Document:

ex10-2.htm

Exhibit 10.2

 

ISS ACQUISITION CORPORATION

 

AND

 

INTEGRATED SOFTWARE SOLUTIONS, INC.

 

ASSET PURCHASE AGREEMENT

 

 

THIS ASSET PURCHASE AGREEMENT (“Agreement”) is made this November 1, 2010, between ISS Acquisition Corporation, a New Jersey corporation (“Buyer”) and Integrated Software Solutions, Inc., a New Jersey corporation (sometimes “ISS” and sometimes “Seller”).

 

RECITALS

 

WHERAS, Seller desires to sell to Buyer and Buyer desires to purchase from Seller, the assets, properties and rights of ISS designated herein (the “Conveyance”), subject to certain liabilities incident thereto, which Buyer is willing to assume, and Seller is willing to assign to Buyer, all on the terms and conditions set forth in this Agreement; and

WHERAS, The Parties desire to memorialize their agreement in this writing, NOW, THEREFORE, 

 

WITNESSETH

 

FOR AND IN CONSIDERATION of the above recitals, the terms, the covenants, mutual representations, warranties, and conditions hereinafter contained and other good and valuable consideration, the parties agree as follows:

 

1. CONVEYANCE.

1.1.      Purchase and Sale of Assets of ISS. Buyer hereby purchases from Seller, and Seller hereby sells, transfers, conveys and delivers to Buyer, subject only to the “Assumed Liabilities” (as defined hereinafter), all of the “Assets” for the Purchase Price.

1.2.      Purchase Price for Assets. The purchase price of the Assets is Eight Hundred Fifty Thousand Dollars ($850,000), payable as follows:

1.2.1. Cash. The sum of Seven Hundred Thousand Dollars ($700,000) cash which cash shall be paid to Seller at Closing.

1.2.2. Cash in Escrow. Pursuant to the terms of an Escrow Agreement, the sum of One Hundred Fifty Thousand Dollars ($150,000) (the “Escrow Funds”) shall be delivered to an Escrow Agent and the agreement under which the Escrow Funds are held shall be the “Escrow Agreement” (Exhibit D).

1.3.      Assumption of Liabilities. Buyer assumes the Assumed Liabilities as defined in below, Assumed Liabilities shall include those obligations which arise after Closing including but not limited to the obligations under immigration visa and visa applications. The Buyer shall not assume or have any responsibility whatsoever with respect to the Excluded Liabilities, all of which will remain the sole responsibility of Sellers.

1.3.1. Application of Escrow Funds. The Escrow Funds shall be held for a period of Ninety (90) days following the Closing, for the payment of the following expenses:

1.3.1.1. amounts due to employees, consultants or vendors for work delivered or performed prior to the Closing;

1.3.1.2. expenses due for office, utilities, communications, taxes, rent of any kind and leases as of the Closing Date (including all amounts due as of the Closing Date for Assumed Liabilities;

1.3.1.3. obligations due and costs discovered relating to immigration not disclosed herein as of the Closing Date;

 

  

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1.3.1.4. taxes for any obligations due to taxing agencies discovered and not disclosed herein as of the Closing Date; and

1.3.1.5. claims, litigation, and other Excluded Liabilities discovered and not disclosed herein as of the Closing Date.

1.3.2. The balance of the Escrow Funds after payment of all amounts required under this Paragraph 3(d) shall be paid by the Escrow Agent to Seller.

1.3.3. Assumption of Employee Obligations. Buyer assumes and undertakes responsibility for all of the Contractual Obligations arising after the Closing dated relative to employees, independent contractors and consultants whose employment or engagement is assigned as part of the Assigned Assets including but not limited to: (i) payroll wages and payroll withholding taxes associated with such employees and/or consultants; (ii) health care (medical and dental) insurance premiums to be paid for the benefit of such employees and/or consultants; (iii) all liability for the attestations made in the Labor Condition Application for each employee and H1-b consultants from the original petitioning employer (with assignment of each employee's or consultant's employment to the Buyer such that the obligations to such employees or consultants shall remain the same but for the identity of the new employer which is now the Buyer; and (iv) the satisfaction of any other obligation under any visa, visa application, obligation to or claimed by any Governmental Entity in connection with immigration status or permission to work in the United States (including but not limited to all pending/approved Labor Certifications and I-140 applications).

1.3.4. Non-Competition Agreement. The signing by specified “Key Employees” Shareholders and Officers of Seller of a Non-Competition Agreement in the form attached hereto as Exhibit E is a condition precedent to the effectiveness of this Agreement regardless of the order in which this Agreement and the Non Competition Agreements are signed.

1.3.5. Sales and Transfer Taxes and Fees. Seller shall pay all applicable sales, transfer, documentary, use, filing and other taxes that may become due and payable as a result of the sale, transfer and delivery of the Assets.

 

2. RIGHTS OF INSPECTION. Prior to Closing, Buyer and Seller shall make reasonable efforts to give the other party, including its representatives and agents, full access to the premises, books and records of each of the entities, and to furnish the other with such financial and operating data and other information including, but not limited to, copies of all legal documents and instruments referred to on any schedule or exhibit hereto, with respect to the business and properties of Buyer or Seller, as the case may be, as the other shall from time to time request; provided, however, if there are any such investigations: (1) they shall be conducted in such manner as not to unreasonably interfere with the operation of the business of the other party and (2) such right of inspection shall not affect in any way whatsoever any of the representations or warranties given by the respective parties hereunder. ISS shall direct its directors, Employee, accountants, attorneys, financial advisors and other agents and representatives to fully cooperate with Buyer and its agents, officers and professional advisors in connection with due diligence investigation of ISS as the primary focus of this paragraph. In the event of termination of this Agreement, Buyer and Seller shall each return to the other all documents, work papers and other materials obtained from the other party in connection with the transactions contemplated hereby, and shall take such other steps necessary to protect the confidentiality of such material.

 

3. CONDITIONS TO OBLIGATION TO CLOSE. The obligations of Buyer to consummate the Conveyance is subject to the following: (i) the Assets shall have been inspected and approved by Buyer; (ii) the representations and warranties set forth in Appendix E (including any change in conditions requiring disclosure) shall be true and correct in all material respects on the Closing Date; and (iii) no other condition or change in conditions exists except as may be waived in writing executed and delivered at or prior to the Closing).

 

4. THE CLOSING.

4.1.Closing Date. The closing of the Conveyance (the “Closing”) shall be effective for all purposes at 8:00 AM on November 1, 2010 (the “Closing Date”) notwithstanding that the provisions of Paragraph 4.2 may take place on a later date.

 

  

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4.2. Deliveries and Proceedings at the Closing. At the Closing, the following shall occur:

4.2.1. Seller shall execute and deliver to Buyer, its Bill Of Sale in the form attached hereto as Exhibit A together with all such other documents and instruments of conveyance as may be reasonably necessary to transfer title including any consents to the use of names, assumed names, trademarks or service marks and, where necessary or appropriate, in recordable form.

4.2.2. The Parties shall execute and exchange an assignment and assumption agreement in a form attached hereto as Exhibit B to evidence the transfer to Buyer of the Assumed Liabilities.

4.2.3. Buyer shall deliver to the Escrow Agent the Escrow Funds to be held in the manner provided. 

4.2.4.Seller, specified shareholders, officers and/or employees of ISS/CS shall execute and deliver to Buyer a Non-Competition Agreement in the form required and agreed-upon.

4.2.5.ISS shall furnish, with the assignments, such passwords, account information, assignment forms, signature cards and similar documents that permit Buyer to acquire exclusive control over those accounts, domain names, bank accounts, email accounts, computer systems and networks and other assets and relationships that utilize any similar control of the Assets to effectuate the assignments of control contemplated herein.

 

5. POST-CLOSING COVENANTS.

5.1. Further Assurances. If, at any time after Closing, any further action is necessary or desirable to carry out the purposes of this Agreement, each of the Parties shall take such further action (including the execution and delivery of such further instruments and documents) as the other Party may reasonably request, with each Party to bear its own costs and expenses under this provision (unless the requesting Party is entitled to indemnification therefore).

5.2. Payment of Excluded Liabilities. To the extent that any of the Excluded Liabilities are not satisfied in full prior to Closing, Seller shall perform, discharge, pay, or otherwise eliminate such liabilities according to the terms of such liabilities, as and when the same becomes due, and evidence of such payment satisfactory in substance and form to Buyer shall be provided to Buyer upon written request.

 

6. NOTICE. Any notice, declaration, demand or communication to be given by any party to this Agreement to any other party shall be in writing and transmitted to the other party by certified U.S. mail, return receipt requested, postage fully prepaid, addressed as follows:

 

	
To Buyer:

	
2850 Golf Road 

Suite 30, 

Rolling Meadows, IL 60008 

	With a Copy to: 	
Steven D Talbot 

2101 NE 129th Street, 

Suite 213 

Vancouver, WA 98686

	 	  	 	 
	
To Seller:

	
666 Plainsboro Road  

Suite 1236 

Plainsboro, NJ 08536 

	With a Copy to:	
Robert W. Rubinstein

Attorney

10 Rutgers Place 

Trenton, NJ 08618

The mailing and registering or certifying of any such notice as herein provided shall be sufficient service thereof. All notices complying with this paragraph shall be deemed effective two (2) business days following the deposit thereof in the U.S. mail, irrespective of the date of actual receipt of such notice by the addressee. Either party may by notice change such address for notice.

 

7.MISCELLANEOUS PROVISIONS.

7.1. Press Releases and Public Announcements. No Party may issue any press release or make any public announcement relating to the subject matter of this Agreement without the prior written approval of the other Parties. The Parties acknowledge that Buyer may, as a result of an intended merger, have reporting obligations under the Securities Exchange Act of 1934 and Seller and Buyer shall use reasonable best efforts to propose and negotiate disclosures acceptable to Buyer which conform, as to content and timing, to all disclosures required under the act. ISS’s consent to such disclosures shall not be unreasonably withheld or delayed.

 

  

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7.2.  Entire Agreement. This Agreement (including the Appendices, Schedules and other documents referred to or incorporated by reference herein or attached hereto) constitutes the entire agreement between the Parties and supersedes any prior understandings, agreements, or representations by or between the Parties, written or oral, to the extent they related in any way to the subject matter hereof. The Appendices and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof.

7.3.  Succession and Assignment, No Third-Party Beneficiaries. This Agreement is binding upon and inures to the benefit of the Parties named herein and their respective successors and permitted assigns. No Party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other Parties. This Agreement shall not confer any rights or remedies upon any Person other than the Parties and their respective successors and permitted assigns. No holder of any claims or rights against ISS shall have the right under this Agreement to any claim against Buyer except as assumed herein.

7.4.  Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which taken together shall constitute one and the same instrument. The exchange of copies of this Agreement and of signature pages by facsimile or electronic transmission shall constitute effective execution and delivery of this Agreement and may be used instead of the original Agreement for all purposes.

7.5.  Amendments and Waivers. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by each of the Parties hereto. No waiver by any Party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

7.6.  Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.

7.7.   Expenses. Each of the Parties shall bear its own costs and expenses, including legal fees and expenses, incurred in connection with this Agreement and the transactions contemplated hereby.

7.8.   Construction. Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. Words in the singular shall be held to include the plural and vice versa, and words of one gender shall be held to include the other genders as the context requires. The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. The terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the Schedules and Appendices hereto) and not to any particular provision of this Agreement. Article, Section, paragraph, Appendices and Schedule references are to the Articles, Sections, paragraphs, Appendices and Schedules to this Agreement unless otherwise specified. The word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless otherwise specified. The word “or” shall not be exclusive, and references to a Person are also references to its permitted successors and assigns. The Parties have participated jointly in the negotiation and drafting of this Agreement and this Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted.

 

8.  RISK OF LOSS. Seller shall retain all risk of condemnation, destruction, loss or damage due to fire or other casualty to the Assets until the Closing.

 

  

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9. ARBITRATION. Any dispute, controversy or claim arising out of or relating to this Agreement (including, without limitation, the breach thereof or the scope and applicability of this arbitration clause) shall, unless otherwise agreed by the parties, be settled by binding arbitration, in accordance

 with the then-current rules of and conducted by the American Arbitration Association. Any arbitration proceeding hereunder shall take place, at the sole discretion of the party initiating such action, in either the New Jersey or Delaware, unless otherwise agreed by the parties in writing. Any award or determination of the arbitration shall be final and binding upon the parties and final judgment upon such award or determination may be entered in any court having jurisdiction thereof. The parties hereby agree that the prevailing party in any arbitration, suit, action or proceeding arising out of or relating to this Agreement shall be entitled to reimbursement of its reasonable attorneys' fees incurred in connection therewith, as well as all other costs and expenses relating thereto, from the non-prevailing party or parties. Notwithstanding the foregoing, the parties retain the right to seek injunctive or other equitable relief in a court of competent jurisdiction to prevent or stop a breach of this Agreement, and nothing in this Section shall preclude a party from seeking provisional remedies in order to protect his or its rights pending arbitration. Process in any action or proceeding referred to in the preceding sentence may be served on either party anywhere in the world. This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule either of the State of Delaware or any other jurisdiction.

 

10. ATTORNEYS’ FEES. If any legal action, arbitration, mediation or other proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default, or misrepresentation in connection with this Agreement, then the successful or substantially prevailing Party or Parties shall be entitled to recover reasonable attorneys’ fees and other costs, including court costs, incurred in that action or proceeding, in addition to any other relief to which the successful or substantially prevailing Party or Parties may be entitled.

 

11. CERTAIN DEFINITIONS. As used in this Agreement, capitalized terms not otherwise defined in this Agreement shall have the respective meanings ascribed to them in Appendix A to this Agreement.

 

12. REPRESENTATIONS AND WARRANTIES. As used in this Agreement, the Parties shall have made the representations and warranties as of the date of this Agreement and which representations and warranties shall remain true, correct and complete and binding on each Party as of the “Closing” (as hereinafter defined).

 

  

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APPENDICES

	
Appendix A:

	
Definitions

	
Appendix B:

	
Accounts Receivable

	
Appendix C:

	
Assumed Contracts

	
Appendix D:

	
List of Assets

	
Appendix E:

	
Representations and Warranties of the Parties

	
Appendix F:

	
Accounts Payable

 

 

  

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APPENDIX A

 

CERTAIN DEFINITIONS

 

As used in this Agreement, the following terms have the meanings ascribed to them in this Appendix A.

