ASSET PURCHASE AGREEMENT by and among GLOBALOPTIONS GROUP, INC. And OMEGA INSURANCE SERVICES, INC. d/b/a FIRST ADVANTAGE INVESTIGATIVE SERVICES, a wholly owned subsidiary of FIRST ADVANTAGE CORPORATION As of April 21, 2008
Exhibit 10.1
by
and among
And
OMEGA
INSURANCE SERVICES, INC. d/b/a
FIRST
ADVANTAGE INVESTIGATIVE SERVICES, a wholly owned subsidiary of
FIRST
ADVANTAGE CORPORATION
As
of April 21, 2008
THIS
ASSET PURCHASE AGREEMENT (the “Agreement”) is made
as of April 21, 2008, by and among GLOBALOPTIONS GROUP, INC., a Delaware
corporation (“Buyer”), Omega
Insurance Services, Inc., a Florida corporation (“Seller”), and First Advantage
Corporation, a Delaware corporation (“Parent”).
RECITALS
WHEREAS,
The Parent owns one hundred percent of the outstanding stock of the Seller, and
the Parent is desirous of permitting the Seller to sell its Assets (as defined
below) to the Buyer.
WHEREAS,
the Seller owns and operates a business under the name of First Advantage
Investigative Services, and the Parent and Seller desire to sell the Seller’s
Assets to the Buyer on the terms and subject to the conditions set forth in this
Agreement.
WHEREAS,
Seller desires to sell, and Buyer desires to purchase, the Assets of the Seller
for the consideration and on the terms and subject to the conditions set forth
in this Agreement.
WHEREAS,
Parent and Buyer desire to enter into a business alliance agreement wherein
Parent will utilize the services of the Buyer in the future.
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
reasonably acceptable to Buyer (a “Permitted
Encumbrance”), all of Seller’s right, title and interest in
and to the following assets related to the business of investigation and
surveillance business (the “Business”),
(collectively, the “Purchased Assets”)
(but excluding the Excluded Assets):
(a) all
personal property and other tangible assets (other than inventory) of every kind
owned or leased by the Seller’s (the “Tangible Personal
Property”) as identified in Schedule 2.7(a);
2
(b) 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”),
that are listed on Schedule
2.14 and
which are assignable (the “Assumed Contracts”);
(c) all
Governmental Authorizations (as defined in Section 2.11(b)) and all
pending applications therefore or renewals thereof, in each case to the extent
transferable to Buyer;
(d) all
data and records related to the operations of Seller, and copies of all records
referenced in Section
1.2(e) below;
(e) all
of the intangible rights and property of Seller, including the Intellectual
Property Assets (as defined in Section 2.15) and the
Proprietary Assets (as defined in Section 2.15), going concern
value, goodwill, domain names, and any previous name or names utilized by the
Seller, including Omega Investigative Services but not Seller’s d/b/a name
(First Advantage Investigative Services);
(f) intentionally
deleted;
(g) all
claims of the Seller against third parties relating to the Assets;
(h) all
rights of the Seller relating to deposits (excluding prepaid expenses) claims
for refunds and rights to offset in respect thereof which are not excluded under
Section
1.2(f);
(i) all
accounts receivables, work-in-progress and employee advances; and
(j) intentionally
deleted.
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, Division seal, charter, documents, qualifications to
conduct business, company arrangements with registered agents, taxpayer and
other identification numbers and other documents related to the organization,
maintenance and existence of the Seller as a corporation ;
(b) all
cash and cash equivalents;
3
(c) records
that Seller is required by law to retain in its possession;
(d) all
claims for refund of taxes and other governmental charges of whatever
nature;
(e) all
rights in connection with and assets of any Employee Benefit Plans (as defined
in Section 2.10 below);
(f) all
rights of Seller in connection with the transactions contemplated
hereby;
(g) all
pre-paid expenses, furniture, vehicles, leased office equipment, leased computer
hardware and computer software referred to as Riskminder™; and property
leases;
(h) all
insurance policies of Seller (including proceeds thereof);
(i) All
of Seller’s rights in any tradenames including “First Advantage”, and “First
Advantage Investigative Services”.
