Exhibit 2.1
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AGREEMENT AND PLAN OF MERGER
DATED AS OF JUNE 24, 2005
AMONG
GLOBALOPTIONS, INC.,
GLOBALOPTIONS ACQUISITION CORP.
AND
CREATIVE SOLUTIONS WITH ART, INC.
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GLOSSARY OF DEFINED TERMS
DEFINED TERMS DEFINED IN SECTION
Acquisition Transaction................................. Section 5.1(a)
Affiliated Group........................................ Section 2.13(b)
Agreement............................................... Preamble
Assumed Stock Options................................... Section 1.6(a)
Bank Accounts........................................... Section 2.21
Benefit Plans........................................... Section 2.10(a)(i)
CBR..................................................... Section 2.26
Certificate of Merger................................... Section 1.2
Closing................................................. Section 1.3
Closing Date............................................ Section 1.3
Code.................................................... Recitals
Confidential Information................................ Section 2.19(i)
Confidential Material................................... Section 5.4
Copyrights.............................................. Section 2.19(a)(iii)
Delaware Law............................................ Section 1.1
Effective Time.......................................... Section 1.2
Employee Arrangements................................... Section 2.10(a)(iii)
Environmental Claim..................................... Section 2.7(d)
Environmental Law....................................... Section 2.7(d)
Environmental Permits................................... Section 2.7(a)
ERISA................................................... Section 2.10(a)(i)
Exchange Act............................................ Section 2.3(b)
Exchange Ratio.......................................... Section 1.4(a)
Financial Statements.................................... Section 2.4
GAAP.................................................... Section 2.4(a)
GlobalOptions........................................... Preamble
GlobalOptions Certificates.............................. Section 1.9
GlobalOptions Common Stock.............................. Section 1.4(a)
GlobalOptions Disclosure Schedule....................... Article II Preamble
GlobalOptions Intellectual Property..................... Section 2.19(b)
GlobalOptions Material Contracts........................ Section 2.16(a)
GlobalOptions Option Plan............................... Section 1.6(a)
GlobalOptions Preferred Stock........................... Section 1.4(a)
GlobalOptions Products.................................. Section 2.19(c)(ii)
GlobalOptions Software.................................. Section 2.19(k)
GlobalOptions Stock Option.............................. Section 1.6(a)
GlobalOptions Stockholder Approval...................... Section 2.3(a)
GlobalOptions Stockholders.............................. Section 1.4(a)
Governmental Entity..................................... Section 2.3(b)
Hazardous Materials..................................... Section 2.7(d)
Intellectual Property................................... Section 2.19(a)
Investment Letter....................................... Section 5.10
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DEFINED TERMS DEFINED IN SECTION
IRS..................................................... Section 2.10(b)
Issued Patents.......................................... Section 2.19(a)(i)
Know.................................................... Section 8.12(a)
Knowledge............................................... Section 8.12(a)
Law..................................................... Section 2.3(b)
Lien.................................................... Section 8.12(b)
Material Adverse Effect................................. Section 2.1(a)
Merger.................................................. Section 1.1
Merger Shares........................................... Section 1.4(a)
Merger Sub.............................................. Preamble
Patent Applications..................................... Section 2.19(a)(ii)
Patents................................................. Section 2.19(a)(ii)
Permits................................................. Section 2.9
Permitted Lien.......................................... Section 8.12(c)
Person.................................................. Section 8.12(d)
Placement Agent......................................... Recitals
Private Placement....................................... Recitals
Pubco................................................... Preamble
Pubco Common Stock...................................... Recitals
Pubco Disclosure Schedule............................... Article III Preamble
Pubco Material Contracts................................ Section 3.15(a)
Pubco Stockholder Approval.............................. Section 3.3(a)
SEC..................................................... Section 3.4(a)
SEC Reports............................................. Section 3.4(b)
Securities Act.......................................... Section 2.3(b)
Surviving Corporation................................... Section 1.1
Tax Return.............................................. Section 2.13(a)
Taxes................................................... Section 2.13(a)
Termination Date........................................ Section 7.2(a)
Third Party Consents.................................... Section 5.7(a)
Third Party Intellectual Property....................... Section 2.19(d)
Trademarks.............................................. Section 2.19(a)(iv)
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PAGE
TABLE OF CONTENTS
ARTICLE I THE MERGER................................................................1
Section 1.1 The Merger.............................................................1
Section 1.2 Effective Time.........................................................2
Section 1.3 The Closing............................................................2
Section 1.4 Merger Consideration...................................................2
Section 1.5 Effects of the Merger..................................................3
Section 1.6 Conversion of Securities...............................................3
Section 1.7 Directors and Officers.................................................4
Section 1.8 Certificate of Incorporation and Bylaws................................4
Section 1.9 Exchange of Shares.....................................................5
Section 1.10 Lost Certificates......................................................5
Section 1.11 Tax Consequences.......................................................5
Section 1.12 Stock Transfer Books...................................................5
Section 1.13 No Further Rights......................................................5
ARTICLE II REPRESENTATIONS AND WARRANTIES OF GLOBALOPTIONS...........................6
Section 2.1 Organization; Qualification............................................6
Section 2.2 Capital Stock; Subsidiaries............................................6
Section 2.3 Corporate Authority Relative to this Agreement; No Violation...........7
Section 2.4 Financial Statements...................................................8
Section 2.5 No Undisclosed Liabilities.............................................8
Section 2.6 No Default; Compliance with Applicable Laws............................8
Section 2.7 Environmental Matters..................................................8
Section 2.8 Litigation.............................................................9
Section 2.9 Permits...............................................................10
Section 2.10 Employee Plans........................................................10
Section 2.11 Labor Matters.........................................................12
Section 2.12 Absence of Certain Changes or Events..................................12
Section 2.13 Tax Matters...........................................................14
Section 2.14 Absence of Questionable Payments......................................16
Section 2.15 Title and Related Matters.............................................16
Section 2.16 Material Contracts....................................................16
Section 2.17 Insurance.............................................................17
Section 2.18 Subsidies.............................................................17
Section 2.19 Intellectual Property.................................................18
Section 2.20 Minute Books; Stock Record Books......................................21
Section 2.21 Disclosure............................................................21
Section 2.22 Certain Transactions..................................................21
Section 2.23 Brokers or Finders....................................................21
Section 2.24 Private Placement Disclosure..........................................22
Section 2.25 Investments in Competitors............................................22
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TABLE OF CONTENTS
(continued)
Section 2.26 CBR Acquisition Transaction...........................................22
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PUBCO..................................22
Section 3.1 Organization; Qualification...........................................23
Section 3.2 Capital Stock; Subsidiaries...........................................23
Section 3.3 Corporate Authority Relative to this Agreement; No Violation..........24
Section 3.4 Reports and Financial Statements......................................24
Section 3.5 No Undisclosed Liabilities............................................25
Section 3.6 No Default; Compliance with Applicable Laws...........................25
Section 3.7 Environmental Matters.................................................25
Section 3.8 Litigation............................................................26
Section 3.9 Employee Plans........................................................26
Section 3.10 Labor Matters.........................................................26
Section 3.11 Absence of Certain Changes or Events..................................26
Section 3.12 Tax Matters...........................................................28
Section 3.13 Absence of Questionable Payments......................................29
Section 3.14 Title and Related Matters.............................................29
Section 3.15 Material Contracts....................................................29
Section 3.16 Subsidies.............................................................30
Section 3.17 Bank Accounts; Powers of Attorney.....................................30
Section 3.18 Disclosure............................................................30
Section 3.19 Certain Transactions..................................................30
Section 3.20 Brokers or Finders....................................................30
Section 3.21 No Prior Activities...................................................31
ARTICLE IV COVENANTS RELATED TO CONDUCT OF BUSINESS.................................31
Section 4.1 Conduct of Business of GlobalOptions and Pubco........................31
Section 4.2 Access to Information.................................................33
Section 4.3 Continuation of Insurance Coverage....................................33
ARTICLE V ADDITIONAL AGREEMENTS....................................................34
Section 5.1 Exclusivity...........................................................34
Section 5.2 Public Announcements..................................................34
Section 5.3 Private Placement.....................................................34
Section 5.4 Confidentiality.......................................................35
Section 5.5 Additional Documents and Further Assurances...........................35
Section 5.6 Notification of Certain Matters.......................................35
Section 5.7 Third Party Consents..................................................36
Section 5.8 Legal Opinion Certificates............................................36
Section 5.9 Blue Sky Laws.........................................................37
ARTICLE VI CONDITIONS TO CONSUMMATION OF THE MERGER.................................37
Section 6.1 Conditions to Each Party's Obligations to Effect the Merger...........37
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TABLE OF CONTENTS
(continued)
Section 6.2 Conditions to the Obligations of Pubco and Merger Sub.................37
Section 6.3 Conditions to the Obligations of GlobalOptions........................38
ARTICLE VII TERMINATION; AMENDMENT; WAIVER...........................................39
Section 7.1 Termination by Mutual Agreement.......................................39
Section 7.2 Termination by either Pubco or GlobalOptions..........................39
Section 7.3 Termination by GlobalOptions..........................................39
Section 7.4 Termination by Pubco..................................................40
Section 7.5 Effect of Termination and Abandonment.................................40
Section 7.6 Amendment.............................................................40
Section 7.7 Extension; Waiver.....................................................40
ARTICLE VIII MISCELLANEOUS............................................................41
Section 8.1 Non-Survival of Representations and Warranties........................41
Section 8.2 Entire Agreement; Assignment..........................................41
Section 8.3 Notices...............................................................41
Section 8.4 Governing Law.........................................................42
Section 8.5 Expenses..............................................................42
Section 8.6 Descriptive Headings..................................................42
Section 8.7 Severability..........................................................42
Section 8.8 Specific Performance..................................................43
Section 8.9 Counterparts..........................................................43
Section 8.10 Further Assurances....................................................43
Section 8.11 Interpretation........................................................43
Section 8.12 Definitions...........................................................44
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated June 24,
2005, is among Creative Solutions with Art, Inc., a Nevada corporation
("PUBCO"), GlobalOptions Acquisition Corp., a Delaware corporation ("MERGER
SUB") and a wholly-owned subsidiary of Pubco, and GlobalOptions, Inc., a
Delaware corporation ("GLOBALOPTIONS"). Certain capitalized and non-capitalized
terms used herein are defined in SECTION 8.12.
RECITALS
WHEREAS, the Boards of Directors of GlobalOptions, Pubco and Merger
Sub each have, in light of and subject to the terms and conditions set forth
herein, approved this Agreement and the transactions contemplated hereby,
including the Merger (as defined in SECTION 1.1 below), and declared the Merger
advisable and fair to, and in the best interests of, their respective
stockholders;
WHEREAS, pursuant to the Merger, among other things, and subject to
the terms and conditions of this Agreement, all of the issued and outstanding
shares of capital stock of GlobalOptions shall be converted into the right to
receive shares of new common stock, par value $0.001 per share, of Pubco (the
"PUBCO COMMON STOCK");
WHEREAS, for federal income tax purposes, it is intended that the
Merger qualifies as a reorganization under the provisions of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "CODE");
WHEREAS, after the Merger, GlobalOptions shall become a wholly owned
subsidiary of Pubco; and
WHEREAS, concurrently with the closing of the Merger, Pubco will
consummate a private placement of at least 7,500 units, with each unit
consisting of one share of Pubco's Series A Convertible Preferred Stock and a
warrant to purchase 125 shares of Pubco's common stock (the "PRIVATE
Placement"), and pursuant to which Xxxxxxxxxx Securities Corporation (the
"PLACEMENT AGENT") has agreed to serve as placement agent.
NOW, THEREFORE, in consideration of the foregoing premises and of
the mutual covenants, representations and warranties contained herein, and
subject to the terms and conditions set forth herein, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. At the Effective Time (as defined in SECTION
1.2) and upon the terms and subject to the conditions set forth in this
Agreement and in accordance with applicable provisions of the Delaware General
Corporation Law (the "DELAWARE LAW"), Merger Sub shall be merged with and into
GlobalOptions (the "MERGER"), with GlobalOptions being the surviving corporation
of the Merger (the "SURVIVING CORPORATION") and becoming a wholly-owned
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subsidiary of Pubco. Following the Merger, the separate existence of Merger Sub
shall cease.
Section 1.2 EFFECTIVE TIME. At the Closing (as defined in SECTION
1.3), the parties shall cause the Merger to be consummated by executing and
filing a duly executed certificate of merger in the form attached hereto as
EXHIBIT A and other appropriate documents (the "CERTIFICATE OF MERGER") with
respect to the Merger, with the Secretary of State of the State of Delaware, in
such form as GlobalOptions and Pubco reasonably determine is required by and in
accordance with the relevant provisions of Delaware Law. The Merger shall become
effective upon the filing of the Certificate of Merger (the "EFFECTIVE TIME").
Section 1.3 THE CLOSING. The closing of the transactions
contemplated by this Agreement (the "CLOSING") shall take place at the offices
of Xxxxxxxxx Traurig, LLP, MetLife Building, 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000 as soon as practicable following satisfaction or waiver of
all of the conditions to the obligations of the parties to consummate the
transactions contemplated hereby, or at such other time and place as Pubco and
GlobalOptions shall mutually agree (the date on which such closing occurs being
herein referred to as the "CLOSING DATE"); PROVIDED, HOWEVER, that this
Agreement has not been terminated pursuant to Article VII hereof.
Section 1.4 MERGER CONSIDERATION.
(a) For purposes of this agreement, "MERGER SHARES" shall mean
9,890,266 shares of Pubco Common Stock, all unencumbered and free and clear of
all liens, charges, pledges, security interests or any other restrictions,
except for those as may be imposed by federal and state securities laws. The
Merger Shares shall constitute 40.65% of the outstanding voting securities of
Pubco, on a fully diluted basis, immediately following the Closing. The number
of Merger Shares shall be subject to adjustment as provided in SECTIONS 1.4(B)
and 1.4(C) below. At the Effective Time, by virtue of the Merger, and without
further action by any Person or entity, each issued and outstanding 1.7 shares
of the common stock, par value of $0.01 per share, of GlobalOptions
("GLOBALOPTIONS COMMON STOCK") and each issued and outstanding 1.7 shares of
preferred stock, par value of $0.01 per share, of Global Options ("GLOBALOPTIONS
PREFERRED STOCK") shall automatically be converted into the right to receive one
share of Pubco Common Stock, subject to adjustment as provided in SECTIONS
1.4(B) and 1.4(C) below (the "EXCHANGE RATIO"). SCHEDULE 1.4(A) of the
GlobalOptions Disclosure Schedule (as defined herein) sets forth to whom and in
what denominations the Merger Shares are to be allocated amongst the
stockholders of GlobalOptions (the "GLOBALOPTIONS Stockholders").
Notwithstanding the foregoing, no fractional shares shall be issued. Fractional
shares of Pubco Common Stock to be issued hereunder shall be rounded to the
nearest whole number (with any fractional share greater than or equal to
one-half share being rounded up).
(b) If, between the date of this Agreement and the exchange of
shares pursuant to SECTION 1.9 below, either (i) the outstanding shares of Pubco
Common Stock shall have been changed into a different number of shares or a
different class by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, or any similar
event, or (ii) the number of outstanding voting shares of Pubco changes for any
2
reason, including without limitation the issuance of additional voting shares,
then the Exchange Ratio shall be correspondingly adjusted to the extent
necessary.
