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Exhibit 2.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made as of the 13th day
of October, 2000, by and between STRATUS SERVICES GROUP, INC. a Delaware
corporation (the "Buyer"), and OUTSOURCE INTERNATIONAL OF AMERICA, INC., a
Florida corporation ("Seller").
PRELIMINARY STATEMENT
WHEREAS, the Buyer desires to purchase, and the Seller desires to sell
substantially all of the assets of the Seller that comprise the ongoing
businesses of the offices of the Seller's "Tandem" division in states of New
Hampshire and Massachusetts, consisting of the offices located in the cities of
Lawrence, Leominster, Lowell, Athol (recruiting office) and Worcester
(recruiting office), Massachusetts and Manchester and Nashua, New Hampshire
(collectively, the "Acquired Business") in exchange for the consideration and
the assumption of certain of the Seller's liabilities as set forth below,
subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
The recitals set forth above are true and correct and are hereby
incorporated herein by reference.
1. SALE AND DELIVERY OF THE ASSETS
1.1 Delivery of the Assets.
(a) Subject to and upon the terms and conditions of
this Agreement, at the closing of the transactions
contemplated by this Agreement (the "Closing"), the Seller
shall sell, transfer, convey, assign and deliver, and cause
its Affiliates (as defined in Section 2.6) to sell, transfer,
convey, assign and deliver, to the Buyer, and the Buyer shall
purchase from the Seller and such Affiliates, all of the
assets, tangible and intangible, of every kind and nature
owned or used by Seller exclusively in connection with the
operation of the Acquired Business (collectively, the
"Assets"), which Assets include those which are set forth on
Schedule 1.1 attached hereto and the following properties,
assets, rights and interests:
(i) all office supplies and similar
materials of the Seller which exist on the Closing
Date (as defined below) and are used exclusively in
the Acquired Business (other than the letterhead,
marketing materials and other supplies bearing the
name "Tandem", which Buyer may use for a reasonable
transition period, not to exceed sixty (60) days from
the Effective Date, as defined below) (the
"Supplies");
(ii) all rights of the Seller and its
Affiliates under the contracts, agreements, real
estate leases, licenses and other instruments
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relating exclusively to the Acquired Business, as set
forth on SCHEDULE 1.1 attached hereto (collectively,
the "Contracts");
(iii) all books and records (limited to the
last three years profit and loss statements and
backup), correspondence, service employee and
customer information in the possession of the Seller,
and reports and summaries relating exclusively to the
Acquired Business or the other assets described
herein (collectively, the "Records");
(iv) all rights of the Seller, if any, under
express or implied warranties from the suppliers of
the Seller in connection with the Acquired Business;
(v) all furniture, fixtures, equipment and
leasehold improvements owned by the Seller on the
Closing Date and relating exclusively to the Acquired
Business, whether or not reflected as capital assets
in the accounting records of the Seller, as set forth
on SCHEDULE 1.1 attached hereto (collectively, the
"Fixed Assets"); and
(vi) all other assets, properties, claims,
rights and interests of the Seller and its Affiliates
existing on the Closing Date, of every kind and
nature and description, whether tangible or
intangible, real, personal or mixed, that are used
solely in connection with the Acquired Business.
(b) Notwithstanding anything to the contrary set
forth in this Agreement, the assets, properties, claims,
rights and interests of the Seller that are not used
exclusively in connection with the Acquired Business will not
be transferred to Buyer hereunder. In addition,
notwithstanding anything to the contrary set forth in this
Agreement, the following items are not included in the sale of
Assets contemplated hereby: (i) the cash and cash equivalents,
accounts receivable, prepaid items (except for health benefits
to the employees of the Acquired Business which shall be
Seller's obligation through October 29, 2000) and deposits,
used in or relating to the Acquired Business, (ii) the
Purchase Price (as hereinafter defined) and the other rights
of the Seller under or relating to this Agreement, (iii) the
corporate minute books, stock records, qualification to
conduct business as a foreign corporation, and other documents
relating to the organization, maintenance or existence as a
corporation of the Seller or any Affiliate of the Seller, (iv)
any proprietary software of Seller or any Affiliate of Seller,
are not to be transferred to Buyer hereunder and are not
included within the definition of the Assets, (v) the names
"Tandem", "Labor World", "Outsource" and all other tradenames,
trademarks and other intellectual property now or hereafter
owned by Seller or any Affiliate, and (vi) any real property
owned by the Seller or any Affiliate of the Seller.
