Exhibit 2.2
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made as of December 30,
2005 by and between S.E.S. Resources, Ltd., a New York corporation ("Seller")
and SES Resources International, Inc., a Delaware corporation ("Purchaser").
RECITALS
WHEREAS, Purchaser is a wholly-owned subsidiary of LQ Corporation, a
Delaware corporation ("Parent"); and
WHEREAS, Seller is a consulting firm which provides specialized services
to law enforcement and other governmental agencies and private industry
corporate clients (the "Business"); and
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, certain Purchased Assets (as hereinafter defined) used in,
held by or relating to the Business upon the terms and subject to the conditions
set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the
representations, warranties, covenants, agreements and conditions contained
herein, the parties hereto, intending to be legally bound hereby, agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. Unless otherwise provided herein, capitalized terms used herein
without definition shall have the meanings ascribed to them in Exhibit A
attached hereto.
ARTICLE II
PURCHASE AND SALE OF SELLER'S ASSETS
2.1 Purchased Assets. Subject to the terms and conditions set forth herein, at
the Closing (as defined in Section 4.1 hereof), Seller shall sell, assign,
transfer, convey and deliver to Purchaser, and Purchaser shall purchase, receive
and accept from Seller, all assets and rights owned by, leased to or otherwise
used or usable by Seller in the operation of the Business (other than the
Excluded Assets), wherever located, whether tangible or intangible, real,
personal or mixed, including, but not limited to those assets set forth on
Schedule 2.1 (each a "Purchased Asset," and collectively, the "Purchased
Assets").
2.2 Excluded Assets. It is understood and agreed between the parties that the
following assets (the "Excluded Assets") shall not be included in the Purchased
Assets and shall be excluded therefrom:
(a) the corporate minute books, capital stock books and tax returns
of Seller;
(b) any assets of the Business listed on Schedule 2.2 hereto.
2.3 Excluded Liabilities. Purchaser shall not assume, and the parties do not
intend for Purchaser to assume, pursuant to this Agreement or otherwise, any
liabilities or obligations of Seller or any of its Affiliates of any kind or
nature whatsoever, whether accrued, absolute, contingent or otherwise, known or
unknown (collectively, the "Excluded Liabilities").
2.4 Nonassignable Assets. Anything in this Agreement to the contrary
notwithstanding, this Agreement shall not constitute an Agreement to sell,
assign, transfer, convey or sublease any Purchased Asset, if an attempted sale,
assignment, transfer, conveyance or sublease thereof without the consent of
another Person or Persons is prohibited by any applicable Law or would
constitute a breach of, or in any way affect the rights of Seller or Purchaser
with respect to, such Purchased Asset (any such Purchased Asset being referred
to as a "Nonassignable Asset"). Seller shall use reasonable efforts, and
Purchaser shall cooperate with Seller in all reasonable respects, to obtain and
satisfy all consents and to resolve all impracticalities of sale, assignment,
transfer, conveyance or sublease necessary to sell, assign, transfer, convey or
sublease any and all Nonassignable Assets (or any interest therein) in
accordance with this Agreement. If any such consent is not obtained and is
required to effectively assign a Purchased Asset, Seller will use its best
efforts to provide, or cause to be provided, to Purchaser the full claims,
rights and benefits of or under such Nonassignable Assets.
ARTICLE III
PAYMENT OF PURCHASE PRICE
3.1 Purchase Price. In consideration for the Purchased Assets, Purchaser shall
issue to Seller nineteen and 5/10 percent (19.5%) of the shares of common stock
of Purchaser (the "Shares"); provided, however, the parties hereto agree that
the ownership of the Shares shall be subject to the terms and conditions set
forth in the Shareholders' Agreement and the Preemptive Right as set forth in
Section 7.4.
ARTICLE IV
CLOSING
4.1 Closing. The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the law offices of Xxxxxxx, Xxxxxxxxx LLP,
located at 0 Xxxx Xxxxx, Xxxxxx, Xxx Xxxxxx 00000 at 10:00 a.m., local time, no
later than ten (10) days after satisfaction or waiver of all other conditions to
the obligations of the parties as set forth in Article VIII, or at such other
place or at such other time or on such other date as the Seller and the
Purchaser may mutually agree upon in writing (the "Closing Date"); provided,
however, that the Closing shall be deemed effective as of 11:59 p.m. on the day
preceding the Closing Date.
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4.2 Transactions on the Closing Date.
(a) Deliveries by Seller. At or prior to the Closing, Seller shall
deliver or cause to be delivered to Purchaser (unless delivered previously) the
following:
(i) the Xxxx of Sale duly executed by Seller;
(ii) the Shareholders' Agreement duly executed by Seller;
(iii) an employment agreement by and between the Purchaser and
Xxxxxxx Xxxxxx, a shareholder of Seller, in form and substance
reasonably satisfactory to Xxxxxxx Xxxxxx and Purchaser (the
"Employment Agreement");
(iv) a consulting agreement by and between the Purchaser and
Xxxxxx Xxxxxx, a shareholder of Seller, in form and substance
reasonably satisfactory to Xxxxxx Xxxxxx and Purchaser (the
"Consulting Agreement");
(v) an incumbency and specimen signature certificate with
respect to the officers of Seller executing the Agreement and the
Other Agreements;
(vi) a copy of the resolutions of the Board of Directors of
Seller authorizing the execution, delivery and performance of the
Agreement and the Other Agreements, certified by the Secretary or an
Assistant Secretary of Seller;
(vii) proof of the satisfaction and discharge of any and all
Encumbrances on the Purchased Assets;
(viii) such other deeds, bills of sale, endorsements,
assignments, affidavits, and other good and sufficient instruments
of sale, assignment, transfer and conveyance in form and substance
satisfactory to Purchaser which are required to effectively vest
Purchaser with good and marketable title in and to all of the
Purchased Assets; and
(ix) the agreements, certificates and other documents required
to be delivered pursuant to Section 8.1.