(c) If, between the date of this Agreement and the exchange of
shares pursuant to SECTION 1.9 below, either (i) the outstanding shares of
GlobalOptions Common Stock or the outstanding shares of the GlobalOptions
Preferred Stock shall have been changed into a different number of shares or a
different class by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, or any similar
event, or (ii) the number of shares of GlobalOptions Common Stock issuable upon
conversion of each share of GlobalOptions Preferred Stock shall have been
changed pursuant to contract, an anti-dilution adjustment provision contained in
GlobalOptions' certificate of incorporation or otherwise, or (iii) the number of
outstanding shares of GlobalOptions Preferred Stock changes for any reason,
including, without limitation, the issuance of additional shares of
GlobalOptions Preferred Stock, then the calculation of the Exchange Ratio shall
be correspondingly adjusted to the extent necessary.
Section 1.5 EFFECTS OF THE MERGER. The Merger shall have the effects
set forth in this Agreement, the Certificate of Merger and the applicable
provisions of Delaware Law. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time, all of the properties, rights,
privileges, powers and franchises of Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of Merger Sub shall become
the debts, liabilities and duties of the Surviving Corporation.
Section 1.6 CONVERSION OF SECURITIES.
(a) At the Effective Time, each outstanding option to acquire
GlobalOptions Common Stock ("GLOBALOPTIONS STOCK OPTION") shall be adjusted as
follows: At the Effective Time, the then outstanding GlobalOptions Stock
Options, whether vested or unvested, will be assumed by the Surviving
Corporation ("ASSUMED STOCK OPTIONS"). SCHEDULE 1.6(A) of the GlobalOptions
Disclosure Schedule hereto sets forth a true and complete list as of the date
hereof of all holders of outstanding options to purchase shares of GlobalOptions
Common Stock, including the number of shares of GlobalOptions Common Stock
subject to each such option, the exercise or vesting schedule, the exercise
price per share and the term of each such option. Each such option so assumed by
Surviving Corporation under this Agreement shall continue to have, and be
subject to, the same terms and conditions set forth in the GlobalOptions 2002
Stock Option Plan (the "GLOBALOPTIONS OPTION PLAN") and any other document
governing such option immediately prior to the Effective Time, except that (a)
such option will be exercisable for that number of whole shares of Pubco Common
Stock equal to the quotient of the number of shares of GlobalOptions Common
Stock that were issuable upon exercise of such option immediately prior to the
Effective Time divided by 1.7 and rounded up to the nearest whole number of
shares of Pubco Common Stock, (b) the per share exercise price for the shares of
Pubco Common Stock issuable upon exercise of such assumed option will be equal
to the product determined by multiplying the exercise price per share of
GlobalOptions Common Stock at which such option was exercisable immediately
prior to the Effective Time by 1.7, rounded down to the nearest whole tenth of a
cent and (c) any restriction on the exercisability of such GlobalOptions Stock
Option shall continue in full force and effect, and the term, exercisability,
vesting schedule and other provisions of such GlobalOptions Stock Option shall
remain unchanged. Consistent with the terms of the GlobalOptions Option Plan and
3
the documents governing the outstanding options, the Merger will not terminate
any of the outstanding options under the GlobalOptions Option Plan or accelerate
the exercisability or vesting of such options or the shares of Pubco Common
Stock which will be subject to those options upon the Surviving Corporation's
assumption of the options in the Merger. It is the intention of the parties that
the options so assumed by the Surviving Corporation following the Effective Time
will remain incentive stock options as defined in Section 422 of the Code to the
extent such options qualified as incentive stock options prior to the Effective
Time and that the requirements set forth in Section 409A of the Code, Treasury
regulations and other IRS guidance promulgated thereunder (including Notice
2005-1) be satisfied, and the parties hereto shall use their commercially
reasonable efforts to carry out such intention. Within 10 business days after
the Effective Time, the Surviving Corporation will issue to each person who,
immediately prior to the Effective Time, was a holder of an outstanding option
under the GlobalOptions Option Plan, a document evidencing the foregoing
assumption of such option by the Surviving Corporation.
(b) At the Effective Time, each outstanding share of common
stock, par value $0.01 per share, of Merger Sub shall, by virtue of the Merger
and without any action on the part of GlobalOptions, Pubco or Merger Sub, be
converted into one fully paid and non-assessable share of common stock of the
Surviving Corporation.
Section 1.7 DIRECTORS AND OFFICERS.
(a) PUBCO. As of the Effective Time, each of the officers and
directors of Pubco then in office shall resign. As of the Effective Time, the
officers and directors of Pubco shall be as set forth on SCHEDULE 1.7(A) of the
GlobalOptions Disclosure Schedule, each of whom shall serve in such capacity
until their respective successors are duly elected or appointed and qualified.
(b) SURVIVING CORPORATION. As of the Effective Time, the officers
and directors of the Surviving Corporation shall be as set forth on SCHEDULE
1.7(B) of the GlobalOptions Disclosure Schedule, each of whom shall serve in
such capacity until their respective successors are duly elected or appointed
and qualified.
Section 1.8 CERTIFICATE OF INCORPORATION AND BYLAWS.
(a) PUBCO.
(i) Attached hereto as EXHIBIT B are amended and restated
articles of incorporation which shall be in effect immediately prior to the
Effective Time.
(ii) The amended and restated articles of incorporation of
Pubco attached hereto as Exhibit B shall remain in full force and effect after
the Effective Time; PROVIDED, HOWEVER, that Article FIRST of the certificate of
incorporation of Pubco shall be amended to read in its entirety as follows: "The
name of the corporation is GlobalOptions Group, Inc."
(iii) The bylaws of Pubco in effect immediately prior to the
Effective Time shall remain in full force and effect after the Effective Time.
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(b) SURVIVING CORPORATION. Effective immediately following the
Merger, the certificate of incorporation and bylaws of GlobalOptions as in
effect immediately prior to the Effective Time shall be the certificate of
incorporation and bylaws of the Surviving Corporation, until amended in
accordance with applicable law.
Section 1.9 EXCHANGE OF SHARES. At the Closing or as soon as
practicable thereafter, each GlobalOptions Stockholder shall deliver to Pubco
any certificates representing outstanding shares of GlobalOptions Common Stock
and GlobalOptions Preferred Stock that they own (collectively, "GLOBALOPTIONS
CERTIFICATES"), duly endorsed in proper form for transfer, and Pubco shall issue
to each GlobalOptions Stockholder immediately upon receipt of such GlobalOptions
Certificates, certificates representing the applicable Merger Shares into which
the shares represented by the GlobalOptions Certificates were converted pursuant
to SECTION 1.4 hereof and all GlobalOptions Certificates so surrendered shall
subsequently be cancelled. Pending surrender of the GlobalOptions Certificates
accompanied by a letter of transmittal, each such certificate shall be deemed
for all corporate purposes to evidence the Merger Shares into which such
certificate shall have been converted in the Merger.
Section 1.10 LOST CERTIFICATES. If any GlobalOptions Certificates
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the Person claiming such Certificate to be lost, stolen or
destroyed and, if required by the Surviving Corporation, the posting by such
Person of a bond in such reasonable amount as the Surviving Corporation may
direct as indemnity by such Person against any claim that may be made against
the Surviving Corporation with respect to such Certificate, Pubco will deliver
in exchange for such lost, stolen or destroyed Certificate the applicable Merger
Shares with respect to the GlobalOptions Common Stock formerly represented
thereby and any unpaid dividends and other distributions deliverable in respect
thereof, pursuant to this Agreement.
Section 1.11 TAX CONSEQUENCES. It is intended by the parties hereto
that the Merger shall constitute a reorganization within the meaning of Section
368(a) of the Code. Each party hereto shall use its commercially reasonable
efforts to cause the Merger to be so qualified, shall report the transactions
contemplated by this Agreement in a manner consistent with such reorganization
treatment and will not take any position inconsistent therewith in any Tax
Return (as hereinafter defined), refund claim, litigation or otherwise, unless
required to do so by law.
Section 1.12 STOCK TRANSFER BOOKS. The stock transfer books of
GlobalOptions shall be closed immediately upon the Effective Time and there
shall be no further registration of transfers of shares thereafter on the
records of GlobalOptions. On or after the Effective Time, any GlobalOptions
Certificates presented to Pubco for any reason shall be converted into the
Merger Shares with respect to the shares formerly represented by such
Certificates and any unpaid dividends or other distributions to which the
holders thereof are entitled.
Section 1.13 NO FURTHER RIGHTS. At and after the Effective Time,
holders of GlobalOptions Certificates shall cease to have any rights as
stockholders of the Surviving Corporation, except for the rights to surrender
such certificates in exchange for the Merger Shares pursuant to SECTION 1.9
hereof.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF GLOBALOPTIONS
Except as set forth on the Schedule delivered by GlobalOptions to
Pubco, Merger Sub and the Placement Agent in connection with the execution and
delivery of this Agreement (the "GLOBALOPTIONS DISCLOSURE SCHEDULE"),
GlobalOptions hereby represents and warrants to Pubco, Merger Sub and the
Placement Agent as follows:
Section 2.1 ORGANIZATION; QUALIFICATION.
(a) GlobalOptions is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the corporate power and authority required for it to own its properties and
assets and to carry on its business as it is now being conducted. GlobalOptions
is duly qualified to do business and is in good standing in each jurisdiction in
which the ownership of its properties or the conduct of its business requires
such qualification, except for jurisdictions in which the failure to be so
qualified or in good standing would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect on GlobalOptions. As used in
this Agreement, "MATERIAL ADVERSE EFFECT" means any change, effect, event,
occurrence, state of facts or developments that (i) materially adversely affects
the assets, liabilities, business, results of operations, condition (financial
or otherwise) or prospects of a party and its subsidiaries, taken as a whole, or
(ii) adversely affects or delays the ability of such party to consummate the
transactions contemplated by this Agreement or otherwise prevent such party from
performing its obligations hereunder. GlobalOptions has made available to Pubco
copies of its certificate of incorporation and bylaws. Such copies of each
GlobalOptions' certificate of incorporation and bylaws are complete and correct
and in full force and effect, and GlobalOptions is not in violation of any of
the provisions of its certificate of incorporation or bylaws.
Section 2.2 CAPITAL STOCK; SUBSIDIARIES.
(a) SCHEDULE 2.2(A) of the GlobalOptions Disclosure Schedule sets
forth as of June 24, 2005: (i) the number of authorized shares of each class or
series of capital stock of GlobalOptions; (ii) the number of shares of each
class or series of capital stock of GlobalOptions which are issued and
outstanding; (iii) the number of shares of each class or series of capital stock
which are held in the treasury of GlobalOptions; (iv) the number of shares of
each class or series of capital stock of GlobalOptions which are reserved for
issuance (except for shares reserved for issuance under stock option plans or
other benefit plans), indicating each specific reservation; and (v) the number
of shares of each class or series of capital stock of GlobalOptions which are
subject to stock options or other rights to purchase or receive capital stock
granted under GlobalOptions' stock option plan or other stock based employee or
non-employee director benefit plans, indicating the name of the plan, the date
of grant, the number of shares and the exercise price thereof.
(b) All the outstanding shares of capital stock of GlobalOptions
are duly authorized, validly issued, fully paid and non-assessable and issued in
compliance with all applicable U.S. state and federal securities laws. Except as
set forth in SCHEDULE 2.2(B) of the GlobalOptions Disclosure Schedule, (i) as of
the date of this Agreement there are no authorized or outstanding options,
6
warrants, calls, preemptive rights, subscriptions or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of GlobalOptions, obligating GlobalOptions to issue, transfer or
sell or cause to be issued, transferred or sold any shares of capital stock or
other equity interest in GlobalOptions or securities convertible into or
exchangeable for such shares or equity interests, or obligating GlobalOptions to
grant, extend or enter into any such option, warrant, call, subscription or
other right, agreement, arrangement or commitment, (ii) there are no outstanding
contractual obligations of GlobalOptions to repurchase, redeem or otherwise
acquire any shares of capital stock of GlobalOptions or to provide funds to make
any investment (in the form of a loan, capital contribution or otherwise) in any
other entity, and (iii) there are no stockholder agreements, voting trusts or
other agreements to which GlobalOptions is a party or to which it is bound
relating to the voting of any shares of the capital stock of GlobalOptions.
(c) GlobalOptions is not in violation of, nor has it violated,
any federal or state securities laws in connection with any transaction relating
to GlobalOptions, including without limitation, the acquisition of any stock,
business or assets of any third party or the issuance of any capital stock of
GlobalOptions.
(d) GlobalOptions does not have any subsidiaries nor does it
presently own or control, directly or indirectly, any equity interest in any
other corporation, partnership, limited liability company, association or other
business entity.
Section 2.3 CORPORATE AUTHORITY RELATIVE TO THIS AGREEMENT; NO
VIOLATION.
(a) GlobalOptions has the corporate power and authority to enter
into this Agreement and to carry out its obligations hereunder. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors of GlobalOptions and the requisite approval of the stockholders of
GlobalOptions (the "GLOBALOPTIONS STOCKHOLDER APPROVAL") and, except for the
filing of the Certificate of Merger, no other corporate proceedings on the part
of GlobalOptions are necessary to authorize the consummation of the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by GlobalOptions and, assuming this Agreement constitutes a valid and
binding agreement of Pubco and Merger Sub, constitutes a valid and binding
agreement of GlobalOptions, enforceable against GlobalOptions in accordance with
its terms, except as enforceability thereof may be limited by (i) bankruptcy
laws and other similar laws affecting creditors' rights generally or (ii)
general principles of equity.
(b) Except as may be required under, and other applicable
requirements of, the Securities Act of 1933, as amended (the "SECURITIES ACT"),
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and the
rules and regulations promulgated thereunder, state securities or blue sky laws,
and the filing of the Certificate of Merger under Delaware Law, none of the
execution, delivery or performance of this Agreement by GlobalOptions, the
consummation by GlobalOptions of the transactions contemplated hereby or
compliance by GlobalOptions with any of the provisions hereof will (i) conflict
with or result in any breach of any provision of the certificate of
incorporation, bylaws or similar organizational documents of GlobalOptions, (ii)
require any filing with, or permit, authorization, consent or approval of, any
7
federal, regional, state or local court, arbitrator, tribunal, administrative
agency or commission or other governmental or other regulatory authority or
agency, whether U.S. or foreign (a "GOVERNMENTAL ENTITY"), (iii) result in a
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,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which GlobalOptions is a party or by which any
of them or any of their properties or assets may be bound, or (iv) violate any
order, writ, injunction, decree, judgment, permit, license, ordinance, law,
statute, rule or regulation ("LAW") applicable to GlobalOptions or any of its
properties or assets, excluding from the foregoing clauses (ii), (iii) and (iv)
such filings, permits, authorizations, consents, approvals, violations, breaches
or defaults which are not, individually or in the aggregate, reasonably likely
to have a Material Adverse Effect on GlobalOptions.
Section 2.4 FINANCIAL STATEMENTS. GlobalOptions has delivered to
Pubco copies of its audited balance sheet for the fiscal year ended December 31,
2003 and its unaudited balance sheet for the fiscal year ended December 31,
2004, together with the related statements of income, stockholders' equity and
changes in cash flow for such fiscal years (audited), and the notes thereto
(such financial statements being hereinafter referred to as the "FINANCIAL
Statements"). The Financial Statements, including the notes thereto, (i) were
prepared in accordance with GAAP throughout the periods covered thereby, and
(ii) present fairly in all material respects the financial position, results of
operations and changes in cash flow of GlobalOptions as of such dates and for
the periods then ended.
