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EXHIBIT 10.5
ASSET PURCHASE AGREEMENT
This
Agreement is made on October 18, 2007 by and among JANEL WORLD
TRADE, LTD. ("Janel"), a Nevada corporation, with its
principle office at 150-14 132 nd Avenue, Jamaica,
New York, 11434; JANEL NEWCO, INC., a Nevada corporation with
its principle office at 150-14 132 nd Avenue,
Jamaica, New York, 11434 (“Buyer@); and ORDER LOGISTICS,
INC. (“Seller”).
WHEREAS,
Seller desires to sell and Buyer desires to purchase assets of
Seller in exchange for consideration, and the assumption of
certain liabilities of Seller, all as set forth in this
Agreement; and
WHEREAS,
the transaction contemplated hereby is intended to be
accounted for as a "purchase" in accordance with Generally
Accepted Accounting Principles ("
GAAP ")
and applicable Securities and Exchange Commission (“
SEC ”)
regulatory standards governing such a transaction.
In
consideration of the mutual promises contained herein, Buyer
and Seller agree as follows:
1.
Seller
. Seller
is engaged in the business of offering an internet-based
collaborative logistics management and tracking solution by
providing a single, integrated technology platform which enables
customers to collaborate with logistics professionals for the
planning, execution, management and tracking of shipments, and
financial settlement and control of their shipments to and from
anywhere in the world across the supply chain..
2.
Purchase and Sale
. Subject
to the terms and conditions set forth in this Agreement, the Seller
will sell to Buyer and Buyer will purchase from Seller, on the
Closing Date, the properties, assets (tangible and intangible) and
business of Seller as a going concern, excluding only the assets
set forth on the attached
Schedule 2 ,
which will be referred to as
A
Excluded Assets ."
The assets to be purchased are all the assets of Seller (other than
Excluded Assets) owned, leased, licensed or used by Seller in the
conduct of its business. Buyer will acquire and operate the
business conducted by Seller as described in
Section 1 .
The assets being purchased shall include, without limitation, all
of the Seller’s right, title and interest to:
2.1
the
computer software and hardware, title and/or licenses for the
exclusive ownership and use of all intellectual property
required to own and use the software, hardware, patents,
copyright, trademarks and all property set forth on
Schedule 2.1 ,
and all improvements thereon, and any other assets related thereto
or in connection therewith ;
2.2
accessory
equipment, set forth on
Schedule 2.2 ;
2.3
all
other personal property, including, but not limited to,
machinery, equipment, computers, software, source codes,
furniture and fixtures, set forth on
Schedule 2.3 ;
2.4
prepaid
expenses, set forth on
Schedule 2.4 ,
related to the assets, business and liabilities being acquired by
the Buyer pursuant to this Agreement;
2.5
all
documentary and computerized records relating to the acquired
property;
2.6
books,
records, Financial Records, and marketing materials relating
to the acquired property;
2.7
the
name “Order Logistics” and any other trade names,
service marks, trademarks, copyrights, patents, and other
intellectual or proprietary property, and all registrations
and applications pertaining thereto, all set forth on
Schedule 2.7 attached,
including, but not limited to, proprietary technology, know-how,
manuals, trade secrets, processes, and technical expertise, and the
goodwill thereof and of the business of Seller;
2.8
business
agreements, including, but not limited to, agreements for the
sale, purchase, lease or license of goods, services or
property of any kind as well as debt instruments, credit
agreements, loans, notes and guarantees, set forth on
Schedule 2.8 ;
2.9
customer
contracts and customer lists, set forth on
Schedule 2.9 ;
2.10
employee
lists, including status, social security number and current
compensation of each employee, and employment, consultant,
independent contractor, union and collective bargaining
agreements, set forth on
Schedule 2.10 ;
2.11
certain
insurance policies, set forth on
Schedule 2.11 ;
and
2.12
permits,
authorizations, licenses, franchises, approvals or consents
from any regulatory or administrative body or organization, or
governmental or quasi-governmental body or agency, set forth
on
Schedule 2.12 ,
to the extent that they are assignable or
transferable.
The
transfer of all personal property and contracts, and the
assumption of certain liabilities and obligations, hereunder
shall be deemed to take place on the Closing Date. This
Agreement constitutes the transferring of all right, title and
interest in the intellectual property described in this
Agreement and
Section 2.1 ,
Section 2.7 ,
and as set forth on
Schedule 2.1 and
Schedule 2.7 .
3.
Purchase Price; Obligations to Janel;
Expenses
.
