Attached files
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act
August 24, 2010
Date of Report (Date of Earliest Event Reported)
Iron Eagle Group, Inc.
--------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-22965 84-1414869
---------------------------------------------------------------------
(State or other jurisdiction (Commission File Number (I.R.S.
Employer
of incorporation or organization Identification
Number)
448 West 37th Street, Suite 9G
New York, New York 10018
---------------------------------------------------------------------
(Address of principal executive offices, Zip Code)
(888) 481-4445
------------------------------------------
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c))
2
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
Asset Purchase Agreement dated August 24, 2010
----------------------------------------------
On August 24, 2010, Iron Eagle Group, Inc. entered into an asset
purchase agreement to acquire the assets of Farache Enterprises, Inc.,
a Florida based regional site development, excavation, and road
building construction firm. Pursuant to the asset purchase agreement,
the purchased assets will be transferred to a new entity 100% owned by
Iron Eagle and will be called Farache Enterprises, a division of Iron
Eagle Group, Inc. Moshe Farache, President and Founder of Farache
Enterprises, Inc. will become President of the new division.
Purchased Assets. The assets consist of the following:
a) all contracts of Farache including any licenses, bids,
engineering drawings, employee work product, or similar materials shall
be assigned to Iron Eagle at Closing.
b) all equipment of Farache relating to or arising out of the its
business.
c) all other tangible property owned and used by Farache in
connection with its business, including without limitation, inventory,
supplies, materials, and other personal property related to or used in
connection with the assets, including any furniture, computer hardware,
software, tools, spare parts, manuals, signage, forms, fixtures,
brochures, and sales, promotional and marketing materials;
e) all rights of Farache under non-disclosure or confidentiality,
non-compete, or non-solicitation agreements with employees and agents
of such Farache or with third parties to the extent relating to the
Assets
f) all permits (including business licenses), and pending
applications for permits used in, held for use in or intended to be
used in connection with the assets.
g) all rights and licenses and all copyrights, patents,
trademarks, trade names, service marks, trade dress, logos, domain name
registrations and applications, trade secrets, and other proprietary
rights of every kind and nature associated with or owned or used in
connection with the business, including the name Farache Enterprises,
Inc., together with all renewals, translations, adaptations,
derivatives and combinations thereof and all goodwill with respect
thereto.
h) All of Farache's goodwill and other intangible assets
associated with its business, including without limitation (i) all
permits, licenses, approvals, and authorizations of governmental or
regulatory authorities used or held for use in connection with the
business that are assignable by Farache; (ii) all lists of customers,
customer mailing lists, and customer files of the business; (iii) any
market studies, market surveys and/or customer surveys relating to the
business; and (iv) all of Farache's rights under any assumed contracts.
Excluded Assets. The following properties, assets, rights and
interests of Farache are expressly excluded from the purchase and sale:
a) Cash. All cash as of the Closing Date.
b) Accounts Receivable. All accounts receivable, costs in excess of
billings, and billings in excess of costs of Farache relating to or
arising out of the business as of the Closing Date
3
c) Taxes. All refunds, credits, or overpayments with respect to
taxes;
d) Other Assets. All advances to stockholders of Farache, advances
from stockholders of Farache, and life insurance policies.
e) Organizational Documents. All organizational documents, minute
books, and records which Seller is required by law to retain, subject
to Seller providing true and correct copies thereof to Iron Eagle at
the Closing; and
f) Transactions. All rights of Farache or Seller under this
Agreement or any document executed in connection herewith.
