Execution Document
ASSET PURCHASE AGREEMENT
BY AND AMONG
GLOBALOPTIONS GROUP, INC.
AND
SECURE SOURCE, INC.
XXXXXX X. XXXXXXXX
XXXXX X. XXXXXXXX
DATED AS OF MAY 15, 2006
Execution Document
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "AGREEMENT"), is made as of May 15,
2006, by and among GLOBALOPTIONS GROUP, INC., a Nevada corporation ("BUYER"),
SECURE SOURCE, INC., a Delaware corporation ("SELLER"), Xxxxxx X. Xxxxxxxx
("Stockholder" or "X. Xxxxxxxx"), and Xxxxx X. Xxxxxxxx ("Stockholder" or "X.
Xxxxxxxx") X. Xxxxxxxx and X. Xxxxxxxx are herein collectively referred to as
the "Stockholders". X. Xxxxxxxx, X. Xxxxxxxx, and Seller are herein collectively
referred to as "Sellers".
RECITALS
Seller desire to sell, and Buyer desires to purchase, the Assets (as
defined below) of Seller for the consideration and on the terms set forth in
this Agreement.
AGREEMENT
The parties, intending to be legally bound, hereby agree as follows:
ARTICLE I
SALE AND TRANSFER OF ASSETS; CLOSING
SECTION 1.1 ASSETS TO BE SOLD. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing (as defined in Section
1.6 below), Sellers shall sell, convey, assign, transfer and deliver to Buyer,
and Buyer shall purchase and acquire from Sellers, free and clear of any charge,
claim, equitable interest, lien, option, pledge, security interest, mortgage,
encroachment, or restriction of any kind (an "ENCUMBRANCE"), other than any
Encumbrance identified on ANNEX A as acceptable to Buyer (a "PERMITTED
ENCUMBRANCE"), all of Seller's property and assets, real, personal or mixed,
tangible and intangible, of every kind and description, wherever located,
belonging to Seller and used in the conduct of the Seller's private
investigations and consulting business (the "BUSINESS"), including the following
(but excluding the Excluded Assets):
(a) the leasehold interest in all real property leased or used
by Seller described in SCHEDULE 2.6 (the "REAL PROPERTY");
(b) all equipment, furniture, office equipment, computer
hardware, supplies, materials, vehicles, and other items of tangible personal
property (other than inventory) of every kind owned or leased by Seller
described in SCHEDULE 2.7(b) (the "TANGIBLE PERSONAL PROPERTY");
(c) oral or written contracts or agreement (i) under which
Seller has or may acquire any rights or benefits, (ii) under which Seller has or
may become subject to any obligation or liability, or (iii) by which Seller or
any of the Assets is or may become bound , that are listed on SCHEDULE 2.14 (any
such contract or agreement, a "SELLER CONTRACT");
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(d) all Governmental Authorizations (as defined in SECTION
2.11(b)) and all pending applications therefor or renewals thereof, in each case
to the extent transferable to Buyer;
(e) all data and records related to the operations of Seller,
and copies of all records referenced in SECTION 1.2(e) below;
(f) all of the intangible rights and property of Seller,
including the Intellectual Property Assets (as defined in SECTION 2.16) and the
Proprietary Assets (as defined in SECTION 2.16), going concern value, goodwill,
telephone, telecopy and e-mail addresses, websites, domain names, and listings
including the name "Secure Sources, Inc.," and any abbreviations thereof;
(g) all insurance rights and proceeds, arising from or
relating to the Assets prior to the Closing Date;
(h) all claims of Seller against third parties relating to the
Assets;
(i) all rights of Seller relating to deposits and prepaid
expenses, claims for refunds and rights to offset in respect thereof which are
not excluded under SECTION 1.3(f);
and (j) all other properties and assets of every kind,
character and description, tangible or intangible, of every kind and
description, owned by Seller, whether or not similar to the items specifically
set forth above.
All of the property and assets to be transferred to Buyer hereunder are referred
to collectively as the "Assets". Notwithstanding the foregoing, the transfer of
the Assets pursuant to this Agreement will not include the assumption of any
liability or obligation in respect thereof unless the Buyer expressly assumes
such liability or obligation pursuant to SECTION 1.4(a).
SECTION 1.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary
contained in Section 1.1 or elsewhere in this Agreement, the following items
(collectively, the "EXCLUDED ASSETS") are not part of the sale and purchase
contemplated hereunder, are excluded from the Assets, and will remain the
property of Seller after the Closing:
(a) the minute book of Sellerand the records and company seal
of Seller;
(b) the Stockholders' interest of Seller;
(c) all of Seller's life insurance policies and rights
thereunder (except to the extent specified in Sections 1.1(h) and (i));
(d) all personnel records and other records that Seller is
required by law to retain in its possession;
(e) all claims for refund of taxes and other governmental
charges of whatever nature;
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(f) all rights in connection with and assets of any Employee
Benefit Plans (as defined in Section 2.10 below);
(g) all rights of Seller in connection with the transactions
contemplated hereby;
(h) all cash and cash equivalents and all securities and
short-term investments;
(i) all accounts receivable of Seller; and
(j) the property and assets expressly designated in SCHEDULE
2.7(a).
SECTION 1.3 PURCHASE PRICE. The consideration for the Assets (the
"PURCHASE PRICE") will be Three Million Two Hundred and Fifty Thousand and
No/100 Dollars ($3,250,000) wherein the Purchase Price shall include: (i) cash
in the amount of Two Million Seven Hundred and Fifty Thousand and No/Dollars
($2,750,000) ("Cash Portion"); and (ii) Buyer's stock in the amount of Five
Hundred Thousand and No/100 Dollars ($500,000) ("Stock Portion").
In accordance with SECTION 1.7(b), at the Closing, the Purchase Price shall be
delivered by Buyer to Seller, as follows: (A) a promissory note providing for
the payment of One Million Five Hundred Thousand and No/100 Dollars ($1,500,000)
, adjusted by an amount equal to any unbilled retainers received by the Seller
prior to the Closing (the "Adjusted Purchase Price") and an amount equal to Five
Hundred Thousand and No/100 Dollars ($500,000) of the Stock Portion of the
Purchase Price all payable sixty (60) days from the date of Closing (in the form
of Exhibit 1.3 (a), the "Secured Promissory Note") secured by a standby
irrevocable letter of credit by Buyer's bank in the amount of the portion of the
Secured Promissory Note payable in cash (in the form of Exhibit 1.3 (b), the
"Irrevocable Letter of Credit"); (B) Five Hundred Thousand and No/100 Dollars
($500,000) promissory note (in the form of Exhibit 1.3 (c), the "Promissory Note
1"); (C) A promissory note providing for the payment of an amount equal to Two
Hundred and Fifty Thousand and No/100 Dollars ($250,000) of the Cash Portion of
the Purchase price to the Seller one year from the date of the Closing Date, and
the same amount each year thereafter for the remaining two years (in the form of
Exhibit 1.3 (d), the "Promissory Note 2"). The Promissory Notes 1 and 2 shall
provide if the Employment of X. Xxxxxxxx is terminated for cause (as that term
is defined in the Employment Agreement) and/or X. Xxxxxxxx terminates the
Employment prior to the term of said Employment Agreement, all payments due by
the Buyer to the Seller under the Promissory Notes shall terminate as of said
date of termination. The Stock Portion shall be paid in shares of common stock,
which number of shares shall be equal to the number of shares resulting from
$500,000 divided by the 30-day average of the per share price for shares of
Stock being traded on the Over the Counter Bulletin Board for the thirty (30)
days immediately preceding the Closing Date.
SECTION 1.4 LIABILITIES.
(a) At the Closing Buyer shall not assume and or agree to
discharge any liabilities and obligations of Seller.
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(b) All liabilities and obligations of Seller arising prior to
the Closing Date are referred to as the "RETAINED LIABILITIES". All of the
Retained Liabilities will remain the sole responsibility of and will be
retained, paid, performed and discharged solely by Seller.
SECTION 1.5 ALLOCATION. The Purchase Price will be allocated as set
forth in EXHIBIT 1.5. After the Closing, the parties shall make consistent use
of the allocation specified in EXHIBIT 1.5 for all tax purposes and in any tax
returns filed with the Internal Revenue Service in respect thereof, including
IRS Form 8594.
