ASSET PURCHASE AGREEMENT
Exhibit 10.1
This Agreement executed this 4th day of
October 2010 and effective October 4, 2010 (the “Closing Date”) between Xxxxxxx
International Logistics, Inc., a New Jersey corporation with its principal place
of business at 0000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxxxx 00000 (hereinafter
“FIL”) and Xxxxx World Trade, Ltd., a Nevada corporation with its principal
place of business at 000-00 000xx Xxxxxx,
Xxxxxxx, Xxx Xxxx 00000 (hereinafter “Xxxxx”).
WHEREAS, FIL is the owner of, among
other businesses, an International Freight Forwarding business
consisting of warehousing (handling and storage), customs container freight
station, trucking and cross-docking, stuffing of export containers (full and
consolidation), ocean export business, air export business, ocean import
business (forwarding and brokerage), and air import business (forwarding and
brokerage) located at FIL’s 0000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxxxx 00000
and 000 Xxxxxxxx Xxxxxx, Xxxx Xxxxxxxx, XX 00000 premises (hereinafter
collectively referred to as the “Business”).
WHEREAS, FIL desires to sell certain
specified assets as listed on the Schedule of Assets as set forth on Exhibit A
which are substantially all of the assets of the Business other than FIL’s
accounts receivable (the “Assets”), and Xxxxx wishes to acquire the Assets, but
no liabilities, claims or debts, of the Business, and integrate the
Assets into Janel's operations.
THEREFORE, in consideration of the
premises and the covenants contained herein, the Parties agree as
follows:
PURCHASE
AND SALE OF ASSETS
1. FIL agrees to sell,
assign, transfer and deliver to Xxxxx on the Closing Date all the Assets,
including but not limited to all of the books, records, forms, manuals, internet
access codes, goodwill, customer lists and customer contact information,
telephone, yellow page, trade journal listings pertaining to the
Business.
2. The amounts allocated
among the Asset as set forth on Exhibit B, all of which are included in the
Purchase Price, shall be used by all of the Parties for reporting for federal
tax purposes. The necessary tax filings in order to comply with
Internal Revenue Code Section 1060 is attached as Exhibit C. Janel’s
accountant shall complete such form.
3. Xxxxx does not assume any
liabilities or obligations of FIL or the Business, known, unknown, contingent or
otherwise including any and all obligations arising prior to the date of this
Agreement to any suppliers to the Business or under any of the agreements
included in the Assets (collectively, the “Liabilities”). Xxxxx is
purchasing the Assets free and clear of all liens and
encumbrances. The transaction described in this section is referred
to as the “Sale”. FIL expressly acknowledges that Xxxxx has no
responsibility for any Liabilities.
4. FIL agrees to indemnify
and hold Xxxxx harmless from any cost or expense arising from any claim asserted
against Xxxxx with respect to any Liabilities, including without limitation any
New Jersey state tax liability, and to pay all costs of investigation and
defense in connection with any such claim.
PURCHASE
PRICE
5. FIL represents its good
faith belief that the Earnings before Interest, Taxes, Depreciation and
Amortization (“EBITDA”) of the Business for fiscal year 2011 will meet or exceed
$667,000.
6. The purchase price for
the Assets shall be as follows:
a)
Restricted shares of common stock of Xxxxx World Trade, Ltd. (“Xxxxx Shares”) in
an amount which have a market value of $600,000 based on the closing market
price of the stock on the Friday immediately prior to the Closing Date (the
“Stock Allocation”), subject to adjustment as provided in Paragraphs 7 and 8
hereof.
b) Cash
(the “Earn-Out Payment”) in an amount determined as follows: 70% of
the annual actual EBITDA achieved over the three 12-month periods following the
Closing Date (the “Earn-Out Period”) from revenues generated from the customers
included in the Assets (“Earn-Out EBITDA”).
c) Subject
to the provisions of Paragraphs 7 and 8 hereof, the Earn-Out Payment will be
paid as follows: An amount equal to seventy percent (70%) of the
Earn-Out EBITDA achieved for each three-month period following the Closing Date
(“Quarter”) during the Earn-Out Period will be paid in cash following the end of
such Quarter. Each Earn-Out Payment will be made thirty (30) days
following the end of such Quarter, beginning with the Quarter ending March 31,
2011 and ending with the Quarter ending September 30, 2013. To the
extent the Earn-Out EBITDA with respect to any Quarter is less than zero, such
amount shall be deducted from subsequent Earn-Out Payments until deducted in
full. Any amounts otherwise owed by FIL or its affiliates to Xxxxx
may also be deducted from the Earn-Out Payments in Janel’s sole
discretion.
