Document:

Exhibit 4.1.11

 

AGREEMENT TO EXCHANGE SERIES B PREFERRED SHARES 

FOR SERIES E PREFERRED SHARES

 

THIS AGREEMENT, dated as of July 19, 2002,

is entered into by and between STRATUS

SERVICES GROUP, INC., a Delaware corporation, with headquarters

located at 500 Craig Road, Suite 201, Manalapan, New Jersey 07726 (the

“Company”) and Transworld Management Services, Inc. a New York corporation,

with offices located at 500 Craig Road, Suite 201, Manalapan, New Jersey 07726

(“Transworld”).

 

WITNESSETH:

 

WHEREAS, on March 11, 2002, the

Company entered into a certain Agreement to Cancel Promissory Note in Exchange

for Preferred Shares (the “Note Exchange Agreement”), whereby Transworld

exchanged $160,000 of the Note for an aggregate of 32,000 shares of Series B

Preferred Stock; and

 

WHEREAS, the Company also owes Transworld certain

monies for dividends and penalties due and owing on such Preferred Stock, and

Transworld agrees to waive same; and

 

WHEREAS, Transworld is desirous of exchanging the

remaining 32,000 shares of Series B Preferred Stock for a Series E preferred

stock equity interest in the Company, the terms of such preferred stock (the

“Series E Preferred Stock”) being substantially in the form of the Certificate

of Designation attached as Exhibit A hereto.

 

NOW, THEREFORE, in consideration for the

foregoing, the parties hereto agree as follows:

 

1.               Transworld’s

32,000 shares of Series B Preferred Stock in the principal amount of $160,000

will be exchanged on July 19, 2002 for 1,600 shares of Series E Preferred Stock,

$.01 par value per share.

 

2.               If Series E

Preferred Stock is to be issued in the name of an entity other than Transworld,

Transworld will pay all transfer taxes payable with respect thereto.  No fee will be charged to Transworld for the

exchange except for such transfer taxes, if any.

 

3.               As set forth in

Items 5c and 5f below, the Series E Preferred Stock cannot be converted into

Common Stock until the Company’s proposal to amend its Amended and Restated

Certificate of Incorporation to increase the number of authorized shares of

Common Stock to 100,000,000 is approved. 

In the event

 

 

that

the same is not approved by the stockholders within one hundred and twenty

(120) days from the date hereof, then the Series E Preferred Stock shall become

immediately redeemable, in cash.

 

4.               Transworld’s Representations, Warranties, Etc.; Access To Information;

Independent Investigation.  Transworld represents and warrants to, and covenants and agrees

with, the Company as follows:

 

a.               Transworld is

exchanging the Series B Preferred Stock and accrued dividends and penalties for

the Series E Preferred Stock for its own account for investment only and not

with a view towards the public sale or distribution thereof and not with a view

to or for sale in connection with any distribution thereof.

 

b.              Transworld is

(i) an “accredited investor” as that term is defined in Rule 501 of the General

Rules and Regulations under the 1933 Act by reason of Rule 501(a)(3), and (ii)

experienced in making investments of the kind described in this Agreement and

the related documents, (iii) able, by reason of the business and financial

experience of its officers (if an entity) and professional advisors (who are

not affiliated with or compensated in any way by the Company or any of its affiliates

or selling agents), to protect its own interests in connection with the

transactions described in this Agreement, and the related documents, and (iv)

able to afford the entire loss of its investment in the Preferred.

 

c.               Transworld understands that

the 32,000 shares of Series B Preferred Stock are being exchanged for the

Series E Preferred Stock in reliance on specific exemptions from the

registration requirements of United States federal and state securities laws

and that the Company is relying upon the truth and accuracy of, and

Transworld’s compliance with, the representations, warranties, agreements,

acknowledgements and understandings of Transworld set forth herein in order to

determine the availability of such exemptions and the eligibility of Transworld

to acquire the Preferred Stock.

 

d.              Transworld and

its advisors, if any, have been furnished with all materials relating to the

business, finances and operations of the Company and materials relating to the

exchange of the Series B Preferred Stock and the issuance of Series E Preferred

Stock which have been

 

2

 

 requested by Transworld.  Transworld and its advisors, if any, have

been afforded the opportunity to ask questions of the Company and have received

complete and satisfactory answers to any such inquiries;

 

e.               Transworld

understands that no United States federal or state agency or any other

government or governmental agency has passed on or made any recommendation or

endorsement of the Series E Preferred Shares.

 

f.                 This Agreement

has been duly and validly authorized, executed and delivered on behalf of

Transworld and is a valid and binding agreement of Transworld enforceable in

accordance with its terms, subject as to enforceability to general principles

of equity and to bankruptcy, insolvency, moratorium and other similar laws

affecting the enforcement of creditors’ rights generally.

 

5.                       Company Representations,

Etc.  The Company represents and warrants to Transworld that:

 

a.               Concerning the

Common Stock.   There are no preemptive rights of any stockholder of the

Company, as such, to acquire the Company’s Series E Preferred.

 

b.              Reporting Company Status.  The Company is a corporation duly organized,

validly existing and in good standing under the laws of the State of Delaware,

and has the requisite corporate power to own its properties and to carry on its

business as now being conducted.  The

Company is duly qualified as a foreign corporation to do business and is in

good standing in each jurisdiction where the nature of the business conducted

or property owned by it makes such qualification necessary other than those

jurisdictions in which the failure to so qualify would not have a material and

adverse effect on the business, operations, properties, prospects or condition

(financial or otherwise) of the Company. 

The Company has registered its Common Stock pursuant to Section 12 of

the Securities Exchange Act of 1934, as amended (the “1934 Act”), and the

Common Stock is listed and traded on the OTC Bulletin Board Market.

 

c.               Authorized

Shares. Upon the Company obtaining

stockholder approval to increase its authorized shares of Common Stock to

100,000,000, the shares of Common Stock issuable upon conversion of the Series

E Preferred Stock will be duly authorized and, when issued to

 

3

 

Transworld,

will be duly and validly issued, fully paid and non-assessable and will not

subject the holder thereof to personal liability by reason of being such holder.

