Exhibit 10.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
GLOBALOPTIONS GROUP, INC.
AND
FACTICON, INC.
FEBRUARY 28, 2007
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "AGREEMENT"), is made February 28,
2007, by and among GLOBALOPTIONS GROUP, INC., a Delaware corporation ("Buyer"),
Facticon, Inc., a Pennsylvania corporation ("SELLER").
RECITALS
Seller desires to sell, and Buyer desires to purchase, the Assets (as
defined below) of Seller for the consideration and on the terms set forth in
this Agreement.
AGREEMENT
The parties, intending to be legally bound, hereby agree as follows:
ARTICLE I
SALE AND TRANSFER OF ASSETS; CLOSING
SECTION 1.1 ASSETS TO BE SOLD. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing (as defined in Section
1.6 below), Seller shall sell, convey, assign, transfer and deliver to Buyer,
and Buyer shall purchase and acquire from Seller, free and clear of any charge,
claim, equitable interest, lien, option, pledge, security interest, mortgage,
encroachment, or restriction of any kind (an "ENCUMBRANCE"), other than any
Encumbrance identified on ANNEX A as acceptable to Buyer (a "PERMITTED
ENCUMBRANCE"), all of Seller's property and assets, personal or mixed, tangible
and intangible, of every kind and description, wherever located, belonging to
Seller and used in the conduct of the Seller's private investigations and
security consulting business (the "BUSINESS"), including the following (but
excluding the Excluded Assets):
(a) all equipment, furniture, office equipment, computer hardware,
supplies, materials, vehicles, and other items of tangible personal property
(other than inventory) of every kind owned or leased by Seller (the "TANGIBLE
PERSONAL PROPERTY"), including those items described in SCHEDULE 2.7(B);
(b) all trade accounts receivable and all other accounts or notes
receivable of Seller (the "ACCOUNTS RECEIVABLE");
(c) any oral or written contracts or agreement (i) under which
Seller has or may acquire any rights or benefits, (ii) under which Seller has or
may become subject to any obligation or liability, or (iii) by which Seller or
any of the Assets is or may become bound (any such contract or agreement, a
"SELLER CONTRACT"), including those Seller Contracts listed on SCHEDULE 2.14;
(d) all Governmental Authorizations (as defined in SECTION
2.11(B)) and all pending applications therefor or renewals thereof, in each case
to the extent transferable to Buyer;
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(e) all data and records related to the operations of Seller, and
copies of all records referenced in SECTION 1.2(E) below;
(f) all of the intangible rights and property of Seller, including
the Intellectual Property Assets (as defined in SECTION 2.16) and the
Proprietary Assets (as defined in SECTION 2.16), going concern value, goodwill,
telephone, telecopy, and e-mail addresses, websites, domain names, and listings
including the name "Facticon," abbreviations thereof, and Facticon, Inc., or any
previous name or names utilized by the Seller;
(g) all insurance benefits, including rights and proceeds, arising
from or relating to the Assets prior to the Closing Date;
(h) all claims of Seller against third parties relating to the
Assets;
(i) all cash and cash equivalents and all securities and short
term investments, provided however, the parties agree that any such cash and/or
cash equivalents will be used to satisy any State tax liens filed upon the
Seller priot to Closing;
(j) all rights of Seller relating to deposits and prepaid
expenses, claims for refunds and rights to offset in respect thereof which are
not excluded under SECTION 1.2(F); and
(k) all other properties and assets of every kind, character and
description, tangible or intangible, of every kind and description, owned by
Seller, whether or not similar to the items specifically set forth above.
All of the property and assets to be transferred to Buyer hereunder are referred
to collectively as the "ASSETS". Notwithstanding the foregoing, the transfer of
the Assets pursuant to this Agreement will not include the assumption of any
liability or obligation in respect thereof unless the Buyer expressly assumes
such liability or obligation pursuant to SECTION 1.4(A).
SECTION 1.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary
contained in Section 1.1 or elsewhere in this Agreement, the following items
(collectively, the "EXCLUDED ASSETS") are not part of the sale and purchase
contemplated hereunder, are excluded from the Assets, and will remain the
property of Seller after the Closing:
(a) the minute book, membership records, and company seal of
Seller;
(b) the equity of Seller and/or loan receivables from
stockholders;
(c) all of Seller's life insurance policies and rights thereunder
(except to the extent specified in Sections 1.1(h) and (i));
(d) all personnel records and other records that Seller is
required by law to retain in its possession;
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(e) all claims for refund of taxes and other governmental charges
of whatever nature;
(f) all rights in connection with and assets of any Employee
Benefit Plans (as defined in Section 2.10 below);
(g) all rights of Seller in connection with the transactions
contemplated hereby; and
(h) the property and assets expressly designated in and including
the five real estate leases not being assumed by the Buyer SCHEDULE 2.7(A).
Provided, however, the Buyer shall reimburse the Seller for the use of real
estate leases located in Boston, Philadelphia, Pittsburg and New Jersey for the
remainder of the respective lease terms (5/15/07, 5/31/07, 7/31,07 and 4/30/07,
respectively), and for the period of use for the Dallas lease, subsequent to the
Closing Date, and such reimbursement shall be equal to the respective monthly
lease cost for such leased property including any common area cost and utility
cost. The reimbursement shall be paid in advance for each month for the
anticipated use of said leased property.
SECTION 1.3 PURCHASE PRICE. The consideration for the Assets (the
"PURCHASE PRICE") will be Two Million Eight Hundred Thousand and No/100 Dollars
($2,800,000) wherein the Purchase Price shall include: (i) cash in the amount of
One Million Four Hundred Thousand and No/ Dollars ($1,400,000) ("Cash Portion");
and (ii) Buyer's stock in the amount of One Million Four Hundred Thousand and
No/ Dollars ($1,400,000) ("Stock Portion"), and the assumption of the Assumed
Liabilities (as defined in Section 1.4 below).
In accordance with SECTION 1.7(B), at the Closing, the Purchase Price shall be
delivered by Buyer to Seller, as follows: (A) the payment of One Million Three
Hundred Thousand and No/100 Dollars ($1,300,000) by wire to an escrow account,
wherein the Seller's and Buyer's legal counsels will jointly agree as to the
distribution, anticipated as follows: (i) Seller's creditors, including but not
limited to (x) the Internal Revenue Service; (y) various States to satisfy State
tax liens; and (z) Seller's financial institution for its line of credit; and
(ii) any remaining cash shall be delivered to the Law Offices of Xxxxxx X.
Xxxxxxx and XxXxxxxx, Xxxxx & Matlawski, P.C., as a joint escrow agent (the
"ESCROW AGENT") under the Escrow Agreement (as defined in SECTION 1.7(A) below),
(B) at Closing, an amount equal to Seven Hundred and Fifty Thousand and No/100
Dollars ($750,000) of the Stock Portion of the Purchase Price shall be delivered
to the Escrow Agent under the Escrow Ageement, as such Stock Portion is
determined in accordance with SECTION 1.3(B); (C) at Closing, a promissory note
in the amount of One Hundred Thousand and No/100 Dollars ($100,000) (in the form
of Exhibit 1.3(a), the "Promissory Note 1") of the Cash Portion of the Purchase
Price to be delivered to the the Escrow Agent under the Escrow Agreement; (D) at
Closing, stock in an amount equal to Two Hundred Fifty Thousand and No/100
Dollars ($250,000) of the Stock Portion of the Purchase price to the Seller, (in
the form of Exhibit 1.3 (b), the "Promissory Note 2") to be delivered to the
Escrow Agent under the Escrow Agreement; and (E) at Closing, the remaining Stock
Portion ($400,000) shall be placed in escrow by the Buyer and held by the Buyer
for the benefit of the Seller (the "Escrowed Stock"), and said Escrowed Stock,
subject to the last sentence of this Section 1.3(a), shall be distributed to the
Seller as follows: (i) one year from the date of Closing, an amount equal to Two
Hundred Thousand and No/100 Dollars ($200,000) of the Escrowed Stock , as such
Stock Portion is determined in accordance with SECTION 1.3(B), of the Purchase
Price ; and (ii) two years from the date of Closing, an amount equal to Two
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Hundred Thousand and No/100 Dollars ($200,000) of the Escrowed Stock, as such
Stock Portion is determined in accordance with SECTION 1.3(B), of the Purchase
Price Any Escrowed Stock not yet distributed shall be forfeited by the Buyer, if
the Employment of Messrs. Xxxxxxx and Xxxxxx are terminated for cause (as that
term is defined in the Employment Agreements) and/or Messrs. Xxxxxxx and Xxxxxx
terminate their Employment prior to the term of said Employment Agreement (the
"Termination of Employment").
