EXHIBIT 10.2
PROMISSORY NOTE
U.S. $400,000.00 June 19, 2000
Manalapan, NJ
FOR VALUE RECEIVED, STRATUS SERVICES GROUP, INC., a Delaware
corporation (hereinafter referred to as the "Maker") promises to pay to the
order of OUTSOURCE INTERNATIONAL OF AMERICA, INC., a Florida corporation
(hereinafter referred to as the "Lender") at 1690 South Congress Avenue, Suite
210, Delray Beach, Florida, 33445, or at such address as Lender may designate
from time to time, the principal sum of Four Hundred Thousand and 00/100 Dollars
($400,000.00), together with interest thereon at the rate of eight and one-half
percent (8 1/2%), payable in two installments of Two Hundred Thousand and 00/100
Dollars ($200,000.00) each, the first of which shall be due and payable by wire
transfer on August 1, 2000 and the second of which, together with all accrued
and unpaid interest, shall be due and payable by wire transfer on September 15,
2000 (the "Maturity Date").
This Note is made pursuant to the provisions of that certain asset
purchase agreement, dated as of June 16, 2000, by and between the Maker and
Lender (the "Asset Purchase Agreement"). Lender and any holder hereof is
entitled to the benefits of that certain security agreement of even date
herewith (the "Security Agreement"), and may enforce the agreements of Maker
contained therein, and any holder hereof may exercise the remedies provided for
thereby or otherwise available in respect thereof, all in accordance with the
terms thereof. The capitalized terms herein not otherwise defined, shall have
the meaning given to such terms in the Asset Purchase Agreement and the Security
Agreement.
In the event that the Maker sells or otherwise disposes of
substantially all of the Assets or sells the Acquired Businesses, as those terms
are defined in the Asset Purchase Agreement, then, in such event, said sale or
disposition shall be deemed an event of default hereunder.
Payments of the amounts due hereunder shall be made in lawful money of
the United States which shall be legal tender in payment of all debts, public
and private, at the time of payment.
Maker will be in default under this Note if it fails to make payment of
any installment within ten (10) days of the applicable due date. Upon the
Maker's default, the late installment shall be subject to a five percent (5%)
late charge.
Upon any default under this Note, with such default continuing for a
period of thirty (30) days after written notice to the Maker of such default,
the unpaid principal shall, at the option of the Lender, become immediately due
and payable and interest will accrue, commencing at the end of such thirty (30)
day period, at an annual rate equal to the lesser of eighteen percent (18%) or
the maximum rate of interest permitted by applicable law. Failure to exercise
this right to accelerate the Maturity Date, shall not constitute a waiver of
Lender's right to exercise the same in the event of any subsequent default. Any
property of the Maker or of any endorser held by the Lender hereof may be
applied by the Lender to any sums due and unpaid pursuant to this Note.
As to this Note and any other instruments securing the indebtedness,
the Maker and all guarantors and endorsers severally waive all notice of
acceleration, presentment, protest and demand, dishonor and non-payment of this
Note, and expressly agree that the maturity of this Note, or any payment
hereunder, may be extended from time to time without in any way affecting the
liability of the Maker and all guarantors and endorsers.
Should it become necessary to collect this Note through an attorney,
the Maker and any surety, endorser or guarantor of this Note hereby agree to pay
all costs and expenses of collection, including reasonable attorneys' fees and
any attorneys' fees incurred in appellate, bankruptcy or post-judgment
proceedings.
This Note shall be governed by and construed in accordance with the
laws of the State of New Jersey. The Maker agrees to submit to the jurisdiction
of any court which Lender may select in Monmouth County, New Jersey to enforce
the terms of this Note.
The Maker acknowledges and agrees that this Note has been signed and
delivered in exchange for valuable consideration.
This Note may be prepaid in whole or in part at any time prior to the
Maturity Date without penalty.
This Note may not be changed orally, but only by an agreement in
writing, signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought.
The term "Maker" as used herein in every instance shall include the
heirs, executors, administrators, successors, legal representatives and assigns
of Maker.
STRATUS SERVICES GROUP, INC.
Attest:
/s/ J. Todd Raymond By: /s/ Joseph J. Raymond
- ---------------------- -------------------------------
Joseph J. Raymond, President and CEO
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SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Security Agreement") is entered into as
of June 19, 2000 by and between OUTSOURCE INTERNATIONAL OF AMERICA, INC. a
Florida corporation, with its principal office at 1144 East Newport Center
Drive, Deerfield Beach, Florida 33486 ("Outsource"), and STRATUS SERVICES GROUP,
INC., a Delaware corporation, with its principal office at 500 Craig Road, Suite
201, Manalapan, NJ 07726 (the "Debtor").
