AGREEMENT AND PLAN OF SHARE EXCHANGE
by and among
UNIVERSAL GUARDIAN HOLDINGS, INC.,
a Delaware corporation,
and its wholly owned subsidiary,
SECURE RISKS LTD,
a limited liability company
registered in England and Wales
on the one hand;
and the
SHAREHOLDERS
of
STRATEGIC SECURITY SOLUTIONS INTERNATIONAL LTD.,
a limited liability company
registered in England and Wales
on the other hand
Dated as of June 28, 2004
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This AGREEMENT AND PLAN OF SHARE EXCHANGE (this "Agreement") is made and
entered into as of June 28, 2004, by and among Universal Guardian Holdings,
Inc., a publicly traded Delaware corporation ("UGHO"), and Secure Risks Ltd, a
limited liability company registered in England and Wales and wholly owned
subsidiary of UGHO ("Secure Risks"), on the one hand, and each of the
shareholders of Strategic Security Solutions International Ltd., a limited
liability company registered in England and Wales ("SSSI"), listed on Schedule I
hereto (the "Shareholders"), on the other hand, and is made with reference to
the following:
RECITALS
A. This Agreement provides for (i) the acquisition by Secure Risks of all
of the issued and outstanding shares of capital stock of SSSI (collectively, the
"SSSI Shares"), such that SSSI shall become a wholly owned subsidiary of Secure
Risks; and in exchange therefor (ii) the issuance by UGHO at the Closing of an
aggregate of _4,101,494 shares of restricted Common Stock of UGHO (collectively,
the "Tranche I Shares") to the Shareholders, plus additional shares of UGHO
Common Stock based on the value of certain pending contracts of SSSI executed
after the Closing.
B. The board of directors and shareholders of SSSI and the board of
directors of UGHO and Secure Risks have determined, subject to the terms and
conditions set forth in this Agreement, that the transactions contemplated
hereby are desirable and in the best interests of the parties hereto.
C. The parties to this Agreement desire that the transactions contemplated
by the provisions of this Agreement satisfy the requirements of Section
368(a)(1)(B) of the United States Internal Revenue Code of 1986, as amended, and
the regulations promulgated pursuant thereto.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and the mutual benefits to the parties to be derived
herefrom, it is hereby agreed as follows:
ARTICLE I
SHARE EXCHANGE; CLOSING; ESCROW;
VOTING RIGHTS; POST-CLOSING ISSUANCE OF UGHO SHARES
SECTION 1.1 SHARE EXCHANGE/DELIVERY OF SSSI SHARES. At the Closing, the
Shareholders shall deliver to Secure Risks certificates or other documents
evidencing the full legal and beneficial interest in and title to the SSSI
Shares (and any other outstanding security of SSSI, including, but not limited
to, options warrants, conversion rights or other equity interests), duly
endorsed in blank , together with duly executed stock transfer forms
transferring the SSSI Shares such that SSSI shall become a wholly owned
subsidiary of Secure Risks as of the Closing.
SECTION 1.2 ISSUANCE OF TRANCHE I SHARES; ESCROW AGENT. In exchange for
the SSSI Shares, and any other securities of SSSI delivered to Secure Risks
pursuant to Section 1.1 above, at the Closing, UGHO shall issue an aggregate of
4,101,4941 restricted shares of UGHO Common Stock to the Shareholders, with each
Shareholder to receive the number of Tranche I Shares set forth opposite such
Shareholder's name on Schedule I hereto. Such shares shall be restricted in
accordance with Rule 144 of the Securities Act of 1933. UGHO shall instruct its
transfer agent to deliver certificates representing 50% of the Tranche I Shares
(the "Tranche I Escrow Shares") to Xxxxxxxxxx & Xxxxx LLP (the "Escrow Agent")
at the Closing in accordance with the terms and conditions of an Escrow
Agreement in the form attached hereto as Exhibit A (the "Escrow Agreement"). At
the Closing, each Shareholder shall deliver to the Escrow Agent a duly executed
stock power in transferable form in the form attached hereto as Exhibit B, with
signature medallion guaranteed or accompanied by an apostille, to accompany such
Shareholder's Tranche I Escrow Shares.
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1 SSSI's current annualized revenue, excluding extraordinary sales or revenues
and assuming an EBITDA of at least 20%, divided by the average VWAP of UGHO's
Common Stock for the 5 trading days immediately preceding the Closing Date.
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SECTION 1.3 CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at 7:00 a.m. Pacific Time at the
offices of Xxxxxxxxxx & Xxxxx LLP, 00000 Xxxxxxxx Xxxx, Xxxxx 000, Xxx Xxxxxxx,
Xxxxxxxxxx on the date of this Agreement, or on such other date as may be
mutually agreed upon by the parties (the "Closing Date").
SECTION 1.4 ADDITIONAL SHARES OF UGHO FOR SSSI CONTRACTS.
