SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): May 16, 1999
JOULE INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 1-9477 22-2735672
(State or other jurisdiction of (Commission (IRS employer
incorporation) file number) identification no.)
1245 Route 1 South, Edison, New Jersey 08837
(Address of principal executive offices) (Zip Code)
(732) 548-5444
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 16, 1999, Joule Inc. (the "Company") completed the acquisition
of the principal operating assets of Ideal Technical Services, Inc.
("Ideal"), a staffing company specializing in engineering and other
technical services, for $1.3 million, subject to adjustment in certain
circumstances. Ideal, which has offices in Mobile, Alabama and Houston,
Texas, had been a subsidiary of SkillMaster, Inc. of Houston, Texas.
The purchase price was funded by cash on hand and borrowings under the
Company's bank credit facility with Summit Bank. The Company intends to
continue to use the assets acquired in connection with the Ideal
business. Ideal had revenues of approximately $15 million in 1998.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of the business acquired.
Financial statements required by this item will be filed
by amendment to this initial report no later than July
30, 1999.
(b) Pro forma financial information.
Pro forma financial information required by this item
will be filed by amendment to this initial report no
later than July 30, 1999.
(c) Exhibits
EXHIBIT NUMBER DESCRIPTION
2.1 Form of Asset Purchase Agreement, dated as of May 16,
1999, between Ideal Technical Services, Inc., SkillMaster
Staffing Services, Inc. and the Company.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: May 20, 1999
JOULE INC.
By: /s/ BERNARD G. CLARKIN
---------------------------------
Bernard G. Clarkin,
Vice President and Chief
Financial Officer
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================================================================================
ASSET PURCHASE AGREEMENT
among
JOULE TECHNICAL STAFFING, INC.
and
IDEAL TECHNICAL SERVICES, INC.
and
SKILLMASTER STAFFING SERVICES, INC.
Dated as of May 16, 1999
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TABLE OF CONTENTS
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ARTICLE 1 SALE OF ASSETS.........................................1
1.1. Purchase and Sale of Assets...............................1
1.2. Excluded Assets...........................................2
1.3. Purchase Price............................................2
1.4. Accounts Receivable.......................................3
1.5. Liabilities...............................................3
1.6. Allocation of Purchase Price..............................3
1.7. Employees.................................................3
1.8. Instruments of Conveyance and Transfer....................4
1.9. Further Assurances........................................4
1.10. Payment of Taxes and Other Charges........................4
1.11. Consent of Third Parties..................................4
ARTICLE 2 CLOSING................................................5
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF IDEAL AND
SKILLMASTER............................................5
3.1. Organization and Good Standing............................5
3.2. Authority and Status......................................5
3.3. No Event of Breach or Default.............................6
3.4. Financial Statements......................................6
3.5. Absence of Undisclosed Liabilities........................6
3.6. Litigation and Claims.....................................6
3.7. Title to Assets...........................................7
3.8. Compliance with Laws......................................7
3.9. No Finder or Broker.......................................7
3.10. Employee Benefit Plans and Related Matters................7
3.11. Labor Contracts and Employment Agreements.................8
3.12. Contracts and Agreements..................................8
3.13. Patents, Trademarks, Trade Names..........................8
3.14. All Assets to be Transferred..............................8
3.15. Consents..................................................8
3.16. Tax Matters...............................................9
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TABLE OF CONTENTS
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3.17. Environmental Matters.....................................9
3.18. Insurance................................................10
3.19. Suppliers and Customers..................................10
3.20. Bank Accounts; Powers of Attorney........................10
3.21. Year 2000................................................10
3.22. Ownership of Ideal.......................................11
3.23. Material Misstatements or Omissions......................11
ARTICLE 4 REPRESENTATIONS AND WARRANTS OF JOULE.................11
4.1. Organization and Good Standing...........................11
4.2. Authority and Status.....................................11
4.3. No Event of Breach or Default............................11
4.4. Consents.................................................11
4.5. No Finder or Brokers.....................................11
4.6. Material Misstatements or Omissions......................12
ARTICLE 5 COVENANTS OF IDEAL....................................12
5.1. Indemnification of Joule.................................12
5.2. Procedure for Indemnification............................12
5.3. Indemnification Threshold, Limitation....................13
5.4. Covenant Not to Compete..................................13
5.5. Definition of "Compete"..................................13
5.6. Conduct of Ideal's Business Prior to Closing.............13
5.7. Financial Statements.....................................14
5.8. Transitional Services....................................14
5.9. Change of Name...........................................14
5.10. Employee Benefits........................................14
ARTICLE 6 COVENANTS OF JOULE....................................15
6.1. Indemnification of Sellers...............................15
6.2. Procedure for Indemnification............................15
6.3. Indemnification Threshold, Limitation....................15
6.4. Records..................................................16
6.5. Tax Reporting............................................16
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TABLE OF CONTENTS
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ARTICLE 7 DELIVERIES AT CLOSING.................................16
7.1. Obligations of Sellers...................................16
7.2. Obligations of Joule.....................................17
ARTICLE 8 MISCELLANEOUS.........................................17
8.1. Bulk Sales Laws..........................................17
8.2. Parties to Bear Own Expenses.............................17
8.3. Notices..................................................17
8.4. Survival of Representations and Warranties...............18
8.5. Amendments; Waivers......................................18
8.6. No Assignment............................................18
8.7. Benefits.................................................18
8.8. Knowledge................................................19
8.9. Headings.................................................19
8.10. Entire Agreement.........................................19
8.11. Governing Law............................................19
8.12. Counterparts.............................................19
8.13. Severability.............................................19
8.14. Attorneys' Fees..........................................19
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this or the "Agreement") is
entered into as of May 16, 1999, among (i) Joule Technical Staffing, Inc., a New
Jersey corporation ("Joule"), Ideal Technical Services, Inc., an Alabama
corporation ("Ideal"), and SkillMaster Staffing Services, Inc., a Texas
corporation ("SkillMaster" and, together with Ideal, the "Sellers").
RECITALS
A. Ideal is principally engaged in the business of providing
draftsmen, designers, engineers, inspectors, CAD/CAM operators and pipefitters
to customers on a project basis (such business as now being conducted by Ideal
is referred to herein as "Ideal's Business").
B. Joule wishes to purchase or acquire from Ideal, and Ideal
wishes to sell, assign and transfer to Joule, all of the assets primarily used
in or primarily related to Ideal's Business (but not the Excluded Assets as
defined herein), and Joule has agreed to assume certain specified liabilities of
Ideal's Business, all for the purchase price and upon the terms and subject to
the conditions hereinafter set forth.
