ASSET PURCHASE AGREEMENT
Exhibit
10.1
This ASSET PURCHASE AGREEMENT (the
“Agreement”), is made this 10th day of
July, 2009, by and between SteelCloud, Inc., a Virginia corporation (“Seller”), and NCS
Technologies, Inc., a Virginia corporation (“Buyer”).
1. Purchase
of Assets. Upon the terms and subject to the conditions of
this Agreement, Buyer agrees to purchase, and Seller agrees to sell, all of
Seller’s right, title and interest in and to those certain assets of Seller
relating to Seller’s integration business (the “Integration Business”) listed
on Exhibit
1 attached hereto (the “Purchased Assets”), free and
clear of all Encumbrances (as herein defined). The purchase price for the
Purchased Assets shall be $475,000 (the “Purchase Price”), subject to
adjustment pursuant to Section 3 hereof and/or
offset pursuant to Section 12.4
hereof.
2. Payment
of Purchase Price and Reporting.
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2.1.
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Buyer
shall pay Seller $150,000 at Closing, which amount shall be inclusive of
Buyer’s $50,000 good faith advance deposit (the “Escrow Deposit”)
escrowed pursuant to that certain Escrow Agreement dated as of July 2,
2009 by and among Seller, Buyer and Fettmann, Xxxxxxx & Xxxxxx PC, as
escrow agent (the “Escrow
Agreement”). This payment is allocated $75,000 to the
Purchased Assets consisting of finished goods, work in progress, and
components (the “Goods
and WIP Assets”), and $75,000 to the Purchased Assets consisting of
service inventory (the “Service Inventory
Assets”), all as further specified on Exhibit
1 attached hereto. Subject to offset pursuant to Section 12.4 hereof,
the remaining $325,000 of the Purchase Price (the “Earnout Amount”),
allocated to good will, shall be payable solely from, and solely to the
extent of, revenue actually received by Buyer after the Closing Date until
the third (3rd)
anniversary of the Closing Date from the existing Integration Business
clients and prospects with respect to which Seller has had verifiable
contact regarding the Integration Business within the six-month period
immediately preceding the Closing Date, in each case as listed on Exhibit
2 attached hereto (collectively, “Clients”), at a rate
equal to 15% of the Net Sales Price actually received by Buyer from such
Clients. For purposes of this Agreement, “Net Sales Price” means
the aggregate amount, net of any returns or credits against sales, that
one or more Clients shall have paid to Buyer relating to the Goods and WIP
Assets or the Service Inventory Assets, in connection with a sale
transaction accepted by Buyer and closed, less any (i) sales taxes, excise
taxes, value-added taxes and any other taxes (other than income taxes
payable by Buyer to U.S. federal or state authorities) payable in
connection with or as a result of such sale transaction and (ii) any
freight costs, insurance costs or duties payable in connection with or as
a result of such sale transaction.
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2.2.
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Any
post-Closing payments owed to Seller hereunder, including but not limited
to payments in respect of sales of Consigned Filter Inventory pursuant to
Section
5
hereof, are due and payable to Seller on or before the tenth (10th)
business day of the month following the month Buyer actually receives the
applicable payment from Clients.
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2.3.
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Buyer
shall keep full and complete records of sales to Clients. Buyer
shall provide to Seller a report each month on or before the tenth
(10th)
business day of the month listing the Clients from which Buyer actually
received revenue, and the amounts and nature of such sales, during the
prior month, including but not limited to information regarding any sales
of Consigned Filter Inventory pursuant to Section 5
hereof. Seller shall have the right at any reasonable time to
audit or review such records of Buyer at Seller’s own
cost. However, if the audit or review shows aggregate
undisputed underpayments to Seller in excess of 5% in any calendar
quarter, Buyer shall reimburse Seller the reasonable cost of such audit or
review.
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3. Post-Closing
Purchase Price Adjustments. Within thirty (30) days after
Closing, Seller and Buyer shall undertake and complete a joint audit of the
Goods and WIP Assets, for purposes of identifying any missing or materially
deficient items of the Purchased Assets. In the event that any items
of the Purchased Assets are missing or are materially deficient, the Purchase
Price will be adjusted and decreased on a dollar-for-dollar basis using the
values set forth on Schedule
3
attached hereto, and the deficit amount shall be payable by check or wire
transfer of immediately available funds by Seller to Buyer within five (5) days
of the audit. The Service Inventory Assets are not subject to this
clause.
4. Assumption
of Liabilities.
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4.1.
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At
Closing, Buyer shall assume and agrees to pay, discharge or perform as
necessary only the following liabilities and obligations (the “Assumed
Liabilities”):
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a.