(a) In addition to the Tranche I Shares (net of the number of Rescinded
Shares, if any), UGHO shall issue to the Shareholders, on a pro rata basis, no
later than 15 days after the Audit Report Date, a number of restricted shares of
UGHO Common Stock equal to 100% of the revenue value of each contract duly
executed, delivered and fully pre-paid to SSSI within 30 days of the Closing
Date, divided by the average Volume Weighted Average Price (VWAP) of UGHO's
Common Stock for the 5 trading days immediately preceding the date of such
pre-payment in full to SSSI (the "Tranche II Shares"). UGHO shall instruct its
transfer agent to deliver certificates representing 50% of the Tranche II Shares
(the "Tranche II Escrow Shares") to the Escrow Agent in accordance with the
Escrow Agreement. Each Shareholder shall deliver to the Escrow Agent a duly
executed stock power in transferable form in the form attached hereto as Exhibit
B, with signature medallion guaranteed or accompanied by an apostille, to
accompany such Shareholder's Tranche II Escrow Shares.
(b) In addition to the Tranche I Shares and the Tranche II Shares (net of
the number of Rescinded Shares, if any), UGHO shall issue to the Shareholders,
on a pro rata basis, a number of restricted shares of UGHO Common Stock equal to
80% of the monthly EBITDA received by SSSI from each pending contract described
on Schedule 1.4(b) hereto that is duly executed and delivered to SSSI following
the 30th day after the Closing Date, divided by the average VWAP of UGHO's
Common Stock for the 5 trading days immediately preceding the date such contract
is fully executed and delivered to SSSI (the "Tranche III Shares"); provided,
however, that UGHO shall not be obligated to issue any Tranche III Shares prior
to the 15th day following the Audit Report Date. UGHO shall instruct its
transfer agent to deliver certificates representing 50% of the Tranche III
Shares (the "Tranche III Escrow Shares") to the Escrow Agent in accordance with
the Escrow Agreement. Each Shareholder shall deliver to the Escrow Agent a duly
executed stock power in transferable form in the form attached hereto as Exhibit
B, with signature medallion guaranteed or accompanied by an apostille, to
accompany such Shareholder's Tranche III Escrow Shares.
The "Audit Report Date" shall be the date of the audit report prepared by
UGHO's independent auditor regarding SSSI's financial statements.
SECTION 1.5 RESCISSION OF ESCROW SHARES. UGHO shall have the right, at its
sole option, to rescind and cancel some or all of the Escrow Shares if and to
the extent either or both of the following occur:
(a) The annualized revenue of SSSI as of the Closing Date, excluding
extraordinary sales or revenues and assuming EBITDA of at least 20%, as verified
by UGHO's independent auditor following the Closing, is less than that reflected
in the SSSI Unaudited Financial Statements (as defined in Section 3.5). The
number of Escrow Shares subject to such rescission and cancellation shall be
equal to the percentage difference between the audited and unaudited numbers
multiplied by the total number of Escrow Shares then held by the Escrow Agent.
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(b) UGHO notifies the Shareholders within 12 months from the date of this
Agreement that it reasonably believes it or Secure Risks has a claim against the
Shareholders for breach of the Shareholders' representations, warranties or
covenants made in this Agreement, or for indemnification as provided by the
Shareholders in this Agreement or for any claim pursuant to the Tax Indemnity
referred to at Section 5.5 herein or the Confidentiality and Non Competition
Agreement referred to at Section 5.6 herein, and either UGHO or Secure Risks
files a claim against the Shareholders in connection with such alleged breach or
indemnity within 18 months from the date of this Agreement. The number of Escrow
Shares subject to such rescission and cancellation shall not exceed the amount
awarded to UGHO or Secure Risks in a final judgment of its claim against the
Shareholders divided by the average VWAP of UGHO's Common Stock for the 10
trading days immediately preceding the date of such final judgment. Nothing in
this Section 1.54(b) or elsewhere in this Agreement shall be deemed to restrict
any other rights or remedies that UGHO or Secure Risks may have, whether
pursuant to this Agreement or otherwise.
Any and all shares rescinded pursuant to this Section 1.5 are referred to
collectively herein as the "Rescinded Shares".
SECTION 1.6 RELEASE OF ESCROW SHARES. Subject to the terms and conditions
of the Escrow Agreement and Section 1.5 above, all the Escrow Shares (net of any
Rescinded Shares) shall be released to the Shareholders, free and clear of all
encumbrances, save for a number of shares to equal 25% of the actual aggregate.
(these to be known as the "indemnity shares") 15 days after the Audit Report
Date. The "Audit Report Date" shall be the date of the audit report prepared by
UGHO's independent auditor regarding SSSI's financial statements. This date
shall not be later than 60 days from the date of closing. The "indemnity shares"
shall be released to the Shareholders, free and clear of all encumbrances, no
later than 12 months and one day from the date of this Agreement if UGHO does
not notify the Shareholders of a claim as provided under Section 1.5(b), or in
the case of a claim by UGHO no later than 15 days following the date of final
judgment of such claim.
SECTION 1.7 VOTING RIGHTS IN RESPECT OF ESCROW SHARES. The Shareholders
shall not be entitled to exercise any of the voting rights in respect of the
Escrow Shares upon or after the Closing, until or unless the Escrow Shares are
unconditionally transferred by the Escrow Agent to the Shareholders in
accordance with the terms of this Agreement and the Escrow Agreement.