Section 2.5 NO UNDISCLOSED LIABILITIES. GlobalOptions has no
liabilities or obligations of any nature required to be set forth on a balance
sheet of GlobalOptions under GAAP, whether or not accrued, contingent or
otherwise, and there is no existing condition, situation or set of circumstances
which would be expected to result in such a liability or obligation, except (a)
liabilities or obligations reflected in the Financial Statements or (b)
liabilities and obligations which are not, individually or in the aggregate,
reasonably expected to have a Material Adverse Effect on GlobalOptions.
Section 2.6 NO DEFAULT; COMPLIANCE WITH APPLICABLE LAWS. The
ownership and operation of the businesses of GlobalOptions is not in conflict
with, or in default or violation of, any term, condition or provision of (i) its
certificate of incorporation or bylaws or similar organizational documents, (ii)
any GlobalOptions Material Contracts (as defined in SECTION 2.17), as
applicable, or (iii) any federal, state, local or foreign statute, Law,
concession, grant, franchise, Permit (as defined in SECTION 2.9) or other
governmental authorization or approval applicable to GlobalOptions, excluding
from the foregoing clauses (ii) and (iii), defaults or violations which would
not, either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on GlobalOptions.
Section 2.7 ENVIRONMENTAL MATTERS.
(a) GlobalOptions has obtained all licenses, permits,
authorizations, approvals and consents from Governmental Entities which are
required under any applicable Environmental Law and necessary for it to carry on
its business or operations as now conducted ("ENVIRONMENTAL PERMITS"), except
8
for such failures to have Environmental Permits which, individually or in the
aggregate, are not reasonably expected to have a Material Adverse Effect on
GlobalOptions. Each of such Environmental Permits is in full force and effect,
and GlobalOptions is in compliance with the terms and conditions of all such
Environmental Permits and with all applicable Environmental Laws, except for
such failures to be in full force and effect or to be in compliance which,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect on GlobalOptions.
(b) There are no Environmental Claims pending, or to the
knowledge of GlobalOptions, threatened, against GlobalOptions, or, to the
knowledge of GlobalOptions, any Person whose liability for any such
Environmental Claim GlobalOptions has or may have retained or assumed either
contractually or by operation of law for which reserves have not been
established in accordance with GAAP, that, individually or in the aggregate,
would have a Material Adverse Effect on GlobalOptions.
(c) There are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the release, threatened release or presence of any Hazardous Material, that
would form the basis of any Environmental Claim against GlobalOptions, or for
which GlobalOptions is liable, except for such liabilities which, individually
or in the aggregate, are not reasonably likely to have a Material Adverse Effect
on GlobalOptions.
(d) As used in this Agreement: (i) "ENVIRONMENTAL CLAIM" means
any claim, action, lawsuit or proceeding by any Person which seeks to impose
liability (including, without limitation, liability for investigatory costs,
cleanup costs, governmental response costs, natural resources, damages, property
damages, Personal injuries or penalties) arising out of, based on or resulting
from (A) the presence, or release or threatened release, of any Hazardous
Materials at any location, whether or not owned or operated by GlobalOptions, or
(B) circumstances which would give rise to any violation, or alleged violation,
of any Environmental Law; (ii) "ENVIRONMENTAL LAW" means any law or order of any
Governmental Entity relating to (A) the generation, treatment, storage,
disposal, use, handling, manufacturing, transportation or shipment of Hazardous
Materials, or (B) the environment or to emissions, discharges, releases or
threatened releases of Hazardous Materials into the environment; and (iii)
"HAZARDOUS MATERIALS" means (A) any petroleum or petroleum products, radioactive
materials or friable asbestos; (B) any chemicals or other materials or
substances which are now defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely hazardous
wastes," "restricted hazardous wastes," "toxic substances," or "toxic
pollutants" under any Environmental Law; and (C) pesticides.
Section 2.8 LITIGATION. There is no suit, claim, action, proceeding
or investigation pending or, to GlobalOptions' knowledge, threatened against
GlobalOptions or any of its assets or properties which (a) has had or could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on GlobalOptions, or (b) questions the validity of this Agreement
or any action to be taken by GlobalOptions in connection with the consummation
of the transactions contemplated hereby. GlobalOptions is not subject to any
outstanding order, writ, injunction or decree which has had or could reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
on GlobalOptions. There is no action, suit, proceeding or investigation pending
9
or, to GlobalOptions' knowledge, threatened against any current or former
officer, director, employee, consultant, contractor or agent of GlobalOptions
(in his or her capacity as such) which gives rise or could reasonably be
expected to give rise to a claim for contribution or indemnification against
GlobalOptions.
Section 2.9 PERMITS. GlobalOptions holds, and has at all times held,
all permits, licenses, variances, exemptions, orders, and approvals of all
Governmental Entities necessary for the lawful conduct of its business (the
"PERMITS"), except for such Permits the absence of which would not reasonably be
expected to have a Material Adverse Effect on GlobalOptions. GlobalOptions is in
material compliance with the terms of GlobalOptions' Permits. No investigation
or review by any Governmental Entity in respect of GlobalOptions is pending or,
to GlobalOptions' knowledge, threatened, nor has GlobalOptions received notice
from any Governmental Entity of its intention to conduct the same.
Section 2.10 EMPLOYEE PLANS.
(a) SCHEDULE 2.10(A) of the GlobalOptions Disclosure Schedule
sets forth a true, correct and complete list of:
(i) all "employee benefit plans," as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
which GlobalOptions has any obligation or liability, contingent or otherwise
(the "BENEFIT PLANS");
(ii) all key employees, consultants and independent
contractors of GlobalOptions; and
(iii) all employment, consulting, termination, profit
sharing, severance, change of control, individual compensation or
indemnification agreements, and all bonus or other incentive compensation,
deferred compensation, salary continuation, disability, severance, stock award,
stock option, stock purchase, educational assistance, legal assistance, club
membership, employee discount, employee loan, credit union or vacation
agreements, policies or arrangements under which GlobalOptions has any
obligation or liability (contingent or otherwise) in respect of any current or
former officer, director, key employee, consultant or contractor of
GlobalOptions (the "EMPLOYEE ARRANGEMENTS").
Benefit Plans and Employee Arrangements which cover current or former key
employees, consultants, contractors, officers, or directors (or their
equivalent) of GlobalOptions are separately identified on SCHEDULE 2.10(A) of
the GlobalOptions Disclosure Schedule.
(b) In respect of each Benefit Plan and Employee Arrangement of
GlobalOptions, a complete and correct copy of each of the following documents
(if applicable) has been delivered to Pubco: (i) the most recent plan and
related trust documents, and all amendments thereto; (ii) the most recent
summary plan description, and all related summaries of material modifications
thereto; (iii) the most recent Form 5500 (including, schedules and attachments);
(iv) the most recent Internal Revenue Service ("IRS") determination, opinion or
notification letter; (v) each of the stock option grant agreements used to make
grants under GlobalOptions' Option Plans, and all amendments thereto; (vi) each
written employment, consulting or individual severance or other compensation
10
agreement, and all amendments thereto; and (vii) the most recent actuarial
reports (including for purposes of Financial Accounting Standards Board report
nos. 87, 106 and 112).
(c) None of the Benefit Plans or Employee Arrangements is subject
to Title IV of ERISA, constitutes a defined benefit retirement plan or is a
multi-employer plan described in Section 3(37) of ERISA, and GlobalOptions does
not have any obligation or liability (contingent or otherwise) in respect of any
such plans. GlobalOptions is not a member of a group of trades or businesses
under common control or treated as a single employer pursuant to Section 414 of
the Code.
(d) The Benefit Plans and their related trusts intended to
qualify under Sections 401 and 501(a) of the Code, respectively, have either
received a favorable determination, opinion or notification letter from the IRS
with respect to each such Benefit Plan as to its qualified status under the
Code, or has remaining a period of time under applicable Treasury regulations or
IRS pronouncements in which to apply for such a letter and make any amendments
necessary to obtain a favorable determination as to the qualified status of each
such Benefit Plans. Any voluntary employee benefit association which provides
benefits to current or former employees of GlobalOptions, or their
beneficiaries, is and has been qualified under Section 501(c)(9) of the Code.
(e) All contributions or other payments required to have been
made by GlobalOptions to or under any Benefit Plan or Employee Arrangement by
applicable Law or the terms of such Benefit Plan or Employee Arrangement (or any
agreement relating thereto) have been timely and properly made.
(f) The Benefit Plans and Employee Arrangements have been
maintained and administered in all material respects in accordance with their
terms and applicable Laws. In particular, no individual who has performed
services for GlobalOptions has been improperly excluded from participation in
any Benefit Plan or Employee Arrangement.
(g) There are no pending or, to GlobalOptions' knowledge,
threatened actions, claims, or proceedings against or relating to any Benefit
Plan or Employee Arrangement (other than routine benefit claims by Persons
entitled to benefits thereunder), and, to the knowledge of GlobalOptions, there
are no facts or circumstances which could form the basis for any of the
foregoing.
(h) GlobalOptions does not have any obligation or liability
(contingent or otherwise) to provide post-retirement life insurance or health
benefits coverage for current or former officers, directors, employees,
consultants or contractors of GlobalOptions except (i) as may be required under
Part 6 of Title I of ERISA at the sole expense of the participant or the
participant's beneficiary, (ii) a medical expense reimbursement account plan
pursuant to Section 125 of the Code, or (iii) through the last day of the
calendar month in which the participant terminates employment with
GlobalOptions.
(i) None of the assets of any Benefit Plan is stock of
GlobalOptions or any of its affiliates, or property leased to or jointly owned
by GlobalOptions or any of its affiliates.
11
(j) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment becoming due to any employee, consultant or contractor (current, former,
or retired) of GlobalOptions, (ii) increase any benefits under any Benefit Plan
or Employee Arrangement or (iii) result in the acceleration of the time of
payment of, vesting of, or other rights in respect of any such benefits (except
as which may be required by the partial or full termination of any Benefit Plan
intended to be qualified under Section 401 of the Code).
Section 2.11 LABOR MATTERS.
(a) GlobalOptions is not a party to any labor or collective
bargaining agreement, and no employees of GlobalOptions are represented by any
labor organization. Within the preceding three years, there have been no
representation or certification proceedings, or petitions seeking a
representation proceeding, pending or, to GlobalOptions' knowledge, threatened
in writing to be brought or filed with the National Labor Relations Board or any
other labor relations tribunal or authority. Within the preceding three years,
to GlobalOptions' knowledge, there have been no organizing activities involving
GlobalOptions in respect of any group of employees of GlobalOptions.
(b) There are no strikes, work stoppages, slowdowns, lockouts,
material arbitrations or material grievances or other material labor disputes
pending or, to the knowledge of GlobalOptions, threatened against or involving
GlobalOptions. There are no unfair labor practice charges, grievances or
complaints pending or, to GlobalOptions' knowledge, threatened by or on behalf
of any employee or group of employees of GlobalOptions and, to the knowledge of
GlobalOptions, there are no facts or circumstances which could form the basis
for any of the foregoing.
(c) There are no complaints, charges or claims against
GlobalOptions pending or, to GlobalOptions' knowledge, threatened to be brought
or filed with any Governmental Entity or arbitrator based on, arising out of, in
connection with, or otherwise relating to the employment or termination of
employment of any individual by GlobalOptions, and, to the knowledge of
GlobalOptions, there are no facts or circumstances which could form the basis
for any of the foregoing.
Section 2.12 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as set forth in SCHEDULE 2.12 of the GlobalOptions Disclosure
Schedule, since January 1, 2005 (i) the business of GlobalOptions has been
conducted in all material respects in the ordinary course consistent with past
practice and (ii) there has not been:
(a) a material adverse change in the assets, liabilities,
business, results of operations, condition (financial or otherwise) or prospects
of GlobalOptions, or any event, occurrence or development which has had or could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on GlobalOptions;
(b) any declaration, setting aside or payment of any dividend or
other distribution in respect of any shares of capital stock of GlobalOptions,
or any repurchase, redemption or other acquisition by GlobalOptions of any of
its securities;
12
(c) any incurrence or assumption by GlobalOptions of any
indebtedness for borrowed money (or any renewals, replacements, or extensions
that increase the aggregate commitments thereunder) except (i) in the ordinary
and usual course of business consistent with past practice or (ii) in connection
with any capital expenditure permitted by SECTION 3.1, or (iii) any guarantee,
endorsement, or other incurrence or assumption of liability (whether directly,
contingently or otherwise) by GlobalOptions for the obligations of any other
Person;
(d) any creation or assumption by GlobalOptions of any material
Lien on any material asset of GlobalOptions other than Permitted Liens (as
defined in SECTION 8.12);
(e) any making of any loan, advance or capital contribution to or
investment in any Person by GlobalOptions other than loans or advances to
employees, contractors or consultants of GlobalOptions made in the ordinary and
usual course of business consistent with past practice;
(f) (i) any contract or agreement entered into by GlobalOptions
on or prior to the date hereof relating to any material acquisition or
disposition of any assets or business or (ii) any modification, amendment,
assignment, termination or relinquishment by GlobalOptions of any contract,
license or other right (including any insurance policy naming it as a
beneficiary or a loss payable payee) that does or would reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on
GlobalOptions, other than those contemplated by this Agreement;
(g) any (i) grant of any severance or termination pay to any
director, officer, employee, consultant or contractor of GlobalOptions; (ii)
entering into of any employment, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any director,
officer, employee, consultant or contractor of GlobalOptions; (iii) increase in
benefits payable under any existing severance or termination pay policies or
employment agreements; or (iv) increase in compensation, bonus or other benefits
payable to directors, officers, employees, consultants or contractors of
GlobalOptions other than, in the case of clause (iv) only, increases prior to
the date hereof in compensation, bonus or other benefits payable to employees,
consultants or contractors of GlobalOptions in the ordinary and usual course of
business consistent with past practice or merit increases in salaries of
employees, consultants or contractors at regularly scheduled times in customary
amounts consistent with past practices;
(h) any adoption, entering into, amendment, alteration or
termination of (partially or completely) any Benefit Plan or Employee
Arrangement, except as contemplated by this Agreement or to the extent required
by applicable Law;
(i) any (i) making or revoking of any material election relating
to Taxes (as hereinafter defined), (ii) settlement or compromise of any material
claim, action, suit, litigation, proceeding, arbitration, investigation, audit
or controversy relating to Taxes, or (iii) change to any material methods of
reporting income or deductions for federal income tax purposes;
(j) any capital expenditures in excess of $10,000 individually
and in excess of $25,000 in the aggregate;
13
(k) any lease, license or grant to any Person of any rights in
any of GlobalOptions' assets or properties;
(l) any amendment of the certificate of incorporation or bylaws
of GlobalOptions;
(m) any sufferance of any material damage, destruction or loss
(whether or not covered by insurance) to any material assets of GlobalOptions;
(n) any strike, slowdown or demand for recognition by a labor
organization by or with respect to any of the employees of GlobalOptions;
(o) any issuance, or authorization for issuance, of any equity
securities of GlobalOptions, except as otherwise provided in the Agreement; and
(p) any resignation or termination of employment of any key
officer, consultant or employee of GlobalOptions.
