Exhibit 10.1
Execution Copy
ASSET PURCHASE AGREEMENT
BY AND AMONG
GLOBALOPTIONS GROUP, INC.
AND
HYPERION RISK, INC.
AUGUST 10, 2006
Execution Copy
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "AGREEMENT"), is made August 10,
2006, by and among GLOBALOPTIONS GROUP, INC., a Nevada corporation ("BUYER"),
Hyperion Risk, Inc., a Florida corporation ("SELLER").
RECITALS
Seller desires 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), Seller shall sell, convey, assign, transfer and deliver to Buyer,
and Buyer shall purchase and acquire from Seller, 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 security consulting business (the "BUSINESS"), including the
following (but excluding the Excluded Assets):
(a) all leasehold interest in all real property leased or
used by Seller (the "REAL PROPERTY"), including the Real Property described in
SCHEDULE 2.6;
(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 (the
"TANGIBLE PERSONAL PROPERTY"), including those items described in SCHEDULE
2.7(B);
(c) all trade accounts receivable and all other accounts or
notes receivable of Seller (the "ACCOUNTS RECEIVABLE");
(d) any 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 (any such contract or
agreement, a "SELLER CONTRACT"), including those Seller Contracts listed on
SCHEDULE 2.14;
(e) 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;
(f) all data and records related to the operations of
Seller, and copies of all records referenced in SECTION 1.2(E) below;
(g) 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 "Hyperion Risk," abbreviations thereof, and Hyperion Risk,
Inc., or any previous name or names utilized by the Seller;
(h) all insurance benefits, including rights and proceeds,
arising from or relating to the Assets prior to the Closing Date;
(i) all claims of Seller against third parties relating to
the Assets;
(j) all cash and cash equivalents and all securities and
short term investments;
(k) 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 1.2(F); and
(l) 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, membership records, and company seal of
Seller;
(b) the equity of Seller;
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(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;
(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; and
(h) 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 Four Hundred Thousand and No/100 Dollars
($3,400,000) wherein the Purchase Price shall include: (i) cash in the amount of
One Million Nine Hundred Thousand and No/ Dollars ($1,900,000) ("Cash Portion");
and (ii) Buyer's stock in the amount of One Million Five Hundred Thousand and
No/ Dollars ($1,500,000) ("Stock Portion"), and the assumption of the Assumed
Liabilities (as defined in Section 1.4 below).
In accordance with SECTION 1.7(B), at the Closing, the Purchase Price shall be
delivered by Buyer to Seller, as follows: (A) the payment of One Million Nine
Hundred Thousand and No/100 Dollars ($1,900,000) by wire transfer to an account
specified by Seller; (B) an amount equal to Two Hundred Fifty Thousand and
No/100 Dollars ($250,000) of the Stock Portion of the Purchase Price at Closing
to the Law Offices of Xxxxxx X. Xxxxxxx, as escrow agent (the "ESCROW AGENT")
under the Escrow Agreement (as defined in SECTION 1.7(A) below); (C) at Closing
an amount equal to Six Hundred Thousand and NO/ Dollars ($600,000) of the Stock
Portion of the Purchase Price shall be delivered to the Seller; (D) an amount
equal to One Hundred Fifty Thousand and No/100Dollars ($150,000) of the Stock
Portion of the Purchase price shall be delivered to the Seller one year from the
date of the Closing Date; (E) an amount equal to Two Hundred Fifty Thousand and
No/100Dollars ($250,000) of the Stock Portion of the Purchase price shall be
delivered to the Seller two years from the date of the Closing Date; and (F) an
amount equal to Two Hundred Fifty Thousand and No/100Dollars ($250,000) of the
Stock Portion of the Purchase price shall be delivered to the Seller three years
from the date of the Closing Date. The Stock Portion shall be paid in shares of
common stock of Buyer ("Stock"), which number of shares shall equal to the
number of shares resulting from $1,500,000 divided by the average per share
price of the closing prices of the sales of Common Stock, as of one day prior to
the Closing Date, on all securities exchanges on which Common Stock may at the
time be listed, or, if there have been no sales on any such exchange on any day,
the average of the highest bid and lowest asked prices on all such exchanges at
the end of such day, or, if on any day Common Stock are not so listed, the
average of the representative bid and asked prices quoted in the NASDAQ System
as of 4:00 P.M., New York time, or, if on any day Common Stock are not quoted in
the NASDAQ System, the average of the highest bid and lowest asked prices on
such day in the domestic over-the-counter market as reported by the National
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Quotation Bureau Incorporated, or any similar successor organization, in each
such case averaged over a period of 30 days consisting of the day as of which
the Fair Market Value of a Share is being determined and the 29 consecutive
trading days prior to such day.