(j) all
causes of actions, claims, rights of recovery and set-off of the Seller not
related to the Purchased Assets or Business;
(k) all
contracts which are not assumed (the “Excluded
Contracts”)
and
(l) the
other assets expressly designated in Schedule 2.7(a), including all
private investigator licenses.
Section 1.3
Purchase
Price. Subject to
adjustment, the consideration for the Assets (the “Purchase Price”) will
be Two Million Dollars ($2,000,000), plus an Earnout (defined below), and the
assumption of the Assumed Liabilities as set forth in Section 1.4.
At the
Closing or other date specified below, the Purchase Price shall be delivered by
Buyer to Seller, as follows: (A) at Closing, the payment of Two
Million Dollars ($2,000,000) (the “Cash Closing
Payment”) by wire transfer of immediately available funds to an account
specified by Seller and (B) the Earnout payment conditioned upon the revenues of
the Seller “Buyer Business” for the twelve months following the Closing Date
(the “Earnout”), as
follows:
(i) The
Earnout shall be payable ninety (90) days from the first anniversary of the
Closing Date provided the revenues of the Buyer Business exceeds, during the
one-year period following the Closing Date (the “Earnout Period”), the
following: (x) Ten Million Five Hundred Thousand Dollars
($10,500,000), the Earnout payment shall be paid in the
amount of Two Hundred Fifty Thousand Dollars ($250,000); (y) Twelve Million Five
Hundred Thousand Dollars ($12,500,000), the Earnout payment
shall be paid in the amount of One Million Dollars
($1,000,000); or (x) Fourteen Million Five Hundred Thousand Dollars
($14,500,000), the Earnout payment shall then be paid in the amount of Two
Million Dollars ($2,000,000); and
4
(ii) In
the event the Buyer Business revenue in the Earnout Period is less than
$10,500,000, the Earnout Payment shall be zero.
For the
purposes hereof, “Buyer Business” means
the Business and the Purchased Assets of Seller acquired by Buyer pursuant
hereto and all revenues generated from said Assets including the current active
client list (those clients generating income in the last twelve months) as shown
on Schedule 1.3 prior to
the Closing date and any revenue generated for the Buyer Business by the
Alliance Agreement (as set forth in Section 4.1), below for the
twelve month period subsequent to the Closing Date. Buyer and Seller agree that
during the Earnout Period, the Business operations will not be sold, transferred
or otherwise disposed of without (i) consulting with Seller prior to agreeing to
such sale or transfer, provided however, the Seller acknowledge that the Buyer
Business shall be moved from its present location to the Buyer’s Orlando
facility; (ii) paying any Earnout amount that is then due Seller and (iii)
negotiating in good faith with Seller to determine any Earnout amount that may
come due at the end of the Earnout Period.
For the
purposes hereof, “Revenue” means Revenue for the Earnout
Period and shall refer to total gross sales made by the Business containing all or
substantially all of the Purchases Assets, as if it were a separate business
unit, even if the Buyer elects to merge or consolidate such
unit with its other operations (hereafter such business operations shall
be referred to as the "Business
Operations"). Revenue shall be determined in accordance with
U.S. generally accepted accounting principles, consistently applied throughout
the periods involved (“GAAP”). The parties
acknowledge and agree that any Earnout payments shall be deemed to be part of
the Purchase Price.