C. SkillMaster is the parent company of Ideal.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants,
agreements representations and warranties set forth in this Agreement and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
SALE OF ASSETS
1.1. PURCHASE AND SALE OF ASSETS. Subject to the terms and conditions
set forth in this Agreement, on the date hereof, Sellers are hereby selling,
transferring, assigning, conveying and delivering to Joule, and Joule is hereby
purchasing and acquiring from Sellers, free and clear of all liens, security
interests, mortgages, charges and similar encumbrances, all of Sellers' right,
title and interest in and to the assets, properties and rights of every nature,
kind and description owned or held by Ideal or SkillMaster that primarily relate
to or primarily are used in Ideal's Business, whether located at SkillMaster's
facility in Houston, Texas or the Mobile Property (as defined herein), as the
same may exist on the date hereof (collectively, hereinafter referred to as the
"Assets"). Without limiting the foregoing, the Assets shall include those
certain assets, properties and rights described in the following clauses (a)
through (i):
(a) the leasehold interest, including any options to renew or
purchase in connection therewith, relating to the premises located at 851 South
Beltline Highway, Suite 904, Mobile, Alabama (the "Mobile Property") and the
lease relating thereto (the "Mobile Lease");
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(b) the furniture, equipment, machinery (including, without
limitation, telephone systems) and other tangible personal property set forth in
EXHIBIT A (collectively, the "Equipment") and the leases relating to any
Equipment leased by the Sellers (the "Equipment Leases");
(c) the Rights (as defined in Section 3.13) owned by Ideal or
SkillMaster and related to Ideal's Business as set forth in EXHIBIT B;
(d) the contracts, licenses, agreements and commitments set forth
on EXHIBIT C (the "Contracts and Agreements");
(e) the databases and software programs, source codes and user
manuals owned, used, leased by or licensed to the Sellers that are used in
Ideal's Business as set forth on EXHIBIT D and the computer hardware used in
Ideal's Business as set forth on EXHIBIT A;
(f) all customer and vendor lists to the extent relating to
Ideal's Business, and all files and documents (including credit information) to
the extent relating to customers and vendors of Ideal's Business, and other
business and financial records, files, books and documents (whether in hard copy
or computer format) to the extent relating to Ideal's Business or the Assets;
provided, however, that subsequent to the date of such transfer, Joule shall
comply with Ideal's reasonable requests for access to such documents as may be
necessary for Ideal to collect accounts receivable, in accordance with the
provisions set forth in Section 1.4 below, and to otherwise comply with
reporting requirements relating to the operation of Ideal's Business prior to
the date hereof;
(g) transferable governmental authorizations owned, utilized or
licensed (subject to the terms of such licenses) that are required in the
operation of Ideal's Business;
(h) all rights of the Sellers under or pursuant to deposits,
claims in bankruptcy and causes in action, indemnification agreements and
indemnifications rights provided to the Sellers by third parties to the extent
relating to Ideal's Business or the Assets; and
(i) all rights of the Sellers under or pursuant to all
warranties, representations and guarantees made by suppliers, manufacturers and
contractors to the extent relating to Ideal's Business or to the extent
affecting the Assets.
1.2. EXCLUDED ASSETS. Notwithstanding anything to the contrary
contained in Section 1.1 hereof, the sale of the Assets contemplated by this
Agreement shall not include the accounts receivable that relate to services
rendered by Ideal's Business prior to the date hereof (the "Ideal Receivables")
and the other assets owned by Ideal set forth on EXHIBIT E (collectively, the
"Excluded Assets")
1.3. PURCHASE PRICE. The aggregate consideration for the transfer to
Joule of the Assets hereunder (the "Purchase Price") shall be equal to One
Million Three Hundred Thousand Dollars ($1,300,000). The Purchase Price shall be
paid at the opening of business on the first business day following the date
hereof to Ideal by wire transfer in immediately available funds to a United
States bank designated by Ideal in writing at least two business days prior to
the scheduled payment date.
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1.4. ACCOUNTS RECEIVABLE. Sellers shall be responsible for the
collection of the Ideal Receivables and agree in connection therewith that, for
a period of three (3) months commencing on the date hereof, they shall not use
collection practices and follow-up procedures for any client that are more
aggressive than those used in the past twelve months for such client. The
parties recognize that clients may misdirect payments in respect of accounts
receivable and agree for six (6) months after the date hereof to deliver to the
other copies of the lock-box and other remittances, including any attachments
detailing the application thereof, and that they will jointly consult with the
payor if there is any question as to the invoice to which a particular payment
relates. In the event that Sellers receive any payment in respect of an invoice
rendered by Joule for services performed after the date hereof, they will
promptly remit such amount to Joule as collected. Similarly, if Joule shall
receive any payment in respect of the Ideal Receivables, it will promptly remit
such amount to Ideal as collected. The remittances provided for in this Section
1.4 shall be made without set-off of any kind.
1.5. LIABILITIES. Except with respect to those certain obligations (the
"Assumed Liabilities") that (i) arise subsequent to the date hereof, (ii) relate
solely to Joule's use of the Assets subsequent to the date hereof and (iii) are
specifically identified and described in, and assumed by Joule under the terms
of, the Assumption Agreement to be executed by Ideal and Joule substantially in
the form of EXHIBIT F attached hereto (the "Assumption Agreement"), Joule shall
not assume, pay, perform, defend or discharge any liability, obligation,
responsibility or debt of Ideal or SkillMaster relating to Ideal's Business,
Ideal's employees or former employees or the Assets, whether written or oral,
accrued, fixed or contingent, asserted or unasserted, and whether due or to
become due, known or unknown, based in common law or statute or arising under
contract or otherwise and whether now existing or hereafter arising.
1.6. ALLOCATION OF PURCHASE PRICE. Joule, on the one hand, and Ideal
and SkillMaster, on the other, acknowledge and consent to (a) the Purchase Price
being allocated among the Assets as set forth on SCHEDULE 1.6 hereto and (b) the
preparation of and submission to the IRS of Form 8594 in accordance with Section
1060 of the Internal Revenue Code of 1986, as amended, reflecting the allocation
of the Purchase Price among the Assets as set forth on SCHEDULE 1.6 hereto.
1.7. EMPLOYEES.
(a) TERMINATION. As of the close of business on the date hereof,
Ideal shall terminate the employment of any and all employees, all of whom
Sellers represent are identified in SCHEDULE 1.7 attached hereto. Ideal and
SkillMaster shall be fully responsible for all claims of or with respect to such
employees including, but not limited to, claims related to compensation,
federal, state or local income taxes, or for wages, pending or potential
litigation, salaries or overtime, vacation pay, holiday pay, severance pay,
FICA, payroll taxes, benefits accrued under any Employee Benefit Plan as defined
Section 3(3) of ERISA, including pension or welfare benefits or other employee
benefits, or other employee benefit plans or benefits, including without
limitation all claims under SkillMaster's self-funded health insurance program
previously in effect for employees and dependents, or employment of any such
employees arising out of, or attributable to Ideal or SkillMaster or the conduct
of Ideal's Business through the close of business on the date hereof, except
that Joule shall assume and be responsible for the first $75,000 of the accrued
vacation pay that the employees identified on SCHEDULE 1.7 have
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earned through the date hereof. Joule shall not assume or be obligated for any
claims owed by Ideal to such employees, whether or not any employees become
employees of Joule following the date hereof, other than claims for the first
$75,000 of accrued earned vacation pay that Joule is assuming and shall be
responsible for as set forth above. Sellers represent that SCHEDULE 1.7 sets
forth the accrued earned vacation pay liability as of May 2, 1999 for the
employees identified thereon. As soon as practicable after the Closing, Sellers
shall furnish an update of SCHEDULE 1.7 through the date hereof to Joule. At
such time or times as Joule makes payments (either in cash in lieu of vacation
time or as paid vacation time) in respect of accrued earned vacation pay that
exceed $75,000 in the aggregate, Joule shall give written notice of the amount
of such excess (the "Excess Vacation Pay Amount") and supporting information to
Sellers. Sellers shall reimburse Joule for the Excess Vacation Pay Amount within
ten days of receipt of the notice with respect thereto.