(b) The number of shares of Buyer Common Stock comprising the Stock Portion
shall be equal to number of shares resulting from $1,400,000 divided by the
higher of: (i) the Fair Market Value of a Share at the Closing Date or $2.00.
"FAIR MARKET VALUE OF A SHARE" shall mean the average of the closing prices of
the sales of Buyer Common Stock on all securities exchanges on which Buyer
Common Stock may at the time be listed, or, if there have been no sales on any
such exchange on any day, the average of the highest bid and lowest asked prices
on all such exchanges at the end of such day, or, if on any day Buyer Common
Stock are not so listed, the average of the representative bid and asked prices
quoted in the NASDAQ System as of 4:00 P.M., New York time, or, if on any day
Buyer Common Stock are not quoted in the NASDAQ System, the average of the
highest bid and lowest asked prices on such day in the domestic over-the-counter
market as reported by the National Quotation Bureau Incorporated, or any similar
successor organization, in each such case averaged over a period of 180 trading
days consisting of the trading day as of which the Fair Market Value of a Share
is being determined and the 180 consecutive trading days prior to such day. All
Shares issued herein will be subject to Rule 144 promulgated under the
Securities Act of 1933, as amended.
SECTION 1.4 LIABILITIES.
(a) At the Closing, Buyer shall assume and be obligated to
discharge only the following specifically enumerated liabilities and obligations
of Seller (the "ASSUMED LIABILITIES"):
(i) any trade account payable that is incurred by Seller in
the Ordinary Course of Business at the Closing Date, in each case which remains
unpaid as of the Closing, providing such account payables are described and aged
in Schedule 1.4(a)(i);
(ii) any liability arising after the Closing under any Seller
Contract included in the Assets (other than any liability arising out of or
relating to a breach which occurred prior to the Closing); and
(iii) any liability of Seller described in SCHEDULE
1.4(A)(III), including an amount up to Fifty Thousand and No/100 Dollars
($50,000) for : (i) an accrual for accounting services required to provide
audited financial statements as required under SECTION 2.4 of this Agreement and
(ii) any legal fees incurred in the review, negotiation or preparation hereof.
(b) All liabilities and obligations of Seller, whether arising
prior to the Closing Date, other than the Assumed Liabilities, are referred to
as the "RETAINED LIABILITIES". All of the Retained Liabilities will remain the
sole responsibility of and will be retained solely by Seller. Retained
Liabilities include, but not limited to: (i) subject to Section 1.2(h), the five
real estate leases ; (ii) subject to Section 1.4(a) (iii), the legal and
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accounting fees incurred by the Seller as a result of the anticipated
transaction under this Agreement, whether such fees are incurred before or after
the Closing Date; and (iii) any tax liabilities not disclosed herein.
SECTION 1.5 ALLOCATION. The Purchase Price will be allocated as set forth
in EXHIBIT 1.5. After the Closing, the parties shall make consistent use of the
allocation specified in EXHIBIT 1.5 for all tax purposes and in any tax returns
filed with the Internal Revenue Service in respect thereof, including IRS Form
8594.
SECTION 1.6 CLOSING. The consummation of the purchase and sale provided
for in this Agreement (the "CLOSING") will take place at Buyer's offices at New
York City, at 10:00 a.m. (local time) on a date mutually agreed to by the
parties but not later than February 28, 2007 (the "CLOSING DATE"). Provided,
however, the Closing Date shall be automatically extended to permit the Seller
sufficient time to provide the audited financial statements required in a form
in compliance with Section 2.4 of this Agreement, but in no event later than
March 31, 2007. Delivery of documents at the Closing may be accomplished by
facsimile and/or PDF electronic files, to be followed by delivery of originals
by overnight courier, of national reputation, the day after Closing.
SECTION 1.7 CLOSING OBLIGATIONS.
(a) At the Closing, Seller shall deliver to Buyer:
(i) a xxxx of sale for all of the Assets in a form to be
agreed upon (the "XXXX OF SALE"), executed by Seller;
(ii) an assignment of all of the Assets which are intangible
personal property in the form of EXHIBIT 1.7(A)(II), which assignment shall also
contain Buyer's undertaking and assumption of the Assumed Liabilities (the
"ASSIGNMENT AND ASSUMPTION AGREEMENT"), executed by Seller;
(iii) releases from the Internal Revenue Service for its tax
lien and any States with their respective tax liens or soon thereafter;
(iv) copies of any other consent (excluding consents relating
to the Non-Material Contracts (as defined in SECTION 1.8 below)) required to be
obtained in connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby as disclosed on SCHEDULE
2.2(C);
(v) an escrow agreement in the form of EXHIBIT 1.7(A)(V),
executed by Seller, Buyer and the Escrow Agent (the "ESCROW AGREEMENT");
(vi) the employment agreements in the form of EXHIBIT
1.7(A)(VI), executed by Xxxx Xxxxxxx and Xxx Xxxxxx (the "EMPLOYMENT
AGREEMENTS");
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(vii) the noncompetition, nondisclosure and nonsolicitation
agreements that have been previously executed by employees and assigned to the
Seller, listed on SCHEDULE 1.7.(A)(VII);
(viii) a certificate of the Secretary of Seller certifying, as
complete and accurate as of the Closing, attached copies of the Articles of
Incorporation and the bylaws of Seller, certifying and attaching all requisite
resolutions or actions of Seller's shareholders approving the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby and the change of name contemplated by SECTION 4.5 and certifying to the
incumbency of the officers of Seller executing this Agreement and any other
document relating to the transactions contemplated hereby and accompanied by the
requisite documents for amending the Articles of Incorporation of Seller
required to effect such change of name in form sufficient for filing with the
State of Pennsylvania;
(ix) an opinion of counsel of the Seller, dated the Closing
Date, in a form customary for a similar transactions;
(x) the Articles of Incorporation and all amendments thereto
of Seller, duly certified as of a recent date by the Secretary of State of the
Commonweath of Pennsylvania;
(xi) certificates as to the good standing of Seller and
payment of all applicable state taxes by Seller, executed by the appropriate
officials of the jurisdiction of Seller's incorporation and each jurisdiction in
which Seller is licensed or qualified to do business as a foreign corporation as
specified in SCHEDULE 2.1 To the extent that such certificates cannot be
provided prior to Closing, seller agrees to indemnify and hold harmless Buyer
for the non-payment of sales and income taxes for any of the jurisdictions in
which Seller is licensed and qualified to do business as a foreign corporation;
and
(xii) such other deeds, bills of sale, assignments,
certificates of title, documents and other instruments of transfer and
conveyance as may reasonably be requested by Buyer, each in form and substance
reasonably satisfactory to Buyer and its counsel and executed by Seller for the
purpose of facilitating the consummation or performance of the transactions
contemplated hereby.
(b) At the Closing, Buyer shall deliver to Seller:
(i) The Cash Portion and the Stock Portion in accordance with
Section 1.3 of this Agreement, by wire transfer to Seller's counsel's escrow
account;
(ii) the Assignment and Assumption Agreement, executed by
Buyer;
(iii) the Escrow Agreement, executed by Buyer and the Escrow
Agent, together with the delivery of an amount equal Seven Hundred Thousand and
Fifty Thousand and No/100 Dollars ($750,000.00) of Stock; One Hundred Thousand
and No/100 Dollars ($100,000) Promissory Note; and Two Hundred Fifty Thousand
and No/100 Dollars ($250,000) of Stock to the Escrow Agent;
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(iv) the Employment Agreements, executed by Buyer;
(v) the Noncompetition Agreements, executed by Buyer;
(vi) a certificate of the Secretary of Buyer certifying, as
complete and accurate as of the Closing, attached copies of the bylaws of Buyer
and certifying and attaching all requisite resolutions or actions of Buyer's
board of directors approving the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby and certifying to the
incumbency of the officers of Buyer executing this Agreement and any other
document relating to the transactions contemplated hereby; and
(vii) a stock option plan for the executives and employees of
the Seller to be available to said employees subsequent to the Closing Date, and
said option plan will contain in part: (x) stock options priced at the end of
the Closing Date at the market value of $420,000 as of the end of the Closing
Date; (y) with a vesting schedule of three years; and (z) distribution list of
said stock options to employees determined by the Seller.
