Exhibit 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT
is entered into as of the 23rd day of January, 2007 among Logistics
International, LLC, a Minnesota limited liability company
(“Buyer”), M.G.R., Inc., a Minnesota corporation
(“M.G.R.”), Contract Air, Inc., a Minnesota corporation
(“CA”) Stonepath Logistics Domestic Services, Inc., a
Delaware corporation (“Logistics”), and Stonepath
Group, Inc., a Delaware corporation (“Stonepath”)
(together, the “Sellers”). The Sellers collectively do
business under the “Stonepath Logistics” name.
RECITALS:
WHEREAS , Stonepath owns,
directly or indirectly, beneficially and of record 100% of the
issued and outstanding capital stock of Logistics, M.G.R. and
CA;
WHEREAS , the Sellers are
currently operating the Air Plus Limited division of Stonepath
Logistics based in Shakopee, Minnesota which provides freight
forwarding, transportation and related services in intrastate and
interstate commerce (the “Business”); and
WHEREAS , Buyer desires to
acquire selected assets relating to the Business from the Sellers
and the Sellers desire that Buyer purchase such assets from the
Sellers;
NOW, THEREFORE , in
consideration of the representations, warranties, premises and
covenants contained in this Agreement and for other good and
valuable consideration, the parties agree as follows:
ARTICLE I
DEFINITIONS
“Acquired Assets” has the
meaning set forth in Section 2.1.
“Affiliate ” of a
Person means any other Person which, directly or indirectly,
controls, is controlled by, or is under common control with, such
Person. The term “control” (including, with correlative
meaning, the terms “controlled by” and “under
common control with”), as used with respect to any Person,
means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by
contract or otherwise.
“Assumed Liabilities” has
the meaning set forth in Section 2.3.
“Buyer” has the meaning
set forth in the Preamble.
“Buyer Indemnitees” has
the meaning set forth in Section 7.2(a).
“Closing” has the meaning
set forth in Section 3.3.
“Consent” means all
consents, Permits, ratifications, authorizations or approvals of
any Person necessary (a) to transfer any of the Acquired
Assets to the Buyer and (b) for the Buyer to assume any of the
Assumed Contracts or the Assumed Liabilities.
“Court Order” has the
meaning set forth in Section 4.9.
“Employee Benefits” means
any and all pension or welfare benefit programs, payroll practices,
fringe benefits, or other plans, arrangements, agreements and
understandings for employees or other service providers, groups of
employees or other service providers or specific individual
employees or other service providers of the Business to which the
Sellers contribute or are a party, by which they may be bound or
under which it may have liability, other than benefits required by
applicable Law (e.g., social security benefits and payroll taxes
related thereto), including without limitation pension or
retirement plans, deferred compensation plans, bonus or incentive
plans, early retirement programs, severance pay policies, support
funds, medical or dental insurance, short-term and long-term
disability, educational reimbursement plans, sick leave, vacation
policy, and any other payment or reimbursement plans.
“Encumbrance” means any
interest, claim, lien, pledge, option, charge, easement, security
interest, mortgage, right-of-way, encroachment, building or use
restriction, conditional sales agreement, encumbrance or other
right of third parties, whether voluntarily incurred or arising by
operation of Law, absolute or contingent, known or unknown,
determinable or not determinable, and includes any agreement to
give any of the foregoing in the future.
“Environmental Laws”
means all federal, state, and local statutes, regulations,
ordinances, and other provisions having the force or effect of Law,
all judicial and administrative orders and determinations, and all
common law concerning pollution or protection of the environment
(including ambient air, surface water, ground water, land surface
or subsurface strata), including all those relating to the
presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control, or
cleanup of any hazardous materials, substances, or wastes, chemical
substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos,
polycholorinated biphenyls, noise, or radiation, each as amended as
now or hereafter in effect.
“Finally Resolved” means
finally determined by a court of competent jurisdiction or as
agreed to by the parties.
“Hazardous Substances”
means any substance regulated under any Environmental Laws,
including without limitation hazardous substances as defined by the
Comprehensive Environmental Response Compensation and Liability
Act, 42 U.S.C. §9601 et seq., as amended, petroleum products,
radioactive materials, asbestos and polychlorinated
biphenyls.