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Fulfillment
obligations under customer purchase orders with Clients that were not
fulfilled as of the Closing Date, as set forth on Schedule
4.1
attached hereto; and
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b.
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Responsibilities
to Clients under the terms of existing warranties (the “Existing Warranties”)
and existing contracts (the “Existing
Contracts”).
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4.2.
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Except
for the Assumed Liabilities, Buyer is not assuming, nor shall it in any
way be liable or responsible for, any liabilities, obligations or debts of
Seller, whether accrued, absolute, contingent or otherwise and whether
arising out of or relating to the Purchased Assets or otherwise, arising
before or after the Closing Date, including, without limitation, any
liability of Seller or its affiliates not specifically identified in Section 4.1, whether
known or unknown and whether relating to the ownership or use of the
Purchased Assets, Seller’s conduct of the Integration Business or
otherwise, any product liability relating to or in respect of the
Purchased Assets, and any liability of Seller arising out of or relating
to the execution, delivery or performance by Seller of this Agreement or
any other document or instrument in connection with the transactions
contemplated hereby (collectively, the “Excluded
Liabilities”). Seller shall pay all liabilities of
Seller and take any and all actions necessary to prevent any person or
governmental authority from having recourse against any of the Purchased
Assets purchased by Buyer or against Buyer solely with respect to any such
liabilities of Seller, including, without limitation, the Excluded
Liabilities.
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5. Consignment
of Filter Inventory.
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5.1.
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Seller
hereby consigns to Buyer, and Buyer hereby accepts consignment from Seller
of, the Consigned Filter Inventory. The term of such
consignment arrangment shall begin on the Closing Date and shall continue
for a period of two (2) years from the Closing Date (the “Consignment
Period”). For purposes of this Agreement, the term “Consigned Filter
Inventory” shall mean the filter inventory of Seller set forth on
Exhibit
3 attached hereto, in the quantities set forth
thereon.
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5.2.
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During
the Consignment Period, Buyer generally may effect the sale of the
Consigned Filter Inventory through one or more sales or series of sales to
one or more Clients; provided, however, that the pricing terms of any such
sale or sales are within the sole and absolute discretion of
Buyer. Buyer will pay to Seller for each item of the Consigned
Filter Inventory sold to a Client the price stated on Exhibit
3 attached hereto
corresponding to the applicable item of the Consigned Filter Inventory
(irrespective of the pricing terms of such sale, as between Buyer and a
Client), in accordance with Section 0
hereof.
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5.3.
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For
purposes of this Agreement, Buyer will at all times be acting as a
consignee of Seller and not as a principal with regard to the Consigned
Filter Inventory. Ownership in and title to the Consigned
Filter Inventory including ownership in and to all intellectual
proprietary rights relating to the Consigned Filter Inventory shall at all
times, before, during and after the termination of this Agreement and
until items of the Consigned Filter Inventory are sold to a Client, remain
vested in Seller. At all times, the Consigned Filter Inventory
shall be kept separately identified and segregated from the Purchased
Assets and any property of Buyer.
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5.4.
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Buyer
shall return all unsold Consigned Filter Inventory to Seller within thirty
(30) days after the end of the Consignment
Period.
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6. Covenants
of Seller. Seller hereby covenants and agrees with Buyer
that:
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6.1.
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Seller
shall use its best efforts to maintain its current relationships with
suppliers, customers, Clients and others having business relations with
Seller in connection with the Purchased Assets or the Integration Business
and shall assist Buyer in effecting an orderly transition of these
relationships to Buyer from and after
Closing.
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6.2.
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Seller
shall use its best efforts to preserve the Purchased Assets and conduct
the Integration Business and all transactions with respect to the
Purchased Assets in the usual and ordinary course of business consistent
with Seller’s past practice.
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6.3.
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Seller
shall not, directly or indirectly, sell, transfer, pledge, lease, license,
offer to sell, abandon or make any other disposition of any of the
Purchased Assets or grant or suffer to exist, or agree to grant or suffer
to exist, any Encumbrances on any of the Purchased
Assets.
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6.4.
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Seller
shall be responsible for, and shall indemnify Buyer from and against, any
and all accounts payable relating to the Purchased Assets arising on or
prior to the Closing Date; provided, however, that none of the foregoing
of this Section
6.4 shall be
deemed to limit or waive Seller’s obligations to deliver to Buyer the
Purchased Assets free and clear of all
Encumbrances.
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6.5.