SECTION 1. 8 CONSENTS. Buyer may waive the requirement that Seller obtain
consents to assignment with respect to any of the Seller Contracts disclosed on
SCHEDULE 2.2(C) (the contracts with respect to which Buyer grants such waiver,
the "NON-MATERIAL CONTRACTS"), in which case any such Non-Material Contracts
will be identified as such on SCHEDULE 2.2(C). Notwithstanding anything to the
contrary in this Agreement, if any consents to assignment relating to the
Non-Material Contracts have not been obtained at or prior to the Closing, this
Agreement will not constitute an assignment or an agreement to assign if such
assignment or attempted assignment would constitute a breach of the Non-Material
Contract or result in the loss or diminution thereof; PROVIDED, HOWEVER, that in
each such case, Seller shall take commercially reasonable steps after the
Closing to obtain the consent of such other party to the Non-Material Contract
to the assignment of such Non-Material Contract to the Buyer. If such consent is
not obtained, Seller shall cooperate with the Buyer to the extent legally
permissible and feasible in any reasonable arrangement designed to provide for
Buyer the benefits of any Non-Material Contract, including, without limitation,
the enforcement, for the account and benefit of the Buyer, of any and all rights
of Seller against any other person with respect to a Non-Material Contract.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
SECTION 2.1 ORGANIZATION AND GOOD STANDING.
(a) Seller is a corporation duly organized, validly existing, and
in good standing under the laws of the State of the Commonwealth of
Pennsylvania, with full corporate power and authority to conduct its business as
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it is now being conducted, to own or use its properties and assets, and to
perform all its obligations under its contracts. Seller is duly qualified to do
business as a foreign corporation and is in good standing under the laws of each
state or other jurisdiction set forth in SCHEDULE 2.1.
(b) Complete and accurate copies of the articles of incorporation
and bylaws of Seller (collectively, the "GOVERNING DOCUMENTS"), as currently in
effect, have been delivered to Buyer.
(c) Seller does not own and has not entered into any agreement or
contract to acquire, any equity securities or other securities of any person or
any direct or indirect equity ownership interest in any other business.
SECTION 2.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Seller. Upon the execution and delivery by Seller of each of the
documents and instruments to be executed and delivered by Seller at Closing
pursuant to SECTION 1.7(A) (collectively, the "SELLER'S CLOSING DOCUMENTS"),
each of Seller's Closing Documents will constitute the legal, valid, and binding
obligation of Seller, enforceable against Seller in accordance with their
respective terms. Seller has the right, power, authority, and capacity to
execute and deliver this Agreement and Seller's Closing Documents and to perform
its obligations under this Agreement and Seller's Closing Documents, and such
action has been duly authorized by all necessary action by Seller's Members.
(b) Neither the execution and delivery of this Agreement nor the
consummation or performance of any of the transactions contemplated hereby will
(with or without notice or lapse of time): (i) contravene, conflict with, or
result in a violation of any provision of any of the Governing Documents of
Seller, (ii) contravene, conflict with, or result in a violation of any Legal
Requirement (as defined in SECTION 2.11(A) below) or Order (as defined in
SECTION 2.12(B) below) of any court or governmental authority to which Seller or
any of the Assets are subject, or (iii) breach any provision of, give any person
the right to declare a default or exercise any remedy under, accelerate the
maturity or performance of or payment under, result in the creation or
imposition of any Encumbrance upon any of the Assets under, or cancel,
terminate, or modify, any contract to which Seller is a party or by which Seller
or the Assets are bound.
(c) Except as set forth in SCHEDULE 2.2(C), Seller is not and will
not be required to give any notice to or obtain any consent from any person in
connection with the execution and delivery of this Agreement or the consummation
or performance of the transactions contemplated hereby (including the assignment
of the Seller Contracts hereunder).
SECTION 2.3 CAPITALIZATION. The authorized equity of Seller consist of
common stock held entirely by the parties listed on SCHEDULE 2.3.
SECTION 2.4 FINANCIAL STATEMENTS. Attached hereto as SCHEDULE 2.4 are the
Seller's unaudited Balance Sheets and unaudited profit and loss statement for
the twelve months ended December 31, 2004, December 31, 2005 and December 31,
2006 (the "FINANCIAL STATEMENTS"). The Financial Statements fairly present the
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financial condition and the results of operations of Seller as at the respective
dates of and for the periods referred to in such financial statements, all in
accordance with generally accepted accounting principals ("GAAP") except as set
forth on SCHEDULE 2.4. The Financial Statements have been prepared from and are
in accordance with the books and records of Seller. Seller shall provide to the
Buyer, on or before Closing, a draft audited financial statements for the years
ended December 31, 2004, December 31, 2005, December 31, 2006, and within forty
five (45) days of the Closing Date the audited financial statements for the
years ended December 31, 2005 and December 31, 2006 and for the stub period up
to the Closing Date, and such financial statements shall be materially
consistent with the previously submitted unaudited Financial Statements. The
aforementioned audited financial statements must be in the form and an opinion
of an independent certified public accountant attached to meet the standards
required by the Securities and Exchange Commission, and the independent
certified public accountant must provide its consent to the use of the Seller's
audited financial statements in the Buyer's 8-K and other registration filings
with the Securities and Exchange Commission. Further, the Seller's independent
public accountant shall make all of its work papers and other supporting
documents it utilized in proving its opinion available, if needed for review by
the Buyer's independent public accountant.
SECTION 2.5 SUFFICIENCY OF ASSETS. The Assets (a) constitute all of the
assets, tangible and intangible, necessary to conduct Seller's business in the
manner presently operated by Seller, and (b) constitute all of the operating
assets of Seller, other than certain real estate leased.
SECTION 2.6 REAL PROPERTY LEASES. SCHEDULE 2.6 sets forth all leases of
real property to which the Seller is a party (the "LEASES"). Complete and
accurate copies of the Leases, as amended or modified, have been delivered to
Buyer. The Buyer will not assume any of the Leases. Seller enjoys peaceful and
undisturbed possession of all such real property.
SECTION 2.7 PERSONAL PROPERTY.
(a) Except as set forth on SCHEDULE 2.7(A), Seller owns good and
transferable title to all of its Assets (excluding its interest in the real
property described in SCHEDULE 2.6), free and clear of any Encumbrances other
than Permitted Encumbrances.
(b) SCHEDULE 2.7(B) sets forth all items of Tangible Personal
Property with an initial, nondepreciated book value in excess of $2,500. Each
item of Tangible Personal Property is in good repair and good operating
condition, ordinary wear and tear excepted, and is suitable for immediate use in
the ordinary course of business, No item of Tangible Personal Property is in
need of repair or replacement other than as part of routine maintenance in the
ordinary course of business. All Tangible Personal Property is in the possession
of Seller.
SECTION 2.8 TAXES. Except as set forth in Schedule 2.8, Seller, to the
best of its knowledge, has timely filed all tax returns (federal, state or
local) required to be filed by it in accordance with applicable Legal
Requirements (AS DEFINED IN SECTION 2.11(A)). All of such tax returns are
accurate and complete in all material respects. Seller has paid or made
provision for the payment of all taxes that have or may become due for all
periods covered by the tax returns or otherwise, or pursuant to any assessment
received by Seller. There is no dispute or claim concerning any taxes of Seller
either claimed or raised by any governmental authority in writing. Seller has
not requested or been given any extension of time within which to file returns
in respect of any taxes for which Seller may be liable. All taxes that Seller is
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or was required by Legal Requirements to withhold, deduct or collect have been
duly withheld, deducted and collected and, to the extent required, have been
paid to the proper governmental authority.
SECTION 2.9 EMPLOYEES. SCHEDULE 2.9 sets forth a complete and accurate
list, giving name, job title, current compensation paid or payable, sick and
vacation leave that is accrued but unused, and services credited for purposes of
vesting and eligibility to participate under any Employee Benefit Plan (as
defined below) (in each case, to the extent applicable), (a) for each employee
of Seller, including each employee on leave of absence or layoff status (the
"EMPLOYEES"), and (b) for any independent contractors who render services on a
regular basis to, or are under contract with, Seller. Seller has not experienced
any organized slowdown, work interruption strike, or work stoppage by its
employees, and, to the knowledge of Seller, and the stockholders, there is no
strike, labor dispute, or union organization activity pending or threatened that
affects Seller's Employees. None of the Employees belongs to any union or
collective bargaining unit applicable to his employment with the Seller. Except
as set forth on SCHEDULE 2.9, no Employee of Seller is bound by (a) any
employment or similar contract or agreement with Seller, or (b) any contract or
agreement that purports to limit or restrict the ability of such Employee to (i)
perform his duties as an employee of Seller, or (ii) engage in any conduct,
activity, or practice relating to Seller's business.