SECTION 1.4 LIABILITIES.
(a) At the Closing, Buyer shall assume and be obligated to
discharge only the following specifically enumerated liabilities and obligations
of Seller (the "ASSUMED LIABILITIES"):
(i) any trade account payable that is incurred by
Seller in the Ordinary Course of Business at the Closing Date, in each case
which remains unpaid as of the Closing, providing such account payables are
described and aged in Schedule 1.4(a)(i);
(ii) any liability arising after the Closing under
any Seller Contract included in the Assets (other than any liability arising out
of or relating to a breach which occurred prior to the Closing); and
(iii) any liability of Seller described in SCHEDULE
1.4(A)(III), including amounts owed to Sun Trust.
(b) All liabilities and obligations of Seller, whether
arising prior to the Closing Date, other than the Assumed Liabilities, are
referred to as the "RETAINED LIABILITIES". All of the Retained Liabilities will
remain the sole responsibility of and will be retained solely by Seller.
Retained Liabilities include, but not limited to, the legal and accounting fees
incurred by the Seller as a result of the anticipated transaction under this
Agreement, whether such fees are incurred before or after the Closing Date.
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 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 August 15, 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, but in no event
later than August 31, 2006. Delivery of documents at the Closing may be
accomplished by facsimile and/or PDF electronic files, to be followed by
delivery of originals by overnight courier, of national reputation, the day
after Closing.
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SECTION 1.7 CLOSING OBLIGATIONS.
(a) At the Closing, Seller 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
shall 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) an escrow agreement in the form of EXHIBIT
1.7(A)(V), executed by Seller, Buyer and the Escrow Agent (the "ESCROW
AGREEMENT");
(vi) the employment agreements in the form of
EXHIBIT 1.7(A)(VI), executed by Xxxxx Xxxxxx and Xxx Xxxxxx (the "EMPLOYMENT
AGREEMENTS");
(vii) the noncompetition, nondisclosure and
nonsolicitation agreements in the form of EXHIBIT 1.7(A)(VII), executed by
employees listed on SCHEDULE 1.7.(A)(VII);
(viii) a certificate of the Secretary of Seller
certifying, as complete and accurate as of the Closing, attached copies of the
Articles of Incorporation and the bylaws of Seller, certifying and attaching all
requisite resolutions or actions of Seller's shareholders approving the
execution and delivery of 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 Articles of
Incorporation of Seller required to effect such change of name in form
sufficient for filing with the State of Florida;
(ix) an opinion of counsel of the Seller, dated the
Closing Date, in a form customary for a similar transactions;
(x) the Articles of Incorporation and all
amendments thereto of Seller, duly certified as of a recent date by the
Secretary of State of Florida;
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(xi) 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 To the extent that such certificates cannot be
provided prior to Closing, seller agrees to indemnify and hold harmless Buyer
for the non-payment of sales taxes for any of the jurisdictions in which Seller
is licensed and qualified to do business as a foreign corporation; and
(xii) 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
reasonably satisfactory to Buyer and its counsel and executed by Seller for the
purpose of facilitating the consummation or performance of the transactions
contemplated hereby.
(xiv) a subordination agreement by and between the
Buyer, Seller and Silicon Valley Bank, as sepicified in SCHEDULE 1.7(A)(XIV).
(b) At the Closing, Buyer shall deliver to Seller:
(i) The Cash Portion and the Stock Portion in
accordance with Section 1.3 of this Agreement, by wire transfer to accounts
specified in writing by Seller (which wire transfer instructions must be
delivered by Seller to Buyer at least one (1) Business Day prior to Closing);
(ii) the Assignment and Assumption Agreement,
executed by Buyer;
(iii) the Escrow Agreement, executed by Buyer and
the Escrow Agent, together with the delivery of an amount equal to Two Hundred
Fifty Thousand and No/100 Dollars ($250,000) of Stock to the Escrow Agent;
(iv) the Employment Agreements, executed by Buyer;
(v) the Noncompetition Agreements, executed by
Buyer;
(vi) a 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
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 executives and
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
priced at the end of the Closing Date at the market value of $500,000 as of the
end of the Closing Date; (y) with a vesting schedule of four years; and (z)
distribution list of said stock options to employees determined by Xxxxx Xxxxxx
in his sole discretion.
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(viii) the subordination agreement by and between the
Seller, Buyer and Sicicon Bank as set forth in SCHEDULE 1.7(A)(XIV).
SECTION 1. 8 CONSENTS. Buyer may waive the requirement that Seller
obtain consents to assignment with respect to any of the Seller Contracts
disclosed on SCHEDULE 2.2(C) (the contracts with respect to which Buyer grants
such waiver, 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
Seller represents and warrants to Buyer as follows:
SECTION 2.1 ORGANIZATION AND GOOD STANDING.