(b) Deliveries by Purchaser. At the Closing, Purchaser shall deliver
or cause to be delivered (unless delivered previously) to Seller the following:
(i) the Xxxx of Sale duly executed by Purchaser;
(ii) stock certificates representing the Shares;
(iii) the Shareholders' Agreement duly executed by the Parent;
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(iv) the Employment Agreement, in form and substance
reasonably satisfactory to Xxxxxxx Xxxxxx and Purchaser;
(v) a the Consulting Agreement, in form and substance
reasonably satisfactory to Xxxxxx Xxxxxx and Purchaser;
(vi) an incumbency and specimen signature certificate with
respect to the officers of Purchaser executing the Agreement and the
Other Agreements;
(vii) a copy of the resolutions of the member of Purchaser
authorizing the execution, delivery and performance of the Agreement
and the Other Agreements; and
(viii) the agreements, certificates and other documents
required to be delivered pursuant to Section 8.2.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as of the date of this
Agreement, as follows:
5.1 Organization; Standing; Qualification. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York, and has all requisite corporate power and authority to own the
Purchased Assets and to carry on the Business as now conducted and as proposed
to be conducted. Seller is not qualified to transact business as a foreign
corporation in any jurisdiction.
5.2 Authority Relative to this Agreement.
(a) Seller has all necessary corporate power and authority to
execute and deliver this Agreement, the Other Agreements and any other documents
to be executed and delivered by it pursuant hereto and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement, the Other Agreements and any other documents to be executed and
delivered by Seller pursuant hereto and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by Seller.
This Agreement and the documents and instruments to be executed and delivered by
Seller pursuant hereto have been and will be duly and validly executed and
delivered by Seller and, subject to the due authorization, execution and
delivery by the other party or parties thereto, this Agreement, the Other
Agreements and any other documents and instruments to be executed and delivered
by it pursuant hereto constitute valid and binding agreements of Seller
enforceable against Seller in accordance with their terms.
(b) Seller has provided to Purchaser prior to the Closing accurate
and complete copies of all of its books and records, minutes of meetings,
consents, resolutions and other documentation related to the governance of
Seller.
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5.3 Consents and Approvals; No Violations. The execution and delivery by Seller
of this Agreement, the Other Agreements and any other documents and instruments
to be executed and delivered by Seller pursuant hereto, and the consummation of
the transactions contemplated hereby and thereby, either individually or in the
aggregate, do not and will not (i) require any further corporate proceedings on
the part of Seller, (ii) violate or conflict with the Certificate of
Incorporation, Bylaws or other charter documents applicable to Seller, (iii)
require any consent, waiver, approval, authorization or permit of, or filing
with or notification to, any Governmental Authority, (iv) conflict in any
material respect with, require consent under, result in a material violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default or give rise to any right of termination, amendment, acceleration,
cancellation, suspension, impairment, forfeiture or nonrenewal under, any of the
terms, conditions or provisions of any agreement, instrument or obligation by
which Seller or any Purchased Assets may be bound or affected or result in the
imposition of any Encumbrance on the Purchased Assets, or (v) result in a
violation in any material respect of any Law or any Order of any Governmental
Authority by which Seller or any of the Purchased Assets is bound.
5.4 Title and Condition of Purchased Assets. The Seller has good, valid and
marketable title to all of the Purchased Assets, free and clear of all
Encumbrances, and at the Closing will convey good, valid and marketable title to
all such Purchased Assets to Purchaser, free and clear of all Encumbrances. The
Purchased Assets (i) constitute all of the assets used in or required to carry
on the Business as presently conducted, (ii) are adequate for the purposes for
which such Purchased Assets are currently used or held for use and (iii) conform
in all material respects to all applicable Laws, ordinances, Orders, regulations
or governmental or contractual requirements relating to their operation.
5.5 Restrictions on Business Activities. There is no agreement, judgment,
injunction, order, decree or other instrument binding upon Seller which has or
could reasonably be expected to have the effect of prohibiting any business
practice of Seller in relation to the Business or the conduct of the Business by
Purchaser assuming that Purchaser operates the Business after the Closing as it
is currently conducted by Seller and intended to be conducted by Seller.
5.6 Compliance with Law; Permits. Seller is in compliance with all applicable
statutes, judgments, decrees, Laws, ordinances, rules, regulations,
requirements, writs, injunctions and Orders of any Governmental Authority
relating to all operations conducted by Seller in connection with the Business.
No communication, whether from a Governmental Authority or otherwise, has been
received by Seller and no investigation or review is, pending or, to the
Knowledge of Seller, threatened by any Governmental Authority with respect to
(a) any alleged violation by Seller of any permit, Law, ordinance, regulation,
requirement or Order of any Governmental Authority (including, without
limitation, any applicable health, sanitation, fire, safety, zoning or building
permit law, ordinance, regulation, requirement or order) relating to the
operations of Seller in connection with the Business or (b) any alleged failure
to have all permits required in connection with the operations conducted by
Seller with respect to the Business.