SECTION 1.6 CLOSING. The consummation of the purchase and sale provided
for in this Agreement (the "CLOSING") will take place at the offices of Buyer's
offices at New York City, at 10:00 a.m. (local time) on a date mutually agreed
to by the parties but not later than April 30, 2006 (the "CLOSING DATE"),
provided however, the Closing Date shall be automatically extended to permit the
Seller sufficient time to provide the audited financial statements required in a
form in compliance with Section 2.4 of this Agreement. Such extension shall not
be for a period greater than sixty (60) days.
SECTION 1.7 CLOSING OBLIGATIONS.
(a) At the Closing, Seller and Stockholders, as the case may
be, shall deliver to Buyer:
(i) a xxxx of sale for all of the Assets in a form to
be agreed upon (the "XXXX OF SALE"), executed by Seller;
(ii) an assignment of all of the Assets which are
intangible personal property in the form of EXHIBIT 1.7(a)(II), which assignment
will also contain Buyer's undertaking and assumption of the Assumed Liabilities
(the "ASSIGNMENT AND ASSUMPTION AGREEMENT"), executed by Seller;
(iii) with respect to each interest in real property
leased by Seller as set forth in SCHEDULE 2.6(b) below, an Assignment and
Assumption of Lease in the form of EXHIBIT 1.7(a)(III) (the "ASSIGNMENT AND
ASSUMPTION OF LEASE"), executed by Seller and the applicable lessor;
(iv) copies of any other consent (excluding consents
relating to the Non-Material Contracts (as defined in SECTION 1.8 below))
required to be obtained in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby as
disclosed on SCHEDULE 2.2(c);
(v) the employment agreements in the form of Exhibit
1.7(a)(v), executed by X. Xxxxxxxx and X. Xxxxxxxx (the "EMPLOYMENT
AGREEMENTS");
(vi) noncompetition, nondisclosure and
nonsolicitation agreements in the form of EXHIBIT 1.7(a)(vi), executed by the X.
Xxxxxxxx, X. Xxxxxxxx, and the employees listed on SCHEDULE 1.7. (a)(vi);
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(vii) evidence of all necessary action having been
taken by Seller and its Stockholders to approve this Agreement and the
consummation of the transactions contemplated hereby and the change of name
contemplated by SECTION 4.5 and certifying to the incumbency of the officers of
Seller executing this Agreement and any other document relating to the
transactions contemplated hereby and accompanied by the requisite documents for
amending the Certificate of Incorporation of Seller required to effect such
change of name in form sufficient for filing with the State of Texas;
(viii) an opinion of counsel of the Seller, dated the
Closing Date, in a form customary for a similar transactions;
(ix) the certificate of organization and all
amendments thereto of Seller, duly certified as of a recent date by the
Secretary of State of Texas;
(x) certificates as to the good standing of Seller
and payment of all applicable state taxes by Seller, executed by the appropriate
officials of the jurisdiction of Seller's incorporation and each jurisdiction in
which Seller is licensed or qualified to do business as a foreign corporation as
specified in SCHEDULE 2.1; and
(xi) such other deeds, bills of sale, assignments,
certificates of title, documents and other instruments of transfer and
conveyance as may reasonably be requested by Buyer, each in form and substance
satisfactory to Buyer and its counsel and executed by Seller for the purpose of
facilitating the consummation or performance of the transactions contemplated
hereby.
(xii) Subordination agreement by and between Seller
and the lending institution of the Buyer in a form as set forth in EXHIBIT
1.7(a) (xii).
(b) At the Closing, Buyer shall deliver to Seller:
(i) the Irrevocable Letter of Credit in the amount of
One Million Five Hundred Thousand and No/100 Dollars ($1,500,000) or the
Adjusted Purchase Price;
(ii) the Assignment and Assumption Agreement,
executed by Buyer;
(iii) Secured Promissory Note, Promissory Note I and
Promissory Note 2 executed by Buyer;
(iv) the Employment Agreements, executed by Buyer;
(v) the Noncompetition Agreements, executed by Buyer;
(vi) certificate of the Secretary of Buyer
certifying, as complete and accurate as of the Closing, attached copies of the
bylaws of Buyer and certifying and attaching all requisite resolutions or
actions of Buyer's board of directors approving the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby and
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certifying to the incumbency of the officers of Buyer executing this Agreement
and any other document relating to the transactions contemplated hereby; and
(vii) a stock option plan for the employees of the
Seller to be available to said employees subsequent to the Closing Date, and
said option plan will contain in part: (x) stock options at the value of
$250,000 as of the Closing Date; (y) with a vesting schedule of three years; and
(z) distribution list of said stock options to employees determined by the X.
Xxxxxxxx.
(viii) a stock option plan for X. Xxxxxxxx and X.
Xxxxxxxx to be available to said employees subsequent to the Closing Date, and
said option plan will contain in part: (x) stock option at the value of $500,000
as of the Closing Date; and (y) with a vesting schedule of four years.
(ix) an opinion of counsel of the Buyer, dated the
Closing Date, in a form customary for a similar transactions;
SECTION 1.8 CONSENTS. Buyer may waive the requirement that Seller
obtain consents to assignment with respect to the Seller Contracts disclosed on
SCHEDULE 2.2(c), but not identified on said schedule as a "Material Contract.
All Seller Contracts not identified as Material Contracts shall be referred to
as the "NON-MATERIAL CONTRACTS".in which case any such Non-Material Contracts
will be identified as such on SCHEDULE 2.2(c). Notwithstanding anything to the
contrary in this Agreement, if any consents to assignment relating to the
Non-Material Contracts have not been obtained at or prior to the Closing, this
Agreement will not constitute an assignment or an agreement to assign if such
assignment or attempted assignment would constitute a breach of the Non-Material
Contract or result in the loss or diminution thereof; PROVIDED, HOWEVER, that in
each such case, Seller shall take commercially reasonable steps after the
Closing to obtain the consent of such other party to the Non-Material Contract
to the assignment of such Non-Material Contract to the Buyer. If such consent is
not obtained, Seller shall cooperate with the Buyer to the extent legally
permissible and feasible in any reasonable arrangement designed to provide for
Buyer the benefits of any Non-Material Contract, including, without limitation,
the enforcement, for the account and benefit of the Buyer, of any and all rights
of Seller against any other person with respect to a Non-Material Contract.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDERS
Seller and Stockholders represent and warrant, jointly and severally,
to Buyer as follows:
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SECTION 2.1 ORGANIZATION AND GOOD STANDING.
(a) Seller is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Delaware, with full
corporate power and authority to conduct its business as it is now being
conducted, to own or use its properties and assets, and to perform all its
obligations under its contracts. Seller is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each state or
other jurisdiction set forth in SCHEDULE 2.1.
(b) Complete and accurate copies of the certificate of
incorporation and Bylaws of Seller (collectively, the "GOVERNING DOCUMENTS"), as
currently in effect, have been delivered to Buyer.
(c) Seller does not own and has not entered into any agreement
or contract to acquire, any equity securities or other securities of any person
or any direct or indirect equity ownership interest in any other business.
SECTION 2.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Seller and Stockholders, enforceable against each of them in
accordance with its terms. Upon the execution and delivery by Seller and
Stockholders of each of the documents and instruments to be executed and
delivered by Seller and Stockholders at Closing pursuant to SECTION 1.7(a)
(collectively, the "SELLER'S CLOSING DOCUMENTS"), each of Seller's Closing
Documents will constitute the legal, valid, and binding obligation of each of
Seller and Stockholders a party thereto, enforceable against each of them in
accordance with their respective terms. Seller has the right, power, authority
and capacity to execute and deliver this Agreement and Seller's Closing
Documents and to perform its obligations under this Agreement and Seller's
Closing Documents, and such action has been duly authorized by all necessary
action by Seller's Stockholders. X. Xxxxxxxx and X. Xxxxxxxx have all necessary
legal capacity to enter into this Agreement and the Seller's Closing Documents
to which such person is a party and to perform his obligations hereunder and
thereunder.