 

1.           “Assets” mean, except for the Excluded Assets and as otherwise set forth in the Agreement, all right, title, and interest in and to all of the assets and properties of ISS, owned, used or held for use by ISS, whether tangible or intangible, whether real, personal or mixed, whether fixed, contingent or otherwise, and wherever located, including, without limitation, the following:

1.1.           all cash and cash equivalents and billed and unbilled accounts receivable (except for receivables relating to work performed prior to the Closing Date), including, without limitation, the accounts receivable listed on Appendix B;

1.2.           all Intellectual Property, goodwill, licenses and sublicenses, rights, remedies against infringements, and rights to protection of interests under the laws of all jurisdictions;

1.3.           all agreements and contracts listed on Appendix C (collectively, the “Assumed Contracts”) and all rights thereunder;

1.4.           all permits, to the extent transferable;

1.5.           all credits, prepayments, prepaid expenses, and deferred items, claims, causes of action, chooses in action, rights of recovery, rights of set off, and rights of recoupment except where the foregoing relates to an Excluded Asset;

1.6.           all tangible personal property (including supplies, inventory, equipment, furniture, trucks, automobiles), including, without limitation, the inventory, assts equipment, furniture and supplies listed on Appendix D;

1.7.           all books, records, ledgers, files, documents, correspondence, lists, plats, architectural plans, drawings, specifications, creative materials, advertising and promotional materials, customer lists, studies, reports, and other printed, written or machine-readable materials;

1.8.           the trade name “Integrated Software Solutions” and other trademarks and servicemarks used or claimed in connection with the business of ISS and the domain names associated therewith, including but not limited to issinc-use.com (which domain names include all rights for websites, email and other uses permitted under such domain names); and

1.9.           goodwill and going concern value of the ISS and the business of the ISS;

2.           “Adverse Consequences” means the cost of all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid in settlement, liabilities, obligations, taxes, liens, losses, expenses, and fees, including court costs and reasonable attorneys’ fees and expenses.

3.           “Assumed Contracts” has the meaning set forth in the definitions of “Assets.”

4.           “Assumed Liabilities” means:

4.1.           those trade payables presently identified by Seller as not having accrued prior to the Closing Date;

4.2.           all payables of ISS relating to payroll and other obligations to the Employees and consultants which arise or accrue after the Closing Date;

4.3.           all obligations of ISS under the lease for its present location including future payments of rent arising only after the Closing Date; and

4.4.           all obligations of ISS under the Assumed Contracts arising from and after the Closing Date

4.5.           Assumed Liabilities shall not include any duties, responsibilities, commitments, expenses, obligations or liabilities of ISS relating to the Assets or to the business of ISS which may be asserted against or imposed upon Buyer as a successor or transferee of ISS as an acquirer of the Assets or the business or otherwise as a matter of law.

5.           “Business Day” means Monday through Friday, except for a federal holiday that falls on any of those days.

6.           “Closing” has the meaning specified in Section 7 of the Agreement and may also be referred to as the “Closing Date” which shall have the same meaning.

 

  

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7.           “Code” means the Internal Revenue Code of 1986, as amended, and the Regulations promulgated thereunder.

8.           “Contractual Obligation” shall mean, as to any Person, any provision of any security issued by such Person or of any agreement, contract, lease, license, instrument material commitment, plan, promissory note, mortgage, lease, banking relationship (including but not limited to checking, savings, loan or other account or service agreement, merchant account, cash management relationship or safe deposit box), insurance policy or contract (whether for property coverage, liability or other claims) enforceable policy, license, franchise or similar instrument or other written agreement or as a result of a guarantee of the payment of or indemnity against the failure to pay same or any other arrangement or undertaking to which such Person is a party or by which it or any of its property is bound.

9.           “Excluded Assets” means (a) any of the rights of ISS under this Agreement; (b) any duplicate copies of the books and records transferred to Buyer; (c) any rights or choses in action to the extent arising out of occurrences before the Closing and related to any litigation for which any Liability would constitute an Excluded Liability; the rights under accounts receivables for work performed and delivered prior to the Closing Date; and (d) all Seller’s employment, independent contractor and independent consultant contracts, that are the subject of a separate Assignment Agreement of even date herewith, (e) any contracts not specifically identified as an Assumed Liability.

10.           “Excluded Liabilities” all of the following are Excluded Liabilities for purposes of this Agreement:

10.1.           any Liability of ISS for unpaid taxes or for income, transfer and other taxes arising in connection with or as a result of the operation of the business of ISS before Closing or the consummation of the Conveyance;

10.2.           any liability to any employee, independent contractor and independent consultant to compensation that accrued prior to the Closing, or to any taxing agency for any tax or fee that accrued prior to the Closing whether withheld or that is the obligation of ISS such as but not limited to, a matching amount.

10.3.           any obligation of ISS to indemnify any Person (including any stockholder) by reason of the fact that such Person was a director, officer, employee, or agent of the ISS or was serving at the request of any such entity as a partner, trustee, director, officer, employee, or agent of another entity (whether such indemnification is for judgments, damages, penalties, fines, costs, amounts paid in settlement, losses, expenses, or otherwise and whether such indemnification is pursuant to any statute, charter document, bylaw, agreement, or otherwise);

10.4.           all Liabilities arising under any contracts that are not Assumed Contracts;

10.5.           any Liability for criminal activity, criminal or civil fraud or intentional or willful wrongdoing by ISS or its officers, directors, Employee or agents occurring prior to the Closing Date;

10.6.           any Liability with respect to any environmental claim arising in connection with or out of the operation of the business of the ISS prior to the date of Closing;

10.7.           all other Liabilities and obligations of ISS, whether known or unknown, whether or not set forth in ISS’s financial statements; and

10.8.           any Liability or obligation of ISS under this Agreement.

11.           “Governmental Entity” means any government or any agency, bureau, board, commission, court, department, official, political subdivision, tribunal or other instrumentality of any government, whether federal, state or local, domestic or foreign, exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

 

  

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12.           “Intellectual Property” means (a) all trade secrets and confidential business information (including customer and supplier lists, ideas, research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, pricing and cost information, and business and marketing plans and proposals), (b) all trademarks, service marks, trade dress, logos, trade names, and corporate names, together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith, (c) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof, (d) all copyrightable works, all copyrights, and all applications,   registrations, and renewals in connection therewith, (e) all mask works and all applications, registrations, and renewals in connection therewith, (f) all computer software (including data and related documentation), (g) all domain names, websites, phone numbers and facsimile numbers,   (h) all other proprietary rights, and (i) all copies and tangible embodiments thereof (in whatever form or medium).

13.           “Litigation” means, as to any Party, any action, suit, investigation, audit, grievance or proceeding, pending or, to the knowledge of such Party, threatened against such Party, or a judgment, decree, injunction, order or ruling of any Governmental Entity resulting from such Litigation against such Party.

14.           “Liability” means any liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including any liability for Taxes.

15.           “Permits” means all franchises, approvals, permits, licenses, orders, registrations, certificates, variances, exemptions, and similar rights obtained from governments and governmental agencies.

16.           “Person” means an individual, partnership, corporation, association, joint stock company, limited liability company or partnership, trust, estate, joint venture, unincorporated organization, or Governmental Entity (or any department, agency, or political subdivision thereof).

17.           “Requirement of Law” shall mean, as to any Person, the certificate of incorporation and Bylaws or other Government issued certificate of Existence or Authority, organizational or governing documents of such Person, if applicable, and any law, treaty, rule or regulation, or determination of an arbitrator or any court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

18.           “Rule” means any constitution or statute or law or any judgment, decree, injunction, order, ruling, ordinance, regulation or rule of any Governmental Entity, including, without limitation, those relating to disclosure, usury, equal credit opportunity, equal employment, environment, employee safety and health, fair credit reporting, anti-competitive activities and taxation.

19.           “Security Interest” means any lien, claim, encumbrance, mortgage, pledge, charge, or other security interest.

20.            “Subsidiary” means any corporation or other entity with respect to which a specified Person (or a Subsidiary thereof) owns a majority of the common stock or other equity interests or has the power to vote or direct the voting of sufficient securities to elect a majority of the directors or persons serving similar functions.

21.           “Tax” means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code Sec. 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not.

 

  

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APPENDIX B

 

ACCOUNTS RECEIVABLE

 

 

 

 

 

 

 

 

  

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APPENDIX C

 

ASSUMED CONTRACTS

 

 

 

 

  

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APPENDIX D

 

LIST OF ASSETS

 

1.           All domains including but not limited to issinc-usa.com (provide and facilitate transfer of administrative contact with the domain registrar to manage emails, websites, transfers and other domain related matters)

 

2.           All databases containing consultants, past, current and prospective client contacts

 

3.           All marketing material in its original soft and hard copies including rate cards and proposals

 

4.           All previous communications including emails with all clients

 

5.           All physical assets including office furniture, computer equipment, printers, copiers, phones

 

6.           All automobiles used for business purposes

 

7.           Any and all other assets in the name of ISS, Inc.

 

8.           Any and all assets used in the business operations for running the Hyderabad, India office.

 

 

  

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APPENDIX E

 

REPRESENTATIONS AND WARRANTIES

 

1.Each of the Parties to this Agreement has made, in connection with the entry into this Agreement and shall continue to represent and warrant to the other, the truth, accuracy, completeness and satisfaction of each of the representations and warranties:

1.1. Corporate Organization and Authority. Each of ISS and Buyer is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it was formed, and has all the corporate powers necessary to own, lease and operate the assets and properties it now owns, leases and operates and to carry on its businesses as now conducted and is duly qualified and in good standing as a foreign corporation in all jurisdictions in which the nature of its businesses or properties requires qualification.

1.2. Each of ISS and Buyer has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder. Without limiting the generality of the foregoing, the Board of Directors of each of ISS and Buyer has duly authorized the execution, delivery, and performance of this Agreement. This Agreement constitutes the valid and legally binding obligation of each of ISS and Buyer, enforceable in accordance with its terms and conditions, except to the extent such enforceability is subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or other law affecting or relating to creditors’ rights generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

1.3. No Conflicts. The execution, delivery and performance of this Agreement by each of ISS and Buyer shall not (i) violate any provision of the Articles of Incorporation, Bylaws, Board Resolutions or Stockholder Resolutions of either ISS or Buyer (ii) violate or constitute a breach of or default under any material Requirement of Law or Rule of any Governmental Entity to which Seller or Buyer is subject, (iii) violate, constitute a breach under, cause a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel any Contractual Obligation to which ISS or Buyer is a party or by which either is bound or to which any of either’s assets is subject (or result in the imposition of any Security Interest upon any assets), require the filing with or notice to and/or approval by and/or consent from any Governmental Entity or other Person in connection with the execution and delivery of this Agreement or the consummation hereof of the transaction contemplated hereby by either ISS or Buyer.

1.4. No Litigation. There is no Litigation instituted, pending or threatened against any Party which could affect the rights of Buyer to acquire the Assets or Seller to sell the same.

1.5. No Violation of Law. The execution of this Agreement or the consummation of any transaction contemplated hereunder is not in violation of or in default with respect to any applicable law or any applicable rule, regulation, order, writ or decree of any Governmental Entity.

1.6. No Delinquencies.  Neither Party is delinquent with respect to any report required to be filed with any Governmental Entity which violation or default could have a materially adverse effect upon the business, operations or financial condition of ISS.

1.7. Title to Assets. ISS is the sole and unconditional owner of, with good and marketable title to, all the Assets disclosed as owned by such Party free and clear of any Security Interest and ISS has good and marketable title to, or a valid leasehold interest in, all of the Assets, free and clear of any Security Interest or restriction on transfer. All Security Interests not disclosed and accepted as provided herein or paid as of the Closing shall remain the obligation of Seller and any deferred payments due with respect to such Security Interest shall be subject to payment by Seller or release of Buyer from such undisclosed Security Interests.

1.8. All Contracts in Full Force. All Contractual Obligations to which ISS is a party are valid and in full force and effect on the date hereof, and ISS has not breached any material provision of, and is not in default in any material respect under the terms of, any such contract, agreement, plan, promissory note, mortgage, lease, policy, license, franchise or similar instrument which breach or default would have a materially adverse effect upon the business, operations or financial condition of ISS.

 

 

  

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1.9.   No Brokers or Finders. No Party shall have or create any liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which any other Party could become liable or obligated.

1.10. Disclosure. No representation, warranty or statement made by either Party to (i) this Agreement, or (ii) in any other written materials furnished or to be furnished by such Party or its representatives to the other Party or the representatives of such other Party pursuant to this Agreement, contains or shall contain any untrue statement of a material fact, or omits or shall omit to state a material fact required to be stated herein or therein or necessary to make the statements contained herein or therein, in light of the circumstances under which they were made, not materially misleading.

1.11. The Schedules and Appendices are True and Correct and Complete. The Appendices furnished by Seller are true, correct and complete and fully and accurately disclose all of the following, the approval of which shall be a condition to close unless waived by Buyer:

1.11.1.           Financial statements of ISS including, but not limited to, balance sheets and profit and loss statements for the most-recently ended fiscal year, prepared in accordance with generally accepted accounting principles, and interim balance sheets and profit and loss statements for the period following such fiscal year through the month end immediately prior to the Closing, which fairly present the financial condition of ISS at the dates indicated thereon.

1.11.2.           An accurate list and description of all Assets disclosed on Appendix D with specificity as to any assets of a value equal to or greater than $1,000.00; provided, however, that Buyer acknowledges and agrees that Seller make no representation or warranty as to the current condition of any such Assets except that Seller own or lease all Assets in functional or adequate condition and quantity as necessary to conduct Seller’s business in accordance with past practice.

1.11.3.           Security Interests and debts, liabilities and obligations of ISS (individually in excess of $1,000 or collectively in excess of $5,000) incurred or owing as of the date of this Agreement

1.11.4.           A list of all Contractual Obligations of ISS to which ISS is a party, which involves, or can reasonably be expected to involve, aggregate future payments or receipts by ISS of $1,000.00 or more annually during the twelve-month period following the Closing (any of which being assumed shall be set forth on and disclosed on Appendix C).

1.11.5.           A list of all employee and consultant contracts which ISS may have.

1.11.6.           A list of all customers of ISS, including all presently effective contracts of ISS to be assigned to Buyer, accounting for the principle revenues of ISS, indicating the dollar amounts of gross revenues of each such customer for the period ended as of a recent date.

1.11.7.           A list of all accounts receivable as of the Closing disclosed on Appendix B. and all accounts payable as of the Closing disclosed on Appendix F.

 

 

 

 

  

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APPENDIX A

 

BILL OF SALE AND ASSIGNMENT

 

THIS BILL OF SALE AND ASSIGNMENT (the “Bill of Sale”) is made this November 1, 2010 by ISS Acquisition Corporation, a New Jersey corporation (“Buyer”) or its assigns, and Integrated Software Solutions, a New Jersey corporation (“Seller”).