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5.7 Litigation. Except as set forth in Schedule 5.7 there has not been any
claim, action, lawsuit, governmental inquiry or investigation or legal,
administrative or arbitration action or proceeding pending or, to the Knowledge
of Seller, threatened relating to the Business or the Purchased Assets, nor the
Knowledge of Seller, is there any basis for any such action. No claim, action,
lawsuit, inquiry, proceeding or investigation identified on Schedule 5.7 could,
if adversely decided, be expected to have a material adverse effect. Seller is
not subject to any restrictions or limitations under any judgment, Order,
decree, writ, injunction or license of any Governmental Authority pertaining to
the conduct of the Business.
5.8 Brokers and Finders. Except as set forth on Schedule 5.8 neither Seller nor
its Affiliates, nor any officer, director, shareholder or employee of Seller or
any such Affiliates has employed any broker, finder or investment banker or
incurred any liability for any commission, brokerage or investment banking fee
or finder's fee in connection with the transactions contemplated by this
Agreement, nor has any such person taken any action which would result in any
such fees or liabilities being the obligation of Purchaser.
5.9 Disclosure. No representation or warranty made by Seller in this Agreement
or in any other writing furnished pursuant hereto contains an untrue statement
of a material fact or omits to state a material fact necessary to make the
statements and facts contained herein or therein, in light of the circumstances
in which they were or are made, not false or misleading.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller, as of the date of this
Agreement, as follows:
6.1 Organization; Standing; Qualification. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all requisite power and authority to purchase, own and operate
the Purchased Assets and the Business as now conducted and as proposed to be
conducted. Purchaser is duly qualified to transact business and is in good
standing in each jurisdiction in which the character of the property owned or
the nature of the business transacted by it makes such qualification necessary.
6.2 Authority Relative to this Agreement. Purchaser has all necessary power and
authority to execute and deliver this Agreement, the Other Agreements and any
other documents to be executed and delivered by it pursuant hereto and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement, the Other Agreements and any other documents to be
executed and delivered by Purchaser pursuant hereto and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by Purchaser. This Agreement and the documents and instruments to be
executed and delivered by Purchaser pursuant hereto have been and will be duly
and validly executed and delivered by Purchaser and, subject to the due
authorization, execution and delivery by the other party or parties thereto,
this Agreement, the Other Agreements and any other documents and
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instruments to be executed and delivered by it pursuant hereto constitute valid
and binding agreements of Purchaser, enforceable against Purchaser in accordance
with their terms.
6.3 Consents and Approvals; No Violations. The execution and delivery by
Purchaser of this Agreement, the Other Agreements and any other documents and
instruments to be executed and delivered by Purchaser pursuant hereto, and the
consummation of the transactions contemplated hereby and thereby, either
individually or in the aggregate, do not and will not, (i) require any further
corporate proceedings on the part of Purchaser, (ii) violate or conflict with
the constituent documents of Purchaser (iii) require any consent, waiver,
approval, authorization or permit of, or filing with or notification to, any
Governmental Authority, (iv) conflict in any material respect with, require
consent under, result in a material violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default or give rise to any
right of termination, amendment, acceleration, cancellation, suspension,
impairment, forfeiture or nonrenewal under, any of the terms, conditions or
provisions of any agreement, instrument or obligation by which Purchaser or any
of its assets or properties is bound, or (v) result in a violation in any
material respect of any Laws or any Order of any Governmental Authority by which
Purchaser is bound.
6.4 Brokers and Finders. Except as set forth on Schedule 6.4, neither Purchaser
nor any of its Affiliates nor any officer, manager, member or employee of
Purchaser or any such Affiliate has employed any broker, finder or investment
banker or incurred any liability for any commission, brokerage or investment
banking fee or finder's fee in connection with the transactions contemplated by
this Agreement, nor has any such person taken any action which would result in
any such fees or liabilities being the obligation of Seller.
ARTICLE VII
COVENANTS OF THE PARTIES
7.1 Confidentiality. From and after the Closing Date each party hereto shall
keep confidential and not release or disclose to third parties (except as
required by law or compulsory legal process) the material terms and conditions
of this Agreement. For a period of three (3) years from the date hereof, Seller
and its Affiliates shall keep confidential and shall not release or disclose to
third party (except as required by law or compulsory legal process) all
proprietary, non-public or confidential business or technical information
relating to or concerning the Business or the Purchased Assets.
7.2 Public Announcements. Except as required by applicable Law, Seller shall
not, nor shall it permit any of its Affiliates to, make any public announcement
in respect of this Agreement or the transactions contemplated hereby without the
prior written consent of Purchaser. Purchaser may make public announcements in
respect of this Agreement or the transactions contemplated hereby; subject,
however, to Seller's consent to the content of such public announcement, which
consent may not be unreasonably withheld. Purchaser shall provide Seller with a
copy of such public announcement two (2) days prior to the making of such
announcement. In the event Seller fails to advise Purchaser of its comments to
the public
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announcement within two (2) days of its receipt thereof, it shall be presumed
that Seller has consented to the content of such public announcement.