 

d.              Conversion

Agreement.  This

Agreement and the transactions contemplated hereby, have been duly and validly

authorized by the Company.  This

Agreement has been duly executed and delivered by the Company and is a valid

and binding agreement of the Company enforceable in accordance with its terms,

subject as to enforceability to general principles of equity and to bankruptcy,

insolvency, moratorium, and other similar laws affecting the enforcement of

creditors’ rights generally.

 

e.               Non-contravention.  The

execution and delivery of this Agreement by the Company, the issuance of the

Series E Preferred Stock, and the consummation by the Company of the other

transactions contemplated by this Agreement do not and will not conflict with

or result in a breach by the Company of any of the terms or provisions of, or

constitute a default under (i) the articles of incorporation or by-laws of the

Company, (ii) any indenture, mortgage, deed of trust, or other material

agreement or instrument to which the Company is a party or by which it or any

of its properties or assets are bound, (iii) to its knowledge, any existing

applicable law, rule, or regulation or any applicable decree, judgment, or (iv)

to its knowledge, order of any court, United States federal or state regulatory

body, administrative agency, or other governmental body having jurisdiction

over the Company or any of its properties or assets, except such conflict,

breach or default which would not have a material adverse effect on the

transactions contemplated herein. The Company is not in violation of any

material laws, govern­men­tal orders, rules, regula­tions or ordinances to

which its  property, real, personal,

mixed, tangible or intangible,  or its

businesses related to such properties, are subject.

 

f.                 Approvals.  No authorization, approval or consent of any

court, governmental body, regulatory agency, self-regulatory organization, or

stock exchange or market is required to be obtained by the Company for the

issuance and sale of the Series E Preferred Stock to Transworld as contemplated

by this Agreement, except such authorizations, approvals and consents that have

been obtained, and except for the stockholder approval needed to increase the

Company’s

 

4

 

authorized

shares of Common Stock to 100,000,000 to insure that there are sufficient

shares of Common Stock underlying the Series E Preferred Stock upon conversion.

 

g.              SEC Documents,

Financial Statements.  The Common

Stock of the Company is registered pursuant to Section 12(g) of the 1934 Act

and the Company has filed all reports, schedules, forms, statements and other

documents required to be filed by it with the SEC pursuant to the reporting

requirements of the Exchange Act, including material filed pursuant to Section

13(a) or 15(d), in addition to one or more registration statements and

amendments thereto heretofore filed by the Company with the SEC under the Act

(all of the foregoing including filings incorporated by reference therein being

referred to herein as the “SEC Documents”). 

The Company, through its agent, has delivered to Transworld true and

complete copies of the SEC Documents (except for exhibits and incorporated

documents).  The Company has not

provided to Transworld any information which, according to applicable law, rule

or regulation, should have been disclosed publicly by the Company but which has

not been so disclosed, other than with respect to the transactions contemplated

by this Agreement.

 

As of their respective dates, the SEC Documents

complied in all material respects with the requirements of the Act or the

Exchange Act as the case may be and the rules and regulations of the SEC

promulgated thereunder and other federal, state and local laws, rules and

regulations applicable to such SEC Documents, and none of the SEC Documents

contained any untrue statement of a material fact or omitted to state a

material fact required to be stated therein or necessary in order to make the

statements therein, in light of the circumstances under which they were made,

not misleading.  The financial

statements of the Company included in the SEC Documents comply as to form in

all material respects with applicable accounting requirements and the published

rules and regulations of the SEC or other applicable rules and regulations with

respect thereto.  Such financial

statements have been prepared in accordance with generally accepted accounting

principles applied on a consistent basis during the periods involved (except

(i) as may be otherwise indicated in such financial statements or the notes

thereto or (ii) in the case of unaudited interim statements, to the extent they

may not include

 

5

 

footnotes

or may be condensed or summary statements) and fairly present in all material

respects the financial position of the Company as of the dates thereof and the

results of operations and cash flows for the periods then ended (subject, in

the case of unaudited statements, to normal year-end audit adjustments).

 

h.              Absence of

Certain Changes.  Since March 31, 2002, there has been no material adverse change

and no material adverse development in the business, properties, operations,

financial condition, or results of operations of the Company.

 

i.                  Full Disclosure.  There is no fact known to the

Company (other than general economic conditions known to the public generally)

or as disclosed in the documents referred to in Section 2(g), that has not been

disclosed in writing to Transworld that (i) would reasonably be expected to

have a material adverse effect on the business or financial condition of the

Company or (ii) would reasonably be expected to materially and adversely affect

the ability of the Company to perform its obligations pursuant to this

Agreement.

 

6.                       Certain

Covenants And Acknowledgments.

 

a.               Filings.  The Company undertakes and agrees to make

all necessary filings in connection with the exchange of the Series E Preferred

Stock to Transworld under any United States laws and regulations, or by any

domestic securities exchange or trading market, and to provide a copy thereof

to Transworld promptly after such filing.

 

b.              Reporting Status.  So long as Transworld beneficially owns any

of the Series E Preferred Stock, the Company shall file all reports required to

be filed with the SEC pursuant to Section 13 or 15(d) of the 1934 Act,  and the Company shall not terminate its

status as an issuer required to file reports under the 1934 Act even if the

1934 Act or the rules and regulations thereunder would permit such termination.

 

7.                       Covenant

to Register.

 

a.               For purposes of

this Section, the following definitions shall apply:

 

i.      The terms “register”, “registered” and

“registration” refer to a registration under the 1933 Act, effected by

preparing and filing a registration statement or similar

 

6

 

document

in compliance with the 1933 Act, and the declaration or ordering of

effectiveness of such registration statement, document or amendment thereto.

 

ii.     The term “Registrable Securities” means the

Series E Preferred Stock, and any securities of the Company or securities of

any successor corporation issued as or issuable upon the conversion or exercise

of any warrant, right or other security that is issued as a dividend or other

distribution with respect to, or in exchange for, or in replacement of, the

Series E Preferred Stock.