SECTION 2.10 EMPLOYEE BENEFITS. SCHEDULE 2.10 sets forth all plans,
programs, or arrangements that Seller has maintained, sponsored, adopted, or
obligated itself under with respect to employees' benefits, including pension or
retirement plans, medical or dental plans, life or long-term disability
insurance, bonus or incentive compensation, or stock option or equity
participation plans (the "EMPLOYEE BENEFIT PLANS"). Seller has no liability or
obligation with respect to any Employee under any Employee Benefit Plan other
than normal salary or wage accruals and paid vacation, sick leave, and holiday
accruals in accordance with Seller's practice and policy. Seller has performed
all obligations required to be performed under, and has complied with all Legal
Requirements in connection with, all such Employee Benefit Plans and is not in
arrears under any of the terms thereof.
SECTION 2.11 COMPLIANCE WITH LEGAL REQUIREMENTS, GOVERNMENTAL
AUTHORIZATIONS.
(a) Except as set forth on SCHEDULE 2.11(A), Seller, to the best
of its knowledge, is, and at all times since January 1, 2002, has been, in
compliance in all material respects with any federal, state, or local law,
ordinance or regulation (including with respect to environmental, disposal of
hazardous substances, or public health or safety) (a "LEGAL REQUIREMENT"), that
is or was applicable to the operation of its business or the ownership or use of
any of its assets. Seller has not received, at any time since January 1, 2002,
any notice or other communication (whether oral or written) from any
governmental authority or any other person regarding any actual or alleged
violation of, or failure to comply with, any Legal Requirement with the
exception of the Potential Tax Audit.
(b) SCHEDULE 2.11(B) contains a complete and accurate list of each
approval, license or permit (the "GOVERNMENTAL AUTHORIZATIONS") that is held by
Seller or that otherwise relates to the Seller's business or the Assets. The
Governmental Authorizations listed in SCHEDULE 2.11(B) collectively constitute
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all of the approvals, licenses and permits necessary to permit Seller to
lawfully conduct and operate its business in the manner it currently conducts
and operates such business and to permit Seller to own and use its assets in the
manner in which it currently owns and uses such assets. The Buyer will review
each Government Authorization with the corresponding jurisdiction and determine
the necessity to submit new applications if needed to qualify to continue the
operation of the Seller in such jurisdiction.
SECTION 2.12 LEGAL PROCEEDINGS, ORDERS.
(a) Except as set forth in SCHEDULE 2.12(A), there are no actions
or proceedings pending by or against Seller or that otherwise relate to or may
affect the business of, or any of the assets owned or used by, Seller. To the
knowledge of Seller, no such action or proceeding has been threatened, and no
event has occurred or circumstance exists that may serve as a basis for the
commencement of any such action or proceeding.
(b) There are no orders, injunctions, judgments or decrees (an
"ORDER") outstanding against Seller or that otherwise relate to or may affect
the business of, or any of the assets owned or used by, Seller.
SECTION 2.13 INSURANCE. SCHEDULE 2.13 sets forth (a) a complete and
accurate list of all insurance under which any of the assets or properties of
Seller is covered or otherwise relating to the business of Seller, and (b) all
life insurance policies covering the life of any Employee for which Seller has
paid any premiums. Such policies are in full force and effect, and Seller has
paid all premiums due, and has otherwise performed all of its obligations under,
each such policy of insurance.
SECTION 2.14 CONTRACTS; NO DEFAULTS. SCHEDULE 2.14 contains an accurate
and complete list of each Seller Contract. Seller has delivered to Buyer
accurate and complete copies of each written Seller Contract, and has provided
Buyer with a true and accurate written description of each oral Seller Contract.
To the best of Seller's knowledge, each Seller Contract is valid and binding and
in full force and effect, Seller and each other person that has or had any
obligation or liability under any Seller Contract is in compliance with all
material terms and requirements of each Seller Contract, and no event has
occurred or circumstance exists that (with or without notice or lapse of time)
may contravene, conflict with, or result in a violation or breach of, or give
Seller or any other person the right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance of, or to cancel, terminate,
or modify, any Seller Contract.
SECTION 2.15 INTELLECTUAL PROPERTY. SCHEDULE 2.15 lists any names, assumed
names, registered or unregistered trade names, patents, inventions or
discoveries that may be patentable, registered or unregistered trademarks,
registered or unregistered service marks, registered or unregistered copyrights,
applications for any of the foregoing, computer software, rights in internet web
sites and internet domain names owned, used or licensed by Seller (collectively,
the "INTELLECTUAL PROPERTY ASSETS"). The documentation relating to (a) such
Intellectual Property Assets and (b) any trade secrets, know-how, confidential
or proprietary information and customer lists (the items referenced in clause
(b), the "PROPRIETARY ASSETS") is current, accurate, and sufficient in detail
and content to allow its full and proper use. Seller has taken all reasonable
precautions to protect the secrecy, confidentiality, and value of the all of the
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Intellectual Property Assets and Proprietary Assets, and has the right to use
all of the Intellectual Property Assets and Proprietary Assets. None of the
Intellectual Property Assets or Proprietary Assets is subject to any adverse
claim or has been challenged or threatened in any way or infringes or conflicts
with any patent or copyright application or registration or any other
intellectual property right of any other person. The ownership and use of the
Intellectual Property Assets and Proprietary Assets by Buyer following the
Closing will not infringe upon or conflict with the intellectual property rights
of any person.
SECTION 2.16 RELATIONSHIPS WITH RELATED PERSONS. Except as set forth in
SCHEDULE 2.16, no stockholder in Seller or any Related Person (as defined below)
of a stockholder has any interest in any property (whether real, personal, or
mixed and whether tangible or intangible), used in or pertaining to Seller's
business. To the knowledge of the Seller, no stockholder or any Related Person
of any stockholder owns an equity interest or any other financial interest in
any person that has (a) had business dealings or a material financial interest
in any transaction with Seller other than business dealings or transactions
disclosed in SCHEDULE 2.16, each of which has been conducted in the ordinary
course of business at substantially prevailing market prices and on
substantially prevailing market terms, or (b) engaged in competition with Seller
with respect to the Seller's business. Except as set forth on SCHEDULE 2.16, the
Seller is not indebted, directly or indirectly, to any person who is an officer,
director or stockholder of the Seller or any Affiliate of any such person in any
amount other than for salaries for services rendered or reimbursable business
expenses, and no such officer, director, stockholder or Affiliate is indebted to
the Seller, except for advances made to employees of the Seller in the ordinary
course of business to meet reimbursable business expenses anticipated to be
incurred by such person. For the purposes of this SECTION 2.16, "RELATED PERSON"
means, with respect to any individual: (i) an individual's spouse, siblings,
siblings' children, children, grandchildren or parents; or (ii) a trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, or owners, or persons holding a controlling interest of which consist
of such individuals referred to in the immediately preceding clause (i).
Affiliate for purposes of this Agreement shall mean a wholly owned subsidiary of
the Seller.
SECTION 2.17 NO UNDISCLOSED LIABILITIES. Seller has no liabilities or
obligations except for liabilities or obligations reflected or reserved against
in the unaudited balance sheet as of December 31, 2006 (the "BALANCE SHEET") and
current liabilities incurred in the ordinary course of business of Seller since
December 31, 2006.
SECTION 2.18 NO MATERIAL ADVERSE CHANGE. Between the date of this
Agreement and the Closing Date (a) there has not been any material adverse
change in the business, properties, prospects, assets, results of operations or
condition (financial or otherwise) of Seller, and no event has occurred or
circumstance exists that may result in such a material adverse change; (b) there
has not been any sale, lease, or other disposition of any asset or property of
Seller other than in the ordinary course of business, or any Encumbrance on any
asset or property of Seller; and (c) Seller has conducted its business only in
the ordinary course of business so as to preserve its business intact, to keep
available to its business the services of Seller's employees, and to preserve
its business and the goodwill of its suppliers, customers and others having
business relations with it.