If a
dispute arises regarding the Earnout amount for any period, the parties agree to
use reasonable efforts to attempt to reach a mutually acceptable resolution of
the dispute within thirty (30) days of Seller’s written notice to the Buyer of
such dispute. Thereafter, if Seller desires with respect to the
Earnout amount for any period, within ninety (90) days of notice from Buyer of
such Earnout amount, Seller may commence an audit of Buyers Business (an “Earnout
Audit”). Such Earnout Audit will be conducted by a nationally
recognized accounting firm selected by Seller that is reasonably satisfactory to
Buyer (the “Earnout
Auditor”), which Earnout Auditor may consider any relevant materials and
information during its audit. Buyer shall cooperate with the Earnout
Auditor in its performance of the Earnout Audit. Seller will bear the
costs and expenses of the Earnout Auditor if and to the extent the Earnout
Auditor determines that Buyer either correctly calculated the Earnout amount or
Buyer calculated the Earnout amount to within seven and one half percent (7.5%)
of the correct amount for the relevant year of the Earnout
Period. However, Buyer will pay the Earnout Auditor (or reimburse
Seller), in addition to any shortfall due from its miscalculation of the Earnout
amount, for any and all costs and expenses of the Earnout Auditor, if the
Earnout Auditor determines that the correct Earnout amount exceeded Buyer’s
determination of the Earnout amount for any period by more than seven and one
half percent (7.5%). The Earnout Auditor’s determination with respect
to amounts of Earnout payable will be final and binding on the parties in all
respects.
5
Section
1.4 Assumed Liabilities;
Excluded Liabilities.
(a) At
the Closing, Buyer shall assume and be obligated to discharge only the following
enumerated liabilities and obligations of Seller (the “Assumed
Liabilities”):
(i) any
trade account payable or accrued expenses in connection with any contract or
agreement that is a Purchased Asset or other certain trade payables that are
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 or accrued expenses are described and aged in Schedule 1.4(a)(i);
and
(ii) any
liability and obligations arising after the Closing under any Assumed Contract
included in the Assets (other than any liability arising out of or relating to a
breach which occurred prior to the Closing);
(iii) all
accounts payable incurred after the Closing; and
(iv) all
other liabilities and obligations directly related to the Purchased Assets
reflected on the Seller’s balance sheet, including all non-current liabilities,
and all other liabilities incurred in the Business since the date of the balance
sheet in the ordinary course of business that are listed on Schedule
1.4(iv);
(iv) all
obligations related to the ownership or operation of the Purchased Assets on and
after the Closing; and
(v) all
obligations related to accrued PTO (defined below) for Employees offered
employment by Buyer.
(b) At
Closing, Buyer shall not assume the following enumerated liabilities and
obligations of Seller (the “Retained
Liabilities”):
(i) all
liabilities and obligations of Seller under this Agreement;
(ii) all
liabilities and obligations of Seller for expenses and fees incident to or
arising out of the preparation of this Agreement;
(iii) all
liabilities and obligations related to the Excluded Assets;
(iv) all
liabilities and obligations of the Seller under any Assumed Contract arising out
of services of Seller but only to the extent performed prior to the
Closing;
(v) all
liabilities and obligations under the Excluded Contracts;
(vi) all
liabilities and obligations for taxes related to the operation of the Business
prior to the Closing;
(vii) all
liabilities relating to any Seller employees that accrued or should have been
accrued prior to the Closing Date, including but not limited too: commissions,
bonuses, 401K payments or matching payments, salaries, education payments, and
reimbursement of business expenses, but excluding accrued Paid Time Off (“PTO”) for those
employees hired by the Buyer; and
6
(viii) any
and all liabilities relating to the threatened employee litigation
in California relating to retaliatory discharge as listed
on Schedule 2.12.
Section 1.5
Allocation. The
Purchase Price will be allocated, based upon current accounting rules, 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 May 11, 2008, (the “Closing Date”). The
effective date of the agreement shall be 12:01 am, April 21, 2008. 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. At the Closing, Seller shall transfer any all
collections of cash from the Closing Date to the Buyer.
Section
1.7 Closing
Obligations.