“Knowledge” means
(i) that such person is actually aware of such fact or would
be so aware after reasonable investigation and (ii) with
respect to the Business, that Kevin Butler, Chad Ogle, or Robert
Arovas is actually aware of such fact or would be so aware after
reasonable investigation.
“Indemnifying Party” has
the meaning set forth in Section 7.2(c).
“Indemnitee” has the
meaning set forth in Section 7.2(c).
“Holdback” has the
meaning set forth in Section 3.1(b).
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“Law” means any
applicable statute, law, rule, regulation, ordinance, code,
directive, policy or rule of common law in effect of any
governmental agency having jurisdiction over the applicable party
or matter, in each case, as amended from time to time, and any
judicial or administrative interpretation thereof, including any
judicial or administrative order, consent decree or judgment.
“Leased Real Property”
means land, buildings and other improvements covered by the
Lease.
“Lease” means that
certain Building and Industrial Lease, dated July 22, 2004,
between M.G.R., as Tenant, and Long Island Industrial, as successor
to FIDI CMBS I, LLC, as Landlord.
“Liability” means without
limitation any direct or indirect liability, indebtedness,
obligation, commitment, expense, claim, deficiency, guaranty or
endorsement of or by any person of any type, whether accrued,
absolute, contingent, matured or unmatured, known or unknown,
including any liability for Taxes.
“Logistics” has the
meaning set forth in the Preamble.
“Loss(es)” has the
meaning set forth in Section 7.2(a).
“M.G.R.” has the meaning
set forth in the Preamble.
“Permits” has the meaning
set forth in Section 4.11.
“Person” means any
individual, corporation (including any non-profit corporation),
general, limited or limited liability partnership, limited
liability company, joint venture, estate, trust, association,
organization, or other entity or governmental authority.
“Purchase Price” has the
meaning set forth in Section 3.1.
“Retained Liabilities”
has the meaning set forth in Section 2.4.
“Sellers” has the meaning
set forth in the Preamble.
“Seller Indemnitees” has
the meaning set forth in Section 7.2(b)
“Significant Customers”
has the meaning set forth in Section 4.15.
“Stonepath” has the
meaning set forth in the Preamble.
“Tax” means any federal,
state, local or foreign tax, charge, fee, levy, deficiency or other
assessment of whatever kind or nature including, without
limitation, any net income, gross income, profits, gross receipts,
excise, real or personal property, sales, ad valorem, withholding,
social security, retirement, excise, employment, unemployment,
minimum, estimated, severance, stamp, property, occupation,
environmental, windfall profits, use, service, net worth,
payroll,
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franchise, license, gains, customs, transfer, recording and other
tax, duty, fee, assessment or charge of any kind whatsoever,
imposed by any Tax Authority, including any liability therefor as a
transferee (including without limitation under Internal Revenue
Code Section 6901 or any similar provision of applicable Law),
as a result of Treasury Regulation §1.1502-6 or any similar
provision of applicable Law, or as a result of any tax sharing or
similar agreement, together with any interest, penalties or
additions to tax relating thereto.
“Tax Authority” means any
branch, office, department, agency, instrumentality, court,
tribunal, officer, employee, designee, representative, or other
person that is acting for, on behalf or as a part of any foreign or
domestic government (or any political subdivision thereof) that is
engaged in or has any power, duty, responsibility or obligation
relating to the legislation, promulgation, interpretation,
enforcement, regulation, monitoring, supervision or collection of
or any other activity relating to any Tax.
“Vehicles” has the
meaning set forth in Section 2.1(b).
ARTICLE II
TRANSFER OF ASSETS; ASSUMPTION OF LIABILITIES
2.1 Sale and Purchase of
Assets. Subject to the terms and conditions stated in this
Agreement, at the Closing, the Sellers shall convey, transfer and
deliver to Buyer and Buyer shall purchase and acquire from the
Sellers, whether owned by Sellers or any Affiliate thereof, all
right, title and interest in and to the following assets (the
“Acquired Assets”), wherever located, free and clear of
all Encumbrances:
(a)
Tangible and Intangible Personal Property . All of the
tangible and intangible personal property which is listed on
Schedule 2.1(a).
(b)
Vehicles . The trucks, cars and other vehicles owned or
leased by the Sellers and listed on Schedule 2.1(b) (the
“Vehicles”).