(a) Seller is a limited liability company duly organized,
validly existing, and in good standing under the laws of the State of Florida,
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 articles 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.
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SECTION 2.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Seller. Upon the execution and delivery by Seller of each of the
documents and instruments to be executed and delivered by Seller 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 Seller, enforceable against Seller 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 Members.
(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 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 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 common stock held entirely by the parties listed on SCHEDULE 2.3.
SECTION 2.4 FINANCIAL STATEMENTS. Attached hereto as SCHEDULE 2.4
are the Seller's unaudited Balance Sheets and unaudited profit and loss
statement for the twelve months ended December 31, 2004 and December 31, 2005,
unaudited balance sheet as of June 30, 2006, and unaudited profit and loss
statement for the 6 months ended June 30, 2006 (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 June 30, 2006, 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 public accountant.
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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
against 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.
(b) SCHEDULE 2.7(B) sets forth all items of Tangible
Personal Property with an initial, nondepreciated book value in excess of
$2,500. Each item of Tangible Personal Property 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 is in need of repair or replacement other than as part of routine
maintenance in the ordinary course of business. All Tangible Personal Property
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 (AS DEFINED IN SECTION 2.11(A)). 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 other than the
notification of a potential sales and use tax audit by the State of Florida (the
"Potential Tax Audit") Seller has not requested or been given any extension of
time within which to file returns in respect of any taxes for which Seller may
be liable. 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
subject to the Potential Tax Audit.
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
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employee of Seller, including each employee on leave of absence or layoff status
(the "EMPLOYEES"), and (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 activity pending or
threatened that affects Seller's Employees. 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, 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, or 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 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.
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 with the exception of the Potential Tax Audit.
(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. Except as set forth on
SCHEDULE 2.11(B), each such private investigations license or permit is
transferable to Buyer as of the Closing.
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
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the knowledge of Seller, 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 has
provided Buyer with a true and accurate written description of each oral Seller
Contract. To the best of Seller's knowledge, each Seller Contract is valid and
binding and in full force and effect, Seller and each other person that has or
had any obligation or liability under any Seller Contract is in compliance with
all 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 all reasonable
precautions to protect the secrecy, confidentiality, and value of the all of the
Intellectual Property Assets and Proprietary Assets, and has the right to use
all of the Intellectual Property Assets and Proprietary Assets. None of the
Intellectual Property Assets or Proprietary Assets is subject to any adverse
claim or has been challenged or threatened in any way or infringes or conflicts
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 stockholder in te Seller or any Related Person (as defined
below) of a stockholder has any interest in any property (whether real,
personal, or mixed and whether tangible or intangible), used in or pertaining to
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Seller's business. To the knowledge of the Seller, no stockholder or any Related
Person of any stockholder 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 stockholder 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, stockholder 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).
Affiliate for purposes of this Agreement shall mean a wholly owned subsidiary of
the Seller.
SECTION 2.17 NO UNDISCLOSED LIABILITIES. Seller has no liabilities or
obligations except for liabilities or obligations reflected or reserved against
in the unaudited balance sheet as of April 30, 2006 (the "INTERIM BALANCE
SHEET") and current liabilities incurred in the ordinary course of business of
Seller since April 30, 2006.
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 have 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 ACCOUNTS RECEIVABLE. All Accounts Receivable that are
reflected on the Interim Balance Sheet or on the accounting Records of Seller as
of the Closing Date represent or will represent valid obligations arising from
services actually performed by Seller in the ordinary course of business. Except
to the extent paid prior to the Closing Date, such Accounts Receivable are or
will be as of the Closing Date collectible net of the respective reserves shown
on the Interim Balance Sheet (which reserves are adequate and calculated
consistent with past practice). Subject to such reserves, each of such Accounts
Receivable either has been or will be collected in full, without any set-off,
within 365 days after the day on which it first becomes due and payable.
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SCHEDULE 2.20 contains a complete and accurate list of all Accounts Receivable
as of the date of the Interim Balance Sheet, which list sets forth the aging of
each such Account Receivable.
SECTION 2.21 CUSTOMERS AND SUPPLIERS. Since April 30, 2006, 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 REC ORDS. 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 Members 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. There does not now exist any event, condition, or
other matter, individually or in the aggregate, adversely affecting Seller or
the Seller's business, prospects, financial condition, or results of its
operations that has not been set forth this Agreement.
SECTION 2.26 BROKERS. No brokers have been hired or contracted by the
Seller for the transaction contemplated under this Agreement.
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)
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(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 AVAILABILITY OF FINANCING. Buyer has no reason to
believe that the private placement for the funds necessary to finance the Buyer
to consummate the transactions contemplated by this Agreement will not be
available to Buyer on the Closing Date.