SECTION 1.8 RIGHTS IN RESPECT OF SSSI SHARES. The Shareholders hereby
waive any rights of pre-emption with respect to:
(a) the issue and transfer of the SSSI Shares prior to Closing ; and
(b) the transfer of the SSSI Shares to Secure Risks at Closing.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF UGHO
As an inducement to and to obtain the reliance of the Shareholders, UGHO
represents and warrants as follows:
SECTION 2.1 ORGANIZATION. UGHO is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware and has
the corporate power and is duly authorized and qualified under all applicable
laws, regulations, ordinances and orders of public authorities to own all of its
properties and assets and to carry on its business in all material respects as
it is now being conducted, including qualification to do business as a foreign
corporation in any jurisdiction in which the character and location of the
assets owned by it or the nature of the business transacted by it require
qualification.
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SECTION 2.2 CAPITALIZATION. The authorized capitalization of UGHO consists
of (i) 50,000,000 shares of Common Stock, par value $0.001 per share ("UGHO
Common Stock"), of which 30,793,123 shares are issued and outstanding or
issueable as of the date hereof, and (ii) 5,000,000 shares of Series A
Convertible Preferred Stock, 600 shares of which are issued and outstanding as
of the date hereof. If and/or when issued, the Tranche I Shares, the Tranche II
Shares and the Tranche III Shares will be validly issued, fully paid and
non-assessable, subject to the Escrow Agreement and Section 1.5 hereof.
SECTION 2.3 AUTHORITY. UGHO has full power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized and approved by the
Board of Directors of UGHO and no other corporate or other proceedings on the
part of UGHO are necessary to authorize this Agreement or the transactions
contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS
As an inducement to, and to obtain the reliance of UGHO and Secure Risks,
the Shareholders represent and warrant, jointly and severally, as follows:
SECTION 3.1 ORGANIZATION. SSSI is duly organized, validly existing and in
good standing under the laws of the United Kingdom, and has the corporate power
and is duly authorized and qualified under all applicable laws, regulations,
ordinances and orders of public authorities to own all of its properties and
assets and to carry on its business in all material respects as it is now being
conducted, including qualification to do business as a foreign corporation in
any jurisdiction in which the character and location of the assets owned by it
or the nature of the business transacted by it requires qualification. Schedule
3.1 sets forth complete and correct copies of the Memorandum and Articles of
Association of SSSI as in effect on the date hereof. The execution, delivery and
performance of this Agreement do not and the consummation of the transactions
contemplated by this Agreement in accordance with the terms hereof will not,
violate any provision of any agreement, instrument or order of any court or
other government agency to which any Shareholder or such Shareholder's assets
are bound.
SECTION 3.2 CAPITALIZATION. The authorized and issued share capital of
SSSI is as set out in Schedule 1 hereto. The Shareholders are the sole
beneficial and record owners of the SSSI Shares, and the Shareholders have the
unqualified right to transfer and dispose of the SSSI Shares, free and clear of
any liens, charges or encumbrances of any kind. All of the issued and
outstanding shares of capital stock of SSSI are held of record by the
Shareholders, are validly issued, fully paid and non-assessable, and are not
issued and have not been transferred in violation of the preemptive or other
rights of any person. There are no stockholders agreements, voting agreements or
other similar agreements with respect to SSSI's capital stock to which SSSI or
any of the Shareholders is a party.
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SECTION 3.3 OPTIONS AND WARRANTS. There are no outstanding options,
warrants, calls, convertible securities, or rights of any kind to acquire any
securities of SSSI.
SECTION 3.4 SUBSIDIARIES AND INVESTMENTS. SSSI does not own, directly or
indirectly, any capital stock or have any interest in any corporation,
partnership or other form of business organization.
SECTION 3.5 FINANCIAL STATEMENTS. Schedule 3.5 sets forth (i)a copy of the
filed statutory unaudited accounts of SSSI for the year ended 31 March 2004,
including the directors' report, statement of profits and losses and balance
sheet of SSSI as at 31 March 2004. (ii) a copy of the unaudited accounts of SSSI
operation conducted via SSSI BVI (Ltd) for the twelve month period ended 31
March 2004. (iii) a copy of the unaudited accounts of TAG24 for the twelve month
period ended 31 March 2004 (collectively, the "SSSI Unaudited Financial
Statements"). The SSSI Unaudited Financial Statements (a) are complete and
correct to the best of the knowledge of the shareholders. It is the belief of
the shareholders that these statements provide a true and accurate view of the
state of affairs of the Group and its profits as of the relevant dates thereof
and for the periods covered thereby; (b) were prepared in accordance with all
current Statements of Standard Accounting Practice and Financial Reporting
Standards applicable to a company registered in England and Wales and with the
requirements of the United Kingdom Companies Xxx 0000 and all other applicable
legislation consistently applied throughout the periods indicated, (c) were not
affected by any extraordinary, exceptional or non-recurring item; and (d) fairly
and accurately present the financial condition and results of operations of SSSI
and each of its subsidiaries, if any, as of the relevant dates thereof and for
the periods covered thereby.
