Exhibit 2.1
ASSET PURCHASE
AGREEMENT
T HIS A SSET P URCHASE A GREEMENT (the “Agreement”) is entered into
and effective as of March 12, 2007 (“Effective
Date”), by and between T IGER O IL ,
I NC
. , a Florida corporation (“Buyer”),
and D EVCON I NTERNATIONAL C ORP ., a
Florida corporation (“Seller”).
R ECITALS :
A. Seller’s subsidiaries listed on Schedule
“A” (such subsidiaries are collectively referred to
herein as the “Companies”) are presently engaged in the
business of performing earthmoving, excavating, and filling
operations, building golf courses, roads, and utility
infrastructures, dredging waterways and constructing deep-water
piers and marinas, (the “Business”). Seller is, as of
the date hereof, a holding company whose business is primarily
owning the equity interests of various subsidiaries including the
Companies.
B. Seller and certain other of its subsidiaries are
also engaged in business and activities unrelated to the Business
(“Retained Business”).
C. Buyer desires to purchase from Seller, and
Seller desires to sell to Buyer, all of the Business assets owned
or used by Seller and/or the Companies in the conduct of the
Business, except for the Excluded Assets (as defined in
Section 1.2), for the consideration and upon the other terms
and conditions set forth in this Agreement. Seller desires to
retain, and Buyer does not wish to purchase, all of the Retained
Business assets owned or used by Seller in the conduct of the
Retained Business.
D. Seller and Buyer acknowledge that one of
Buyer’s investors is on the Board of Directors of the Seller,
and is the former Chairman and CEO of the Companies, all of which
has been fully disclosed to the Board of Directors of the
Seller.
A GREEMENT :
N OW ,
T HEREFORE
, the parties hereby agree as follows:
1. P URCHASE A ND S ALE OF A SSETS .
1.1
Purchase and Sale.
Upon the terms and subject to the conditions of this Agreement, at
the Closing on the Closing Date (as such terms are defined in
Section 2), Seller shall, and shall cause the Companies to,
sell, transfer, convey, assign and deliver to Buyer, and Buyer
shall purchase and acquire from the Seller and the Companies, free
and clear of all encumbrances of any kind, all of Seller’s
and the Companies’ right, title and interest in and to the
Seller’s and the Companies’ property and assets,
personal or mixed, tangible and intangible, of every kind and
description, wherever located, belonging to Seller and the
Companies as of the Effective Date which are used in conducting the
Business, except as set forth on Exhibit “C”,
including, but not limited to, all of the following property and
assets (the “Acquisition Assets”):
(a)
Vehicles, Equipment and
Machinery. All vehicles, equipment, machinery, tools,
supplies, spare parts, and all other tangible personal property and
assets utilized in the Business, together with all duties and
prepaid expenses related thereto, including those assets more
particularly identified on Exhibit “A”, which is
attached hereto and incorporated by reference herein (the
“Vehicles, Equipment and Machinery”).
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(b) Office
Property. All
furniture, fixtures, computer hardware and software, and supplies,
spare parts, and all other tangible personal property and assets
utilized in the Business, including, without limitation, those
identified on Exhibit “A” (the “Office
Property”).
(c)
Inventories. All
inventories related to the Business, wherever located, including
inventories located in or about Seller’s or the
Companies’ facilities or job sites, or in transit to
Seller’s or the Companies’ facilities or job sites,
provided that title has passed to Seller or the Companies (the
“Inventories”).
(d)
Customer Lists, Data and
Records. All customer lists (the “Customer
Lists”), operating data and records relating to the Business,
including customer records, supplier agreements, general commercial
information, work in process schedules, referral sources, job
status reports and records, equipment logs, operating guides and
manuals, copies of financial, accounting and personnel records,
correspondence and other similar documents and records (the
“Data and Records”). Following the Effective Date,
Buyer will provide Seller access to the Data and Records for
Seller’s business purposes subject to the Non-Competition
Agreements (hereinafter defined).
(e)
Contracts. All the
interest (including all rights, benefits, duties and obligations)
that Seller and the Companies possess and have the right to
transfer in the contracts, identified in Exhibit “B”,
which is attached hereto and incorporated by reference herein (the
“Contracts”), provided, however, that (i) Buyer
shall not assume any contracts not listed on Exhibit
“B”, or any liabilities of the Seller or the Companies
related to the Contracts which were incurred prior to the Effective
Date, provided that Buyer shall assume only the obligation to
complete such Contracts on and after the Effective Date, and
(ii) Seller shall be entitled to receive payments for work
completed prior to Feb. 28, 2007 and for reimbursements of costs
incurred for the benefit of Buyer thereafter.