Section 2.13 TAX MATTERS.
(a) For purposes of this Agreement: (i) "TAXES" means any and all
federal, state, local, foreign or other taxes of any kind (together with any and
all interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any taxing authority, including, without limitation,
taxes or other charges on or with respect to income, franchises, windfall or
other profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment compensation or
net worth, and taxes or other charges in the nature of excise, withholding, ad
valorem or value added, and (ii) "TAX RETURN" means any return, report or
similar statement (including attached schedules) required to be filed with
respect to any Tax, including, without limitation, any information return, claim
for refund, amended return or declaration of estimated Tax.
(b) All federal, state, local and foreign Tax Returns required to
be filed by or on behalf of GlobalOptions, or each affiliated, combined,
consolidated or unitary group of which GlobalOptions is a member (an "AFFILIATED
GROUP") have been timely filed or requests for extensions have been timely filed
and any such extension has been granted and has not expired, and all such filed
Tax Returns are complete and accurate except to the extent any failure to file
or any inaccuracies in filed Tax Returns would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect on
GlobalOptions. All Taxes due and owing by GlobalOptions or any GlobalOptions
Affiliated Group, including estimates and withheld Taxes, have been paid, or
adequately reserved in accordance with GAAP, except to the extent any failure to
pay or reserve for would not, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect on GlobalOptions. There is no audit or
examination in process or pending and there has been no notification of any
request for such audit or other examination and there is no deficiency, refund
litigation, proposed adjustment or matter in controversy with respect to any
Taxes due and owing by GlobalOptions or any GlobalOptions Affiliated Group which
if determined adversely would, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect on GlobalOptions. All assessments for
Taxes due and owing by GlobalOptions or any GlobalOptions Affiliated Group with
14
respect to completed and settled examinations or concluded litigation have been
paid, except to the extent that any failures to pay would not, individually or
in the aggregate, be reasonably likely to have a Material Adverse Effect on
GlobalOptions.
(c) GlobalOptions has not (i) entered into a closing agreement or
other similar agreement with a taxing authority relating to Taxes of
GlobalOptions or any GlobalOptions Affiliated Group with respect to a taxable
period for which the statute of limitations is still open, or (ii) with respect
to U.S. federal income Taxes, granted any waiver of any statute of limitations
with respect to, or any extension of a period for the assessment of, any income
Tax, in either case, that is still outstanding. There are no Liens relating to
Taxes upon the assets of GlobalOptions or any GlobalOptions Affiliated Group
other than Liens relating to Taxes not yet due and Liens that would not,
individually or in the aggregate, have a Material Adverse Effect on
GlobalOptions. Neither GlobalOptions nor any GlobalOptions Affiliated Group is a
party to or is bound by any Tax sharing agreement, Tax indemnity obligation or
similar agreement in respect of Taxes (other than with respect to agreements
solely between or among members of the consolidated group of which GlobalOptions
is the common parent and agreements and obligations that would not, individually
or in the aggregate, have a Material Adverse Effect on GlobalOptions).
(d) Neither GlobalOptions nor any GlobalOptions Affiliated Group
has taken any action or knows of any fact, agreement, plan or other circumstance
that is reasonably likely to prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
(e) Except as set forth on SCHEDULE 2.13 of the GlobalOptions
Disclosure Schedule, each Tax Return of GlobalOptions or any Affiliated Group
for which an accurate copy of the actual Tax Return has been made available by
GlobalOptions to Pubco on or before the date hereof has been filed with the
relevant taxing authority.
(f) Neither GlobalOptions nor any Affiliated Group has requested
or received any private letter ruling from the Internal Revenue Service or
comparable rulings from other taxing authorities.
(g) Neither GlobalOptions nor any member of any Affiliated Group
has constituted either a "distributing corporation" or a "controlled
corporation" (within the meaning of Section 355(a)(1)(A) of the Code) in a
distribution of stock (to any Person or entity that is not a member of any
Affiliated Group) qualifying for tax-free treatment under Section 355 of the
Code (i) within the two-year period ending on the date hereof or (ii) in a
distribution which could otherwise constitute part of a "plan" or "series of
related transactions" (within the meaning of Section 355(e) of the Code) in
conjunction with the Merger.
(h) Neither GlobalOptions nor any member of any Affiliated Group
has any employment, severance or termination agreements, other compensation
arrangements, or Benefit Plans currently in effect which provide for the payment
of any amount (whether in cash or property or the vesting of property) as a
result of any of the transactions contemplated by this Agreement that
individually or collectively (either alone or upon the occurrence of any
15
additional or subsequent event), could give rise to a payment which is
nondeductible by reason of Section 280G of the Code.
(i) Neither GlobalOptions nor any member of any Affiliated Group
has filed any consent agreement under Section 341(f) of the Code or agreed to
have Section 341(f)(4) applied to any disposition of assets owned by
GlobalOptions or any Affiliated Group.
(j) Neither GlobalOptions nor any member of any Affiliated Group
has been at any time a United States Real Property Holding Corporation within
the meaning of Section 897(c)(2) of the Code.
Section 2.14 ABSENCE OF QUESTIONABLE PAYMENTS. Neither GlobalOptions
nor, to GlobalOptions' knowledge, any director, officer, agent, employee,
consultant, contractor or other Person acting on behalf of GlobalOptions, has
used any corporate or other funds for unlawful contributions, payments, gifts,
or entertainment, or made any unlawful expenditures relating to political
activity to government officials or others or established or maintained any
unlawful or unrecorded funds in violation of the Foreign Corrupt Practices Act
of 1977, as amended, or any other domestic or foreign Law. Neither GlobalOptions
nor, to GlobalOptions' knowledge, any director, officer, agent, employee,
consultant, contractor or other Person acting on behalf of GlobalOptions, has
accepted or received any unlawful contributions, payments, gifts or
expenditures.
Section 2.15 TITLE AND RELATED MATTERS. GlobalOptions has good and
valid title to, or a valid leasehold or contractual interest in, all of the
properties and assets reflected in the latest balance sheet included in the
Financial Statements or acquired after the date thereof (except for properties
or assets sold or otherwise disposed of since the date thereof), free and clear
of all Liens, other than statutory Liens securing payments not yet due or
delinquent or the validity of which is being contested in good faith by
appropriate proceedings, and such imperfections or irregularities in title that
do not materially and adversely affect the current use of the properties or
assets subject thereto or affected thereby, affect the ability to convey title
thereto or otherwise materially impair the business operations currently
conducted at such properties. As of the date hereof, SCHEDULE 2.15 of the
GlobalOptions Disclosure Schedule contains a complete and correct list of all
real property owned or leased by GlobalOptions, copies of which have been
delivered or made available to the other party, and a complete and correct list
of each title insurance policy insuring title to any of such real properties.
All rents and mortgages due have been paid.
Section 2.16 MATERIAL CONTRACTS.
(a) SCHEDULE 2.16(A)(I) of the GlobalOptions Disclosure Schedule
sets forth a list of all agreements GlobalOptions would be required to file as
material contracts under Item 601(b)(10) of Regulation S-K were GlobalOptions
subject to the Exchange Act and the disclosure requirements of Regulation S-B
(the "GLOBALOPTIONS MATERIAL CONTRACTS"). GlobalOptions has heretofore delivered
to Pubco true, correct and complete copies of all GlobalOptions Material
Contracts. Except as set forth on SCHEDULE 2.16(A)(II) of the GlobalOptions
Disclosure Schedule, GlobalOptions is not a party to nor bound by any severance
or other agreement with any employee, consultant or contractor pursuant to which
such Person would be entitled to receive any additional compensation or an
accelerated payment of compensation as a result of the consummation of the
transactions contemplated hereby.
16
(b) Each of the GlobalOptions Material Contracts constitutes the
valid and legally binding obligation of GlobalOptions, enforceable in accordance
with its terms, and is in full force and effect, except as may be limited by (A)
bankruptcy laws and other similar laws affecting creditors' rights generally and
(B) general principles of equity. GlobalOptions is not in breach or default in
any material respects of any provisions of any GlobalOptions Material Contract
and, to GlobalOptions' knowledge, no event has occurred which with notice or
lapse of time would constitute a material breach or default by GlobalOptions or
permit termination, modification or acceleration thereunder, and which with
respect to each of the foregoing, could not be timely cured by GlobalOptions.
GlobalOptions does not have any knowledge of any termination or material breach
or anticipated termination or material breach by the other parties to any
GlobalOptions Material Contract or commitment to which it is a party or to which
any of its assets are subject.
(c) No party to any GlobalOptions Material Contract has given
notice to GlobalOptions of or made a claim against GlobalOptions in respect of
any breach or default thereunder.
(d) No terms and conditions of any GlobalOptions Material
Contract or other arrangement or understanding between GlobalOptions and any
other Person in effect on the date of this Agreement prevent, delay or
materially restrict GlobalOptions' ability to deploy any material portion of its
assets or resources as it deems appropriate, and after the Closing shall
prevent, delay or materially restrict GlobalOptions' ability to deploy any
material portion of its assets or resources as it deems appropriate.
Section 2.17 INSURANCE. SCHEDULE 2.17 of the GlobalOptions
Disclosure Schedule sets forth a true and complete list and brief summary
description (including information on the premiums payable in connection
therewith, the scope and amount of the coverage provided thereunder, and the
expiration dates) of directors and officers liability and general liability
insurance policies maintained by GlobalOptions. Such policies have been issued
by insurers which, to GlobalOptions' knowledge, are reputable and financially
sound and provide coverage for the operations conducted by GlobalOptions of a
scope and coverage consistent with customary industry practice. Complete and
correct copies of each such policy have been delivered by GlobalOptions to
Pubco. All such policies are in full force and effect and no notice of
cancellation has been given with respect to any such policy. All premiums due
thereon have been paid in a timely manner. There are no pending claims or, to
the knowledge of GlobalOptions, threatened claims, under any of GlobalOptions'
insurance policies.
Section 2.18 SUBSIDIES. No grants, subsidies or similar arrangements
exist directly or indirectly between or among GlobalOptions, on the one hand,
and any domestic or foreign Governmental Entity or any other Person, on the
other hand. GlobalOptions has not requested, sought, applied for or entered into
any grant, subsidy or similar arrangement directly or indirectly from or with
any domestic or foreign Governmental Entity or any other Person.
17
Section 2.19 INTELLECTUAL PROPERTY.
(a) For purposes of this Agreement, "INTELLECTUAL PROPERTY"
means:
(i) all issued patents, reissued or reexamined patents,
revivals of patents, utility models, certificates of invention, registrations of
patents and extensions thereof, regardless of country or formal name
(collectively, "ISSUED PATENTS");
(ii) all published or unpublished nonprovisional and
provisional patent applications, reexamination proceedings, invention
disclosures and records of invention (collectively "PATENT APPLICATIONS" and,
with the Issued Patents, the "PATENTS");
(iii) all copyrights, copyrightable works, semiconductor
topography and mask work rights, including all rights of authorship, use,
publication, reproduction, distribution, performance transformation, moral
rights and rights of ownership of copyrightable works, semiconductor topography
works and mask works, and all rights to register and obtain renewals and
extensions of registrations, together with all other interests accruing by
reason of international copyright, semiconductor topography and mask work
conventions (collectively, "COPYRIGHTS");
(iv) common law trademarks, registered trademarks,
applications for registration of trademarks, common law service marks,
registered service marks, applications for registration of service marks, trade
names, registered trade names and applications for registrations of trade names
and trade dress (collectively, "TRADEMARKS");
(v) all technology, ideas, inventions, designs, proprietary
information, manufacturing and operating specifications, know-how, formulae,
trade secrets, technical data, computer programs, hardware, software and
processes related to the business of GlobalOptions as such business is currently
conducted and as its business is proposed to be conducted;
(vi) all domain names registered by GlobalOptions; and
(vii) all other intangible intellectual property assets,
properties and rights (whether or not appropriate steps have been taken to
protect, under applicable law, such other intangible assets, properties or
rights).
(b) GlobalOptions owns and has good and marketable title to, or
possesses legally enforceable rights to use, all Intellectual Property used or
currently proposed to be used in the business of GlobalOptions as currently
conducted or as proposed to be conducted by GlobalOptions (the "GLOBALOPTIONS
INTELLECTUAL PROPERTY"), free and clear of all liens, claims or encumbrances.
GlobalOptions Intellectual Property, as listed on SCHEDULE 2.19(B) of the
GlobalOptions Disclosure Schedule, constitutes all of the Intellectual Property
necessary to enable GlobalOptions to conduct its business as such business is
currently being conducted and as its business is proposed to be conducted. No
current or former officer, director, stockholder, employee, consultant or
independent contractor has asserted any right, claim or interest in or with
respect to any GlobalOptions Intellectual Property and GlobalOptions is not
aware of a basis for any such claim. There is no unauthorized use, disclosure or
18
misappropriation of any GlobalOptions Intellectual Property by any employee or,
to GlobalOptions' knowledge, former employee of GlobalOptions or, to
GlobalOptions' knowledge, by any other third party. There are no royalties, fees
or other payments payable by GlobalOptions to any third Person under any written
or oral contract or understanding by reason of the ownership, use, sale or
disposition of GlobalOptions Intellectual Property.
(c) With respect to each item of GlobalOptions Intellectual
Property incorporated into any product of GlobalOptions or otherwise used in the
business of GlobalOptions (except "off the shelf" or other software widely
available through regular commercial distribution channels at a cost not
exceeding $10,000 on standard terms and conditions, as modified for
GlobalOptions' operations), SCHEDULE 2.19(C) of GlobalOptions Disclosure
Schedule lists:
(i) all Patents and Patent Applications, Trademarks, and
Copyrights, including the jurisdictions in which each such Intellectual Property
has been issued or registered or in which any such application for such issuance
and registration has been filed; and
(ii) the following agreements relating to each of the
products of GlobalOptions (the "GLOBALOPTIONS PRODUCTS") or other GlobalOptions
Intellectual Property: all (A) agreements granting any right to distribute or
sublicense a GlobalOptions Product on any exclusive basis, (B) any exclusive
licenses of Intellectual Property to or from GlobalOptions, (C) agreements
pursuant to which the amounts actually paid or payable under firm commitments to
GlobalOptions are $10,000 or more, (D) joint development agreements, (E) any
agreement by which GlobalOptions grants any ownership right to any GlobalOptions
Intellectual Property owned by GlobalOptions, (F) any judicial, administrative,
regulatory or other governmental order relating to Intellectual Property, (G)
any option relating to any GlobalOptions Intellectual Property, and (H)
agreements pursuant to which any party is granted any rights to access source
code or to use source code, including without limitation any rights to create
derivative works of GlobalOptions Products.
(d) SCHEDULE 2.19(D) of GlobalOptions Disclosure Schedule
contains an accurate list as of the date of this Agreement of all licenses,
sublicenses and other agreements to which GlobalOptions is a party and pursuant
to which GlobalOptions is authorized to use any Intellectual Property owned by
any third party, excluding "off the shelf" or other software at a cost not
exceeding $10,000 and widely available through regular commercial distribution
channels on standard terms and conditions ("THIRD PARTY INTELLECTUAL PROPERTY").