SECTION 3.6 CONTRACTS AND UNDERTAKINGS. Schedule 3.6 lists all of the
contracts, agreements, leases, arrangements, commitments or other undertakings
(collectively, the "Contracts") to which SSSI is a party or to which each of
them or their respective properties are subject. SSSI is not in default under
any of its Contracts and, to SSSI's and the Shareholders' best knowledge, after
due inquiry, no other party to any Contract is in default thereunder nor, to
SSSI's and the Shareholders' best knowledge, does there exist any condition or
event which, after notice or lapse of time or both, would constitute a default
by any party to any such Contract.
SECTION 3.7 LIABILITIES. All of the liabilities and obligations of any
nature whatsoever, whether known or unknown, contingent or absolute, matured,
unmatured or otherwise, including, without limitation, any liabilities with
respect to the payment of any country, federal, state, county, local or other
taxes (including any deficiencies, interest or penalties), of SSSI as of the
date hereof are accurately described in detail and quantified (both individually
and in the aggregate) in the SSSI Unaudited Financial Statements. Other than
detailed in Schedule Two, there are no liabilities whatsoever outstanding from
SSSI to the Shareholders, and no outstanding claims against SSSI by any of the
Shareholders, and each of the Shareholders hereby waives any rights it may have
to make claim on SSSI with respect to any matter.
SECTION 3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 31, 2004:
(a) SSSI has not: (i) amended its Memorandum and Articles of
Association; (ii) waived any rights of value which individually or in the
aggregate are material considering the business of SSSI; or (iii) made any
accrual or arrangement for or payment of bonuses or special compensation of any
kind or any severance or termination pay to any present or former officer or
employee;
(b) SSSI has not: (i) granted or agreed to grant any options,
warrants or other rights for its certificates, bonds or other corporate
securities calling for the issuance thereof, which option, warrant or other
right has not been canceled as of the Closing Date; (ii) borrowed or agreed to
borrow any funds or incurred or become subject to, any material obligation or
liability (absolute or contingent) except liabilities incurred in the ordinary
course of business;
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(c) SSSI has not become subject to any law or regulation that
materially and adversely affects, or in the future may adversely affect, the
business, operations, properties, assets or financial condition of SSSI.
(d) SSSI has carried on its business in the ordinary and normal
course at a profit and there has been no deterioration in its turnover or its
financial position or prospects.
(e) No material changes have occurred in the assets or liabilities
of SSSI as shown in the SSSI Unaudited Financial Statements and there has been
no reduction in the value of the net tangible assets of the Company on the basis
of the valuations adopted for the purposes of the SSSI Unaudited Financial
Statements.
SECTION 3.9 TITLE AND RELATED MATTERS.SSSI has good and marketable title
to and is the sole and exclusive owner of all of its properties, inventory,
interests in properties and assets, real and personal, tangible and intangible,
free and clear of all liens, pledges, charges or encumbrances.
SECTION 3.10 LITIGATION AND PROCEEDINGS. Except as set forth on Schedule
3.10, there are no actions, suits, proceedings or investigations pending or, to
SSSI's and the Shareholders' best knowledge, threatened by or against SSSI,
affecting SSSI or its properties, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign or before any
arbitrator of any kind that would have a material adverse affect on the
business, operations or financial condition of SSSI.
SECTION 3.11 NO CONFLICT WITH OTHER INSTRUMENTS. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in the breach of any term or provision of,
or constitute an event of default under, or cause the acceleration of any of
SSSI's obligations under, any of the Contracts.
SECTION 3.12 AUTHORIZATIONS; PERMITS; LICENSES. SSSI has all licenses,
franchises, permits or other governmental authorizations legally required to
enable SSSI to conduct its business as conducted on the date hereof. Except for
compliance with federal and state securities and corporation laws, as
hereinafter provided, no authorization, approval, consent or order of, or
registration, declaration or filing with, any court or other governmental body
is required in connection with the execution, delivery and performance by SSSI
and the Shareholders of this Agreement and the consummation by SSSI and the
Shareholders of the transactions contemplated hereby.
SECTION 3.13 COMPLIANCE WITH LAWS AND REGULATIONS. SSSI has complied with
all applicable statutes and regulations of any federal, state or other
governmental entity or agency thereof, except to the extent that noncompliance
would not materially and adversely affect the business, operations, properties,
assets or financial condition of SSSI or would not result in SSSI incurring any
material liability.
SECTION 3.14 AUTHORITY. Each of SSSI and the Shareholders has full power
and authority to enter into this Agreement and to carry out the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
and approved by all of the Shareholders and the board of directors of SSSI and
no other corporate or other proceedings on the part of SSSI or the Shareholders
are necessary to authorize this Agreement and the transactions contemplated
hereby.
SECTION 3.15 INFORMATION. The information concerning SSSI as set forth in
this Agreement is complete and accurate in all material respects and does not
contain any untrue statement of a material fact or omit to state a material fact
required to make the statements made, in light of the circumstances under which
they were made, not misleading.