 

iii.    The term “holder of Registrable Securities”

means Transworld and any permitted assignee of registration rights pursuant to

Section 7(g).

 

b.                                       i.     The Company shall use its best efforts to

prepare and file a registration statement on Form S-1 within sixty (60) days of

the date hereof and cause such registration statement to become effective as

soon as possible, but no later than one hundred and twenty (120) days from the

date of this Agreement.

 

ii.     The Company may suspend, on no more than

two (2) occasions per twelve-month period, the effectiveness of any

registration effected pursuant to this Subsection (b) in the event and for such

period of time as, such a suspension is required by the rules and regulations

of the Securities and Exchange Commission (“SEC”).  The Company will use its best efforts to cause such suspension to

terminate at the earliest possible date.

 

iii.    If a registration statement covering all

Registrable Securities is not effective by one hundred and twenty (120) days

after the date of this Agreement (the “Target Date”), the Company shall pay

Transworld as liquidated damages an amount equal to fifteen percent (15%) of

the total Purchase price of the Series E Preferred Stock.  Thereafter, the Company will pay additional

penalty payments of fifteen percent (15%) of the purchase price of the Series E

Preferred Stock for every successive one hundred and twenty (120) day period

that a registration statement has still not been declared effective.  Each such payment shall be made to

Transworld by cashier’s check or wire transfer in immediately available funds

to such account as shall be designated in writing by Transworld.

 

7

 

c.               Whenever

required under this Section 7 to effect the registration of any Registrable

Securities, the Company shall, as expeditiously as reasonably possible:

 

i.      Prepare and file with the SEC a

registration statement or amendment thereto with respect to such Registrable

Securities and use its best efforts to cause such registration to become

effective as provided in Section 7(b)(i) hereof, and keep such registration

statement effective for so long as any holder of Registrable Securities desires

to dispose of the securities covered by such registration statement; provided,

however, that in no event shall the Company be required to keep the

registration statement effective for a period greater than three (3) years from

the closing date;

 

ii.     Prepare and file with the SEC such

amendments and supplements to such registration statement and the prospectus

used in connection with such registration statement as may be necessary to

comply with the provisions of the 1933 Act with respect to the disposition of

all securities covered by such registration statement and notify the holders of

the filing and effectiveness of such Registration statement and any amendments

or supplements;

 

iii.    Furnish to Transworld such numbers of copies

of a current prospectus, including preliminary prospectus, conforming with the

requirements of the 1933 Act, copies of the registration statement any

amendment or supplement to any thereof and any documents incorporated by

reference therein, and such other documents as Transworld may reasonably

require in order to facilitate the disposition of the shares of Common Stock

issuable under the Series E Preferred Stock;

 

iv.    Use its best efforts to register and qualify

the securities covered by such registration statement under such other

securities or “Blue Sky” laws of such jurisdictions as shall be reasonably

requested by Transworld;

 

v.     Notify Transworld immediately of the

happening of any event as a result of which the prospectus included in such

registration statement, as then in effect, includes an untrue statement of

material fact or omits to state a material fact required to be stated

 

8

 

therein

or necessary to make the statements therein not misleading in light of the

circumstances then existing, and use its best efforts to promptly update and/or

correct such prospectus.

 

d.              Upon request of

the Company, Transworld will furnish to the Company in connection with any

registration under this Section such information regarding itself, the

securities of the Company held by it, and the intended method of disposition of

such securities as shall be reasonably required to affect the registration of

the  securities held by Transworld.

 

e.                                                               i.      To the fullest extent permitted by law,

the Company shall indemnify, defend and hold harmless Transworld and each

holder of Registrable Securities which are included in a registration statement

and each of its officers, directors, employees, agents, partners or controlling

persons (within the meaning of the 1933 Act) (each, an “indemnified party”)

from and against, and shall reimburse such indemnified party with respect to,

any and all claims, suits, demands, causes of action, losses, damages,

liabilities, costs or expenses (“Liabilities”) to which such indemnified party

may become subject under the 1933 Act or otherwise, arising from or relating to

(A) any untrue statement or alleged untrue statement of any material fact

contained in such registration statement, any prospectus contained therein or

any amendment or supplement thereto, or (B) the omission or alleged omission to

state therein a material fact required to be stated therein or necessary to

make the statements therein, in light of the circumstances in which they were

made, not misleading; provided, however, that

the Company shall not be liable in any such case to the extent that any such

Liability arises out of or is based upon an untrue statement or omission so

made in strict conformity with information furnished by such indemnified party

in writing specifically for use in the registration statement.

 

ii.     In the event of any registration under the

1933 Act of Registrable Securities, Transworld agrees to indemnity, defend and

hold harmless the Company, and its officers, directors, employees, agents,

partners, or controlling persons (within the meaning of the 1933 Act) (each, an

“indemnified party”) from and against, and shall reimburse such

 

9

 

indemnified

party with respect to, any and all Liabilities to which such indemnified party

may become subject under the 1933 Act or otherwise, arising from or relating to

(A) any untrue statement or alleged untrue statement of any material fact

contained in such registration statement, any prospectus contained therein or

any amendment or supplement thereto, or (B) the omission or alleged omission to

state therein a material fact required to be stated therein or necessary to

make the statements therein, in light of the circumstances in which they were

made, not misleading;  provided, that  Transworld will be liable in any such case to the extent and

only to the extent, that any such Liability arises out of or is based upon an

untrue statement or alleged untrue statement or omission or alleged omission

made in such registration statement, prospectus or amendment or supplement

thereto in reliance upon and in conformity with written information furnished

by Transworld specifically for use in the preparation thereof, and such

Liability may in no event exceed the value of the Registrable Securities so

registered.