3.1
Purchase Price. The
Purchase Price is Three Million Six Hundred Thousand Seven Hundred
Dollars ($3,767,429). At the Closing, the Purchase Price shall be
paid as follows:
(a)
Cash Consideration. Consideration
paid in cash will total Two Million Two Hundred Seventy Three
Thousand Seven Hundred Dollars ($2,342,429), and is comprised of
the following obligations of the Seller which will be assumed by
the Buyer;
(i)
The Seller’s obligation to the National Bank of South
Carolina in the principal amount of $648,000, provided that
interest accrues at an interest rate no more than the prime
rate at J.P. Morgan Chase Bank, N.A., less 0.5%, of which
$148,000 of principal will be paid at Closing, together with
$7,854.08 of accrued and unpaid interest;
(ii)
Payment of the Seller’s obligation to Iron & Glass
Bank of the principal amount of $629,291.72, which will be
paid at Closing;
(iii)
Payment of the Seller’s obligation to Marine Bank in the
amount of $152,711.57 at Closing;
(iv)
Payment of the Seller’s obligation to Greater Bay
Business Funding in the amount of $140,000 at
Closing;
(v)
Payment of $225,000 of the Seller’s overdue payroll
taxes incurred by its JAT subsidiary at Closing;
(vi)
Payment of $104,294.32 to satisfy certain of the
Seller’s accounts payable at Closing which are set forth
on
Schedule 3.1(a)-(v) ;
and
(vii)
Payment of $148,000 for the Seller’s first and second
fiscal quarter 2007 payroll taxes at Closing; and
(vii)
Payment of $239,277 to the Seller at Closing, and payment of
$125,000 to Brian Griffin on March 30, 2008.
(b)
Stock Consideration. Buyer
shall authorize an issue of 285,000 unregistered shares of $0.001
par value Series B Convertible Preferred Stock (the "
Janel Shares "),
which will be non-voting shares and will be convertible into
Janel’s unregistered shares of $0.001 par value Common Stock
two (2) years after issuance, which will be issued at Closing as
set forth on
Schedule 3(b) ,
all subject to the applicable rules of the Securities and Exchange
Commission (“SEC”).
(c)
The
Janel Shares will
be valued at the closing price of Janel’s Common Stock in the
public markets on the day of the Closing as if they had already
been converted into shares of Janel’s Common
Stock.
3.2
Obligations Owed to Janel .
Seller
is currently indebted to Janel for services rendered in the sum of
$152,533.10, which must be paid in full on or before Closing,
failing which Janel has the right to reduce the amount of any of
assumed Seller liabilities set forth in Section 3.1(a) by the
amount of the unpaid balance due, in Janel’s sole
discretion.
3.3
Other Expenses
. Each
party hereto shall pay and bear their respective fees and expenses
incident to the negotiation, preparation, and execution of any
documents or transactions contemplated by this Agreement and any
meeting of their respective boards or shareholders, as applicable,
other than as expressly provided for in
Section 3.2 .
3.4
Purchase Price Adjustment
.
Seller
agrees that the Buyer has the right to a downward
adjustment of the Purchase Price (the “
Purchase Price Adjustment ”)
if after the Closing the Buyer becomes obligated to pay any sales,
use, value added, excise, import, privilege, or other similar
taxes, levies, or payments in lieu thereof, and accrued interest or
penalties thereupon (collectively, the “
Unpaid Sales Taxes ”),
which are imposed by any governmental authority and arise out of or
in connection with Seller’s operations of its business prior
to Closing including, but not limited to, the sale of products or
the performance of services by the Buyer. The amount of the Unpaid
Sales Taxes will be deducted parri passu from the Purchase Price
dollar-for-dollar, first by Janel’s cancellation of that
number of Janel Shares in the Stock Consideration at the issuance
value of those Janel Shares, and then by reimbursement to Janel of
the Cash Consideration, up to a sum equivalent to the amount of the
Unpaid Sales Taxes.
3.5
Objections.
(a)
If
Buyer or Seller object (the “
Objection ”)
to the calculation of the
Unpaid
Sales Taxes, either of
them may make the Objection in a written request to the other
parties hereto for a recalculation (a “
Request ”).
If such a Request is made, and within five (5) business days of its
receipt, at least one authorized representative from each of the
parties shall meet or confer and make a good faith effort to
resolve the Objection posed in the Request.