1.2 PURCHASE PRICE. The purchase price for the Assets shall be
One Hundred Twenty Five Thousand and 00/100 Dollars ($125,000.00) (the "Purchase
Price") payable as follows:
(i) the Buyer shall pay to the Seller on the
Closing Date the sum of Fifty Thousand Dollars and
00/100 ($50,000.00) by wire transfer
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of immediately available funds to Seller's designated
account (the "Closing Payment"); and
(ii) the Buyer shall execute and deliver to
Seller on the Closing Date a promissory note in the
principal amount of Seventy Five Thousand and 00/100
Dollars ($75,000.00), in the form attached hereto as
EXHIBIT A (the "Note"). The Note shall be bearing
annual interest at two percent (2%) above the prime
rate of Fleet National Bank, as the same may be
changed from time to time, payable in twenty four
(24) equal monthly installments of principal, plus
accrued interest, commencing on the 1st day of
December, 2000 and continuing on the 1st day of each
month thereafter until November 1st, 2002 when the
final installment, plus all accrued and unpaid
interest shall be due and payable. The Note shall be
secured by a security interest in all of the Assets
purchased by Buyer hereunder pursuant to the terms of
a security agreement executed by the parties as of
the Closing Date in substantially the form attached
hereto as EXHIBIT B (the "Security Agreement").
1.3 Additional Purchase Price.
(a) In addition to the Purchase Price, Buyer, for the
two (2) year period from and after the Effective Date, shall
pay to Seller on a calendar quarterly basis, within forty-five
(45) days after the end of each calendar quarter, an amount
equal to thirty percent (30%) of the EBITDA of the Acquired
Business (the "Earn-Out"). For the purpose of determining the
Earn-Out, the Acquired Business shall mean not only the
current Tandem offices, but also any newly opened or acquired
staffing offices located in the Territory (hereinafter
defined).
(b) EBITDA is defined as earnings before interest,
taxes, depreciation and amortization, and shall be determined
in accordance with generally accepted accounting principles.
Included in the calculation of EBITDA shall be an amount not
to exceed two percent (2%) of the net revenues of the Acquired
Business as the Buyer's corporate allocation (other than sales
and operating costs associated directly with the Acquired
Business which shall be included as expenses in the
calculation of EBITDA) for the Acquired Business (i.e. payroll
processing, recruiting, dispatching and similar costs). At
such time of payment, Buyer shall deliver to Seller a schedule
setting forth the calculations and financial statements
supporting the payment made. In the event Seller disputes
Buyer's calculations, Seller shall, at its own expense, have
the right, directly or through its designated agents, to audit
the books and records of Buyer to determine the correctness of
Buyer's calculations; provided, however, that should the audit
reveal that the amount due and owing to Seller was greater
than ten percent (10%) of the originally calculated amount,
then Buyer shall reimburse to Seller the cost of the audit, in
addition to paying the balance due as determined by the audit.
(c) Buyer shall have the option, at any time after
the Effective Date and prior to the end of the twelfth (12th)
month following the Effective Date to satisfy the Earn-Out in
full by making payment to the Seller of the amount of Two
Hundred Seventy Five Thousand and 00/100 Dollars
($275,000.00), less the amount of any prior payments made by
Buyer under Section 1.3(a). After the
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twelfth (12th) month following the Effective Date, the Buyer
shall have the option to satisfy the Earn-Out in full by
making payment to the Seller of the amount of One Hundred
Seventy Five Thousand and 00/100 Dollars ($175,000.00), less
the amount of any prior payments made by Buyer under Section
1.3(a) for any quarterly period after the end of said twelfth
month. In addition, if EBITDA for any quarter is a negative
amount, the amount of such loss shall be deducted from
earnings in the subsequent quarter(s) for the purpose of
calculating EBITDA for such subsequent quarter(s). Until such
time as Buyer may exercise either option expressed above and
make the stipulated pay-off amount, Buyer shall have the
obligation to continue to make the quarterly payments due on
the Earn-Out. Notwithstanding the foregoing, Buyer, in full
satisfaction of the Earn-Out, shall have the option, within
the first ninety (90) days following the Effective Date, to
pay to Seller (i) the remaining principal balance of the Note,
plus all accrued and unpaid interest, and (ii) the amount of
One Hundred Seventy Five Thousand and 00/100 Dollars
($175,000.00), less the amount of any prior payments made by
Buyer under Section 1.3(a). If the Buyer elects to exercise
this last option, the Seller shall have no obligation to
reimburse Buyer for Seller's share of the audit cost as set
forth in Section 4.1(e) below, except to the extent the total
cost of the audit exceeds $40,000.00.
1.4. Assumption of Liabilities.
(a) The Buyer agrees to assume, as of the Effective
Date, the liabilities of the Seller arising after the Closing on the
Contracts, specifically including all real estate leases for the
offices comprising the Acquired Business and leases with Fleet
Solutions for vans used in the Acquired Business (the "Assumed
Liabilities"). To the extent that the Assets are leased by Seller or
any of its Affiliates as of the Closing Date, the Buyer will thereafter
pay the rental charge or lease payment for same, or, in the
alternative, reimburse Seller periodically in the event Seller is
required to make such payments directly to the lessor. If at any time
after the Trial Period (as defined below), Seller, in its sole
discretion, chooses to pay off the lease liability of any Asset in one
lump sum, Buyer shall reimburse Seller for such payment and title to
such Asset shall pass to Buyer. At any time after the Closing, Buyer,
upon giving Seller forty-five (45) days written notice (the "Trial
Period"), can return any item of leased property to Seller in the same
condition as such property was received by Buyer, normal wear and tear
excepted, and upon such return, Buyer shall no longer have
responsibility to reimburse Seller for the lease payment applicable
thereto. Notwithstanding the foregoing, Buyer has informed Seller that
Buyer will not purchase any of the leased computer equipment located in
the offices comprising the Acquired Business, and as to such leased
computer equipment, Buyer agrees to make said equipment available to
Seller for pick-up within four (4) weeks from the Effective Date.