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Buyer
shall have the first right, but not any obligation, to offer employment
from and after the Closing Date to some or all of Seller’s employees
involved with the Integration Business, at such salaries or wages, duties
and responsibilities as shall be mutually acceptable to Buyer and such
employees; provided, however, that Buyer is not committing to the hiring
of any employees, and under no circumstances shall Buyer assume or bear
any responsibility for any severance obligations in respect of any
terminated Seller employees subsequently hired by Buyer, if any; provided,
further, that Seller shall retain all obligations and liabilities, if any,
for, and shall defend, indemnify and hold harmless Buyer, in accordance
with Section
12.3 hereof, in
connection with (i) any claim (including, without limitation, any claim
for unpaid wages, accrued vacation time and employee benefits matters)
relating to any employment by Seller, (ii) any lawsuit, administrative
charge, arbitration, formal proceeding or written demand or notice
pertaining to an employee and arising out of employment with Seller and
(iii) any worker’s compensation or other claims arising from any injury or
act occurring during employment with Seller. Without limiting
any of the foregoing, Seller shall use its best efforts to cause the
assignment to Buyer of any and all employee non-competition agreements
pertaining to any of Seller’s employees subsequently hired by
Buyer.
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6.6.
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Until
and for the first thirty (30) days following the Closing Date, Seller
shall cooperate in good faith with Buyer and use commercially reasonably
efforts to make available to Buyer its records, staff and such other
materials as related to the Integration Business and the Purchased
Assets.
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7. Covenants
of Buyer. Buyer hereby covenants and agrees with Seller
that:
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7.1.
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Buyer,
at its sole cost, will remove the Purchased Assets and Consigned Filter
Inventory from Seller’s premises within thirty (30) days of
Closing.
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7.2.
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Buyer
shall use its best efforts to cooperate in good faith with Seller to
effect an orderly transition to Buyer of Seller’s current relationships
with suppliers, customers, Clients and others having business relations
with Seller in connection with the Purchased Assets or the Integration
Business and shall assist Seller in transitioning these relationships to
Buyer from and after Closing.
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7.3.
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Buyer
shall cooperate in good faith with Seller and use commercially reasonably
efforts to assist Seller in collecting outstanding receivables owed to
Seller by Clients for transactions effected prior to Closing; provided,
however, that in no event shall Buyer be required to incur any cost or any
material obligations or suffer the loss of any right or benefit in
connection therewith. Seller acknowledges and agrees that
attached hereto as Schedule
7.3
is a list of Seller’s receivables from Clients. All payments
received by Buyer from a Client in respect of a receivable listed on Schedule
7.3
on or after Closing will be credited to such receivable and remitted to
Seller. Without limiting the foregoing, Buyer shall not
knowingly take any action that materially adversely interferes with
Seller’s ability to collect said
receivables.
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8. Representations
and Warranties of Seller. Seller represents and warrants to
Buyer as follows:
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8.1.
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Organization
of Seller. Seller is a corporation duly formed, validly
existing and in good standing under the laws of the Commonwealth of
Virginia.
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8.2.
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Authorization;
Enforceability. Seller has all requisite power and
authority to execute and deliver this Agreement and each other instrument
required hereby to be executed and delivered by it, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by
Seller of this Agreement and each other instrument required hereby and
thereby to be executed and delivered by it, the performance by Seller of
its obligations hereunder and thereunder and the consummation by Seller of
the transactions contemplated hereby and thereby have been duly and
validly authorized by all necessary action on the part of Seller and its
stockholders, board of directors and officers, and no other proceedings on
the part of Seller or its stockholders, board of directors or officers are
required to authorize this Agreement or any of the other instruments
required hereby or thereby or for Seller to consummate the transactions
contemplated hereby or thereby. This Agreement has been, and
upon execution and delivery thereof by Seller each other instrument
described herein and therein and to be executed and delivered by Seller,
will be, duly and validly executed and delivered by Seller and, assuming
the due and valid authorization, execution and delivery by the other
parties thereto, constitutes, or in the case of each such other other
instrument, will constitute, a valid and binding obligation of Seller,
enforceable against Seller in accordance with their respective terms,
except to the extent that enforceability may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium or other similar laws
affecting the enforcement of creditors’ rights generally and by principles
of equity regardless of whether such enforceability is considered in a
proceeding in law or at equity.
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8.3.