(c)
Supplier and Customer Information . All supplier lists,
customer lists, price lists, correspondence, recorded knowledge,
customer files, credit information, account sales histories, all
sales data, surveys, other historical and current information
relating to the sales and services of the Business and any other
records that may be reasonably necessary for the continued
operation of the Business.
(d)
Assumed Contracts . The contracts, agreements, commitments,
licenses and understandings that are listed on
Schedule 2.1(d), along with all inventory and other property
of customers of the Business in Sellers’ possession or under
its control relating to or in connection with customer contracts,
agreements, commitments or understandings assumed hereunder.
(e)
Lease . All rights under the Lease, excluding the
security/damage deposit held by the landlord under the Lease which
shall remain the property of M.G.R..
(f)
Permits . All Permits listed on Schedule 4.11 to the
extent transferable by Law.
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(g)
Name and Other Marks and Copyrighted Material . All rights
to use the name “Stonepath Logistics,” as well as art
work, sales literature and promotional materials, and advertising
prepared for Stonepath Logistics for a one (1) year transition
period from the date of the Closing, after which, all such rights
shall terminate unless otherwise agreed to in writing by
Sellers.
(h)
Telephone Numbers . The telephone and facsimile numbers used
in or related to the Business, including cellular phone
numbers.
(i)
Goodwill . All of the goodwill related to the
Business.
2.2 Excluded Assets. Other
than the Acquired Assets, Buyer is not purchasing any other assets
belonging to the Sellers, including, without limitation, cash or
accounts receivable.
2.3 Assumed Liabilities .
Buyer is not assuming any of the Liabilities of the Sellers of any
kind or nature whatsoever, whether fixed or contingent, known or
unknown, except for the Liabilities of the Sellers under the
Assumed Contracts and the Lease, the payment or performance of
which arises after the Closing (the “Assumed
Liabilities”), but not including any Liability (i) for
any breach of any Assumed Contract occurring prior to the Closing
or as a result of the Closing, (ii) for any damage or loss
occurring to any inventory or other property of any customer of the
Business occurring prior to the Closing, or (iii) for any
discrepancy or loss in the amount of inventory or other property in
Sellers’ possession as at the Closing compared to the amount
of inventory or other property claimed by customers of the Business
to be in Sellers’ possession as at the Closing.
2.4 Retained Liabilities:
Except for the Assumed Liabilities, Buyer shall not assume and
shall have no liability for any Liabilities of the Sellers (the
“Retained Liabilities”), including, specifically, any
Liability (i) for any breach of any Assumed Contract occurring
prior to the Closing or as a result of the Closing, (ii) for
any damage or loss occurring to any inventory or other property of
any customer of the Business occurring prior to the Closing, or
(iii) for any discrepancy or loss in the amount of inventory
or other property in Sellers’ possession as at the Closing
compared to the amount of inventory or other property claimed by
customers of the Business to be in Sellers’ possession as at
the Closing.
ARTICLE III
PURCHASE PRICE AND PAYMENT; CLOSING
3.1 Purchase Price . The
purchase price for the Acquired Assets (the “Purchase
Price”) shall be paid as follows:
(a)
$75,636.84 shall be paid at the Closing by wire transfer to the
landlord under the Lease for January rent, including applicable
late fees;
(b)
$75,629.21 shall be held in trust by Henson & Efron, counsel
for the Buyer, to be submitted to Stonepath’s payroll service
to pay accrued vacation liability for Sellers’ employees who
will terminate employment in connection with the transactions
contemplated hereby;
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(c)
$948,733.95 shall be paid at the Closing by wire transfer to the
account of Sellers’ lender, Laurus Master Fund, Ltd.,
pursuant to wire transfer instructions specified by the Sellers;
and
(d)
$200,000 (the “Holdback”) shall be paid in accordance
with Section 3.4.
3.2 Allocation and Reporting .
The Purchase Price shall be allocated as agreed upon by the parties
prior to the Closing. Except as otherwise provided by law, the
Sellers and Buyer agree to report the transaction on Internal
Revenue Service Form 8594 in accordance with the agreed upon
allocation.
3.3 Closing. The closing of
the transactions contemplated by this Agreement (the
“Closing”) is taking place effective as of
12:00 a.m., Wednesday, January 24, 2007.