SECTION 2.19 BROKERS OR FINDERS. Neither Seller nor any of its officers,
directors, employees or agents have incurred any liability or obligation for
brokerage or finders' fees or agents' commissions or other similar payment in
connection with the sale of the Assets or the transactions contemplated hereby.
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SECTION 2.20 ACCOUNTS RECEIVABLE. All Accounts Receivable that are
reflected on the Balance Sheet or on the accounting Records of Seller as of the
Closing Date represent or will represent valid obligations arising from services
actually performed by Seller in the ordinary course of business. Except to the
extent paid prior to the Closing Date, such Accounts Receivable are or will be
as of the Closing Date collectible net of the respective reserves shown on the
Balance Sheet (which reserves are adequate and calculated consistent with past
practice). Subject to such reserves, each of such Accounts Receivable either has
been or will be collected in full, without any set-off, within 365 days after
the day on which it first becomes due and payable. SCHEDULE 2.20 contains a
complete and accurate list of all Accounts Receivable as of the date of the
Balance Sheet, which list sets forth the aging of each such Account Receivable.
SECTION 2.21 CUSTOMERS AND SUPPLIERS. Since December 31, 2006, there has
been no adverse change in the business relationship of Seller with any material
customer or supplier. Seller has not received any notice that any material
customer or supplier has any intention to terminate or materially reduce
purchases from or supplies to Seller on account of the consummation of the
transactions contemplated hereby or otherwise.
SECTION 2.22 BOOKS AND RECORDS. The books of account and other financial
records of Seller are complete and correct in all material respects and have
been maintained in accordance with sound business practices and in accordance
with applicable laws and regulations.
SECTION 2.23 BANK ACCOUNTS. SCHEDULE 2.23 contains a complete and accurate
list of all bank accounts and safe deposit boxes in the name of or controlled by
the Seller, and the person or persons authorized to act or sign on behalf of the
Seller in respect of any of the foregoing.
SECTION 2.24 PREPAYMENTS AND DEPOSITS. SCHEDULE 2.24 sets forth a complete
and accurate list of all prepayments or deposits from customers for services to
be performed after the Closing Date which have been received by Seller as of the
date hereof.
SECTION 2.25 DISCLOSURE. No representation or warranty or other statement
made by Seller or the Members in this Agreement or in any certificate to be
delivered hereunder, contains or will contain any untrue statement of a material
fact or omits, or will omit, to state a material fact necessary to make any of
them, not misleading. There does not now exist any event, condition, or other
matter, individually or in the aggregate, adversely affecting Seller or the
Seller's business, prospects, financial condition, or results of its operations
that has not been set forth this Agreement or the Schedules hereto.
SECTION 2.26 BROKERS. No brokers have been hired or contracted by the
Seller for the transaction contemplated under this Agreement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
SECTION 3.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware, with full corporate power and authority to conduct its business as it
is now being conducted.
SECTION 3.2 AUTHORITY, NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against it in accordance with its terms. Upon
the execution and delivery by Buyer of each of the documents and instruments to
be executed and delivered by Buyer at Closing pursuant to SECTION 1.7(B)
(collectively, the "BUYER'S CLOSING DOCUMENTS"), each of the Buyer's Closing
Documents will constitute the legal, valid, and binding obligation of Buyer,
enforceable against it in accordance with its terms. Buyer has the absolute
right, power and authority to execute and deliver this Agreement and the Buyer's
Closing Documents and to perform its obligations under this Agreement and the
Buyer's Closing Documents, and such action has been duly authorized by all
necessary corporate action.
(b) Neither the execution and delivery of this Agreement by Buyer
nor the consummation or performance of any of the transactions contemplated
hereby by Buyer will (with or without notice or lapse of time): (i) contravene,
conflict with or result in a violation of any provision of Buyer's certificate
of incorporation or bylaws; (ii) contravene, conflict with or result in a
violation of any Legal Requirement or Order of any court or governmental
authority to which Buyer or its assets are subject, or (iii) conflict with or
result in the breach or termination of any term or provision of, or constitute a
default under, or cause any acceleration under, or cause the creation of any
Encumbrance upon the properties or assets of the Buyer pursuant to, any
indenture, mortgage, deed of trust or other agreement or instrument to which the
Buyer is a party or by which the Buyer or any of its properties is or may be
bound.
SECTION 3.3 CONSENTS AND APPROVALS. SCHEDULE 3.3 sets forth a complete and
accurate list of all consents and approvals of third parties that are required
in connection with the consummation by the Buyer of the transactions
contemplated by this Agreement, all of which consents and approvals either have
been obtained or will be obtained prior to the Closing Date.
SECTION 3.4 REGULATORY APPROVALS. All consents, approvals, authorizations
or other requirements prescribed by any law, rule or regulation that must be
obtained or satisfied by the Buyer and that are necessary for the consummation
of the transactions contemplated by this Agreement have been, or will be prior
to the Closing Date, obtained and satisfied.
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ARTICLE IV
COVENANTS OF SELLER PRIOR TO CLOSING
SECTION 4.1 ACCESS AND INVESTIGATION. Between the date of this Agreement
and the Closing Date, and upon reasonable advance notice received from Buyer,
Seller shall (a) afford Buyer and its Representatives and prospective lenders
and their Representatives (collectively, the "BUYER Group") full and free
access, during normal business hours, to Seller's management personnel offices,
properties offices, and books and records, such rights of access to be exercised
in a manner that does not unreasonably interfere with the operations of Seller,
(b) furnish the Buyer Group with copies of all such Contracts, Governmental
Authorizations, books and records, and other existing data as Buyer may
reasonably request, (c) furnish the Buyer Group with such additional financial,
operating, and other relevant data and information as Buyer may reasonably
request, and (d) otherwise cooperate and assist, to the extent reasonably
requested by Buyer, with Buyer's investigation of the properties, assets, and
financial condition of the Seller.
SECTION 4.2 OPERATION OF THE BUSINESS OF SELLER. Between the date of this
Agreement and the Closing Date, Seller shall:
(a) conduct the business of the Seller only in the Ordinary Course
of Business (as defined below);
(b) use its commercially reasonable efforts to preserve intact the
current business organization of the Seller, keep available the services of the
Seller's officers, employees, and agents, and maintain the Seller's relations
and good will with suppliers, customers, landlords, creditors, employees,
agents, and others having business relationships with it;
(c) confer with Buyer prior to implementing operational decisions
of a material nature; and
(d) otherwise report periodically to Buyer concerning the status
of the business, operations, and finances of the Seller.
"ORDINARY COURSE OF BUSINESS" means an action that is consistent in nature
and scope with Seller's past practices, taken in the ordinary course of the
normal day-to-day operations of Seller and that does not require specific
authorization by the stockholders of Seller.
SECTION 4.3 NEGATIVE COVENANT. Except in the Ordinary Course of Business
or as otherwise expressly permitted herein, between the date of this Agreement
and the Closing Date, Seller shall not, without the prior written Consent of
Buyer:
(a) pay or increase any bonuses, salaries, or other compensation
to any stockholder, director, officer, or employee or enter into any severance
or similar contract with any director, officer, or employee;
(b) adopt, amend or increase the payments to or benefits under,
any Employee Benefit Plan with respect to the Employees;
(c) mortgage, pledge, or impose any Encumbrance on any Asset of
the Seller;
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(d) modify any material Seller Contract or Governmental
Authorization;
(e) cancel or waive any claims or rights with a value to Seller in
excess of $10,000; or
(f) agree, whether orally or in writing, to do any of the
foregoing.
SECTION 4.4. NOTIFICATION. Between the date of this Agreement and the
Closing Date, Seller shall promptly notify Buyer in writing if it becomes aware
of (a) any fact or condition that causes or constitutes a breach of any of
Seller's representations and warranties made as of the date of this Agreement,
or (b) the occurrence after the date of this Agreement of any fact or condition
that would or be reasonably likely to (except as expressly contemplated by this
Agreement) cause any such representation or warranty to be inaccurate or
incomplete in any material respect, had that representation or warranty been
made as of the time of the occurrence of, or Seller's discovery of, such fact or
condition. Should any such fact or condition require any change to the
Schedules, Seller shall promptly deliver to Buyer a supplement to the Schedules
specifying such change.