SECTION 3.6 BROKERS OR FINDERS. Buyer will be responsible for any
brokers it has utilized for this transaction, including but not limited to valid
claims for payment from such brokers.
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
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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 of the 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 stockholders of Seller.
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 stockholder, 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.
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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 shareholders 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.
SECTION 4.8 CHANGE OF NAME. On or before the Closing Date, Seller
shall take all other actions necessary to amend its certificate of organization
and change its name to one sufficiently dissimilar to Seller's present name to
avoid confusion.
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.
SECTION 5.3 NOTIFICATION. Between the date of this Agreement and the
Closing Date, Buyer shall promptly notify Seller in writing if it becomes aware
of 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 Buyer's discovery of, such fact or
condition. Should any such fact or condition require any change to the
Schedules, Buyer shall promptly deliver to Seller a supplement to the Schedules
specifying such change.
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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 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 has completed the
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) A statement from the holder of each note listed on
SCHEDULE 1.4(A)(III), if any, dated the Closing Date, setting forth the
principal amount then outstanding on the indebtedness represented by such note,
the interest rate thereon, and a statement to the effect that Seller, as obligor
under such note, is not in default under any of the provisions thereof;
(b) releases of all Encumbrances on the Assets, other than
Permitted Encumbrances;
(c) 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 New York and
each jurisdiction in which Seller is licensed or qualified to do business as a
foreign corporation as specified in SCHEDULE 2.L. To the extent that such
certificates cannot be provided prior to Closing, seller agrees to indemnify and
hold harmless Buyer for the non-payment of sales taxes for any of the
jurisdictions in which Seller is licensed and qualified to do business as a
foreign corporation; and
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(d) such other documents as Buyer may reasonably request
with reasonable notice 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.
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:
(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.
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.
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ARTICLE VIII
ADDITIONAL COVENANTS
SECTION 8.1 EMPLOYEES AND EMPLOYEE BENEFITS.
(a) Effective immediately before the Closing Date, Seller
shall novate any employment agreements it may have to the Buyer (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.
(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.
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
to make all such payments directly or through the escrow (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 the Purchase Price to be received
under this Agreement, Seller agrees 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
19
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.
(b) 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 seven (7) years those records of Seller
delivered to Buyer. Buyer also shall provide Seller and a representative of the
Members 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.
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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 to comply with its 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 July 31, 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.
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, subject to Article X, all obligations of the parties under this Agreement
will terminate.
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 based upon a breach of any of the representations and warranties
of the Seller contained in this Agreement or breach of any of Seller's covenants
or agreements to be performed at or prior to Closing. Buyer will be deemed to
21
have waived in full any breach of any of Seller's representations and warranties
and any such covenants and agreements of which Buyer has awareness at the
Closing.
SECTION 10.2 INDEMNIFICATION AND REIMBURSEMENT BY SELLER.. Seller
shall indemnify and hold harmless Buyer, and its directors, stockholders,
members, partners, employees, representatives, and agents (collectively, the
"BUYER INDEMNIFIED PERSONS"), and shall reimburse the Buyer Indemnified Persons,
for any loss, liability, claim, damage 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 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.
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 TIME LIMITATIONS.
(a) Seller 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 of a
breach specifying the factual basis of that breach in reasonable detail to the
extent then known by Buyer and providing a reasonable opportunity to cure;
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
breach specifying the factual basis of that breach in reasonable detail to the
extent then known by Seller.
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SECTION 10.5 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 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 the same, and (b) such
defense is instituted and continuously maintained in good faith by Indemnitor.
Indemnitee may, if it so elects, designate and pay for 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 10.6 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
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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):
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 Hyperion Risk, Inc.
X.X. Xxx 000000
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxx
Fax: 000-000-0000
` Email: XXXXXXX@XXXXXXXXXXXX.XXX
with a copy to: Xxxxxx, Price & xxXxxxx
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Fax:000-000-0000
xxxxxx@xxxxxxxxxxx.xxx
SECTION 11.3 JURISDICTION. The parties agree that the state and
federal courts located in New York City, New York, 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
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Agreement may not be amended except by a written agreement signed on behalf of
each of the parties hereto. Provided, however, the Buyer shall have a right to
waive any conditions contained in Article 6 to accomplish the Closing without
the consent of the Seller.
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
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 New York 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
25
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
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 in the event of a ruling by a court of competent jurisdiction in
favor of the prevailing party.
REMAINING PAGE BLANK
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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 Chief Executive Officer
SELLER:
HYPERION RISK, INC.
By: /s/ Xxxxxxxx X. Xxxxxx III
--------------------------------
Name: Xxxxxxxx X. Xxxxxx III
Its: President