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SECTION 3.16 SECURITIES LAWS. The Shareholders acknowledge that the
Tranche I Shares, the Tranche II Shares and the Tranche III Shares, if any
(collectively, the "Shares") are not being registered under the Securities Act
of 1933, as amended (the "Securities Act"), on the ground that the offer and
sale of the Shares are exempt from the registration provisions of Section 5 of
the Securities Act pursuant to Section 4(2) thereof, as transactions by an
issuer not involving any public offering, and/or may be deemed not to involve an
offer or sale within the meaning of Section 5 of the Securities Act pursuant to
Regulation D promulgated thereunder, and that the shares being delivered
pursuant hereto may not be resold in any transaction subject to Section 5 of the
Securities Act unless registered or an exemption from registration is available
for such sale, and that the certificates representing the Shares will bear
substantially the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER XXXXXXX 0 XX XXX XXXXXX XXXXXX SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR REGISTERED OR QUALIFIED UNDER THE SECURITIES
LAWS OF ANY STATE OR TERRITORY OF THE UNITED STATES, IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION OR QUALIFICATION AFFORDED BY SUCH SECURITIES
LAWS, AND HAVE BEEN ACQUIRED BY THE HOLDER FOR INVESTMENT PURPOSES ONLY.
THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED,
OR OFFERED FOR SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION, WITHIN THE
UNITED STATES OR ANY OF ITS TERRITORIES OR TO A UNITED STATES PERSON,
UNLESS (I) THE SECURITIES ARE REGISTERED UNDER SECTION 5 OF THE SECURITIES
ACT, OR (II) THE PROPOSED TRANSACTION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES ACT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE LEAK-OUT
PROVISION SET FORTH IN SECTION 4.1 OF THAT CERTAIN SHARE EXCHANGE
AGREEMENT BY AND AMONG UNIVERSAL GUARDIAN HOLDINGS, INC., THE HOLDER
HEREOF, AND THE OTHER SHAREHOLDERS NAMED THEREIN."
SECTION 3.17 ACQUISITION FOR INVESTMENT. The Shareholders are acquiring
the Shares for investment and not with a view to or for sale in connection with
any distribution thereof.
SECTION 3.18 INTELLECTUAL PROPERTY.
(a) SSSI owns or possesses sufficient legal rights to all patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information, designs, computer software, know-how and proprietary rights and
processes necessary for its business as now conducted and as proposed to be
conducted without any conflict with, or infringement of the rights of, other
persons. SSSI is not a party to any opposition relating to the intellectual
property of any other person.
(b) Schedule 3.18(b)(i) contains a complete list of all patents,
trademarks, service marks and copyrights, and pending applications with respect
thereto, owned by SSSI. All intellectual property of SSSI is owned by SSSI free
and clear of all challenges, liens and encumbrances. From SSSI's inception,
there have been no challenges to SSSI's ownership rights in their respective
intellectual properties. Schedule 3.18(b)(ii) contains a complete list of all
patents, trademarks, service marks and copyrights, and pending applications with
respect thereto, licensed to SSSI (collectively, the "Licensed Intellectual
Property"). Except as set forth in Schedule 3.18(b)(ii), all of the Licensed
Intellectual Property is exclusively licensed to SSSI for all uses necessary for
SSSI's business, as now conducted and as proposed to be conducted. SSSI is not
in material breach of any agreement relating to Licensed Intellectual Property.
SSSI and the Shareholders are not aware of any third party infringing or
otherwise violating its intellectual property. Schedule 3.18(b)(iii) contains a
complete list of all agreements under which SSSI is licensed or is otherwise
permitted, or licenses or otherwise permits a third party, to use any of its
respective intellectual properties. To SSSI's and the Shareholders' best
knowledge, SSSI's business as now conducted and as proposed to be conducted does
not infringe, or conflict with, any patents, trademarks, services marks, trade
names, copyrights, trade secrets or other proprietary rights or processes of any
other person. Except as set forth in Schedule 3.18(b)(iv), SSSI has not received
any notice or claim, written or oral, that its business as now conducted or as
proposed to be conducted infringes, or conflicts with, any patents, trademarks,
service marks, trade names, copyrights, trade secrets or other proprietary
rights or processes of any other person. Any and all patents issued to SSSI are
valid and enforceable.
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SECTION 3.19 EMPLOYEES; EMPLOYEE BENEFIT PLANS.
(a) Schedule 3.19(a) sets forth a complete and accurate list of all the
employees of SSSI as of the Closing Date, including each employee's age, current
salary and commencement date of service.
(b) Except as set forth on Schedule 3.19(b), SSSI does not have any
pension plan, profit sharing plan or employees' savings plan, or other employee
benefit plan.
SECTION 3.20 INSURANCE. Schedule 3.20 contains a description of each
insurance policy maintained by SSSI (or which names SSSI as an additional
insured) with respect to its properties, assets and business, or with respect to
the lives of any of the Shareholders, and each such policy is in full force and
effect on the date hereof. SSSI is not in default with respect to any insurance
policy maintained by it, and, to SSSI's and the Shareholders' knowledge, there
is no default with respect to any insurance policy that names SSSI as an
additional insured.