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Title
to Purchased Assets. Seller has good and marketable
title to all of the Purchased Assets, free and clear of all
Encumbrances. The Goods and WIP Assets are in good condition
and repair. Seller has complete and unrestricted power and the
unqualified right to transfer, convey and assign the Purchased Assets, and
the conveyance instrument executed and delivered at Closing will be, when
executed and delivered by the parties thereto, valid and binding
obligations of Seller, enforceable in accordance with their respective
terms, sufficient for purposes of recordation and filing where permitted
by law, and sufficient to transfer, convey and assign to Buyer all right,
title and interest of Seller in and to the Purchased
Assets. Seller owns or licenses all the intellectual property
associated with the Purchased Assets or that Seller otherwise uses in the
Integration Business. To the knowledge of Seller, the use of
the intellectual property associated with the Purchased Assets or used in,
or necessary to, the conduct of the Integration Business as presently
conducted does not infringe, misappropriate or otherwise violate the
rights of any third parties. For purposes of this Agreement,
the term “Encumbrances” shall
mean any defect or imperfection in title, encumbrance, lien, pledge,
security interest, charge, limitation, commitment or claim against or with
respect to any Purchased Assets or other encumbrance of any kind or nature
whatsoever (whether absolute or
contingent).
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8.4.
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No
Conflicts; Consents and Approvals. The execution and
delivery of this Agreement by Seller do not, and the consummation of the
transactions contemplated hereby by Seller will not (i) violate or
conflict with the constituent or organizational documents of Seller, or
(ii) constitute a breach or default (or an event that with notice or lapse
of time or both would become a breach or default) of any statute,
regulation, judgment, order or decree or any mortgage, agreement, deed of
trust, indenture or any other instrument to which Seller or any item of
the Purchased Assets is bound, and neither the execution and delivery of
this Agreement by Seller nor the consummation of the transactions
contemplated hereby by Seller will require any consent, approval or
authorization of, or filing with or notification to, any third party or
any governmental or regulatory
authority.
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8.5.
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Litigation,
Disputes. There is no (i) proceeding pending or, to the
knowledge of Seller, threatened against or involving Seller, which (A)
questions or challenges the validity of this Agreement or any action taken
or to be taken by Seller pursuant to this Agreement or in connection with
any of the transactions contemplated hereby or (B) could reasonably be
expected to affect the Integration Business or any of the Purchased
Assets, or (ii) outstanding order, injunction, decree, award or judgment
of any governmental authority against Seller in relation to the
Integration Business or the Purchased Assets which could reasonably be
expected to affect the Integration Business or any of the Purchased Assets
or otherwise result in any liability to Buyer on or after the Closing
Date.
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8.6.
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No
Fraudulent Conveyance. Seller has used commercially
reasonable efforts to market the Purchased Assets prior to the date
hereof, and Seller believes in good faith that the Purchase Price,
together with the assumption by Buyer of the Assumed Liabilities,
represent reasonably equivalent value in exchange for the Purchased
Assets. Based on the foregoing, the consummation of the
transactions contemplated by this Agreement will not constitute a
fraudulent transfer or conveyance under federal bankruptcy and applicable
state fraudulent transfer and fraudulent conveyance
laws.
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8.7.
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Payment
of Integration Manufacturer Representatives. Seller has
paid all Integration Manufacturer Representatives in
full.
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8.8.
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Client
Commitments. All Goods and WIP Assets in inventory have
been committed to purchase by Clients. Seller shall indemnify
Buyer, in accordance with Section 12.3 hereof,
for product that is not sold through to such Clients unless the
sell-through problem was caused directly by Buyer’s willful misconduct or
gross negligence.
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8.9.
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Existing
Warranties. The terms and conditions of all Existing
Warranties are substantially the same as set forth in the form of Existing
Warranty attached hereto as Schedule 8.9.
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8.10.
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Existing
Contracts. Schedule 8.10
attached hereto reflects a true and complete listing and enclosure of all
Existing Contracts.
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9. Representations
and Warranties of Buyer. Buyer represents and warrants to
Seller as follows:
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9.1.
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Organization
of Buyer. Buyer is a corporation duly formed, validly
existing and in good standing under the laws of the Commonwealth of
Virginia.
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9.2.
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Authorization;
Enforceability. Buyer has all requisite power and
authority to execute and deliver this Agreement and each other instrument
required hereby to be executed and delivered by it, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by
Buyer of this Agreement and each other instrument required hereby and
thereby to be executed and delivered by it, the performance by Buyer of
its obligations hereunder and thereunder and the consummation by Buyer of
the transactions contemplated hereby and thereby have been duly and
validly authorized by all necessary action on the part of Buyer, and no
other proceedings on the part of Buyer are required to authorize this
Agreement or any of the other instruments required hereby or thereby or
for Buyer to consummate the transactions contemplated hereby or
thereby. This Agreement has been, and upon execution and
delivery thereof by Buyer each other instrument described herein and
therein and to be executed and delivered by Buyer, will be, duly and
validly executed and delivered by Buyer and, assuming the due and valid
authorization, execution and delivery by the other parties thereto,
constitutes, or in the case of each such other instrument, will
constitute, a valid and binding obligation of Buyer, enforceable against
Buyer in accordance with their respective terms, except to the extent that
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting the enforcement of
creditors’ rights generally and by principles of equity regardless of
whether such enforceability is considered in a proceeding in law or at
equity.