 

iii.    Promptly after receipt by any indemnified

party of notice of the commencement of any action, such indemnified party

shall, if a claim in respect thereof is to be made against another party (the

“indemnifying party”) hereunder, notify such party in writing thereof, but the

omission so to notify such party shall not relieve such party from any

Liability which it may have to the indemnified party other than under this

Section and shall only relieve it from any Liability which it may have to the

indemnified party under this Section if and to the extent an indemnifying party

is materially prejudiced by such omission. 

In case any such action shall be brought against any indemnified party

and such indemnified party shall notify an indemnifying party of the

commencement thereof, the indemnifying party shall be entitled to participate

in and, to the extent it shall wish, to assume and undertake the defense

thereof with counsel reasonably satisfactory to such indemnified party, and,

after notice from the indemnifying party to the indemnified party of its

election so to assume and undertake the defense thereof, the indemnifying party

shall not be liable to the indemnified party under this Section for any legal

expenses subsequently incurred

 

10

 

by

the indemnified party in connection with the defense thereof other than

reasonable costs of investigation and of liaison with counsel so selected; provided, however, that if the defendants

in any such action include both parties and the indemnified party shall have

reasonably concluded that there may be reasonable defenses available to them

which are different from or additional to those available to the indemnifying

party or if the interests of the indemnified party reasonably may be deemed to

conflict with the interests of the indemnifying party, the indemnified party

shall have the right to select a separate counsel and to assume such legal

defenses and otherwise to participate in the defense of such action, with the

reasonable expenses and fees of one such separate counsel and other reasonable

expenses related to such participation to be reimbursed by the indemnifying

party as incurred.

 

f.                 With respect to

the above-referenced registration statement, all fees, costs and expenses of

and incidental to such registration, inclusion and public offering shall be

borne by the Company; provided, however, that any security holders

participating in such registration shall bear their pro-rata share of the

underwriting discounts and commission, if any, incurred by them in connection

with registration.

 

g.              The rights to

cause the Company to register all or any portion of securities pursuant to this

Section 7 may be assigned by Transworld to a proper transferee or assignee as

described herein.  Within a reasonable

time after such transfer, Transworld shall notify the Company of the name and

address of such transferee or assignee, and the securities with respect to

which such registration rights are being assigned.  Such assignment shall be effective only if, (i) Transworld agrees

in writing with the transferee or assignee to assign such rights, and a copy of

such agreement is furnished to the Company within a reasonable time after such

transfer or assignment (subject to the purchase price of the shares being kept

confidential by Transworld and such transferee or assignee, (ii) the

Company  is, within a reasonable time

after such transfer or assignment, furnished with written notice of (A) the

name and address of such transferee or assignee, (B) the securities with

respect to which such

 

11

 

registration

rights are being assigned, (iii) following such transfer or assignment, the further

disposition of the Registrable Securities by the transferee or assignee is

restricted under the 1933 Act and applicable state securities laws, (iv) at or

before the time that the Company receives the written notice contemplated by

clause (ii) of this sentence the transferee or assignee agrees in writing with

the Company to be bound by all of the provisions contained herein, (v) such

transfer shall have been made in accordance with the applicable requirements of

the purchase agreement covering the transaction and (vi) such transferee shall

be an “accredited investor”, as that term is defined in Rule 501 of Regulation

D, promulgated under the 1933 Act.

 

8.               Governing Law:  Miscellaneous.  This Agreement shall be

governed by and interpreted in accordance with the laws of the State of New

Jersey.  A facsimile transmission of

this signed Agreement shall be legal and binding on all parties hereto.  This Agreement may be signed in one or more

counterparts, each of which shall be deemed an original.  The headings of this Agreement are for

convenience of reference and shall not form part of, or affect the

interpretation of, this Agreement.  If

any provision of this Agreement shall be invalid or unenforceable in any

jurisdiction, such invalidity or unenforceability shall not affect the validity

or enforceability of the remainder of this Agreement or the validity or

enforceability of this Agreement in any other jurisdiction.  This Agreement may be amended only by an

instrument in writing signed by the party to be charged with enforcement.  This Agreement, and the related agreements

referred to herein, contain the entire agreement of the parties with respect to

the subject matter hereto, superceding all prior agreements, understandings or

discussions.

 

9.               Notices.  Any notice required or permitted hereunder shall be given in

writing (unless otherwise specified herein) and shall be deemed effectively

given, (i) on the date delivered, (a) by personal delivery, or (b) if advance

copy is given by fax, (ii) seven 

business days after deposit in the United States Postal Service by

regular or certified mail, or (iii) three business days mailing by

international express courier, with postage and fees prepaid, addressed to each

of the other parties thereunto entitled at the following addresses, or at such

other addresses as a party may designate by ten days advance written notice to

each of the other parties hereto.

 

12

 

	

   

  	

  COMPANY:

  	

   

  	

  STRATUS SERVICES GROUP,

  INC.

  
	

   

  	

   

  	

   

  	

  500 Craig Road, Suite 201

  
	

   

  	

   

  	

   

  	

  Manalapan, NJ 07726

  
	

   

  	

   

  	

   

  	

  Attn: Suzette Nanovic

  Berrios, Esq.

  
	

   

  	

   

  	

   

  	

  Telecopier No.:

  (732)294-1133

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  TRANSWORLD:

  	

   

  	

  TRANSWORLD MANAGEMENT

  SERVICES, INC.

  
	

   

  	

   

  	

  500 Craig Road, Suite 201

  
	

   

  	

   

  	

  Manalapan, New Jersey

  07726

  
	

   

  	

   

  	

  Attn:  Joseph J. Raymond, Sr.

  
	

   

  	

   

  	

  Telecopier No.:  (732)294-1133

  

 

10.         Successors And Assigns.   This Agreement shall be binding upon and

inure to the benefit of the parties hereto and their respective successors and

permitted assigns.

 

IN WITNESS WHEREOF, the Company and Transworld

have caused this Agreement to be executed by their duly authorized

representatives on the date as first written above.

 

 

	

  STRATUS

  SERVICES GROUP, INC.

  	

   

  	

  TRANSWORLD

  MANAGEMENT SERVICES, INC.

