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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) OCTOBER 5, 2000
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STAR SERVICES GROUP, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 000-28779 65-0893224
(State or other jurisdiction (Commission File (IRS Employer
or incorporation) Number) Identification No.)
2075 NORTH POWERLINE ROAD, POMPANO BEACH, FLORIDA, 33069
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code (954) 974-3800
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER ITEMS
On September 26, 2000, Star Services Group, Inc. (the "Company")
entered into a series of agreements (the "Asset Purchase Agreements") to acquire
specified assets of Peerless Big Apple, Inc. ("Big Apple"), Peerless Miami
Avenue, Inc. ("Miami Avenue") and Peerless Dade, Inc. ("Dade"), each of which is
a Florida corporation (Big Apple, Miami Avenue and Dade are hereinafter
occasionally referred to as the "Peerless Entities"). The Company may form a
wholly owned subsidiary to own and manage the acquired assets. The Peerless
Entities engage in the business of (a) collecting, hauling, recycling, and
depositing construction and demolition debris in the Miami/Dade County Florida
area, (b) operating a construction and demolition debris transfer station in
Miami, Florida, (c) owning and operating a construction and demolition debris
materials recovery facility in Miami, Florida, and (d) managing a portable
toilet business (collectively referred to as the "Business"). Pursuant to the
terms of the Asset Purchase Agreements, the Company has assumed a total of
approximately $1,900,000 of the Peerless Entities' liabilities. The Asset
Purchase Agreements did not become binding obligations of the Company until
completion of its due diligence investigation on October 5, 2000.
Pursuant to a letter agreement dated September 26, 2000 (the "September
26, 2000 Letter Agreement"), consummation of the transactions described in the
Asset Purchase Agreements is subject to delivery to the Company of audited
financial statements of each of the Peerless Entities (the "Financial
Statements"). The Peerless Entities have until April 15, 2001 to provide the
Company with the required Financial Statements. In the event one or more of the
Peerless Entities fails to deliver the Financial Statements by April 15, 2001,
the Company has the right, until October 15, 2001, to have the Financial
Statements prepared. In the event the Peerless Entities and the Company fail to
have the Financial Statements prepared and delivered to the Company by October
15, 2001, the Asset Purchase Agreements shall be terminated and become null and
void. The Company cannot, at this time, ascertain the likelihood of whether the
audited Financial Statements will be prepared and delivered to it.
Pursuant to a letter agreement dated October 5, 2000 (the "October 5,
2000 Letter Agreement"), (a) the Company acknowledged that it had completed its
due diligence of the Peerless Entities, (b) the Company agreed to use its best
efforts to commence services under the O&M Agreement (defined and described
below) as soon as possible, but not later than October 30, 2000, (c) the
Peerless Entities granted the Company the right to terminate the real estate
purchase agreement acquired under the Miami Avenue Asset Purchase Agreement, on
the later of the date all permits and renewals with respect to the property are
in place or March 1, 2001, and (d) Miami Avenue and Big Apple agreed that the
Company can pay Miami Avenue and Big Apple their respective receivables
collected by the Company under the Asset Purchase Agreements over a period of 5
months from the date of collection.
The purchase price for the assets will be paid at closing, and will
include (a) the issuance of 1,595,000 shares of the common stock of the Company
to the Peerless Entities and/or its individual shareholders; and (b) the payment
of $630,850.50 to Dade, in 48 monthly installments of $16,000 each, including
interest at the rate of 10% per year. Commencing at the closing, the Company has
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also agreed to lease from Dade the 20 acres in Miami-Dade County, Florida, on
which it operates its materials recovery facility, for a period of 48 months at
a lease rate of $9,000 per month (plus all applicable Florida state sales tax,
all utilities associated with the operation of the materials recovery facility,
and all property taxes assessed against the property), pursuant to the terms of
a Lease Agreement substantially in the form of Exhibit 10.6 (the "Lease
Agreement"), to be executed by the parties on or about October 24, 2000. During
the term of the Lease Agreement, the Company must make available to Dade, and
Dade must collect, all of the Company's recovered screen materials and concrete
from its operation of the Dade materials recovery facility. The Company has also
agreed to provide NAMCO Metals Management, Inc., a corporation affiliated with
Dade ("NAMCO"), with the exclusive right of first refusal to purchase all
ferrous metals recovered by the Company during its operation of the Dade
materials recovery facility and all ferrous metals recovered or recycled by the
Company at any of its transfer stations or materials recovery facilities in
Miami-Dade, Broward, Palm Beach or Collier Counties, Florida. The Asset Purchase
Agreements also include covenants restricting certain shareholders of Dade from
engaging in specified competing activities for a periods of between three and
five years.
On or about October 24, 2000, in a related transaction, the Company and
the Peerless Entities plan to enter into an Operating and Management Agreement
substantially in the form of Exhibit 10.7 ("O&M Agreement"). The O&M Agreement
will provide that the Company shall manage the Business of the Peerless Entities
until the earlier of (a) termination of the Asset Purchase Agreements, (b)
termination of the September 26, 2000 Letter Agreement, or (c) the closing of
the Asset Purchase Agreements. During such time as the Company manages the
operations of the Business of the Peerless Entities under the O&M Agreement, the
Company will receive all of the revenue generated by the Business and will be
responsible for all of the expenses of the Business. The Company plans to assign
its rights under the O & M Agreement to a newly formed wholly owned subsidiary
of the Company.
On or about October 24, 2000, in a related transaction, the Company and
NAMCO plan to enter into a Right of First Refusal Agreement substantially in the
form of Exhibit 10.8 ("Right of First Refusal Agreement"). The Right of First
Refusal Agreement will be held in escrow pending the final closing of the Asset
Purchase Agreements. Pursuant to the terms of the Right of First Refusal
Agreement the Company will issue 5,000 shares of its common stock to the
shareholders of NAMCO, in consideration for which such shareholders will grant
the Company a right of first refusal to purchase all of their stock of NAMCO for
a period of 48 months.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits:
10.1 Asset Purchase Agreement dated September 26, 2000
between Star Services Group, Inc. and Peerless Big
Apple, Inc.
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10.2 Asset Purchase Agreement dated September 26, 2000
between Star Services Group, Inc. and Peerless Miami
Avenue, Inc.
10.3 Asset Purchase Agreement dated September 26, 2000,
between Star Services Group, Inc. and Peerless Dade,
Inc.
10.4 Letter Agreement dated September 26, 2000, between
Star Services Group, Inc., Peerless Big Apple, Inc.,
Peerless Miami Avenue, Inc., and Peerless Dade, Inc.
10.5 Letter Agreement dated October 5, 2000, between Star
Services Group, Inc., Peerless Big Apple, Inc.,
Peerless Miami Avenue, Inc., and Peerless Dade, Inc.
10.6 Form of Lease Agreement to be entered into on or
about October 24, 2000, by Star Services Group, Inc.
and Peerless Dade, Inc.
10.7 Form of Operating and Management Agreement to be
entered into on or about October 24, 2000, by Star
Services Group, Inc., Peerless Big Apple, Inc.,
Peerless Miami Avenue, Inc., and Peerless Dade, Inc.
10.8 Form of Right of First Refusal Agreement to be
entered into on or about October 24, 2000, by Star
Services Group, Inc. and NAMCO Metals Management,
Inc.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
Star Services Group, Inc. has signed this report.
STAR SERVICES GROUP, INC.
By: /s/ Patrick F. Marzano
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Name: Patrick F. Marzano
Title: President
Dated: October 20, 2000.
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