(f)
Governmental
Authorizations. All governmental authorizations owned, held
or utilized by Seller or the Companies in connection with the
ownership of the Acquisition Assets and the operation of the
Business, and all pending applications therefor, in each case to
the extent transferable to Buyer.
(g)
Goodwill. The going
concern value and goodwill of the Business (the
“Goodwill”).
(h) Name.
All rights to use the name
“Devcon Construction” and all derivatives thereof in
all jurisdictions outside of the continental United States;
provided that Buyer may also use such name, on a nonexclusive
basis, on any facility that is subject to the Real Estate
Leases.
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(i)
Other Assets. Other
properties and assets of every kind, character or description,
tangible or intangible, owned by the Seller or the Companies used
or held for use in connection with the Business, with the exception
of the Excluded Assets (“Other Assets”).
1.2
Excluded Assets. All
assets of the Seller and the Companies not related to the Business
are specifically excluded from this Agreement. Notwithstanding the
foregoing, there shall also be excluded from the Acquisition
Assets, those assets described on Exhibit “C”
(collectively, the “Excluded Assets”).
1.3
No Assumed Liabilities;
Indemnification. Except for forward obligations set forth
in the Contracts Buyer is assuming pursuant to Section 1.1(e),
Buyer shall not assume, and Seller shall remain solely responsible
for, and shall retain, pay, perform and discharge, any and all
liabilities of Seller and the Companies (the “Retained
Liabilities”). Within one week after Closing, a portion of
the Purchase Price shall be used to repay all debt obligations of
the Seller and/or the Companies related to the Business (if any),
so that all Acquisition Assets are delivered to Buyer free and
clear of all liens, claims and encumbrances. Seller hereby agrees
to indemnify and hold Buyer harmless from any and all loss or
additional expense, including attorney’s fees, resulting from
its failure to provide for such debt obligations of the Business or
any Retained Liability.
1.4
Purchase Price; Earnest Money
Deposit. The purchase price for the Acquisition Assets
(“Purchase Price”) shall be $5,250,000.00, which shall
be paid to Seller as follows: (a) deposit by Buyer of the sum
of $525,000.00 (“Earnest Money”) on the Effective Date
with the undersigned escrow agent (“Escrow Agent”) who
shall release and apply all escrowed amounts solely in accordance
with joint written instructions that are executed and delivered to
the Escrow Agent from time to time by each of Seller and Buyer;
(b) at Closing, the delivery by Buyer of immediately available
funds in the amount of $4,200,000.00 (less other adjustments as
provided in this Agreement), by certified check or wire transfer in
immediately available funds to an account designated by Seller; and
(c) execution and delivery at Closing of Buyer’s
non-negotiable promissory note payable one hundred twenty
(120) days from Closing to Seller in the principal amount of
$525,000.00 (the “Note”), said Note to be in
commercially reasonable form as agreed upon by Buyer and Seller.
The Buyer’s obligations of payment under the Note shall be
subject to the Buyer’s right of set-off in accordance with
Section 9 of this Agreement.
1.5
Dredge Repairs.
Immediately upon the execution of this Agreement and payment of the
Earnest Money, Buyer and Seller shall execute and deliver to the
Escrow Agent joint written instructions instructing the Escrow
Agent to pay all liabilities and/or other obligations related to
the repairs to dredge 1 (which obligations are acknowledged to be
Seller’s), with all remaining amounts of Earnest Money being
held to be paid to Seller at Closing.
1.6
Non-Competition Agreements. At or
prior to the Closing, the Seller and the Companies shall execute
non-competition and confidentiality agreements related to the
Business in commercially reasonable form as approved by Buyer (the
“Non-Competition Agreements”).
1.7 Real
Estate Leases. At or prior to the Closing, the
Buyer shall enter into or assume lease agreements or sublease
agreements for a 90 day period for the office location at the
Newport Center, Deerfield Beach, Florida and for the remaining term
for the shop location at Southwest 10 th
Street,
Deerfield Beach, Florida, in commercially reasonable form as
approved by Buyer (the “Real Estate
Leases”).
1.8 Allocation of Purchase
Price. The Purchase
Price shall be allocated among the Acquisition Assets as specified
in Exhibit “D”. After the Closing, the parties agree to
make consistent use of the allocation, fair market values and
useful lives specified in Exhibit “D”.
1.9
Operation of Business prior to
Closing; Indemnification. On the Effective Date, Buyer, or
Buyer’s assignee, shall assume performance of the Contracts
and management of other operations of the Business to be
transferred pursuant to this Agreement. Until Closing, Buyer shall
manage such operations out of the Deerfield Beach location set
forth in Section 1.7 consistent with the manner and level of
care with which such operations were managed previously by Seller
during the twelve (12) months prior to the date hereof.
