PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT
(this “Agreement”) is made and
entered into this 11th day of January, 2010, by and between (i) Global
Technology Partners, Inc., a Maryland corporation (“Purchaser”), and (ii)
SteelCloud, Inc., a Virginia corporation (“Seller”).
RECITALS:
R-1. Seller
is a party to the following contracts: (a) Contract # F08CC10033 between Seller
and Smithsonian Institution – National Zoological Park, (b) Contract #
NMAH-09-DO-550-0000166175 between SteelCloud and Smithsonian Institution –
Museum of American History, (c) USUHS relationship, (d) GEICO/Monument
relationship, (e) BCBS Contract MSA/PSA FEP 08-9881, GMAC relationship, and (f)
GSA Schedule #GS-35F-4085D (hereinafter referred to as the “Government/Commercial
Contracts”).
R-2. Seller
desires to sell and Purchaser desires to purchase the Government/Commercial
Contracts and related agreements together with an assignment of all rights to
employment/independent contractor contracts of persons performing such
agreements (collectively, the “Purchased Assets”) which are
identified on Exhibit A attached hereto and made a part hereof.
R-3. Seller
and Purchaser desire to comply with all applicable regulations to assure the
continued performance of Seller’s obligations under the Government/Commercial
Contracts and the novation of the Government/Commercial Contracts to
Purchaser.
NOW THEREFORE, in
consideration of the mutual promises contained in this Agreement and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Incorporation of
Recitals. The foregoing recitals are hereby incorporated as
part of this Agreement.
2. Purchase and Sale of Purchased
Assets. Purchaser agrees to purchase and Seller agrees to sell
all of the Purchased Assets for a Base Price of One Hundred Forty Thousand and
no/100 Dollars ($140,000.00) (hereinafter the “Base Price”) payable as
follows:
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a.
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The
first payment, in the amount of Seventy Thousand and no/100 Dollars
($70,000), shall be due and payable by Purchaser upon the execution of
this Agreement by Purchaser and contingent upon delivery of Lender’s lien
release of Purchased Assets by
Seller.
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b.
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The
second payment, in the amount of Seventy Thousand and no/100 Dollars
($70,000), shall be due and payable by Purchaser on January 15,
2010. The payment shall be forfeited to Purchaser if (a)
novation is not approved by the Government, and (b) the payments due to
Purchaser under the Subcontract described in paragraph 7 below are not
made to Purchaser. Notwithstanding the foregoing, this
forfeiture clause shall be null and void when the Purchaser’s gross margin
from payments made by Seller under the Subcontract described in paragraph
7 below reach $70,000. For the purposes of this provision,
“gross margin” shall mean revenue less cost of goods
sold.
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In
addition to the Base Price, Purchaser shall make the following contingent
payments:
c. A
payment in the amount of $50,000, on or before October 31, 2010, contingent upon
the first Renewal of the Contract # F08CC10033, Smithsonian Institution –
National Zoological Park.
d. A
payment in the amount of $50,000, on or before October 31, 2011, contingent upon
the second Renewal of the Contract # F08CC10033, Smithsonian Institution –
National Zoological Park.
e. For
the period beginning from the date of execution of this Agreement by Purchaser
and ending on the first anniversary date of the execution, twenty percent (20 %)
of the gross margin from all revenue generated under the
contracts. For the purposes of this provision, “gross margin” shall
mean all sales revenue less cost of goods sold.
f. For
the purposes of this paragraph 2, “Renewal” shall include any exercise of an
option, or any award of a bridge contract or follow-on contract covering
substantially the work under either Government/Commercial Contract.
3. Representations
and Warranties.
a. By Seller. Seller
represents and warrants, as of the date of this Agreement and the Closing Date
(as hereinafter defined), that (i) Seller has not sold, assigned, pledged,
mortgaged, hypothecated, or otherwise encumbered or transferred the Purchased
Assets; (ii) Seller has the authority to subcontract to Purchaser performance of
the Government/Commercial Contracts and as between Purchaser and Seller to
transfer good title to the Purchased Assets free and clear of any liens or
encumbrances by its execution and delivery of and performance under this
Agreement, subject to the obtaining of a novation from the US Government and all
other consents and approvals of counter-parties to the other
Government/Commercial Contracts, which have not been obtained as of the date
hereof; (iii) no broker or finder has acted for Seller in connection
with the transactions contemplated by this Agreement and no broker or finder is
entitled to any broker’s or finder’s fee or other commission in respect thereof
based in any way on agreements, understandings or arrangements with Seller; (iv)
all documents delivered by Seller to Purchaser in response to Purchaser’s due
diligence requests or at the closing hereof are true, correct and
complete.