(b) Neither the execution and delivery of this Agreement nor
the consummation or performance of any of the transactions contemplated hereby
will (with or without notice or lapse of time): (i) contravene, conflict with,
or result in a violation of any provision of any of the Governing Documents of
Seller, (ii) contravene, conflict with, or result in a violation of any Legal
Requirement (as defined in SECTION 2.11(a) below) or Order (as defined in
SECTION 2.12(b) below) of any court or governmental authority to which Seller or
any of the Assets are subject, or (iii) breach any provision of, give any person
the right to declare a default or exercise any remedy under, accelerate the
maturity or performance of or payment under, result in the creation or
imposition of any Encumbrance upon any of the Assets under, or cancel,
terminate, or modify, any material contract to which Seller is a party or by
which Seller or the Assets are bound.
(c) Except as set forth in SCHEDULE 2.2(c), Seller is not and
will not be required to give any notice to or obtain any consent from any person
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in connection with the execution and delivery of this Agreement or the
consummation or performance of the transactions contemplated hereby (including
the assignment of the Seller Contracts hereunder).
SECTION 2.3 CAPITALIZATION. The authorized equity of Seller consist of
a stockholders interest held entirely by the parties listed on SCHEDULE 2.3. X.
Xxxxxxxx and X.Xxxxxxxx own one hundred percent (100%) of the stockholder's
interests in Seller.
SECTION 2.4 FINANCIAL STATEMENTS. Attached hereto as SCHEDULE 2.4 are
the Seller's unaudited balance sheet as of December 31, 2004, unaudited profit
and loss statement for the twelve months ended December 31, 2004, unaudited
balance sheet as of September 30, 2005 and unaudited profit and loss statement
for the 9 months ended September 30, 2005 (the "FINANCIAL STATEMENTS"). The
Financial Statements fairly present the financial condition and the results of
operations of Seller as at the respective dates of and for the periods referred
to in such financial statements, all in accordance with generally accepted
accounting principals ("GAAP") except as set forth on SCHEDULE 2.4. The
Financial Statements have been prepared from and are in accordance with the
books and records of Seller. Seller shall provide to the Buyer, on or before
Closing, audited financial statements for the years ended December 31, 2004,
December 31, 2005, and for the stub period thereafter if the Closing is delayed
by the parties, and such financial statements shall be materially consistent
with the previously submitted unaudited financial statements. The aforementioned
audited financial statements must be in the form and an opinion of an
independent certified public accountant attached to meet the standards required
by the Securities and Exchange Commission and the independent certified public
accountant must provide its consent to the use of the Seller's audited financial
statements in the Buyer's 8-K and other registration filings with the Securities
and Exchange Commission. Further, the Seller's independent public accountant
shall make all of its work papers and other supporting documents it utilized in
proving its opinion available, if needed for review by the Buyer's independent
certified public accountant. .
SECTION 2.5 SUFFICIENCY OF ASSETS. The Assets (a) constitute all of the
assets, tangible and intangible, necessary to conduct Seller's business in the
manner presently operated by Seller, and (b) constitute all of the operating
assets of Seller.
SECTION 2.6 REAL PROPERTY LEASES. SCHEDULE 2.6 sets forth all leases of
real property to which the Seller is a party (the "LEASES"). Complete and
accurate copies of the Leases, as amended or modified, have been delivered to
Buyer. The Leases are in full force and effect, are binding and enforceable each
of the parties thereto in accordance with their respective terms, and have not
been amended or modified since the date of delivery to the Buyer. No party to
any Lease has sent written notice to the other claiming that such party is in
default thereunder, which alleged default remains uncured. Seller enjoys
peaceful and undisturbed possession of all such real property.
SECTION 2.7 PERSONAL PROPERTY.
(a) Except as set forth on SCHEDULE 2.7(a), Seller owns good
and transferable title to all of its Assets (excluding its interest in the real
property described in SCHEDULE 2.6), free and clear of any Encumbrances other
than Permitted Encumbrances.
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(b) SCHEDULE 2.7(b) sets forth all items of Tangible Personal
Property with an initial, nondepreciated book value in excess of $2,500
purchased by Seller within the last three (3) years. Each item of Tangible
Personal Property listed on Schedule 2.7(b) is in good repair and good operating
condition, ordinary wear and tear excepted, and is suitable for immediate use in
the ordinary course of business, No item of Tangible Personal Property listed on
Schedule 2.7(b) is in need of repair or replacement other than as part of
routine maintenance in the ordinary course of business. All Tangible Personal
Property listed on Schedule 2.7(b) is in the possession of Seller.
SECTION 2.8 TAXES. Seller has timely filed all tax returns (federal,
state or local) required to be filed by it in accordance with applicable Legal
Requirements. All of such tax returns are accurate and complete in all material
respects. Seller has paid or made provision for the payment of all taxes that
have or may become due for all periods covered by the tax returns or otherwise,
or pursuant to any assessment received by Seller. There is no dispute or claim
concerning any taxes of Seller either claimed or raised by any governmental
authority in writing to Seller. All taxes that Seller is or was required by
Legal Requirements to withhold, deduct or collect have been duly withheld,
deducted and collected and, to the extent required, have been paid to the proper
governmental authority when due.
SECTION 2.9 EMPLOYEES. SCHEDULE 2.9 sets forth a complete and accurate
list, giving name, job title, current compensation paid or payable, sick and
vacation leave that is accrued but unused, and services credited for purposes of
vesting and eligibility to participate under any Employee Benefit Plan (as
defined below) (in each case, to the extent applicable), (a) for each employee
of Seller, including each employee on leave of absence or layoff status (the
"EMPLOYEES"), (b) for any independent contractors who render services on a
regular basis to, or are under contract with, Seller. Seller has not experienced
any organized slowdown, work interruption strike or work stoppage by its
employees, and, to the knowledge of Seller, and the Stockholders, there is no
strike, labor dispute or union organization activities pending or threatened
affecting Seller. None of the Employees belongs to any union or collective
bargaining unit. Except as set forth on SCHEDULE 2.9, no Employee of Seller is
bound by (a) any employment or similar contract or agreement with Seller that is
not terminable at will, or (b) any contract or agreement that purports to limit
or restrict the ability of such Employee to (i) perform his duties as an
employee of Seller, or (ii) engage in any conduct, activity, or practice
relating to Seller's business.
SECTION 2.10 EMPLOYEE BENEFITS. SCHEDULE 2.10 sets forth all plans,
programs, or arrangements that Seller has maintained, sponsored, adopted or
obligated itself under with respect to employees' benefits, including pension or
retirement plans, medical or dental plans, life or long-term disability
insurance, bonus or incentive compensation, stock option or equity participation
plans (the "EMPLOYEE BENEFIT PLANS"). Seller has no liability or obligation with
respect to any Employee under any Employee Benefit Plan other than normal salary
or wage accruals and paid vacation, sick leave and holiday accruals in
accordance with Seller's past practice and policy. Seller has performed all
obligations required to be performed under, and has complied with all Legal
Requirements in connection with, all such Employee Benefit Plans and is not in
arrears under any of the terms thereof.
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SECTION 2.11 COMPLIANCE WITH LEGAL REQUIREMENTS, GOVERNMENTAL
AUTHORIZATIONS.
(a) Seller is, and at all times since January 1, 2002, has
been, in compliance in all material respects with any federal, state, or local
law, ordinance or regulation (including with respect to environmental, disposal
of hazardous substances, or public health or safety) (a "LEGAL REQUIREMENT"),
that is or was applicable to the operation of its business or the ownership or
use of any of its assets. Except as set forth on SCHEDULE 2.11(a), Seller has
not received, at any time since January 1, 2002, any notice or other
communication (whether oral or written) from any governmental authority or any
other person regarding any actual or alleged violation of, or failure to comply
with, any Legal Requirement.
(b) SCHEDULE 2.11(b) contains a complete and accurate list of
each approval, license or permit (the "GOVERNMENTAL AUTHORIZATIONS") that is
held by Seller or that otherwise relates to the Seller's business or the Assets.
The Governmental Authorizations listed in SCHEDULE 2.11(b) collectively
constitute all of the approvals, licenses and permits necessary to permit Seller
to lawfully conduct and operate its business in the manner it currently conducts
and operates such business and to permit Seller to own and use its assets in the
manner in which it currently owns and uses such assets. Seller shall work with
the Buyer to deligntly cause new private investigation licenses, if necessary to
be issued to the Buyer to permit the Seller to continue its operations after the
anticipated transaction contemplated under this Agreement.