 

RECITALS

 

WHERAS, the Parties entered into that certain Asset Purchase Agreement dated November 1, 2010 (the “APA”), pursuant to which the Assets are to be sold and assigned from Seller to Buyer and certain Assumed Liabilities are to be assumed by Buyer, all under the terms and subject to the conditions contained in the Asset Purchase Agreement and

WHERAS, this Bill of Sale is given in consummation of that Agreement, and

WHERAS, the assignment and assumption of the Assumed Liabilities occurs simultaneously with the execution and delivery of this Bill of Sale pursuant to a separate instrument, NOW, THEREFORE,

 

WITNESSETH

 

FOR AND IN CONSIDERATION of the above recitals, the terms, the covenants, mutual representations, warranties, and conditions hereinafter contained and other good and valuable consideration, the parties agree as follows:

 

1.           SALE AND ASSIGNMENT OF ASSETS. Seller hereby grants, bargains, sells, conveys, assigns, transfers, sets over and delivers to Buyer, its successors and assigns, subject to the terms and reservations hereof, all of Seller’s right, title and interest in and to the Assets, as set forth on Schedule A (the “Assets”) the benefits thereof, and the right to enforce the covenants and warranties, if any, which Seller is entitled to enforce with respect to Seller’s predecessors in title to any and all of the Assets, regardless of the omission of any document of conveyance, errors in description therein, any incorrect or misspelled names thereon or any transcribed or incorrect recording references thereto, and Buyer does hereby assume, acquire, receive, accept and acknowledge delivery of the Assets from Seller, to have and to hold all such Assets together with all rights, titles, interests, estates, remedies, powers and privileges thereunto appertaining unto Buyer and Buyer’s successors and assigns forever; subject only to those matters of title identified as set forth on Schedule B attached hereto and incorporated herein by this reference (the “Permitted Exceptions”).

 

2.           ASSUMPTION OF EMPLOYEE OBLIGATIONS. Buyer assumes and undertakes responsibility for all of the Contractual Obligations for Employees and independent contractors and consultants whose employment or contract is assigned as part of this Agreement. Buyer shall pay (i) payroll wages and payroll withholding taxes which arise on or after the date of this Agreement; (ii) health care (medical and dental) insurance premiums which arise on or after the date of this Agreement; (iii) all liability for the attestations made in the Labor Condition Application for each employee and H1-b consultants from the original petitioning employer (with assignment of each employee's or consultant's employment to Buyer such that the obligations to such Employees or consultants shall remain the same but for the identity of the new employer which is now Buyer; and (iv) the satisfaction of any other obligation under any visa, visa application, obligation to or claimed by any Governmental Entity in connection with immigration status or permission to work in the United States (including but not limited to all pending/approved Labor Certifications and I-140 applications).

 

3.           FURTHER ASSURANCES. From time to time after the date hereof, each of the parties hereto shall, upon request by the other party and without further consideration, execute, acknowledge and deliver all such other instruments of sale, assignment, conveyance and transfer, and shall take all such

 

  

15

  

 

4.           SUCCESSORS AND ASSIGNS. The terms of this Bill of Sale are binding upon, and inure to the benefit of, each party hereto and its successors and permitted assigns, and nothing in this Bill of Sale, express or implied, is intended to or shall confer upon any other person any rights, interests, benefits or remedies of any nature whatsoever under or by reason of this Bill of Sale.

 

5.           AMENDMENTS; WAIVER. This Bill of Sale may be amended, modified or supplemented, and the terms hereof may be waived, in each case only by a written instrument executed by all of the parties hereto. The waiver by any party hereto of a breach of any provision of this Bill of Sale shall not operate or be construed as a waiver of any subsequent or other breach, whether or not similar.

 

6.           COUNTERPARTS. This Bill of Sale may be executed and delivered in any number of counterparts, each of which shall be deemed an original, and all of which taken together shall constitute one and the same instrument. The exchange of copies of this Bill of Sale and of signature pages by facsimile or electronic (i.e., PDF) transmission shall constitute effective execution and delivery of this Bill of Sale and may be used instead of the original Bill of Sale for all purposes.

 

7.           GOVERNING LAW. This Bill of Sale shall be governed by and construed and enforced in accordance with the laws of the State of Delaware without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of law of any jurisdiction other than the State of Delaware.

 

8.           INTERPRETATION. This Bill of Sale is subject to all of the terms, conditions and limitations set forth in the Asset Purchase Agreement. The parties hereto acknowledge that all representations, warranties, covenants and agreements made by them or their owners, as the case may be, in the Asset Purchase Agreement, including in any Schedule or Exhibit thereto, shall, to the extent and for the period set forth in the Asset Purchase Agreement survive the Closing Date, the execution and delivery of this Bill of Sale, the acceptance hereof by Buyer and the sale, conveyance, assignment, transfer and delivery of the Assets hereby effected. In the event that any provision of this Bill of Sale is construed to conflict with a provision of the Asset Purchase Agreement, the provision of the Asset Purchase Agreement shall be deemed to be controlling.

 

9.           Capitalized terms used but not otherwise defined in this Bill of Sale have the meanings set forth in the Asset Purchase Agreement.

  

16

  

 

 

Schedule A to Bill of Sale

 

The “Assets”

 

9.           All domains including but not limited to issinc-usa.com (provide and facilitate transfer of administrative contact with the domain registrar to manage emails, websites, transfers and other domain related matters)

 

10.           All databases containing consultants, past, current and prospective client contacts

 

11.           All marketing material in its original soft and hard copies including rate cards and proposals

 

12.           All previous communications including emails with all clients

 

13.           All physical assets including office furniture, computer equipment, printers, copiers, phones

 

14.           All automobiles used for business purposes

 

15.           Any and all other assets in the name of ISS, Inc.

 

16.           Any and all assets used in the business operations for running the Hyderabad, India office.

 

  

17

  

 

EXHIBIT B

 

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (“Agreement”) is made this November 1, 2010, between ISS Acquisition Corporation, a New Jersey corporation (“Buyer”) or its assigns, and Integrated Software Solutions, Inc., a New Jersey corporation (sometimes “ISS”) and sometimes “Seller”).

 

RECITALS

 

WHERAS, Seller and Buyer entered into that certain Asset Purchase Agreement dated November 1, 2010 (“APA”) whereby Buyer acquired the operational assets of the business known as Integrated Software Solutions (the “Business”),.

WHERAS, Under the APA and in order to operate and exploit the Business, Buyer has agreed to assume only certain debts and liabilities specified therein as the “Assumed Liabilities” (as defined and identified in the APA) which debts and creditor relationships related to and essential to the Assets

WHERAS, Buyer has not agreed to assume or accept any of the “Excluded Liabilities” (as defined and identified in the APA).

WHERAS, Seller and Buyer desire that only the liabilities, debts and credit relationship described herein be assigned to Buyer under the terms and subject to the conditions contained in the APA.

WHERAS, the conveyance of the Assets is taking place simultaneously with the execution and delivery of this Agreement pursuant to a separate instrument, NOW, THEREFORE,

 

WITNESSETH

 

FOR AND IN CONSIDERATION of the above recitals, the terms, the covenants, mutual representations, warranties, and conditions hereinafter contained and other good and valuable consideration, the parties agree as follows:

 

1.           RECITALS INCORPORATED BY REFERENCE. The foregoing recitals are a material part hereof and this Assignment Agreement shall be construed so as to give maximum effect thereto.

2.           ASSIGNMENT AND ASSUMPTION. Seller hereby transfers, assigns, conveys, delivers and delegates to Buyer, the Assumed Liabilities. Buyer hereby accepts such assignment and assumes and agrees to pay, discharge, perform or otherwise satisfy in due course in accordance with their respective terms the Assumed Liabilities. Notwithstanding the foregoing, nothing contained in this Agreement shall be construed to include a transfer, assignment, conveyance, delivery or delegation of any of the Excluded Liabilities.

3.           FURTHER ASSURANCES. From time to time after the date hereof, each of the Parties hereto shall, upon request by the other party and without further consideration, execute, acknowledge and deliver all such other instruments of sale, assignment, conveyance and transfer, and shall take all such other reasonable action, in each case to the extent reasonably required to give effect to the transactions sought to be consummated by this Assignment Agreement.

4.           SUCCESSORS AND ASSIGNS. The terms of this Assignment Agreement are binding upon, and inure to the benefit of, each party hereto and its successors and assigns, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any rights, interests, benefits or remedies of any nature whatsoever under or by reason of this Assignment Agreement.

5.           AMENDMENTS; WAIVER. This Assignment Agreement may be amended, modified or supplemented, and the terms hereof may be waived, in each case only by a written instrument executed by both parties hereto. The waiver by either party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent or other breach, whether or not similar.

6.           COUNTERPARTS. This Assignment Agreement may be executed and delivered in any number of counterparts, each of which shall be deemed an original, and all of which taken together shall

 constitute one and the same instrument. The exchange of copies of this Assignment Agreement and of signature pages by facsimile or electronic transmission shall constitute effective execution and delivery of this Assignment Agreement and may be used instead of the original Assignment Agreement for all purposes.

 

  

18

  

 

7.           GOVERNING LAW. This Assignment Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware, or any other jurisdiction) that would cause the application of law of any jurisdiction other than the State of Delaware.

8.           INTERPRETATION. This Assignment Agreement is subject to all of the terms, conditions and limitations set forth in the APA. Each party hereto acknowledges that all representations, warranties, covenants and agreements made by it or its owners, as the case may be, in the APA, including in any Schedule or Exhibit thereto, shall, to the extent and for the period set forth in the APA survive the Closing Date, the execution and delivery of this Assignment Agreement, the acceptance hereof and the assignment, conveyance, transfer, delivery and delegation of the Assumed Liabilities hereby effected. In the event that any provision of this Assignment Agreement is construed to conflict with a provision of the APA, the provision of the APA shall be deemed to be controlling.

9.           ADDITIONAL TERMS. In the event that any provisions of this Assignment Agreement is held to be invalid, illegal, or unenforceable, the remainder of this Assignment Agreement shall not be affected thereby but shall remain in effect giving as much force as possible, including reformation if possible, to the intent of such provisions.

 

 

  

19

  

 

EXHIBIT C

 

 

 

(Intentionally omitted)

 

 

 

 

 

 

 

 

 

  

20

  

 

 

EXHIBIT D

 

ESCROW AGREEMENT

 

This Escrow Agreement (“Agreement”) is made this November 1, 2010, between ISS Acquisition Corporation, a New Jersey corporation (“Buyer”) or its assigns, and Integrated Software Solutions, Inc., a New Jersey corporation (sometimes “ISS”) and sometimes “Seller”).

 

RECITALS

 

WHERAS, Seller has sold certain assets, and part of the consideration therefore is the sum of One Hundred Fifty Thousand Dollars ($150,000) (the “Escrow Funds”) pursuant to that certain Asset Purchase Agreement dated November 1, 2010 (the “APA”), and

WHERAS, Seller is required by the APA as a condition to receiving the “Purchase Price”, to deposit the Escrow Funds with Escrow Agent who shall hold the Escrow Funds until any unforeseen or undisclosed “Excluded Liabilities” (if any) are identified and paid from the Escrow Funds, and

WHERAS, the parties further desire that

 

Robert S. Rothenberg, Esq.

Rothenberg & Associates, LLC

103 Carnegie Center, Suite 119

Princeton, NJ 08540

 

  serve as Escrow Agent and that Escrow Agent receive the Escrow Funds in accordance with this Agreement and the APA, and after fulfillment of the terms thereof, that Escrow Agent distribute the Escrow Funds in accordance with the requirements of the APA and this Agreement, NOW, THEREFORE,

 

WITNESSETH

 

FOR AND IN CONSIDERATION of the above recitals, the terms, the covenants, mutual representations, warranties, and conditions hereinafter contained and other good and valuable consideration, the parties agree as follows:

 

1.           DELIVERY OF ESCROW FUNDS. Buyer shall deliver or causes to be delivered the Escrow Funds to Escrow Agent in lawful currency of the United States, good funds, deposited to Escrow Agent’s escrow account or otherwise as shall permit Escrow Agent to hold the same for a period commencing on the Closing Date as specified in the APA and continuing for Ninety (90) days thereafter (the “Termination Date”).

2.           PAYMENTS FROM ESCROW FUNDS. Seller hereby directs Escrow Agent to receive the Escrow Funds and hold same until receipt of notice from Buyer and Seller who may direct Escrow Agent to pay certain amounts from the Escrow Funds (up to the full amount of such Escrow Funds) to any one or more creditors, claimants or other parties as entitled under any “Excluded Liabilities” and Escrow Agent shall pay, from the Escrow Funds, such amount directed to be paid.

3.           REMAINDER OF ESCROW FUNDS. If any of the Escrow Funds remains in the Escrow Account as of the Termination Date, Escrow Agent shall deliver the balance to Seller. In the event that Escrow Agent does not receive actual notice from Buyer prior to the Termination Date, Escrow Agent (unless in receipt of a contrary direction from a court of competent jurisdiction) shall deliver all of the Escrow Funds (less Escrow Agent’s fees and costs which shall not exceed $1,000) to Seller via such courier service or other direction as provided to Escrow Agent and this Escrow Agreement shall terminate.

4.           LIMITED OBLIGATION OF ESCROW AGENT. Payment of amounts directed by Buyer under the provision of the paragraph 3 above shall be the sole obligation of Escrow Agent and upon proof of same, Escrow Agent’s obligations shall cease.

 

  

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5.           HOLD HARMLESS. Seller and Buyer, each intending to bind itself/himself, his heirs, itself, its

 heirs, successors and assigns does hereby release and absolutely and forever discharge Escrow Agent, his business/law firm and his heirs, executors, administrators, successors or assigns, from all claims and demands, actions and causes of action, of every name and nature, whether or not stated heretofore so that none of them shall have any claim on or against the Escrow Agent, directly or indirectly, on any claim of damages or supposed liability or thing undertaken, done or omitted to be done, from the inception of their contractual relationship or arising out of any other contract between them to this day and all forever agree to hold harmless Escrow Agent for any costs, obligation or claims including reasonable attorney’s fees resulting from Escrow Agent’s actions in fulfillment of his duties hereunder so long as the terms and conditions of this Escrow Agreement have been met and each, intending to bind himself, his heirs, itself, its heirs, successors and assigns, shall be jointly and severally liable to Escrow Agent for the same. In the event that either or any parties hereto are engaged in any litigation or exchange any notices reasonably implying that litigation is imminent, prior to Escrow Agent’s delivery of the Funds as provided herein, Escrow Agent shall have the right to deposit the Funds into the highest court of general jurisdiction in the state of Delaware or otherwise await orders of the Court in lieu of any obligations imposed on Escrow Agent and this Agreement shall terminate upon such delivery of the Funds to a court of competent jurisdiction.