Assumed Liabilities. Iron Eagle is not assuming or agreeing to
pay or perform any debts, liabilities, accounts payable, billings in
excess of costs, accrued expenses, contracts, commitments or
obligations of Farache, regardless of whether such debt, liability,
contract, commitment or obligation accrued prior to, on, or after the
Closing if it was incurred prior to closing and regardless of when the
liability becomes known and accrued, including without limitation any
liabilities, claims, Liens or indebtedness relating to or arising out
of
(a) failure to pay or perform any obligation owed;
(b) federal, state, or local tax claims or liabilities;
(c) hiring, employment, contractual relationships with or
termination of staff, including without limitation any obligation or
liability of Farache in respect of accrued salaries, accrued profit
sharing or severance pay, or any obligation or unfunded liability
arising from any pension or other employee benefit plan;
(d) obligations or liabilities to customers, suppliers;
(e) environmental liabilities;
(f) health and safety liabilities;
(g) accounts payable, accrued expenses, or obligations under assumed
contracts other than assumed accounts payable; or
(h) any other debt, liability, contract, commitment or obligation
arising out of or in any manner incident, relating or attributable to
any fact, circumstance, event or occurrence relating to any period
prior to Closing, including without limitation the operation and
management of Farache prior to Closing. Seller shall fully pay,
perform and discharge all Farache liabilities when and as due in
accordance with their respective terms.
Purchase Price. The purchase price of $3,385,000 shall be
payable as follows:
a) Cash Consideration. $1,750,000 by wire transfer of immediately
available funds into an account designated by Seller at Closing,
b) Shareholder Note. $325,000 in the form of a shareholder's note
due in two years at an 8.0% interest rate, with interest payable no
less than semi-annually. The Shareholder Note will be subordinated to
1) other debt that might be obtained and 2) surety bonds, but missed
interest or principal payments will convert to a penalty rate of
interest (18.0%) if not paid upon their respective due date.
c) Equity Consideration. $650,000 shall be paid at 40 days after
Closing in Iron Eagle common shares based upon the thirty day volume
4
weighted average price of the Purchaser thirty days after the Closing
Date, pursuant to a 12 month lock up and a Board Approved leak out
provision.
d) Earn-out. $660,000 shall be paid in cash in equal installments of
$220,000 per year over a three year period. The earn-out shall be
based upon exceeding the below EBITDA targets for Farache
i) $1,800,000 EBITDA for year ending December 2010
ii) $2,200,000 EBITDA for year ending December 2011
iii) $2,500,000 EBITDA for year ending December 2012
EBITDA shall be defined as Earnings before Interest and Income Taxes
plus Depreciation and Amortization for the time periods referenced.
Conditions Precedent to Obligations of Iron Eagle. Iron Eagle's
obligation to pay the purchase price and consummate the acquisition of
the Purchased Assets shall be subject to the following conditions
precedent:
a) All consents, permits and approvals required from third parties
or governmental authorities for (i) the sale, transfer and assignment
of the Purchased Assets, (ii) the assignment of all assumed contracts,
and (iii) the continued validity and effectiveness of all assumed
contracts immediately after the Closing, shall have been duly obtained,
in form and substance reasonably satisfactory to Iron Eagle, and no
modification to any Assumed Contract shall have been made in connection
with the obtaining of such consents without the written consent of Iron
Eagle.
b) Iron Eagle shall have completed its due diligence review of the
business of Farache, the results of which shall be satisfactory to Iron
Eagle in its sole and absolute discretion.
c) Farache shall have delivered to Iron Eagle reviewed financials
for six month period ended June 30, 2010, audited financials for the
years ended 2008 and 2009, none of which shall be materially different
than the financials for this period presented to Iron Eagle from
Farache.
d) Iron Eagle shall have received adequate funding to consummate
this Agreement.
e) Iron Eagle shall have received approval from its board of
directors to consummate the transaction prior to Closing.
f) All representations and warranties of Seller made in or pursuant
to the Asset Purchase Agreement, any transaction document, or any other
document or instrument delivered to Iron Eagle hereunder shall be
correct and complete in all material respects on and as of the Closing
Date as if made on and as of that date, Seller shall have complied in
all material respects with all of their obligations under the Asset
Purchase Agreement, all exhibits shall have been satisfactorily
completed and there shall not have been any material error,
misstatement or omission in any exhibit, statement or other document
delivered in connection herewith.