(b) The Buyer shall not assume or agree to perform,
pay or discharge, and the Seller and its Affiliates, as the case may
be, shall remain unconditionally liable for, all obligations,
liabilities and commitments, fixed or contingent, of the Seller and its
Affiliates, other than the Assumed Liabilities.
1.5 OTHER AGREEMENTS. As further consideration for the
transaction contemplated hereby, as of the Closing Date, the Seller
will enter into a non-competition agreement with Buyer (i) prohibiting
the Seller from competing, for two (2) years, in the New Hampshire
county of Hillsborough and the Massachusetts counties of Middlesex,
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Worcester and Essex (collectively, the "Territory"), (ii) prohibiting
Seller from soliciting clients of the Acquired Business for three (3)
years in the Territory, and (iii) prohibiting Seller from employing or
soliciting the employment of Buyer's employees for three (3) years (the
"Non-Competition Agreement").
1.6 THE CLOSING. Subject to and after fulfillment of the
conditions set forth in Section 4 of this Agreement, the Closing shall
take place at the offices of the Seller in Delray Beach, Florida, at
9:00 a.m. Eastern Time, on October 27, 2000, or such other time or date
or such other location as the parties may mutually agree (the "Closing"
or "Closing Date"). The transfer of the Assets by the Seller to the
Buyer shall be deemed to occur at 12:01 a.m., Eastern Time, on October
30, 2000 (the "Effective Date").
1.7 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated among the various Assets by mutual agreement of the parties.
2. REPRESENTATIONS OF THE SELLER. The Seller represents and warrants to
the Buyer as follows:
2.1 ORGANIZATION. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Florida and is duly qualified to do business in, and is in good
standing under, the laws of the States of Florida and New Hampshire and
the Commonwealth of Massachusetts. The Seller has all requisite power
and authority (corporate and other) to execute and deliver this
Agreement and the documents, instruments and agreements contemplated
herein, and to consummate the transactions contemplated hereby and
thereby.
2.2 AUTHORIZATION. The execution and delivery of this
Agreement, and the agreements provided for herein by the Seller, and
the consummation by the Seller of all transactions contemplated hereby
and thereby, have been duly authorized by all requisite corporate
action. This Agreement and all such other agreements and obligations
entered into and undertaken in connection with the transactions
contemplated hereby to which the Seller is a party constitute the valid
and legally binding obligations of the Seller, enforceable against the
Seller in accordance with their respective terms, except as the same
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors'
rights generally and general equitable principles, regardless of
whether such enforceability is considered in a proceeding at law or in
equity. The execution, delivery and performance of this Agreement and
the agreements provided for herein, and the consummation by the Seller
of the transactions contemplated hereby and thereby, will not, with or
without the giving of notice or the passage of time or both, (a)
violate the provisions of any law, rule or regulation applicable to the
Seller; (b) violate the provisions of the Seller's Articles of
Incorporation or Bylaws; (c) violate any judgment, decree, order or
award of any court, governmental body or arbitrator, or (d) conflict
with or result in the breach of any term or provision of, or constitute
a default under, or cause any acceleration under, or cause the creation
of any lien, charge or encumbrance upon the properties or assets of the
Seller pursuant to, any indenture, mortgage, deed of trust or other
agreement or instrument to which it or its properties is a party or by
which the Seller is or may be bound..
2.3 OWNERSHIP OF THE ASSETS; NO OTHER OBLIGATION TO TRANSFER.
Except where any property subject to this sale is leased, and subject
to a general lien on Seller's assets in favor of Outsource
International, Inc.'s senior lenders, the Seller has good and
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marketable title to all of the Assets, free and clear of all liens,
claims, encumbrances and restrictions whatsoever. The release of liens
of Outsource International, Inc.'s senior lenders is required to enable
Seller to sell, transfer and assign the Assets to Buyer as contemplated
in this Agreement.
2.4 LITIGATION. There are no judgments, suits, actions,
investigations or proceedings pending or, to the Seller's knowledge,
threatened against the Seller that relate to or affect the Assets or
the Acquired Business by any party or any court, administrative agency
or other governmental authority.