(a) At
the Closing, Seller shall deliver to Buyer:
(i) a
▇▇▇▇ of sale for all of the Assets in the form attached hereto as Exhibit 1.7(a)(i) (the “▇▇▇▇ 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) with
respect to the real property, located at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, leased by Parent the permission to use the current
space, consistent with current use, on the third floor in the approximate square
footage of 7,802 for up to four months at no cost to the Buyer ; provided,
however, the Buyer will make every reasonable effort to vacate the assigned
lease within three months and such space may be reduced at Seller’s reasonable
discretion based on a reduction of Employees following the Closing;
(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) a
certificate of the Secretary of Seller certifying, as complete and accurate as
of the Closing, certifying and attaching all requisite resolutions or actions of
Seller’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 Seller executing this Agreement
;
7
(vii) intentionally
deleted;
(viii) certificates
as to the good standing of Seller name, executed by the appropriate officials of
the jurisdiction of Seller’s incorporation and each jurisdiction in which
Seller’s Division is licensed or qualified to do business as a foreign entity as
specified in Schedule
2.1
(ix) 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;
(x) such
cash collections received after the effective date, April 21,
2008;
(xi) intentionally
deleted.
(xii) executed
Employment Agreements in a form as set forth in Exhibit
1.7(a)(xii);
and
(xiii) a
Perpetual License Agreement for the use of the Riskminder software in the form
of Exhibit
.
1.7(a)(xiii).
(b) At
the Closing, Buyer shall deliver to Seller:
(iii) The
Cash Closing Payment in accordance with Section 1.3 of this
Agreement, by wire transfer to accounts specified in writing by Seller (which
wire transfer instructions must be delivered by Seller to Buyer at least one (1)
Business Day prior to Closing);
(ii) the
Assignment and Assumption Agreement, executed by Buyer;
(iii) 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;
8
(iv) intentionally
deleted;
(v) a
consent of approval by the Buyer’ Board of Directors for the Buyer to enter into
this Agreement; and
(vi) executed
Employment Agreements in the form of Exhibit
1.7(a)(xii).
(vii) executed
Perpetual License Agreement for the use of the Riskminder software in the form
of Exhibit
.
1.7(a)(xiii).
Section 1.8
Consents. Buyer may
waive the requirement that Seller obtain consents to assignment with respect to
any and all of the Seller’s 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). Seller and Buyer
agree to use commercially reasonable efforts prior to the Closing to obtain any
consents to assignment of the Seller or applicable Seller Contracts that Buyer
deems to be necessary or desirable. 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
and Parent jointly and severally represent and warrant to Buyer as to Sections 2.1, 2.2, 2.4, 2.12,
2.17, 2.19, and
2.22. Seller represents
and warrants to all other provisions 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 Florida with full corporate power and authority to
conduct its business and the Seller’s business as it is now being conducted, to
own or use its properties and assets, and to perform all its obligations under
its contracts. The Seller is duly qualified to do business as a
foreign business and is in good standing under the laws of each state or other
jurisdiction set forth in Schedule 2.1.
9
(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) The
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. Subject to confirmation
(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.
(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, and such assignment
shall be, if necessary, using commercial reasonable time subsequent to the
Closing).
Section
2.3 Intentionally
deleted.
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, 2005, December 31,
2006 and December 31, 2007, unaudited balance sheet as of March 31, 2008, and unaudited
profit and loss statement for the 3 months ended March 31, 2008 (the “Financial
Statements”). The Financial Statements fairly present the
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, 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 or Parent
will cooperate with the Buyer in the event the Buyer requires
any documents to support the financial information contained in the Financial
Statements.
10
Section 2.5
Sufficiency of
Assets. To
the knowledge of Seller,
the Assets (a) constitute all of the assets, tangible and intangible,
necessary to conduct the Division’s business in the manner presently operated by
Seller, and (b)
constitute all of the operating assets of the Division.
Section
2.6 Intentionally
deleted.
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 free and clear of any Encumbrances other than Permitted
Encumbrances.
(b) Schedule 2.7(b) sets forth all
items of Tangible Personal Property. 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.
Section
2.8 Intentionally
deleted.