6.           COSTS AND EXPENSES. Except as provided under the indemnification of Escrow Agent, each party shall pay its own costs and expenses.

 

 

 

  

22

  

 

EXHIBIT E

 

NON-COMPETITION AGREEMENTS

 

 

 

 

  

23

  

 

This NON-COMPETITION AGREEMENT (this “Agreement”) is made on November 1st, 2010, and is between Zolon Corporation, a Florida corporation (“Buyer”), and Ajay Chopra, Prabhakar Gudur, Srirangeva Revuri, Nirmal Sinha Solanki (“Key Employee”) and Integrated Software Solutions, Inc.

 

RECITALS

 

WHERAS, Key Employee is a shareholder and/or an officer of Seller, and/or an independent contractor and/or an independent consultant and/or a Key Employee (all the foregoing herein referred to as “Key Employee”) of Integrated Software Solutions, Inc., a New Jersey corporation (sometimes “ISS” and sometimes “Seller”), and

 

WHERAS, Seller is the employer of, or vendor under an independent contractual relationship with Key Employee, and

 

WHERAS, Buyer (through its wholly owned subsidiary, ISS Acquisition Corporation) and Seller have executed and delivered an Asset Purchase Agreement dated as of November 1, 2010 (the “APA”), wherein Buyer shall acquire certain accounts and contractual relationships belonging to ISS (which transaction is outlined and consummated pursuant to the APA is herein referred to as the “Conveyance”), and

 

WHERAS, Buyer’s business extends throughout the United States of America, and

 

WHERAS, Key Employee accepts and admits that Seller and Buyer are each presently engaged in a highly competitive industry and accepts and admits that the “Current Employees” and “Current Clients” (as each is defined herein) of Seller are substantial assets that are very important to the success of Seller and the value being sold to Buyer pursuant the APA, and

 

WHERAS, Key Employee accepts and admits that a prohibition against competing against Buyer for “current clients” and “current employees” or soliciting business for Key Employee’s own account from “current clients” and “current employees” during the term of this Agreement, is for a reasonable period of time and is appropriate and necessary for the protection of the competitive advantages Buyer is purchasing, and

 

WHERAS, in order to induce Buyer to execute and deliver the APA and consummate the Conveyance, Key Employee is willing to execute this Agreement, NOW, THEREFORE,

 

WITNESSETH

 

  FOR AND IN CONSIDERATION of $100 receipt of which is hereby acknowledged, the above recitals, the terms, the covenants, mutual representations, warranties, and conditions hereinafter contained and other good and valuable consideration, the parties agree as follows:

 

1.           RECITALS INCORPORATED BY REFERENCE. The foregoing recitals are a material part hereof and this Agreement shall be construed so as to give maximum effect thereto.

2.           CERTAIN DEFINITIONS. As used in this Agreement, the following terms shall have the following meaning:

2.1. “Current Clients” shall mean those clients and/or customers of Seller as assigned to Buyer under the APA, including such successors and assigns of such customers and/or clients engaged in the same business or receiving the same services from Buyer as was previously provided by Seller.

 

  

24

  

 

 

2.2.           “Current Employee” shall mean any and all Employees, independent contractors, consultants and agents of Seller and their respective firms, companies, associates, corporations, joint ventures, partnerships, divisions, subsidiaries, employees, agents, heirs, assigns, designees, and consultants previously or currently providing any employment, labor or services to Seller.

 

3.           PAYMENT AND CONSIDERATION. Key Employee shall receive one hundred dollars ($100) and other good and valuable consideration, receipt of which is hereby acknowledged, which would not be paid, but for the agreement of the Key Employee to the terms of this Agreement.

 

4.           NON-COMPETITION, COVENANT NOT TO COMPETE. Key Employee covenants and warrants to Buyer, its successors and assigns that he/she shall not compete with or against Buyer for current clients and current employees in any location where the current clients utilize buyer’s services, nor take any action, the effect of which would be to compete or circumvent this covenant and warranty or go around or utilize any intermediary process to compete for current clients and current employees by knowingly making any contact with, soliciting, dealing with or otherwise being involved in any transaction with any Current Client or Current Employee whether or not seeking or using services of Buyer, for a period of Three (3) years following the date of this Agreement, nor engaging, hiring or utilizing any Current Employee in competition against Buyer for current clients and current employees for a period of Three (3) years. This covenant not to compete, represents the agreement, representation, warranty and acknowledgement by each of the parties hereto, that only Buyer shall be allowed to transact business with a Current Client or engage or hire or utilize any Current Employee during the periods specified and Key Employee shall not engage or participate in any manner, whether directly or indirectly through any family member or as an employee, employer, consultant, agent, principal, partner, more than one percent equity-holder, officer, director, licensor, lender, lessor in any other corporate, individual or representative capacity, current clients and current employees in any location where the current clients utilize Buyer’s services.

 

5.           REASONABLENESS OF SCOPE OF PROTECTION. Buyer and Key Employee hereby acknowledge, accept and admit that the limitations in this Agreement are reasonable, practical and appropriate. Each of Buyer and Key Employee hereby acknowledges, accepts and admits that the purpose of the provisions of this Agreement is to protect the parties hereto from unfair loss of goodwill and business advantage. If any court shall determine that the time, geographical area, or scope of activity of any restriction contained in this Agreement is unenforceable, it is the intention of the parties that such restrictive covenant set forth herein shall not thereby be terminated but shall be deemed amended to the extent required to render it valid and enforceable.

 

6.           TERM AND GEOGRAPHIC AREA. This Agreement shall remain in full force and effect for a period of three (3) years for current clients and current employees and shall not be cancelable nor revocable during that term. This Agreement is applicable throughout the United States of America.

 

7.           CARVE OUT PROVISION. ISS Shareholder Ajay Chopra’s wife, Jessica Chopra is engaged in the business of managing eBusiness Application Solutions, Inc. and Aveeva, Inc., (the “Other Enterprises”). The provisions of this Non-Compete Agreement do not apply to Ajay Chopra’s wife, Jessica Chopra concernng doing business with current clients. However, it is agreed that Jessica Chopra will not hire current employees. ISS shareholder Prabhakar Reddy is engaged in the business of operating/managing Radiant Global, Inc. The provisions of this Non-Compete Agreement do not apply to Prabhakar Reddy continuing his employment/management/operation of Radiant Global, Inc.

 

8.           MISCELLANEOUS.

8.1. The invalidity or non-enforceability of any provision of this Agreement in any respect shall not affect the validity or enforceability of this Agreement in any other respect or of any other provision of this Agreement. In the event that any provision of this Agreement shall be held invalid or unenforceable by a court of competent jurisdiction by reason of the geographic or business scope or the duration thereof, such invalidity or unenforceability shall attach only to the scope or duration of such provision and shall not affect or render invalid or unenforceable any other provision of this Agreement, and, to the fullest extent permitted by law, this Agreement shall be construed as if the geographic or business scope or the duration of such provision had been more narrowly drafted so as not to be invalid or unenforceable.

 

 

 

  

25

  

 

8.2.           The parties hereby acknowledge, accept and admit that the remedy at law for any breach of the provisions of this Agreement is insufficient and inadequate and that the party aggrieved shall be entitled to equitable relief, including by way of temporary and permanent injunction, in addition to any remedies Buyer may have at law.

8.3.           This Agreement may not be altered or amended except in writing, duly executed by the party against whom such alteration or amendment is sought to be enforced.

8.4.           This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware (without regard to rules or principles of conflicts of law requiring the application of the law of another state), and that the courts in the State of Delaware shall have exclusive jurisdiction over, and shall constitute permissible venue for, any litigation, special proceeding, dispute or other proceeding as between the parties that may be brought or arise out of, in connection with, or by reason of this Agreement.

8.5.           This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof.

8.6.           Each of Buyer and the Key Employee has read the foregoing Agreement, fully understands the contents thereof, has had the opportunity to obtain independent legal advice regarding the Agreement’s legal effect, and is under no duress regarding its execution.

8.7.           Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. Words in the singular shall be held to include the plural and vice versa, and words of one gender shall be held to include the other genders as the context requires. The terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the Schedules and Appendices hereto) and not to any particular provision of this Agreement. Article, Section, paragraph, Appendices and Schedule references are to the Articles, Sections, paragraphs, Appendices and Schedules to this Agreement unless otherwise specified. The word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless otherwise specified. The word “or” shall not be exclusive, and references to a party are also references to its permitted successors and assigns. The parties have participated jointly in the negotiation and drafting of this Agreement, and the language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction or presumption requiring construction or interpretation against a particular party may be applied against any party.

8.8.           The captions used in this Agreement are for convenience of reference only and do not constitute a part of this Agreement and shall not be deemed to limit, characterize or in any way affect any provision of this Agreement, and all provisions of this Agreement shall be enforced and construed as if no caption had been used in this Agreement.

8.9.           This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which taken together shall constitute one and the same instrument. The exchange of copies of this Agreement and of signature pages by facsimile or electronic transmission shall constitute effective execution and delivery of this Agreement and may be used instead of the original Agreement for all purposes.

8.10.If any legal action, arbitration, mediation or other proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default, or misrepresentation in connection with this Agreement, then the successful or substantially prevailing Party or Parties shall be entitled to recover reasonable attorneys’ fees and other costs, including court costs, incurred in that action or proceeding, in addition to any other relief to which the successful or substantially prevailing Party or Parties may be entitled.

 

 

  

26ex10-3.htm

Exhibit 10.3

 

 

 

 

SECURITIES PURCHASE AGREEMENT by and between

 

MGL AMERICAS INC.

 

and

 

ZOLON CORPORATION

 

 

Dated as of April 14th, 2011 SECURITIES PURCHASE AGREEMENT

 

 

 

 

  

  

  

 

This SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made as of April 14th, 2011, by and between MGL Americas Inc., a Delaware corporation (the “Seller”), and Zolon Corporation, a Florida corporation (“Buyer”) and made in light of the following recitals which are a material part hereof and this Agreement shall be construed so as to give maximum effect thereto.

 

	
  

	
A.

	
WHEREAS, Seller owns all of the outstanding common stock (the “Securities”) of MGL Solutions, Inc., a Delaware corporation (the “Company”);

 

	
  

	
B.

	
WHEREAS, subject to the terms and conditions set forth herein, Buyer desires to acquire from Seller, and Seller desires to sell to Buyer all of the Securities; and

 

	
  

	
C.

	
WHEREAS, the respective boards of directors or other governing bodies, as applicable, of Buyer and Seller have approved this Agreement and the transactions contemplated hereby, upon the terms and subject to the conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises, representations and warranties and mutual covenants contained herein and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and intending to be legally bound, the parties hereto agree as follows:

 

ARTICLE I

 

PURCHASE AND SALE OF SECURITIES

 

1.01Purchase and Sale of Securities. Upon the terms and subject to the conditions set forth in this Agreement, at the Closing, Seller shall sell, assign, transfer and convey to Buyer, and Buyer shall purchase and acquire from Seller, all of the Securities in exchange for the assumption by the Buyer of the Assumed Liabilities (the “Purchase Price”).

 

1.02 Upon the terms and subject to the conditions of this Agreement, Buyer shall assume effective as of the Closing, and from and after the Closing Buyer shall pay, discharge or perform when due, as appropriate, the following Liabilities of the Seller (the “Assumed Liabilities”), and no other Liabilities:

 

(a) a note for the amount of $3,000,000 (three Million Dollars) carrying a simple annual interest of 12% maturing on December 31, 2011 payable to Laurus Funds

 

(b) a note for the amount of $5,000,000 (Five Million Dollars) carrying a simple annual interest of 5% maturing on June 30, 2014

 

(c) issuance of 4 million shares of the common stock of the buyer

 

(d) contingent earn-out of up to $5,000,000, payable over three years, if earned, as defined elsewhere

 

(e) all Liabilities due with respect to certain accounts payable necessary to operate the business of the Company as listed on Schedule 1.02(b); and all accrued and unpaid Liabilities owing to employees of Seller and/or the Company who are necessary to operate the business of the Company as listed on Schedule 1.02(c) limited to a maximum of $2,000,000 (Two million Dollars)

1.03 The Closing. The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of Buyer, located at 2850 Golf Road, Rolling Meadows, Il 60010 on April 14th, 2011, or if any of the conditions to the Closing set forth in Article II below (other than those to be satisfied at the Closing) have not been satisfied or waived by the party entitled to the benefit thereof prior to such date, then on or prior to the second business day following satisfaction such condition, or on such other date as is mutually agreeable to Buyer and Seller. The date of the Closing is herein referred to as the “Closing Date.” The Closing shall be deemed to occur at 12:01 a.m. on the Closing Date. The Closing may be accomplished by delivery of signed documents or counterparts without physical presence of the parties.

 

  

  

  

 

1.04 Deliveries by Seller at the Closing. At the Closing, Seller shall deliver to Buyer the following:

 

(a)           a Bill of Sale in the form of Exhibit A hereto duly executed by the Seller;

 

(b)           an Assignment and Assumption Agreement in the form of Exhibit B hereto (the deemed to occur at 12:01 a.m. on the Closing Date. The Closing may be accomplished by delivery of signed documents or counterparts without physical presence

 

"Assignment and Assumption Agreement") duly executed by the Seller;

 

(c) an original stock certificate evidencing the Securities, together with an undated stock power with identity of transferee left blank therein which shall each be delivered directly to Agent pursuant to and in compliance with the Buyer Loan Documents (the delivery of which to the Agent shall be in satisfaction of the obligation to deliver to the Seller);

 

(d) the corporate minute book, the documents identified on Schedule 3.15 and all other books and records of the Company; and

 

(e) such other good and sufficient instruments of transfer duly executed by Seller or its affiliated entities as Buyer reasonably deems necessary and appropriate to vest in Buyer all right, title, control and interest in and to the Securities.

1.05 Deliveries by Buyer at the Closing: At the Closing, Buyer shall deliver to Seller the following:

 

(a) the Assignment and Assumption Agreement duly executed by Buyer pursuant to Section 1.02; and

 

(b) the Buyer Loan Documents duly executed by Buyer pursuant to Section 1.02 which shall be delivered directly to Agent (the delivery of which to the Agent shall be in satisfaction of the obligation to deliver to the Buyer).