SECTION 3.21 DISCLOSURE. All information which has been given by the
Shareholders or their professional advisers or any officers or employees of SSSI
to UGHO and/or Secure Risks in the course of the negotiations leading to this
Agreement was when given, is now, and will at the Closing be true and accurate
in all respects. All facts and information concerning SSSI and the SSSI Shares
material for disclosure to an intending purchaser have been disclosed to UGHO
and/or Secure Risks.
ARTICLE IV
SPECIAL COVENANTS
SECTION 4.1 LEAK OUT. Following the Closing, notwithstanding any future
registration of the Shares, the Shareholders, as a group, shall not sell during
any fiscal quarter of UGHO more than 1% of the number of outstanding shares of
UGHO Common Stock as reported in UGHO's most recent periodic report filed with
the U.S. Securities and Exchange Commission.
SECTION 4.4 INDEMNIFICATION.
(a) The Shareholders hereby agree, jointly and severally, to
indemnify UGHO, Secure Risks and each of their respective subsidiaries and the
officers, directors, agents and representatives directors of UGHO, Secure Risks
and each of their respective subsidiaries against any loss, liability, claim,
damage or expense (including, but not limited to, any and all expenses
whatsoever reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever) to which it or
they may become subject arising out of or based on any breach of or inaccuracy
in any of the representations and warranties made by the Shareholders herein or
any misrepresentation made by the Shareholders in this Agreement. The
indemnification provided for in this paragraph shall survive the Closing .
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(b) The Shareholders hereby agree to indemnify UGHO and Secure Risks
against any and all debts, liabilities and obligations of SSSI (whether
contingent or otherwise) existing or arising on or before the date of this
Agreement that were not specifically disclosed in the SSSI Unaudited Financial
Statements. Following the Closing, the Shareholders agree to pay any and all
such pre-existing debts, liabilities and obligations when and as such
liabilities and obligations are discovered or become due, upon demand made by
UGHO and/or Secure Risks.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF UGHO
The obligations of UGHO and Secure Risks under this Agreement are subject
to the satisfaction, at or before the Closing, of the following conditions:
SECTION 5.1 SHAREHOLDER AND DIRECTOR APPROVAL. The board of directors of
UGHO, Secure Risks, SSSI and all of the Shareholders shall have duly approved
this Agreement and the transactions contemplated hereby and the Board of
Directors of SSSI shall have transacted the business set out in the draft board
minutes annexed hereto as Exhibit C.
SECTION 5.2 ESCROW AGREEMENT. Each of the Shareholders and the Escrow
Agent shall have duly executed the Escrow Agreement and delivered to UGHO an
executed stock power for such Shareholder's pro rata portion of the Tranche I
Escrow Shares.
SECTION 5.3 EMPLOYMENT AGREEMENTS. Each of the persons named below shall
have duly executed an Agreement with Secure Risks , substantially in the form of
the Exhibit hereto listed opposite such person's name below:
Xxxxx Braes Exhibit D - Employment Agreement
Xxxx Xxxxx Exhibit E -Employment Agreement
Xxxxxxxx Xxxx Exhibit F - Independent Contractor Agreement
Xxx Xxxxxxx Exhibit G - Independent Contractor Agreement
Xxxx Xxxxxxx Exhibit H - Independent Contractor Agreement
SECTION 5.4 SSSI BOARD OF DIRECTORS. Xxxxx Braes Xxxx, Xxx Xxxxxxx
Xxxxxxx, and Xxxxxxx Xxxxxxx Xxxx shall have delivered their contingent written
resignations as directors of SSSI to SSSI and Xxxxxxx Xxxxxxxx and Xxxxxxx
Xxxxxxxx shall be appointed as directors of SSSI , which resignations and
appointments shall be effective as of the Closing. As of the Closing, the entire
board of directors of SSSI shall consist as follows:
10
Xxxxx Braes
Xxxx Xxxxx
Xxxxxxx Xxxxxxxx
Xxxxxxx Xxxxxxxx
SECTION 5.5 TAX INDEMNITY. The Shareholders shall have duly executed the
Tax Indemnity in the form of Exhibit J hereto.
SECTION 5.6 CONFIDENTIALITY AND NON-COMPETITION AGREEMENT. Each of the
Shareholders shall have duly executed and delivered to Secure Risks the
Confidentiality and Non-Competition Agreement in the form of Exhibit I hereto.
SECTION 5.6 POWER OF ATTORNEY. Each of the Shareholders shall have duly
executed a Power of Attorney in the form of Exhibit K hereto enabling Secure
Risks to exercise voting rights with respect to the SSSI Shares prior to the
registration of Secure Risks as the holder of the SSSI Shares in SSSI's register
of shareholders.