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10. Closing.
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10.1.
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General. The
consummation of the purchase and sale of the Purchased Assets and
transactions contemplated hereunder (“Closing”) shall be held
on the first business day upon which the conditions set forth in Section 10.4 hereof
have been satisfied or waived in writing (other than the conditions which
are by their nature to be satisfied at Closing), unless another time or
date, or both, are agreed to in writing by the parties (the “Closing Date”), by
facsimile or portable document format (.pdf) transmission (and overnight
mailing) of the signature pages to this Agreement and all ancillary
agreements. Buyer, on the one hand, and Seller, on the other
hand, shall as soon as practicable thereafter deliver to the other party
or such party’s counsel two original sets of signature pages to the
documents and agreements executed at Closing. Closing shall be
effective for tax and accounting purposes as of 12:01 a.m. New York City
time on the Closing Date.
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10.2.
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Deliveries
of Seller. At Closing, Seller shall deliver to Buyer the
Purchased Assets, free and clear of all Encumbrances, and the following
documents:
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a.
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the
Xxxx of Sale attached hereto as Exhibit
4 (the “Xxxx of
Sale”), duly executed by
Seller;
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b.
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the
certificate required to be delivered pursuant to Section 10.4.a(iii)
hereof; and
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c.
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such
other documents as may be reasonably requested by Buyer in connection with
the consummation of the transactions contemplated by this
Agreement.
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10.3.
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Deliveries
of Buyer. At Closing, Buyer shall pay to Seller such
part of the Purchase Price due at Closing and shall deliver to Seller the
following documents:
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a.
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an
executed counterpart of the Xxxx of
Sale;
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b.
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the
certificate required to be delivered pursuant to Section 10.4.b(iii)
hereof; and
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c.
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such
other documents as may be reasonably requested by Seller in connection
with the consummation of the transactions contemplated by this
Agreement.
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10.4.
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Conditions
Precedent to Closing.
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a.
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Conditions
to Buyer’s Obligations. The obligations of Buyer to
consummate the transactions contemplated by this Agreement is subject to
the satisfaction of the following conditions, any of which may be waived
in writing by Buyer:
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(i)
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Representations
and Warranties of Seller. The representations and
warranties of Seller set forth in Section 8 hereof shall
be true and correct in all material respects (except for any
representation or warranty that by its terms is qualified by materiality,
in which case it shall be true and correct in all respects) as of the date
of this Agreement and as of the Closing Date as if made on and as of such
dates.
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(ii)
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Performance
of Obligations of Seller. Seller shall have performed
and complied in all material respects with all agreements, covenants,
obligations and conditions required by this Agreement to be performed or
complied with by Seller on or prior to the Closing
Date.
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(iii)
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Closing
Certificate. Seller shall have delivered to Buyer a
certificate, dated as of the Closing Date and signed on behalf of Seller
by an appropriate senior officer, confirming the satisfaction by Seller of
the conditions set forth in Sections 10.4.a(i) and
10.4.a(ii)
(without qualification as to knowledge or materiality or
otherwise).
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(iv)
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Closing
Deliveries. Seller shall have delivered to Buyer all
documents required to be delivered pursuant to Section 10.2.
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(v)
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No
Injunctions; No Litigation. No suit, action or other
proceeding shall be pending before any court or governmental or regulatory
authority which seeks to restrain or prohibit or to obtain damages or
other relief in connection with this Agreement or the consummation of the
transactions contemplated by this
Agreement.
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(vi)
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Consents
and Approvals. All consents, waivers,
authorizations and approvals legally required from all governmental or
regulatory authorities to consummate the transactions contemplated by this
Agreement, without the imposition of material conditions or requirements
on Buyer, shall have been obtained and shall remain in full force and
effect as of the Closing Date.
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b.
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Conditions
to Seller’s Obligations. The obligations of Seller to
consummate the transactions contemplated by this Agreement is subject to
the satisfaction of the following conditions, any of which may be waived
in writing by Seller:
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(i)
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Representations
and Warranties of Buyer. The representations and
warranties of Buyer set forth in Section 9 hereof shall
be true and correct in all material respects (except for any
representation or warranty that by its terms is qualified by materiality,
in which case it shall be true and correct in all respects) as of the date
of this Agreement and as of the Closing Date as if made on and as of such
dates.