(b) EMPLOYMENT BY JOULE. Effective as of the commencement of
business on the day following the date hereof, Joule agrees to employ all of the
employees of Ideal identified in SCHEDULE 1.7. Each of Ideal and SkillMaster
covenants to use its reasonable best efforts to assist Joule in employing such
individuals. The continued employment with Joule will be subject to the needs of
Joule and the performance of the employees.
1.8. INSTRUMENTS OF CONVEYANCE AND TRANSFER. Ideal and SkillMaster
shall execute and deliver to Joule at the Closing a general conveyance, with the
appropriate schedules attached thereto, in the form attached hereto as EXHIBIT G
(the "Bill of Sale") and all indentures, titles, certificates of title, bills of
sale, deeds, assignments and other instruments, in form and substance
satisfactory to Joule, that shall be necessary to effect the transfer to Joule
of, and to vest in Joule a complete, valid and legal title to, the Assets, free
and clear of all liens of any nature whatsoever.
1.9. FURTHER ASSURANCES. Ideal and SkillMaster shall execute and
deliver, or cause to be executed and delivered to Joule from time to time after
the Closing, upon and as soon as practicable after the reasonable request of
Joule, such additional instruments of conveyance and transfer and take such
other action as Joule may reasonably require (i) to vest in Joule complete,
valid and legal title to, and to transfer to Joule, all of the Assets free and
clear of liens of any nature whatsoever, and (ii) and in the case of any
contracts or rights, if any, that cannot be transferred effectively without the
consent of a third party, to assure that such consents to assignment are
obtained.
1.10. PAYMENT OF TAXES AND OTHER CHARGES. Ideal shall be liable for and
shall, after the date hereof, pay all Federal or state income, payroll,
franchise or sales taxes (subject to the final sentence of this Section) that
may be or may become due and payable by reason of the transactions contemplated
herein.
1.11. CONSENT OF THIRD PARTIES. Notwithstanding anything to the
contrary in this Agreement, this Agreement shall not constitute an agreement to
assign or transfer any instrument, contract, commitment, order, license, lease
(including the Mobile Lease), permit or other agreement or arrangement or any
claim, right or benefit arising thereunder or resulting therefrom if an
assignment or transfer or an attempt to make such an assignment or transfer
without the consent or approval of a third party (or without the novation
thereof) would
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constitute a breach or violation thereof or affect adversely the rights of Joule
or Sellers thereunder; and any transfer or assignment to Joule by Sellers of any
interest under any such instrument, contract, commitment, order, license, lease,
permit or other agreement or arrangement that requires novation or the consent
or approval of a third party shall be made subject to such novation, consent or
approval being obtained. If any such novation, consent or approval has not been
obtained on or prior to the date hereof, which the parties acknowledge is,
without limitation, the case with respect to the Mobile Lease, then Sellers
shall (a) cause any and all monies payable to Sellers under any such instrument,
contract, commitment, order, license, lease, permit or other agreement or
arrangement to be delivered to Joule, (b) hold such instrument, contract,
commitment, order, license, lease, permit or other agreement or arrangement on
behalf of Joule, (c) cooperate with Joule in any lawful arrangement to provide
that Joule shall receive the benefits under any such instrument, contract,
commitment, order, license, lease or permit or other agreement or arrangement,
including performance by Sellers, as agent or trustee, and (d) enforce and
perform for the account of Joule any rights of Sellers arising from such
instrument, contract, commitment, order, license, lease, permit or other
agreement or arrangement; PROVIDED, HOWEVER, that Joule shall pay or satisfy the
corresponding obligations and liabilities for the enjoyment of such benefit to
the extent Joule would have been responsible therefor under this Agreement if
such novation, consent or approval had been obtained. Nothing in this SECTION
1.11 shall be deemed a waiver by Joule of its right to receive an effective
assignment of all the Assets.
ARTICLE 2
CLOSING
The consummation of the transactions contemplated by this
Agreement (the "Closing") shall be deemed to be effective as of 11:59 p.m.,
Central Daylight Time, on May 16, 1999.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF IDEAL AND SKILLMASTER
To induce Joule to proceed with and purchase the Assets, Ideal
and SkillMaster hereby jointly and severally represent and warrant to Joule as
follows:
3.1. ORGANIZATION AND GOOD STANDING. Each of Ideal is a corporation
duly organized, validly existing, and in good standing under the laws of the
jurisdiction of its organization. Ideal has full corporate power and authority
to carry on Ideal's Business and to own or lease and to operate the properties
of Ideal's Business. Ideal is duly qualified or licensed to do business and is
in good standing in each jurisdiction listed on SCHEDULE 3.1. Ideal does not own
any stock or other equity interest in any entity.
3.2. AUTHORITY AND STATUS. Each of Ideal and SkillMaster has the full
capacity and authority to execute and deliver this Agreement, to perform
hereunder, and to consummate the transactions contemplated hereby without the
necessity of any act or consent of any other entity, including any governmental
agencies or authorities. The execution, delivery and performance by each of
Ideal and SkillMaster of this Agreement and each and every agreement, document
and instrument provided for herein have been duly authorized and approved by all
requisite corporate
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action of Ideal and SkillMaster, respectively. This Agreement and each and every
agreement, document and instrument to be executed, delivered and performed by
Ideal or SkillMaster in connection herewith, constitute or will, when executed
and delivered, constitute the valid and legally binding obligations of Ideal and
SkillMaster, enforceable against them in accordance with their respective terms,
except as enforceability may be limited by applicable equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws from time to
time in effect affecting the enforcement of creditors' rights generally.
3.3. NO EVENT OF BREACH OR DEFAULT. The execution of this Agreement and
the consummation of the transactions contemplated by this Agreement will not
violate or result in any default under, or in any breach of, any agreement,
instrument, order, arbitration award, judgment or decree to which Ideal or
SkillMaster is a party or by which Ideal or SkillMaster is bound and will not
violate or conflict with any other restriction of any kind or character to which
Ideal or SkillMaster is subject, including without limitation its articles of
incorporation or bylaws. Except as specified in SCHEDULE 3.3, no governmental
approval or other consent (including consents under the Contracts and
Agreements) is required to be obtained or made by Ideal or SkillMaster in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby.
3.4. FINANCIAL STATEMENTS. Ideal has delivered to Joule the balance
sheet and income statement with respect to Ideal's Business as of and for the
fiscal years ended December 31, 1998, 1997 and January 31, 1997, and the interim
period ended March 31, 1999 (the "Financial Statements"). To the best of Ideal's
and SkillMaster's knowledge, such statements were accurately compiled from the
accounting records of Ideal and correctly set forth the information contained in
such accounting records with respect to the various items of revenue and expense
set forth on such statements and were prepared in accordance with generally
accepted accounting principles and fairly present the financial condition of
Ideal's Business and the Assets as of the date of the Financial Statements.