(e) To the knowledge of GlobalOptions, there is no unauthorized
use, disclosure, infringement or misappropriation of any GlobalOptions
Intellectual Property, including any Third Party Intellectual Property by any
third party, including any employee or former employee of GlobalOptions. Other
than in respect of agreements with GlobalOptions' officers and directors,
GlobalOptions has not entered into any agreement to indemnify any other Person
against any charge of infringement of any Intellectual Property, other than
indemnification provisions contained in standard sales or agreements to end
users arising in the ordinary course of business. There are no royalties, fees
or other payments payable by GlobalOptions to any Person by reason of the
ownership, use, sale or disposition of Intellectual Property.
(f) GlobalOptions is not in breach of any license, sublicense or
other agreement relating to GlobalOptions Intellectual Property or Third Party
Intellectual Property rights. Neither the execution, delivery or performance of
19
this Agreement or any ancillary agreement contemplated hereby nor the
consummation of the Merger or any of the transactions contemplated by this
Agreement will contravene, conflict with or result in an infringement on
GlobalOptions Intellectual Property, including any Third Party Intellectual
Property.
(g) All Patents, registered Trademarks, registered service marks
and registered Copyrights held by GlobalOptions are valid and subsisting. All
maintenance and annual fees have been fully paid and all fees paid during
prosecution and after issuance of any patent comprising or relating to such item
have been paid in the correct entity status amounts. GlobalOptions is not
infringing, misappropriating or making unlawful use of, or received any notice
or other communication (in writing or otherwise) of any actual, alleged,
possible or potential infringement, misappropriation or unlawful use of any
proprietary asset owned or used by any third party. There is no proceeding
pending or, to GlobalOptions' knowledge, threatened nor has any claim or demand
been made, which challenges the legality, validity, enforceability or ownership
of any item of GlobalOptions Intellectual Property or Third Party Intellectual
Property or alleges a claim of infringement of any Patents, Trademarks, service
marks, Copyrights or violation of any trade secret or other proprietary right of
any third party. GlobalOptions has not brought a proceeding alleging
infringement of GlobalOptions Intellectual Property or breach of any license or
agreement involving Intellectual Property against any third party.
(h) All current and former officers and employees of
GlobalOptions have executed and delivered to GlobalOptions an agreement
(containing no exceptions or exclusions from the scope of its coverage)
regarding the protection of proprietary information and the assignment to
GlobalOptions of any Intellectual Property arising from services performed for
GlobalOptions by such Persons. All current and former consultants and
independent contractors to GlobalOptions involved in the development,
modification, marketing and servicing of GlobalOptions' products, and/or
GlobalOptions Intellectual Property have executed and delivered to GlobalOptions
an agreement (containing no exceptions or exclusions from the scope of its
coverage) regarding the protection of proprietary information and the assignment
to GlobalOptions of any Intellectual Property arising from services performed
for GlobalOptions by such Persons. To GlobalOptions' knowledge, no employee or
independent contractor of GlobalOptions is in violation of any term of any
patent disclosure agreement or employment contract or any other contract or
agreement relating to the relationship of any such employee or independent
contractor with GlobalOptions.
(i) GlobalOptions has taken all commercially reasonable and
customary measures and precautions necessary to protect and maintain the
confidentiality of all GlobalOptions Intellectual Property (except such
GlobalOptions Intellectual Property whose value would be unimpaired by public
disclosure) and otherwise to maintain and protect the full value of all
Intellectual Property it owns or uses. All Intellectual Property not otherwise
protected by Patents or Copyrights ("CONFIDENTIAL INFORMATION") owned by
GlobalOptions used by or disclosed to a third party has been pursuant to the
terms of a written agreement between GlobalOptions and such third party.
(j) No product liability claims have been communicated in writing
to or, to GlobalOptions' knowledge, threatened against GlobalOptions.
20
(k) A complete list of each of GlobalOptions Products and
GlobalOptions' proprietary software ("GLOBALOPTIONS SOFTWARE"), together with a
brief description of each, is set forth in SCHEDULE 2.19(K) of the GlobalOptions
Disclosure Schedule. GlobalOptions Software and GlobalOptions Products conform
in all material respects with any specification, documentation, performance
standard, representation or statement provided with respect thereto by or on
behalf of GlobalOptions.
(l) GlobalOptions is not subject to any proceeding or outstanding
decree, order, judgment, or stipulation restricting in any manner the use,
transfer, or licensing thereof by GlobalOptions, or which may affect the
validity, use or enforceability of such GlobalOptions Intellectual Property.
GlobalOptions is not subject to any agreement which restricts in any material
respect the use, transfer, or licensing by GlobalOptions of GlobalOptions
Intellectual Property or GlobalOptions Products.
Section 2.20 MINUTE BOOKS; STOCK RECORD BOOKS. True and correct
copies of GlobalOptions' minute books and stock record books have been made
available to Pubco. The minute books of GlobalOptions contain true and complete
originals or copies of all minutes of meetings of and actions by the
stockholders, Board of Directors and all committees of the Board of Directors of
GlobalOptions, and accurately reflect in all material respects all corporate
actions of GlobalOptions which are required by law to be passed upon by the
Board of Directors or stockholders of GlobalOptions.
Section 2.21 DISCLOSURE. The representations and warranties by
GlobalOptions in this Agreement and the statements contained in the schedules,
certificates and other writings furnished and to be furnished by GlobalOptions
to Pubco pursuant to this Agreement, when considered as a whole and giving
effect to any supplements or amendments thereof prior to the time of signing on
the date hereof, do not and will not contain any untrue statement of a material
fact and do not and will not omit to state any material fact necessary to make
the statements herein, in light of the circumstances under which they were or
shall be made, not misleading. GlobalOptions has provided to Pubco copies of all
contracts and agreements that can be reasonably construed as material to the
business of GlobalOptions.
Section 2.22 CERTAIN TRANSACTIONS. Except as set forth on SCHEDULE
2.22 of the GlobalOptions Disclosure Schedule, none of the stockholders,
officers, directors or employees of GlobalOptions, nor any member of any such
Person's or stockholder's family is presently a party to any transaction with
GlobalOptions relating to the business of GlobalOptions, including without
limitation, any contract, agreement or other arrangement (i) providing for the
furnishing of services by, (ii) providing for the rental of real or Personal
property from, or (iii) otherwise requiring payments to (other than for services
as officers, directors or employees of GlobalOptions), any such Person or any
corporation, partnership, trust or other entity in which any such Person has a
substantial interest as a stockholder, officer, director, trustee or partner.
Section 2.23 BROKERS OR FINDERS. GlobalOptions represents, as to
itself, and its affiliates, that no agent, broker, investment banker, financial
advisor or other firm or Person is or will be entitled to any brokers' or
finder's fee or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement. GlobalOptions agrees to
indemnify and hold Pubco, including its officers, directors, agents or
21
representatives, harmless from and against any and all claims, liabilities or
obligations with respect to any other fees, commissions or expenses asserted by
any Person on the basis of any act or statement alleged to have made by such
parties or their affiliates.
Section 2.24 PRIVATE PLACEMENT DISCLOSURE. The capitalization
(actual), business, management and principal stockholders of GlobalOptions
conform to the descriptions thereof under the captions "Executive Summary,"
"Risk Factors-Risks Relating to the Business," "Capitalization," "Business,"
"Management" and "Principal Stockholders" in the Confidential Private Placement
Memorandum dated April 2005, used in connection with the Private Placement (as
supplemented from time to time, the "Placement Memorandum"), in all material
respects (provided that GlobalOptions makes no representation with respect to
information relating to Pubco or Merger Sub). The Summary Projected Pro Forma
Financial Data contained in the Placement Memorandum are based on good faith
estimates or projections of, and assumptions believed to be reasonable by, the
management of GlobalOptions as of the date such statements were prepared and on
the Closing Date, and the management of GlobalOptions believes said assumptions
remain reasonable. There is no fact known to GlobalOptions which materially and
adversely affects the capitalization, business, management or principal
stockholders of GlobalOptions which has not been set forth in the Placement
Memorandum or in any other document, certificate or statement furnished to
investors by or on behalf of GlobalOptions in connection with the Private
Placement.
Section 2.25 INVESTMENTS IN COMPETITORS. Except as set forth in
SCHEDULE 2.25 of the GlobalOptions Disclosure Schedule, none of the
stockholders, officers, directors or employees of GlobalOptions, nor any member
of any such Person's or stockholder's family, owns any interest, directly or
indirectly, or serves as an officer, director, employee or consultant, or has
entered into an agreement to acquire any such interest or serve in any such
capacity, in any Person that is a competitor of GlobalOptions, other than owning
the securities of an issuer that are traded on a national securities exchange or
are traded in the over-the-counter market which do not constitute more than 2.0%
of the total amount of such securities that are outstanding.
Section 2.26 CBR ACQUISITION TRANSACTION. GlobalOptions has
furnished to Pubco a true and correct copy of the Asset Purchase Agreement,
dated as of June 8, 2005, between GlobalOptions and Confidential Business
Resources, Inc. ("CBR") (including all schedules and exhibits thereto), pursuant
to which GlobalOptions will acquire all of the assets and business activities of
CBR.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PUBCO
Except as set forth on the Schedule delivered by Pubco and Merger
Sub to GlobalOptions in connection with the execution and delivery of this
Agreement (the "PUBCO DISCLOSURE SCHEDULE"), Pubco hereby represents and
warrants to GlobalOptions as follows:
Section 3.1 ORGANIZATION; QUALIFICATION. Pubco is a corporation duly
organized, validly existing and in good standing under the laws of Nevada and
has the corporate power and authority required for it to own its properties and
assets and to carry on its business as it is now being conducted. Pubco is duly
qualified to do business and is in good standing in each jurisdiction in which
22
the ownership of its properties or the conduct of its business requires such
qualification. Pubco has made available to GlobalOptions copies of its articles
of incorporation and bylaws. Such copies of each of Pubco's articles of
incorporation and bylaws are complete and correct and in full force and effect,
and Pubco is not in violation of any of the provisions of its articles of
incorporation or bylaws.
Section 3.2 CAPITAL STOCK; SUBSIDIARIES.
(a) SCHEDULE 3.2(A) of the Pubco Disclosure Schedule sets forth
as of June 24, 2005: (i) the number of authorized shares of each class or series
of capital stock of Pubco; (ii) the number of shares of each class or series of
capital stock of Pubco which are issued and outstanding; (iii) the number of
shares of each class or series of capital stock which are held in the treasury
of Pubco; (iv) the number of shares of each class or series of capital stock of
Pubco which are reserved for issuance (except for shares reserved for issuance
under stock option plans or other benefit plans), indicating each specific
reservation; and (v) the number of shares of each class or series of capital
stock of Pubco which are subject to stock options or other rights to purchase or
receive capital stock granted under Pubco's stock option plan or other stock
based employee or non-employee director benefit plans, indicating the name of
the plan, the date of grant, the number of shares and the exercise price
thereof.
(b) All the outstanding shares of capital stock of Pubco are, and
the Merger Shares to be issued in the Merger will be when issued in accordance
with the terms of this Agreement, duly authorized, validly issued, fully paid
and non-assessable and issued in compliance with all applicable U.S. state and
federal securities laws. Except as set forth in SCHEDULE 3.2(B) of the Pubco
Disclosure Schedule, (i) as of the date of this Agreement there are no
authorized or outstanding options, warrants, calls, preemptive rights,
subscriptions or other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of Pubco, obligating
Pubco to issue, transfer or sell or cause to be issued, transferred or sold any
shares of capital stock or other equity interest in Pubco or securities
convertible into or exchangeable for such shares or equity interests, or
obligating Pubco to grant, extend or enter into any such option, warrant, call,
subscription or other right, agreement, arrangement or commitment, (ii) there
are no outstanding contractual obligations of Pubco to repurchase, redeem or
otherwise acquire any shares of capital stock of Pubco or to provide funds to
make any investment (in the form of a loan, capital contribution or otherwise)
in any other entity, and (iii) there are no stockholder agreements, voting
trusts or other agreements to which Pubco is a party or to which it is bound
relating to the voting of any shares of the capital stock of Pubco.
(c) Pubco is not in violation of, nor has it violated, any
federal or state securities laws in connection with any transaction relating to
Pubco, including without limitation, the acquisition of any stock, business or
assets of any third party or the issuance of any capital stock of Pubco.
(d) Merger Sub is a wholly-owned subsidiary of Pubco that was
formed specifically for the purpose of the Merger and that has not conducted any
business or acquired any property, and will not conduct any business or acquire
any property prior to the Closing Date, except in preparation for and otherwise
in connection with the transactions contemplated by this Agreement. Except for
23
Merger Sub, Pubco does not have any subsidiaries or presently own or control,
directly or indirectly, any equity interest in any other corporation,
partnership, limited liability company, association or other business entity.
Section 3.3 CORPORATE AUTHORITY RELATIVE TO THIS AGREEMENT; NO
VIOLATION.
(a) Each of Pubco and Merger Sub have the corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the Boards of Directors of Pubco and Merger Sub and the requisite approval of
the stockholders of Pubco (the "PUBCO STOCKHOLDER APPROVAL") and, except for the
filing of the Certificate of Merger, no other corporate proceedings on the part
of Pubco and Merger Sub are necessary to authorize the consummation of the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Pubco and Merger Sub and, assuming this Agreement
constitutes a valid and binding agreement of GlobalOptions, constitutes a valid
and binding agreement of Pubco and Merger Sub, enforceable against Pubco and
Merger Sub in accordance with its terms, except as enforceability thereof may be
limited by (i) bankruptcy laws and other similar laws affecting creditors'
rights generally or (ii) general principles of equity.
(b) Except as may be required under, and other applicable
requirements of, the Securities Act, the Exchange Act, and the rules and
regulations promulgated thereunder, state securities or blue sky laws, and the
filing of the Certificate of Merger under Delaware Law, none of the execution,
delivery or performance of this Agreement by Pubco and Merger Sub, the
consummation by Pubco and Merger Sub of the transactions contemplated hereby or
compliance by Pubco and Merger Sub with any of the provisions hereof will (i)
conflict with or result in any breach of any provision of the articles of
incorporation, bylaws or similar organizational documents of Pubco or Merger
Sub, (ii) require any filing with, or permit, authorization, consent or approval
of, any Governmental Entity, (iii) result in a 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, cancellation or acceleration)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which Pubco is a party or by which any of them or any of their properties or
assets may be bound, or (iv) violate any Law applicable to Pubco or any of its
properties or assets, excluding from the foregoing clauses (ii), (iii) and (iv)
such filings, permits, authorizations, consents, approvals, violations, breaches
or defaults which are not, individually or in the aggregate, reasonably likely
to have a Material Adverse Effect on Pubco as it currently exists.
Section 3.4 REPORTS AND FINANCIAL STATEMENTS.
(a) Pubco has previously furnished or otherwise made available to
GlobalOptions true and complete copies of Pubco's: (i) Annual Report on Form
10-KSB filed with the Securities and Exchange Commission (the "SEC") for the
fiscal year ended December 31, 2004, (ii) Quarterly Report on Form 10-QSB filed
with the SEC for the quarter ended March 31, 2005, and (iii) any Current Reports
on Form 8-K filed with the SEC. Pubco has not previously filed any proxy
statements with the SEC.