Section 2.9
Employees. Schedule 2.9 sets forth a
complete and accurate list, giving name, job title, current compensation paid or
payable, and PTO 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, except as shown on Schedule 2.12, to the
knowledge of Seller, 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. 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 the Seller,
or (ii) engage in any conduct, activity, or practice relating to Seller. Buyer
shall provide employment to all Employees that are listed on Schedule 2.9 and are actively
employed by Seller or one of its affiliates in the Business on the Closing Date,
provided however, Buyer shall have an opportunity to review and approve each and
every employee included on Schedule
2.9. All full time Employees will be eligible to apply
for enrollment in the health insurance and benefit plans of Buyer and other
benefits plans available to Buyer employees in similar positions in accordance
with the terms of the then-existing benefit plan documents and shall be subject
to Buyer’s employees handbook and its personnel and company policies and
procedures as they are in effect from time to time. All Employees who
are employed by Buyer shall be given credit for the service they have with the
Seller in assessing entitlement to benefits and PTO but only up to
11
the
maximum number of years permitted under policies then in effect for
Buyer. Buyer agrees to waive, any limitation regarding pre-existing
conditions under any existing plan that exclusively provides for medical
benefits maintained by Buyer and/or any of its affiliates for the benefit of
Employees currently covered or eligible to be covered under existing health
benefit plans or in which employees of Buyer
participate. Buyer agrees that in the event it
terminates the employment of the following four (4) employees prior to its entry
into any employment agreements with such employees, it will pay the employees
the severance amounts as listed below:
|
1.
▇▇▇▇▇ ▇▇▇▇▇
|
21.00
wks
|
$48,461.79
|
|
2.
▇▇▇▇ ▇▇▇▇▇▇
|
18.00
wks
|
$36,984.21
|
|
3.
▇▇▇▇▇ ▇▇▇▇▇▇▇
|
2.00
wks
|
$2,500.00
|
|
4.
▇▇▇▇▇▇ ▇▇▇▇▇
|
4.00
wks
|
$4,615.38
|
Section 2.10
Employee
Benefits.
Schedule 2.10 sets forth
all plans, programs, or arrangements that Seller has with respect to the
Employees and 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”). Except as set forth in such Schedule 2.10, or to the
extent that any breach of the representations set forth in the previous sentence
would not have a material adverse effect on the Business, taken as a whole,
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. Seller acknowledges that Buyer does not assume or shall be liable
to any Employee of the Seller for any Employee Benefit Plans that accrued prior
to the Closing Date.
Section
2.11 Compliance With Legal Requirements,
Governmental Authorizations.
(a) Except
as set forth in Schedule
2.11(a), Seller with is, and at all times since September 30, 2003, 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. Except as set forth on Schedule 2.11(b), Seller has
not received, at any time since September 30, 2003, 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 Assets. To the knowledge of Seller, the Governmental
Authorizations listed in Schedule 2.11(b) collectively
constitute all of the approvals, licenses and permits necessary to permit
Seller’s Division 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.
12
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 Intentionally
deleted.
Section 2.14
Contracts; No
Defaults. Schedule 2.14 contains
an accurate and complete list of each Seller’s Contract. Seller has
made available to Buyer accurate and complete copies of each written material
Seller’s Contract, and has provided Buyer with a true and accurate written
description of each oral Seller’s Contract. To the best of Seller’s
knowledge: (i) each Seller’s Contract is valid and binding and in
full force and effect, (ii) Seller and each other person that has or had any
obligation or liability under any Seller’s Contract is in compliance
with all material terms and requirements of each Seller’s Contract,
and (iii) 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’s 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 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 .
Section 2.16
Relationships
with Related Persons. Schedule
2.16 attached hereto
identifies all contracts, commitments and agreements in effect as of the date
hereof by and between the Business on the one hand and the Seller on the
other hand.
Section 2.17
No
Undisclosed Liabilities. Seller has no material
liabilities or obligations except for liabilities or obligations reflected or
reserved against in the unaudited balance sheet as of March 31, 2008 (the “Balance Sheet”) and
current liabilities incurred in the ordinary course of business of Seller since
March 31, 2008.
13
Section
2.18 Intentionally deleted.
Section 2.19
Brokers or
Finders. Neither Seller, Parent nor any of its officers,
directors, employees or agents has 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.