SECTION 2.12 LEGAL PROCEEDINGS, ORDERS.
(a) Except as set forth in SCHEDULE 2.12(a), there are no
actions or proceedings pending by or against Seller or that otherwise relate to
or may affect the business of, or any of the assets owned or used by, Seller. To
the knowledge of Seller and the Stockholders, no such action or proceeding has
been threatened, and no event has occurred or circumstance exists that may serve
as a basis for the commencement of any such action or proceeding.
(b) There are no orders, injunctions, judgments or decrees (an
"ORDER") outstanding against Seller or that otherwise relate to or may affect
the business of, or any of the assets owned or used by, Seller.
SECTION 2.13 INSURANCE. SCHEDULE 2.13 sets forth (a) a complete and
accurate list of all insurance under which any of the assets or properties of
Seller is covered or otherwise relating to the business of Seller, and (b) all
life insurance policies covering the life of any Employee for which Seller has
paid any premiums. Such policies are in full force and effect, and Seller has
paid all premiums due, and has otherwise performed all of its obligations under,
each such policy of insurance.
SECTION 2.14 CONTRACTS; NO DEFAULTS. SCHEDULE 2.14 contains an accurate
and complete list of each Seller Contract. Seller has delivered to Buyer
accurate and complete copies of each written Seller Contract, and have provided
Buyer with a true and accurate description of each oral Seller Contract. To
Seller's knowledge, each Seller Contract is valid and binding and in full force
and effect. To Seller's knowledge, Seller and each other person that has or had
any obligation or liability under any Seller Contract is in compliance with all
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material terms and requirements of each Seller Contract, and no event has
occurred or circumstance exists that (with or without notice or lapse of time)
may contravene, conflict with, or result in a violation or breach of, or give
Seller or any other person the right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance of, or to cancel, terminate,
or modify, any Seller Contract.
SECTION 2.15 INTELLECTUAL PROPERTY. SCHEDULE 2.15 lists any names,
assumed names, registered or unregistered trade names, patents, inventions or
discoveries that may be patentable, registered or unregistered trademarks,
registered or unregistered service marks, registered or unregistered copyrights,
applications for any of the foregoing, computer software, rights in internet web
sites and internet domain names, owned, used or licensed by Seller
(collectively, the "INTELLECTUAL PROPERTY ASSETS"). The documentation relating
to (a) such Intellectual Property Assets and (b) any trade secrets, know-how,
confidential or proprietary information and customer lists (the items referenced
in clause (b), the "PROPRIETARY ASSETS") is current, accurate, and sufficient in
detail and content to allow its full and proper use. Seller has taken reasonable
precautions to protect the secrecy, confidentiality and value of the
Intellectual Property Assets and Proprietary Assets, and has the right to use
the Intellectual Property Assets and Proprietary Assets as has been used in the
past. The Intellectual Property Assets and Proprietary Assets are not subject to
any adverse claim and have not been challenged or threatened in any way, and to
Seller's knowledge, does not infringes or conflict with any patent or copyright
application or registration or any other intellectual property right of any
other person. The ownership and use of the Intellectual Property Assets and
Proprietary Assets by Buyer following the Closing will not infringe upon or
conflict with the intellectual property rights of any person.
SECTION 2.16 RELATIONSHIPS WITH RELATED PERSONS. Except as set forth in
SCHEDULE 2.16, no Partner or any Related Person (as defined below) of the
Partner has any interest in any property (whether real, personal, or mixed and
whether tangible or intangible), used in or pertaining to Seller's business. To
the knowledge of the Seller, no Partner or any Related Person of any Partner
owns an equity interest or any other financial interest in any person that has
(a) had business dealings or a material financial interest in any transaction
with Seller other than business dealings or transactions disclosed in SCHEDULE
2.16, each of which has been conducted in the ordinary course of business at
substantially prevailing market prices and on substantially prevailing market
terms, or (b) engaged in competition with Seller with respect to the Seller's
business. Except as set forth on SCHEDULE 2.16, the Seller is not indebted,
directly or indirectly, to any person who is an officer, director or Partner of
the Seller or any Affiliate of any such person in any amount other than for
salaries for services rendered or reimbursable business expenses, and no such
officer, director, Partner or Affiliate is indebted to the Seller, except for
advances made to employees of the Seller in the ordinary course of business to
meet reimbursable business expenses anticipated to be incurred by such person.
For the purposes of this SECTION 2.16, "RELATED PERSON" means, with respect to
any individual: (i) an individual's spouse, siblings, siblings' children,
children, grandchildren or parents; or (ii) a trust, corporation, partnership or
other entity, the beneficiaries, stockholders, partners, or owners, or persons
holding a controlling interest of which consist of such individuals referred to
in the immediately preceding clause (i).
SECTION 2.17 NO UNDISCLOSED LIABILITIES. Seller has no material
liabilities or obligations except for liabilities or obligations reflected or
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reserved against in the unaudited balance sheet as of September 30, 2005 (the
"INTERIM BALANCE SHEET") and current liabilities incurred in the ordinary course
of business of Seller since September 30, 2005.
SECTION 2.18 NO MATERIAL ADVERSE CHANGE. Between the date of this
Agreement and the Closing Date (a) there has not been any material adverse
change in the business, properties, prospects, assets, results of operations or
condition (financial or otherwise) of Seller, and no event has occurred or
circumstance exists that may result in such a material adverse change; (b) there
has not been any sale, lease, or other disposition of any asset or property of
Seller other than in the ordinary course of business, or any Encumbrance on any
asset or property of Seller; and (c) Seller has conducted its business only in
the ordinary course of business so as to preserve its business intact, to keep
available to its business the services of Seller's employees, and to preserve
its business and the goodwill of its suppliers, customers and others having
business relations with it.
SECTION 2.19 BROKERS OR FINDERS. Neither Seller nor any of its
officers, directors, employees or agents has incurred any liability or
obligation for brokerage or finders' fees or agents' commissions or other
similar payment in connection with the sale of the Assets or the transactions
contemplated hereby.
SECTION 2.20 INTENTIONALY LEFT BLANK .
SECTION 2.21 CUSTOMERS AND SUPPLIERS. Since September 30, 2005, there
has been no adverse change in the business relationship of Seller with any
material customer or supplier. Seller has not received any notice that any
material customer or supplier has any intention to terminate or materially
reduce purchases from or supplies to Seller on account of the consummation of
the transactions contemplated hereby or otherwise.
SECTION 2.22 BOOKS AND RECORDS. The books of account and other
financial records of Seller are complete and correct in all material respects
and have been maintained in accordance with sound business practices and in
accordance with applicable laws and regulations.
SECTION 2.23 BANK ACCOUNTS. SCHEDULE 2.23 contains a complete and
accurate list of all bank accounts and safe deposit boxes in the name of or
controlled by the Seller, and the person or persons authorized to act or sign on
behalf of the Seller in respect of any of the foregoing.
SECTION 2.24 PREPAYMENTS AND DEPOSITS. SCHEDULE 2.24 sets forth a
complete and accurate list of all prepayments or deposits from customers for
services to be performed after the Closing Date which have been received by
Seller as of the date hereof.
SECTION 2.25 DISCLOSURE. No representation or warranty or other
statement made by Seller or the Stockholders in this Agreement or in any
certificate to be delivered hereunder, contains or will contain any untrue
statement of a material fact or omits, or will omit, to state a material fact
necessary to make any of them, not misleading. To Seller's knowledge, there does
not now exist any event, condition, or other matter, individually or in the
aggregate, materially adversely affecting Seller or the Seller's business,
prospects, financial condition, or results of its operations that has not been
set forth this Agreement. The term "materially" used in this Section and other
Sections of this Agreement shall mean an economic effect of greater then five
percent (5%) of the Purchase Price.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
SECTION 3.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Nevada, with full corporate power and authority to conduct its business as it is
now being conducted.
SECTION 3.2 AUTHORITY, NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against it in accordance with its terms. Upon
the execution and delivery by Buyer of each of the documents and instruments to
be executed and delivered by Buyer at Closing pursuant to SECTION 1.7(b)
(collectively, the "BUYER'S CLOSING DOCUMENTS"), each of the Buyer's Closing
Documents will constitute the legal, valid, and binding obligation of Buyer,
enforceable against it in accordance with its terms. Buyer has the absolute
right, power and authority to execute and deliver this Agreement and the Buyer's
Closing Documents and to perform its obligations under this Agreement and the
Buyer's Closing Documents, and such action has been duly authorized by all
necessary corporate action.