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  By:

  	

   /s/ Michael Maltzman

  	

   

  	

   

  	

  By:

  	

   /s/ Joseph J. Raymond

  	

   

  
	

  Name:  Michael Maltzman

  	

   

  	

  Name:  Joseph J. Raymond, Sr.

  	

   

  
	

  Title:    Chief Fiananacial Officer

  	

   

  	

  Title:     President

  	

   

  
							

 

13Exhibit  4.1.12

 

SECURITIES

PURCHASE AGREEMENT

 

THIS

SECURITIES PURCHASE AGREEMENT, dated as of July 30, 2002, is

entered into by and between STRATUS SERVICES GROUP, INC., a Delaware

corporation, with headquarters located at 500 Craig Road, Suite 201, Manalapan,

New Jersey 07726 (the “Company”), and the undersigned (the “Buyer”).

 

W I T N

E S S E T H:

 

WHEREAS,

the Buyer wishes to purchase from the Company, upon the terms and subject to

the conditions of this Agreement, 10,000 shares of Series F Preferred Stock,

having the rights, preferences and privileges set forth on Schedule I attached

hereto (the “Securities”);

 

WHEREAS,

in order to induce the Buyer to purchase the Securities, the Company desires to

enter into this Agreement and make the representations, warranties and

covenants contained herein.

 

NOW

THEREFORE, in consideration of the premises and the mutual

covenants contained herein and other good and valuable consideration, the

receipt and sufficiency of which are hereby acknowledged, the parties agree as

follows:

 

1.             AGREEMENT TO PURCHASE.

 

a.             Purchase. 

The undersigned hereby agrees to purchase the Securities from the

Company for an aggregate purchase price of $1,000,000.

 

b.             Form of Payment.  The Buyer shall pay the purchase price for the Securities by

cashier’s check or by wiring immediately available good funds in United States

Dollars to the Company.

 

2.  BUYER REPRESENTATIONS, WARRANTIES, ETC.;

ACCESS TO INFORMATION; INDEPENDENT INVESTIGATION.

 

The Buyer

represents and warrants to, and covenants and agrees with, the Company as

follows:

 

a.             The Buyer is

purchasing the Securities for his own account for investment only and not with

a view towards the public sale or distribution thereof and not with a view to

or for sale in connection with any distribution thereof;

 

b.             The Buyer is (i) an

“accredited investor” as that term is defined in Rule 501 of the General Rules

and Regulations under the Securities Act of 1933, as amended (the “1933 Act”)

by reason of Rule 501(a)(3), and (ii) experienced in making investments of the

kind described in this Agreement and the related documents, (iii) able, by

reason of the business and financial experience of its officers (if an entity)

and professional advisors (who are not affiliated with or compensated in any way

by the Company or any of its affiliates or selling agents), to protect his own

interests in connection with the transactions described in this Agreement, and

the related documents, and (iv) able to afford the entire loss of his

investment in the Shares;

 

c.             The Buyer understands

that the Securities are being offered and sold to him in reliance on specific

exemptions from the registration requirements of United States federal and

state securities laws and that the Company is relying upon the truth and accuracy

of, and the Buyer’s compliance with, the representations, warranties,

agreements, acknowledgements and understandings of the Buyer set forth herein

in order to determine the availability of such exemptions and the eligibility

of the Buyer to acquire the Securities;

 

e.             The Buyer and his

advisors, if any, have been furnished with all materials relating to the

business, finances and operations of the Company and materials relating to the

offer and sale of the Securities which have been requested by the Buyer. The

Buyer and his advisors, if any, have been afforded the opportunity to ask

questions of the Company and have received complete and satisfactory answers to

any such inquiries.

 

f.              The Buyer

understands that no United States federal or state agency or any other

government or governmental agency has passed on or made any recommendation or

endorsement of the Securities;

 

 

g.             This Agreement has

been duly and validly authorized, executed and delivered on behalf of the Buyer

and is a valid and binding agreement of the Buyer enforceable in accordance

with its terms, subject as to enforceability to general principles of equity

and to bankruptcy, insolvency, moratorium and other similar laws affecting the

enforcement of creditors’ rights generally.

 

3.             COMPANY

REPRESENTATIONS, ETC.

 

The Company

represents and warrants to the Buyer that:

 

a.             Concerning the Common

Stock.   There are no preemptive

rights of any stockholder of the Company, as such, to acquire the Company’s

Common Stock.

 

b.             Reporting Company

Status.  The Company is a

corporation duly organized, validly existing and in good standing under the

laws of the State of Delaware, and has the requisite corporate power to own its

properties and to carry on its business as now being conducted.  The Company is duly qualified as a foreign

corporation to do business and is in good standing in each jurisdiction where

the nature of the business conducted or property owned by it makes such

qualification necessary other than those jurisdictions in which the failure to

so qualify would not have a material and adverse effect on the business,

operations, properties, prospects or condition (financial or otherwise) of the

Company.  The Company has registered its

Common Stock pursuant to Section 12 of the Securities Exchange Act of 1934, as

amended (the “1934 Act”), and the Common Stock is listed and traded on the OTC

Bulletin Board.

 

c.             Authorized Shares.

The shares of Common Stock issuable upon conversion of the Securities (the

“Shares”) will be duly authorized and, when issued to Buyer, will be duly and

validly issued, fully paid and non-assessable and will not subject the holder

thereof to personal liability by reason of being such holder.

 

d.             Securities Purchase

Agreement.  This Agreement and the

transactions contemplated hereby, have been duly and validly authorized by the

Company, this Agreement has been duly executed and delivered by the Company and

is a valid and binding agreement of the Company enforceable in accordance with

its terms, subject as to enforceability to general principles of equity and to

bankruptcy, insolvency, moratorium, and other similar laws affecting the

enforcement of creditors’ rights generally.

