto, intending to be legally bound, agree as
follows:
1. CAPITALIZED TERMS. Unless otherwise defined herein, capitalized
terms used herein shall have the meanings ascribed to them in the Asset Purchase
Agreement.
2. ALLOCATION OF PROCEEDS. After satisfaction of all indebtedness,
liabilities and expenses of the Company, Parent will receive eighty percent of
the First Payment after payment of all costs and expenses of the transaction,
and $250,000 of each of the Second Payment and the Third Payment. In
consideration of Parent's agreement to waive the conversion right of its
preferred units, Executive and Xxxxxxx LLC hereby jointly and severally
guarantee payment to Parent of each of the said $250,000 installments to Parent,
regardless of the amounts paid by Purchaser under the Asset Purchase Agreement.
Parent acknowledges that, upon its receipt of all of the payments set forth in
this Section 2, its membership interest in the Company shall, without further
action on its part, become void and Xxxxxxx LLC shall become the sole member of
the Company and entitled to all of the Subsequent Payments.
Allocation and Indeminity Agreement
3. EXECUTIVE AND XXXXXXX LLC INDEMNIFICATION. The Executive and Xxxxxxx
LLC shall, jointly and severally, but subject to the limitations on liability
described in this Section 3 , and otherwise provided herein and in the Asset
Purchase Agreement, indemnify Parent from and against all damages, costs, fees
and expenses ("Losses"), arising out of, or related to the following:
(a) Any breach or non-fulfillment of one or more of any covenant
or agreement to be performed or complied with by the Executive
or Xxxxxxx LLC prior to or at the Closing;
(b) A breach or non-fulfillment of any agreement, certificate,
document or instrument executed by the Executive or Xxxxxxx
LLC and delivered pursuant to or in connection with the Asset
Purchase Agreement prior to or at the Closing;
(c) Negligence of the Company or of the Engineering Division of
Parent (collectively, the "Division") in conducting the
Business, including the provision of engineering services, to
the extent that any such Loss relates to a claim of a party
other than Parent;
(d) Illegal conduct or willful misconduct on the part of employees
of the Division in the course of conducting the Business;
(e) Failure of the Division to comply with applicable laws in the
course of conducting the Business, including any failure to
have applicable permits or licenses, but only to the extent
that the failure was within the responsibility of the Division
and not of Parent;
(f) Breach prior to the Closing of any contract pertaining to the
provision of engineering services by the Division to a party
other than Parent.
(g) Any breach or non-fulfillment of one or more of the following
representations and warranties set forth in the following
sections of Exhibit 2 of the Asset Purchase Agreement, but
only to the extent they relate to breaches or non-fulfillment
by the Executive or Xxxxxxx LLC or as otherwise set forth
below:
1.1(c),
1.1(d),
1.4,
1.6, to the extent that any breach relates to actions, suits,
legal, administrative or arbitration proceedings or inquiries,
relating to the Business threatened against Parent, the
Company or any officer, director or employee of Parent or the
Company,
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Allocation and Indeminity Agreement
1.7(a), to the extent that any breach relates to the failure
of any employees of the Division to comply with applicable
Laws in the course of conducting the Business,
1.7(b), to the extent that any breach is caused by (i) the
failure of the Managers to have any Licenses and Approvals
required to conduct the Business, but only insofar as the
obtaining of the said Licenses and Approvals was the
responsibility of the Division and not of Parent or (ii) any
material violation of the terms or conditions under which any
such License or Approval was granted.,
1.8, to the extent that any breach relates solely to debts,
liabilities or obligations arising out of the conduct of the
Business,
1.9, to the extent that any breach relates to actions taken by
employees of the Division,
1.12, to the extent that any breach relates to (A) clause (d)
thereof to the extent related to the failure by the Managers
to identify any contracts, agreements and commitments,
pursuant to which any substantial portion of the Business has
been obtained or (B) the matters set forth in clauses (f)
through (m) thereof,
1.14, to the extent that any breach relates to actions taken
by any employee of the Division,
1.16(b), to the extent that any breach relates to any unfair
labor practice, grievance, arbitration, sexual harassment,
workers compensation or other employee complaints threatened
against Parent or any officer or employee of Parent as a
result of actions of employees of the Division, and only to
the extent that the breach does not relate to matters within
the responsibility of employees or agents of Parent not
employed within or engaged by the Division,
1.18,
1.19,
1.22,
1.25,
1.26, and
1.27
The obligations of the Executive and Xxxxxxx LLC hereunder, (a) shall
apply only to the extent that such Losses are not covered by Seller's insurance
policies, and (b) shall be subject to the time limitations applicable to the
comparable provisions outlined in Article 6A.6 of the Asset Purchase
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Allocation and Indeminity Agreement
Agreement. In no event shall the aggregate liability of the Executive and
Xxxxxxx LLC for all Losses exceed the amounts received by Xxxxxxx LLC pursuant
to the Asset Purchase Agreement as limited by this Agreement, provided however
that, subject to the limits on liability described above, nothing contained
herein shall prohibit Parent from recovering the full amount of any claim
hereunder from either the Executive or Xxxxxxx LLC.