2.5 REAL PROPERTY; LEASES. Seller does not own any real estate
used in connection with the Acquired Business. SCHEDULE 2.5 attached
hereto sets forth a true, correct and complete list as of the date
hereof of all leases of real and personal property to which the Seller
is a party in connection with the Acquired Business (collectively, the
"Leases"). True, correct and complete copies of the Leases, and all
amendments and modifications thereof, have previously been delivered by
the Seller to the Buyer. The Leases are in full force and effect and
have not been modified or amended since the date of delivery to the
Buyer. No party to any Lease has sent written notice to the other
claiming that such other party is in default thereunder, which alleged
default remains uncured.
2.6 COMPLIANCE WITH AGREEMENTS AND LAWS. The Seller has all
requisite licenses, permits and certificates from federal, state and
local authorities necessary to conduct the Acquired Business and own
and operate the Assets (collectively, the "Permits").
2.7 CONSENTS. Except as set forth on Schedule 2.7, no consent,
approval, authorization or other action by, or filing with, any
governmental authority or any other third party is required in
connection with the execution, delivery and performance by the Seller
of its obligations under this Agreement and the consummation by the
Seller of the transactions contemplated hereby.
3. REPRESENTATIONS OF THE BUYER. The Buyer represents and warrants to
the Seller as follows:
3.1 ORGANIZATION AND AUTHORITY. The Buyer is a corporation
duly organized, validly existing and in good standing under the laws of
the State of Delaware and has requisite power and authority (corporate
and other) to own its properties and to carry on its business as now
being conducted. The Buyer has full power to execute and deliver this
Agreement and all other documents, instruments and agreements to be
delivered by it hereunder and to consummate the transactions
contemplated hereby and thereby.
3.2 AUTHORIZATION. The execution and delivery of this
Agreement by the Buyer, and the agreements provided for herein, and the
consummation by the Buyer of all transactions contemplated hereby, have
been duly authorized by all requisite corporate action. This Agreement
and all such other agreements and written obligations entered into and
undertaken in connection with the transactions contemplated hereby
constitute the valid and legally binding obligations of the Buyer,
enforceable against it in accordance with their respective terms. The
execution, delivery and performance of this Agreement and the
agreements provided for herein, and the consummation by the Buyer of
the transactions contemplated hereby and thereby, will not, with or
without the giving of notice or the passage of time or both, (a)
violate the provisions of any law, rule or regulation applicable to the
Buyer; (b) violate the provisions of the Buyer's Articles of
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Incorporation or Bylaws; (c) violate any judgment, decree, order or
award of any court, governmental body or arbitrator; or (d) conflict
with or result in the breach or termination of any term or provision
of, or constitute a default under, or cause any acceleration under, or
cause the creation of any lien, charge or encumbrance upon the
properties or assets of the Buyer pursuant to, any indenture, mortgage,
deed of trust or other agreement or instrument to which it or its
properties is a party or by which the Buyer is or may be bound.
3.3 CONSENTS. No consent, approval, authorization or other
action by, or filing with, any governmental authority or any other
third party is required in connection with the execution, delivery and
performance by the Buyer of its obligations under this Agreement and
the consummation by the Buyer of the transactions contemplated hereby.
3.4 DEFAULT. The Buyer is not currently, nor will Buyer be as
of the Closing Date, in default of any loan agreement or credit
facility or other material agreement to which it is a party.
4. CLOSING DELIVERIES
4.1 BY SELLER. The Seller shall deliver to the Buyer at the
Closing each of the following documents:
(a) a Bill of Sale in the form attached hereto as
EXHIBIT C, duly executed by Seller and the appropriate
Affiliates of Seller;
(b) an Assignment and Assumption of Contracts and
Liabilities executed by the Seller evidencing the Seller's
assignment and the Buyer's assumption of the Assumed
Liabilities contemplated by Section 1.3 hereof in the form
attached hereto as EXHIBIT D (the "Assignment and Assumption
Agreement");
(c) the Non-Competition Agreement in the form
attached hereto as EXHIBIT E;
(d) the Records;
(e) copies of the profit and loss statements and
general ledgers of the Seller pertaining to the Assets or the
Acquired Business for the past three years (the fiscal years
1998 and 1999, and the interim period January 1 through the
most recent available month-end subsequent to July 31, 2000)
and audited annual and unaudited interim "Statements of Net
Assets Acquired and Liabilities Assumed" and "Statements of
Division Results of Operations" in satisfaction of Rule
3.05(c) of Regulation S-X and for the required periods of Form
8-K, it being understood and agreed by the Buyer that the
cost, excluding expenses, charged by Seller's auditors to
produce such statements (the "audit cost"), to the extent
required by Buyer, shall be shared equally by the Buyer and
Seller up to the first $20,000.00 of the audit cost, with the
Buyer being solely responsible for the next $20,000.00 of the
audit cost, and the Seller being solely responsible thereafter
to the extent the audit cost exceeds $40,000.00. In addition
to the audit cost, the Buyer shall be responsible for the
first $3,000.00 of expenses incurred by the Seller's auditors,
with the Seller responsible for any excess of such expenses.