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(ii)
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Performance
of Obligations of Buyer. Buyer shall have performed and
complied in all material respects with all agreements, covenants,
obligations and conditions required by this Agreement to be performed or
complied with by Buyer on or prior to the Closing
Date.
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(iii)
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Closing
Certificate. Buyer shall have delivered to Seller a
certificate, dated as of the Closing Date and signed on behalf of Buyer by
an appropriate senior officer, confirming the satisfaction by Buyer of the
conditions set forth in Sections 10.4.b(i) and
10.4.b(ii)
(without qualification as to knowledge or materiality or
otherwise).
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(iv)
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Closing
Deliveries. Buyer shall have delivered to Seller all
documents required to be delivered pursuant to Section 10.3.
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11. Delivery
and Condition of the Purchased Assets.
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11.1.
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Effective
immediately upon Closing, Seller shall be deemed to have fully and
completely transferred to Buyer all of Seller’s right, title and interest
in and to the Purchased Assets.
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11.2.
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EXCEPT
AS EXPRESSLY STATED IN THIS AGREEMENT, SELLER DOES NOT MAKE ANY EXPRESS OR
IMPLIED REPRESENTATIONS, STATEMENTS, WARRANTIES, OR CONDITIONS OF ANY KIND
OR NATURE WHATSOEVER CONCERNING THE PURCHASED ASSETS, AND ANY AND ALL
IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
ARE DISCLAIMED.
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12. Survival;
Indemnification.
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12.1.
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Survival
of Representations and Warranties. The representations
and warranties of the parties in this Agreement shall survive Closing and
the consummation of the transactions contemplated hereby, and shall expire
upon the three (3) month anniversary of the Closing Date. No
claim may be made based upon an alleged breach of any of such
representations or warranties, whether for indemnification in respect
thereof or otherwise, unless written notice of such claim, in reasonable
detail, is given by a party to the other party on or before the three (3)
month anniversary of the Closing Date. Notwithstanding the
foregoing, the representations and warranties set forth in Sections 8.2 and 8.3 shall
survive until expiration of the applicable statutes of
limitation. The right of any party to indemnification,
reimbursement or other remedy based upon breaches of representations and
warranties in this Agreement shall not be affected by any investigation
conducted with respect to, or any knowledge of any party or person
acquired at any time, whether before or after the execution and delivery
of this Agreement or the Closing Date, with respect to, the accuracy or
inaccuracy of or compliance with any such representation or
warranty.
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12.2.
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Indemnification
by Buyer. Buyer shall indemnify, defend and hold Seller
harmless from and against any and all losses, liabilities, damages, costs
and obligations (or actions or claims in respect thereof) (including
reasonable counsel fees), which Seller may suffer or incur arising out of
or based upon:
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|
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a.
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any
breach of any of the representations or warranties made by Buyer in this
Agreement or in any certificate or document signed or delivered by Buyer
in connection with this Agreement;
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|
|
b.
|
any
breach of any covenant or obligation of Buyer contained in this Agreement;
or
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|
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c.
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the
Assumed Liabilities.
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12.3.
|
Indemnification
by Seller. Seller shall indemnify, defend and hold Buyer
harmless from and against any and all losses, liabilities, damages, costs
and obligations (or actions or claims in respect thereof) (including
reasonable counsel fees), which Buyer may suffer or incur arising out of
or based upon:
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|
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a.
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any
breach of any of the representations or warranties made by Seller in this
Agreement or in any certificate or document signed or delivered by Seller
in connection with this Agreement;
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|
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b.
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any
breach of any covenant or obligation of Seller contained in this
Agreement;
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c.
|
any
matters described in Sections 6.4, 6.5 or 8.8 hereof;
or
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Page
11
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d.
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the
Excluded Liabilities.
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12.4.
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Right
of Set-Off. Buyer shall first satisfy any amounts
determined by an arbitration award or agreed by the parties to be owed to
it by Seller pursuant to this Section 12 by way of
set-off, and shall offset on a dollar-for-dollar basis, against any and
all payments of the Earnout Amount otherwise due and payable to Seller
pursuant to Section 2.1 hereof
prior to seeking recovery against Seller for any remaining and unsatisfied
amounts determined by an arbitration award or agreed by the parties to be
owed by Seller pursuant to this Section 12.
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13. Termination.
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13.1.
|
Events
of Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned only as
follows:
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a.
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at
any time prior to Closing by mutual written agreement of the
parties;
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b.
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by
Buyer, if there shall be a material breach by Seller of any representation
or warranty, or any covenant or agreement contained in this Agreement
which would result in a failure of any condition set forth in Section 10.4 hereof and
which breach cannot be cured or has not been cured within ten (10) days
after the giving of written notice to Seller of such
breach;
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c.