Notwithstanding the foregoing, (i) Purchaser shall obtain Seller's prior written
consent to the disclosure of the identity of any member of Purchaser's Advisory
Panel (other than Xxxxxxx Xxxxxx) and (ii) Purchaser may make all public
announcements required by applicable Law without seeking the prior consent of
Seller so long as Purchaser does not disclose the identity of any member of
Purchaser's Advisory Panel without the consent of such member.
7.3 Names of Seller. At the Closing, Seller shall deliver to Purchaser all
documentation as may be required to effectuate a transfer of the name "S.E.S.
Resources" to Purchaser. At that time, Seller shall, at the expense of Parent,
take all such action as may be required so that immediately upon the Closing,
Seller shall change its name to one which shall not be confusingly similar to
their present names. Seller agrees that Purchaser and its successors and assigns
shall own and possess, to the exclusion of Seller, all rights of Seller to such
names or any names similar thereto in the operation of any business. Seller
represents to Purchaser that its has the exclusive right to assign such names to
Purchaser and that the use of such names is not limited by virtue of any written
or oral agreements with any party.
7.4 Preemptive Rights. As a shareholder of Purchaser, Seller shall have the
right ("Preemptive Right") to purchase its pro rata share of all, or any part
of, any additional shares of common stock of Purchaser ("New Shares") which
Purchaser may, from time to time, propose to sell and issue. Purchaser shall
give written notice to Seller not less than twenty (20) days prior to each such
issuance of New Shares, setting forth a description of such New Shares and the
offering price therefor ("Issuance Notice"). Seller shall have ten (10) days
from its receipt of the Issuance Notice to elect, by written notice to Purchaser
("Preemptive Rights Exercise Notice"), to exercise its Preemptive Right with
respect to all or a portion of its pro rata share of such New Shares.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF THE PARTIES
8.1 Conditions to Obligations of Purchaser.
The obligations of Purchaser under this Agreement to consummate the
transactions contemplated hereby shall be, at the option of Purchaser, subject
to the fulfillment, on or before the Closing Date, of each of the following
conditions (provided that Purchaser's election to close despite the
non-satisfaction of one or more of the following conditions shall not be deemed
a waiver by Purchaser of any of its rights under this Agreement or a waiver by
Purchaser of any of Seller's obligations under this Agreement):
(a) Representations and Warranties. The representations and
warranties of Seller contained in this Agreement shall have been true and
correct when made and shall be true and correct as of the Closing with the same
force and effect as if made as of the Closing (other
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than such representations and warranties as are made as of another date), the
covenants and agreements contained in this Agreement to be complied with by
Seller on or before the Closing shall have been complied with.
(b) Proceedings and Documents. All corporate and other proceedings
of Seller in connection with this Agreement and the transactions contemplated
hereby shall be reasonably satisfactory in form and substance to Purchaser, and
Purchaser shall have received all such counterpart original and certified or
other copies of such documents as it may reasonably request.
(c) Consents and Approvals. All consents, approvals, authorizations,
exemptions and waivers from third parties and Governmental Authorities that are
required by Law or which are necessary in order to enable Purchaser to
consummate the transactions contemplated hereby and to operate the Business
substantially in the same manner in which Seller has operated the Business prior
to the date hereof shall have been duly obtained and effective on and as of the
Closing Date.
(d) Deliveries at Closing. Seller shall have executed and delivered
to Purchaser all other assignments, registrations, endorsements, bills of sale,
deeds, assignments and other instruments of transfer and conveyance, and such
other agreements, instruments, certificates and documents, all in form and
substance reasonably satisfactory to Purchaser, as shall be effective to vest in
Purchaser all of the right, title and interest of Seller in and to the Purchased
Assets free and clear of all Encumbrances, and as shall be necessary to fully
effectuate the transactions contemplated hereby. Seller shall use its
commercially reasonable efforts to take all such steps as may be necessary to
put Purchaser in actual possession and operating control of the Business and the
Purchased Assets.
(e) No Adverse Changes. Between the date of this Agreement and the
Closing Date, there shall not have occurred any damage to, or destruction or
loss of, any of the Purchased Assets, whether or not covered by insurance, nor
shall there have occurred any other event or condition, any of the foregoing of
which has had or may reasonably be expected to have a material adverse effect.
(f) No Proceeding or Litigation. No action or legal proceeding shall
have been commenced by or before any Governmental Authority against either
Seller or Purchaser seeking to restrain or materially and adversely alter the
transactions contemplated hereby which Purchaser believes, in its sole and
absolute discretion, is likely to render it impossible or unlawful to consummate
the transactions contemplated by this Agreement or which could have a material
adverse effect.
(g) Certificate of Executive Officer of Seller. Purchaser shall have
received a certificate, dated the Closing Date, executed by the chief executive
officer of Seller, certifying that each of the conditions set forth in Section
8.1(a), (b), (e) and (f) have been satisfied.
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(h) Checkpoint Acquisition. Parent, through a wholly-owned
subsidiary known as Sielox, LLC, a Delaware limited liability company, shall
have consummated the transactions contemplated by that certain Asset Purchase
Agreement between Sielox, LLC and Checkpoint Systems, Inc., dated November 4,
2005.
(i) Options. Parent shall have granted Seller, Xxxxxx Xxxxxx and
Xxxxxxx Xxxxxx stock options in a mutually agreed upon amount and manner (the
"Stock Options").