SECTION 4.5 NO NEGOTIATION. Until such time as this Agreement is
terminated pursuant to SECTION 9.1, Seller shall not directly or indirectly
solicit, initiate, encourage or entertain any inquiries or proposals from,
discuss or negotiate with, provide any non-public information to, or consider
the merits of any inquiries or proposals from, any person (other than Buyer)
relating to any business combination transaction involving Seller, including the
sale by the shareholders of Seller's stock, the merger or consolidation of
Seller, or the sale of the Business or any of the Assets (other than in the
Ordinary Course of Business). Seller shall promptly notify Buyer of any such
inquiry or proposal.
SECTION 4.6 BEST EFFORTS. Seller and the stockholders shall use their best
efforts to cause the conditions in Article VI and Article VII to be satisfied.
SECTION 4.7 PAYMENT OF LIABILITIES. Seller shall pay or otherwise satisfy
in the Ordinary Course of Business all of its liabilities and obligations. Buyer
and Seller hereby waive compliance with the bulk transfer provisions of the
Uniform Commercial Code (or any similar law) ("BULK SALES LAWS") in connection
with the contemplated transactions.
SECTION 4.8 CHANGE OF NAME. On or soon after the Closing Date, Seller
shall take all other actions necessary to amend its certificate of organization
and change its name to one sufficiently dissimilar to Seller's present name to
avoid confusion.
ARTICLE V
COVENANTS OF BUYER PRIOR TO CLOSING
SECTION 5.1 REQUIRED APPROVALS. As promptly as practicable after the date
of this Agreement, Buyer shall obtain all consents and approvals as identified
in SCHEDULE 3.3. Buyer also shall fully cooperate with Seller in obtaining all
consents identified in SCHEDULE 2.2(C).
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SECTION 5.2 BEST EFFORTS. Buyer shall use its best efforts to cause the
conditions in Article VI and Article VII to be satisfied.
SECTION 5.3 NOTIFICATION. Between the date of this Agreement and the
Closing Date, Buyer shall promptly notify Seller in writing if it becomes aware
of the occurrence after the date of this Agreement of any fact or condition that
would or be reasonably likely to (except as expressly contemplated by this
Agreement) cause any representation or warranty to be inaccurate or incomplete
in any material respect, had that representation or warranty been made as of the
time of the occurrence of, or Buyer's discovery of, such fact or condition.
Should any such fact or condition require any change to the Schedules, Buyer
shall promptly deliver to Seller a supplement to the Schedules specifying such
change.
ARTICLE VI
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Assets and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part):
SECTION 6.1 ACCURACY OF REPRESENTATIONS. The representations and
warranties of Seller in this Agreement shall be accurate in all material
respects as of the Closing Date as if made on the Closing Date, except for any
changes consented to in writing by Buyer.
SECTION 6.2 SELLER'S PERFORMANCE. All of the covenants and obligations
that Seller is required to perform or to comply with pursuant to this Agreement
at or prior to the Closing shall have been duly performed and complied with in
all material respects.
SECTION 6.3 CONSENTS. Each of the consents identified in EXHIBIT 6.3 (the
"MATERIAL CONSENTS") must have been obtained and must be in full force and
effect.
SECTION 6.4 TAX LIENS. Seller shall make every effort to resolve the
Federal and State tax liens and Buyer shall be satisfied that such effort will
result in full releases of such liens.
SECTION 6.5 ADDITIONAL DOCUMENTS. Seller must have caused the documents
and instruments required by SECTION 1.7(A) and the following documents to be
delivered (or tendered subject only to Closing) to Buyer:
(a) A statement from the holder of each note listed on SCHEDULE
1.4(A)(III), if any, dated the Closing Date, setting forth the principal amount
then outstanding on the indebtedness represented by such note, the interest rate
thereon, and a statement to the effect that Seller, as obligor under such note,
is not in default under any of the provisions thereof;
(b) releases of all Encumbrances on the Assets, other than
Permitted Encumbrances;
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(c) certificates dated as of a recent date prior to the Closing as
to the good standing of Seller and payment of all applicable state Taxes by
Seller, from the appropriate officials of the State of the Commonwealth of
Pennsylvania and each jurisdiction in which Seller is licensed or qualified to
do business as a foreign corporation as specified in SCHEDULE 2.L. To the extent
that such certificates cannot be provided prior to Closing, seller agrees to
indemnify and hold harmless Buyer for the non-payment of sales taxes for any of
the jurisdictions in which Seller is licensed and qualified to do business as a
foreign corporation; and
(d) such other documents as Buyer may reasonably request with
reasonable notice for the purpose of (i) evidencing the satisfaction of any
condition referred to in this Article VI, or (ii) otherwise facilitating the
consummation or performance of any of the Contemplated Transactions.
SECTION 6.6 NO PROCEEDINGS. Since the date of this Agreement, there has
not been commenced or threatened proceeding or action (a) involving any
challenge to, or seeking damages or other relief in connection with, any of the
contemplated transactions, or (b) that may have the effect of preventing, making
illegal, imposing limitations or conditions on, or otherwise interfering, with
any of the contemplated transactions.
SECTION 6.7 GOVERNMENTAL AUTHORIZATIONS. Buyer must have received such
Governmental Authorizations as are necessary or desirable to allow Buyer to
operate the Assets from and after the Closing.
ARTICLE VII
CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
Seller's obligation to sell the Assets and to take the other actions
required to be taken by Seller at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Seller, in whole or in part):
SECTION 7.1 ACCURACY OF REPRESENTATIONS. All of Buyer's representations
and warranties in this Agreement must be accurate in all material respects as of
the Closing Date as if made on the Closing Date.
SECTION 7.2 BUYER'S PERFORMANCE. All of the covenants and obligations that
Buyer is required to perform or to comply with pursuant to this Agreement at or
prior to the Closing must have been performed and complied with in all material
respects.
SECTION 7.3 CONSENTS. Each of the Consents identified in EXHIBIT 6.3 must
have been obtained and must be in full force and effect.
SECTION 7.4 ADDITIONAL DOCUMENTS. Buyer must have caused the documents and
instruments required by SECTION 1.7(B) and the following documents to be
delivered (or tendered subject only to Closing) to Seller:
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(a) an opinion of the Law Offices of Xxxxxx X. Xxxxxxx, dated the
Closing Date, in a form customary for similar transactions; and
(b) such other documents as Seller may reasonably request for the
purpose of evidencing the satisfaction of any condition referred to in this
Article VII.
SECTION 7.5 NO INJUNCTION. There must not be in effect any Legal
Requirement or any injunction or other Order that (a) prohibits the consummation
of the Contemplated Transactions, and (b) has been adopted or issued, or has
otherwise become effective, since the date of this Agreement.
ARTICLE VIII
ADDITIONAL COVENANTS
SECTION 8.1 EMPLOYEES AND EMPLOYEE BENEFITS.
(a) Effective immediately before the Closing Date, Seller shall
novate any employment agreements it may have to the Buyer (the "AVAILABLE
EMPLOYEES") and shall release such Available Employees from the provisions of
any restrictive covenants and/or agreements with Seller with respect to Buyer so
as to enable Buyer to employ such individuals.
(b) It is understood and agreed that (i) any offer of employment
made by Buyer as referenced in SECTION 8.1(A) above will not constitute any
commitment, contract or understanding (expressed or implied) of any obligation
on the part of Buyer to a post-Closing Date employment relationship of any fixed
term or duration or upon any terms or conditions other than those that Buyer may
establish pursuant to individual offers of employment; and (ii) employment
offered by Buyer is "at will" and may be terminated by Buyer or by an employee
at anytime for any reason (subject to any written commitments to the contrary
made by Buyer).
(c) Seller will be responsible for (i) the payment of all wages
and other remuneration due to its Employees with respect to their services as
employees of Seller through the close of business on the Closing Date, provided
however, the Buyer shall be responsible for any salaries accrued for a period
not to exceed ten working days prior to the Closing Date for any employees of
the Seller that become employees of the Buyer immediately after the Closing
Date.
SECTION 8.2 PAYMENT OF TAXES RESULTING FROM SALE OF ASSETS BY SELLER.
Seller shall pay in a timely manner all taxes (other than income taxes) imposed
on it resulting from or payable in connection with the sale of the Assets
pursuant to this Agreement.
