EXHIBIT C-1 STRATUS NON-COMPETE/NON-SOLICITATION AGREEMENT

This STRATUS NON-COMPETE AND NON-SOLICITATION AGREEMENT (the “Agreement”) is made and entered into as of this 8^th day of June, 2005, by and between STRATUS SERVICES GROUP, INC., a Delaware company (“Stratus”) and ALS, LLC, a Florida limited liability company (“ALS”), and the respective affiliates, officers, directors and/or principals of each of Stratus and ALS.

WHEREAS, ALS and Stratus have executed an Asset Purchase Agreement whereby ALS has purchased certain assets related to the ongoing clerical and light industrial staffing business of Stratus at the Cotati, Fairfield, Hayward, Napa, Roseville and Sacramento branch offices (the “Purchased Assets”); and

WHEREAS, Stratus possesses substantial information and knowledge regarding the Purchased Assets; and

WHEREAS, the parties desire to enter into an agreement whereby Stratus agrees not to compete with ALS relating to the Purchased Assets.

NOW, THEREFORE, for consideration, the receipt and sufficiency of which is hereby acknowledged, and other good and valuable consideration, the parties hereto agree as follows:

Stratus acknowledges that it has had access to confidential information concerning the Purchased Assets and clients relating thereto, including their business affairs, special needs, preferred methods of doing business, methods of operation, key contact personnel and other data, all of which provides Stratus with a competitive edge and none of which is readily available except to Stratus and employees of ALS.

Stratus further acknowledges that it has had access to the names, addresses, telephone numbers, qualifications, education, accomplishments, experience, availability, resumes and other data regarding persons who have applied or been recruited for temporary or permanent employment relating to the Purchased Assets, as well as job order specifications and the particular characteristics and requirements of persons generally hired by a client, specific job listings, mailing lists, computer runoffs, financial and other information, all of which provides Stratus with a competitive edge and none of which is readily available except to Stratus and employees of ALS.

Stratus agrees that all of the foregoing information regarding the Purchased Assets and all clients and employees related thereto constitutes valuable and proprietary trade secrets and confidential information of ALS (hereafter “Confidential Information”).

Stratus agrees that it will not, during the two (2) year period commencing with the Effective Date of the Asset Purchase Agreement (“Restrictive Period”) and unless otherwise agreed to by the parties by way of subcontracting agreement, payrolling agreement, outsourcing agreement or otherwise, service, solicit, compete in the geographic area of or deal with any customers or future customers of the Cotati, Fairfield, Hayward, Napa, Roseville and Sacramento, California branch offices (the “ALS California Offices”). Stratus acknowledges that doing so in any manner would interfere with, diminish and otherwise jeopardize and damage the business and goodwill of the ALS California Offices. Notwithstanding the foregoing, Stratus retains the right to continue to service all of its other existing California and nationwide customers and accounts, as well as the accounts shared with ALS, i.e., GRM, APX and Spherion (the “Shared Accounts”). Stratus will have the right to service the Shared Accounts in locations other than the ALS California Offices.

Stratus agrees that except as directed by ALS, it will not at any time use for any reason or disclose to any person any of the Confidential Information of the ALS California Offices or permit any person to examine and/or make copies of any documents which may contain or are derived from Confidential Information, whether prepared by Stratus or otherwise, without the prior written permission of ALS.

Except as set forth above, Stratus agrees that during the Restrictive Period it will not, directly or indirectly, contact, solicit, divert, take away or attempt to contact, solicit, divert or take away any staff employee, temporary personnel, customer, account, business or goodwill from ALS in the ALS California Offices, either for Stratus’ own benefit or some other person or entity, and will not aid or assist any other person or entity to engage in any such activities.

 

Stratus acknowledges and agrees that any breach or threatened breach by of this Agreement by Stratus would cause immediate and irreparable injury to ALS and that money damages alone would not provide an adequate remedy in the event Stratus breaches any of the above covenants. Accordingly, Stratus agrees that ALS shall have the right to seek and obtain an injunction to enjoin any such breach by Stratus without the requirement of the posting of a bond and, if ALS shall institute any action or proceeding to enforce those covenants, Stratus hereby waives and agrees not to assert the claim or defense that ALS has an adequate remedy at law. The foregoing shall not prejudice ALS’ right to require Stratus to account for and pay over to ALS the amount of any damages incurred by ALS as a result of any such breach.

 

 

It is expressly understood and agreed that Stratus and ALS consider the restrictions contained in this Agreement to be reasonable and necessary for the purposes of preserving and protecting the goodwill, legitimate business interests, and proprietary trade secrets and confidential information of ALS. Nevertheless, if any of the aforesaid restrictions are found by a court having jurisdiction to be unreasonable, or to be overbroad as to geographic area, or time, or with respect to a particular scope of commerce, or to be otherwise unenforceable, the parties intend for the restrictions set forth above to be modified by such court so as to be reasonable and enforceable and, as so modified by the court, to be fully enforced.

This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and assigns, except that neither party may assign its obligations hereunder without the prior written consent of the other parties hereto; provided, however, that the Buyer may assign Buyer's rights hereunder to a subsidiary or affiliate of Buyer, provided that the Buyer shall remain liable for its obligations hereunder. Any assignment in contravention of this provision shall be null and void. No assignment shall release the Buyer from any obligation or liability under this Agreement.

This Agreement, all schedules and exhibits hereto, and all agreements and instruments to be delivered by the parties pursuant hereto represent the entire understanding and agreement between the parties hereto with respect to the subject matter hereof and supersede all prior oral and written, and all contemporaneous oral negotiations, commitments and understandings between such parties. The Buyer and the Seller, by the consent of their respective Boards of Directors, Members or officers authorized by such Boards, may amend or modify this Agreement, in such manner as may be agreed upon, by a written instrument executed by the Buyer and the Seller.

This Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to conflicts of law principles.

 

The section headings are for the convenience of the parties and in no way alter, modify, amend, limit, or restrict the contractual obligations of the parties.

The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which, when taken together, shall be one and the same document.

	STRATUS SERVICES GROUP, INC.
	By: /s/ Joseph J. Raymond
	Joseph J. Raymond
	Chairman and CEO
	ALS, LLC
	By: /s/ Michael J. O’Donnell
	Michael J. O’Donnell
	Managing Member