3.5. ABSENCE OF UNDISCLOSED LIABILITIES. Neither Ideal nor SkillMaster
has any debts, claims, commitments, liabilities or obligations of any nature,
whether accrued, absolute, contingent or otherwise, and whether due or to become
due or arising out of transactions entered into, or any state of facts existing,
on or prior to this date, arising out of or relating to Ideal's Business except
as set forth in the most recent Financial Statements or as set forth on SCHEDULE
3.5.
3.6. LITIGATION AND CLAIMS. Except for routine accounts payable
incurred in the ordinary course of business from which Joule will be held
harmless as provided herein, there are no judgments unsatisfied against Ideal or
SkillMaster or consent decrees or injunctions to which Ideal or SkillMaster is
subject, and, except as listed on SCHEDULE 3.6, there is no litigation, claim,
or legal, administrative or arbitration proceeding or investigation, including
any claim under any workers' compensation or other occupational injury or
disease related law, pending or, so far as is known to Ideal or SkillMaster,
threatened against or relating to the Assets or Ideal's Business, nor do Ideal
or SkillMaster know of any basis for any such action or of any governmental
investigation relative to Ideal or Ideal's Business.
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3.7. TITLE TO ASSETS. Ideal has good, valid and marketable title to all
of the Assets, free and clear of all mortgages, pledges, liens, restrictions,
encumbrances or charges of any kind. Ideal has the sole and exclusive right,
title and interest in and to the Assets and the unqualified right to transfer
and convey the Assets to Joule. The transfer and conveyance of the Assets by
Ideal to Joule shall pass good, valid and marketable title to the Assets to
Joule, free and clear of all mortgages, liens, conditional sales agreements,
charges, claims, breaches or encumbrances of any nature whatsoever, except as
provided in the Assumption Agreement.
3.8. COMPLIANCE WITH LAWS. Each of Ideal and SkillMaster has complied
in all material respects with all laws, regulations and orders applicable to
Ideal's Business and has obtained all governmental permits or licenses required
in order to conduct Ideal's Business, and the present use of its properties and
the conduct of Ideal's Business do not violate in any material respect any law,
regulation, ordinance, decree, injunction or order. Except for routine business
licenses required by local jurisdictions or sales tax permits, all of which are
listed on SCHEDULE 3.8, Ideal does not require any governmental permits or
licenses in connection with the transaction of Ideal's Business as presently
conducted. No notice or warning from any governmental authority with respect to
any failure or alleged failure of Ideal or SkillMaster to comply with any law,
regulation or order has been issued or given, nor is any such notice or warning
proposed or threatened so far as is known to Ideal or SkillMaster.
3.9. NO FINDER OR BROKER. Each of Ideal and SkillMaster hereby
represent and warrant to Joule that neither Ideal nor SkillMaster nor any party
acting on its or his behalf has paid or has become obligated to pay any fee or
commission to any broker, finder or intermediary for or on account of the
transactions contemplated by this Agreement.
3.10. EMPLOYEE BENEFIT PLANS AND RELATED MATTERS.
(a) SCHEDULE 3.10 lists each pension, retirement, profit-sharing,
deferred compensation, bonus, phantom stock, restricted stock plan, stock option
plan, stock purchase plan, deferred compensation arrangement, other incentive
plan, severance pay plan or policy, supplemental executive retirement plan or
policy, or other employee benefit program, arrangement, agreement or
understanding, or medical, vision, dental or other health plan, or life
insurance or disability plan, or any other employee benefit plan, including any
"employee benefit plan" as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), to which Ideal or SkillMaster
contributes or is a party or is bound and under which either of them may have
liability and under which employees or former employees of Ideal's Business (or
their beneficiaries) are eligible to participate or derive a benefit ("EMPLOYEE
BENEFIT PLANS").
(b) No liability has been or is expected to be incurred by Ideal
under or pursuant to the Internal Revenue Code of 1986, as amended (the "Code")
or Title I or IV of ERISA or the penalty, excise tax or joint and several
liability provisions of the Code or ERISA relating to Employee Benefit Plans
and, to the knowledge of Ideal, no event, transaction or condition has occurred
or exists that could result in any such liability to Ideal's Business or,
following the Closing, Joule.
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(c) No Employee Benefit Plan is a "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA, a "multiple employer plan" within the
meaning of Section 413(c) of the Code, or a defined benefit plan within the
meaning of Section 3(35) of ERISA.
3.11. LABOR CONTRACTS AND EMPLOYMENT AGREEMENTS. Ideal does not have
any (a) collective bargaining agreement, or (b) employment agreement, oral or
written, express or implied, which is not terminable without cost or liability
to Ideal on 30 days' notice. This representation shall not alter or affect the
provisions of Sections 1.5 or 1.7, to the effect that Joule is assuming none of
Ideal's obligations existing on the date hereof with respect to its employees
other than claims for the first $75,000 of accrued earned vacation pay as set
forth in Section 1.7.
3.12. CONTRACTS AND AGREEMENTS. EXHIBIT C contains a true, complete and
correct list of the Contracts and Agreements. Ideal has furnished Joule with
access to all written Contracts and Agreements, together with all amendments
thereto, set forth on Exhibit C. Ideal has furnished Joule with a true, complete
and correct summary of all oral Contracts and Agreements listed on EXHIBIT C.
There does not exist under any Contract and Agreement any event of default or
event or condition that, after notice or lapse of time or both, would constitute
a violation, breach or event of default thereunder on the part of Ideal, or, to
the knowledge of Sellers, any other party thereto except for such events or
conditions that, individually and in the aggregate, (a) have not had or resulted
in, and could not reasonably be expected to result in the future in, a material
adverse effect on Ideal's Business, and (b) have not materially impaired the
ability of Ideal to perform its obligations under this Agreement. Each Contract
and Agreement is a legal, valid, binding and enforceable obligation of Ideal,
and, to the knowledge of Sellers, the other parties thereto.
3.13. PATENTS, TRADEMARKS, TRADE NAMES. Ideal owns or is licensed or
otherwise has the full right to use all patents, inventions, trademarks, trade
names (including the name Ideal Technical Services), copyrights, technology,
know-how and processes, registrations or applications therefor, used in or
necessary for the conduct of Ideal's Business as heretofore conducted and the
domain name or URL "http://www.ideal4u.com" and other rights relating to the web
site maintained in respect of Ideal's Business (the "Rights"). Ideal is in
compliance with all licenses and other arrangements with respect to the Rights.
No claims have been asserted by any person to the use of any of the Rights or
challenging or questioning the validity or effectiveness of any such Rights, and
to the best knowledge of Ideal and SkillMaster, there is no valid basis for any
such claim. To the best knowledge of Ideal and SkillMaster, the use of the
Rights by Ideal does not infringe on the rights of any person. No director,
officer or employee of Ideal owns directly or indirectly, in whole or in part,
any of the Rights or interest therein that Ideal has used, is presently using,
or the use of which is necessary for Ideal's Business as now conducted.
3.14. ALL ASSETS TO BE TRANSFERRED. There is no asset that is owned by
Ideal or SkillMaster and that is primarily used by Ideal in or primarily relates
to the conduct of Ideal's Business that is not included in the Assets.