(b)
If
the Objection cannot be resolved within five (5) business days
from the first meeting or conference of the representatives,
unless the delay is merely as a result of a scheduling
conflict, (the “
Resolution Period ”)
then, within ten (10) business days after the expiration of the
Resolution Period (the “
Selection Period ”),
each of Buyer and Seller shall select a certified public accountant
(“
CPA ”),
and one CPA shall be randomly selected from the members of the
American Institute of Certified Public Accountants (“
AICPA ”)
who provide such auditing or calculation services. Each CPA
selected shall be a duly qualified CPA in good standing with
respect to his certification in the State of New York
.
The
three CPAs so chosen shall recalculate the amount that is the
subject of the Objection by majority vote and, within thirty (30)
days from the expiration of the Selection Period, furnish the
parties with a writing, approved by a majority of the CPAs, setting
forth the recalculated amount and briefly describing the manner in
which it was determined. The amount that is arrived at by the
majority vote of the CPAs shall be the amount used as the
Unpaid
Sales Taxes .
(c)
The
parties shall share equally all of the expenses and fees
associated with resolving the Objection under
this Section. Any party hereto shall have the right to seek
specific enforcement or other equitable relief or remedies at
law in court for any breach or threatened breach of this
Section .
3.6
Allocation of Purchase Price .
Janel and Buyer shall have the exclusive and sole right to allocate
the Purchase Price among the acquired assets. Seller agrees that
such allocation is the proper allocation of the Purchase Price in
accordance with the fair market value and ownership of the assets.
Seller and Buyer agree to report the federal, state and local
income taxes and other tax consequences of the transactions
contemplated hereby, including the reporting of information
required under Section 1060(b) of the IRC, in a manner consistent
with such allocation. Seller and Buyer further agree not to take
any tax position inconsistent with such allocation in connection
with (a) the preparation of their respective Financial Records, tax
returns, reports to shareholders, reports to governmental
authorities or otherwise, (b) any examination of their tax returns
or any refund claims, or (c) any litigation, investigations or
other proceedings involving any of their tax returns. Seller and
Buyer each agree to furnish to the other a copy of IRS Form 8594
(Asset Acquisition Statement under Section 1060 of the IRC) as
filed with the Internal Revenue Service by such party pursuant to
Sections 755 and 1060 of the IRC within thirty (30) days following
such filing.
3.7
Sales and Use Taxes; Recording Expenses
.
Buyer agrees to pay any and all taxes payable in connection with
the consummation of the transactions contemplated by this Agreement
and the sale, conveyance or assignment of the assets hereunder
(other than Unpaid
Sales Taxes, and income
taxes incurred by Seller or resulting directly from such sale,
which shall be borne by Seller), including sales and use taxes, and
to prepare and file any necessary tax returns in connection
therewith. Buyer further agrees to pay all filing and recording
fees relating to the filing and recording of any instruments
delivered by Seller to convey the assets to Buyer, if
any.
4.
Seller’s Representations, Warranties and
Covenants
. The
Seller represents and warrants to Buyer and Janel that, as of the
date hereof, for the period of time until the Closing Date, if such
date is later than the date hereof, and on the Closing
Date:
4.1
Organization and Good Standing. Seller
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware with all requisite
power and authority to own, use, operate, lease and license its
assets and to carry on its business as now being conducted with all
requisite corporate power and authority to (a) execute, deliver and
perform its obligations under this Agreement and other agreements
contemplated hereby and (b) consummate the transactions
contemplated hereby and thereby. Seller is duly qualified to do
business and is in good standing in each jurisdiction where the
conduct of its business or the ownership, usage, operation, lease
or license of its assets requires such qualification.
4.2
Authorization. The
execution and delivery by Seller of this Agreement, the performance
by Seller of its and his obligations hereunder and the consummation
by Seller of the transactions contemplated hereby have been duly
authorized by all necessary corporate action. This Agreement
constitutes the legal, valid and binding obligation of Seller,
enforceable against it in accordance with its terms.
4.3
Consent; Notice. No
consent, notice, approval, exemption, permit, license, or
authorization (“
Consent ”)
is required to be obtained by Seller, and no filing is required to
be made with, any person or entity, including, but not limited to,
any creditors of Seller (a) in order for this Agreement to
constitute a legal, valid and binding obligation of Seller or, (b)
to authorize or permit the consummation by Seller of the
transactions contemplated hereby or; (c) under or pursuant to any
Consents held by or issued to Seller (including, without
limitation, environmental, health, safety and operating permits and
licenses) by reason of this Agreement or the consummation of the
transactions contemplated hereby, except as set forth on
Schedule 4.3 attached.
Buyer agrees to cooperate with Seller in seeking any required
Consents, except that if Consent is required, and such Consent
cannot be secured, Buyer will not have any liability to Seller with
respect to such agreement or document as to which such Consent
cannot be secured.