ARTICLE II

 

CONDITIONS TO CLOSING

 

2.01 Conditions to All Parties’ Obligations. The obligations of Seller and Buyer to consummate the transactions contemplated by this Agreement are subject to the satisfaction of the following conditions as of the Closing Date:

 

(a) The applicable waiting periods, if any, under the HSR Act shall have expired or been terminated;

 

(b) Except for any pending action or proceeding directly or indirectly initiated by the party asserting its right to not consummate the transactions contemplated by this Agreement pursuant to this Section 2.01(b), no action or proceeding before any court or government body shall be pending wherein an unfavorable judgment, decree or order would prevent the performance of this Agreement or the consummation of any of the transactions contemplated hereby, declare unlawful the transactions contemplated by this Agreement or cause such transactions to be rescinded;

 

(c) All documentation required by the Lenders relating to the bifurcation of indebtedness owing by the Seller and the Company to the Lenders shall have been duly authorized, executed and delivered; such that after giving effect to such bifurcation, the Company’s Liabilities to the Lenders shall be limited to the Lenders Debt; and

 

  

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(d) This Agreement shall not have been terminated in accordance with Section 7.01(a).

 

2.02 Conditions Precedent to Buyer’s Obligations. The obligation of Buyer to consummate the transactions contemplated by this Agreement is subject to the satisfaction of the following conditions as of the Closing Date:

 

(a) Each of the representations and warranties of each Seller contained in Article III shall be true and correct as of the Closing Date as if made anew as of such date (except to the extent any such representation and warranty expressly relates to an earlier date (in which case as of such earlier date)), except to the extent of changes or developments contemplated by the terms of this Agreement or caused by the transactions contemplated hereby;

 

(b) Seller shall have performed all of the covenants and agreements required to be performed by it under this Agreement at or prior to the Closing, except to the extent of changes or developments contemplated by the terms of this Agreement or caused by the transactions contemplated hereby and except for any failure to perform any such covenant or agreement that has not had a Material Adverse Effect;

 

(c) A Material Adverse Effect shall not have occurred since the date of this Agreement;

 

(d) Seller shall have delivered to the Buyer each of the following, in form and substance reasonably satisfactory to the Buyer:

 

(i) certified copies of the resolutions duly adopted by Seller’s board of directors (or equivalent governing body) authorizing the execution, delivery and performance of this Agreement and the other agreements contemplated hereby, and the consummation of all transactions contemplated hereby and thereby; and

 

(ii) (A) certified copies of the certificate of incorporation or equivalent organizational document of each of Seller and the Company and (B) certificates of good standing or equivalent certificates for each of the Seller and the Company from the jurisdiction in which each (Seller or Company, as the case may be) is incorporated or formed, in each case, dated within 30 days of the Closing Date.

2.03 Conditions Precedent to Seller’s Obligations. The obligation of Seller to consummate the transactions contemplated by this Agreement are subject to the satisfaction of the following conditions as of the Closing Date:

 

(a) The representations and warranties set forth in Article IV hereof (other than those representations and warranties that address matters as of particular dates) shall be true and correct at and as of the Closing Date as if made anew as of such date (except to the extent any such representation and warranty expressly relates to an earlier date (in which case as of such earlier date)), except for any failure of such representations and warranties to be true and correct that has not had a material adverse effect on the financial condition or operating results of Buyer taken as a whole or on the ability of Buyer to consummate the transactions contemplated hereby;

 

(b) Buyer shall have performed all of the covenants and agreements required to be performed by it under this Agreement at or prior to the Closing except for any failure to perform any such covenant or agreement that has not had a material adverse effect on the financial condition or operating results of Buyer taken as a whole or on the ability of Buyer to consummate the transactions contemplated hereby;

 

(c) Buyer shall have delivered to the Seller each of the following, in form and substance reasonably satisfactory to the Seller:

 

(i) certified copies of the resolutions duly adopted by Buyer’s board of directors (or equivalent governing body) authorizing the execution, delivery and performance of this Agreement and the other agreements contemplated hereby, and the consummation of all transactions contemplated hereby and thereby; and

 

(ii) (A) a certified copy of the certificate of incorporation or equivalent organizational document of Buyer and (B) a certificate of good standing or equivalent certificate from the jurisdiction in which Buyer is incorporated or formed, in each case, dated within 30 days of the Closing Date.

 

  

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2.04 Waiver of Conditions. All conditions to the Closing shall be deemed to have been satisfied or waived from and after the Closing; provided that each representation and warranty herein shall otherwise survive the closing to the extent expressly provided for herein.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF SELLER

 

Seller represents and warrants to Buyer as follows:

 

3.01 Authority. Seller has all requisite power and authority and full legal capacity to execute and deliver this Agreement and to perform its obligations hereunder.

 

3.02 Organization and Power. Seller is duly organized, validly existing and in good standing under the laws of the State of Delaware.

 

3.03 Execution and Delivery; Valid and Binding Agreement. The execution, delivery and performance of this Agreement by Seller and the consummation of the transactions contemplated hereby have been duly and validly authorized by all requisite action on the part of Seller, and no other proceedings on Seller’s part are necessary to authorize the execution, delivery or performance of this Agreement. Assuming that this Agreement is a valid and binding obligation of Buyer, this Agreement constitutes a valid and binding obligation of Seller, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, or moratorium laws, other similar laws affecting creditors’ rights and general principles of equity affecting the availability of specific performance and other equitable remedies.

 

3.04 No Breach. The execution and delivery of this Agreement by Seller does not, and the performance of this Agreement and the consummation of the transactions contemplated hereby by Seller will not, (a) conflict with or violate the constituting documents of Seller, (b) conflict with or violate any legal requirement applicable to Seller or by which any of its assets are bound or affected, or (c) conflict with or violate the terms of any agreement of Seller.

 

3.05 Consents, etc. Except as set forth on Schedule 3.05 hereto, no consent, approval, permit or license from or filing with any Governmental Body nor any other party or Person, is required to be obtained or made by Seller in connection with the execution, delivery and performance by it of this Agreement or the consummation of any of the transactions contemplated hereby. In the event that Seller determines that it qualifies as a “person” with a value for purposes of the HSR Act, in excess of $131,900,000, Seller shall present, within Schedule 3.05, proof of its notice to the US Department of Justice and the US Federal Trade Commission as required under the HSR (Buyer having represented that it is a “person” with a value above $13,200,000 but not above $131,900,000 for purposes of the HSR Act) or in the alternative, proof in the form of an opinion of counsel, that either Seller does not meet the foregoing “size of the person test” or the transaction contemplated herein does not meet the “size of the transaction” test obviating the need for such notice.

 

  

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3.06 Ownership. Seller is the record owner of the Securities. On the Closing Date, Seller shall transfer to Buyer good and marketable title to the Securities free and clear of all Liens (other than Permitted Liens), options, proxies, voting trusts or agreements and other restrictions and limitations of any kind, other than applicable federal and state securities law restrictions which Securities are duly authorized, validly issued and fully paid and nonassessable and are the only shares issued and outstanding by the Company.

 

3.07 Litigation. Except as set forth on Schedule 3.07, there are no actions or proceedings pending or, to Seller’s knowledge, overtly threatened against or affecting Seller at law or in equity, or before or by any Governmental Body, which would adversely affect Seller’s performance under this Agreement or the consummation of the transactions contemplated hereby. Seller is not subject to any outstanding judgment, order or decree of any court or Governmental Body.

 

3.08 Brokerage. There are no claims for brokerage commissions, finders’ fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement made by or on behalf of Seller.

 

3.09 Financial Statements. Attached to Schedule 3.09 are the unaudited financial statements of Seller and the Company including, but not limited to, balance sheets and profit and loss statements from the fiscal year ended December 31, 2010 and interim balance sheets and profit and loss statements for the three-month period ending March 31, 2011, prepared in accordance with GAAP, and which fairly present the financial condition of the Seller and the Company as of the dates thereof which shall include the following minimum information: for accounts receivable, aged trial balances by customer (with access to sufficient detail to test and contact information with written permission or an omnibus letter of introduction to permit confirmation of same); for accounts payable and other current liabilities, a detailed list identifying each payee or claimant to permit communication or research (with access to sufficient detail to test); and for all other liabilities including payroll-related liabilities and contractor-related liabilities, a detailed trial balance with sufficient detail to permit testing.

 

3.10 Title. The Company owns outright and has good and marketable title to all Assets set forth on Schedule 3.10, free and clear of any Liens other than Permitted Liens. Schedule 3.10 sets forth a complete and accurate list and description of all Assets of the Company with each of the Assets having a value equal to or greater than One Thousand Dollars ($1,000.00) separately listed and described.

 

3.11 Liens and Liabilities. Schedule 3.11 lists of all debts, liabilities and obligations (including, by separate designation, liens, encumbrances, easements, security interests or similar interests in or on any of the Assets described as owned, held or used by the Company designating the nature of any such lien or security interest and the Assets against which it may be claimed) which list shall also identify any potential material claims known to Seller against the Company for any liability for criminal or civil claims, environmental claims or other claims which may be made against the Company or arising in connection with or out of the business operations of the Company and which list provides all detail regarding withholding, payment and current unpaid obligations for all taxes and other assessments and levies applicable to the Seller and the Company and which list shall accurately describe all liabilities of any nature, whether fixed, absolute, contingent or accrued, together with any knowledge of potential liability or threat of same or liability or potential liability for income, transfer, franchise, sales and use, property and other taxes arising in connection with or as a result of the operation of the business of the Company or the consummation of the transactions contemplated hereby including but not limited to actions or potential civil, criminal, administrative, arbitration or other such proceedings or investigations pending or to the knowledge of Seller, threatened, failures to comply with any and all laws, ordinances, requirements, rule, regulation, order, writ or decree of any court or any governmental commission, board, bureau, agency or instrumentality applicable to the Company’s business.

 

  

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3.12 Employees and Vendors. Schedule 3.12 sets forth a complete and accurate list of all of the full time and part time employees and vendors of the Company and, as attached to such Schedule 3.12, complete and accurate copies of all salary, stock option, bonus, incentive compensation, deferred compensation, profit sharing, retirement, pension, group insurance, disability, death benefit or other benefit plans, trust agreements or arrangements of the Company in effect on Closing Date or to become effective after the Closing Date, together with copies of any determination letters issued by the IRS with respect thereto. Except as separately disclosed, neither Seller nor the Company shall have caused to occur nor contemplates causing to be effective, a “plant closing” or “mass layoff” as each is described in the Worker Adjustment and Retraining Notification Act (or any similar state law having jurisdiction over the Seller or Company or otherwise being applicable) prior to the Closing.

 

3.13 Leases and Contracts. Schedule 3.13 sets forth a complete and accurate list of all material leases (whether of real or personal property) and each contract, promissory note, mortgage, license, franchise or other written agreement or any obligation of the Company to indemnify any other individual or entity, to which the Company is a party, which involves, or can reasonably be expected to involve, aggregate future payments or receipts by the Company (whether by the terms of such lease, contract, promissory note, license, franchise or other written agreement or as a result of a guarantee of the payment of or indemnity against the failure to pay same) of $1,000.00 or more annually during the twelve-month period ended December 31, 2011 or any consecutive twelve-month period thereafter, except any of said instruments which terminate or are cancelable without penalty during such twelve-month period and which lists accurately describe the contracts, agreements, plans, promissory notes, mortgages, leases, policies, licenses, franchises or similar instruments to which the Company is a party, all of which are, unless otherwise disclosed, valid and in full force and effect as of the Closing Date with no requirements for consent or approval unless described therein.

 

3.14 Loans and Obligations. Schedule 3.14 sets forth a complete and accurate list of all loans, notes and each contract or other written agreement to which the Company is a party with respect to repayment of borrowed money or any similar obligations of the Company, which requires, or can reasonably be expected to require, aggregate future payments by the Company under the terms thereof or as a result of a guarantee of payment or performance or indemnity against the failure to pay same of $1,000.00 or more annually during the twelve-month period ended December 31, 2011 or any consecutive twelve-month period thereafter.

 

3.15 Corporate Organization Documents. Attached to Schedule 3.15 are complete and accurate copies of all corporate organizational documents including but not limited to Articles of Incorporation and Bylaws of the Company and articles or certificates of authority for each jurisdiction in which the Company is formed, authorized to do business or otherwise governed, together with all amendments thereto and all corporate governance documents interpreting, modifying or implementing any authority or right thereunder, all documents pertaining to the sale, offer, registration, designation or authority for shares of any securities offered or sold by the Company including common and preferred stock and convertible debt instruments and a complete and accurate list of all persons or entities holding either capital stock or any rights to subscribe for, acquire or receive shares of the capital stock of the Company (whether warrants, calls, options or conversion rights), including copies of all stock option plans, whether qualified or nonqualified and a complete and accurate list of all officers and directors and advisors for the Company.

 

3.16 Customers. Schedule 3.16 sets forth a complete and accurate list (in all material respects) of the customers of the Company, including all presently effective contracts accounting for the principle revenues of the Company (and its predessessors), indicating the dollar amounts of gross revenues of each such customer for the twelve-month period ended as of March 31, 2011, the relationship with each of which customers being the exclusive customer and relationship of the Company. Neither Seller nor its affiliates shall solicit or contract or otherwise enter into competitive relationships with any of the Customers set forth on Schedule 3.16 for a period of seven (7) years following the Closing and this covenant shall alone survive the Closing for that period.

 

  

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3.17 Licenses and Permits. Schedule 3.17 sets forth a complete and accurate list of all material licenses, permits and other authorizations of the Company including but not limited to the qualifications necessary relating to issuance of visas and employment of under any applicable immigration laws properly vested in the Company.

 

3.18 Disclosure. No representation or warranty in this Article III, the Appendices, Schedules, Exhibits or in any certificate furnished to Buyer pursuant hereto or in connection with the transactions contemplated hereby contains or will contain any untrue statement or omits or will omit to state any fact required to be stated herein or therein or necessary to make the statements herein or therein not misleading, and Seller has not intentionally misrepresented any statements in any other documents furnished or to be furnished to Buyer pursuant hereto or in connection with the transactions contemplated hereby.

 

3.19 Solvency. Upon consummation of the transaction contemplated hereby, Seller will not

(a) be insolvent or left with unreasonably small capital, (b) have incurred debts beyond its ability to pay such debts as they mature, or (c) have liabilities in excess of the reasonable market value of its assets.

 

3.20 Adequate Consideration Seller has made such determinations of value as it deems necessary and determined that the Purchase Price represents adequate consideration for the Securities notwithstanding that Seller may not realize any Cash proceeds from the Closing.