SECTION 5.7 WAIVER OF CLAIMS. The Board of Directors of Strategic Security
Solutions International Ltd, a company incorporated in the British Virgin
Islands ("BVICO") shall have signed a letter in the form of Exhibit L hereto
confirming that BVICO does not have any claims with respect to the SSSI Shares
or otherwise relating to SSSI.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SHAREHOLDERS
The obligations of the Shareholders under this Agreement are subject to
the satisfaction, at or before the Closing (unless otherwise indicated herein),
of the following conditions:
SECTION 6.1 DIRECTOR APPROVAL. The board of directors of UGHO and Secure
Risks shall have approved this Agreement and the transactions contemplated
hereby.
SECTION 6.2 EMPLOYMENT AGREEMENTS. Secure Risks shall have duly executed
an Employment Agreement with each of the persons named in Section 5.3 above.
SECTION 6.3 ESCROW AGREEMENT. UGHO, Secure Risks and the Escrow Agent
shall have duly executed the Escrow Agreement.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 BROKERS AND FINDERS. Each party hereto hereby represents and
warrants that, except as set forth on Schedule 7.1, such party is under no
obligation, express or implied, to pay any commission, brokerage or finder's
fees in connection with the bringing of the parties together in the negotiation,
execution, or consummation of this Agreement. The parties each agree to
indemnify the other against any claim by any third person for any commission,
brokerage or finder's fee or other payment with respect to this Agreement or the
transactions contemplated hereby based on any alleged agreement or understanding
between the indemnifying party and such third person, whether express or implied
from the actions of the indemnifying party.
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SECTION 7.2 GOVERNING LAW; ARBITRATION. This Agreement shall be construed
and interpreted in accordance with the laws of the State of Delaware, USA. Any
controversy, dispute or claim of any nature whatsoever arising out of, in
connection with or in relation to this Agreement will be resolved by final
binding arbitration in accordance with the American Arbitration Association
(International) Rules by a retired judge at Judicial Arbitration and Mediation
Service (JAMS) in Los Angeles, California and all parties hereto consent to such
jurisdiction for such arbitration and enforcement of any awards by JAMS.
SECTION 7.3 NOTICES. Any notices or other communications required or
permitted hereunder shall be deemed sufficiently given if personally delivered
to it or sent by registered mail or certified mail, postage prepaid, or by
prepaid telegram addressed as follows:
If to UGHO:
Universal Guardian Holdings, Inc.
0000 Xxxxxxx Xxxxxx
Building 4, Suites 000-000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxx
Fax: x0 000-000-0000
with a copies to:
Xxxxxxxxxx & Xxxxx LLP
00000 Xxxxxxxx Xxxx.
Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxxx, Esq.
Fax: x0 000-000-0000
If to Secure Risks
Secure Risks Ltd.
00 Xxxx Xxxxxx
Xxxxxx X0 0XX
Xxxxxx Xxxxxxx
Attention: Xxxxxxx Xxxxxxxx
Fax: x00 00-0000-0000
If to the Shareholders:
To the addresses set forth in Schedule 1.
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given as of the date so delivered, mailed or telegraphed.
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SECTION 7.4 ATTORNEYS' FEES. In the event that any party institutes any
action or suit to enforce this Agreement or to secure relief from any default
hereunder or breach hereof, the breaching party or parties shall reimburse the
non-breaching party or parties for all costs, including reasonable attorneys'
fees, incurred in connection therewith and in enforcing or collecting any
judgment rendered therein.
SECTION 7.5 ENTIRE AGREEMENT. This Agreement, with all exhibits, schedules
and attachments hereto and thereto, represents the entire agreement between the
parties relating to the subject matter hereof. This Agreement, with all
exhibits, schedules and attachments hereto and thereto, alone fully and
completely expresses the agreement of the parties relating to the subject matter
hereof. There are no other courses of dealing, understanding, agreements,
representations or warranties, written or oral, except as set forth herein. This
Agreement may not be amended or modified, except by a written agreement signed
by all parties hereto.
SECTION 7.6 SURVIVAL; TERMINATION. The representations, warranties and
covenants of the respective parties shall survive the Closing Date and the
consummation of the transactions herein until the expiration of the applicable
statute of limitations.
SECTION 7.7 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which taken together shall
be but a single instrument.
SECTION 7.8 AMENDMENT OR WAIVER. Every right and remedy provided herein
shall be cumulative with every other right and remedy, whether conferred herein,
at law, or in equity, and may be enforced concurrently herewith, and no waiver
by any party of the performance of any obligation by the other shall be
construed as a waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. This Agreement may be amended by a writing
signed by all parties hereto, with respect to any of the terms contained herein,
and any term or condition of this Agreement may be waived or the time for
performance hereof may be extended by a writing signed by the party or parties
for whose benefit the provision is intended.
SECTION 7.9 INCORPORATION OF RECITALS. All of the recitals hereof are
incorporated by this reference and are made a part hereof as though set forth at
length herein.
SECTION 7.10 EXPENSES. Each party hereto shall bear all of its/his
respective costs and expenses incurred in connection with the negotiation of
this Agreement and in the consummation of the transactions contemplated hereby
and the preparation hereof.