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by
Seller, if there shall be a material breach by Buyer of any representation
or warranty, or any covenant or agreement contained in this Agreement
which would result in a failure of any condition set forth in Section 10.4 hereof and
which breach cannot be cured or has not been cured within ten (10) days
after the giving of written notice to Buyer of such breach;
or
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d.
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by
Buyer or Seller, if the Closing Date shall not have occurred on or before
July 24, 2009; provided, however, that the right to terminate this
Agreement under this Section 13.1.d shall
not be available to any party whose willful breach of any obligation under
this Agreement has been, directly or indirectly, the cause of, or has
resulted in, the failure of Closing to
occur.
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13.2.
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Rights
upon Termination. If this Agreement is terminated
pursuant to Section 13.1, all
further obligations of the parties under or pursuant to this Agreement
shall terminate without further liability of either party to the other;
provided, that nothing contained in this Section 13.2 shall
relieve any party from liability for any willful breach of this Agreement;
provided, further, that upon any termination of this Agreement pursuant to
Section
13.1, Buyer and
Seller shall cause the Escrow Deposit to be released promptly to Buyer in
accordance with the provisions of the Escrow
Agreement.
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Page
12
14. Miscellaneous.
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14.1.
|
Notices. Any
notice required or permitted by this Agreement shall be in writing and
effectively delivered for all purposes if delivered personally, by
overnight delivery service, or by United States mail, certified mail,
postage prepaid, return receipt requested, or via email with a receipt,
and:
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If
directed to Seller:
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SteelCloud,
Inc.
ADDRESS:
00000 Xxxx Xxxxxx Xxxx
Xxxxxxx,
XX 00000
ATTN:
Xxxxx Xxxxxx
xxxxxxx@xxxxxxxxxx.xxx
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|
If
directed to Buyer:
|
NCS
Technologies, Inc.
ADDRESS:
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxx,
XX 00000
ATTN:
Xxxx Xxxxxxxxxxx
xxxxxxxxxxxx@xxxx.xxx
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All notices shall be deemed delivered
upon receipt.
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14.2.
|
Brokers,
Professional Fees and Expenses. Buyer and Seller each
warrants to the other that it has not engaged, consented to, or authorized
any broker, investment banker, or other third party to act on its behalf,
directly or indirectly, as a broker or finder in connection with the
transactions contemplated by this Agreement and no such third party is
entitled to any fee or compensation in connection with this Agreement or
the transactions contemplated hereby by reason of any action of
it. Except as otherwise provided in this Agreement, Seller and
Buyer shall bear their own expenses, including professional and legal
fees, incurred in connection with the negotiation and execution of this
Agreement and each other agreement, document and instrument contemplated
by this Agreement and the consummation of the transactions contemplated
hereby and thereby. Seller shall bear all transfer, sales, use,
excise, recording and similar taxes, if any, arising in connection with
the transactions contemplated hereunder, and Seller shall compensate
Xxxxxx Xxxxx & Co. for any services provided to Seller relating to
this transaction.
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|
14.3.
|
Amendment
and Modification. This Agreement may be amended,
modified or supplemented only by written agreement of Buyer and
Seller.
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|
14.4.
|
Severability. Any
provision of this Agreement that shall be prohibited or unenforceable
shall be deemed ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof.
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Page
13
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14.5.
|
Entire
Agreement. This Agreement sets forth all of the
promises, covenants, agreements, conditions and undertakings between the
parties hereto with respect to the subject matter hereof, and supersedes
all prior and contemporaneous agreements and undertakings, inducements or
conditions, express or implied, oral or
written.
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|
14.6.
|
Relationship
of Parties. Nothing in this Agreement shall constitute
or be deemed to constitute a partnership or joint venture between the
parties hereto or constitute Buyer as an agent or representative of Seller
for any purpose other than as, and solely to the extent, expressly set
forth in Section
5
hereof.
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|
14.7.
|
Governing
Law and Dispute Resolution. This Agreement shall be
governed by and construed in accordance with the laws of the Commonwealth
of Virginia. Any dispute arising from or relating to this
Agreement, which dispute cannot be resolved by good faith negotiation of
the parties, shall be resolved by arbitration by one arbitrator selected
by the parties. If the parties cannot agree on an arbitrator
within fifteen (15) days of demand by either party for arbitration, the
parties agree to arbitrate under the rules of the American Arbitration
Association, before a single arbitrator. The award of the
arbitrator is binding and the arbitrator may apportion costs and
attorneys’ fees as it deems appropriate. An award of the
arbitrator may be entered as a judgment of the court having jurisdiction
over the matter.