3.15. CONSENTS. Except as may be waived in writing by Joule, Ideal and
SkillMaster have obtained the consents and approvals of all parties whose
consent or approval is necessary
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for the valid and effective consummation and completion of the transactions
contemplated hereby or as necessary in order that Ideal and SkillMaster may
validly, lawfully and effectively perform and carry out their obligations
hereunder without subjecting Joule, the Assets or Ideal's Business to any claim
or penalty.
3.16. TAX MATTERS. Ideal and SkillMaster have timely filed all federal,
state and local tax returns or extensions thereof relating to the operation of
Ideal's Business that were required to be filed. Ideal has paid, or where
payment is not yet required, established reserves that it has deemed adequate as
set forth in the Financial Statements, for the payment of all taxes with respect
to the periods covered by such returns. Neither Ideal nor either SkillMaster is
delinquent in the payment of any material tax, assessment or governmental
charge.
3.17. ENVIRONMENTAL MATTERS.
(a) DEFINITIONS. For purposes of this Section 3.17, the following
terms shall have the meanings herein set forth:
(i) "ENVIRONMENTAL LAWS": means any and all applicable laws
relating to the protection of the environment, to human health and safety, or to
any emission, discharge, generation, processing, storage, holding, abatement,
existence, Release, threatened Release, arranging for the disposal or
transportation of any Hazardous Substances.
(ii) "ENVIRONMENTAL LIABILITIES AND COSTS": means any and all
liabilities imposed by, under or pursuant to Environmental Laws, based on,
arising out of or otherwise in respect of (i) the ownership or operation of
Ideal's Business or any real property, leased or operated by Ideal, or (ii) the
environmental conditions existing on the date hereof on, under, above, or about
any real property leased or operated by Ideal's Business or Ideal.
(iii) "HAZARDOUS SUBSTANCE": means any substance that: (i)
requires investigation, removal or remediation under any Environmental Law, or
is defined, listed or identified as a "hazardous waste" or "hazardous substance"
thereunder; or (ii) is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic, or otherwise hazardous and is regulated by
any governmental authority or Environmental Law.
(iv) "RELEASE": means any releasing, disposing, discharging,
injecting, spilling, leaking, leaching, pumping, dumping, emitting, escaping,
emptying, seeping, dispersal, migration, transporting, placing and the like,
including the moving of any materials through, into or upon, any land, soil,
surface water, ground water or air, or otherwise entering into the environment.
(b) COMPLIANCE WITH ENVIRONMENTAL LAW. Ideal is and has been in
compliance in all material respects with all applicable Environmental Laws
pertaining to any of the properties and assets of Ideal's Business and the use
by Ideal thereof. No material permits, licenses and other authorizations are
required under Environmental Laws to operate Ideal's Business. Ideal has not
received notice of any violation of any applicable Environmental Law relating to
any of the Assets or to any part of the premises utilized by the Business and,
to the knowledge of Sellers, no such violation has been threatened.
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(c) OTHER ENVIRONMENTAL MATTERS. Ideal has not caused or taken
any act on that resulted in, and Ideal is not subject to, any material liability
or obligation relating to (i) the environmental conditions on, under, or about
any part of the premises utilized by Ideal's Business or other properties or
assets owned, leased, operated or used by Ideal in Ideal's Business, including
the air, soil and groundwater conditions at such properties, or (ii) the use,
management, handling, transport, treatment, generation, storage, disposal or
Release of any Hazardous Substances by Ideal.
(d) NO HAZARDOUS SUBSTANCES. No Hazardous Substances have been
treated, stored or disposed of by Ideal (or, to the knowledge of Sellers, any
other person) at, on, or under any part of the premises utilized by Ideal's
Business, which are required by applicable Environmental Laws currently in
effect to be remediated by Ideal, where the cost of such remediation,
individually or in the aggregate, would have a material adverse effect.
3.18. INSURANCE. Ideal has in full force and effect insurance policies
covering the Assets and the Business that it deems adequate. All policies of
insurance, together with the premiums currently paid thereon, providing coverage
with respect to Ideal's Business are described on SCHEDULE 3.18. Except as set
forth on SCHEDULE 3.18, since January 1, 1997 there have been no material
claims, actions, suits or proceedings arising out of or based upon any of such
policies of insurance, and, so far as is known to the Sellers or any of their
officers, no basis for any such claim, action, suit or proceeding exists.
3.19. SUPPLIERS AND CUSTOMERS. SCHEDULE 3.19 attached hereto sets forth
the 15 largest customers of Ideal's Business, in each case for the period
January 1, 1997 through the date hereof. During the period January 1, 1997
through the date hereof, none of such 15 largest customers has canceled or
substantially modified its agreement or commitment with Ideal or Ideal's
Business to purchase services (or threatened in writing to do any of the
foregoing). To Seller's knowledge, the relationship of Ideal with each of its
suppliers and each of its customers is a good commercial working relationship.
Sellers do not have knowledge that any customer of Ideal's Business intends to
cancel or otherwise substantially modify its relationship with Ideal or Ideal's
Business, or substantially modify its usage or purchase of the services of
Ideal's Business either as a result of the transactions contemplated hereby or
otherwise.
3.20. BANK ACCOUNTS; POWERS OF ATTORNEY. Set forth on SCHEDULE 3.20 is
a true and complete list of (a) the name of each bank with which Ideal has an
account or safe deposit box, the identifying numbers or symbols thereof and the
name of each person authorized to draw thereon or to have access thereto and (b)
the name of each person, if any, holding a power of attorney from Ideal and a
summary statement of the terms thereof.
3.21. YEAR 2000. To Sellers' knowledge (which, as to intellectual
property and assets acquired from third parties, is based solely on the
representations of such third parties), none of the intellectual property and
other Assets will be adversely affected by, and each will continue to operate in
the same manner as it currently operates, notwithstanding Year 2000. As used
herein, the term "Year 2000" means the occurrence of or calculation involving
the Year 2000 A.D., or other calendar dates occurring after December 31, 1999.
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3.22. OWNERSHIP OF IDEAL. SkillMaster is the record and beneficial
owner of all the outstanding capital stock of Ideal.
3.23. MATERIAL MISSTATEMENTS OR OMISSIONS. No representation or
warranty by Ideal or SkillMaster in this Agreement, or any schedule or
certificate furnished to Joule pursuant hereto or in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact, or will as of the date hereof omit to
state a material fact necessary to make the statements contained therein not
misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTS OF JOULE
Joule represents and warrants to Ideal and SkillMaster as
follows:
4.1. ORGANIZATION AND GOOD STANDING. Joule is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
New Jersey.
4.2. AUTHORITY AND STATUS. Joule has the full capacity and authority to
execute and deliver this Agreement, to perform hereunder, and to consummate the
transactions contemplated hereby without the necessity of any act or consent of
any other entity. The performance by Joule of the transactions contemplated by
this Agreement and each and every agreement, document and instrument provided
for herein have been duly authorized and approved by all requisite corporate
action of Joule. This Agreement and each and every agreement, document and
instrument to be executed, delivered and performed by Joule in connection
herewith, constitute or will, when executed and delivered, constitute the valid
and legally binding obligations of Joule, enforceable against it in accordance
with their respective terms, except as enforceability may be limited by
applicable equitable principles or by bankruptcy, insolvency, reorganization,
moratorium, or similar laws from time to time in effect affecting the
enforcement of creditors' rights generally.