24
(b) As of their respective dates, such reports filed with the SEC
by Pubco (collectively with, and giving effect to, all amendments, supplements
and exhibits thereto, the "SEC REPORTS") (i) complied as to form in all material
respects with the applicable requirements of the Securities Act and the Exchange
Act, and (ii) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The audited consolidated financial statements and
unaudited consolidated interim financial statements included in the SEC Reports
(including any related notes and schedules) fairly present in all material
respects the financial position of Pubco as of the dates thereof and the results
of operations and cash flows for the periods or as of the dates then ended
(subject, in the case of the unaudited interim financial statements, to normal
recurring adjustments), in each case in accordance with past practice and GAAP
consistently applied during the periods involved (except as otherwise disclosed
in the notes thereto). Since its inception, Pubco has timely filed all reports,
registration statements and other filings required to be filed by it with the
SEC under the rules and regulations of the SEC.
Section 3.5 NO UNDISCLOSED LIABILITIES. Pubco has no liabilities or
obligations of any nature required to be set forth on a balance sheet of Pubco
under GAAP, whether or not accrued, contingent or otherwise, and there is no
existing condition, situation or set of circumstances which would be expected to
result in such a liability or obligation, except liabilities or obligations
reflected in the SEC Reports.
Section 3.6 NO DEFAULT; COMPLIANCE WITH APPLICABLE LAWS. The
ownership and operation of the businesses of Pubco is not in conflict with, or
in default or violation of, any term, condition or provision of (i) its articles
of incorporation or bylaws or similar organizational documents, (ii) any Pubco
Material Contracts or (iii) any federal, state, local or foreign statute, Law,
concession, grant, franchise, Permit or other governmental authorization or
approval applicable to Pubco.
Section 3.7 ENVIRONMENTAL MATTERS.
(a) Pubco has obtained all Environmental Permits necessary to
carry on its business. Each of such Environmental Permits is in full force and
effect, and Pubco is in compliance with the terms and conditions of all such
Environmental Permits and with all applicable Environmental Laws.
(b) There are no Environmental Claims pending, or to the
knowledge of Pubco, threatened, against Pubco, or, to the knowledge of Pubco,
any Person whose liability for any such Environmental Claim Pubco has or may
have retained or assumed either contractually or by operation of law for which
reserves have not been established in accordance with GAAP.
(c) There are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the release, threatened release or presence of any Hazardous Material, that
would form the basis of any Environmental Claim against Pubco, or for which
Pubco is liable.
25
Section 3.8 LITIGATION. There is no suit, claim, action, proceeding
or investigation pending or, to Pubco's knowledge, threatened against Pubco,
Merger Sub or any of their assets or properties. Neither Pubco nor Merger Sub is
subject to any outstanding order, writ, injunction or decree. There is no
action, suit, proceeding or investigation pending or, to Pubco's knowledge,
threatened against any current or former officer, director, employee,
consultant, contractor or agent of Pubco or Merger Sub (in his or her capacity
as such) which gives rise or could reasonably be expected to give rise to a
claim for contribution or indemnification against Pubco or Merger Sub, as the
case may be.
Section 3.9 EMPLOYEE PLANS. Pubco has no, and has never had any,
Benefit Plans under which Pubco has any obligation or liability, contingent or
otherwise, and which relate to employees (current or former) or independent
contractors of Pubco.
Section 3.10 LABOR MATTERS. Xxxxx Xxxxxx is the only current
employee of Pubco. Pubco has no, and had never and any, Employee Arrangements.
Pubco has never been a party to any collective bargaining agreement or other
labor agreement with any labor union or organization. There is no unfair labor
practice charge or other grievance procedure against Pubco pending, or, to the
best knowledge of Pubco, threatened. There is no complaint, lawsuit or
proceeding in any forum by or on behalf of any present or former employee, any
applicant for employment or any classes of the foregoing alleging breach of any
express or implied contract of employment, any law or regulation governing
employment or the termination thereof or other discriminatory, wrongful or
tortious conduct in connection with the employment relationship against Pubco,
pending, or, to the best knowledge of Pubco, threatened. Pubco is in compliance
with all applicable laws respecting employment and employment practices, terms
and conditions of employment, wages, hours of work and occupational safety and
health. There is no proceeding, claim, suit, action or governmental
investigation pending or, to the best knowledge of Pubco, threatened, in respect
to which any current or former director, officer, employee or any contract or
agreement creating any Lien on any property or assets of Pubco. Neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will result in any payment becoming due to any
employee, consultant or contractor (current, former, or retired) of Pubco.
Section 3.11 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as set forth in SCHEDULE 3.11 of the Pubco Disclosure
Schedule, since December 31, 2004, (i) the business of Pubco has been conducted
in all material respects in the ordinary course consistent with past practice
and (ii) there has not been:
(a) a material adverse change in the assets, liabilities,
business, results of operations, condition (financial or otherwise) or prospects
of Pubco, or any event, occurrence or development which has had or could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Pubco;
(b) any declaration, setting aside or payment of any dividend or
other distribution in respect of any shares of capital stock of Pubco, or any
repurchase, redemption or other acquisition by Pubco of any Pubco securities;
26
(c) any incurrence or assumption by Pubco of any indebtedness for
borrowed money (or any renewals, replacements, or extensions that increase the
aggregate commitments thereunder);
(d) any creation or assumption by Pubco of any material Lien on
any material asset of Pubco;
(e) any making of any loan, advance or capital contribution to or
investment in any Person by Pubco;
(f) (i) any contract or agreement entered into by Pubco on or
prior to the date hereof relating to any material acquisition or disposition of
any assets or business or (ii) any modification, amendment, assignment,
termination or relinquishment by Pubco of any contract, license or other right
(including any insurance policy naming it as a beneficiary or a loss payable
payee);
(g) any (i) grant of any severance or termination pay to any
director, officer, employee, consultant or contractor of Pubco; (ii) entering
into of any employment, deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any director, officer, employee,
consultant or contractor of Pubco; (iii) increase in benefits payable under any
existing severance or termination pay policies or employment agreements; or (iv)
increase in compensation, bonus or other benefits payable to directors,
officers, employees, consultants or contractors of Pubco other than, in the case
of clause (iv) only, increases prior to the date hereof in compensation, bonus
or other benefits payable to employees, consultants or contractors of Pubco;
(h) any (i) making or revoking of any material election relating
to Taxes, (ii) settlement or compromise of any material claim, action, suit,
litigation, proceeding, arbitration, investigation, audit or controversy
relating to Taxes, or (iii) change to any material methods of reporting income
or deductions for federal income tax purposes;
(i) any capital expenditures in excess of $10,000 individually
and in excess of $25,000 in the aggregate;
(j) any lease, license or grant to any Person of any rights in
any of Pubco's assets or properties;
(k) any amendment of the articles of incorporation or bylaws of
Pubco;
(l) any sufferance of any material damage, destruction or loss
(whether or not covered by insurance) to any material assets of Pubco; and
(m) any issuance, or authorization for issuance, of any equity
securities of Pubco, except as otherwise provided in the Agreement.
27
Section 3.12 TAX MATTERS.
(a) All federal, state, local and foreign Tax Returns required to
be filed by or on behalf of Pubco have been timely filed or requests for
extensions have been timely filed and any such extension has been granted and
has not expired, and all such filed Tax Returns are complete and accurate. All
Taxes due and owing by Pubco, including estimates and withheld Taxes, have been
paid, or adequately reserved in accordance with GAAP. There is no audit or
examination in process or pending and there has been no notification of any
request for such audit or other examination and there is no deficiency, refund
litigation, proposed adjustment or matter in controversy with respect to any
Taxes due and owing by Pubco. All assessments for Taxes due and owing by Pubco
with respect to completed and settled examinations or concluded litigation have
been paid.
(b) Pubco has not (i) entered into a closing agreement or other
similar agreement with a taxing authority relating to Taxes of Pubco with
respect to a taxable period for which the statute of limitations is still open,
or (ii) with respect to U.S. federal income Taxes, granted any waiver of any
statute of limitations with respect to, or any extension of a period for the
assessment of, any income Tax, in either case, that is still outstanding. There
are no Liens relating to Taxes upon the assets of Pubco other than Liens
relating to Taxes not yet due. Pubco is not a party to or is bound by any Tax
sharing agreement, Tax indemnity obligation or similar agreement in respect of
Taxes.
(c) Pubco has not taken any action or knows of any fact,
agreement, plan or other circumstance that is reasonably likely to prevent the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Code.
(d) SCHEDULE 3.12 of the Pubco Disclosure Schedule lists each Tax
Return of Pubco for which an accurate copy of the actual Tax Return as filed
with the relevant taxing authority has been made available by Pubco to the other
on or before the date hereof.
(e) Pubco has not requested or received any private letter ruling
from the Internal Revenue Service or comparable rulings from other taxing
authorities.
(f) Pubco has not constituted either a "distributing corporation"
or a "controlled corporation" (within the meaning of Section 355(a)(1)(A) of the
Code) in a distribution of stock (to any Person or entity that is not a member
of any Affiliated Group) qualifying for tax-free treatment under Section 355 of
the Code (i) within the two-year period ending on the date hereof or (ii) in a
distribution which could otherwise constitute part of a "plan" or "series of
related transactions" (within the meaning of Section 355(e) of the Code) in
conjunction with the Merger.
(g) Pubco has no employment, severance or termination agreements,
other compensation arrangements, or Benefit Plans currently in effect which
provide for the payment of any amount (whether in cash or property or the
vesting of property) as a result of any of the transactions contemplated by this
Agreement that individually or collectively (either alone or upon the occurrence
of any additional or subsequent event), could give rise to a payment which is
nondeductible by reason of Section 280G of the Code.
(h) Pubco has not filed any consent agreement under Section
341(f) of the Code nor agreed to have Section 341(f)(4) applied to any
disposition of assets owned by Pubco.
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(i) Pubco has never been a United States Real Property Holding
Corporation within the meaning of Section 897(c)(2) of the Code.
Section 3.13 ABSENCE OF QUESTIONABLE PAYMENTS. Neither Pubco nor, to
Pubco's knowledge, any director, officer, agent, employee, consultant,
contractor or other Person acting on behalf of Pubco, has used any corporate or
other funds for unlawful contributions, payments, gifts, or entertainment, or
made any unlawful expenditures relating to political activity to government
officials or others or established or maintained any unlawful or unrecorded
funds in violation of the Foreign Corrupt Practices Act of 1977, as amended, or
any other domestic or foreign Law. Neither Pubco nor, to Pubco's knowledge, any
director, officer, agent, employee, consultant, contractor or other Person
acting on behalf of Pubco, has accepted or received any unlawful contributions,
payments, gifts or expenditures.
Section 3.14 TITLE AND RELATED MATTERS. As reflected in the SEC
Reports, Pubco has no real properties or tangible assets. There is no real
property owned or leased by Pubco. Pubco currently operates out of office space
located at 00X Xxxxxx Xxxxxxx Xxxx, Xxxxx Xxxxxx, XX 00000, provided by Xxxxx X.
Xxxxxx, its sole employee, at no cost with no written lease agreement.
Section 3.15 MATERIAL CONTRACTS.
(a) The SEC Reports contain true and accurate copies of all of
the agreements required to be filed as material contracts under Item 601(b)(10)
of Regulation S-B under the Securities Act (the "PUBCO MATERIAL CONTRACTS").
Except as set forth on SCHEDULE 3.15 of the Pubco Disclosure Schedule, Pubco is
not a party to nor bound by any severance or other agreement with any employee,
consultant or contractor pursuant to which such Person would be entitled to
receive any additional compensation or an accelerated payment of compensation as
a result of the consummation of the transactions contemplated hereby.
(b) Each of the Pubco Material Contracts constitutes the valid
and legally binding obligation of Pubco, enforceable in accordance with its
terms, and is in full force and effect, except as may be limited by (A)
bankruptcy laws and other similar laws affecting creditors' rights generally and
(B) general principles of equity. Pubco is not in breach or default in any
material respects of any provisions of any Pubco Material Contract and, to
Pubco's knowledge, no event has occurred which with notice or lapse of time
would constitute a material breach or default by Pubco or permit termination,
modification or acceleration thereunder, and which with respect to each of the
foregoing, could not be timely cured by Pubco. Pubco does not have any knowledge
of any termination or material breach or anticipated termination or material
breach by the other parties to any Pubco Material Contract or commitment to
which it is a party or to which any of its assets are subject.
(c) No party to any Pubco Material Contract has given notice to
Pubco of or made a claim against Pubco in respect of any breach or default
thereunder.
(d) No terms and conditions of any Pubco Material Contract or
other arrangement or understanding between Pubco and any other Person in effect
on the date of this Agreement prevent, delay or materially restrict Pubco's
ability to deploy any material portion of its assets or resources as it deems
appropriate, and after the Closing shall prevent, delay or materially restrict
Pubco's ability to deploy any material portion of its assets or resources as it
deems appropriate.
29
Section 3.16 SUBSIDIES. No grants, subsidies or similar arrangements
exist directly or indirectly between or among Pubco, on the one hand, and any
domestic or foreign Governmental Entity or any other Person, on the other hand.
Pubco has not requested, sought, applied for or entered into any grant, subsidy
or similar arrangement directly or indirectly from or with any domestic or
foreign Governmental Entity or any other Person.
Section 3.17 BANK ACCOUNTS; POWERS OF ATTORNEY. SCHEDULE 3.17 of the
Pubco Disclosure Schedule hereto sets forth a complete and correct list showing:
(a) all banks in which Pubco maintains a bank account or safe deposit box
(collectively, "Bank Accounts"), together with, as to each such Bank Account,
the account number, the names of all signatories thereof and the authorized
powers of each such signatory and, with respect to each such safe deposit box,
the number thereof and the names of all Persons having access thereto; and (b)
the names of all Persons holding powers of attorney from Pubco, true and correct
copies thereof which have been delivered to GlobalOptions.
Section 3.18 DISCLOSURE. The representations and warranties by Pubco
in this Agreement and the statements contained in the schedules, certificates
and other writings furnished and to be furnished by Pubco to GlobalOptions
pursuant to this Agreement, when considered as a whole and giving effect to any
supplements or amendments thereof prior to the time of signing on the date
hereof, do not and will not contain any untrue statement of a material fact and
do not and will not omit to state any material fact necessary to make the
statements herein, in light of the circumstances under which they were or shall
be made, not misleading. Pubco has provided to GlobalOptions copies of all
contracts and agreements that can be reasonably construed as material to the
business of Pubco.
Section 3.19 CERTAIN TRANSACTIONS. Except as set forth in the SEC
Reports, none of the stockholders, officers, directors or employees of Pubco,
nor any member of any such Person's or stockholder's family is presently a party
to any transaction with Pubco relating to the business of Pubco, including
without limitation, any contract, agreement or other arrangement (i) providing
for the furnishing of services by, (ii) providing for the rental of real or
Personal property from, or (iii) otherwise requiring payments to any such Person
or any corporation, partnership, trust or other entity in which any such Person
has a substantial interest as a stockholder, officer, director, trustee or
partner.
Section 3.20 BROKERS OR FINDERS. Pubco represents, as to itself, and
its affiliates, that, except for Verus International Group Ltd. And the
Placement Agent, no agent, broker, investment banker, financial advisor or other
firm or Person is or will be entitled to any brokers' or finder's fee or any
other commission or similar fee in connection with any of the transactions
contemplated by this Agreement. Pubco agrees to indemnify and hold
GlobalOptions, including its officers, directors, agents or representatives,
harmless from and against any and all claims, liabilities or obligations with
respect to any other fees, commissions or expenses asserted by any Person on the
basis of any act or statement alleged to have been made by such party or its
affiliates.