4.4
Omitted
4.5
Environmental Conditions. Seller,
to its knowledge, has conducted its business operations in
compliance with all applicable Environmental Laws, and to its
knowledge, there is no event, condition, circumstance, activity,
practice, incident, action or plan which interferes with or prevent
its business operations from being in continued compliance with any
Environmental Law.
4.6
Personal Property. Seller
owns, leases, or licenses certain property set forth in
Sections 2.1, 2.2, 2.3, 2.7, 2.8, 2.11, 2.12, and 2.13
,
and will own or have in effect valid, enforceable leases or
licenses and good marketable title to all such property. None of
such property is or will be subject to any (a) contracts of sale,
leases, or licenses or (b) Liens of any kind or character, other
than as indicated on Schedule 4.6.
4.7
Intellectual Property.
(a)
Seller
has and will have the right to use the name "Order Logistics,"
and all trade names, service marks, patents, copyrights, trade
marks, and other like intellectual or proprietary property,
and the goodwill pertaining to each and to the business of
Seller, and all of said rights are, and will be, free and
clear of all royalty obligations, Liens, expenses,
attorney’s fees for services, and governmental,
quasi-governmental, regulatory or administrative fees. There
are no pending claims or known demands of infringements
asserted by any person or entity. Seller has no knowledge of
any conflicting use of any of such property or rights. To
Seller’s knowledge, Seller's use of said intellectual
property and any proprietary property or technology of Seller
is not in violation of any law or regulation or breach of any
agreement or instrument.
(b)
Seller
has no trade names, service marks, patents, copyrights,
trademarks or other intellectual or proprietary property other
than as set forth on
Schedule 2.7 .
4.8
Employee Plans. Seller
has no employee benefit plans (as defined in section 3 (3) of the
Employee Retirement Income Security Act of 1974), except those set
forth on
Schedule 2.11 (“Benefit Plans”) .
4.9
Insurance. All
policies of insurance of any kind maintained, owned or held by
Seller are set forth on
Schedule 2.11 and
such policies are in full force and effect, all premiums with
respect thereto covering all periods up to and including the
Closing Date have been paid, and no notice of cancellation or
termination has been received with respect to any such policy which
has not been replaced on substantially similar terms prior to the
date of such cancellation or termination. The insurance policies to
which Seller is a party are sufficient for compliance with all
requirements of applicable laws and all agreements to which Seller
is a party or by which Seller or its assets are bound, and the
coverage provided by said policies are sufficient to cover all
risks insured against. Seller will maintain insurance coverage, in
amounts deemed adequate by Seller’s management, against all
risks presently insured against. In the event any such insurance
policy is not acquired or assumed by the Buyer or Janel by the
Closing Date, Seller shall not be responsible for the maintenance
of any such insurance coverage after the Closing Date, unless
otherwise agreed between Buyer and Seller.
4.10
Permits; Licenses.
Schedule 2.12 sets
forth all of the Consents and franchises which have been issued to
or are held or used by Seller, or for which Seller has applied.
Seller has obtained all of the Consents and franchises which are
necessary for the ownership and use of the Purchased Assets, the
conduct of its business, and the consummation of the transactions
contemplated hereby. All such Consents and franchises are in full
force and effect, no violations exist or have been recorded in
respect of any thereof, and no proceeding is pending or threatened
to revoke or limit any thereof.
4.11
Financial Records. Seller's
Financial Records and tax returns have been prepared in the normal
course of business using normal good faith allocations and in
accordance with GAAP, consistently applied, and present fairly all
the assets, liabilities and results of operations of Seller for the
periods specified. Janel shall have made a review of Seller’s
Financial Records, including for the years ended December 31, 2006
and 2005. The accounts and notes receivable reflected on the
Financial Records represent bona fide claims of Seller against
debtors for sales or advances made or services performed in the
ordinary course of business and have been collected or are and will
be good and collectible in the ordinary course of business. Except
as set forth on
Schedule 4.11 attached,
Seller has no knowledge of any such receivables that are
uncollectible, in controversy or subject to offset or
counterclaim.
Schedule 4.11 also
sets forth (a) Seller's standard terms and conditions for sales and
collections and (b) a list of those customers to which such
standard terms and conditions do not apply, if any, and a
description of such non-standard terms on a customer by customer
basis.
4.12
Tax Matters. All
required federal, state, county, town, city and village tax reports
and returns of Seller have been and will be properly and accurately
filed, and all taxes due thereunder have been paid or adequate
reserves therefore have been established. Seller sh
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