4.3. NO EVENT OF BREACH OR DEFAULT. The execution of this Agreement and
the consummation of the transactions contemplated by this Agreement will not
violate or result in any default under, or in any breach of, any agreement,
instrument, order, arbitration award, judgment or decree to which Joule is a
party or by which Joule is bound and will not violate or conflict with any other
restriction of any kind or character to which Joule is subject, including
without limitation its articles of incorporation or bylaws. No governmental
approval or other consent is required to be obtained or made Joule in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
4.4. CONSENTS. Except as may be waived in writing by Ideal, Joule has
obtained the consents and approvals of all parties whose consent or approval is
necessary for the valid and effective consummation and completion of the
transactions contemplated hereby or as necessary in order that Joule may
validly, lawfully and effectively perform and carry out its obligations
hereunder without subjecting SkillMaster or Ideal to any claim or penalty.
4.5. NO FINDER OR BROKERS. Joule hereby represents and warrants to
Ideal that neither Joule nor any party acting on Joule's behalf has paid or has
become obligated to pay any fee or
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commission to any broker, finder or intermediary for or on account of the
transactions contemplated by this Agreement.
4.6. MATERIAL MISSTATEMENTS OR OMISSIONS. No representation or warranty
by Joule in this Agreement, or any schedule or certificate furnished to
SkillMaster or Ideal pursuant hereto or in connection with the transactions
contemplated hereby contains any untrue statement of a material fact or omits to
state a material fact, or will as of the date hereof omit to state a material
fact necessary to make the statements contained therein not misleading.
ARTICLE 5
COVENANTS OF IDEAL
5.1. INDEMNIFICATION OF JOULE. Ideal and SkillMaster hereby agree
jointly and severally to indemnify and hold Joule harmless from, against and in
respect of any and all losses, liabilities, damages, costs and expenses
(collectively, "Losses") resulting from:
(a) Any untrue representation, breach of warranty or
nonfulfillment of any covenant or agreement by Ideal or SkillMaster contained
herein or in any certificate, document or instrument delivered to Joule
hereunder;
(b) Any and all claims asserted by third parties arising or
resulting from or relating to Ideal's Business or the Assets (including any
expenses related to Ideal's employees), accrued, absolute, contingent,
unliquidated or otherwise, which arise on or before the Closing or are based
upon or arise from any act, omission, transaction, circumstance, performance of
services, state of facts or other condition which occurred or existed on or
before the date of the Closing, whether or not then known, due or payable; and
(c) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without limitation, legal
fees and expenses, incident to any of the foregoing or incurred in investigation
or attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
Each of Ideal and SkillMaster agrees that no provision of the
Articles of Incorporation or Bylaws of Ideal or SkillMaster or of any applicable
law should be invoked by it or on its behalf to avoid or vitiate its obligations
to provide indemnification as provided herein.
5.2. PROCEDURE FOR INDEMNIFICATION. In the event any Losses are
incurred by Joule for which Joule would be entitled to indemnification pursuant
to this Article 5, Joule shall promptly notify Ideal and SkillMaster in writing
of such Losses. Ideal and SkillMaster agree that they will promptly reimburse
and pay Joule for such Losses promptly after the legitimacy and amount of such
damages and expenses are established. If any claim for indemnification hereunder
is based upon an action or claim filed or made against Joule by a third party,
then Ideal and SkillMaster shall have the right to negotiate a settlement or
compromise of any such action or claim or to defend any such action or claim at
the sole cost and expense of Ideal and SkillMaster with counsel selected by
Ideal and approved by Joule, which approval shall not be unreasonably withheld;
provided, however, that Joule at its expense shall have the right to have its
counsel participate in such proceedings and any compromise or settlement of any
claim other than for money damages shall be subject to the consent of Joule.
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5.3. INDEMNIFICATION THRESHOLD, LIMITATION. Notwithstanding anything to
the contrary contained in Section 5.1 above, no claim may be made against
Sellers for indemnification pursuant to Section 5.1 above unless the claim is
made by Joule and received by Sellers on or prior to December 31, 2000 and
unless the aggregate of the Losses for which Joule has claimed or is claiming
indemnification exceeds Thirteen Thousand Dollars ($13,000), and then only to
the extent of such excess. In addition, Joule shall not be indemnified pursuant
to Section 5.1 above with respect to any additional individual item of Loss if
the Losses of Joule for which Joule has received indemnification pursuant to
Section 5.1 above have aggregated Six Hundred Fifty Thousand Dollars ($650,000).
For purposes of this Section 5.3, the amount of each claim shall be (i) net of
the value of any tax benefit to Joule, and (ii) net of any insurance proceeds
and any indemnity, contribution or other similar payment recoverable by Joule
from any third party with respect thereto. Notwithstanding any other provision
of this Agreement, there shall be no limitation (either in time or amount) on
the ability of Joule to seek indemnification with respect to tax matters or for
fraud or intentional concealment. Furthermore, the provisions of this Section
5.3 shall not apply with respect to payments of Excess Vacation Pay Amounts
required to be made pursuant to Section 1.7.
5.4. COVENANT NOT TO COMPETE. Each of Ideal and SkillMaster covenants
and agrees that for a period of three (3) years from the date hereof, it will
not compete with Joule (as such term is defined in Section 5.5 below). Ideal and
SkillMaster further agree not to divulge, communicate, use to the detriment of
Joule or for the benefit of any other person, or misuse in any way, any
confidential information or trade secrets of Ideal's Business, including
personnel information, secret processes, customer lists, formulas or other
technical information. Ideal and SkillMaster acknowledge that a substantial part
of said technical information, including but not limited to techniques, designs,
programs, processes, testing procedures, developments, equipment, and customer
information and business information is not generally known in the trade and
will be held in confidence. The parties recognize that the covenants set forth
in this Section 5.4 serve as a material inducement for Joule to enter into the
transactions contemplated herein and that Joule shall be entitled, in addition
to all other rights and remedies as may be provided by law, to specific
performance, injunctive, and other equitable relief to prevent or restrain a
breach of this Section 5.4.
5.5. DEFINITION OF "COMPETE". For the purposes of this Agreement, the
term "compete" shall mean with respect to Ideal's Business: (a) calling on,
soliciting, taking away, accepting as a client or customer or attempting to call
on, solicit, take away or accept as a client or customer any individual,
partnership, corporation or association that was a client or customer of Ideal
during the twelve (12) calendar month period ending on the date hereof for the
purpose of providing services of the type that heretofore comprised Ideal's
Business or (b) soliciting any person employed either on a full-time basis or as
a temporary staffing employee by the Ideal Business on the date hereof to become
an employee of SkillMaster or an affiliate thereof.