The total audit cost, including expenses, shall be paid by
Buyer to
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Seller's auditors when the invoice for same is due, with the
Buyer deducting the Seller's responsibility for the audit
cost, plus the expenses in excess of $3,000.00, from the
payments to be made by Buyer to Seller on account of the
Earn-Out and only to the extent of fifty percent (50%) of each
quarterly Earn-Out payment until the Seller's responsibility
for the audit cost is paid in full.
(f) consents, in the form of EXHIBIT F attached
hereto from each lessor relating to all Leases identified on
SCHEDULE 2.5 attached hereto, consenting to the assumption of
each such Lease by the Buyer;
(g) cross receipt executed by the Seller, in the form
of EXHIBIT G ("Cross Receipt");
(h) a certificate executed by an officer of the
Seller that all representations and warranties made herein by
the Seller are true and correct at the time of Closing;
(i) a certificate from the secretary of the Seller
attesting to the accuracy of resolutions to be attached
thereto approved by the Board of Directors of the Seller
authorizing the sale of the Assets and providing incumbency
information for the individual signing this Agreement on
behalf of the Seller; and
(j) a copy of the release of Ableco Finance, LLC (the
"Lender"), as evidenced by UCC-3 Termination Statements,
pursuant to which the Lender releases or terminates its
security interest in the Assets.
4.2 BY THE BUYER. The Buyer shall deliver to the Seller at the
Closing each of the following documents:
(a) the Assignment and Assumption Agreement (EXHIBIT
D), executed by Buyer;
(b) payment of the Closing Payment;
(c) the Note (EXHIBIT A), executed by the Buyer;
(d) the Security Agreement (EXHIBIT B), executed by
the Buyer;
(e) a UCC-1 financing statement, executed by the
Buyer;
(f) the Cross Receipt, executed by the Buyer;
(g) a certificate executed by an officer of the Buyer
that all representations and warranties made herein are true
and correct at the time of Closing; and
(h) a certificate of the secretary of the Buyer
attesting to the accuracy of the resolutions of the Board of
Directors of the Buyer authorizing the purchase of the Assets
and providing incumbency information for the individual
signing this Agreement on behalf of the Buyer.
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5. INDEMNIFICATION
5.1 BY THE SELLER. The Seller shall indemnify and hold the
Buyer harmless from any and all actions, claims, liabilities, damages,
costs or expenses (including, without limitation, reasonable attorney's
fees and expenses) that the Buyer may incur, or to which it may become
subject, as a result of the breach by Seller of the terms of this
Agreement, from third party claims arising from or relating to the
operation of the Acquired Business prior to the Effective Date.
5.2 BY THE BUYER. The Buyer shall indemnify and hold the
Seller harmless from any and all actions, claims, liabilities, damages,
costs or expenses (including, without limitation, reasonable attorney's
fees and expenses) that the Seller may incur, or to which it may become
subject, as a result of the breach by Buyer of the terms of this
Agreement, from third party claims arising from or relating to the
operation of the Acquired Business from and after the Effective Date.
5.3 THIRD-PARTY CLAIMS. If any claim for indemnification by
the party(ies) seeking indemnification ("Indemnitee") arises out of a
third-party claim (i.e., out of a claim made by or an action of a
person or entity other than Indemnitee), the party(ies) from whom
Indemnitee seeks indemnification ("Indemnitor") may, by written notice
to Indemnitee, undertake to conduct the defense thereof and to take all
other steps or proceedings to defeat or compromise any such action or
claim, including the employment of counsel reasonably satisfactory to
Indemnitee; provided that Indemnitor shall reasonably consider the
advice of Indemnitee as to the defense or compromise of such actions
and claims, and Indemnitee shall have the right to participate in such
proceedings (at the sole cost and expense of Indemnitee), but control
of such proceedings shall remain exclusively with Indemnitor.
Indemnitee shall provide all reasonable cooperation to Indemnitor in
connection with such proceedings. Counsel and auditor costs and
expenses and court costs and fees of all proceedings with respect to
any such action or claim shall be borne by Indemnitor. If any such
claim is made hereunder and Indemnitor does not elect to undertake the
defense thereof by written notice to Indemnitee, then Indemnitee shall
be entitled to control such proceedings and shall be entitled to
indemnity with respect thereto pursuant to the terms of this Agreement.
If the Indemnitor shall assume the defense of such claim, it shall not
settle such claim unless such settlement includes as an unconditional
term thereof the giving by the claimant or the plaintiff of a release
of the Indemnitee, satisfactory to the Indemnitee, from all liability
with respect to such claim.
5.4 NOTICE. Within thirty (30) days after notice of any
action, receipt of any claim in writing or similar form of actual
notice of any claim as to which it asserts a right to indemnification,
Indemnitee shall notify the Indemnitor. The failure of Indemnitee to
give the notification to Indemnitor contemplated above in this Section
shall not relieve Indemnitor from any liability or obligation that it
may have pursuant to this Agreement unless the failure to give such
notice within such time shall have been materially damaging or
prejudicial to Indemnitor, and in no event shall the failure to give
such notice relieve Indemnitor from any liability it may have other
than pursuant to this Agreement.