 

e.             Non-contravention.  The execution and delivery of this

Agreement by the Company, the issuance of the Securities, and the consummation

by the Company of the other transactions contemplated by this Agreement do not

and will not conflict with or result in a breach by the Company of any of the

terms or provisions of, or constitute a default under (i) the articles of

incorporation or by-laws of the Company, (ii) any indenture, mortgage, deed of

trust, or other material agreement or instrument to which the Company is a

party or by which it or any of its properties or assets are bound, (iii) to its

knowledge, any existing applicable law, rule, or regulation or any applicable

decree, judgment, or (iv) to its knowledge, order of any court, United States

federal or state regulatory body, administrative agency, or other governmental

body having jurisdiction over the Company or any of its properties or assets,

except such conflict, breach or default which would not have a material adverse

effect on the transactions contemplated herein. The Company is not in violation

of any material laws, govern­men­tal orders, rules, regula­tions or ordinances

to which its property, real, personal, mixed, tangible or intangible, or its

businesses related to such properties, are subject.

 

f.              Approvals.  No authorization, approval or consent of any

court, governmental body, regulatory agency, self-regulatory organization, or

stock exchange or market is required to be obtained by the Company for the

issuance and sale of the Securities to the Buyer as contemplated by this

Agreement, except such authorizations, approvals and consents that have been

obtained.

 

g.             SEC Documents,

Financial Statements.  The Common

Stock of the Company is registered pursuant to Section 12(g) of the 1934 Act

and the Company has filed all reports, schedules, forms, statements and other

documents required to be filed by it with the SEC pursuant to the reporting

requirements of the Exchange Act, including material filed pursuant to Section

13(a) or 15(d), in addition to one or more registration statements and

amendments thereto heretofore filed by the Company with the SEC under the Act

(all of the foregoing including filings incorporated by reference therein being

referred to herein as the “SEC Documents”). 

The Company, through 

 

2

 

its agent, has delivered

to the Buyer true and complete copies of the SEC Documents (except for exhibits

and incorporated documents).  The

Company has not provided to the Buyer any information which, according to

applicable law, rule or regulation, should have been disclosed publicly by the

Company but which has not been so disclosed, other than with respect to the

transactions contemplated by this Agreement.

 

As of their

respective dates, the SEC Documents complied in all material respects with the

requirements of the 1933 Act or the 1934 Act as the case may be and the rules

and regulations of the SEC promulgated thereunder and other federal, state and

local laws, rules and regulations applicable to such SEC Documents, and none of

the SEC Documents contained any untrue statement of a material fact or omitted

to state a material fact required to be stated therein or necessary in order to

make the statements therein, in light of the circumstances under which they

were made, not misleading.  The financial

statements of the Company included in the SEC Documents comply as to form in

all material respects with applicable accounting requirements and the published

rules and regulations of the SEC or other applicable rules and regulations with

respect thereto.  Such financial

statements have been prepared in accordance with generally accepted accounting

principles applied on a consistent basis during the periods involved (except

(i) as may be otherwise indicated in such financial statements or the notes

thereto or (ii) in the case of unaudited interim statements, to the extent they

may not include footnotes or may be condensed or summary statements) and fairly

present in all material respects the financial position of the Company as of

the dates thereof and the results of operations and cash flows for the periods

then ended (subject, in the case of unaudited statements, to normal year-end

audit adjustments).

 

h.             Absence of Certain

Changes.  Since March 31, 2002,

there has been no material adverse change and no material adverse development

in the business, properties, operations, financial condition, or results of

operations of the Company.

 

i.              Full Disclosure.  There is no fact known to the Company (other

than general economic conditions known to the public generally) or as disclosed

in the documents referred to in Section 2(e), that has not been disclosed in

writing to the Buyer that (i) would reasonably be expected to have a material

adverse effect on the business or financial condition of the Company or (ii)

would reasonably be expected to materially and adversely affect the ability of

the Company to perform its obligations pursuant to this Agreement.

 

4.             CERTAIN COVENANTS AND

ACKNOWLEDGMENTS.

 

a.             Filings.  The Company undertakes and agrees to make

all necessary filings in connection with the sale of the Shares to the Buyer

under any United States laws and regulations, or by any domestic securities

exchange or trading market, and to provide a copy thereof to the Buyer promptly

after such filing.

 

b.             Reporting Status.  So long as the Buyer beneficially owns any

of the Shares, the Company shall file all reports required to be filed with the

SEC pursuant to Section 13 or 15(d) of the 1934 Act,  and the Company shall not terminate its status as an issuer

required to file reports under the 1934 Act even if the 1934 Act or the rules

and regulations thereunder would permit such termination.

 

5.             COVENANT TO REGISTER.

 

a.             For purposes of this

Section, the following definitions shall apply:

 

(i)            The

terms “register,” “registered,” and “registration” refer to a registration

under the 1933 Act, effected by preparing and filing a registration statement

or similar document in compliance with the 1933 Act, and the declaration or

ordering of effectiveness of such registration statement, document or amendment

thereto.

 

(ii)           The

term “Registrable Securities” means the Shares, and any securities of the

Company or securities of any successor corporation issued as or issuable upon

the conversion or exercise of any warrant, right or other security that is

issued as a dividend or other distribution with respect to, or in exchange for,

or in replacement of, the Shares.

 

(iii)          The term “holder of Registrable Securities”

means the Purchaser and any permitted assignee of registration rights pursuant

to Section 5(g).

 

3

 

b.             (i)            The Company shall use its best efforts to

prepare and file a registration statement on Form S-1 within sixty (60) days of

the date hereof and cause such registration statement to become effective as

soon as possible, but no later than one hundred and twenty (120) days from the

date of this Agreement.

 

(ii)           The

Company may suspend, on no more than two (2) occassions per twelve-month

period, the effectiveness of any registration effected pursuant to this

Subsection (b) in the event and for such period of time as, such a suspension

is required by the rules and regulations of the Securities and Exchange

Commission (“SEC”).  The Company will

use its best efforts to cause such suspension to terminate at the earliest

possible date.