g) No suit, action, or proceeding shall be pending or threatened
before any court or governmental agency seeking to restrain, prohibit
or obtain damages or other relief in connection with the Asset Purchase
Agreement or the consummation of the transactions contemplated herein,
there shall not be in effect any statute, rule or regulation which
5
makes it illegal for Iron Eagle to consummate the transactions
contemplated hereby or any order, decree or judgment which enjoins Iron
Eagle or any Seller from consummating the transactions contemplated
hereby, and there shall have been no investigation or inquiry made or
commenced by any governmental agency in connection with this Agreement
or the transactions contemplated herein.
h) During the period from the date of the Asset Purchase Agreement
to the Closing Date, there shall have been no material adverse change,
either individually or in the aggregate, in the general affairs,
business, prospects, Assets, financial position, or operations of the
Farache's business. Seller will notify the Iron Eagle of any adverse
or material change in the business as soon as it is known by the Seller
or Farache.
Iron Eagle may waive in writing any condition precedent contained
herein and, upon the exercise of such right of waiver, the transactions
contemplated hereby shall be consummated in accordance with the terms
contained in this Agreement as modified by said writing.
Conditions Precedent to Obligations of Seller. Seller's
obligation to consummate the purchase of the Purchased Assets shall be
subject to the following conditions precedent:
a) Compliance with Asset Purchase Agreement. Iron Eagle shall have
performed and complied in all respects with all of its obligations
under the Asset Purchase Agreement which is to be performed or complied
with by Iron Eagle prior to or on the Closing Date.
b) Representations, Warranties and Covenants. All representations
and warranties of Iron Eagle made in or pursuant to the Asset Purchase
Agreement, any transaction document, or any other document or
instrument delivered to Seller hereunder shall be correct and complete
in all material respects on and as of the Closing Date as if made on
and as of that date, Iron Eagle shall have complied in all material
respects with all of their obligations under the Asset Purchase
Agreement and there shall not have been any material error,
misstatement or omission in any statement or other document delivered
in connection herewith. At the signing of the Asset Purchase Agreement
and through Closing, Iron Eagle shall be in full compliance with all
required Securities and Exchange Commission and financial reporting
regulations.
c) Third-Party Action. No action, proceeding, investigation,
inquiry or objection by any governmental authority or other person
shall have been instituted or threatened which could enjoin, restrain
or prohibit, or could result in substantial damages in respect of, any
provision of the Asset Purchase Agreement or the consummation of the
transactions contemplated thereby.
d) During the period from the date hereof to the Closing Date, there
shall have been no material adverse change, either individually or in
the aggregate, in the general affairs, business, prospects, assets,
financial position, or operations of Iron Eagle's business. Iron Eagle
will notify the Seller of any adverse or material change in the
business as soon as it is known by the Iron Eagle.
6
Seller may waive in writing any condition precedent contained herein
and, upon the exercise of such right of waiver, the transactions
contemplated hereby shall be consummated in accordance with the terms
contained in this Agreement as modified by said writing.
Termination. a) The Asset Purchase Agreement may be terminated
by either Iron Eagle or the Seller at any time prior to Closing if that
party, in its good faith judgment, determines that there is any
inaccuracy or incompleteness in any representation or breach of any
warranty contained herein, or any failure of the offending party to
perform or satisfy, or cause to be performed or satisfied, any of the
terms or conditions of this Agreement or any other transaction
document, or any error, misstatement or omission with regard to any of
the exhibits, information or other documents referred to, or if Iron
Eagle, in its sole judgment, is not satisfied with the contents of any
of the exhibits, information or documents, or with the results of its
investigation of Farache's business and assets.