7. In the event the total
EBITDA of the Business for the Earn-Out Period fails to equal $2,000,000 (the
“Estimated EBITDA”), Xxxxx shall be entitled to a corresponding percentage
reduction of the number of Xxxxx Shares of the Stock Allocation (the “Shortfall
Reduction”). For purposes of illustration, if the actual EBITDA
achieved is ten percent (10%) less than the Estimated EBITDA, the Stock
Allocation will be reduced by ten percent (10%).
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8. The percentage of the
Stock Allocation equal to the percentage of the Estimated EBITDA achieved in the
preceding 12 months (less any reduction pursuant to Paragraph 7 hereof), will be
delivered to FIL within forty (40) days following the first, second, and third
anniversary dates of the Closing Date. If, at the end of the Earn-Out
Period, the Shortfall Reduction exceeds the number of Xxxxx Shares of the Stock
Allocation delivered to FIL, FIL shall immediately surrender such excess to
Xxxxx.
9. It is understood between
the parties that the persons presently employed by FIL listed on the Schedule of
Hired Employees attached as Exhibit D hereto will become employed by Xxxxx on or
after the closing date in the operation of the Business.
10. It is further understood
that following the Earn-Out Period, a commission will be paid
to Xxxxxxxx X. Xxxxxxx in an amount equal to forty percent (40%) of
the actual EBITDA achieved in excess of $850,000 from customers included in the
Assets. The payments will be made within thirty (30) days following
the completion of Janel’s annual audited financial statements.
11. In addition to any
remuneration due to FIL pursuant to this Agreement, Xxxxxxxx X. Xxxxxxx shall
receive, as an employee of Xxxxx, the same salary as he currently receives as an
employee of FIL, and he shall be entitled to receive the same benefits as other
executive officers of Xxxxx receive from time to time.
12. Representations,
Warranties and Covenants of Xxxxx
Xxxxx represents, warrants, covenants
and agrees with FIL as follows:
(a) Xxxxx is a corporation
duly organized, validly existing and in good standing under the laws of Nevada,
with full power and authority to enter into this Agreement and perform its
obligations;
(b) This Agreement has been
duly and validly authorized, executed and delivered on behalf of Xxxxx and is
the valid, binding and enforceable obligation of Xxxxx in according with its
terms.
(c) Xxxxx will reserve at
all times a sufficient number of Xxxxx Shares to satisfy the Stock
Allocation.
(d) Following the Closing
Date, Xxxxxxxx X. Xxxxxxx will become a member of the Board of Directors of
Xxxxx.
13. Representations,
Warranties and Covenants of FIL
FIL represents, warrants, covenants and
agrees with Xxxxx as follows:
(a) FIL is a corporation
duly organized, validly existing and in good standing under the laws of New
Jersey, with full power and authority to enter into this Agreement and perform
its obligations.
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(b) This Agreement has been
validly and duly authorized, executed and delivered by FIL and is a valid,
binding and enforceable obligation upon it in accordance with its
terms.
(c) FIL shall at all times
comply with all applicable federal and state laws in connection with its
activities pursuant to this Agreement, in particular the rules and regulations
of the SEC under the Securities Act of 1933 and the Securities Exchange Act of
1934.
(d) On the date hereof, FIL
has, and on the Closing Date will have, good and marketable title to all of the
Assets, free and clear of any liens or encumbrances, and all of the Assets
are reflected on FIL’s latest balance sheet (subject to dispositions or
replacements prior to the Closing Date in the ordinary course of
business). The Assets constitute all of the assets and properties
used in the Business of any kind or character as heretofore
conducted.
(e) FIL
is an “accredited investor” as defined in Rule 501 promulgated under the
Securities Act of 1933 (the “Securities Act”). FIL has had a
reasonable opportunity to ask questions of and receive answers from
representatives of Xxxxx concerning Xxxxx and its operations, and all such
questions have been answered to FIL’s full satisfaction, and has relied solely
upon FIL’s own investigation in making a decision to invest in the
Xxxxx. FIL has such knowledge and experience in financial, tax, and
business matters to enable it evaluate the merits and risks of
acquiring the Xxxxx Shares. FIL fully understands that the investment
in Xxxxx Shares is speculative and involves a high degree of risk of loss of the
entire investment. FIL fully understands the nature of the risks
involved in acquiring the Xxxxx Shares and the Holder is qualified by knowledge
and experience to evaluate investments of this type.
(f) FIL
is acquiring the Xxxxx Shares solely for FIL’s account and not for the account
of any other person or for or with a view to distribution, assignment, or resale
to others.