BACKGROUND INFORMATION
A. Debtor has executed on this date a promissory note in the principal amount of
Four Hundred Thousand and 00/100 Dollars ($400,000.00) (the "Note"). The Note
was made pursuant to the provisions of that certain asset purchase agreement,
dated as of June 16, 2000, by and between Outsource and Debtor (the "Asset
Purchase Agreement"). The capitalized terms herein not otherwise defined, shall
have the meaning given to such terms in the Asset Purchase Agreement.
B. In consideration for the loan evidenced by the Note, the Debtor desires to
grant to Outsource a security interest in the Collateral (as hereinafter
defined) in accordance with the terms of this Security Agreement.
PROVISIONS
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, it is agreed as follows:
1. GRANT OF SECURITY INTEREST. Debtor hereby grants, pledges and
assigns to Outsource a security interest in the Assets, including all customer
lists, goodwill, inventory, furnishings, fixtures, equipment and all other forms
of personal property of the Debtor in the Acquired Businesses, wherever same may
be located, whether now owned or existing or hereafter arising or acquired by
Debtor, together with all substitutions, replacements, additions and accessions
therefor or thereto, all negotiable documents relating thereto and all cash and
non-cash proceeds thereof including, but not limited to, notes, drafts, checks,
instruments, insurance proceeds, indemnity proceeds, warranty and guaranty
proceeds except no present or future accounts (as defined in the Uniform
Commercial Code of New Jersey) or proceeds of such accounts shall be subject to
such security interest (all of the foregoing hereinafter referred to as the
"Collateral").
The security interest hereby granted is to secure the prompt and full
payment and complete performance of all obligations of Debtor to Outsource under
the Note and this Security Agreement. Notwithstanding anything contained in this
Agreement to the contrary, and provided that Debtor is not in default under the
Note or this Security Agreement, Debtor may dispose of in any manner any portion
of the Collateral and have and retain the proceeds from any such disposition to
Debtor's exclusive use and benefit, so long as such disposition will not
materially and adversely affect the operation of Acquired Businesses.
2. GENERAL COVENANTS. Debtor represent, warrants and covenants to and
for the benefit of Outsource as follows:
(a) Except for the security interest granted hereby (i) Debtor is the
sole owner of the Collateral free from any and all liens, security interests,
encumbrances, claims and other adverse interests;
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and (ii) no security agreement, financing statement, equivalent security or lien
instrument or continuation statement covering any of the Collateral has been
executed by Debtor, or is on file or of record in any public office, except for
the lien of Outsource's senior lenders and the lien of the equipment lessor as
to the leased Assets.
(b) Debtor shall not create, permit or suffer to exist, and shall take
such action as is necessary to remove, any claim to or interest in or lien or
encumbrance upon the Collateral, other than the security interest granted hereby
and the prior liens heretofore granted. Debtor shall defend the right, title and
interest of Outsource in, to and under the Collateral against all claims and
demands of all persons and entities at any time claiming the same or any
interest therein.
(c) Subject to any limitation stated therein or in connection
therewith, all information furnished by Debtor concerning the Collateral, is or
shall be at the time the same is furnished, accurate, correct and complete in
all material respects.
3. ADDITIONAL ASSURANCES. Debtor shall perform, do, make, execute
and deliver all such additional and further acts, things, deeds, assurances and
instruments as Outsource may require to more completely vest in and assure to
Outsource its rights hereunder and in, to or under the Collateral.
4. PRESERVATION AND DISPOSITION OF COLLATERAL.
(a) Except for the security interest granted hereby and the
prior liens heretofore granted, Debtor shall keep the Collateral free from any
and all liens, security interests, encumbrances, claims and interests. Debtor
shall advise Outsource promptly, in writing and in reasonable detail, (i) of any
material encumbrance upon or claim asserted against any of the Collateral; (ii)
of any material change in the composition of the Collateral; and (iii) of the
occurrence of any other event that would have a material effect upon the
aggregate value of the Collateral or upon the security interest of Outsource.
(b) Debtor shall not sell or otherwise dispose of the
Collateral.