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Section 3.21 NO PRIOR ACTIVITIES. Except for obligations incurred in
connection with its incorporation or organization or the negotiation and
consummation of this Agreement and the transactions contemplated hereby, Pubco
represents and warrants that Merger Sub has neither incurred any obligation or
liability nor engaged in any business or activity of any type or kind whatsoever
or entered into any agreement or arrangement with any Person.
ARTICLE IV
COVENANTS RELATED TO CONDUCT OF BUSINESS
Section 4.1 CONDUCT OF BUSINESS OF GLOBALOPTIONS AND PUBCO. Except
as contemplated by this Agreement, during the period from the date hereof to the
Effective Time (or the termination of this Agreement pursuant to Article VII),
GlobalOptions on the one hand, and Pubco on the other hand, will each conduct
its operations in the ordinary and usual course of business consistent with past
practice and, to the extent consistent therewith, with no less diligence and
effort than would be applied in the absence of this Agreement, use commercially
reasonable efforts to preserve intact its current business organizations, keep
available the service of its current officers and employees, preserve its
relationships with customers, suppliers and others having business dealings with
it and preserve its goodwill through the Effective Time. Without limiting the
generality of the foregoing, and except as otherwise expressly provided in this
Agreement or in SCHEDULE 4.1 of the Disclosure Schedule of GlobalOptions or
Pubco, as the case may be, prior to the Effective Time, GlobalOptions and Pubco
will not, without the prior written consent of the other party:
(a) amend its certificate of incorporation or articles of
incorporation, as the case may be, or bylaws (or other similar organizational or
governing instruments), as each such document is in effect on the date hereof;
(b) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or otherwise)
any stock of any class or any other securities convertible into or exchangeable
for any stock or any equity equivalents (including, any stock options or stock
appreciation rights), except for the issuance or sale of shares pursuant to
outstanding GlobalOptions stock options and warrants;
(c) (i) split, combine or reclassify any shares of its capital
stock; (ii) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock; (iii) make any other actual, constructive or deemed
distribution in respect of any shares of its capital stock or otherwise make any
payments to stockholders in their capacity as such; or (iv) redeem, repurchase
or otherwise acquire, directly or indirectly, any of its securities;
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
(other than the Merger);
(e) (i) incur or assume any long-term or short-term debt or issue
any debt securities; (ii) assume, guarantee, endorse or otherwise become liable
or responsible (whether directly, contingently or otherwise) for the obligations
of any other Person; (iii) make any loans, advances or capital contributions to,
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or investments in, any other Person (other than customary loans or advances to
employees, consultants or contractors in the ordinary and usual course of
business consistent with past practice and in amounts not material to the maker
of such loan or advance); (iv) pledge or otherwise encumber shares of its
capital stock; or (v) mortgage or pledge any of its material assets, tangible or
intangible, or create or suffer to exist any Lien thereupon, other than as
disclosed in the schedules hereto and Permitted Liens;
(f) enter into any lease for new office space;
(g) (i) except as may be required by Law or as contemplated by
this Agreement, enter into, adopt or amend or terminate (partially or
completely) any Benefit Plan, Employee Arrangement (including, the repricing of
any stock options or the acceleration or vesting of any stock options), stock
appreciation right, restricted stock, performance unit, stock equivalent or
stock purchase agreement for the benefit or welfare of any director, officer,
employee, consultant or contractor in any manner, (ii) except as required under
existing agreements, increase in any manner the compensation or fringe benefits
of any director, officer, employee, consultant or contractor or pay any benefit
not required by any plan and arrangement as in effect as of the date hereof
(including, the granting of stock appreciation rights or performance units) or
grant any completion bonuses or change of control payments in respect of the
Merger or that will be affected thereby; or (iii) hire, promote or change the
classification or status in respect of any employee or individual; PROVIDED,
HOWEVER, that Pubco or GlobalOptions, as the case may be, shall not unreasonably
withhold or delay any consent sought to hire, promote or change the
classification or status of any employee or individual.
(h) acquire, sell, lease or dispose of any assets outside the
ordinary and usual course of business, consistent with past practice or any
assets which in the aggregate are material to GlobalOptions or Pubco, as the
case may be, enter into any commitment or transaction outside the ordinary and
usual course of business consistent with past practice or grant any exclusive
distribution rights;
(i) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof or any equity interest therein;
(j) settle or compromise any pending or threatened suit, action
or claim relating to the transactions contemplated hereby;
(k) take any action (including, any action otherwise permitted by
this SECTION 4.1 that would prevent or impede the Merger from qualifying as a
"reorganization" under Section 368(a) of the Code;
(l) fail to comply in any material respect with any Law
applicable to it or its assets which would reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect on its business
and operations;
(m) change any of the banking or safe deposit arrangements
described in SECTION 3.17 hereto, as the case may be, except in the ordinary
course of business;
32
(n) fail to maintain its books, accounts and records in the
usual, regular and ordinary manner on a basis consistent with prior years; or
(o) take, propose to take, or agree in writing or otherwise to
take, any of the actions described in this SECTION 4.1 or any action which would
make any of the representations or warranties of GlobalOptions, Pubco or Merger
Sub, as the case may be, contained in this Agreement untrue, incomplete or
incorrect.
Section 4.2 ACCESS TO INFORMATION.
(a) Between the date hereof and the Effective Time (or
termination of this Agreement pursuant to Article VII), GlobalOptions, Pubco and
Merger Sub will each give the authorized representatives (including counsel,
financial advisors and auditors) of the other reasonable access to all its
employees, consultants, contractors, plants, offices, warehouses and other
facilities and to all its books and records, and will permit the other to make
such inspections and investigations as each may require. Each of GlobalOptions,
Pubco and Merger Sub will cause its officers to furnish the other with such
financial and operating data and other information in respect of its business,
properties and personnel as each may from time to time reasonably request,
provided that no investigation pursuant to this SECTION 4.2(A) shall affect or
be deemed to modify any of the representations or warranties made by each of
GlobalOptions, Pubco and Merger Sub pursuant to this Agreement.
(b) Between the date hereof and the Effective Time, (or
termination of this Agreement pursuant to Article VII), GlobalOptions, Pubco and
Merger Sub shall each furnish to the other (i) within five business days after
the delivery thereof to management, such monthly financial statements and data
as are regularly prepared for distribution to GlobalOptions' management and
Pubco's management, respectively, and (ii) at the earliest time they are
available, such quarterly and annual financial statements as are regularly
prepared for GlobalOptions' Board of Directors and Pubco's Board of Directors,
respectively.
(c) Each of Pubco, Merger Sub and GlobalOptions will hold and
will cause its authorized representatives to hold in confidence all documents
and information concerning the other furnished in connection with the
transactions contemplated by this Agreement.
Section 4.3 CONTINUATION OF INSURANCE COVERAGE. From the date hereof
to the Closing, GlobalOptions shall keep in full force and effect insurance
coverage for its assets and operations comparable in amount and scope to the
coverage now maintained covering its assets and operations.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 EXCLUSIVITY.
(a) Unless GlobalOptions, Pubco or Merger Sub are in breach of
this Agreement prior to the Closing, and such breach has not been cured within
20 days written notice of such breach, neither GlobalOptions, Pubco nor Merger
Sub and any of their respective directors, officers, employees, representatives
33
or agents shall directly or indirectly, (i) discuss, negotiate, undertake,
authorize, recommend, propose or enter into, either as the proposed surviving,
merged, acquiring or acquired corporation, any transaction involving a merger,
consolidation, business combination, purchase or disposition of any amount of
assets or capital stock or other equity interest of GlobalOptions, Pubco or the
Merger Sub, as the case may be, other than the transactions contemplated by this
Agreement (an "ACQUISITION TRANSACTION"), (ii) facilitate, encourage, solicit or
initiate discussions, negotiations or submissions of proposals or offers in
respect of an Acquisition Transaction, (iii) furnish or cause to be furnished to
any Person any information concerning the business operations, properties or
assets of GlobalOptions, Pubco or the Merger Sub, as the case may be, in
connection with an Acquisition Transaction, or (iv) otherwise cooperate in any
way with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other Person to do or seek any of the foregoing. GlobalOptions,
on the one hand, and Pubco on the other hand, will inform each other in writing
immediately following the receipt by such party or a representative of any
proposal or inquiry with respect to any Acquisition Transaction.
Section 5.2 PUBLIC ANNOUNCEMENTS. Each of Pubco, Merger Sub and
GlobalOptions will consult with one another before issuing any press release or
otherwise making any public statements in respect of the transactions
contemplated by this Agreement, including the Merger, and shall not issue any
such press release or make any such public statement prior to such consultation,
except as may be required by applicable Law, as determined by Pubco, Merger Sub
or GlobalOptions, as the case may be, a copy of which shall be sent
simultaneously to the other parties upon such release.
Section 5.3 PRIVATE PLACEMENT. GlobalOptions acknowledges that the
issuance of the Merger Shares pursuant to Section 1.4 is intended to be exempt
from registration under the Securities Act, by virtue of Regulation D of the
Securities Act and/or Section 4(2) of the Securities Act, and that its
stockholders, upon receipt of such Merger shares, may not sell such shares,
unless such shares subsequently are registered under the Securities Act or an
exemption from such registration is available. GlobalOptions understands that
the Merger Shares must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such registration is
available and that no tacking of holding period is available under Rule 144(d)
of the Securities Act. GlobalOptions understands and agrees that, in order to
ensure compliance with the restrictions referred to herein, Pubco may issue
appropriate "stop transfer" instructions to its transfer agent. Pubco
understands that the following legend (and such other legends as Pubco deems
appropriate) shall be placed on such shares:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED
FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE
SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE
EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO
OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT."
34
Pubco shall use commercially reasonable efforts to meet the requirements of Rule
144(c) of the Securities Act and, if an opinion is required by Pubco for
transfer of such shares, Pubco shall retain counsel to determine whether such an
opinion may be rendered.
Section 5.4 CONFIDENTIALITY. In the course of their business
operations, all parties shall have received, and will continue to receive,
information that gives the other parties an advantage over its competitors, and
which is confidential and proprietary, including, without limitation, each
party's respective names and preferences of customers, products and markets,
technological data, computer programs, know-how, potential acquisitions, sources
of financing, corporate operating and financing strategies, operating plans and
similar related information (collectively, the "CONFIDENTIAL MATERIAL"). At no
time during the period commencing on the date hereof shall any party to this
Agreement, whether individually, or jointly with others, for the benefit of
itself, himself, or any third party, publish, disclose, use, or authorize anyone
else to publish, disclose, or use any Confidential Material of the other
parties; PROVIDED, HOWEVER, that any such Confidential Material may be disclosed
only as required by law. In the event that any party is requested pursuant to,
or is required by, applicable law or regulation or by legal process to disclose
any Confidential Material, such party shall promptly notify the other parties of
any anticipated disclosure obligation and cooperate with the other parties at
such other parties' expense, in any efforts to seek an appropriate protective
order or other reliable assurance that confidential treatment will be accorded
to that portion of the Confidential Material that is required to be disclosed.
The parties acknowledge that any disclosure of any Confidential Material would
cause material and irrevocable harm to the other parties and their respective
business.
Section 5.5 ADDITIONAL DOCUMENTS AND FURTHER ASSURANCES. At, and
from time to time after, the date of this Agreement, at the request of Pubco or
GlobalOptions but without further consideration, GlobalOptions or Pubco, as the
case may be, shall execute and deliver such other instruments of conveyance,
assignment, transfer, and delivery and take such other action as the other party
reasonably may request in order to more effectively convey, transfer, assign and
deliver to the Surviving Corporation, and to place the Surviving Corporation in
possession and control of, any of the rights, properties, assets and business
intended to be sold, conveyed, transferred, assigned and delivered hereunder, or
to assist in the collection or reduction to possession of any and all of such
rights, properties, and assets or to enable the Surviving Corporation to
exercise and enjoy all rights and benefits of GlobalOptions with respect
thereto.
Section 5.6 NOTIFICATION OF CERTAIN MATTERS. GlobalOptions shall
give prompt notice to Pubco and Merger Sub, and Pubco and Merger Sub shall give
prompt notice to GlobalOptions, of (a) the occurrence or nonoccurrence of any
event the occurrence or nonoccurrence of which would be likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Effective Time, (b) any
material failure of GlobalOptions, Pubco or Merger Sub, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder, (c) any notice or other communication from any
third party alleging that the consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement, or (d) any
facts or circumstances that could reasonably be expected to result in a Material
Adverse Effect; PROVIDED, HOWEVER, that the delivery of any notice pursuant to
35
this SECTION 5.6 shall not cure such breach or non-compliance or limit or
otherwise affect the rights, obligations or remedies available hereunder to the
party receiving such notice.
Section 5.7 THIRD PARTY CONSENTS.
(a) Each of Pubco, Merger Sub and GlobalOptions shall use its
commercially reasonable efforts to obtain at the earliest practicable date all
consents of third parties and Governmental Entities necessary to the
consummation of the transactions contemplated hereby (the "THIRD PARTY
CONSENTS") and will provide to the other parties hereto copies of each such
Third Party Consent promptly after it is obtained. Each of Pubco, Merger Sub and
GlobalOptions agrees to cooperate fully with the other parties hereto in
connection with the obtaining of the Third Party Consents; PROVIDED, HOWEVER,
that no party shall be required to pay any additional sums to secure such Third
Party Consents of the other parties hereto.
(b) In furtherance and not in limitation of the covenants of the
parties contained in SECTION 5.7(A), if any administrative or judicial action or
proceeding, including any proceeding by a private party, is instituted (or
threatened to be instituted) challenging any transaction contemplated by this
Agreement, each of Pubco, Merger Sub and GlobalOptions shall cooperate in all
respects with each other and use its respective commercially reasonable efforts
to contest and resist any such action or proceeding and to have vacated, lifted,
reversed or overturned any decree, judgment, injunction or other order, whether
temporary, preliminary or permanent, that is in effect and that prohibits,
prevents or restricts consummation of the transactions contemplated by this
Agreement.
(c) If any objections are asserted with respect to the
transactions contemplated hereby or if any suit is instituted by any
Governmental Entity or any private party challenging any of the transactions
contemplated hereby as violative of any regulatory Law, each of Pubco, Merger
Sub and GlobalOptions shall use its commercially reasonable efforts to resolve
any such objections or challenge as such Governmental Entity or private party
may have to such transactions under such regulatory Law so as to permit
consummation of the transactions contemplated by this Agreement.
Section 5.8 LEGAL OPINION CERTIFICATES. GlobalOptions, Pubco and
Merger Sub shall execute and deliver to Xxxxxxxxx Xxxxxxx, LLP, counsel to
Pubco, and Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx & Wolosky LLP, counsel to
GlobalOptions, certificates at such time or times as are reasonably requested by
such law firms in connection with their respective deliveries of opinions in
respect of the transactions contemplated hereby. Prior to the Effective Time,
none of GlobalOptions, Pubco or Merger Sub shall take or cause to be taken any
action which would cause to be untrue (or fail to take or cause not to be taken
any action which would cause to be untrue) any of the representations in such
previously-agreed certificates.