5.5 SURVIVAL OF REPRESENTATIONS. All representations and
warranties made by the parties herein or in any instrument or document
furnished in connection herewith shall survive for a period of six (6)
months following the Closing and any investigation at any time made by
or on behalf of the parties hereto.
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5.6 REDUCTION FOR INSURANCE PROCEEDS. To the extent that any
Indemnified Party shall receive payment under any insurance policies on
account of Claims arising under Section 5.1 or Section 5.2 hereof, the
amount (if any) payable by the Indemnifying Party on account of such
Claims shall be reduced by the amount of such payment or, if the
Indemnified Party shall have already collected on such Claims from the
Indemnifying Party, then the Indemnified Party shall repay to the
Indemnifying Party the amount of such payment.
6. PRE-CLOSING AGREEMENTS
6.1 CORE EMPLOYEES. While the Buyer understands that the
Seller cannot guarantee that any employees will enter into employment,
non-competition and non-solicitation agreements with the Buyer, Seller
will make a good faith effort in encouraging the core staff employees
to enter into such agreements with Buyer. Seller agrees to assign to
Buyer at the Closing any such agreements between Seller and the
employees of the Acquired Business.
6.2 CONDUCT OF BUSINESS. Between the date of this Agreement
and the Effective Date, the Seller shall carry on the Acquired Business
substantially in the same manner as heretofore and shall not make or
institute any unusual or new methods of purchase, sale, performance,
lease, management, accounting or operation. Between the date of this
Agreement and the Effective Date, all of the Assets shall be used,
operated, repaired and maintained by the Seller in a normal business
manner consistent with past practice and Seller shall use its
reasonable efforts to preserve intact the business organization of the
Acquired Business, to keep available its present employees and maintain
its present relationships with customers and suppliers. Unless
instructed otherwise by the Buyer in writing, the Seller will accept
customer requests for services in the ordinary course of business and
consistent with past practice for all services offered by the Seller
but expected to be performed by the Buyer after the Effective Date. The
Seller and the Buyer will cooperate in communications with suppliers
and customers to accomplish the transfer of the Assets to the Buyer on
the Effective Date. The Seller will comply with all laws and
regulations which are applicable to its ownership of the Assets or to
the conduct of the Acquired Business and will perform and comply with
all contracts, commitments and obligations by which it is bound. Seller
agrees to notify and consult with Buyer with respect to all decisions
outside of the ordinary course relating to the Acquired Business and to
notify Buyer of any employee departures or any pending employee
departures. Seller shall use its reasonable efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all things
which are necessary, proper or advisable under applicable laws and
regulations or otherwise in order to consummate and make effective the
transactions contemplated by this Agreement, including using reasonable
efforts to obtain any required third party consents.
6.3 ACCESS TO MANAGEMENT, PROPERTIES AND RECORDS. From the
date of this Agreement until the Effective Date, the Seller shall
afford the officers, attorneys, accountants and other authorized
representatives of the Buyer reasonable access upon reasonable notice
and during normal business hours to all management personnel, and books
and records of the Seller relating solely to the Acquired Business. The
Buyer shall be permitted to make abstracts from, or copies of, all such
books and records. The Seller shall furnish to the Buyer such financial
and operating data and other information as to the Assets and the
Acquired Business as the Buyer shall reasonably request and cause its
management personnel to cooperate with the Buyer and to be available at
the reasonable
<PAGE>
request of the Buyer so as to provide the Buyer's agents with any and
all information concerning the Assets and the Acquired Business that
may reasonably be required to close the transactions contemplated
hereby. Notwithstanding anything contained in this Section 6.3 above,
the Buyer's right to continue its due diligence procedures shall in no
way be construed to imply that completion of such due diligence, or the
ability of the Buyer to obtain financing, is or will be a condition to
closing this transaction. Furthermore, to the extent Buyer requires
Seller to engage Seller's outside auditors to perform any work in
connection with any requests under this Section 6.3, Buyer shall pay
the full cost of such engagement directly to Seller's outside auditors.
6.4 AGENTS OF AFFILIATES OF SELLER. Seller shall cause its
Affiliates to execute and deliver at Closing the Bill of Sale referred
to in Section 4.1(a) of this Agreement and the Assignment and
Assumption Agreement referred to in Section 4.1(b) of this Agreement
and any other documents required to be delivered by such Affiliates in
furtherance of evidencing the transfer of the Assets to the Buyer.