(j) Agreements. Seller shall have executed the Employment Agreement,
in form and substance reasonably satisfactory to Xxxxxxx Xxxxxx and Purchaser;
and Xxxxxx Xxxxxx shall have executed the Consulting Agreement, in form and
substance reasonably satisfactory to Xxxxxx Xxxxxx and Purchaser.
8.2 Conditions to Obligations of Seller. The obligations of Seller under this
Agreement to consummate the transactions contemplated hereby shall be, at the
option of Seller, subject to the fulfillment, on or prior to the Closing Date,
of each of the following conditions (provided that Seller's election to close
despite the non-satisfaction of one or more of the following conditions shall
not be deemed a waiver by Seller of any of its rights under this Agreement or a
waiver by Seller of any of Purchaser's obligations under this Agreement):
(a) Representations and Warranties. The representations and
warranties of Purchaser contained in this Agreement shall have been true and
correct when made and shall be true and correct as of the Closing with the same
force and effect as if made as of the Closing (other than such representations
and warranties as are made as of another date), the covenants and agreements
contained in this Agreement to be complied with by Seller on or before the
Closing shall have been complied with.
(b) Proceedings and Documents. All corporate and other proceedings
of Purchaser in connection with this Agreement and the transactions contemplated
hereby shall be reasonably satisfactory in form and substance to Seller, and
Seller shall have received all such counterpart original and certified or other
copies of such documents as it may reasonably request.
(c) No Proceeding or Litigation. No action or legal proceeding shall
have been commenced by or before any Governmental Authority against either
Seller or Purchaser seeking to restrain or materially and adversely alter the
transactions contemplated hereby which Seller believes, in its sole and absolute
discretion, is likely to render it impossible or unlawful to consummate the
transactions contemplated by this Agreement or which could have a Material
Adverse Effect.
(d) Reimbursement of Expenses. Purchaser shall have reimbursed
Xxxxxx Xxxxxx for all properly documented costs and expense incurred by Xxxxxx
Xxxxxx in connection with the formation and operation of Purchaser. It is hereby
acknowledged and agreed that the amount of such expenses shall be a minimum of
ten thousand dollars ($10,000) and shall not exceed fifteen thousand dollars
($15,000).
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(e) Options. Parent shall have granted Seller, Xxxxxx Xxxxxx and
Xxxxxxx Xxxxxx the Stock Options in a mutually agreed upon amount and manner.
(f) Agreements. Purchaser shall have executed the Employment
Agreement, in form and substance reasonably satisfactory to Xxxxxxx Xxxxxx and
Purchaser; and the Consulting Agreement, in form and substance reasonably
satisfactory to Xxxxxx Xxxxxx and Purchaser.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
9.1 Survival of Representations and Covenants. Each representation and warranty
made by any party to this Agreement shall survive the Closing for a period of
twenty-four (24) months following the Closing Date. Notwithstanding the
foregoing, the representations and warranties contained in Section 5.1, Section
5.2, Section 5.3 and Section 5.4 shall survive indefinitely. Each covenant and
agreement made by any party to this Agreement shall survive the Closing
indefinitely, unless a shorter period is specifically set forth in such covenant
or agreement.
9.2 Indemnification.
(a) Seller's Agreement to Indemnify. Subject to the terms and
conditions of this Article IX, Seller hereby agrees to indemnify, defend and
hold harmless Purchaser and its members, officers, directors, employees, agents,
Affiliates, successors and permitted assigns (the "Purchaser Group"), after
consummation of the Closing, from and against any and all losses, liabilities,
costs, expenses (including reasonable attorneys' fees) penalties, fines and
damages (collectively, "Damages") incurred by any member of the Purchaser Group
to the extent arising from or attributable to (i) the breach of any
representation or warranty of Seller contained in this Agreement or any of the
Other Agreements, (ii) any breach of any covenant or agreement of Seller
contained in this Agreement or any of the Other Agreements or (iii) the Excluded
Liabilities. Claims by any member of the Purchaser Group under this Section
9.2(a) are referred to individually as a "Purchaser Claim" or collectively, as
"Purchaser Claims."
(b) Purchaser's Agreement to Indemnify. Subject to the terms and
conditions of this Article IX, Purchaser hereby agrees to indemnify, defend and
hold harmless Seller and its shareholders, officers, directors, employees,
agents, Affiliates, successors and permitted assigns (the "Seller Group"), after
consummation of the Closing, from and against any and all Damages (as defined in
Section 9.2(a) above) incurred by any member of the Seller Group to the extent
arising from or attributable to (i) the breach of any representation or warranty
of Purchaser contained in this Agreement or any of the Other Agreements or (ii)
any breach of any covenant or agreement of Purchaser contained in this Agreement
or any of the Other Agreements. Claims by any member of the Seller Group under
this Section 9.2 (b) are referred to individually as a "Seller Claim" or
collectively, as "Seller Claims."