SECTION 8.3 PAYMENT OF OTHER RETAINED LIABILITIES. In addition to payment
of taxes pursuant to SECTION 8.2, Seller shall pay, or make adequate provision
for the payment, in full of all of the Retained Liabilities. If any such
Retained Liabilities are not so paid or provided for, or if Buyer reasonably
determines that failure to make any payments will impair Buyer's use or
enjoyment of the Assets or conduct of the business of the Seller previously
conducted using the Assets, Buyer may at any time after the Closing Date elect
to make all such payments directly or through the escrow (but shall have no
obligation to do so) and will be promptly reimbursed therefor by Seller.
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SECTION 8.4 COVENANT NOT TO COMPETE.
(a) In consideration of the Purchase Price to be received under
this Agreement, Seller agrees that, for a period of three (3) years after the
Closing Date, it shall not directly or indirectly, do any of the following:
(i) engage in, or invest in, own, manage, operate, finance,
control, be employed by, associated with or in any manner connected with, or
render services or advice or other aid to, any person engaged in or planning to
become engaged in, or any other business whose products or activities compete in
whole or in part with, the business of Buyer, or any business carried on by
Buyer utilizing the Assets, anywhere within the continental United States;
(ii) induce or attempt to induce any employee of Buyer to
leave the employ of Buyer, in any way interfere with the relationship between
Buyer and any employee of Buyer, or solicit, offer employment to, otherwise
attempt to hire, employ, or otherwise engage as an employee, independent
contractor, or otherwise, any such employee; or
(iii) induce or attempt to induce any person that was a
customer, client or business relation of Buyer at any time during the one (1)
year period preceding the Closing Date to cease doing business with Buyer, in
any way interfere with the relationship between Buyer and any such customer,
client or business relation, or solicit the business of any such customer,
client or business relation.
(b) Seller acknowledges that all of the foregoing provisions are
reasonable and are necessary to protect and preserve the value of the Assets and
to prevent any unfair advantage being conferred on Seller. If any of the
covenants set forth in this SECTION 8.4 are held to be unreasonable, arbitrary,
or against public policy, the restrictive time period herein will be deemed to
be the longest period permissible by law under the circumstances and the
restrictive geographical area herein will be deemed to comprise the largest
territory permissible by law under the circumstances.
SECTION 8.5 CUSTOMER AND OTHER BUSINESS RELATIONSHIPS. After the Closing,
Seller shall use its reasonable efforts to cooperate with Buyer in its efforts
to continue and maintain for the benefit of Buyer those business relationships
of Seller existing prior to the Closing and relating to the business to be
operated by Buyer after the Closing, including relationships with lessors,
employees, regulatory authorities, licensors, customers, suppliers and others,
and Seller will satisfy the Retained Liabilities in a manner which is not
detrimental to any of such relationships. Seller will refer to Buyer all
inquiries relating to the Business. Neither Seller nor any of its officers or
employees, shall take any action which would tend to diminish the value of the
Assets after the Closing or which would interfere with the business of Buyer to
be engaged in after the Closing.
SECTION 8.6 RETENTION AND ACCESS TO RECORDS. After the Closing Date, Buyer
shall retain for a period of seven (7) years those records of Seller delivered
to Buyer. Buyer also shall provide Seller and a representative of the Seller's
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stockholders reasonable access thereto, during normal business hours and on at
least three (3) days' prior written notice, to enable them to prepare financial
statements or tax returns or deal with tax audits. After the Closing Date,
Seller shall provide Buyer and Buyer's representatives reasonable access to
records that are Excluded Assets, during normal business hours and on at least
three (3) days' prior written notice, for any reasonable business purpose
specified by Buyer in such notice.
ARTICLE IX
TERMINATION
SECTION 9.1 TERMINATION EVENTS. This Agreement may be terminated by
written notice given prior to or at the Closing, subject to SECTION 9.2 as
follows:
(a) by Buyer or Seller if a material breach of any provision of
this Agreement has been committed by the other party and such breach has not
been waived by the non-breaching party;
(b) by Buyer if any condition in Article VI has not been satisfied
as of the date specified for Closing Date; or if satisfaction of such a
condition by such date is or becomes impossible (other than through the failure
of Buyer to comply with its obligations under this Agreement).
(c) by Seller, if any condition in Article VII has not been
satisfied as of the date specified for Closing Date or if satisfaction of such a
condition by such date is or becomes impossible (other than through the failure
of Seller to comply with its obligations under this Agreement) and Seller has
not waived such condition on or before such date;
(d) by mutual consent of Buyer and Seller; or
(e) by Buyer or Seller if the Closing has not occurred on or
before March 15, 2007 or such later date as the parties may agree upon or as
provided herein, unless the party giving notice of termination is in material
breach of this Agreement.
SECTION 9.2 EFFECT OF TERMINATION. Each party's right of termination under
SECTION 9.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of such right of termination will not be an
election of remedies. If the Agreement is terminated pursuant to SECTION 9.1,
subject to Article X, all obligations of the parties under this Agreement will
terminate.
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ARTICLE X
INDEMNIFICATION
SECTION 10.1 SURVIVAL. All representations, warranties, covenants, and
obligations in this Agreement, the Schedules attached hereto, and the
certificates delivered pursuant to SECTION 1.7, will survive the Closing and the
consummation of the transactions contemplated hereby for a period of two (2)
years. Except as otherwise provided herein the right to indemnification,
reimbursement, or other remedy based on such representations, warranties,
covenants, and obligations will not be affected by any investigation conducted
with respect to, or any knowledge acquired (or capable of being acquired) about,
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant or obligation. Buyer is not aware of any facts or
circumstances that would serve as the basis for a claim by Buyer against Seller
based upon a breach of any of the representations and warranties of the Seller
contained in this Agreement or breach of any of Seller's covenants or agreements
to be performed at or prior to Closing. Buyer will be deemed to have waived in
full any breach of any of Seller's representations and warranties and any such
covenants and agreements of which Buyer has awareness at the Closing.
SECTION 10.2 INDEMNIFICATION AND REIMBURSEMENT BY SELLER.. Seller shall
indemnify and hold harmless Buyer, and its directors, stockholders, members,
partners, employees, representatives, and agents (collectively, the "BUYER
INDEMNIFIED PERSONS"), and shall reimburse the Buyer Indemnified Persons, for
any loss, liability, claim, damage or expense (including costs of investigation
and defense and reasonable attorneys' fees and expenses) whether or not
involving a third-party claim (collectively, "DAMAGES"), arising, directly or
indirectly, from or in connection with:
(a) any breach of any representation or warranty made by Seller in
this Agreement, or the certificates delivered pursuant to SECTION 1.7;
(b) any breach of any covenant or obligation of Seller in this
Agreement;
(c) any Retained Liabilities;
(d) any liabilities that arise after Closing and are in any way
related to the Assets or the conduct of Seller's business; and
(e) any Federal and State tax liens
SECTION 10.3 INDEMNIFICATION AND REIMBURSEMENT BY BUYER. Buyer shall
indemnify and hold harmless Seller and its directors, stockholders, partners,
employees, representatives, and agents (collectively, the "SELLER INDEMNIFIED
PERSONS"), and shall reimburse the Seller Indemnified Persons for any Damages
arising, directly or indirectly, from or in connection with:
(a) any breach of any representation or warranty made by Buyer in
this Agreement or in any certificate or document delivered by Buyer pursuant to
this Agreement;
(b) any breach of any covenant or obligation of Buyer in this
Agreement or in any other document, writing, or instrument delivered by Buyer
pursuant to this Agreement; and
(c) the Assumed Liabilities.
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SECTION 10.4 TIME LIMITATIONS.
(a) Seller will have no indemnification liability for the breach
of any representation or warranty set forth in Article II, unless on or before
the second anniversary of the Closing Date, Buyer notifies Seller of a breach
specifying the factual basis of that breach in reasonable detail to the extent
then known by Buyer and providing a reasonable opportunity to cure; PROVIDED,
HOWEVER, that any claim with respect to Section 2.8 taxes, 2.10 employee
benefits, or 2.11 environmental matters may be made at any time, subject to the
applicable period of statute of limitations.
(b) Buyer will have no indemnification liability for the breach of
any representation or warranty set forth in Article III, unless on or before the
second anniversary of the Closing Date, Seller notifies Buyer of a breach
specifying the factual basis of that breach in reasonable detail to the extent
then known by Seller.