5.6. CONDUCT OF IDEAL'S BUSINESS PRIOR TO CLOSING. Except as required
to effect the transactions contemplated by this Agreement, Ideal and SkillMaster
represent and covenant that, between March 31, 1999 and the date hereof, Ideal
and SkillMaster have conducted Ideal's Business in the ordinary course, and that
they have, except as otherwise specifically provided in this Agreement:
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(a) not engaged in extraordinary transactions;
(b) used reasonable efforts to preserve Ideal's Business intact
and to preserve the goodwill of customers and others having business relations
with Ideal;
(c) not disposed of any Assets, except in the ordinary course of
business;
(d) maintained the Assets in the same working order and condition
as such Assets are in as of the date of this Agreement, reasonable wear and tear
excepted;
(e) not increased the annual level of compensation of any
employee and not grant any unusual or extraordinary bonuses, benefits or other
forms of direct or indirect compensation to any employee, officer, director or
consultant, except in amounts in keeping with past practices by formula or
otherwise; and
(f) not increased, terminated, amended or otherwise modified any
plan for the benefit of employees.
5.7. FINANCIAL STATEMENTS. Sellers agree to cooperate with Joule in
obtaining audited financial statements of Ideal's Business as of December 31,
1998 and for the year then ended that meet the requirements of Item 7 of Form
8-K under the Securities Exchange Act of 1934, as amended ("Form 8-K") and, if
required to be included in a Form 8-K required to be filed by Joule with respect
to the acquisition of Ideal's Business, unaudited financial statements of
Ideal's Business as of the most recently available pre-closing accounting period
end and related statements of income that meet the requirements of Item 7 of
Form 8-K. Joule agrees to reimburse Sellers for the third-party cost of such
audit.
5.8. TRANSITIONAL SERVICES. Sellers agree that Joule may continue to
occupy the space used for Ideal's Business in SkillMaster's facility at 5353
West Alabama, Suite 600, Houston, Texas (the "Houston Space") for a period of up
to three months (the "Transition Period") at a rental of $1,500 per month
(apportioned for any partial month), which includes utilities, cleaning and the
services of the switchboard operator. In addition, during the Transition Period,
Sellers will continue to provide to Joule the use of the LAN system at the
Houston Space and the WAN system linking the Mobile Property with the Houston
Space and the telephone lines at the Houston Space in exchange for reimbursement
of applicable third-party telephone charges and will provide management
information services with respect to the LAN system, the WAN system and
maintenance of the web site at "http://www.Ideal4u.com" by agreed upon employees
of SkillMaster at the rate of $32.50 per hour.
5.9. CHANGE OF NAME. Sellers agree to take such action as is necessary
to change the name of Ideal to a name that does not include the word "Ideal" and
further agree that they will not include the word "Ideal" in the name or trade
names of any business hereafter conducted by them.
5.10. EMPLOYEE BENEFITS. Sellers agree to provide such information to
Joule as it may reasonably request in connection with the transition of employee
benefits of the employees identified in SCHEDULE 1.7.
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ARTICLE 6
COVENANTS OF JOULE
6.1. INDEMNIFICATION OF SELLERS. Joule hereby agrees to indemnify and
hold Sellers harmless from, against and in respect of any and all Losses
resulting from:
(a) Any untrue representation, breach of warranty or
nonfulfillment of any covenant or agreement by Sellers contained herein or in
any certificate, document or instrument delivered to Joule hereunder;
(b) The Assumed Liabilities; and
(c) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without limitation, legal
fees and expenses, incident to any of the foregoing or incurred in investigation
or attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
Joule agrees that no provision of the Articles of Incorporation
or Bylaws of Joule or of any applicable law should be invoked by it or on its
behalf to avoid or vitiate its obligations to provide indemnification as
provided herein.
6.2. PROCEDURE FOR INDEMNIFICATION. In the event any Losses are
incurred by Sellers for which Sellers would be entitled to indemnification
pursuant to this Article 6, Sellers shall promptly notify Joule in writing of
such Losses. Joule agrees that it will promptly reimburse and pay Sellers for
such Losses. If any claim for indemnification hereunder is based upon an action
or claim filed or made against Sellers by a third party, then Joule shall have
the right to negotiate a settlement or compromise of any such action or claim or
to defend any such action or claim at the sole cost and expense of Joule with
counsel selected by Joule and approved by Sellers; provided, however, that
Sellers at their expense shall have the right to have their counsel participate
in such proceedings and any compromise or settlement of any claim other than for
money damages shall be subject to the consent of Sellers.
6.3. INDEMNIFICATION THRESHOLD, LIMITATION. Notwithstanding anything to
the contrary contained in Section 6.1 above, no claim may be made against Joule
for indemnification pursuant to Section 6.1 above unless the claim is made by
Sellers and received by Joule on or prior to December 31, 2000 and unless the
aggregate of the Losses for which Sellers have claimed or are claiming
indemnification exceeds Thirteen Thousand Dollars ($13,000), and then only to
the extent of such excess. In addition, Sellers shall not be indemnified
pursuant to Section 6.1 above with respect to any additional individual item of
Loss if the Losses of Sellers for which Sellers have received indemnification
pursuant to Section 6.1 above have aggregated Six Hundred Fifty Thousand Dollars
($650,000). For purposes of this Section 6.3, the amount of each claim shall be
(i) net of the value of any tax benefit to Sellers, and (ii) net of any
insurance proceeds and any indemnity, contribution or other similar payment
recoverable by Sellers from any third party with respect thereto.
Notwithstanding any other provision of this Agreement, there shall be no
limitation (either in time or amount) on the ability of Sellers to seek
indemnification with respect to tax matters or for fraud or intentional
concealment.
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6.4. RECORDS.
(a) TAX PURPOSES. Joule shall allow Sellers access to existing
records of Ideal's Business that are in Joule's possession as may reasonably be
requested by Sellers in connection with the preparation of any tax return or any
audit or other proceeding that relates to Ideal's Business prior to the date
hereof, and Joule shall use its good faith efforts to maintain such records for
six (6) years from the end of the year to which they relate unless specifically
authorized by Sellers to the contrary.
(b) DISPUTES. To facilitate the resolution of any claims made by
or against or incurred by Sellers, after the Closing, upon reasonable notice to
Joule, Joule shall (i) permit Sellers, their counsel, accountants and other
representatives to have full access during regular business hours to the
offices, properties, books and records of Joule relating to the Assets and
Ideal's Business prior to the date hereof, (ii) furnish Sellers, their counsel,
accountants, and other representatives such additional financial and other
information regarding the Assets and Ideal's Business as Sellers may from time
to time reasonably request, and (iii) make available to Sellers, their counsel,
accountants and other representatives the employees of Joule whose assistance,
testimony or presence is necessary to assist Sellers in evaluating any claims
and defending any claims; PROVIDED, HOWEVER, that such investigation and access
shall not unreasonably interfere with the business or operations of Joule.
6.5. TAX REPORTING. The parties hereby agree to adopt the alternate
procedure provided in Section 5 of Revenue Procedure 96-60 for preparing and
filing all payroll and employment tax returns for the employees of Ideal that
are engaged by Joule, pursuant to which Joule will assume Sellers' obligation to
furnish Forms W-2 to the employees of Sellers who will continue their employment
in Ideal's Business with Joule. Sellers and Joule will each perform the duties
imposed on them as predecessor and successor, respectively, in such Section 5,
and Sellers will furnish all relevant information with respect to such
employees.