(b) Neither the execution and delivery of this Agreement by
Buyer nor the consummation or performance of any of the transactions
contemplated hereby by Buyer will (with or without notice or lapse of time): (i)
contravene, conflict with or result in a violation of any provision of Buyer's
certificate of incorporation or bylaws; (ii) contravene, conflict with or result
in a violation of any Legal Requirement or Order of any court or governmental
authority to which Buyer or its assets are subject, or (iii) conflict with or
result in the breach or termination of any term or provision of, or constitute a
default under, or cause any acceleration under, or cause the creation of any
Encumbrance upon the properties or assets of the Buyer pursuant to, any
indenture, mortgage, deed of trust or other agreement or instrument to which the
Buyer is a party or by which the Buyer or any of its properties is or may be
bound.
SECTION 3.3 CONSENTS AND APPROVALS. SCHEDULE 3.3 sets forth a complete
and accurate list of all consents and approvals of third parties that are
required in connection with the consummation by the Buyer of the transactions
contemplated by this Agreement, all of which consents and approvals either have
been obtained or will be obtained prior to the Closing Date.
SECTION 3.4 REGULATORY APPROVALS. All consents, approvals,
authorizations or other requirements prescribed by any law, rule or regulation
that must be obtained or satisfied by the Buyer and that are necessary for the
consummation of the transactions contemplated by this Agreement have been, or
will be prior to the Closing Date, obtained and satisfied.
SECTION 3.5 BROKERS OR FINDERS. Buyer will be responsible for any
brokers it has utilized for this transaction.
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SECTION 3.6 Buyer, to best of its knowledge, has filed true and
complete copies of all reports, registration statements, proxy statements and
other definitive filings with the Securities and Exchange Commission since
January 1, 2004 (such reports, registration statements, proxy statements and
other definitive filings, as amended, are sometimes collectively referred to as
the "SEC Filings"). To the Buyer knowledge, the SEC Filings comply in all
material respects with the Securities Act of 1933, as amended and the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"), and to Buyer's
knowledge did not as of the dates thereof contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements contained therein not misleading.
ARTICLE IV.
COVENANTS OF SELLER PRIOR TO CLOSING
SECTION 4.1 ACCESS AND INVESTIGATION. Between the date of this
Agreement and the Closing Date, and upon reasonable advance notice received from
Buyer, Seller shall (a) afford Buyer and its Representatives and prospective
lenders and their Representatives (collectively, the "BUYER GROUP") full and
free access, during normal business hours, to Seller's management personnel
offices, properties offices, and books and records, such rights of access to be
exercised in a manner that does not unreasonably interfere with the operations
of Seller, (b) furnish the Buyer Group with copies of all such Contracts,
Governmental Authorizations, books and records, and other existing data as Buyer
may reasonably request, (c) furnish the Buyer Group with such additional
financial, operating, and other relevant data and information as Buyer may
reasonably request, and (d) otherwise cooperate and assist, to the extent
reasonably requested by Buyer, with Buyer's investigation of the properties,
assets and financial condition related to Seller.
SECTION 4.2 OPERATION OF THE BUSINESS OF SELLER. Between the date of
this Agreement and the Closing Date, Seller shall:
(a) conduct the business of the Seller only in the Ordinary
Course of Business (as defined below);
(b) use its commercially reasonable efforts to preserve intact
the current business organization of the Seller, keep available the services of
the Seller's officers, employees, and agents, and maintain the Seller's
relations and good will with suppliers, customers, landlords, creditors,
employees, agents, and others having business relationships with it;
(c) confer with Buyer prior to implementing operational
decisions of a material nature; and
(d) otherwise report periodically to Buyer concerning the
status of the business, operations, and finances of the Seller.
"ORDINARY COURSE OF BUSINESS" means an action that is consistent in
nature and scope with Seller's past practices, taken in the ordinary course of
the normal day-to-day operations of Seller and that does not require specific
authorization by the Board of Directors of Seller.
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SECTION 4.3 NEGATIVE COVENANT. Except in the Ordinary Course of
Business or as otherwise expressly permitted herein, between the date of this
Agreement and the Closing Date, Seller shall not, without the prior written
Consent of Buyer:
(a) pay or increase any bonuses, salaries, or other
compensation to any shareholder, director, officer or employee or entry into any
severance or similar contract with any director, officer, or employee;
(b) adopt, amend or increase the payments to or benefits
under, any Employee Benefit Plan with respect to the Employees;
(c) mortgage, pledge, or impose any Encumbrance on any Asset
of the Seller;
(d) modify any material Seller Contract or Governmental
Authorization;
(e) cancel or waive any claims or rights with a value to
Seller in excess of $10,000; or
(f) agree, whether orally or in writing, to do any of the
foregoing.
SECTION 4.4. NOTIFICATION. Between the date of this Agreement and the
Closing Date, Seller shall promptly notify Buyer in writing if it becomes aware
of (a) any fact or condition that causes or constitutes a breach of any of
Seller's representations and warranties made as of the date of this Agreement,
or (b) the occurrence after the date of this Agreement of any fact or condition
that would or be reasonably likely to (except as expressly contemplated by this
Agreement) cause any such representation or warranty to be inaccurate or
incomplete in any material respect, had that representation or warranty been
made as of the time of the occurrence of, or Seller's discovery of, such fact or
condition. Should any such fact or condition require any change to the
Schedules, Seller shall promptly deliver to Buyer a supplement to the Schedules
specifying such change.
SECTION 4.5 NO NEGOTIATION. Until such time as this Agreement is
terminated pursuant to SECTION 9.1, Seller shall not directly or indirectly
solicit, initiate, encourage or entertain any inquiries or proposals from,
discuss or negotiate with, provide any non-public information to, or consider
the merits of any inquiries or proposals from, any person (other than Buyer)
relating to any business combination transaction involving Seller, including the
sale by the Stockholders of Seller's stock, the merger or consolidation of
Seller, or the sale of the Business or any of the Assets (other than in the
Ordinary Course of Business). Seller shall promptly notify Buyer of any such
inquiry or proposal.
SECTION 4.6 BEST EFFORTS. Seller and the Stockholders shall use their
best efforts to cause the conditions in Article VI and Article VII to be
satisfied.
SECTION 4.7 PAYMENT OF LIABILITIES. Seller shall pay or otherwise
satisfy in the Ordinary Course of Business all of its liabilities and
obligations. Buyer and Seller hereby waive compliance with the bulk transfer
provisions of the Uniform Commercial Code (or any similar law) ("BULK SALES
LAWS") in connection with the contemplated transactions.
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ARTICLE V
COVENANTS OF BUYER PRIOR TO CLOSING
SECTION 5.1 REQUIRED APPROVALS. As promptly as practicable after the
date of this Agreement, Buyer shall obtain all consents and approvals as
identified in SCHEDULE 3.3. Buyer also shall fully cooperate with Seller in
obtaining all consents identified in SCHEDULE 2.2(c).
SECTION 5.2 BEST EFFORTS. Buyer shall use its best efforts to cause the
conditions in Article VI and Article VII to be satisfied.
ARTICLE VI
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Assets and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part):
SECTION 6.1 ACCURACY OF REPRESENTATIONS. The representations and
warranties of Seller and the Stockholders in this Agreement shall be accurate in
all material respects as of the Closing Date as if made on the Closing Date,
except for any changes consented to in writing by Buyer.
SECTION 6.2 SELLER'S PERFORMANCE. All of the covenants and obligations
that Seller is required to perform or to comply with pursuant to this Agreement
at or prior to the Closing shall have been duly performed and complied with in
all material respects.
SECTION 6.3 CONSENTS. Each of the consents identified in EXHIBIT 6.3
(the "MATERIAL CONSENTS") must have been obtained and must be in full force and
effect.
SECTION 6.4 AVAILABILITY OF FINANCING. Buyer shall have received
financing in an amount sufficient to consummate the transactions contemplated
under this Agreement.