Section 2.20
Accounts
Receivable. The
Seller has not received any notice of any contest, claim, defense, or right of
setoff with respect to any Account Receivable of the Business which has arisen
after the Closing. 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 Intentionally
deleted.
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 Intentionally
deleted.
Section 2.24
Deposits. Schedule 2.24 sets forth a
complete and accurate list of all deposits from customers for services to be
performed pursuant to the Seller’s Contracts after the Closing Date,
which have been received by Seller as of the date hereof.
Section
2.25 Intentionally
deleted.
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, to own or use its properties and assets,
and to perform all its obligations under its contracts.
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.
14
(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
..
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.
Section
3.5
Brokers
or Finders. Buyer will be responsible
for any brokers it has utilized for this transaction, including but not limited
to valid claims for payment from such brokers.
Section
3.6 Legal Proceedings,
Orders.
(a) Except
as set forth in Schedule
3.6(a), there are no actions or proceedings pending by or against Buyer
or that otherwise relate to or may materially adversely affect the business of,
or any of the assets owned or used by, Buyer. To the knowledge of
Buyer, 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 outstanding against Buyer or that otherwise relate to or may
affect the business of, or any of the assets owned or used by,
Buyer.
Section 3.7
Filings. Buyer has filed true and
complete copies of all reports, registration statements, proxy statements and
other definitive filings with the Securities and Exchange Commission since
January 1, 2004 (such reports, registration statements, proxy statements and
other definitive filings, as amended, are sometimes collectively
referred to as the "SEC Filings"). The
SEC Filings comply in all material respects with the Securities Act of 1933, as
amended and the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and
did not as of the dates thereof contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
contained therein not misleading.
15
ARTICLE
IV.
COVENANTS
POST CLOSING
Section 4.1 Execution of
Business Alliance Agreement. Within ninety (90) days of the
Closing, the parties agree to negotiate and enter into a business alliance
agreement on terms and conditions mutually agreed to by both Parent and
Buyer.
Section 4.2
No
Negotiation. Until such time as this Agreement is terminated
pursuant to Section
9.1, Parent or 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, the merger or consolidation
of Seller, or the sale of the Seller’s 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 4.3
Commercially
Reasonable Efforts. Seller shall use its commercially
reasonable effort to cause the conditions in Article VI and Article VII to be
satisfied.
Section 4.4
Payment of
Liabilities. Seller shall pay or otherwise satisfy in the
Ordinary Course of Business all of its Seller’s 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 4.5
Use
of Name. Buyer shall be permitted to use the fictitious
name First Advantage Investigative Services for a period of three months or
less; however, Buyer in using such fictitious name must indicate that it is no
longer affiliated with Parent and that the Business has been acquired by
Buyer Within three months or less, Buyer shall discontinue the
use of the First Advantage Investigative Services and all logos, names,
trademarks, service marks, trade names or any derivatives thereof, and remove
them from all signs, packaging stock, letterhead, labels, websites, and other
materials used or produced by the Buyer.
Section
4.6
Transition
Services.
During the Transition Period following the Closing Date (which for
avoidance of doubt shall be for up to and including the period of time Buyer
utilizes the facility of the Seller or such shorter period as elected
by the Buyer by giving five business days’ prior written notice to the Seller),
the Seller shall, and shall cause its affiliates to, provide the Buyer services
listed on Schedule
4.6 hereto (“Transition Services”)
at the rates set forth on Schedule 4.6. In connection therewith, the
Seller shall deliver to the Buyer, within ten (10) business days of the last day
of each month during such period, an invoice containing a description of the
Transitions Services provided by the Seller and its affiliates during such
period. Such invoice shall be due and payable immediately upon
receipt, and payment shall be made no later thirty (30) days after receipt of
such invoice. The parties shall use their commercially reasonable best efforts
to cause the transition of the Business to the Buyer to be completed as
expeditiously as possible, and in any event by the end of the Transition
Period. In order to facilitate an orderly early transition, the Buyer
shall have the right to terminate the provision of any or all transition
services prior to the end of the Transition Period upon five (5) days’ prior
written notice to Seller.