 

(iii)           If a registration statement covering all

Registrable Securities is not effective by one hundred and twenty (120) days

after the date of this Agreement (the “Target Date”), the Company shall pay

Purchaser as liquidated damages an amount equal to fifteen percent (15%) of the

total Purchase Price of the Shares. Thereafter, the Company will pay additional

penalty payments of fifteen percent (15%) of the purchase price of the Shares

for every successive one hundred twenty (120) day period that a registration

statement has still not been declared effective.  Each such payment shall be made to the Buyer by cashier’s check

or wire transfer in immediately available funds to such account as shall be

designated in writing by the Buyer.

 

c.             Whenever required

under this Section 5 to effect the registration of any Registrable Securities,

the Company shall, as expeditiously as reasonably possible:

 

(i)            Prepare

and file with the SEC a registration statement or amendment thereto with

respect to such Registrable Securities and use its best efforts to cause such

registration to become effective as provided in Section 5(b)(i) hereof, and

keep such registration statement effective for so long as any holder of

Registrable Securities desires to dispose of the securities covered by such

registration statement; provided, however, that

in no event shall the Company be required to keep the Registration statement

effective for a period greater than three (3) years from the Closing Date;

 

(ii)           Prepare

and file with the SEC such amendments and supplements to such registration

statement and the prospectus used in connection with such registration

statement as may be necessary to comply with the provisions of the 1933 Act

with respect to the disposition of all securities covered by such registration

statement and notify the holders of the filing and effectiveness of such

Registration statement and any amendments or supplements;

 

(iii)          Furnish to each holder of Registrable

Securities such numbers of copies of a current prospectus, including a

preliminary prospectus, conforming with the requirements of the 1933 Act,

copies of the registration statement, any amendment or supplement thereto and

any documents incorporated by reference therein, and such other documents as

such holder of Registrable Securities may reasonably require in order to

facilitate the disposition of Registrable Securities  owned by such holder of Registrable Securities;

 

(iv)          Use

its best efforts to register and qualify the securities covered by such

registration statement under such other securities or “Blue Sky” laws of such

jurisdictions as shall be reasonably requested by the holder of Registrable

Securities;

 

(v)           Notify

each holder of Registrable Securities immediately of the happening of any event

as a result of which the prospectus included in such registration statement, as

then in effect, includes an untrue statement of material fact or omits to state

a material fact required to be stated therein or necessary to make the

statements therein not misleading in light of the circumstances then existing,

and use its best efforts to promptly update and/or correct such prospectus.

 

d.             Upon request of the

Company, each holder of Registrable Securities will furnish to the Company in

connection with any registration under this Section such information regarding

itself, the Registrable Securities and other securities of the Company held by

it, and the intended method of disposition of such securities as shall be

reasonably required to effect the registration of the  Registrable Securities held by such holder of Registrable

Securities.

 

e.             (i)            To the fullest extent permitted by law, the

Company shall indemnify, defend and hold harmless each holder of Registrable

Securities which are included in a registration statement and each of its

officers, 

 

4

 

directors, employees,

agents, partners or controlling persons (within the meaning of the 1933 Act)

(each, an “indemnified party”) from and against, and shall reimburse such

indemnified party with respect to, any and all claims, suits, demands, causes

of action, losses, damages, liabilities, costs or expenses (“Liabilities”) to

which such indemnified party may become subject under the 1933 Act or

otherwise, arising from or relating to (A) any untrue statement or alleged

untrue statement of any material fact contained in such registration statement,

any prospectus contained therein or any amendment or supplement thereto, or (B)

the omission or alleged omission to state therein a material fact required to

be stated therein or necessary to make the statements therein, in light of the

circumstances in which they were made, not misleading; provided, however, that the Company shall

not be liable in any such case to the extent that any such Liability arises out

of or is based upon an untrue statement or omission so made in strict

conformity with information furnished by such indemnified party in writing

specifically for use in the registration statement.

 

(ii)           In

the event of any registration under the 1933 Act of Registrable Securities,

each holder of such Registrable Securities hereby severally agrees to

indemnity, defend and hold harmless the Company, and its officers, directors,

employees, agents, partners, or controlling persons (within the meaning of the

1933 Act) (each, an “indemnified party”) from and against, and shall reimburse

such indemnified party with respect to, any and all Liabilities to which such

indemnified party may become subject under the 1933 Act or otherwise, arising from

or relating to (A) any untrue statement or alleged untrue statement of any

material fact contained in such registration statement, any prospectus

contained therein or any amendment or supplement thereto, or (B) the omission

or alleged omission to state therein a material fact required to be stated

therein or necessary to make the statements therein, in light of the

circumstances in which they were made, not misleading; provided, that such holders will be liable

in any such case to the extent and only to the extent, that any such Liability

arises out of or is based upon an untrue statement or alleged untrue statement

or omission or alleged omission made in such registration statement, prospectus

or amendment or supplement thereto in reliance upon and in conformity with

written information furnished by such holder specifically for use in the

preparation thereof, and such Liability may in no event exceed the value of the

Registrable Securities so registered.

 

(iii)          Promptly after receipt by any indemnified party

of notice of the commencement of any action, such indemnified party shall, if a

claim in respect thereof is to be made against another party (the “indemnifying

party”) hereunder, notify such party in writing thereof, but the omission so to

notify such party shall not relieve such party from any Liability which it may

have to the indemnified party other than under this Section and shall only

relieve it from any Liability which it may have to the indemnified party under

this Section if and to the extent an indemnifying party is materially

prejudiced by such omission.  In case

any such action shall be brought against any indemnified party and such

indemnified party shall notify an indemnifying party of the commencement

thereof, the indemnifying party shall be entitled to participate in and, to the

extent it shall wish, to assume and undertake the defense thereof with counsel

reasonably satisfactory to such indemnified party, and, after notice from the

indemnifying party to the indemnified party of its election so to assume and

undertake the defense thereof, the indemnifying party shall not be liable to

the indemnified party under this Section for any legal expenses subsequently

incurred by the indemnified party in connection with the defense thereof other

than reasonable costs of investigation and of liaison with counsel so selected;

provided, however, that if the

defendants in any such action include both parties and the indemnified party

shall have reasonably concluded that there may be reasonable defenses available

to them which are different from or additional to those available to the

indemnifying party or if the interests of the indemnified party reasonably may

be deemed to conflict with the interests of the indemnifying party, the

indemnified party shall have the right to select a separate counsel and to

assume such legal defenses and otherwise to participate in the defense of such

action, with the reasonable expenses and fees of one such separate counsel and

other reasonable expenses related to such participation to be reimbursed by the

indemnifying party as incurred.