(c) Debtor shall not use the Collateral in violation of any
statute, ordinance, regulation, rule, decree or order. Debtor shall pay and/or
satisfy any charges or levies upon the Collateral or in respect to the income or
profits therefrom, except that no such charge need be paid if (i) the validity
thereof is being contested in good faith by appropriate proceedings; and (ii)
such proceedings do not involve any danger of sale, forfeiture or loss of any
Collateral or any interest therein.
(d) Unless Debtor pays the same within ten (10) business days
after written demand for such payment by Outsource, Outsource may, at its
option, discharge taxes, liens, security interests or other encumbrances at any
time levied or placed on the Collateral and may pay for the maintenance and
preservation of the Collateral. Debtor agrees to reimburse Outsource upon demand
for any payment made or any expense incurred (including reasonable attorneys'
fees) by Outsource pursuant to the foregoing authorization Should Debtor fail to
pay said sum to Outsource upon demand, interest shall accrue thereon, from the
date of demand until paid in full, at the highest rate set forth in the Note.
5. EXTENSIONS AND COMPROMISES. With respect to any Collateral
held by Outsource as security for the Note, Debtor assents to all extensions or
postponements of the time of payment thereof or any other indulgence in
connection therewith, to each substitution, exchange or release of the
Collateral, to the addition or release of any party primarily or secondarily
liable therefor, to the acceptance of partial payments thereof and to the
settlement, compromise or adjustment thereof, all in such manner and at such
time or times as Outsource may deem advisable. Outsource shall have no duty as
to the collection or protection of the Collateral or any income therefrom, nor
as to the preservation of rights against prior
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parties, nor as to the preservation of any right pertaining thereto, beyond the
safe custody of the Collateral in the possession of Outsource, provided,
however, nothing contained in this paragraph 5 shall exculpate Outsource from
any liability which would otherwise arise as a result of any action (as
distinguished from an omission) constituting gross negligence or willful
misconduct of Outsource.
6. FINANCING STATEMENTS. At the request of Outsource, Debtor
shall join with Outsource in executing one or more financing statements in form
satisfactory to Outsource and shall pay the cost of filing the same in all
public offices wherever filing is deemed by Outsource to be necessary or
desirable. Debtor hereby agrees that a carbon, photographic or other
reproduction of this Security Agreement or of a financing statement shall be
sufficient as a financing statement.
7. DEFAULT. If Debtor shall fail to make any payment of
principal of or interest on the Note when due:
(a) Outsource may, pursuant to the terms of the Note, declare
the unpaid balance of the Note immediately due and payable and this Security
Agreement in default.
(b) Outsource shall have the rights and remedies of a secured
party under this Security Agreement, under any other instrument or agreement
securing the Note and under the laws of the State of New Jersey.
8. MISCELLANEOUS PROVISIONS.
(a) All of Outsource's rights and remedies, whether at law or
in equity and whether evidenced hereby or by any other agreement, instrument or
paper, shall be cumulative and may be exercised singularly or concurrently. The
exercise of one or more rights or remedies shall not prejudice or impair the
concurrent or subsequent exercise of other rights or remedies.
(b) Any demand upon or notice to Debtor shall be in writing
delivered in person (which delivery shall be acknowledged by written receipt),
by facsimile transmission, or by depositing the same in the U.S. mails, postage
prepaid, addressed to Debtor at the address set forth at the beginning of this
Security Agreement. Such demand or notice shall be effective upon receipt or
upon the refusal by any employee, agent or representative of Debtor to accept
delivery thereof.
(c) Outsource shall not be deemed to have waived any of its
rights hereunder or under any other agreement, instrument or paper signed by
Debtor unless such waiver be in writing and signed by Outsource.
(d) This Security Agreement and all rights and obligations
hereunder, including matters of construction, validity and performance, shall be
governed by the laws of the State of New Jersey. The parties hereto agree that
any action concerning, relating to or involving this Security Agreement must be
venued in Monmouth County, New Jersey, and the parties hereby consent to the
jurisdiction of the courts in Monmouth County, New Jersey.
(e) The provisions hereof shall, as the case may require, bind
or inure to the benefit of the respective successors and assigns of Debtor and
Outsource.
(f) Any provision of this Security Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or
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unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
IN WITNESS WHEREOF, Debtor and Outsource have signed this Security
Agreement this 19th day of June, 2000.
OUTSOURCE INTERNATIONAL OF
AMERICA, INC.
By: /s/ Scott R. Francis
---------------------------
Name: Scott R. Francis
Its: Vice President
STRATUS SERVICES GROUP, INC.
By: /s/ Joseph J. Raymond
---------------------------
Name: Joseph J. Raymond
Its: President and CEO
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