SECTION 10.5 PROCEDURE FOR INDEMNIFICATION - THIRD PARTY CLAIMS. If, after
the Closing Date, either a Buyer Indemnified Person or Seller Indemnified
Person, as the case may be (the "INDEMNITEE"), receives notice of any
third-party claim or alleged third-party claim asserting the existence of any
matter of a nature as to which the Indemnitee is entitled to be indemnified
under this Agreement, the Indemnitee shall promptly notify Seller, or Buyer, as
the case may be (the "INDEMNITOR"), in writing with respect thereto, but the
failure to notify the Indemnitor will not relieve the Indemnitor of any
liability that it may have to an Indemnitee, except to the extent that the
Indemnitor demonstrates that the defense of such action has been prejudiced by
the Indemnitee's failure to give such notice. The Indemnitor will have the right
to defend against any such claim provided (a) that the Indemnitor, within ten
(10) days after the giving of such notice by Indemnitee, notifies Indemnitee in
writing that (i) Indemnitor disputes such claim and gives reasons therefor, and
(ii) Indemnitor will, at its own cost and expense, defend the same, and (b) such
defense is instituted and continuously maintained in good faith by Indemnitor.
Indemnitee may, if it so elects, designate and pay for its own counsel to
participate with the counsel selected by Indemnitor in the conduct of such
defense. Indemnitor will not permit any lien or execution to attach to the
assets of Indemnitee as a result of such claim, and the Indemnitor shall provide
such bonds or deposits as are necessary to prevent the same. In any event,
Indemnitor will keep Indemnitee fully advised as to the status of such defense.
If Indemnitor is given notice of a claim as aforesaid and fails to notify
Indemnitee of its election to defend such claim within the time prescribed
herein, or after having elected to defend such claim fails to institute and
maintain such defense as prescribed herein, or if such defense is unsuccessful
then, in any such event, the Indemnitor shall fully satisfy and discharge the
claim within ten (10) days after notice from the Indemnitee requesting
Indemnitor to do so. If the Indemnitor assumes the defense of any action or
proceeding (y) no compromise or settlement of such claims may be effected by the
Indemnitor without the Indemnitee's consent unless (A) there is no finding or
admission of any violation of any legal requirement or any violation of the
rights of any person and no effect on any other claims that may be made against
the Indemnitee, and (B) the sole relief provided is monetary damages that are
paid in full by the Indemnitor; and (z) the Indemnitee will have no liability
with respect to any compromise or settlement of such claims effected without its
consent.
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SECTION 10.6 PROCEDURE FOR INDEMNIFICATION - OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.1 EXPENSES. Except as otherwise expressly provided in this
Agreement, each party to this Agreement shall bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the transactions contemplated hereby, including all fees and
expenses of its representatives.
SECTION 11.2 NOTICES. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by facsimile with confirmation of transmission by the
transmitting equipment, (c) received by the addressee, if sent by certified
mail, return receipt requested, (d) sent by email; or (e) received by the
addressee, if sent by a nationally recognized overnight delivery service, in
each case to the appropriate addresses or facsimile numbers set forth below (or
to such other addresses or facsimile numbers as a party may designate by notice
to the other parties):
Buyer: GlobalOptions Group, Inc.
00 Xxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxx
Fax: 000-000-0000
Email: xxxxxxxx@xxxxxxxxxxxxx.xxx
with a copy to: Xxxxxx X. Xxxxxxx, Esq.
0000 00xx Xxxxxx, X.X., Xxxxxx Xxxxx
Xxxxxxxxxx, X.X. 00000
Fax: 000-000-0000
Email: xxxxxxxx@xxxxxx.xxx
Seller Facticon, Inc.
with a copy to: Xxxxx X. Xxxxx, Esq.
000 Xxxx Xxxxxxxxx Xxxx
Xxxxx, XX 00000
Fax: 000-000-0000
Email: xxxxxxx@xxxxxxxxxxxx.xxx
SECTION 11.3 JURISDICTION. The parties agree that the state and federal
courts located in New York City, New York, will be the sole venue and will have
sole jurisdiction for the resolution of all disputes arising hereunder. Process
in any action or proceeding referred to in the preceding sentence may be served
on any party anywhere in the world.
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SECTION 11.4 WAIVER. No failure to exercise, and no delay in exercising,
on the part of either party, any right hereunder will operate as a waiver
thereof, nor will any single or partial exercise of any right hereunder preclude
further exercise of any other right hereunder.
SECTION 11.5 ENTIRE AGREEMENT AND MODIFICATION. This Agreement, together
between Seller and Buyer and the Schedules, Exhibits, and other documents
delivered pursuant to this Agreement, constitutes a complete and exclusive
statement of the terms of the agreement between the parties with respect to its
subject matter and supersedes all prior agreements, whether written or oral,
between the parties with respect to its subject matter. This Agreement may not
be amended except by a written agreement signed on behalf of each of the parties
hereto. Provided, however, the Buyer shall have a right to waive any conditions
contained in Article 6 to accomplish the Closing without the consent of the
Seller, and Seller shall have a right to waive any conditions contained in
Article 7 to accomplish the Closing without consent of the Buyer.
SECTION 11.6 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. No party
may assign any of its rights or delegate any of its obligations under this
Agreement without the prior written consent of the other parties, except that
Buyer may assign any of its rights and delegate any of its obligations under
this Agreement (i) to any affiliate of Buyer, and (ii) in connection with the
sale of all or substantially all of the assets of Buyer, provided that no such
assignment or delegation will relieve Buyer from any of its obligations
hereunder. Subject to the preceding sentence, this Agreement will apply to, be
binding in all respects upon, and inure to the benefit of the successors and
permitted assigns of the parties. Nothing in this Agreement will be construed to
give any person other than the parties to this Agreement any legal or equitable
right under or with respect to this Agreement or any provision of this
Agreement, except such rights as shall inure to a successor or permitted
assignee pursuant to this SECTION 11.6.
SECTION 11.7 SEVERABILITY. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. The parties
agree that if any provision contained herein is, to any extent, held invalid or
unenforceable in any respect under the laws governing this Agreement, they shall
take any actions necessary to render the remaining provisions of this Agreement
valid and enforceable to the fullest extent permitted by law and, to the extent
necessary, shall amend or otherwise modify this Agreement to replace any
provision contained herein that is held invalid or unenforceable with a valid
and enforceable provision giving effect to the intent of the parties.
SECTION 11.8 SECTION HEADINGS, CONSTRUCTION. The headings of Articles and
Sections in this Agreement are provided for convenience only and will not affect
its construction or interpretation. All Exhibits and Schedules to this Agreement
are incorporated into and constitute an integral part of this Agreement as if
fully set forth herein. All words used in this Agreement will be construed to be
of such gender or number as the context requires. The language used in the
Agreement shall be construed, in all cases, according to its fair meaning, and
not for or against any party hereto. The parties acknowledge that each party has
reviewed this Agreement and that rules of construction to the effect that any
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ambiguities are to be resolved against the drafting party will not be available
in the interpretation of this Agreement.
SECTION 11.9 GOVERNING LAW. This Agreement will be governed by and
construed under the laws of the State of New York without regard to conflicts of
laws principles that would require the application of any other law.
SECTION 11.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
SECTION 11.11 FURTHER ASSURANCES. The parties shall cooperate reasonably
with each other and with their respective representatives in connection with any
steps required to be taken as part of their respective obligations under this
Agreement, and the parties agree (a) to furnish upon request to each other such
further information, (b) to execute and deliver to each other such other
documents, and (c) to do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the transactions contemplated hereby.
SECTION 11.12 LEGAL FEES. In the event that legal proceedings are
commenced by Buyer against Seller, or by Seller against Buyer, in connection
with this Agreement or the transactions contemplated hereby, the party or
parties that do not prevail in such proceedings shall pay the reasonable
attorneys' fees and expenses incurred by the prevailing party in such
proceedings in the event of a ruling by a court of competent jurisdiction in
favor of the prevailing party.
REMAINING PAGE BLANK
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ASSET PURCHASE AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have executed this Asset Purchase
Agreement as of the date first written above.
BUYER:
GLOBALOPTIONS GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx, Ph.D.
-----------------------------------
Its: Chairman and Chief Executive Officer
------------------------------------
SELLER:
FACTICON, INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------------
Its: President
------------------------------------
ASSET PURCHASE AGREEMENT
SIGNATURE PAGE