 

f.              (i)            With respect to the inclusion of

Registrable Securities in a registration statement, all fees, costs and

expenses of and incidental to such registration, inclusion and public offering

shall be borne by the Company; provided,

however, that any security holders participating in such

registration shall bear their pro–rata share of the underwriting

discounts and commissions, if any, incurred by them in connection with such

registration.

 

(ii)           The

fees, costs and expenses of registration to be borne by the Company as provided

in this Subsection (f) shall include, without limitation, all registration,

filing and NASD fees, printing expenses, fees and disbursements of counsel and

accountants for the Company, and all legal fees and disbursements and other

expenses of complying with state securities or Blue Sky laws of any

jurisdiction or jurisdictions in which securities 

 

5

 

to be offered are to be

registered and qualified.  Subject to

appropriate agreements as to confidentiality, the Company shall make available

to the holders of Registrable Securities and their counsel its documents and

personnel for due diligence purposes, provided that the fees and disbursements

of counsel and accountants for the selling security holders shall be borne by

the respective selling security holders.

 

g.             The rights to cause

the Company to register all or any portion of Registrable Securities pursuant

to this Section 5 may be assigned by Buyer to a proper transferee or assignee

as described herein.  Within a

reasonable time after such transfer, the Buyer shall notify the Company of the

name and address of such transferee or assignee, and the securities with

respect to which such registration rights are being assigned.  Such assignment shall be effective only if,

(i) the Buyer agrees in writing with the transferee or assignee to assign such

rights, and a copy of such agreement is furnished to the Company within a

reasonable time after such transfer or assignment (subject to the purchase

price of the shares being kept confidential by the Buyer and such transferee or

assignee, (ii) the Company is, within a reasonable time after such transfer or

assignment, furnished with written notice of (A) the name and address of such

transferee or assignee, (B) the Registrable Securities with respect to which

such registration rights are being assigned, (iii) following such transfer or

assignment, the further disposition of the Registrable Securities by the

transferee or assignee is restricted under the 1933 Act and applicable state

securities laws, (iv) at or before the time that the Company receives the

written notice contemplated by clause (ii) of this sentence the transferee or

assignee agrees in writing with the Company to be bound by all of the

provisions contained herein, (v) such transfer shall have been made in

accordance with the applicable requirements of the purchase agreement covering

the transaction and (vi) such transferee shall be an “accredited investor”, as

that term is defined in Rule 501 of Regulation D, promulgated under the 1933

Act.

 

6.             GOVERNING LAW; MISCELLANEOUS.  This Agreement shall be governed by and

interpreted in accordance with the laws of the State of New Jersey.  A facsimile transmission of this signed

Agreement shall be legal and binding on all parties hereto.  This Agreement may be signed in one or more

counterparts, each of which shall be deemed an original.  The headings of this Agreement are for

convenience of reference and shall not form part of, or affect the

interpretation of, this Agreement.  If

any provision of this Agreement shall be invalid or unenforceable in any

jurisdiction, such invalidity or unenforceability shall not affect the validity

or enforceability of the remainder of this Agreement or the validity or

enforceability of this Agreement in any other jurisdiction.  This Agreement may be amended only by an

instrument in writing signed by the party to be charged with enforcement.  This Agreement, and the related agreements

referred to herein, contain the entire agreement of the parties with respect to

the subject matter hereto, superceding all prior agreements, understandings or

discussions.

 

7.             NOTICES. 

Any notice required or permitted hereunder shall be given in writing

(unless otherwise specified herein) and shall be deemed effectively given, (i)

on the date delivered, (a) by personal delivery, or (b) if advance copy is

given by fax, (ii) seven  business days

after deposit in the United States Postal Service by regular or certified mail,

or (iii) three business days mailing by international express courier, with

postage and fees prepaid, addressed to each of the other parties thereunto

entitled at the following addresses, or at such other addresses as a party may

designate by ten days advance written notice to each of the other parties

hereto.

 

	

  COMPANY:

  	

   

  	

  STRATUS SERVICES GROUP, INC.

  
	

   

  	

   

  	

  500 Craig Road, Suite 201

  
	

   

  	

   

  	

  Manalapan,NJ 07726

  
	

   

  	

   

  	

  Attn: Suzette Nanovic Berrios, Esq.

  
	

   

  	

   

  	

  Telecopier No.: (732)294-1133

  
	

   

  	

   

  	

   

  
	

  BUYER:

  	

   

  	

  Joseph J. Raymond, Sr.

  
	

   

  	

   

  	

  Villa Mare Condominiums

  
	

   

  	

   

  	

  3211 South Ocean Boulevard, #801

  
	

   

  	

   

  	

  Highland Beach, Florida 33487

  
	

   

  	

   

  	

  Telecopier No. 

  (732)294-1133

  

 

8.             SUCCESSORS AND ASSIGNS.   This Agreement shall be binding upon and

inure to the benefit of the parties hereto and their respective successors and

permitted assigns.

 

6

 

IN

WITNESS WHEREOF, the Company and Buyer have caused this

Agreement to be executed by their duly authorized representatives on the date

as first written above.

 

STRATUS

SERVICES GROUP, INC.

 

 

	

  By:

  	

    /s/ Michael

  A. Maltzman

  	

   

  	

  By:

  	

    /s/ Joseph

  J. Raymond

  	

   

  
	

  Name: 

  Michael Maltzman

  	

  Name: Joseph J. Raymond

  
	

  Title:  Chief

  Financial Officer

  	

   

  

 

7

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