SECTION 7.11 HEADINGS; CONTEXT. The headings of the sections and
paragraphs contained in this Agreement are for convenience of reference only and
do not form a part hereof and in no way modify, interpret or construe the
meaning of this Agreement.
SECTION 7.12 ASSIGNMENT. This Agreement shall not be assigned by any party
without the prior written consent of the other parties.
SECTION 7.13 SEVERABILITY. In the event that any particular provision or
provisions of this Agreement or the other agreements contained herein shall for
any reason hereafter be determined to be unenforceable, or in violation of any
law, governmental order or regulation, such unenforceability or violation shall
not affect the remaining provisions of such agreements, which shall continue in
full force and effect and be binding upon the respective parties hereto.
SECTION 7.14 CONSTRUCTION. The language of this Agreement shall not be
construed for or against any party hereto, regardless of who drafted or was
principally responsible for drafting the Agreement or terms or conditions
hereof.
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SECTION 7.15 EXECUTION KNOWING AND VOLUNTARY. In executing this Agreement,
the parties severally acknowledge and represent that each: (a) has fully and
carefully read and considered this Agreement; (b) has been or has had the
opportunity to be fully apprized by legal counsel of the effect and meaning of
this document and all terms and conditions hereof; and (c) is executing this
Agreement voluntarily, free from any influence, coercion or duress of any kind.
SECTION 7.16 CONFLICT OF TERMINOLOGY. References herein to any U.S. legal
or generally accepted accountings terms for any action, remedy, method or
judicial proceeding, legal or accounting document, legal or accounting status,
court governmental or administrative authority or agency, accounting body,
official or any legal or accounting concept practice or principle or thing shall
in respect of any jurisdiction other than the U.S. be deemed to include what
most approximates in that jurisdiction to the U.S. legal or accounting term
concerned.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan
of Share Exchange to be duly executed as of the date first above written.
UGHO:
Universal Guardian Holdings, Inc.,
a Delaware corporation
By:_____________________________________
Name: Xxxxxxx X. Xxxxxxxx
Its: Chief Executive Officer
SECURE RISKS:
Secure Risks Limited, a limited
liability company registered
in England and Wales
By:_____________________________________
Name: Xxxxxxx X. Xxxxxxxx
Its: Managing Director
SHAREHOLDERS:
________________________________________
XXXXXXX XXXX XXXXXXX
________________________________________
XXXX XXXXX
________________________________________
XXXXXXX XXXXXXX XXXX
________________________________________
IAN XXXXXXX XXXXXXX
________________________________________
XXXXX XXXXXX BRAES
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SCHEDULE IA
AUTHORISED SHARE CAPITAL OF SSSI
Ordinary Shares 940 (pound)1
Deferred A Shares 10 (pound)1
Deferred B Shares 10 (pound)1
Deferred C Shares 10 (pound)1
Deferred D Shares 10 (pound)1
Deferred E Shares 10 (pound)1
Deferred F Shares 10 (pound)1
Total 1000 (pound)1000:00
SCHEDULE 1B
NAME OF SHAREHOLDER ADDRESS OF SHAREHOLDER NUMBER AND CLASS OF SSSI NUMBER TRANCHE I UGHO
SHARES HELD IMMEDIATELY COMMON STOCK / OTHER
PRIOR TO CLOSING CONSIDERATION RECEIVABLE
AT CLOSING
Xxxxxxx Xxxx Xxxxxxx Rancho "Paso A Paso", 10 Ordinary Shares 205,075 Tranche I Shares
0000 00xx Xx.
Xxxxxxx
Xxxxxx
XXX
00000
Xxxx Xxxxx 00 Xxxx Xxxxxx 30 Ordinary Shares 615,224 Xxxxxxx X Xxxxxx
Xxxxxx
XX
X0 0XX
Xxxxxxx Xxxxxxx Xxxx Binneford House 40 Ordinary Shares 820,299 Tranche I Shares
Xxxxxxx Xxxx 00 "D" Shares (pound)10 Xxxxxxxx
Xxxxxxxx
Xxxxxxxx
Xxxxx
Xxxxxxx
XX
XX00 0XX
Ian Xxxxxxx Xxxxxxx 00 Xxxxxx Xxxx 00 Ordinary Shares 1,230,448 Tranche I Shares
Xxxxxxxxx 00 "X" Xxxxxx (xxxxx)00 Sterling
0000
Xxxxxxx Xxxx Xxxxxxxx
Xxxxxxxx xx Xxxxx Xxxxxx
Xxxxx Xxxxxx Braes 00 Xxxxxxxxx Xxxxx 60 ordinary Shares 1,230,448 Tranche I Shares
Beechwood Grove 10 "A" Shares (pound)20 Xxxxxxxx
Xxxxxxxxxx 10 "B" Shares
Scotland
UK
XX00 0XX
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SCHEDULE 2
OUTSTANDING LIABILITIES OF SSSI TO THE SHAREHOLDERS
Xxxxxxx Xxxx is owed approximately US$265,000 by SSSI, which sum will be repaid
as to 25% on completion and then the remainder in four equal payments quarterly
from there on.
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