SECTION 6.5 ADDITIONAL DOCUMENTS. Seller must have caused the documents
and instruments required by SECTION 1.7(a) and the following documents to be
delivered (or tendered subject only to Closing) to Buyer:
(a) releases of all Encumbrances on the Assets, other than
Permitted Encumbrances;
(b) certificates dated as of a recent date prior to the
Closing as to the good standing of Seller and payment of all applicable state
taxes by Seller, from the appropriate officials of the State of Texas and each
jurisdiction in which Seller is licensed or qualified to do business as a
foreign corporation as specified in SCHEDULE 2.l; and
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(c) such other documents as Buyer may reasonably request for
the purpose of (i) evidencing the satisfaction of any condition referred to in
this Article VI, or (ii) otherwise facilitating the consummation or performance
of any of the Contemplated Transactions, including the subordination agreement
as may be required by the Buyer's lending institution.
SECTION 6.6 NO PROCEEDINGS. Since the date of this Agreement, there has
not been commenced or threatened proceeding or action (a) involving any
challenge to, or seeking damages or other relief in connection with, any of the
contemplated transactions, or (b) that may have the effect of preventing, making
illegal, imposing limitations or conditions on, or otherwise interfering, with
any of the contemplated transactions.
SECTION 6.7 GOVERNMENTAL AUTHORIZATIONS. Buyer must have received such
Governmental Authorizations as are necessary or desirable to allow Buyer to
operate the Assets from and after the Closing.
ARTICLE VII
CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
Seller's obligation to sell the Assets and to take the other actions
required to be taken by Seller at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Seller, in whole or in part):
SECTION 7.1 ACCURACY OF REPRESENTATIONS. All of Buyer's representations
and warranties in this Agreement must be accurate in all material respects as of
the Closing Date as if made on the Closing Date.
SECTION 7.2 BUYER'S PERFORMANCE. All of the covenants and obligations
that Buyer is required to perform or to comply with pursuant to this Agreement
at or prior to the Closing must have been performed and complied with in all
material respects.
SECTION 7.3 CONSENTS. Each of the Consents identified in EXHIBIT 6.3
must have been obtained and must be in full force and effect.
SECTION 7.4 ADDITIONAL DOCUMENTS. Buyer must have caused the documents
and instruments required by SECTION 1.7(b) and the following documents to be
delivered (or tendered subject only to Closing) to Seller and Stockholder:
(a) an opinion of the Law Offices of Xxxxxx X. Xxxxxxx, dated
the Closing Date, in a form customary for similar transactions; and
(b) such other documents as Seller may reasonably request for
the purpose of evidencing the satisfaction of any condition referred to in this
Article VII.
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SECTION 7.5 NO INJUNCTION. There must not be in effect any Legal
Requirement or any injunction or other Order that (a) prohibits the consummation
of the Contemplated Transactions, and (b) has been adopted or issued, or has
otherwise become effective, since the date of this Agreement.
ARTICLE VIII
ADDITIONAL COVENANTS
SECTION 8.1 EMPLOYEES AND EMPLOYEE BENEFITS.
(a) Effective immediately before the Closing Date, Seller
shall terminate the employment of all of its Employees (the "AVAILABLE
EMPLOYEES") and shall release such Available Employees from the provisions of
any restrictive covenants and/or agreements with Seller with respect to Buyer so
as to enable Buyer to employ such individuals. Buyer shall offer employment to
all of the Available Employees following the Closing at the same base salary and
incentive bonus arrangements, and comparable group health insurance and other
benefits, as each such Available Employee has with Seller.
(b) It is understood and agreed that (i) any offer of
employment made by Buyer as referenced in SECTION 8.1(a) above will not
constitute any commitment, contract or understanding (expressed or implied) of
any obligation on the part of Buyer to a post-Closing Date employment
relationship of any fixed term or duration or upon any terms or conditions other
than those that Buyer may establish pursuant to individual offers of employment;
and (ii) employment offered by Buyer is "at will" and may be terminated by Buyer
or by an employee at anytime for any reason (subject to any written commitments
to the contrary made by Buyer).
(c) Seller will be responsible for (i) the payment of all
wages and other remuneration due to its Employees with respect to their services
as employees of Seller through the close of business on the Closing Date; and
(ii) the payment of any termination or severance payments and the provision of
health plan continuation coverage in accordance with the requirements of the
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), as amended, or
any other legal requirement. Seller will be liable for any claims made or
incurred by the Employees and their beneficiaries under the Employee Benefit
Plans, and Buyer will not have any responsibility, liability or obligation, to
the Employees or to any other person with respect to any Employee Benefit Plan.
SECTION 8.2 PAYMENT OF TAXES RESULTING FROM SALE OF ASSETS BY SELLER.
Seller shall pay in a timely manner all taxes (other than income taxes) imposed
on it resulting from or payable in connection with the sale of the Assets
pursuant to this Agreement.
SECTION 8.3 PAYMENT OF OTHER RETAINED LIABILITIES. In addition to
payment of taxes pursuant to SECTION 8.2, Seller shall pay, or make adequate
provision for the payment, in full of all of the Retained Liabilities. If any
such Retained Liabilities are not so paid or provided for, or if Buyer
reasonably determines that failure to make any payments will impair Buyer's use
or enjoyment of the Assets or conduct of the business of the Seller previously
conducted using the Assets, Buyer may at any time after the Closing Date elect
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to make all such payments directly and offset such amount from Promissory Note 1
and/or Promissory Note 2 (but shall have no obligation to do so) and will be
promptly reimbursed therefor by Seller.
SECTION 8.4 COVENANT NOT TO COMPETE.
(a) In consideration of and conditioned upon the payments of
the Purchase Price to be received under this Agreement, Seller and the
Stockholders agree that, for a period of three (3) years after the Closing Date,
they shall not directly or indirectly, do any of the following:
(i) engage in, or invest in, own, manage, operate,
finance, control, be employed by, associated with or in any manner connected
with, or render services or advice or other aid to, any person engaged in or
planning to become engaged in, or any other business whose products or
activities compete in whole or in part with, the business of Buyer, or any
business carried on by Buyer utilizing the Assets, anywhere within the
continental United States;
(ii) induce or attempt to induce any employee of
Buyer to leave the employ of Buyer, in any way interfere with the relationship
between Buyer and any employee of Buyer, or solicit, offer employment to,
otherwise attempt to hire, employ, or otherwise engage as an employee,
independent contractor, or otherwise, any such employee; or
(iii) induce or attempt to induce any person that was
a customer, client or business relation of Buyer at any time during the one (1)
year period preceding the Closing Date to cease doing business with Buyer, in
any way interfere with the relationship between Buyer and any such customer,
client or business relation, or solicit the business of any such customer,
client or business relation.
(d) Seller acknowledges that all of the foregoing provisions
are reasonable and are necessary to protect and preserve the value of the Assets
and to prevent any unfair advantage being conferred on Seller. If any of the
covenants set forth in this SECTION 8.4 are held to be unreasonable, arbitrary,
or against public policy, the restrictive time period herein will be deemed to
be the longest period permissible by law under the circumstances and the
restrictive geographical area herein will be deemed to comprise the largest
territory permissible by law under the circumstances.
SECTION 8.5 CUSTOMER AND OTHER BUSINESS RELATIONSHIPS. After the
Closing, Seller shall cooperate with Buyer in its efforts to continue and
maintain for the benefit of Buyer those business relationships of Seller
existing prior to the Closing and relating to the business to be operated by
Buyer after the Closing, including relationships with lessors, employees,
regulatory authorities, licensors, customers, suppliers and others, and Seller
will satisfy the Retained Liabilities in a manner which is not detrimental to
any of such relationships. Seller will refer to Buyer all inquiries relating to
the Business. Neither Seller nor any of its officers or employees, shall take
any action which would tend to diminish the value of the Assets after the
Closing or which would interfere with the business of Buyer to be engaged in
after the Closing.
SECTION 8.6 RETENTION AND ACCESS TO RECORDS. After the Closing Date,
Buyer shall retain for a period of three (3) years those records of Seller
delivered to Buyer. Buyer also shall provide Seller and a representative of the
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Stockholders reasonable access thereto, during normal business hours and on at
least three (3) days' prior written notice, to enable them to prepare financial
statements or tax returns or deal with tax audits. After the Closing Date,
Seller shall provide Buyer and Buyer's representatives reasonable access to
records that are Excluded Assets, during normal business hours and on at least
three (3) days' prior written notice, for any reasonable business purpose
specified by Buyer in such notice.