Possession of the Acquisition Assets shall be given to Buyer on the
Effective Date and Seller shall cooperate to ensure a smooth
transition to Buyer. During the period from the Effective Date
through the Closing, the Buyer shall consult with the Seller and
obtain Seller’s concurrence on Business decisions which could
be reasonably expected to result in a material adverse change to
the Business, and the relationship between Buyer and Seller shall
be as independent contractor. Buyer shall indemnify and hold Seller
harmless for any damages, losses, and claims incurred by Seller and
caused by Buyer following the Effective Date. During the period
from the Effective Date through Closing, Buyer and Seller will
jointly evaluate the costs to complete the Contracts and the prior
work performed by Seller and the Companies, and will adjust the
Purchase Price by mutual agreement if necessary. All liabilities
for work performed: 1) prior to the Effective Date shall be the
responsibility of Seller; and 2) after the Effective Date shall be
the responsibility of Buyer. Retentions will be prorated by the
Seller and the Buyer in proportion to the work
completed.
1.10
Allocation of Contract Revenue
and Costs. The WIP Schedule (as defined in
Section 3.5) will be jointly updated to reflect the value of
the jobs as of February 28, 2007. All job costs incurred by
Seller prior to February 28, 2007 shall be the obligation of
Seller and all job costs incurred following that date shall be the
obligation of the Buyer. Similarly, the value of work performed and
unpaid prior to February 28, 2007 is to be paid to the Seller
and the value of work following February 28, 2007 is to be
paid to the Buyer.
1.11
Accounts Receivable.
The Seller shall retain all accounts receivable and notes,
provided, however, that the Buyer and Seller may mutually agree
that the Buyer handle collection thereof. The mechanism and
compensation to Buyer shall be established prior to Closing. If
payments have been made to the Seller or the Companies in excess of
the value of the work performed by Seller or the Companies prior to
the Effective Date, the Seller will reimburse the Buyer
accordingly.
2. C LOSING . Consummation of the purchase and sale of the
Acquisition Assets as contemplated in this Agreement (the
“Closing”) shall take place on or before March 20,
2007, or on such other date and at such place as the parties may
mutually agree (the “Closing Date”).
3. R EPRESENTATIONS AND WARRANTIES OF SELLER . Seller and the Companies hereby represent and
warrant to Buyer as follows:
3.1
Authority . The Seller
is a corporation duly incorporated and existing under the laws of
the State of Florida, and the Companies are duly organized, validly
existing and in good standing under the laws of the jurisdictions
listed on Schedule “A”, and all are authorized to
transact business therein. Seller has full power and authority to
enter into this Agreement, and Seller and the Companies have full
power and authority to perform the transactions contemplated by
this Agreement. Seller’s and the Companies’ execution,
delivery and performance of, and the consummation of the
transactions contemplated by, this Agreement have been duly
authorized by Seller’s board of directors and by the
Companies’ board of directors and shareholders. This
Agreement constitutes the legal, valid, and binding obligation of
Seller, enforceable in accordance with its terms.
3.2
Title to Acquisition
Assets . Seller and/or the Companies have good and
marketable title to all of the Acquisition Assets which are fully
paid for as of the Closing and will transfer the same to Buyer at
the Closing, free and clear of all liens, pledges, security
interests and encumbrances.
3.3
Compliance with Law .
To the best of Seller’s and the Companies’ knowledge,
Seller and the Companies are in compliance in all material respects
with all applicable laws, rules, and regulations of the city,
county, state and federal government applicable to the
Business.
3.4
Contracts. Seller has
furnished to Buyer a true and complete copy of each written
Contract listed on Exhibit “B”. To the knowledge of
Seller, each such Contract is legal, valid, binding, enforceable
and in force and effect in all material respects. No party to any
such Contract is in material breach or default. All of the
Contracts are assignable by Seller and/or the Companies to Buyer.
In the event that a Contract is not assignable, a subcontract will
be issued.
3.5 Work in Process
Schedule. Seller has
delivered to Buyer a work in process schedule of existing jobs
related to the Business (the “WIP Schedule”). The WIP
Schedule represents Seller’s management’s evaluation of
the status of the work performed to date and the financial position
of the Contracts, including all unsigned change orders, and the
results of performance and operations of the Seller and the
Companies regarding the Contracts as of December 31, 2006 and
for the periods referred to in the WIP Schedule. The WIP Schedule
has been prepared in accordance with industry standards. The
parties shall mutually update the WIP Schedule as of
February 28, 2007.
3.6
Permits and Licenses Necessary
to Business. Seller and the Companies have all required and
proper material permits and licenses, including franchises, titles
(including motor vehicle titles and current registrations), and any
other similar documents constituting a material entitlement or
otherwise material to the operation of the Business
(coll