ARTICLE 7
DELIVERIES AT CLOSING
All transactions at the Closing shall be deemed to take place
simultaneously and no transaction at the Closing shall be deemed to have been
completed until all documents set forth in this Article 7 have been delivered by
the parties hereto except as waived by the party to which such document is to be
delivered.
7.1. OBLIGATIONS OF SELLERS. At the Closing, Sellers shall deliver to
Joule:
(a) The Bill of Sale and the Assumption Agreement;
(b) All books of account, contracts, files and other data and
documents pertaining to the Assets and Ideal's Business;
(c) Physical possession of the Assets where located;
(d) The non-compete agreement with Elizabeth E. Osher in the form
of EXHIBIT H hereto;
(e) The guarantee of SkillMaster, Inc. in the form of EXHIBIT I
hereto; and
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(f) Such other instruments or documents as may be reasonably
requested by Joule or Joule's counsel to fully and effectively convey the Assets
to Joule in accordance with the provisions of this Agreement.
7.2. OBLIGATIONS OF JOULE. At the Closing, Joule shall deliver:
(a) The Purchase Price in the manner specified in Section 1.3;
(b) The Assumption Agreement;
(c) The guarantee of Joule Inc. in the form of EXHIBIT J hereto;
and
(d) Such other instruments and documents as may be reasonably
requested by Ideal to fully and effectively evidence Joule's compliance with the
provisions of this Agreement.
ARTICLE 8
MISCELLANEOUS
8.1. BULK SALES LAWS. Ideal and SkillMaster shall jointly and severally
reimburse, indemnify and hold harmless Joule from and against any and all Losses
which Joule may sustain by reason of failure by either party to comply with any
bulk transfer or bulk sales laws which may be applicable to the transaction
described in this Agreement.
8.2. PARTIES TO BEAR OWN EXPENSES. Whether or not the Closing is
consummated, Joule, on the one hand, and Ideal and SkillMaster, on the other
hand, shall each bear their own expenses incurred in preparation for and
contemplation of the Closing, including but not limited to fees for attorneys
and accountants.
8.3. NOTICES. All notices, claims, certificates, requests, demands and
other communications under this Agreement shall be made in writing and shall be
delivered by hand or sent by cable or facsimile, or sent, postage prepaid, by
registered, certified or express mail, or reputable overnight courier service,
and shall be deemed given when so delivered by hand, cabled or telecopied, or if
mailed, three (3) days after mailing (one (1) business day in the case of
express mail or overnight courier service) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
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If to Sellers: SkillMaster Staffing Services, Inc.
5353 W. Alabama
Suite 600
Houston, Texas 77056
Attn: Chief Executive Officer
Fax No.: 713-871-5226
With a copy to: Doherty, Doherty & Adams
1717 St. James Place
Suite 520
Houston, Texas 77056
Fax No.: 713-572-1001
If to Joule: Joule Technical Staffing Inc.
1245 Route 1 South
Edison, New Jersey 08837
Attn: Bernard G. Clarkin
Fax No.: 732-603-0898
With a copy to: Whitman Breed Abbott & Morgan LLP
200 Park Avenue
New York, New York 10166
Attn: John H. Denne, Esq.
Fax No.: 212-351-3131
8.4. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the parties made under the terms of this Agreement or
otherwise contained herein or in any schedule, exhibit or other document
delivered pursuant hereto shall survive and shall not expire with or be
terminated by the Closing and shall continue in full force and effect until
December 31, 2000 or such longer period as may be provided in Section 5.3 and
Section 6.3 with respect to indemnification claims with respect thereto.
8.5. AMENDMENTS; WAIVERS. This Agreement may be amended or modified
only by a written instrument executed by the parties to this Agreement. No
failure or delay on the part of any party in exercising any of its respective
rights hereunder upon any failure by any other party to perform or observe any
condition, covenant or provision herein contained shall operate as a waiver
thereof, nor shall any single or partial exercise of any such rights preclude
any other or further exercise thereof or the exercise of any other right
hereunder.
8.6. NO ASSIGNMENT. The rights and obligations of each party under this
Agreement shall not be assignable prior to, on or after the Closing without the
written consent of the other party hereto. The obligations of Ideal, SkillMaster
and Joule hereunder shall be binding upon their respective successors and
permitted assigns. Any assignment in contravention of the foregoing shall be
void and of no further force or effect.
8.7. BENEFITS. Nothing expressed or referred to in this Agreement is
intended or shall be construed to give any person or entity, other than the
parties to this Agreement, or their
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respective successors and assigns, any legal or equitable right, remedy or claim
under or in respect thereof or any provision contained herein, it being the
intention of the parties that this Agreement is for the sole and exclusive
benefit of such parties, and such successors and assigns of this Agreement and
for the benefit of no other person or entity.
8.8. KNOWLEDGE. For purposes of this Agreement, a corporation will be
deemed to have knowledge of a particular fact or other matter if any individual
who is serving, or who has at any time served, as a director or officer of such
corporation has, or at any time had, knowledge of such fact or other matter. An
individual will be deemed to have "knowledge" of a particular fact or other
matter if such individual is actually aware of such fact or other matter or a
prudent individual could be expected to discover or otherwise become aware of
such fact or other matter in the course of conducting a reasonably comprehensive
investigation concerning the existence of such fact or other matter.
8.9. HEADINGS. The article, paragraph and other headings contained in
this Agreement are for reference purposes only and shall not in any way affect
the meaning or interpretation of this Agreement.
8.10. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
of the parties with respect to the subject matter of this Agreement and
supersedes all prior oral and written agreements, understandings, or
representations relating to the subject of this Agreement.
8.11. GOVERNING LAW. This Agreement shall be construed in accordance
with, and governed by, the internal laws of the State of New Jersey (and not the
laws of conflict of law).
8.12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same agreement.
8.13. SEVERABILITY. If any provisions of this Agreement, or any
covenant, obligation or agreement contained herein is determined by a court to
be invalid or unenforceable, such determination shall not affect any other
provision, covenant, obligation or agreement, each of which shall be construed
and enforced as if such invalid or unenforceable provision were not contained
herein. Such invalidity or unenforceability shall not affect any valid and
enforceable application thereof, and each such provision, covenant, obligation
or agreement shall be deemed to be effective, operative, made, entered into or
taken in the matter and to the full extent permitted by law.
8.14. ATTORNEYS' FEES. In the event suit is brought by either party to
enforce, interpret or in any way arising out of any part of this Agreement, the
prevailing party shall be entitled to recover as an element of its costs of
suit, and not as damages, such reasonable attorneys' fees as may be fixed by the
court. The "prevailing party" shall be the party who is entitled to recover its
costs of suit, whether or not the suit proceeds to final judgment. A party not
entitled to recover its costs shall not recover attorneys' fees. No sum for
attorneys' fees shall be counted in calculating the amount of the judgment for
purposes of determining whether a party is entitled to recover its costs or
attorneys' fees.
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IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the 16th day of May, 1999.
JOULE TECHNICAL STAFFING, INC.
By:________________________________
Name:______________________________
Title:_____________________________
IDEAL TECHNICAL SERVICES, INC.
By:________________________________
Name:______________________________
Title:_____________________________
SKILLMASTER STAFFING SERVICES, INC.
By:________________________________
Name:______________________________
Title:_____________________________
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