16
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 set forth in
Section 2.2(c).
Section 5.2
Commercially
Reasonable Efforts. Buyer shall use its commercially
reasonable efforts to cause the conditions in Article VI and Article VII to be
satisfied.
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
as if made on the Closing, except for any changes consented to in writing by
Buyer.
Section 6.2
Seller’s
Performance. All of the material 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, unless waived by Buyer.
Section 6.3
Consents. Each of the
consents identified in Schedule
3.3 (the “Material Consents”)
must have been obtained and must be in full force and effect.
Section
6.4 Board of
Director’s Consent. Buyer’s Board of Directors must have consented and
approved the anticipated transaction contemplated under this
Agreement.
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:
17
(a) releases
of all Encumbrances on the Assets, other than Permitted
Encumbrances;
(b) certificates
dated as of a recent date prior to the Closing as to the good standing of
Seller, from the appropriate officials of the states for each jurisdiction in
which Seller’s Division is licensed or qualified to do business as a foreign
corporation as specified in Schedule 2.l; and
(c) 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
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.
Section 7.2
Buyer’s
Performance. All of the material 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 and from
the Buyer’s Board of Directors.
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:
(a) intentionally
deleted;
(b) such
documents as Seller may reasonably request for the purpose of evidencing the
satisfaction of any condition referred to in this Article VII.
18
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
upon the Closing Date, Seller shall release such available employees (“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. Buyer shall offer employment to some of the Available
Employees following the Closing Date at the same approximate base salary and
incentive bonus arrangements, and comparable group health insurance and other
benefits, as each such Available Employee has with Seller.
(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 or an employment agreement; 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 employment agreement to the contrary
made by Buyer).
(c) Seller
will be responsible for the payment of all wages and commissions due to its
Employees with respect to their services as employees of Seller through the
close of business on the Closing Date including but not limited to: (i) 401K
payments; (ii) commissions and bonuses; and (iii) any other payments due
employees prior to and up to the day of the Closing Date. Buyer shall be
responsible for all accrued PTO for those Employees hired by the Buyer; however,
prior to Closing, Seller shall pay the Employee his or her accrued PTO and upon
Closing, Buyer shall reimburse Seller for all PTO paid to those Employees hired
by the Buyer, less $62,299.00.
Section 8.2
Payment of Taxes
Resulting From Sale of Assets by Seller. Seller and Parent shall
pay in a timely manner all taxes imposed on it resulting from or payable in
connection with the sale of the Assets pursuant to this Agreement. Seller or
Parent shall pay in a timely manner all sales and income taxes imposed on it
resulting from or payable in connection with the sale of Assets pursuant to this
Agreement.
Section
8.3 Intentionally
deleted.
19
Section
8.4 Covenant Not to
Compete.
(a) In
consideration of the Purchase Price to be received under this Agreement, Seller
and Parent agree that, for a period of two (2) years after the Closing Date,
they shall not directly or indirectly, do any of the following:
(iv) 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 Seller’s Business on the Closing Date, anywhere
within the continental United States that the Seller’s Business is doing
business on the Closing Date; provided, however, notwithstanding the above
provision, Seller may sell the Private Investigative/Detective Licenses which
Seller currently holds as shown on Schedule 2.1 or use the
Licenses in Parent’s other lines of business without violating this
provision;
(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 Seller’s Business 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
and Parent acknowledge 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 or Parent. 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 and
Parent shall 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
Section
8.6 Intentionally
deleted.
Section
8.7 Termination of
Seller Obligations Pursuant to 8.4 and 8.5 for Non-Payment. In
the event Buyer defaults in the payment of any amounts due by reason of Earnout
or reimbursement of PTO and fails to cure said default within any applicable
cure period, or thirty (30) days with respect to the reimbursement of
PTO, Seller obligations pursuant to Section 8.4 and 8.5 above shall
terminate immediately
20
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 cured after five (5)
days notice or 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 or 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 and Buyer has not waived such
condition on or before such date).