7. POST-CLOSING AGREEMENTS. The Seller and the Buyer, as the case may
be, agree that from and after the Closing Date:
7.1 PROPRIETARY INFORMATION.
(a) The Seller shall hold in confidence, and use its
best efforts to have all of its officers, directors and
personnel hold in confidence, all knowledge and information of
a secret or confidential nature with respect to the Acquired
Business and shall not disclose, publish or make use of the
same without the consent of the Buyer, except (i) to the
extent that such information shall have become public
knowledge other than by breach of this Agreement by the
Seller, (ii) as may be required to enforce any of Seller's
rights against Buyer, or (iii) as may be required by law or
legal process.
(b) The Seller agrees that the remedy at law for any
breach of this Section 7.1 may be inadequate and that the
Buyer shall be entitled to seek injunctive relief in addition
to any other remedy it may have upon breach of any provision
of this Section 7.1.
7.2 FURTHER ASSURANCES AND DATA.
(a) At any time and from time to time after the
Effective Date, at the Buyer's reasonable request and without
further consideration, the Seller shall execute and deliver,
and cause its Affiliates to execute and deliver, such
instruments of sale, transfer, conveyance, assignment and
confirmation, and take such other action, all at the Seller's
sole cost and expense, as the Buyer may reasonably request to
more effectively transfer, convey and assign to the Buyer, and
to confirm the Buyer's title to, all of the Assets, to put the
Buyer in actual possession and operating control thereof, to
assist the Buyer in exercising all rights with respect
thereto, and to carry out the purpose and intent of this
Agreement. Immediately after the Closing, the Seller shall, to
the extent applicable, authorize the release, and cause its
Affiliates to authorize the release,
<PAGE>
to the Buyer of all files pertaining to the Assets or the
Acquired Business held by any federal, state, county or local
authorities, agencies or instrumentalities.
(b) The parties agree that from and after the
Effective Date, as to any monies received that rightfully
belong to the other party, they shall remit such monies
promptly to the other party.
(c) Within thirty (30) days after the Effective Date,
the parties shall mutually agree on the pro-ration as of the
Effective Date of rent, utilities and telephone for the
Acquired Business, and the party obligated to pay the net
amount of such pro-rated items to the other party will make
such payment ten (10) days after the agreement on pro-rations
is consummated. Seller will pay the premiums for health
benefits of the employees of the Acquired Business through
October 30, 2000.
(d) The Buyer shall have the right, for a period of
three (3) years following the Closing Date, to have reasonable
access to those books, records and accounts, including
financial and tax information, correspondence, employment
records and other records that may, at that time, be retained
by the Seller to the extent that any of the foregoing relates
to the Acquired Business and is needed by the Buyer in order
to comply with its obligations under applicable securities,
tax, environmental, employment or other laws and regulations.
7.3 COOPERATION IN LITIGATION. Each party hereto will
reasonably cooperate with the other in the defense or prosecution of
any litigation or proceeding already instituted or which may be
instituted hereafter against or by such party relating to or arising
out of the conduct of the Acquired Business prior to the Closing Date
(other than litigation arising out of the transactions contemplated by
this Agreement). The party requesting such cooperation shall pay the
out-of-pocket expenses (including legal fees and disbursements) of the
party providing such cooperation and of its officers, directors,
employees and agents reasonably incurred in connection with providing
such cooperation, but shall not be responsible to reimburse the party
providing such cooperation for such party's time spent in such
cooperation or the salaries or costs of fringe benefits or similar
expenses paid by the party providing such cooperation to its officers,
directors, employees and agents while assisting in the defense or
prosecution of any such litigation or proceeding.
8. TRANSFER AND SALES TAX. Notwithstanding any provisions of law
imposing the burden of such taxes on the Seller or the Buyer, as the case may
be, the Seller shall be responsible for and shall pay (a) all sales, use and
transfer taxes, and (b) all governmental charges, if any, upon and due in
connection with the sale or transfer of any of the Assets hereunder. If the
Seller shall fail to pay such amounts on a timely basis, the Buyer may pay such
amounts to the appropriate governmental authority or authorities, and the Seller
shall promptly reimburse the Buyer for any amounts so paid by the Buyer.
<PAGE>
9. BROKERS
9.1 FOR THE BUYER. The Buyer agrees to pay all fees, expenses
and other compensation owed by it to any broker or agent in connection
with this transaction ("Broker"). The Buyer agrees to indemnify and
hold harmless the Seller against any claims or liabilities asserted
against it by the Broker or by any other person acting or claiming to
act as a broker or finder on behalf of the Buyer.
9.2 FOR THE SELLER. The Seller represents and warrants that
the Seller has not engaged any broker or finder or incurred any
liability for brokerage fees, commissions or finder's fees in
connection with the transactions contemplated by this Agreement. The
Seller agrees to indemnify and hold harmless the Buyer against any
claims or liabilities asserted against it by any person acting or
claiming to act as a broker or finder on behalf of the Seller.
10. NOTICES. Any notices or other communications required or permitted
hereunder shall be in writing and shall be sufficiently given if delivered
personally or sent by facsimile (with transmission confirmed), federal express,
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows or to such other address or facsimile number of which the
parties may have given notice:
To the Seller: With a copy to:
Mr. Scott R. Francis Joseph C. Wasch, Esq.