9.3 Conditions of Indemnification.
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(a) The obligations and liabilities of an indemnifying party under
Section 9.2 hereof with respect to Purchaser Claims or Seller Claims made by
third parties shall be subject to the following terms and conditions:
(i) the indemnified party will give the indemnifying party
written notification of any Purchaser Claim or Seller Claim made by
third parties, and the indemnifying party shall have the right, so
long as it acts with reasonable diligence to defend such claim, to
undertake the defense thereof by counsel and other representatives
chosen by it in each case reasonably acceptable to the indemnified
party;
(ii) in the event the indemnifying party assumes the defense
of a claim, the indemnified party shall have the right to employ
counsel separate from counsel employed by the indemnifying party in
any such action and to participate therein, but the fees and
expenses of such counsel employed by the indemnified party shall be
at its expense, unless (A) the indemnified party is required to
retain separate counsel due to a conflict of interest with the
indemnifying party or (B) the indemnifying party fails to act with
reasonable diligence in defending such claim;
(iii) if the indemnifying party, within twenty (20) Business
Days after notice of any such Purchaser Claim or Seller Claim, fails
to agree in writing to defend the indemnified party against which
such Purchaser Claim or Seller Claim has been asserted or thereafter
fails to reasonably defend such party, the indemnified party shall
(upon further notice to the indemnifying party) have the right to
undertake the defense, compromise or settlement of such Purchaser
Claim or Seller Claim on behalf of and for the account and risk of
the indemnifying party (subject to the right of the indemnifying
party thereafter to assume such defense in accordance with this
Section 9.3); provided that the indemnified party shall not, without
the written consent of the indemnifying party, settle or --------
compromise any Purchaser Claim or Seller Claim, as the case may be,
or consent to the entry of any judgment which does not include as an
unconditional term thereof the giving by the claimant or the
plaintiff to the indemnifying party a release from any and all
liability or obligation in respect to such Purchaser Claim or Seller
Claim, as the case may be;
(iv) no claim shall be settled without the indemnified party's
prior written consent, which consent shall not be unreasonably
withheld or delayed, unless the settlement involves only the payment
of monetary consideration by the indemnifying party and includes an
unconditional release of the indemnified party; and
(v) whether or not an indemnifying party chooses to defend a
claim, all the parties hereto shall cooperate in the defense or
prosecution thereof and
12
shall furnish such records, information and testimony, and attend
such conferences, discovery proceedings, hearings, trials and
appeals, as may be reasonably requested in connection therewith.
(b) Anything in this Section 9.3 to the contrary notwithstanding,
(i) if there is a reasonable probability that a Purchaser Claim or a Seller
Claim may materially and adversely affect the indemnified party other than as a
result of money damages or other money payments, the indemnified party shall
have the right, at its own cost and expense, to defend, compromise or settle
such Purchaser Claim or Seller Claim; provided, however, that if such Purchaser
Claim or Seller Claim is settled without the indemnifying party's consent (which
consent shall not be unreasonably withheld, delayed or conditioned), the
indemnified party shall be deemed to have waived all rights hereunder against
the indemnifying party for money damages arising out of such Purchaser Claim or
Seller Claim, and (ii) with respect to any Purchaser Claims or Seller Claims
relating to Taxes, the indemnifying party shall not settle or compromise any
Purchaser Claim or Seller Claim or enter into any closing or other final
agreement with any taxing authority without the written consent of the
indemnified party.
9.4 Disclosure. No action by Purchaser to determine the extent of indemnified
Damages, including voluntary disclosure to Governmental Authorities or potential
claimants, shall in any way affect any member of the Purchaser Group's right to
indemnification hereunder.
ARTICLE X
TERMINATION OF AGREEMENT
10.1 Events of Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned, at any time prior to Closing:
(a) by the mutual consent of Purchaser and Seller; or
(b) by the Seller on the one hand, or the Purchaser, on the other
hand, if the other party shall have materially breached or failed in any respect
to comply with any of its covenants, agreements or obligations under this
Agreement, or if any of the representations and warranties of such other party
contained in this Agreement shall have been inaccurate in any material respect
when made or become inaccurate in any respect at any time prior to the Closing;
or
(c) by either Seller or Purchaser if prior to February 15, 2006, (i)
Seller and Xxxxxxx Xxxxxx have been unable to mutually agree upon the terms and
conditions of the Employment Agreement, (ii) Seller and Xxxxxx Xxxxxx have been
unable to mutually agree upon the terms and conditions of the Consulting
Agreement and (iii) Parent, Xxxxxxx Xxxxxx and Xxxxxx Xxxxxx have been unable to
mutually agree upon the terms and conditions of the grant of the Stock Options.
13
(d) by the Seller or the Purchaser, if the Closing shall not have
occurred prior to February 15, 2006; provided, however, that the right to
terminate this Agreement under this Section 10.1(c) shall not be available to
any party whose failure to fulfill any covenant, obligation or agreement under
this Agreement shall have been the cause of, or shall have resulted in, the
failure of the Closing to occur prior to such date.
10.2 Effect of Termination. In the event that either party shall elect to
terminate this Agreement pursuant to any provision contained herein expressly
giving such party the right to terminate this Agreement, this Agreement shall
forthwith terminate and have no further effect and no party shall have any
further obligation or liability in respect of such termination (except with
respect to those provisions hereof which expressly survive any termination of
this Agreement), provided, that the provisions of Sections 7.1 and 11.13 shall
survive any such termination and be enforceable hereunder and provided, further,
that nothing in this Section 10.2 shall relieve either party hereto of any
liability for its breach of this Agreement.
10.3 Waiver. At any time prior to the Closing, either party hereto may (a)
extend the time for the performance of any of the obligations or other acts of
the other party hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto or (c)
waive compliance with any of the agreements or conditions contained herein. Any
such extension or waiver shall be valid if set forth in an instrument in writing
signed by the party to be bound thereby.