(g) FIL
understands and agrees that: (i) FIL may not transfer any of the Xxxxx Shares
other than in compliance with the Securities Act and other applicable securities
laws; (ii) the Xxxxx Shares have not been registered under the Securities Act or
the securities laws of any state (the “State Acts”) in reliance upon the
exemption from registration contained in Sections 4(2) of the Securities Act and
Regulation D promulgated thereunder, and applicable provisions of the State Acts
and regulations promulgated thereunder, and may not be transferred or assigned
without an effective registration under the Securities Act and applicable State
Acts; (iii) neither Xxxxx nor any affiliate thereof is under any obligation, and
neither intends, to file any such registration statement at any time in the
future; (iv) neither Xxxxx nor any affiliate thereof has agreed to assist FIL in
complying with any exemption under the Securities Act or applicable State Acts
for the transfer of the Xxxxx Shares.
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(h) Prior to the Closing
Date, FIL will make available its sales journal, sales by customer and the
associated accounts receivable for such customers for inspection by
Xxxxx.
14. No Other
Representations
None of Xxxxx, its affilitates, or
their directors, officers, or employees, or any other person or entity has made
any representations or warranties to FIL other than as expressly set forth and
designated in this Agreement as such.
15. Assignment
FIL shall not assign this Agreement or
any rights or obligations hereunder without the prior written consent of Xxxxx,
which consent shall not be unreasonably withheld.
16. Binding
Effect
This Agreement shall inure solely to
the benefit of, and shall be binding upon, the parties and their respective
successors and assigns and, except as otherwise specifically provided for
herein, no other person shall have or be construed to have any legal or
equitable right, remedy or claim under or in respect of or by virtue of this
Agreement or any provisions herein contained.
17. Entire Agreement; Waiver;
Severability
This Agreement contains the entire
understanding of the parties and no waiver or modification of any provision of
this Agreement shall be valid unless in writing and signed by the party to be
charged with such waiver. No waiver of any breach shall be deemed a
waiver of any subsequent breach or of a breach of any other provision of this
Agreement. If any provision of this Agreement is held to be invalid
or unenforceable, the remaining provisions shall not be affected.
18. Headings
The headings of the paragraphs herein
are inserted for convenience of reference only and shall not affect any
interpretation of this Agreement.
19. Construction and
Jurisdiction
This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
without giving effect to choice of law or conflicts of laws
principles. The New York state and federal courts in Nassau County,
New York, and any arbitration or other alternative dispute resolution forum in
Nassau County, New York, mutually selected by the parties, shall have
jurisdiction over any and all disputes arising out of or related to this
Agreement.
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20. Notices
All notices and communications
hereunder, except as herein otherwise specifically provided, shall be in writing
and shall be deemed to have been duly given, effective upon receipt, if mailed
or transmitted by any confirmed standard form of personal delivery, mail,
courier, fax or e-mail to the parties at their respective addresses as set forth
in this Agreement or as subsequently designated by them in writing.
21. Counterparts
This Agreement may be executed in any
number of counterparts, including confirmed fax transmission, each of which
shall be deemed to be an original, and all of which taken together shall be
deemed to be one and the same instrument.
IN WITNESS WHEREOF, the parties
have executed this Agreement as of the day and year first above
written.
| Xxxxx World Trade, Ltd. | ||||||
| By: |
/s/
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Xxxxx
X. Xxxxxxxx
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Executive
Vice President
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| Xxxxxxx International Logistics, Inc. | ||||||
| By: |
/s/
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Xxxxxxxx
X. Xxxxxxx, CEO
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|||||
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EXHIBIT
A
SCHEDULE OF
ASSETS
FIL is the owner of, among other
businesses, an International Freight Forwarding business; located at FIL’s 0000
Xxxxx Xxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxxxx premises; consisting of the following
elements and their respective revenue streams:
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Warehousing
(handling and storage)
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Customs
container freight
station
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Trucking
and cross-docking
|
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Stuffing
of export containers (full and
consolidation)
|
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Ocean
export business
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|
Air
export business
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Ocean
import business (forwarding and
brokerage)
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Air
import business (forwarding and
brokerage)
|
These elements and their respective
revenue streams are the assets being sold under the Asset Purchase
Agreement.
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EXHIBIT
B
PURCHASE PRICE
ALLOCATION
The up-to-date, full and complete,
customer list of the assets being purchased on Exhibit A from Xxxxxxx
International Logistics, Inc. and all materials appurtenant to the customer
list: $2,000,000
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EXHIBIT
C
TAX FILINGS IN ORDER TO
COMPLY WITH
INTERNAL REVENUE CODE
1060
To be completed by the
Accountants
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EXHIBIT
D
SCHEDULE OF HIRED
EMPLOYEES
Xxxxxx
Xxxxxxxxx
Sahjjad
Mazhar
Xxxxx
Xxxxxxxxx
Xxxxx
Xxxxxx
Xxxxxx
Xxxxxxxx
Xxxxx
Xxxxx
Xxxxxxxx
Xxxxxx
Xxxxx
Xxxxxx
Xxxxxxxx
X. Xxxxxxx
Xxxxxxxx
X. Xxxxxxx
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