SECTION 8.7 TERMINATION OF SELLER AND STOCKHOLDERS OBLIGATIONS PURSUANT
TO 8.4 AND 8.5 FOR NON-PAYMENT. In the event Buyer defaults in the payment of
any amounts due by reason of Promissory Note 1 and/or Promissory Note 2 and
fails to cure said default within any applicable cure period, Seller and
Stockholders obligations pursuant to Section 8.4 and 8.5 above shall terminate
upon ten (10) days prior written notice to Buyer.
Section 8.8 Dissolution of Seller. Prior to closing Seller intends to
enter into a plan of complete liquidation of Seller to be completed not more
than twelve months from the adoption of said plan. Upon Closing or within a
reasonable period of time following Closing, Seller and Stockholders shall take
such steps as are necessary to dissolve Seller. In event Seller is unable to
dissolve within sixty (60) days of Closing, Seller shall change its name to
avoid confusing names of the parties.
ARTICLE IX
TERMINATION
SECTION 9.1 TERMINATION EVENTS. This Agreement may be terminated by
written notice given prior to or at the Closing, subject to SECTION 9.2 as
follows:
(a) by Buyer or Seller if a material breach of any provision
of this Agreement has been committed by the other party and such breach has not
been waived by the non-breaching party;
(b) by Buyer if any condition in Article VI has not been
satisfied as of the date specified for Closing Date; or if satisfaction of such
a condition by such date is or becomes impossible (other than through the
failure of Buyer to comply with its obligations under this Agreement).
(c) by Seller, if any condition in Article VII has not been
satisfied as of the date specified for Closing Date or if satisfaction of such a
condition by such date is or becomes impossible (other than through the failure
of Seller or the Stockholders to comply with their obligations under this
Agreement) and Seller has not waived such condition on or before such date;
(d) by mutual consent of Buyer and Seller; or
(e) by Buyer or Seller if the Closing has not occurred on or
before April 30, 2006 or such later date as the parties may agree upon, or as
provided herein, unless the party giving notice of termination is in material
breach of this Agreement.
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SECTION 9.2 EFFECT OF TERMINATION. Each party's right of termination
under SECTION 9.1 is in addition to any other rights it may have under this
Agreement or otherwise, and the exercise of such right of termination will not
be an election of remedies. If the Agreement is terminated pursuant to SECTION
9.1, all obligations of the parties under this Agreement will terminate, except
that the obligations of the parties in this SECTION 9.2 and Article X will
survive; PROVIDED, HOWEVER, that if this Agreement is terminated because of a
breach of this Agreement by the non-terminating party or because one or more of
the conditions to the terminating party's obligations under this Agreement is
not satisfied as a result of the party's failure to comply with its obligations
under this Agreement, the terminating party's right to pursue all legal remedies
will survive such termination unimpaired.
ARTICLE X
INDEMNIFICATION
SECTION 10.1 SURVIVAL. All representations, warranties, covenants, and
obligations in this Agreement, the Schedules attached hereto, and the
certificates delivered pursuant to SECTION 1.7, will survive the Closing and the
consummation of the transactions contemplated hereby. The right to
indemnification, reimbursement, or other remedy based on such representations,
warranties, covenants and obligations will not be affected by any investigation
conducted with respect to, or any knowledge acquired (or capable of being
acquired) about, the accuracy or inaccuracy of or compliance with, any such
representation, warranty, covenant or obligation. Buyer is not aware of any
facts or circumstances that would serve as the basis for a claim by Buyer
against Seller or the Stockholders based upon a breach of any of the
representations and warranties of the Seller and the Stockholders contained in
this Agreement or breach by any of Seller's covenants or agreements to be
performed by any of them at or prior to Closing. Buyer will be deemed to have
waived in full any breach of any of Seller's and the Stockholders'
representations and warranties and any such covenants and agreements of which
Buyer has such awareness at the Closing.
SECTION 10.2 INDEMNIFICATION AND REIMBURSEMENT BY SELLER AND THE
STOCKHOLDERS. Seller and the Stockholders, jointly and severally, (with respect
to clause (a) below), and Seller (with respect to clauses (b) and (c)) shall
indemnify and hold harmless Buyer, and its directors, stockholders,
Stockholders, partners, employees, representatives and agents (collectively, the
"BUYER INDEMNIFIED PERSONS"), and shall reimburse the Buyer Indemnified Persons,
for any loss, liability, claim, damage (excluding incidental and consequential
damages), or expense (including costs of investigation and defense and
reasonable attorneys' fees and expenses) whether or not involving a third-party
claim (collectively, "DAMAGES"), arising, directly or indirectly, from or in
connection with:
(a) any breach of any representation or warranty made by
Seller or the Stockholders in this Agreement, or the certificates delivered
pursuant to SECTION 1.7;
(b) any breach of any covenant or obligation of Seller in this
Agreement; and
(c) any Retained Liabilities.
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SECTION 10.3 INDEMNIFICATION AND REIMBURSEMENT BY BUYER. Buyer shall
indemnify and hold harmless Seller and its directors, Stockholders, partners,
employees, representatives and agents (collectively, the "SELLER INDEMNIFIED
PERSONS") and shall reimburse the Seller Indemnified Persons for any Damages
arising, directly or indirectly, from or in connection with:
(a) any breach of any representation or warranty made by Buyer
in this Agreement or in any certificate or document delivered by Buyer pursuant
to this Agreement;
(b) any breach of any covenant or obligation of Buyer in this
Agreement or in any other document, writing or instrument delivered by Buyer
pursuant to this Agreement; and
(c) the Assumed Liabilities.
SECTION 10.4 LIMITATIONS ON AMOUNT - SELLER AND STOCKHOLDERS
(a) Seller and Stockholders shall have no liability (for
indemnification or otherwise) with respect to claims under SECTION 10.2(a)
until the total amount of Damages with respect to such matters exceeds $25,000,
and then only for the amount by which such Damages exceed $25,000.
SECTION 10.5 TIME LIMITATIONS.
(a) Seller and the Stockholders will have no indemnification
liability for the breach of any representation or warranty set forth in Article
II, unless on or before the second anniversary of the Closing Date, Buyer
notifies Seller or the Stockholders of a claim specifying the factual basis of
that claim in reasonable detail to the extent then known by Buyer; PROVIDED,
HOWEVER, that any claim with respect to Section 2.8 taxes, 2.10 employee
benefits or 2.11 environmental matters may be made at any time, subject to the
applicable period of statute of limitations.
(b) Buyer will have no indemnification liability for the
breach of any representation or warranty set forth in Article III, unless on or
before the second anniversary of the Closing Date, Seller notifies Buyer of a
claim specifying the factual basis of that claim in reasonable detail to the
extent then known by Seller.
SECTION 10.6 PROCEDURE FOR INDEMNIFICATION - THIRD PARTY CLAIMS. If,
after the Closing Date, either a Buyer Indemnified Person or Seller Indemnified
Person, as the case may be (the "INDEMNITEE"), receives notice of any
third-party claim or alleged third-party claim asserting the existence of any
matter of a nature as to which the Indemnitee is entitled to be indemnified
under this Agreement, the Indemnitee shall promptly notify Seller or the
Stockholders, or Buyer, as the case may be (the "INDEMNITOR"), in writing with
respect thereto, but the failure to notify the Indemnitor will not relieve the
Indemnitor of any liability that it may have to an Indemnitee, except to the
extent that the Indemnitor demonstrates that the defense of such action has been
prejudiced by the Indemnitee's failure to give such notice. The Indemnitor will
have the right to defend against any such claim provided (a) that the
Indemnitor, within ten (10) days after the giving of such notice by Indemnitee,
notifies Indemnitee in writing that (i) Indemnitor disputes such claim and gives
reasons therefor, and (ii) Indemnitor will, at its own cost and expense, defend
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the same, and (b) such defense is instituted and continuously maintained in good
faith by Indemnitor. Indemnitee may, if it so elects, designate its own counsel
to participate with the counsel selected by Indemnitor in the conduct of such
defense. Indemnitor will not permit any lien or execution to attach to the
assets of Indemnitee as a result of such claim, and the Indemnitor shall provide
such bonds or deposits as are necessary to prevent the same. In any event,
Indemnitor will keep Indemnitee fully advised as to the status of such defense.