 

3.21 No Other Representations and Warranties. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS ARTICLE III, NEITHER THE COMPANY NOR THE SELLER MAKES ANY EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY, AND THE COMPANY AND THE SELLER HEREBY DISCLAIM ANY SUCH REPRESENTATION OR WARRANTY WITH RESPECT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. BUYER SHALL ACQUIRE THE COMPANY WITHOUT ANY REPRESENTATION OR WARRANTY AS TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, IN AN “AS IS” CONDITION AND ON A “WHERE IS” BASIS, EXCEPT AS OTHERWISE EXPRESSLY REPRESENTED OR WARRANTED IN THIS AGREEMENT.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer represents and warrants to Seller as follows:

 

4.01 Organization and Power. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida, with full power and authority to enter into this Agreement and perform its obligations hereunder.

 

4.02 Authorization; Valid and Binding Agreement. The execution, delivery and performance of this Agreement by Buyer and the consummation of the transactions contemplated hereby have been duly and validly authorized by all requisite action on the part of Buyer, and no other proceedings on Buyer’s part are necessary to authorize the execution, delivery or performance of this Agreement. Assuming that this Agreement is a valid and binding obligation of Seller, this Agreement constitutes a valid and binding obligation of Buyer, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, or moratorium laws, other similar laws affecting creditors’ rights and general principles of equity affecting the availability of specific performance and other equitable remedies.

 

  

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4.03 No Breach. Buyer is not subject to or obligated, to the extent applicable, under its articles of incorporation, its bylaws or applicable governing documents, any applicable law, or rule or regulation of any governmental authority, or any material agreement or instrument, or any license, franchise or permit, or any order, writ, injunction or decree, which would be breached or violated in any material respect by its execution, delivery or performance of this Agreement.

 

4.04 Consents, etc.. Except for the applicable requirements of the HSR Act, if applicable, Buyer is not required to submit any notice, report or other filing with any governmental authority in connection with the execution, delivery or performance by it of this Agreement or the consummation of the transactions contemplated hereby. Buyer has made or caused to be made all filings and submissions under the HSR Act necessary for the consummation of the transactions contemplated herein. No consent, approval or authorization of any governmental or regulatory authority or any other party or Person is required to be obtained by Buyer in connection with its execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby. For purposes of the HSR Act, Buyer represents that that it is a “person” with a value above $13,200,000 but not above $131,900,000 but any requirement for such notice shall be as determined by Seller.

 

4.05 Litigation. There are no actions or proceedings pending or, to Buyer’s knowledge, overtly threatened against or affecting Buyer at law or in equity, or before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, which would adversely affect Buyer’s performance under this Agreement or the consummation of the transactions contemplated hereby. Buyer is not subject to any outstanding judgment, order or decree of any court or Governmental Body.

 

4.06 Brokerage. There are no claims for brokerage commissions, finders’ fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement made by or on behalf of Buyer.

 

4.07 Solvency. Upon consummation of the transaction contemplated hereby, Buyer and the Company will not (a) be insolvent or left with unreasonably small capital, (b) have incurred debts beyond their ability to pay such debts as they mature, or (c) have liabilities in excess of the reasonable market value of their assets.

 

4.08 Investment Representation. Buyer is acquiring the Securities for its own account with the present intention of holding such securities for investment purposes and not with a view to, or for sale in connection with, any distribution of such securities in violation of any federal or state securities laws. Buyer is an “accredited investor” as defined in Regulation D promulgated by the Securities and Exchange Commission under the Securities Act. Buyer acknowledges that it is informed as to the risks of the transactions contemplated hereby and of ownership of the Securities. Buyer acknowledges that the Securities have not been registered under the Securities Act, or any state or foreign securities laws and that the Securities may not be sold, transferred, offered for sale, assigned, pledged, hypothecated or otherwise disposed of unless such transfer, sale, assignment, pledge, hypothecation or other disposition is pursuant to the terms of an effective registration statement under the Securities Act and the Securities are registered under any applicable state or foreign securities laws or sold pursuant to an exemption from registration under the Securities Act and any applicable state or foreign securities laws.

 

4.09 Financing. Buyer has, on the date hereof, the financial capability and all sufficient cash on hand necessary to consummate the transactions contemplated by this Agreement on the terms and subject to the conditions set forth herein, and will have all such capability as of the Closing.

 

4.10 Investigation. Buyer acknowledges that it is relying on its own independent investigation and analysis in entering into the transactions contemplated hereby. Buyer is knowledgeable about the industries in which the Company operates and is capable of evaluating the merits and risks of the transactions contemplated by this Agreement and is able to bear the substantial economic risk of such investment for an indefinite period of time. Buyer has been afforded full access to the books and records, facilities and personnel of the Company for purposes of conducting a due diligence investigation and has conducted a full due diligence investigation of the Company. Buyer does not have any knowledge that the representations and warranties of any Seller or the Company in this Agreement are not true and correct in all material respects, and Buyer does not have any knowledge of any material errors in, or material omissions from, the attached disclosures schedules.

 

  

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ARTICLE V

 

CERTAIN PRE-CLOSING COVENANTS

 

5.01 Conduct of the Business. From the date hereof until the Closing Date, Seller shall use its commercially reasonable efforts to cause the Company to carry on its (and its Subsidiaries’if any) businesses according to its ordinary course of business and substantially in the same manner as heretofore conducted; provided that, the foregoing notwithstanding, the Company may use all available cash to repay any expenses incurred by it in connection with this Agreement or the transactions contemplated hereby prior to the Closing but the Company may not pay dividends or distributions to its stockholders of any amount, in cash or in kind.

 

5.02 Access to Books and Records. From the date hereof until the Closing Date, Seller shall use its commercially reasonable efforts to cause the Company to provide Buyer and its authorized representatives (“Buyer’s Representatives”) with access deemed reasonable by the Company during normal business hours and upon reasonable notice to the offices, properties, books and records of the Company and its Subsidiaries to the extent relating to the transition of the Company’s business to Buyer; provided that such access does not unreasonably interfere with the normal operations of the Company; provided further that all requests for such access shall be directed to Sivakumar Srinivasan or such other Person as Seller may designate in writing from time to time. Notwithstanding anything to the contrary in this Agreement, the Company shall not be required to disclose any information to Buyer if such disclosure would be reasonably likely to (a) jeopardize any attorney-client or other legal privilege or (b) contravene any applicable Laws, fiduciary duty or binding agreement entered into prior to the date hereof. Seller does not make any representation or warranty as to the accuracy of any information (if any) provided pursuant to this Section 5.02, and Buyer may not rely on the accuracy of any such information. The information provided pursuant to this Section 5.02 will be used solely for the purpose of effecting the transactions contemplated hereby, and will be governed by all the terms and conditions of the Confidentiality Agreement, dated March 20th, 2011 between Buyer and Seller (the “Confidentiality Agreement”).

 

5.03 Regulatory Filings. Seller shall cooperate with Buyer and the Company to make or cause to be made all filings and submissions under any material laws or regulations applicable to the Company or the Buyer for the consummation of the transactions contemplated herein. Seller shall use its commercially reasonable efforts to cause the Company shall coordinate and cooperate with Buyer in exchanging such information and providing such assistance as Buyer may reasonably request in connection with the foregoing. Consents for any such filings or notices shall not be unreasonably withheld or delayed.

 

5.04 Exclusive Dealing. During the period from the date of this Agreement through the Closing Date or the earlier termination of this Agreement pursuant to Section 7.01 hereof, Seller shall not take or permit any other Person on its behalf to take any action to encourage, initiate or engage in discussions or negotiations with, or provide any information to, any Person (other than Buyer and Buyer’s Representatives) concerning any purchase of the Securities, any merger involving the Company, any sale of substantially all of the assets of the Company, or other similar transaction involving the Company (other than assets sold in the ordinary course of business).

 

5.05 Notification. From the date hereof until the Closing Date, Seller shall disclose to Buyer in writing any development, fact or circumstance arising after the date hereof causing a breach of any of Seller’s representations and warranties contained in Article IV. Seller shall promptly notify Buyer if Seller obtains knowledge that the representations and warranties of Buyer in this Agreement and the disclosure schedules hereto are not true and correct in all material respects, or if Seller obtains knowledge of any breaches of any covenants, agreements or material errors in, or omissions from, the disclosure schedules to this Agreement.

 

  

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ARTICLE VI

 

REGULATORY FILINGS AND EMPLOYMENT MATTERS

 

6.01 Regulatory Filings. Each of Buyer and Seller shall, within two business days after the date hereof, make or cause to be made all filings and submissions under any laws or regulations applicable to it and its Affiliates for the consummation of the transactions contemplated herein. Subject to applicable laws relating to the exchange of information, the other party shall have the right to review in advance, and to the extent practicable will consult with the filing party on all the information that appears in any such filings and shall act reasonably and as promptly as practicable. Each of Seller and Buyer shall pay all fees associated with all filings and submissions required of it.

 

6.02 Employment and Benefit Arrangements. For a period of one year following the Closing Date, Buyer shall cause the Company and its Subsidiaries to continue all employment, severance, termination, consulting, retirement and other compensation and benefit plans, arrangements and agreements to which the Company is a party as of the date hereof, or make available alternative benefits, plans, arrangements and agreements that are substantially comparable, in the aggregate, to such plans, arrangements and agreements. Buyer shall take all actions required so that eligible employees of the Company shall receive service credit for all purposes under any successor employee benefit plans and arrangements sponsored by Buyer. To the extent that Buyer modifies any coverage or benefit plans under which the employees of the Company participate, Buyer shall waive any applicable waiting periods, pre­existing conditions or actively-at-work requirements and shall give such employees credit under the new coverages or benefit plans for deductibles, co-payments and out-of-pocket payments that have been paid during the year in which such coverage or plan modification occurs. This Section 6.02 shall survive the consummation of the transactions contemplated by this Agreement and shall be binding on all successors and assigns.

 

6.03 Employee Matters. Buyer will indemnify the Seller and its Affiliates from and against any losses that may be incurred by them under the Worker Adjustment and Retraining Notification Act or under any state, local or foreign law of a similar nature with respect to any office closing, layoff or relocation occurring after the Closing as a result of any action taken by the Company following the Closing or with respect to any obligation to provide notice, payment or any other benefit as a result of or arising out of any termination of employment of any employee of the Company following the Closing.

 

ARTICLE VII

 

TERMINATION

 

7.01 Termination. This Agreement may be terminated at any time prior to the Closing:

 

(a) by the mutual written consent of Buyer and Seller;

 

(b) by Buyer, if there has been a material violation or breach by Seller of any covenant, representation or warranty contained in this Agreement which has prevented the satisfaction of any condition to the obligations of Buyer at the Closing and such violation or breach has not been waived by Buyer or, in the case of a covenant breach, cured by Seller within ten days after written notice thereof from Buyer;

 

(c) by Seller, if there has been a material violation or breach by Buyer of any covenant, representation or warranty contained in this Agreement which has prevented the satisfaction of any condition to the obligations of Seller at the Closing and such violation or breach has not been waived by Seller or, in the case of a covenant breach, cured by Buyer within ten days after written notice thereof by Seller (provided that neither a breach by Buyer of Section 4.09 hereof nor the failure to assume the Liabilities pursuant to Article I under this Agreement at the Closing as required hereunder shall be subject to cure hereunder unless otherwise agreed to in writing by Seller);

 

  

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(d) by either Buyer or Seller, in its sole discretion, if any Governmental Body shall institute any suit or action challenging the validity or legality, or seeking to retrain the consummation of, the transactions contemplated by this Agreement;

 

(e) by either Buyer or Seller in its sole discretion if any Governmental Body shall request the submission of additional information or documentary material regarding the transactions contemplated by this Agreement from Seller or Buyer after review of the initial notification submitted pursuant to the HSR Act, if applicable, or any other applicable antitrust or competition law; or

 

(f) by either Buyer or Seller if the transactions contemplated hereby have not been consummated by 5:00 p.m., Central Daylight Time on April 18, 2011; provided that neither Buyer nor Seller shall be entitled to terminate this Agreement pursuant to this Section 7.01(f) if such Person’s knowing or willful breach of this Agreement has prevented the consummation of the transactions contemplated hereby.

7.02 Effect of Termination. In the event of the termination of this Agreement by either Buyer or Seller as provided above, the provisions of this Agreement shall immediately become void and of no further force or effect (other than this Section 7.02 and Article X hereof which shall survive the termination of this Agreement in accordance with their terms; provided, however, that Section 1.03 shall survive the termination of this Agreement and the last sentence of Section 5.02 above, and the Confidentiality Agreement referred to therein, shall survive the termination of this Agreement, and there shall be no liability on the part of any of Buyer or Seller to one another, except for knowing or willful breaches of the covenants contained in this Agreement (including, without limitation, the failure of a party to consummate the transactions contemplated by this Agreement following the satisfaction of all the conditions to such party’s obligations under Article II) prior to the time of such termination. Nothing in this Article VII shall be deemed to impair the right of any party to compel specific performance by another party of its obligations under this Agreement.

 

ARTICLE VIII

 

ADDITIONAL COVENANTS AND AGREEMENTS

 

8.01 Survival. The representations and warranties contained in Article III and Article IV and the covenants and agreements contained in this Agreement shall survive the Closing and shall terminate on the date that is one year following the Closing Date, provided, however, the covenants contained in Article V and Article VI shall terminate on the Closing Date unless a specific covenant contained in Article V and Article VI requires performance after the Closing Date, in which case such covenant shall survive for a period of 30 days following the date on which the performance of such covenant is required to be completed. The agreements and covenants set forth in Article VIII, Article IX and Article X shall survive in accordance with the terms thereof.

 

8.02 Tax Matters.Responsibility for Filing Tax Returns. Buyer shall prepare or cause to be prepared and timely file or cause to be timely filed all Tax Returns for the Company that have not yet been filed as of the Closing Date. All such Tax Returns shall be prepared and filed in a manner consistent with prior practice. Buyer shall deliver all such Tax Returns to Seller at least 45 days before such Tax Returns are to be filed. Seller shall have the right to review and approve all such Tax Returns prepared by Buyer. Buyer shall cause the Company and its Subsidiaries not to waive any carryback of any net operating loss, capital loss or credit on any such Tax Return. All benefits, deductions and tax-advantaged benefits shall remain the property of the Company.

 

(b) Cooperation. The parties shall cooperate with each other to provide each other with such assistance as may be reasonably requested by them in connection with the preparation of any Tax Returns, including the filing of any claim for refund resulting from a carry back of a Transaction Tax Deduction, any Tax audit or other examination in connection with an administrative or judicial proceeding involving a taxing authority relating to Taxes, and the enforcement of the provisions of this Section 8.02(b). Such cooperation shall include, including upon Seller’s request providing records and information that are reasonably relevant to any such matters and making employees available on a mutually convenient basis to provide additional information.