ARTICLE XI
MISCELLANEOUS
11.1 Further Assurances. Whenever and so often as requested by Purchaser, Seller
will promptly execute and deliver or cause to be executed and delivered all such
other and further instruments, documents or assurances, and promptly do or cause
to be done all such other and further things, as may be necessary and reasonably
required in order to further and more fully vest in Purchaser all rights,
interests, powers, benefits, privileges and advantages conferred or intended to
be conferred by this Agreement.
11.2 Entire Agreement. This Agreement, including the Schedules and Exhibits
hereto, and the documents and instruments to be executed and delivered pursuant
hereto constitute the entire agreement among the parties with respect to the
subject matter hereof, supersede all prior agreements and understandings among
the parties with respect thereto party shall be liable or bound to any other
party in any manner by any promises, conditions, warranties, representations, or
covenants except as specifically set forth herein or therein.
11.3 Successors and Assigns. This Agreement may not be assigned by any party
hereto without the written consent of Purchaser and Seller; provided, however,
that Purchaser may assign its rights hereunder to any Affiliate which assumes
the obligations of Purchaser hereunder, but no such assignment shall relieve
Purchaser of any such obligations. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of, and be
14
enforceable by the parties hereto and their respective heirs, personal
representatives, legatees, successors and permitted assigns. Notwithstanding
anything to the contrary set forth herein, in the event of a conveyance, sale or
other disposition of all or any portion of the Business and/or the Purchased
Assets, Purchaser may from time to time assign and transfer to the purchaser
thereof, all of the interest, rights and remedies of Purchaser in, to and with
respect to the indemnification obligations of Seller set forth in Article IX.
Seller and its Affiliates and their successors and assigns hereby expressly
consent to such assignment or assignments. This Agreement shall not confer any
rights or remedies upon any Person other than the parties hereto and their
respective heirs, personal representatives, legatees, successors and permitted
assigns.
11.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York excluding its conflicts of law
principles (other than Section 5-1401 of the General Obligations Law of the
State of New York). In the event of any controversy or claim arising out of or
relating to this Agreement or the breach or alleged breach hereof, each of the
parties hereto irrevocably (a) submits to the exclusive jurisdiction of any New
York state court or any federal court sitting in the State of New York, (b)
waives any objection which it may have at any time to the laying of venue of any
action or proceeding brought in any such court, (c) waives any claim that such
action or proceeding has been brought in an inconvenient forum and (d) agrees
that service of process or of any other papers upon such party by registered
mail at the address to which notices are required to be sent to such party under
Section 11.12 shall be deemed good, proper and effective service upon such
party.
11.5 Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from this
Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
11.6 Waiver of Compliance. Without limiting Purchaser's right to indemnification
pursuant to Section 9.2 for Damages incurred as a result of third party claims,
suits or proceedings, Purchaser agrees that Seller's non-compliance with any
applicable bulk transfer provisions of the Uniform Commercial Code will not be
deemed a breach or default under any representation or warranty by Seller made
under or in connection with this Agreement.
11.7 Amendments and Waivers. This Agreement may not be modified, nor may any
term or provision hereof be waived or discharged, except by an instrument in
writing signed by the party against whom enforcement of such modification,
waiver or discharge is sought. No such waiver or discharge shall be deemed to be
or shall constitute a waiver or discharge with respect to any other terms or
provisions of this Agreement, whether or not similar. Each such waiver or
discharge shall be effective only in the specific instance and for the purpose
for which it was given, and shall not constitute a continuing waiver or
discharge.
11.8 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
15
11.9 Captions. The table of contents, headings and captions used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
11.10 Certain References. The term "herein," "hereof" "hereunder" or similar
terms used in this Agreement refer to this entire Agreement and not to the
particular provision in which the term is used. The word "including" shall mean
"including without limitation", whether or not expressed. Unless otherwise
stated, all references herein to Articles, Sections, subsections or other
provisions are references to Articles, Sections, subsections or other provisions
of this Agreement.
11.11 Interpretation. The parties hereto acknowledge and agree that: (i) each
party and its counsel reviewed and negotiated the terms and provisions of this
Agreement and have contributed to its revision; (ii) the rule of construction to
the effect that any ambiguities are resolved against the drafting party shall
not be employed in the interpretation of this Agreement; and (iii) the terms and
provisions of this Agreement shall be construed fairly as to all parties hereto
and not in favor of or against any party, regardless of which party was
generally responsible for the preparation of this Agreement.
11.12 Notices. All notices, requests, demands, waivers and other communications
required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been duly given if delivered personally, sent by
overnight courier, facsimile transmission (with confirmation of receipt) or
mailed (postage prepaid and by certified or registered mail, return receipt
requested):
If to Seller, to:
S.E.S. Resources, Ltd.
000 Xxxxx Xxxxxxxx
Xxxxx 000
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
16
If to Purchaser, to:
SES Resources International, Inc.
c/o LQ Corporation, Inc.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxx, CEO
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy to:
Xxxxxxx, Xxxxxxxxx LLP
0 Xxxx Xxxxx, 00xx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
or to such other person or address as any party shall specify by notice in
writing to the other party. All such notices, requests, demands, waivers and
communications shall be deemed to have been received on the date on which so
hand-delivered or telecommunicated or delivered by overnight courier or on the
fifth business day following the date on which so mailed, except for a notice of
change of address, which shall be effective only upon receipt thereof.
11.13 Expenses. Purchaser and Seller shall bear and pay their own respective
costs and expenses incurred by them (including but not limited to counsel,
financial advisory and accounting fees and expenses) in connection with the
transactions contemplated hereby.