If Indemnitor is given notice of a claim as aforesaid and fails to notify
Indemnitee of its election to defend such claim within the time prescribed
herein, or after having elected to defend such claim fails to institute and
maintain such defense as prescribed herein, or if such defense is unsuccessful
then, in any such event, the Indemnitor shall fully satisfy and discharge the
claim within ten (10) days after notice from the Indemnitee requesting
Indemnitor to do so. If the Indemnitor assumes the defense of any action or
proceeding (y) no compromise or settlement of such claims may be effected by the
Indemnitor without the Indemnitee's consent unless (A) there is no finding or
admission of any violation of any legal requirement or any violation of the
rights of any person and no effect on any other claims that may be made against
the Indemnitee, and (B) the sole relief provided is monetary damages that are
paid in full by the Indemnitor; and (z) the Indemnitee will have no liability
with respect to any compromise or settlement of such claims effected without its
consent.
SECTION 10.7 PROCEDURE FOR INDEMNIFICATION - OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.1 EXPENSES. Except as otherwise expressly provided in this
Agreement, each party to this Agreement shall bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the transactions contemplated hereby, including all fees and
expenses of its representatives.
SECTION 11.2 NOTICES. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by facsimile with confirmation of transmission by the
transmitting equipment, (c) received by the addressee, if sent by certified
mail, return receipt requested, (d) sent by email; or (e) received by the
addressee, if sent by a nationally recognized overnight delivery service, in
each case to the appropriate addresses or facsimile numbers set forth below (or
to such other addresses or facsimile numbers as a party may designate by notice
to the other parties):
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Buyer: GlobalOptions Group, Inc.
00 Xxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxx
Fax: 000-000-0000
Email: xxxxxxxx@xxxxxxxxxxxxx.xxx
with a copy to: Xxxxxx X. Xxxxxxx, Esq.
0000 00xx Xxxxxx, X.X., Xxxxxx Xxxxx
Xxxxxxxxxx, X.X. 00000
Fax: 000-000-0000
Email: xxxxxxxx@xxxxxx.xxx
Seller: Secure Source, Inc.
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx, 00000
Attn: Xxxxx Xxxxxxxx
Fax:
` Email:
with a copy to: Xxxxx Xxxx Xxxxx
0000 Xxxxxxx X. Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxx 00000
Fax: 000-000-0000
E-mail: XXXXxxx@xxx.xxx
SECTION 11.3 JURISDICTION. The parties agree that the state and federal
courts located in Texas. will be the sole venue and will have sole jurisdiction
for the resolution of all disputes arising hereunder. Process in any action or
proceeding referred to in the preceding sentence may be served on any party
anywhere in the world.
SECTION 11.4 WAIVER. No failure to exercise, and no delay in
exercising, on the part of either party, any right hereunder will operate as a
waiver thereof, nor will any single or partial exercise of any right hereunder
preclude further exercise of any other right hereunder.
SECTION 11.5 ENTIRE AGREEMENT AND MODIFICATION. This Agreement,
together between Seller and Buyer and the Schedules, Exhibits and other
documents delivered pursuant to this Agreement, constitutes a complete and
exclusive statement of the terms of the agreement between the parties with
respect to its subject matter and supersedes all prior agreements, whether
written or oral, between the parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement signed on behalf of
each of the parties hereto.
SECTION 11.6 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. No
party may assign any of its rights or delegate any of its obligations under this
Agreement without the prior written consent of the other parties, except that
Buyer may assign any of its rights and delegate any of its obligations under
this Agreement (i) to any affiliate of Buyer, and (ii) in connection with the
sale of all or substantially all of the assets of Buyer, provided that no such
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assignment or delegation will relieve Buyer from any of its obligations
hereunder. Subject to the preceding sentence, this Agreement will apply to, be
binding in all respects upon, and inure to the benefit of the successors and
permitted assigns of the parties. Nothing in this Agreement will be construed to
give any person other than the parties to this Agreement any legal or equitable
right under or with respect to this Agreement or any provision of this
Agreement, except such rights as shall inure to a successor or permitted
assignee pursuant to this SECTION 11.6.
SECTION 11.7 SEVERABILITY. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. The parties
agree that if any provision contained herein is, to any extent, held invalid or
unenforceable in any respect under the laws governing this Agreement, they shall
take any actions necessary to render the remaining provisions of this Agreement
valid and enforceable to the fullest extent permitted by law and, to the extent
necessary, shall amend or otherwise modify this Agreement to replace any
provision contained herein that is held invalid or unenforceable with a valid
and enforceable provision giving effect to the intent of the parties.
SECTION 11.8 SECTION HEADINGS, CONSTRUCTION. The headings of Articles
and Sections in this Agreement are provided for convenience only and will not
affect its construction or interpretation. All Exhibits and Schedules to this
Agreement are incorporated into and constitute an integral part of this
Agreement as if fully set forth herein. All words used in this Agreement will be
construed to be of such gender or number as the context requires. The language
used in the Agreement shall be construed, in all cases, according to its fair
meaning, and not for or against any party hereto. The parties acknowledge that
each party has reviewed this Agreement and that rules of construction to the
effect that any ambiguities are to be resolved against the drafting party will
not be available in the interpretation of this Agreement.
SECTION 11.9 GOVERNING LAW. This Agreement will be governed by and
construed under the laws of the State of Texas without regard to conflicts of
laws principles that would require the application of any other law.
SECTION 11.10 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
SECTION 11.11 FURTHER ASSURANCES. The parties shall cooperate
reasonably with each other and with their respective representatives in
connection with any steps required to be taken as part of their respective
obligations under this Agreement, and the parties agree (a) to furnish upon
request to each other such further information, (b) to execute and deliver to
each other such other documents, and (c) to do such other acts and things, all
as the other party may reasonably request for the purpose of carrying out the
intent of this Agreement and the transactions contemplated hereby.
SECTION 11.12 LEGAL FEES. In the event that legal proceedings are
commenced by Buyer against Seller, or by Seller against Buyer, in connection
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with this Agreement or the transactions contemplated hereby, the party or
parties that do not prevail in such proceedings shall pay the reasonable
attorneys' fees and expenses incurred by the prevailing party in such
proceedings.
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IN WITNESS WHEREOF, the parties have executed this Asset Purchase
Agreement as of the date first written above.
BUYER:
GLOBALOPTIONS GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxxx
-----------------------------------
Its: Chairman and CEO
------------------------------------
SELLERS
SELLER:
SECURE SOURCE, INC.
By:
-------------------------------------
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxxx, Stockholder
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxxx, Stockholder
EXHIBITS AND ANNEX
ANNEX A: Permitted Encumbrances
EXHIBIT 1.3a: Form of Secured Promissory Note
EXHIBIT 1.3b Irrevocable Letter of Credit
EXHIBIT 1.3c Form of Promissory Note 1
EXHIBIT 1.3d Form of Promissory Note 2
EXHIBIT 1.5: Purchase Allocation
EXHIBIT 1.7(a)(ii): Form of Assignment & Assumption for Assets
EXHIBIT 1.7(a)(iii): Form of Assignment & Assumption for Leases
EXHIBIT 1.7(a)(vi): Employment Agreements
EXHIBIT 1.7(a)(vii): Non-competition/Employment Agreements:
EXHIBIT 1.7(a)(xii): Form of Subordinated Agreement
EXHIBIT 6.3: Material Consent
SCHEDULES
Schedule 2.1 Good Standing Certificates
Schedule 2.2 Consents
Schedule 2.2(c) Non-Material Contracts
Schedule 2.3 Membership Interests
Schedule 2.4 Financial Statements
Schedule 2.6 Real Property Leases
Schedule 2.7 Tangible Personal Property
Schedule 2.9 Employees
Schedule 2.10 Employee Benefits
Schedule 2.11 Compliance
Schedule 2.12(a) Legal Proceedings
Schedule 2.13 Insurance Policies
Schedule 2.14 Seller Contracts
Schedule 2.15 Intellectual Properties
Schedule 2.16 Related Person Transactions
Schedule 2.23 Bank Accounts
Schedule 2.24 Prepayments
Schedule 3.3 Buyer Consents and Approvals