b. By
Purchaser. Purchaser represents and warrants, as of the date
of this Agreement and the Closing Date, that (I) relying upon the
representations and warranties of Seller in a. above, and as applicable to
novation of the US Government contracts, Purchaser has the requisite power and
authority to execute, deliver and perform under this Agreement; and (ii) no
broker or finder has acted for Purchaser in connection with the transactions
contemplated by this Agreement and no broker or finder is entitled to any
broker’s or finder’s fee or other commission in respect thereof based in any way
on agreements, understandings or arrangements with Purchaser.
c. Delivery of Documents/Due
Diligence. Seller has delivered in connection with execution
hereof, or prior hereto, electronic copies of all contracts, and
employee/independent contractor agreements,
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4. Covenants Purchaser and
Seller. Purchaser and Seller each covenants to the other that
prior to and subsequent to the closing it will take such additional action and
will execute such additional documents as are reasonably necessary or
appropriate to effectuate the transfer of the Purchased Assets to Purchaser and
to provide for the performance of Seller’s contractual obligations under the
Government/Commercial Contracts in compliance with all applicable regulations
including, without limitation, the execution and delivery to the United States
Government of a novation agreement and such other documents as may be required
by the United States Government.
5. Closing.
a. Time and Place of
Closing. The Closing of the sale of the Purchased Assets (the
“Closing”) shall take
place at 00000 Xxxx Xxxxxx Xxxx, Xxxxxxx, XX 00000, or other place as
may be agreed upon. (the “Transfer Date”) for transfer
of Purchased Assets will be Jan 16, 2010 at which time relevant
employees/independent contractors as listed in Exhibit A attached hereto and
made a part hereof will transfer from Seller payroll/liabilities to Purchaser’s
payroll/liability
b. Delivery By
Seller. At Closing, Seller shall deliver to
Purchaser:
(1) a
xxxx of sale for the assignment of the Purchased Assets,
(2) Lien
Release on the Purchased Assets from lender, Caledonia Capital,
(3) hard
copies plus electronic copies of all contracts, and employee agreements
certified by Seller to be true, correct and complete, provided that such
contracts shall be identical in all material respects to the forms of contract
delivered by Seller to Purchaser upon execution of the Agreement.
c. Obligations Survive
Closing. All representations, warranties, covenants and
obligations of Purchaser, Corporation and Seller survive Closing.
6. Notices. All
notices shall be in writing and shall be delivered in person or sent by the
United States Postal Service first class mail postage prepaid, or electronic
mail/email as follows:
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If
to Seller:
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SteelCloud,
Inc.
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00000 Xxxx Xxxxxx Xxxx
Xxxxxxx, XX 00000
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If
to Purchaser:
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Global
Technology Partners, Inc.
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0000 Xxxxxxxx Xxxx
Xxxxxx, XX 00000
7. Novation; Subcontract. (a)
Novation The parties agree to cooperate in obtaining Government approval
of the novation of all Government contracts included in the Purchased Assets
from Seller to Purchaser. Unless such requirement is waived by the
United States Government, in order to effectuate the novation of the
Government/Commercial Contracts to Purchaser, Seller agrees to guarantee payment
of all liabilities and the performance of all obligations that Purchaser assumes
under the Government contracts or may undertake in the future should
these contracts be modified under their terms and conditions. Seller
waives notice of, and consents to, any such future
modifications. Notwithstanding anything to the contrary in this
paragraph, Seller shall have no obligation to guarantee the obligations of
Seller after the expiration of the current Contract. Should the
Government notify Seller of any liability Seller may have under or concerning
any Government contract following such novation, Purchaser hereby indemnifies
Seller from any and all such liability and any expenses, including attorneys
fees, Seller may incur in resolving or attempting to resolve the matter with the
Government
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(b) Subcontract. Until
such novation is approved and completed, Seller hereby subcontracts all work
under the Government contracts to Purchaser and the terms of the subcontracts
shall be deemed identical to the Government contracts except that references to
the Government will be deemed to refer to Seller and references to Seller will
be deemed to refer to Purchaser. As provided in the subcontract,
Purchaser will complete all work as subcontracted, will xxxx Seller for the work
and Seller will re-xxxx the Government within one business day
thereafter. All monies paid to Seller by the Government for work
subcontracted to Purchaser will be paid by Seller to Purchaser using a payment
mechanism specified by Purchaser which is reasonably acceptable to Seller, such