[Remainder of page intentionally left blank]
17
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
SES Resources International, Inc.
By:____________________________
Name:
Title:
S.E.S. Resources, Ltd.
By:____________________________
Name:
Title:
18
EXECUTION COPY
EXHIBIT A
DEFINITIONS
The following terms, as used in the Agreement, have the following
meanings:
"Affiliate" shall mean, with respect to a specified Person, a Person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with, such specified Person, and also
includes any stockholder, member, officer, manager or director of such Person.
"Xxxx of Sale" shall mean the Xxxx of Sale, dated as of the Closing Date,
from Seller to Purchaser in the form attached hereto as Exhibit B, pursuant to
which Seller shall transfer the Purchased Assets to Purchaser.
"Business Day" shall mean a day of the year on which banks are not
required or authorized to be closed in the State of New York.
"Encumbrances" shall mean any mortgages, liens, pledges, security
interests, leases, options or rights in third persons to acquire or lease,
charges, adverse interests, judgments, claims, encumbrances, restrictions or
defects of any nature whatsoever.
"Governmental Authority" shall mean any public body, governmental,
administrative or regulatory authority, agency, instrumentality or commission,
including courts of competent jurisdiction and arbitral tribunals, whether
Federal, state, local or foreign.
"Knowledge of Seller" means the best knowledge, after reasonable inquiry,
at any time, of Seller or the officers and directors of Seller.
"Laws" shall mean any and all statutes, ordinances, rules, regulations,
orders, writ or other laws of any Governmental Authority.
"Orders" shall mean any orders, writs, injunctions, judgments, decrees or
awards of any Governmental Authority.
"Other Agreements" shall mean the Xxxx of Sale and the Shareholders'
Agreement.
"Person" means an individual, partnership, venture, unincorporated
association, organization, syndicate, corporation, limited liability company, or
other entity, trust, trustee, executor, administrator or other legal or personal
representative or any government or any agency or political subdivision thereof.
"Shareholders' Agreement" shall mean that certain Shareholders' Agreement
of Purchaser by and between Seller and the Parent, dated as of the date hereof,
in the form attached hereto as Exhibit C.
"Taxes" shall mean any domestic or foreign federal, state or local taxes,
levies, imposts, duties or other like assessments or charges of any kind
whatsoever, together with any interest or penalty, addition to tax or additional
amount imposed thereon, whether payable by reason of contract, assumption,
transferee liability, operation of law or otherwise (including any income, net
income, gross income, receipts, windfall profit, severance, property,
production, sales, use, license, excise, registration, franchise, employment,
payroll, withholding, alternative or add-on minimum, intangibles, ad valorem,
transfer, gains, stamp, estimated, transaction, title, capital, paid-up capital,
profits, occupation, premium, value-added, recording, real property, personal
property, federal highway use, commercial rent or environmental tax).
2
EXHIBIT B
XXXX OF SALE
KNOW ALL MEN BY THESE PRESENTS THAT pursuant to the Asset Purchase
Agreement dated as of December ___, 2005 (the "Asset Purchase Agreement") by and
between S.E.S. RESOURCES, LTD., a New York corporation ("Seller") and SES
RESOURCES INTERNATIONAL, INC., a Delaware corporation ("Purchaser"), for good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Seller does hereby sell, transfer, deliver and assign unto
Purchaser, the Purchased Assets as set forth in Section 2.1 of the Asset
Purchase Agreement, intending to hereby convey all of the right, title and
interest of Seller therein, free and clear of all Encumbrances.
This Xxxx of Sale is executed and delivered in connection with the Asset
Purchase Agreement and notwithstanding anything to the contrary set forth
herein, nothing hereby shall in any way vary the express promises, agreements,
representations and warranties of Seller set forth in the Asset Purchase
Agreement.
Notwithstanding anything to the contrary set forth or implied in the
foregoing paragraphs hereof, the Excluded Assets listed in Section 2.2 of the
Asset Purchase Agreement are specifically excluded from this Xxxx of Sale and
are not being sold to Purchaser.
The interpretation and performance of this Xxxx of Sale shall be governed
by and in accordance with the laws of the State of New York without regard to
such State's conflicts of law principles (other than Section 5-1401 of the
General Obligations Law of the State of New York).
All capitalized terms used herein but not defined herein shall have the
meanings assigned to such terms in the Asset Purchase Agreement.
S.E.S. RESOURCES, LTD.
By:____________________________
Name:
Title:
3
EXHIBIT C
SHAREHOLDERS' AGREEMENT
ATTACHED HERERTO
4
SCHEDULES
Schedule 2.1
Purchased Assets
Trademark (servicemark) application for S.E.S. Resources Serial Number 78/688715
URL's registered with Xxxxxxx.xxx:
o xxxxxxxxxxxx.xxx
o xxxxxxxxxxxx.xxx
o xxxxxxxxxxxx.xx.xx
o xxxxxxxxxxxx.xxxx
o xxxxxxxxxxxx.xxx
o xxxxxxxxxxxx.xxx
o xxxxxxxxxxxx.xx
5
Schedule 2.2
Excluded Assets
None
6
Schedule 5.7
Litigation
None
7
Schedule 5.8
Brokers and Finders - Seller
None
8
Schedule 6.4
Brokers and Finders - Purchaser
None
9