 

(c) Transfer Taxes. Each party shall pay the real property transfer or gains tax, stamp tax, stock transfer tax, or other similar Tax typically imposed on a “buyer” or ”seller” as the case may be as a result of the transactions contemplated by this Agreement (collectively, “Transfer Taxes”), and any penalties or interest with respect to the Transfer Taxes. Seller agrees to cooperate with Buyer in the filing of any returns with respect to the Transfer Taxes, including promptly supplying any information in their possession that is reasonably necessary to complete such returns.

 

  

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8.03 Further Assurances. From time to time, as and when requested by any party hereto and at such requesting party’s expense, any other party shall execute and deliver, or cause to be executed and delivered, all such documents and instruments and shall take, or cause to be taken, all such further or other actions as the requesting party may reasonably deem necessary or desirable to evidence and effectuate the transactions contemplated by this Agreement.

 

ARTICLE IX

 

DEFINITIONS

 

9.01 Definitions. For purposes hereof, the following terms, when used herein with initial capital letters, shall have the respective meanings set forth herein:

 

“Affiliate” of any particular Person means any other Person controlling, controlled by or under common control with such particular Person. For the purposes of this definition, “controlling,” “controlled” and “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise.

 

“Agent” means LV Administrative Services, Inc., a Delaware corporation, in its capacity as administrative and collateral agent to the Lenders.

 

“Assets” means, all right, title, and interest in and to all of the assets and properties of the Company owned, used or utilized or held for use by the Company, whether tangible or intangible, whether real, personal or mixed, whether fixed, contingent or otherwise, and wherever located, including, without limitation, the following:

 

(a) all cash and cash equivalents and billed and unbilled accounts receivable;

 

(b) all of its Intellectual Property, goodwill associated therewith, licenses and sublicenses granted and obtained with respect thereto, and rights thereunder, remedies against infringements thereof, and rights to protection of interests therein under the laws of all jurisdictions and any other proprietary rights;

 

(c) all of its agreements and contracts and contractual rights, known or unknown, perfected or in choate, including without limitation, accounts and trade accounts and all rights thereunder;

 

(d) all of its Permits, to the extent transferable;

 

(e) all of its credits, prepayments, prepaid expenses, and deferred items, claims, causes of action, chooses in action, rights of recovery, rights of set off, and rights of recoupment;

 

(f) all of its tangible personal property (including supplies, inventory, equipment, furniture, trucks, automobiles);

 

(g) all of its books, records, ledgers, files, documents, correspondence, lists, plats, architectural plans, drawings, specifications, creative materials, advertising and promotional materials, customer lists, studies, reports, and other printed, written or machine-readable materials;

 

(h) the trade names owned or used by the Company; and

 

(i) goodwill and going concern value of Company and the business and business model of the Company.

 

  

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“Buyer Loan Documents” means the Guaranty, the Master Security Agreement, the Stock Pledge Agreement and the Collateral Assignment.

 

“Cash” means a payment or tender of United States lawful currency, in good funds, whether held in account or transferred when due, which shall be immediately deliverable to the party to whom due.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Collateral Assignment” means that certain Collateral Assignment, dated as of the date hereof by and between Buyer and Agent, for the ratable benefit of the Lenders, in the form attached hereto as Exhibit E.

 

“GAAP” means generally accepted accounting principles, consistently applied, in the United States.

 

“Governmental Body” means any federal, state, local, municipal, foreign or other government or quasi-governmental authority or any department, agency, commission, board, subdivision, bureau, agency, instrumentality, court or other tribunal of any of the foregoing.

 

“Guaranty” means that certain Guaranty of the Buyer of the Lenders Debt for the benefit of the Lenders, dated as of the date hereof in the form attached hereto as Exhibit F.

 

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

 

“Intellectual Property” means (a) all trade secrets and confidential business information (including customer and supplier lists, ideas, research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, pricing and cost information, and business and marketing plans and proposals), (b) all trademarks, service marks, trade dress, logos, trade names, and corporate names, together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith, (c) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof, (d) all copyrightable works, all copyrights, and all applications, registrations, and renewals in connection therewith, (e) all mask works and all applications, registrations, and renewals in connection therewith, (f) all computer software (including data and related documentation), (g) all domain names, websites, phone numbers and facsimile numbers, (h) all other proprietary rights, and (i) all copies and tangible embodiments thereof (in whatever form or medium) .

 

“Lenders” means Valens US, Valens Offshore and PSDL

 

  

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“Lenders Debt” means all “Obligations” of the Company under and as defined in the Solutions Security Agreement.

 

“Liabilities” means in respect of any party, its liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise.

 

“Liens” means any lien, mortgage, security interest, pledge deposit, encumbrance, or other similar restriction.

 

“Master Security Agreement” means that certain Master Security Agreement, dated as of the date hereof by and between Company and Agent, for the ratable benefit of the Lenders, in the form attached hereto as Exhibit D.]

 

“Material Adverse Effect” means any change that, individually or in the aggregate, is materially adverse to the results of operations or financial condition of the Company or any of its Subsidiaries, taken as a whole, but excluding (and none of the following shall be taken into account in determining whether there has been a Material Adverse Effect) any change resulting or arising from

(a) any general deterioration in the economy or change in financial or market conditions generally affecting the industries in which the Company or any of its Subsidiaries operates, (b) the announcement or pendency of the transactions contemplated by this Agreement, (c) changes in laws, rules, regulations, orders or other binding directives issued by any governmental entity that are not specific to the business or markets in which the Company or any of its Subsidiaries operate, (d) changes in GAAP, (e) any act of terrorism, declaration of war or other global unrest or international hostilities except to the extent such events result in direct loss or damage to the tangible assets of the Company or any of its Subsidiaries,

(f) any matter set forth in the disclosure schedules to this Agreement, (g) the failure of the Company or its Subsidiaries to meet any financial plan or projection or (h) compliance with the terms of, or the taking of any action contemplated by the Agreement or any related action. Buyer acknowledges that there could be a disruption to the Company’s or any of its Subsidiary’s businesses as a result of the execution of this Agreement or the announcement or pendency of the transactions contemplated by this Agreement, and Buyer agrees that such disruptions do not and shall not constitute a Material Adverse Effect. For greater clarity, notwithstanding anything to the contrary in this Agreement, a material adverse change to the tax treatment and legal status of independent contractors in the courier industry shall constitute a Material Adverse Effect.

 

“Permitted Liens” means (a) statutory Liens for current Taxes or other governmental charges not yet due and payable or the amount or validity of which is being contested in good faith by appropriate proceedings by the Company, (b) mechanic’s, carriers’, workers’, repairers’ and similar statutory Liens arising or incurred in the ordinary course of business for amounts which are not delinquent and which are not, individually or in the aggregate, significant, (c) zoning, entitlement, building and other land use regulations imposed by governmental agencies having jurisdiction over any leased real property which are not violated by the current use and operation of the leased real property,

 

(d) covenants, conditions, restrictions, easements and other similar matters of record affecting title to the leased real property which do not materially impair the occupancy or use of the leased real property for the purposes for which it is currently used or proposed to be used in connection with the Company’s business, (e) public roads and highways, (f) matters which would be disclosed by an inspection or accurate survey of each parcel of real property, (g) Liens arising under worker’s compensation, unemployment insurance, social security, retirement and similar legislation, (h) purchase money liens and liens securing rental payments under capital lease arrangements, (i) other Liens arising in the ordinary course of business and not incurred in connection with the borrowing of money, (j) liens, the existence of which have not had a Material Adverse Effect, and (k) those matters identified on the attached Schedule 3.06 (Permitted Liens).

“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.

 

  

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“Pre-Closing Tax Period” means any taxable period ending on or before the Closing Date and the portion of any Straddle Period up to and including the Closing Date.

 

“PSDL” means PSource Structured Debt Limited, a Guernsey company, together with its successors and assigns.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Solutions Security Agreement” means that certain Security Agreement, dated as of the date hereof, by and among the Company, the Agent, Valens US, Valens Offshore and PSDL, as may be amended, modified or supplemented from time to time.

 

“Stock Pledge Agreement” means that certain Stock Pledge Agreement, dated as of the date hereof by and between Buyer and Agent, for the ratable benefit of the Lenders, in the form attached hereto as Exhibit C.

 

“Straddle Period” means any taxable period beginning on or prior to and ending after the Closing Date.

 

“Subsidiary” means, with respect to any Person, any corporation, partnership, association or other business entity of which (a) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (g) if a partnership, association or other business entity, a majority of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a partnership, association or other business entity if such Person or Persons shall be allocated a majority of partnership, association or other business entity gains or losses or shall be or control the managing director, managing member, general partner or other managing Person of such partnership, association or other business entity. Unless the context requires otherwise, each reference to a Subsidiary shall be deemed to be a reference to a Subsidiary of the Company.

 

“Tax” or “Taxes” means any federal, state, local or foreign income, gross receipts, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, ad valorem/personal property, stamp, excise, occupation, sales, use, transfer, value added, alternative minimum, estimated or other tax, including any interest, penalty or addition thereto.

 

“Tax Returns” means any return, report, information return or other document (including schedules or any related or supporting information) filed or required to be filed with any governmental entity or other authority in connection with the determination, assessment or collection of any Tax or the administration of any laws, regulations or administrative requirements relating to any Tax.

 

“Transaction Tax Deductions” means any item of loss, deduction, or credit resulting from or attributable to costs and expenses of the Company and/or any of its Subsidiaries related to or arising out of the transactions contemplated by this Agreement, including, but not limited to, any loss, deduction or credit resulting from any employee bonuses, debt prepayment fees or capitalized debt costs.

 

“Valens Offshore” means Valens Offshore SPV I, Ltd., a Cayman Islands company, together with its successors and assigns.

 

“Valens US” means Valens U.S. SPV I, LLC, a Delaware limited liability company, together with its successors and assigns.

 

  

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Additional Definitions:

Term Section

“AAA” Section 10.14 “Arbitrable Dispute” Section 10.14 “Arbitration Expenses” Section 10.14(c) “Arbitrators” Section 10.14(b) “Closing” Section 1.02 “Closing Date” Section 1.02 “Confidentiality Agreement” Section 5.02 “IRS Tax Lien” Section 1.02(a) “Manager” Section 10.20(a) “Transfer Taxes” Section 8.02(c) “Unpaid Taxes” Section 1.02(a)

 

9.02 Other Definitional ProvisionsAll references in this Agreement to Exhibits, disclosure schedules, Articles, Sections, subsections and other subdivisions refer to the corresponding Exhibits, disclosure schedules, Articles, Sections, subsections and other subdivisions of or to this Agreement unless expressly provided otherwise. Titles appearing at the beginning of any Articles, Sections, subsections or other subdivisions of this Agreement are for convenience only, do not constitute any part of this Agreement, and shall be disregarded in construing the language hereof.

 

(b) Exhibits and disclosure schedules to this Agreement are attached hereto and by this reference incorporated herein for all purposes.

 

(c) The words “this Agreement,” “herein,” “hereby,” “hereunder” and “hereof,” and words of similar import, refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. The words “this Article,” “this Section” and “this subsection,” and words of similar import, refer only to the Article, Section or subsection hereof in which such words occur. The word “or” is exclusive, and the word “including” (in its various forms) means including without limitation.

 

(d) All references to “$” and dollars shall be deemed to refer to United States currency unless otherwise specifically provided.

 

(e) Pronouns in masculine, feminine or neuter genders shall be construed to state and include any other gender, and words, terms and titles (including terms defined herein) in the singular form shall be construed to include the plural and vice versa, unless the context otherwise requires.

ARTICLE X

 

MISCELLANEOUS

 

10.01 Press Releases and Communications. No press release or public announcement related to this Agreement or the transactions contemplated herein, or prior to the Closing, any other announcement or communication to the employees, clients or suppliers of the Company, shall be issued or made by any party hereto without the joint approval of Buyer and Seller, unless required by law including disclosure requirements for any reporting company under applicable securities laws in which case Buyer and Seller shall have the right to review such press release, announcement, filing disclosing a current report or communication prior to its issuance, distribution or publication.

 

10.02 Expenses. Except as otherwise expressly provided herein, Buyer and Seller shall each pay their own expenses (including attorneys’ and accountants’ fees and expenses) in connection with the negotiation of this Agreement, the performance of its obligations hereunder and the consummation of the transactions contemplated by this Agreement (whether consummated or not).

 

  

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10.03 Prevailing Party. In the event of a dispute between any of the parties hereto with respect to obligations under this Agreement, the prevailing party in any action or proceeding in any court or arbitration in connection therewith shall be entitled to recover from such other party its costs and expenses, including, without limitation, reasonable legal fees and associated court costs.

 

10.04 Notices. All notices, demands and other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given (a) when personally delivered, (b) when transmitted via telecopy (or other facsimile device) to the number set out below if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), (c) the day following the day (except if not a business day then the next business day) on which the same has been delivered prepaid to a reputable national overnight air courier service, (d) when transmitted via email (including via attached PDF or other static image document) to the email address set out below if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), or (e) the third business day following the day on which the same is sent by certified or registered mail, postage prepaid. Notices, demands and communications, in each case to the respective parties, shall be sent to the applicable address set forth on the signature pages hereto, unless another address has been previously specified in writing.

 

10.05 Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, except that neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned or delegated by any party hereto without the prior written consent of the other parties hereto. Notwithstanding the foregoing, (a) Buyer may assign this Agreement to any Subsidiary of Buyer or to any lender to Buyer or any Subsidiary or Affiliate thereof as security for obligations to such lender in respect of the financing arrangements entered into in connection with the transactions contemplated hereby and any refinancings, extensions, refundings or renewals thereof, provided that no assignment to any such Subsidiary or lender shall in any way affect Buyer’s obligations or liabilities under this Agreement, and (b) after the Closing, each Seller may assign this Agreement to any of its beneficial owners or successors by operation of law.

 

10.06 Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement, and the parties shall amend or otherwise modify this Agreement to replace any prohibited or invalid provision with an effective and valid provision that gives effect to the intent of the parties to the maximum extent permitted by applicable law.