Vice President General Counsel
Outsource International of Outsource International, Inc.
America, Inc. 1690 South Congress Avenue,
1690 South Congress Avenue, Suite 210 Suite 210
Delray Beach, FL 33445 Delray Beach, FL 33445
To the Buyer: With a copy to:
Mr. Joseph J. Raymond J. Todd Raymond, Esq.
President & CEO General Counsel
Stratus Services Group, Inc. Stratus Services Group, Inc.
500 Craig Road, Suite 201 500 Craig Road, Suite 201
Manalapan, NJ 07726 Manalapan, NJ 07726
Unless otherwise specified herein, such notices or other communications shall be
deemed received (a) on the date delivered, if delivered personally, by facsimile
or by federal express; or (b) three business days after being sent, if sent by
registered or certified mail.
11. SUCCESSORS AND ASSIGNS. 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 void. No assignment shall release the Buyer from any
obligation or liability under this Agreement.
<PAGE>
12. ENTIRE AGREEMENT; AMENDMENTS; ATTACHMENTS
12.1 ENTIRE AGREEMENT; AMENDMENT. 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 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.
12.2 ATTACHMENTS. If the provisions of any Schedule or Exhibit
to this Agreement are inconsistent with the provisions of this
Agreement, the provisions of this Agreement shall prevail. The Exhibits
and Schedules attached hereto or to be attached hereafter are hereby
incorporated as integral parts of this Agreement.
13. EXPENSES. Except as otherwise expressly provided herein, each party
hereto shall pay its own expenses in connection with this Agreement and the
transactions contemplated hereby.
14. LEGAL FEES. In the event that legal proceedings are commenced by
any party hereto against any other party hereto in connection with this
Agreement or the transactions contemplated hereby, the party which does not
prevail in such proceedings shall pay the reasonable attorneys' fees and costs
incurred by the prevailing party in such proceedings.
15. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey, without regard to conflicts
of law principles. The parties hereto agree to be subject to the exclusive
jurisdiction and venue shall reside in the state and federal courts located in
Monmouth County, New Jersey for the purpose of adjudicating any dispute relating
to or arising out of this Agreement.
16. SECTION HEADINGS. 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.
17. SEVERABILITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
18. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which,
when taken together, shall be one and the same document.
19. SURVIVAL. The terms and provisions of Section 5 through (and
including) this Section 19 shall survive the Closing of the transactions
contemplated hereby.
20. PUBLIC DISCLOSURE. Neither party shall make any public statement
about, nor issue any press release concerning this Agreement or the transaction
contemplated hereby without first consulting with the other party hereto as to
the form and substance of any such press release or public disclosure; provided,
however, that nothing in this Section 20 shall be deemed to prohibit any party
hereto from making any disclosure that its counsel deems necessary or advisable
in order to satisfy such party's disclosure obligation imposed by law.
<PAGE>
21. TERMINATION. This Agreement may be terminated at any time prior to
or on the Closing Date:
(a) by mutual written consent of the Buyer and the
Seller; or
(b) by the Buyer if (i) the Seller fails to deliver by
the Closing Date all of the documents the Seller is
required to deliver under Section 4.1 of this
Agreement, (ii) if Seller breaches any of its
representations and warranties contained in this
Agreement or if the Seller breaches any of the other
provisions of this Agreement or (iii) there is any
material adverse change in the financial condition or
operating results of the Acquired Business; or
(c) by the Seller if (i) the Buyer fails to deliver by
the Closing all of the documents the Buyer is
required to deliver under Section 4.2 of this
Agreement or (ii) if Buyer breaches any of its
representations and warranties contained in this
Agreement or if the Buyer breaches any of the other
provisions of this Agreement; or
(d) by any party in the event that the Closing shall not
have occurred on or prior to October 31, 2000;
PROVIDED, HOWEVER, that the failure of the Closing to
occur by such date shall not have been the result of
the failure of the party seeking to terminate this
Agreement to deliver by the Closing Date all such
documents as are required under the relevant
subsection of Section 4.
If this Agreement is terminated as set forth in this Section 21, this Agreement
shall no longer be of any force or effect and there shall be no liability on the
part of any party; provided, however, that no such termination shall relieve any
party from any liability for breach of this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the date first above written.
OUTSOURCE INTERNATIONAL OF AMERICA, INC.
By: /s/ SCOTT R. FRANCIS
------------------------------------
Print Name: SCOTT R. FRANCIS
Title: VICE PRESIDENT
STRATUS SERVICES GROUP, INC.
By: /s/ JOSEPH J. RAYMOND
------------------------------------
Print Name: JOSEPH J. RAYMOND
Title: PRESIDENT AND CEO
NOTE: EXHIBITS TO THIS ASSET PURCHASE AGREEMENT HAVE BEEN OMMITTED AND WILL BE
SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSION UPON REQUEST.