b) The Asset Purchase Agreement may be terminated at any time prior
to the Closing: (a) by mutual written consent of Iron Eagle and Seller;
or (b) by either Iron Eagle or Seller, if the Closing shall not have
occurred on or prior to 75 days from the signing of the Asset Purchase
Agreement (or such later date as shall have been consented to by all
parties hereto), unless failure of such occurrence shall be due to the
failure of the party seeking to terminate the Asset Purchase Agreement
to perform or observe any agreements and conditions to be performed or
observed by such party or to use its reasonable efforts to obtain any
third party consents or actions required as a condition to Closing.
c) If the Asset Purchase Agreement has not been terminated and the
Closing shall not have taken place on or prior to 90 days after the
Asset Purchase Agreement has been signed, the Asset Purchase Agreement
shall automatically terminate.
d) Should Iron Eagle decide to terminate the Asset Purchase
Agreement due to either (i) a failure to secure adequate financing
based on reasonable terms, (ii) a financial or operational concern
raised during due diligence that is immaterial to the future
performance of Farache and/or the post-transaction combined entity
based on the reasonable judgment of Iron Eagle, or (iii) any other
reason not in good faith compliance with the spirit of the Asset
Purchase Agreement, Iron Eagle will reimburse Seller upon termination
an amount equal to one-half (1/2) of expenses incurred in obtaining the
2008 and 2009 audits and reviewed six (6) months 2010 financial
statements, subject to a maximum amount of ten thousand dollars
($10,000). Such reimbursement must be made to Seller within thirty
(30) days of Iron Eagle's written termination of the Asset Purchase
Agreement. No such reimbursement is required if the Seller decides not
to move forward and close upon the existing terms of the Asset Purchase
Agreement.
7
Post Closing Obligations
a) Names. As soon as practicable following the Closing Date, Seller
will assist Iron Eagle in obtaining the full and exclusive right to use
such name(s) in connection with its business and the Purchased Assets.
b) Further Assurances. Following the Closing Date, Sellers shall, for
no further consideration, perform all such other actions and execute
and deliver, or cause to be executed and delivered, such further
assignments, transfers, instruments, certificates and other documents
as Iron Eagle or its counsel may reasonably request to vest in Iron
Eagle full and complete title to and protect Iron Eagle's rights, title
and interest in and to Farache's business and the Purchased Assets and
to affirm and protect Iron Eagle's rights and interests under the Asset
Purchase Agreement.
c) The cost of the 2008 and 2009 audit, as well as the 2010 review,
shall be the responsibility of Seller; however, all such costs, up to a
maximum of twenty thousand dollars ($20,000) shall be reimbursed by
Iron Eagle at the Closing Date.
d) Survival of Representations, Warranties, and Agreements. The
representations, warranties, and agreements contained in the Asset
Purchase Agreement and the other transaction documents shall expire on
the first anniversary of the Closing Date except that (i) Seller's
obligation to pay, perform and discharge all Farache liabilities shall
survive indefinitely; (ii) the representations and warranties contained
in Article 2 of the Asset Purchase Agreement and the exhibits
referenced therein shall survive the Closing and shall remain in full
force and effect until expiration of the statute of limitations period
applicable to the subject matter thereof (or, if a claim has been
asserted prior to such expiration, until after the date of its final
resolution), and (iii) if a claim or notice is given under Section 4.06
(Indemnification) of the Asset Purchase Agreement with respect to any
representation, warranty, covenant or agreement prior to the applicable
expiration date, such representation, warranty, covenant or agreement
shall continue indefinitely until the applicable claim is finally
resolved.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
Exhibits
No. Description
10-1 Farache Asset Purchase Agreement dated August 24, 2010
99-1 Press release dated July 24, 2010
99-2 Financial Statements of Farache - to be filed by
amendment
8
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Current Report on Form 8-K to be
signed on its behalf by the undersigned hereunto duly authorized.
Iron Eagle Group, Inc.
By: /s/ Michael E. Bovalino
------------------------
Michael E. Bovalino
Chief Executive Officer
Dated: September 2, 2010