Section 5.9 BLUE SKY LAWS. Pubco, Merger Sub and GlobalOptions shall
take such steps as may be necessary to comply with the securities and blue sky
laws of all jurisdictions which are applicable to the issuance of the Merger
Shares. The parties hereto shall use all reasonable efforts to assist each other
in complying with all applicable securities and blue sky laws.
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ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE
MERGER. The respective obligations of each party to consummate the transactions
contemplated by this Agreement are subject to the fulfillment at or prior to the
Effective Time of each of the following conditions, any or all of which may be
waived in whole or in part by the party being benefited thereby, to the extent
permitted by applicable Law: (a) APPROVALS. Pubco and Merger Sub shall have
timely obtained from each Governmental Entity any and all Third Party Consents,
if any, necessary for consummation of or in connection with the transactions
contemplated hereby, including such approvals, waivers and consents as may be
required under the blue sky laws, if any, and such approvals, waivers and
consents are still in full force and effect, except for such authorizations,
consents or approvals, the failure of which to have been made or obtained does
not and could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
(b) INJUNCTION, ETC. As of the Effective Time, there shall not be
in effect any Law of any Governmental Entity of competent jurisdiction
restraining, enjoining or otherwise preventing consummation of the transactions
contemplated by this Agreement and no Governmental Entity shall have instituted
any proceeding which continues to be pending seeking any such Law.
(c) PRIVATE PLACEMENT. The Private Placement shall have been
consummated.
Section 6.2 CONDITIONS TO THE OBLIGATIONS OF PUBCO AND MERGER SUB.
The respective obligations of Pubco and Merger Sub to consummate the
transactions contemplated by this Agreement are subject to the fulfillment at or
prior to the Effective Time of each of the following additional conditions, any
or all of which may be waived in whole or part by Pubco and Merger Sub to the
extent permitted by applicable Law:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of GlobalOptions contained herein shall be true and correct in each
case in all material respects (other than representations and warranties that
contain materiality qualifications which shall be true and correct in all
respects) on and as of the date when made and as of the Closing (except for
representations and warranties made as of a specified date, which shall speak
only as of the specified date).
(b) PERFORMANCE OF AGREEMENT. GlobalOptions shall have performed
or complied in all material respects with all covenants, conditions and other
obligations contained herein required to be performed or complied with by it
prior to or at the time of the Closing.
(c) NO MATERIAL ADVERSE CHANGE. From the date hereof through the
Closing Date, there shall not have occurred any Material Adverse Effect on
GlobalOptions.
(d) CERTIFICATE. GlobalOptions shall have delivered to Pubco a
certificate, dated the Closing Date, signed by the Chief Executive Officer or
President of GlobalOptions, certifying as to the fulfillment of the conditions
specified in SECTION 6.2(a), SECTION 6.2(b) and SECTION 6.2(c).
37
(e) OPINION OF COUNSEL TO GLOBALOPTIONS. Pubco shall have
received an opinion of Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx & Wolosky LLP, counsel
to GlobalOptions, dated the Closing Date, in form and substance reasonably
satisfactory to Pubco and Merger Sub and substantially in the form attached
hereto as EXHIBIT D.
(f) NO LITIGATION. Immediately prior to the Effective Time, no
action, suit, claim or proceeding shall have been commenced and be pending
against GlobalOptions by any third party that seeks to prohibit or restrict the
consummation of the Merger.
(g) LOCK-UP AGREEMENTS. All recipients of Merger Shares shall
have delivered to Pubco an executed lock-up agreement in form and substance
reasonably satisfactory to Pubco.
(h) GLOBALOPTIONS WARRANTS AND CONVERTIBLE DEBT. Immediately
prior to or at the Effective Time, all issued and outstanding warrants and
convertible debt of GlobalOptions shall have converted into shares of
GlobalOptions Common Stock.
Section 6.3 CONDITIONS TO THE OBLIGATIONS OF GLOBALOPTIONS. The
obligations of GlobalOptions to consummate the transactions contemplated by this
Agreement are subject to the fulfillment at or prior to the Effective Time of
each of the following conditions, any or all of which may be waived in whole or
in part by GlobalOptions to the extent permitted by applicable Law:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Pubco and Merger Sub contained herein shall be true and correct in
each case in all material respects (other than the representations and
warranties that contain materiality qualifications which shall be true and
correct in all respects) on and as of the date when made and as of the Closing
(except for representations and warranties made as of a specified date, which
shall speak only as of the specified date).
(b) PERFORMANCE OF AGREEMENT. Pubco shall have performed or
complied in all material respects with all covenants, conditions and other
obligations contained herein required to be performed or complied with by it
prior to or at the time of the Closing.
(c) NO MATERIAL ADVERSE CHANGE. Prior to the Closing, there shall
not have occurred any Material Adverse Effect on Pubco or Merger Sub.
(d) CERTIFICATE. Each of Pubco and Merger Sub shall have
delivered to GlobalOptions a certificate, dated the Closing Date, signed by its
Chief Executive Officer or President, certifying as to the fulfillment of the
conditions specified in SECTION 6.3(A), SECTION 6.3(B) and SECTION 6.3(C).
(e) DIRECTORS AND OFFICERS OF PUBCO. All of the present directors
and officers of Pubco shall have submitted their written resignations effective
as of the Effective Time, and Pubco shall have taken, or caused to have been
38
taken, all necessary corporate action, so that at or immediately after the
Effective Time the directors and officers of Pubco shall be as set forth on
SCHEDULE 1.7(A) of the GlobalOptions Disclosure Schedule.
(f) OPINION OF COUNSEL TO PUBCO. GlobalOptions shall have
received an opinion of Xxxxxxxxx Xxxxxxx, LLP, counsel to Pubco, dated the
Closing Date, in the form and substance reasonably satisfactory to GlobalOptions
and substantially in the form attached hereto as EXHIBIT E.
(g) NO LITIGATION. Immediately prior to the Effective Time, no
action, suit, claim or proceeding shall have been commenced and be pending
against Pubco or Merger Sub by any third party that seeks to prohibit or
restrict the consummation of the Merger.
(h) EMPLOYMENT. GlobalOptions and Xxxxxx X. Xxxxxxxx shall have
amended Xx. Xxxxxxxx'x employment agreement and assigned such agreement to Pubco
in a manner reasonably acceptable to the parties hereto.
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
Section 7.1 TERMINATION BY MUTUAL AGREEMENT. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, by mutual written consent of GlobalOptions and Pubco by action of their
respective boards of directors.
Section 7.2 TERMINATION BY EITHER PUBCO OR GLOBALOPTIONS. This
Agreement may be terminated and the Merger may be abandoned at any time prior to
the Effective Time by action of the board of directors of either Pubco or
GlobalOptions if:
(a) the Merger shall not have been consummated by July 18, 2005
(the "TERMINATION DATE");
(b) any Law permanently restraining, enjoining or otherwise
prohibiting consummation of the Merger shall become final and non-appealable;
PROVIDED, HOWEVER, that the right to terminate this Agreement pursuant to this
SECTION 7.2 shall not be available to any party that has breached in any
material respect its obligations under this Agreement in any manner that shall
have proximately contributed to the occurrence of the failure of the Merger to
be consummated.
Section 7.3 TERMINATION BY GLOBALOPTIONS. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, by action of GlobalOptions' Board of Directors, if:
(a) (i) any of Pubco's representations and warranties shall have
been inaccurate as of the date of this Agreement, such that the conditions set
forth in SECTION 6.3(a) would not be satisfied, or (ii) if (A) any of Pubco's
representations and warranties become inaccurate as of a date subsequent to the
date of this Agreement (as if made on such subsequent date), such that the
conditions set forth in SECTION 6.3(a) would not be satisfied and (B) such
39
inaccuracy has not been cured by Pubco within twenty (20) business days after
its receipt of written notice thereof and remains uncured at the time notice of
termination is given, or (iii) any of Pubco's covenants contained in this
Agreement shall have been breached, such that the conditions set forth in
SECTION 6.3(B) would not be satisfied; or
(b) if, since the date of this Agreement, there shall have
occurred any Material Adverse Effect on Pubco.
Section 7.4 TERMINATION BY PUBCO. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, by
action of the Board of Directors of Pubco, if:
(a) (i) any of GlobalOptions' representations and warranties
shall have been inaccurate as of the date of this Agreement, such that the
conditions set forth in SECTION 6.2(A) would not be satisfied, or (ii) if (A)
any of GlobalOptions' representations and warranties become inaccurate as of a
date subsequent to the date of this Agreement (as if made on such subsequent
date), such that the conditions set forth in SECTION 6.2(A) would not be
satisfied and (B) such inaccuracy has not been cured by GlobalOptions within
twenty (20) business days after its receipt of written notice thereof and
remains uncured at the time notice of termination is given, or (iii) any of
GlobalOptions' covenants contained in this Agreement shall have been breached,
such that the conditions set forth in SECTION 6.2(B) would not be satisfied; or
(b) if, since the date of this Agreement, there shall have
occurred any Material Adverse Effect on GlobalOptions.
Section 7.5 EFFECT OF TERMINATION AND ABANDONMENT. In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
ARTICLE VII, this Agreement (other than this SECTION 7.5, SECTION 5.7, SECTION
8.2(A) and SECTION 8.5) shall become void and of no effect with no liability on
the part of any party hereto (or of any of its directors, officers, employees,
consultants, contractors, agents, legal and financial advisors, or other
representatives); PROVIDED, HOWEVER, that except as otherwise provided herein,
no such termination shall relieve any party hereto of any liability or damages
resulting from any willful breach of this Agreement.
Section 7.6 AMENDMENT. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties hereto.
Section 7.7 EXTENSION; WAIVER. At any time prior to the Effective
Time, each party hereto may (a) extend the time for the performance of any of
the obligations or other acts of the other party, (b) waive any inaccuracies in
the representations and warranties of the other party contained herein or in any
document, certificate or writing delivered pursuant hereto, or (c) waive
compliance by the other party with any of the agreements or conditions contained
herein. Any agreement on the part of either party hereto to any such extension
or waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party hereto to assert any of its
rights hereunder shall not constitute a waiver of such rights.
40
ARTICLE VIII
MISCELLANEOUS
Section 8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the parties made in Articles II and III of
this Agreement (including the Disclosure Schedules to the Agreement, which are
hereby incorporated by reference) shall survive for six (6) months beyond the
Effective Time. This SECTION 8.1 shall not limit any claim for fraud or any
covenant or agreement of the parties which by its terms contemplates performance
after the Effective Time or pursuant to any other certificate, statement or
agreement.
Section 8.2 ENTIRE AGREEMENT; ASSIGNMENT.
(a) This Agreement (including exhibits and schedules attached
hereto) constitutes the entire agreement between the parties hereto in respect
of the subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, between the parties in respect of the
subject matter hereof.
(b) Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by operation of Law (including by merger
or consolidation) or otherwise. Any assignment in violation of the preceding
sentence shall be void. Subject to the preceding sentence, this Agreement will
be binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and permitted assigns and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other Person any
rights, benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
Section 8.3 NOTICES. All notices, requests, instructions or other
documents to be given under this Agreement shall be in writing and shall be
deemed given, (a) five business days following sending by registered or
certified mail, postage prepaid, (b) when sent if sent by facsimile; PROVIDED,
HOWEVER, that the facsimile is promptly confirmed by telephone confirmation
thereof by the intended recipient, (c) when delivered, if delivered personally
to the intended recipient, and (d) one business day following sending by
overnight delivery via a national courier service, and in each case, addressed
to a party at the following address for such party:
if to Pubco or Merger Sub, to: Creative Solutions with Art, Inc.
00X Xxxxxx Xxxxxxx Xxxx
Xxxxx Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
with copies to: Xxxxxxxxx Traurig, LLP
MetLife Building
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
41
if to GlobalOptions: GlobalOptions, Inc.
00 Xxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Chairman
Facsimile: (000) 000-0000
with copies to: Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx &
Wolosky LLP
Park Avenue Tower
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
or to such other address or facsimile number as the Person to whom notice is
given may have previously furnished to the other in writing in the manner set
forth above.
Section 8.4 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to the choice of law principles thereof.
Section 8.5 EXPENSES. GlobalOptions shall be solely responsible for
the legal, accounting and other fees and expenses incurred by GlobalOptions in
connection with the execution of this Agreement and the consummation of the
transactions contemplated hereby. Pubco and Merger Sub shall be solely
responsible for the legal, accounting and other fees and expenses incurred by
Pubco and Merger Sub in connection with execution of this Agreement and the
consummation of the transactions contemplated hereby.
Section 8.6 DESCRIPTIVE HEADINGS. The descriptive headings herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
Section 8.7 SEVERABILITY. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
Section 8.8 SPECIFIC PERFORMANCE. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
42
specifically the terms and provisions of this Agreement, this being in addition
to any other remedy to which they are entitled at Law or in equity.
Section 8.9 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
Section 8.10 FURTHER ASSURANCES. Each party to this Agreement agrees
(a) to furnish upon request to the other party such further information, (b) to
execute and deliver to the other party such other documents and (c) to do such
other acts and things as the other party reasonably requests for the purpose of
carrying out the intent of this Agreement and the documents and instruments
referred to herein.
Section 8.11 INTERPRETATION.
(a) The words "hereof," "herein," "herewith" and words of similar
import shall, unless otherwise stated, be construed to refer to this Agreement
as a whole and not to any particular provision of this Agreement, and article,
section, paragraph, exhibit, and schedule references are to the articles,
sections, paragraphs, exhibits, and schedules of this Agreement, unless
otherwise specified. Whenever the words "include," "includes," or "including"
are used in this Agreement, they shall be deemed to be followed by the words
"without limitation." All terms defined in this Agreement shall have the defined
meanings contained herein when used in any certificate or other document made or
delivered pursuant hereto, unless otherwise defined therein. The definitions
contained in this Agreement are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such terms. Any agreement, instrument, or statute defined or referred
to herein or in any agreement or instrument that is referred to herein means
such agreement, instrument, or statute as from time to time, amended, qualified
or supplemented, including (in the case of agreements and instruments) by waiver
or consent and (in the case of statutes) by succession of comparable successor
statutes and all attachments thereto and instruments incorporated therein.
References to a Person are also to its permitted successors and assigns.
(b) The phrases "the date of this Agreement," "the date hereof,"
and terms of similar import, unless the context otherwise requires, shall be
deemed to refer to the date set forth in the opening paragraph of this
Agreement.
(c) The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
Section 8.12 DEFINITIONS. As used herein,
(a) "KNOW" or "KNOWLEDGE" means, (i) in respect of Pubco, the
knowledge of Pubco's executive officers, and (ii) in respect of GlobalOptions,
the knowledge of GlobalOptions' executive officers.
43
(b) "LIEN" means, in respect of any asset (including any
security) any mortgage, lien, pledge, charge, security interest, or encumbrance
of any kind in respect of such asset.
(c) "PERMITTED LIEN" means a statutory Lien not yet delinquent; a
purchase money Lien arising in the ordinary course of business consistent with
past practices; a Lien reflected in the financial statements of the applicable
party; or a Lien which does not materially detract from the value or impair the
use of the asset or property in question.
(d) "PERSON" means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization, other
entity or group (as defined in the Exchange Act).
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be duly executed on its behalf as of the date first above written.
GLOBALOPTIONS, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Chairman
CREATIVE SOLUTIONS WITH ART, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
GLOBALOPTIONS ACQUISITION CORP.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