3.4 Deliveries at Closing. At the
Closing, the following transactions shall occur, all of such
transactions being deemed to occur simultaneously:
(a) At
or prior to the Closing, representatives of Sellers and Buyer shall
taken mutually agreeable efforts to establish the amount of
inventory and other property of customers of the Business in
possession of the Business as of the Closing. At the Closing,
Sellers shall deliver to Buyer possession of all inventory and
other property of customers of the Business whose customer
contracts are Assumed Contracts hereunder. Any remaining inventory
and other property shall be removed by Sellers immediately
following the Closing.
(b) Sellers’
lender, Laurus Master Fund, Ltd. (“Laurus”), shall have
delivered its consent to the transactions contemplated hereby and
release any security interests against or in the Acquired
Assets.
(c) Kevin
Butler shall have delivered a voluntary letter of resignation to
Logistics (countersigned and agreed to by Stonepath) pursuant to
which his employment agreement with Logistics is terminated, and
Sellers shall waive all confidentiality and non-competition
obligations that may inhibit or otherwise interfere with his
employment with the Buyer.
3.5 Transition Services
Agreement. The Buyer and Sellers shall negotiate and deliver a
Transition Services Agreement to provide mutually beneficial
services after the Closing.
3.6 Holdback . The Holdback
shall be paid as set forth in that certain Holdback Agreement,
dated even date herewith, by and between Buyer and the
Sellers.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Sellers, jointly and severally,
hereby represent and warrant to Buyer as follows:
4.1 Organization . M.G.R. is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Minnesota. CA is a corporation duly
organized, validly existing and in good standing under the laws of
Minnesota. Logistics is a corporation duly
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organized, validly existing and in good standing under the laws of
the State of Delaware. Stonepath is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware. Each of the Sellers has full corporate power to carry
on its business as it is now being conducted and to own and operate
the Acquired Assets. Each of the Sellers is qualified to transact
business and is in good standing in any jurisdiction which such
qualification is necessary to conduct the Business. Each of the
Sellers has the power and authority to enter into and complete the
transactions contemplated by this Agreement .
4.2 Authorization . All
corporate actions and proceedings necessary to be taken by or on
the part of each of the Sellers to authorize and approve the
transactions contemplated by this Agreement and necessary to make
the same effective have been duly and validly taken, and the
execution, delivery and performance of this Agreement have been
duly and validly authorized, executed and delivered by each of the
Sellers. This Agreement constitutes the valid and binding agreement
of each of the Sellers, enforceable against such parties in
accordance with and subject to its terms.
4.3 No Violation . Except as
set forth on Schedule 4.3 , the execution, delivery and
performance by each of the Sellers of this Agreement and the
transactions contemplated hereby do not and will not, with the
giving of notice or the passage of time or both (a) require
the Consent of any Person, except where the failure to obtain such
Consent would not have a material effect upon the Business, or
(b) constitute a violation of or conflict with, require the
payment of any penalty under or result in any breach, acceleration,
termination or adverse modification of or any default under, the
terms, conditions or provisions of any judgment, Law, regulation,
license or decree to or by which any of the Sellers or the Acquired
Assets are subject, or of any of the Sellers’ articles of
incorporation, bylaws or any material agreement or instrument to
which any of them is a party or by which any of them is bound, or
result in the creation or imposition of any Encumbrance of any
nature whatsoever on any of the Acquired Assets.
4.4 Financial Statements .
Sellers have previously delivered to Buyer unaudited financial
statements of the Business. All financial statements are, in all
material respects, true, accurate and complete as of the date and
accurately represent the results of the Business for the periods
then ended, and are consistent with the books and records of the
Sellers.
4.5 Taxes . Except as set
forth on Schedule 4.5 , the Sellers have accurately
prepared and timely filed with each applicable Tax Authority all
reports and returns of every kind (including, without limitation,
sales tax returns and employment withholding tax returns) for Taxes
required to be filed by them with respect to the Business, and have
duly paid all such Taxes due to or claimed to be due by each such
Tax Authority, (b) no Tax Authority is now asserting or, to
the Knowledge of the Sellers, threatening to assert against the
Sellers any deficiency or claim for additional Taxes with respect
to the Business and (c) to the Knowledge of the Sellers, no
state, local or foreign Tax Authority is currently claiming or
investigating whether, and of the Sellers is liable for Taxes which
relate t the Business in such taxing jurisdiction, except such
jurisdiction where the Sellers have filed a return for such Taxes.
The Sellers have withheld all required amounts from the employees
of the Business for all pay periods and are in full and complete
compl
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