as the use of an escrow account, provided that the cost is born by
Purchaser. Should the Government claim a default under the Government
contracts arising from Purchaser’s fault as a subcontractor, Seller may stop the
payments to Purchaser under the relevant Government contract pertaining to
Seller’s non-performance until Purchaser cures the default. Should
the Government notify Seller of any liability Seller may have under or
concerning any Government contract arising from Purchaser’s involvement as a
subcontractor or Purchaser’s actions subsequent to the date of this Agreement,
Purchaser hereby indemnifies Seller from any and all such liability and any
expenses, including attorneys fees, Seller may incur in resolving or attempting
to resolve the matter with the Government, and Seller may withhold all payments
from Purchaser until this indemnification obligation is
satisfied. Should the Government notify Seller of any liability
Seller may have under or concerning any Government contract arising from
Seller’s involvement as the contractor or actions of Seller subsequent to the
date of this Agreement, Seller hereby indemnifies Purchaser from any and all
such liability and any expenses, including attorneys fees, Purchaser may incur
as a result thereof. Should a claim arise under a Government contract
pursuant to which Seller/Purchaser may demand an adjustment from the Government,
Seller will sponsor the claim on behalf of Purchaser at Purchaser’s cost and
risk, provided that Purchaser may not require Seller to act in a manner
inconsistent with the law or its contractual obligations.
(c)
Failure to Novate. If the Government denies novation of any
Government contract or if a commercial customer prohibits assignment of any
commercial contract, Seller and Purchaser will cooperate in transferring the
contract to Purchaser through another mechanism reasonably available to the
parties and acceptable to the customer.
(d)
Seller indemnity. If for any reason the Government or any other party
to a Government/Commercial Contract deems the purported transfer of its contract
and/or the subcontracting of responsibilities under such contract to Purchaser
to be void, voidable and/or a default thereunder, or makes any claims or asserts
any liabilities against Seller, such liabilities shall be the sole
responsibility of Seller and notwithstanding any other provision hereof,
Purchaser shall have no liability or responsibility therefor, and Seller shall
indemnify, defend and hold harmless Purchaser from any and all
liability, losses and any expenses, including attorneys fees, Purchaser may
incur as a result thereof.
8. Miscellaneous.
a. Binding Effect of
Agreement. This Agreement shall inure to the benefit of, and
shall be binding upon, the parties hereto and their legatees, distributees,
estates, executors, administrators, personal representatives, transferees and
assigns, and other legal representatives.
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b. Entire
Agreement. This Agreement constitutes the entire understanding
of the parties and supersedes all prior promises, agreements, conditions,
understandings, warranties or representations, whether oral or written,
expressed or implied, between the parties with respect to the subject matter of
this Agreement.
c. Headings. No
heading or caption contained in this Agreement shall be considered in
interpreting any of its terms or provisions.
d. Construction. The
parties hereto stipulate and agree that the rule of construction to the effect
that any ambiguities are to be or may be resolved against the drafting party
shall not be employed in the interpretation of this Agreement to favor any party
against another.
e. Applicable
Law. This Agreement shall be governed in all respects and be
interpreted by and under the laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the
parties hereto have executed this Agreement under seal as of the day and year
first hereinabove written.
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Purchaser:
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a
Maryland corporation
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By:
Xxxxxx X.
Xxxxx
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(Seal)
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Its:
President
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Seller:
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a
Virginia corporation
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By:
/s/ Xxxxx X.
Xxxxxx
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(Seal)
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Its:
Chief Executive
Officer
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Exhibit
A to Purchase and Sale Agreement dated January 11, 2010
between
Purchaser and Seller
Must
include (i) Government/Commercial contracts and (ii) employment/independent
contractor contracts assuming the terms of those contracts are
acceptable.
Purchased Assets - $140,000
base value allocated between 1, 2, 3 below:
1. The
Government/Commercial Contracts purchase allocation value at
$51,670.
2. The
contracts between SteelCloud and the following employees, and independent
contractors each of whom is currently working on the Government/Commercial
Contracts (and a copy of each contract is appended hereto)
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