|
|
14.8.
|
Counterparts. This
Agreement may be executed in one or more counterparts all of which when
taken together constitute one and the same instruments. A signed
counterpart is as binding as an
original.
|
|
14.9.
|
Exhibits. All
Exhibits are attached to and by this reference made a part of this
Agreement.
|
|
14.10.
|
Binding
Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto, their successors and
assigns. No party may assign this Agreement or assign or
delegate any of its rights, interests or obligations hereunder without the
prior written approval of the other party
hereto.
|
[Signature page
follows]
Page
14
IN WITNESS WHEREOF, the
parties hereto have executed this Asset Purchase Agreement as of the date and
year first above written.
|
SELLER:
|
BUYER:
|
|
STEELCLOUD,
INC.
By:
/s/ Xxxxx
Xxxxxx
Name:
Xxxxx Xxxxxx
Title:
President and CEO
|
NCS
TECHNOLOGIES, INC.
By:
/s/ An Xxx
Xxxxxx
Name:
An Xxx Xxxxxx
Title:
President
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Page
15
EXHIBIT
1
PURCHASED
ASSETS
Purchased
Assets includes, collectively, certain tangible property relating to the
Integration Business as follows:
(A) the
Goods and WIP Assets (finished goods, work in progress and components) as
follows:
[Insert
list.]; and
(B) the
Service Inventory Assets (service inventory) as follows:
[Insert
list.]; and
the
following intangible property: all right, title and interest of Seller, if any,
under leases of personal property and equipment, intellectual property
(including, without limitation, trademarks, trade names, and service marks),
insurance policies, customer lists, goodwill and other intangible property
related to the Integration Business, but excluding all
other assets of Seller and specifically excluding: (i) cash; (ii) any
accounting-related books and records, whether written or electronically
recorded; (iii) causes of action not related to the Purchased Assets; (iv)
contingent and unliquidated claims of Seller of every nature including tax
refunds, counterclaims, and rights to set off claims including those related to
the Purchased Assets; (v) tooling and associated equipment, including that
related to the Purchased Assets; (vi) deposits; (vii) trade accounts receivable;
and (viii) any interests in real property.
EXHIBIT
2
LIST
OF CLIENTS
[Insert
list of existing Integration Business clients and prospects with respect to
which Seller has had verifiable contact regarding the Integration Business
within the six-month period immediately preceding the Closing
Date.]
EXHIBIT
3
CONSIGNED
FILTER INVENTORY
|
Filter Inventory
|
Quantity
|
Per Item Price Payable to
Seller
|
EXHIBIT
4
XXXX
OF SALE
This XXXX OF SALE dated July [___],
2009 (the “Xxxx of
Sale”) is executed and delivered pursuant to that certain Asset Purchase
Agreement, dated July [10th], 2009
(the “Purchase
Agreement”), by and between SteelCloud, Inc., a Virginia corporation
(“Seller”), and NCS
Technologies, Inc., a Virginia corporation (“Buyer”). Capitalized
terms not otherwise defined in this Xxxx of Sale have the meanings ascribed to
them in the Purchase Agreement.
Pursuant to the Purchase Agreement, for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged (including as set forth in the Purchase Agreement), effective as of
12:01 a.m. New York City time on the date hereof, Seller hereby sells, conveys,
assigns, transfers and delivers to Buyer, and Buyer hereby purchases and
acquires from Seller, all of Seller’s right, title and interest in and to the
Purchased Assets, free and clear of all Encumbrances.
To the extent any terms and provisions
of this Xxxx of Sale are in any way inconsistent with or in conflict with any
term, condition or provision of the Purchase Agreement, the Purchase Agreement
shall govern and control.
This Xxxx of Sale shall be governed by
and construed in accordance with the laws of the Commonwealth of Virginia,
without regard to the conflicts of laws principles or rules
thereof.
This Xxxx of Sale may be executed in
one or more counterparts, each of which will be deemed to be an original copy of
this Xxxx of Sale and all of which, when taken together, will be deemed to
constitute one and the same instrument.
[Signature page
follows]
IN WITNESS WHEREOF, the
parties hereto have caused this Xxxx of Sale to be executed and delivered on the
date first above written.
|
SELLER:
|
||
|
STEELCLOUD,
INC.
|
||
|
By:
|
||
|
Name:
|
Xxxxx
Xxxxxx
|
|
|
Title:
|
President
and CEO
|
|
|
BUYER:
|
||
|
NCS
TECHNOLOGIES, INC.
|
||
|
By:
|
||
|
Name:
|
An
Xxx Xxxxxx
|
|
|
Title:
|
President
|
|