4. PARENT INDEMNIFICATION. Parent shall indemnify the Executive and
Xxxxxxx LLC from and against all damages, costs, fees and expenses ("Losses"),
arising out of, or related to the following:
(a) Any breach or non-fulfillment of one or more of any covenant
or agreement to be performed or complied with by Parent prior
to or at the Closing;
(b) A breach or non-fulfillment of any agreement, certificate,
document or instrument executed by Parent and delivered
pursuant to or in connection with the Asset Purchase Agreement
prior to or at the Closing;
(c) any breach or non-fulfillment of one or more of the
representations and warranties set forth in Exhibit 2 of the
Asset Purchase Agreement, except to the extent covered by the
Executive and Xxxxxxx LLC Indemnification set forth in Section
3 above:
5. NOTICES. All notices and other communications under this Agreement
shall be in writing and shall be deemed given when delivered personally
(including by confirmed legible telecopier transmission) or mailed by certified
mail, return receipt requested, to the parties at the following addresses set
forth in SCHEDULE A attached hereto (or to such address as a party may have
specified in a notice given to the other party pursuant to this provision).
6. BINDING EFFECT; ASSIGNMENT. The terms of this Agreement shall be
binding upon the parties and their heirs, successors and assigns Neither the
Executive, Xxxxxxx LLC nor Parent may assign this Agreement without the prior
written consent of the other parties hereto.
7. GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the laws of the State of New Jersey, without regard to the
principles of conflicts of laws. The Parties consent to the exercise of personal
and subject matter jurisdiction of the state and federal courts of New Jersey
and agree that venue shall be proper therein.
8. HEADINGS. The paragraph headings of this Agreement are for reference
purposes only and are to be given no effect in the construction or
interpretation of this Agreement.
9. SEVERABILITY. In the event that any provision hereof would, under
applicable law, be invalid or unenforceable in any respect, such provision shall
be construed by modifying or limiting it so as to be valid and enforceable to
the maximum extent compatible with, and permissible under, applicable law. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement
which shall remain in full force an effect. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent and will be construed and interpreted as though drafted by all the
parties to this Agreement.
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Allocation and Indeminity Agreement
10. WAIVER. Any party may waive compliance by another with any of the
provisions of this Agreement. No waiver of any provision shall be construed as a
waiver of any other provision. Any waiver must be in writing.
11. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be an original, but all of which together shall constitute one
and the same Agreement.
12. ADDITIONAL INSURANCE/CONDITIONAL INDEMNITY.
a. Parent shall, prior to the Closing Date, provide to the
Executive copies of all insurance policies in force covering
or relating to the Business (the "Applicable Policies").
Parent shall ensure that the coverage provided under the
Applicable Policies extends to claims arising out of events
prior to Closing which are made or discovered a minimum of
twenty-four (24) months after the Closing Date.
b. The obligations of the Executives and the Company under this
Agreement shall be conditioned upon Parent's compliance with
the terms of this Article 12, to the extent the Loss in
question is covered by insurance or would have been covered by
insurance, had Parent so complied.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of
the date first written above.
Stratus Services Group, Inc.
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxxx Holdings, LLC
By: /s/ Xxxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx
By: /s/ Xxxxxxx Xxxxxxx
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SEP, LLC
By: /s/ Xxxxxxx Xxxxxxx
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Agreed and accepted solely with respect to Article 2:
SEA CONSULTING SERVICES CORPORATION.
/s/ Xxxxxxxx X. Xxxxxxxxx
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Allocation and Indeminity Agreement
By:
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Allocation and Indeminity Agreement
SCHEDULE A
MAILING ADDRESSES FOR NOTICE
----------------------------
Stratus Services Group Xxxxxxx Holdings, LLC
000 Xxxxx Xxxx, 0xx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000 0000 Xx. 000
Xxxxxxxx X
Xxxxxxxx, XX 00000
Xxxxxxx Xxxxxxx SEP, LLC
0 Xxxxxxxxxx Xxx 000 Xxxxx Xxxx, 0xx Xxxxx
Xxxxxx Xxxxxxxx, XX 00000 Xxxxxxxxx, Xxx Xxxxxx 00000
SEA Consulting Services Corporation
Cranbury Plaza
0000 Xxxxx 000
Xxxxxxxx X
Xxxxxxxx, XX 00000
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