(c) by
Seller, if any condition in Article VII has not been satisfied as of the date
specified for Closing or 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 May 11, 2008 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 its sole right
under this Agreement or otherwise, other than the parties’ obligations under
Article X. If the Agreement is terminated pursuant to Section 9.1, subject to
Article X, all obligations of the parties under this Agreement will
terminate.
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. 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 or Parent based
upon a breach of any of the representations and warranties of the Seller or
Parent contained in this Agreement or breach of any of Seller’s or Parent’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 or Parent’s
representations and warranties and any such covenants and agreements of which
Buyer has awareness at the Closing.
21
Section 10.2
Indemnification
and Reimbursement By Seller or Parent. Seller or Parent 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”) but
excluding any punitive, special or consequential or indirect damages, arising,
directly or indirectly, from or in connection with:
(a) any
breach of any representation or warranty made by Seller or Parent in this
Agreement, or the certificates delivered pursuant to Section 1.7;
(b) any
breach of any covenant or obligation of Seller or Parent in this Agreement;
and
(c) any
Retained Liabilities.
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, but excluding any punitive, special or consequential or indirect
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,
including without limitation reimbursement of PTO; and
(c) the
Assumed Liabilities.
Section
10.4 Time and Amount
Limitations.
(a) Seller
or Parent 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 or Parent 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 taxes 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 or
Parent.
22
(c) Seller
or Parent shall have no liability under this Agreement with respect to claims
under Section 10.2 until the total amount of Damages with respect to such
matters exceeds $25,000, and then only for the amount by which such Damages in
the aggregate exceeds $25,000. The maximum liability for any party under this
Agreement shall not exceed 40% of the Purchase Price except for claims made with
respect to tax, fraud, or any employee issue as disclosed on Schedule 2.12 for
which there shall be no limitation of liability.
(d) The
Parties acknowledge and agree that, from and after the Closing, their sole and
exclusive remedy with respect to any and all monetary claims relating to the
subject matter of this Agreement shall be pursuant to Sections 10.2 and
10.3.
Section 10.5
Procedure for
Indemnification - Third Party Claims. If, after the Closing
Date, either a Buyer Indemnified Person or Seller Indemnified Person (includes
Parent), 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.
23
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:
|
▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇
▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
|
|
with
a copy to:
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇.▇. ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
|
|
|
Seller
or Parent:
|
First
Advantage Corporation
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(▇▇▇)
▇▇▇-▇▇▇▇
Email:
▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇.▇▇▇
|
Section 11.3
Jurisdiction. The
parties agree that the state and federal courts located in Tampa, Florida, 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.
24
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, Parent 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 (except for
the nondisclosure agreement previously signed by the parties), 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, either party shall have a right
to waive any conditions contained in Article VI to accomplish the Closing
without the consent of the other party.
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
ambiguities are to be resolved against the drafting party will not be available
in the interpretation of this Agreement.
25
Section 11.9
Governing Law.
This Agreement will be governed by and construed under the laws of the
State of Florida 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 and/or Parent, 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.
26
IN
WITNESS WHEREOF, the parties have executed this Asset Purchase Agreement as of
the date first written above.
|
BUYER:
|
||
|
By:
|
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | |
|
Name:
|
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | |
|
Its:
|
Chairman and CEO | |
|
SELLER:
|
||
|
OMEGA
INSURANCE SERVICES, INC.
|
||
|
By:
|
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ | |
|
Name:
|
▇▇▇▇▇▇ ▇▇▇▇▇▇ | |
|
Its:
|
President | |
|
PARENT
|
||
|
FIRST
ADVANTAGE CORPORATION
|
||
|
By:
|
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ | |
|
Name:
|
▇▇▇▇▇ ▇▇▇▇▇▇ | |
|
Its:
|
Vice-President and General Counsel | |
Signature
Page
-27-