 

10.07 No Strict Construction. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any Person. The disclosure schedules attached to this Agreement have been arranged for purposes of convenience in separately titled sections corresponding to sections of this Agreement; provided however, each section of the disclosure schedules shall be deemed to incorporate by reference all information disclosed in any other section of the disclosure schedules. Capitalized terms used in the disclosure schedules and not otherwise defined therein have the meanings given to them in this Agreement. In the event a subject matter is addressed in more than one representation and warranty, Buyer shall be entitled to rely only on the most specific representation and warranty addressing such matter. The specification of any dollar amount or the inclusion of any item in the representations and warranties contained in this Agreement or the disclosure schedules or Exhibits attached hereto is not intended to imply that the amounts, or higher or lower amounts, or the items so included, or other items, are or are not required to be disclosed (including, without limitation, whether such amounts or items are required to be disclosed as material or threatened) or are within or outside of the ordinary course of business, and no party shall use the fact of the setting of the amounts or the fact of the inclusion of any item in this Agreement or the disclosure schedules or Exhibits in any dispute or controversy between the parties as to whether any obligation, item or matter not described or included in this Agreement or in any disclosure schedule or Exhibit is or is not required to be disclosed (including whether the amount or items are required to be disclosed as material or threatened) or is within or outside of the ordinary course of business for purposes of this Agreement. The information contained in this Agreement and in the disclosure schedules and Exhibits hereto is disclosed solely for purposes of this Agreement, and no information contained herein or therein shall be deemed to be an admission by any party hereto to any third party of any matter whatsoever (including, without limitation, any violation of law or breach of contract).

 

  

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10.08 Amendment and Waiver. Any provision of this Agreement or the disclosure schedules or Exhibits hereto may be amended or waived only in a writing signed by Buyer and Seller. No waiver of any provision hereunder or any breach or default thereof shall extend to or affect in any way any other provision or prior or subsequent breach or default.

 

10.09 Complete Agreement. This Agreement and the documents referred to herein (including the Confidentiality Agreement) contain the complete agreement between the parties hereto and supersede any prior understandings, agreements or representations by or between the parties, written or oral, which may have related to the subject matter hereof in any way.

 

10.10 Counterparts. This Agreement may be executed in multiple counterparts (including by means of telecopied signature pages or electronic transmission in portable document formant (PDF)), any one of which need not contain the signatures of more than one party, but all such counterparts taken together shall constitute one and the same instrument.

 

10.11 Governing Law. All matters relating to the interpretation, construction, validity and enforcement of this Agreement shall be governed by and construed in accordance with the domestic laws of the State of Illinois without giving effect to any choice or conflict of law provision or rule (whether of the State of Illinois or any other jurisdiction) that would cause the application of laws of any jurisdiction other than the State of Illinois.

 

10.12 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. SUBJECT TO

SECTION 10.14 (WHICH SHALL GOVERN ANY DISPUTE NOT SEEKING INJUNCTIVE RELIEF), THE PARTIES TO THIS AGREEMENT SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE STATE COURTS LOCATED IN CHICAGO, ILLINOIS OR THE COURTS OF THE UNITED STATES LOCATED IN CHICAGO, ILLINOIS IN RESPECT OF THE INTERPRETATION AND ENFORCEMENT OF THE PROVISIONS OF THIS AGREEMENT AND ANY RELATED AGREEMENT, CERTIFICATE OR OTHER DOCUMENT DELIVERED IN CONNECTION HEREWITH AND BY THIS AGREEMENT WAIVE, AND AGREE NOT TO ASSERT, ANY DEFENSE IN ANY ACTION FOR THE INTERPRETATION OR ENFORCEMENT OF THIS AGREEMENT AND ANY RELATED AGREEMENT, CERTIFICATE OR OTHER DOCUMENT DELIVERED IN CONNECTION HEREWITH, THAT THEY ARE NOT SUBJECT THERETO OR THAT SUCH ACTION MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN SUCH COURTS OR THAT THIS AGREEMENT MAY NOT BE ENFORCED IN OR BY SUCH COURTS OR THAT THEIR PROPERTY IS EXEMPT OR IMMUNE FROM EXECUTION, THAT THE ACTION IS BROUGHT IN AN INCONVENIENT FORUM, OR THAT THE VENUE OF THE ACTION IS IMPROPER. SERVICE OF PROCESS WITH RESPECT THERETO MAY BE MADE UPON BUYER BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PARTY AT ITS ADDRESS AS PROVIDED IN SECTION10.04.

 

10.13 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.13.

 

  

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10.14 Arbitration. Except for claims seeking injunctive relief (for which the provisions of Section 10.12and Section 10.13 shall be applicable), any dispute, controversy, or claim arising under or relating to this Agreement or any breach or alleged breach thereof (“Arbitrable Dispute”) shall be resolved by final and binding arbitration administered by the American Arbitration Association (“AAA”) under its Commercial Arbitration Rules, subject to (and as modified by) the following:

 

(a) Any party hereto may demand that any Arbitrable Dispute be submitted to binding arbitration. The demand for arbitration shall be in writing, shall be served on the parties in the manner prescribed herein for the giving of notices, and shall set forth a short statement of the factual basis for the claim, specifying the matter or matters to be arbitrated.

 

(b) The arbitration shall be conducted by a panel of three arbitrators, one selected by Buyer, one selected by Seller and one selected jointly by the arbitrators selected by Buyer and Seller (collectively, the “Arbitrators”). Any arbitration pursuant hereto shall be conducted by the Arbitrators under the guidance of the Federal Rules of Civil Procedure and the Federal Rules of Evidence, but the Arbitrators shall not be required to comply strictly with such Rules in conducting any such arbitration. All such arbitration proceedings shall take place in Chicago, Illinois.

 

(c) The fees and expenses of the Arbitrators and all other costs and expenses incurred in connection with the arbitration (“Arbitration Expenses”) shall be borne by the non-prevailing party in the arbitration, as determined by the Arbitrators and, notwithstanding the foregoing, the Arbitrators shall be empowered to require any one or more of the parties to the arbitration to bear all or any portion of such fees, costs and expenses of the Arbitrators in the event that the Arbitrators determine such party has acted unreasonably or in bad faith.

 

(d) Unless the parties to such arbitration otherwise agree in writing, the arbitration shall be conducted on an expedited basis, testimony and briefing will be concluded no later than 120 days after the arbitration is initiated, each party shall be entitled to take at least one deposition, the award shall be made in writing no more than 30 days following the end of the proceeding, and all facts and circumstances relating to such arbitration, including the existence of the dispute and the ultimate resolution, shall be kept confidential in accordance with a confidentiality agreement containing customary terms to be agreed to by the parties to such arbitration.

 

(e) The Arbitrators shall have the authority to award any remedy or relief that a Court of the State of Illinois could order or grant, including specific performance of any obligation created under this Agreement, the awarding of monetary compensation, the issuance of an injunction, or the imposition of sanctions for abuse or frustration of the arbitration process. The Arbitrators shall render their decision and award upon the concurrence of at least two of their number. Such decision and award shall be in writing and counterpart copies thereof shall be delivered to each of the parties. The decision and award of the Arbitrators shall be final and binding. In rendering such decision and award, the Arbitrators shall not add to, subtract from or otherwise modify the provisions of this Agreement and shall make its determinations in accordance therewith and shall in no event award against any Person in contravention of the provisions of this Agreement, including, without limitation, Section 10.14(f). Any party to the arbitration may, notwithstanding anything to the contrary set forth in Section 10.12, seek to have judgment upon the award rendered by the Arbitrators entered in any court having jurisdiction thereof.

 

(f) In no event shall any party be entitled to recover or make a claim for any amounts in respect of consequential, incidental, special or indirect damages, lost profits, diminution in value or punitive damages and, in particular, no “multiple of profits” or “multiple of cash flow” or other valuation methodology shall be used in calculating the amount of any recovery by any party. In addition, in no event shall any party be entitled to recover for any amounts that are not paid to a third party (e.g., general and administrative time or other overhead expenses) or due to the unavailability of any Tax attribute from a Pre-Closing Tax Period or for any Taxes relating to any period (or portion thereof) beginning after the Closing Date, and no party shall be liable hereunder in respect of any claim if such claim would not have arisen but for a change in legislation or accounting policies or a change in interpretation of applicable Law as determined by a court or pursuant to an administration rule-making decision. Furthermore, no party shall have a right to make a claim for any amount to the extent it is primarily a possible or potential loss that such party believes may be asserted rather than an actual and out-of-pocket loss that has, in fact, been paid or incurred by such party.

 

  

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(g) No party shall file any suit, motion, petition or otherwise commence any legal action or proceeding for any matter which is required to be submitted to arbitration as contemplated herein except in connection with the enforcement of an award rendered by the Arbitrators. Upon the entry of an order dismissing or staying any action or proceeding filed contrary to the preceding sentence, the Person which filed such action or proceeding shall promptly pay to the other Person the reasonable attorney’s fees, costs and expenses incurred by such other Person prior to the entry of such order.

 

(h) The parties agree that it is their intention that all Arbitrable Disputes be governed by this Section 10.14 and agree to cause any of their Affiliates to observe the provisions of this Section 10.14.

 

10.15 No Liability for Information Not Part of Schedules .

 

(a) Neither the Company, Seller, nor any stockholder, member, officer, director, employee or agent of any of the foregoing, whether in an individual, corporate or any other capacity, will have or be subject to any liability or indemnification obligation to Buyer or any other Person resulting from (nor shall Buyer have any claim with respect to) the distribution to Buyer, or Buyer’s use of, or reliance on, any information, documents, projections, forecasts or other material made available to Buyer in certain “data rooms,” confidential information memoranda or management presentations in expectation of, or in connection with, the transactions contemplated by this Agreement, regardless of the legal theory under which such liability or obligation may be sought to be imposed, whether sounding in contract or tort, or whether at law or in equity, or otherwise.

 

(b) In connection with the investigation by Buyer of the Company, Buyer has received or may receive from the Company certain projections, forward-looking statements and other forecasts and certain business plan information. Buyer acknowledges that there are uncertainties inherent in attempting to make such estimates, projections and other forecasts and plans, that Buyer is familiar with such uncertainties, that Buyer is taking full responsibility for making its own evaluation of the adequacy and accuracy of all estimates, projections and other forecasts and plans so furnished to it (including the reasonableness of the assumptions underlying such estimates, projections, forecasts or plans), and that Buyer shall have no claim against anyone with respect thereto. Accordingly, Buyer acknowledges that neither the Company, Seller, nor any member, officer, director, employee or agent of any of the foregoing, whether in an individual, corporate or any other capacity, make any representation, warranty, or other statement with respect to, and Buyer is not relying on, such estimates, projections, forecasts or plans (including the reasonableness of the assumptions underlying such estimates, projections, forecasts or plans), and Buyer agrees that it has not relied thereon.

10.16 No Third Party Beneficiaries. No Person other than the parties hereto shall have any rights, remedies, obligations or benefits under any provision of this Agreement.

 

10.17 Conflict Between Transaction Documents. The parties hereto agree and acknowledge that to the extent any terms and provisions of this Agreement are in any way inconsistent with or in conflict with any term, condition or provision of any other agreement, document or instrument contemplated hereby, this Agreement shall govern and control.

 

10.18 Specific Performance. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed by Buyer in accordance with their specific terms or were otherwise breached by Buyer. It is accordingly agreed that Seller shall be entitled to an injunction or injunctions to prevent breaches of this Agreement by Buyer and to enforce specifically the terms and provisions hereof against Buyer in any court having jurisdiction, this being in addition to any other remedy to which Seller is entitled at law or in equity.

 

  

-20-

  

 

10.19 Consents. Buyer acknowledges that certain consents to the transactions contemplated by this Agreement may be required from parties to contracts, leases, licenses or other agreements to which the Company is a party (including the contracts set forth on Schedule 4.09(a) (Contracts) and such consents have not been obtained. Buyer agrees and acknowledges that the Company and Seller shall have no liability whatsoever to Buyer (and Buyer shall not be entitled to assert any claims) arising out of or relating to the failure to obtain any consents (after using commercially-reasonable attempts to secure same) that may have been or may be required in connection with the transactions contemplated by this Agreement or because of the default, acceleration or termination of any such contract, lease, license or other agreement as a result thereof. Buyer further agrees that no representation, warranty or covenant of the Company contained herein shall be breached or deemed breached and no condition of Buyer shall be deemed not to be satisfied as a result of the failure to obtain any consent or as a result of any such default, acceleration or termination or any lawsuit, action, claim, proceeding or investigation commenced or threatened by or on behalf of any Person arising out of or relating to the failure to obtain any consent or any such default, acceleration or termination.

 

[SIGNATURE PAGE FOLLOWS]

 

 

 

 

 

 

 

  

-21-

  

 

IN WITNESS WHEREOF, the parties hereto have executed this Securities Purchase Agreement on the day and year first above written.

 

 

	 	SELLER:
	 	 
	 	MGL AMERICAS INC.
	 	 
	 	By:/s/ Sandy Chandra                         
	 	Sandy Chandra 
	 	CEO
	 	 
	 	Address:    1699 E. Woodfield Road, Suite 200
	 	Schaumburg, IL 60173
	 	 
	 	 
	 	BUYER:
	 	 
	 	ZOLON CORPORATION
	 	 
	 	By:/s/ Dhru Desai                               
	 	Dhru Desai
	 	CFO
	 	Zolon Corporation
	 	 
	 	Address:    2850 Golf Road, Suite 30
	 	Rolling Meadows, IL 60008

 

 

[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]

 

  

-22-

  

 

SCHEDULES

 

Schedule 1.02(b) 

 

Payment to third parties

 

	 	 	
Particulars

	 	
Amount

	 
	 1	 	
Employees Obligation

	 	$	119,987	 
	 2	 	
Vendors Obligation

	 	$	387,090	 
	 3	 	
Off-shore Software Development Services

	 	$	491,923	 
	 4	 	
Payment to MGL Americas

	 	$	1,000	 

 

 

 

  

-23-

  

 

Schedule 1.02(c) 

 

Assumed obligations of vendors and employees

 

a. Employees Obligation (Project-wise)

 

	  	 	
Amount

	 
	
EIG

	 	$	8,251	 
	
AIMS

	 	$	13,330	 
	
Ceridian

	 	$	6,551	 
	
EKC

	 	$	4,698	 
	
FRI

	 	$	26,982	 
	
Magic CPA

	 	$	4,349	 
	
NPD

	 	$	9,288	 
	
Paychex

	 	$	8,957	 
	
Schawk

	 	$	29,034	 
	
Unique

	 	$	2,334	 
	
SG&A

	 	$	3,862	 
	
Galaxy

	 	$	2,351	 
	
Total

	 	$	119,987	 

 

b. Vendors Obligation (Project-wise)

 

	  	
Client

	 	
Amount

	 
	
AA Software & Networking, Inc

	
Walgreens

	 	$	16,790	 
	
DBA Bartronics USA

	
Walgreens

	 	$	31,580	 
	
Edify Technologies Inc.

	
Walgreens

	 	$	7,248	 
	
InfoVizon Technologies Inc

	
Walgreens

	 	$	1,118	 
	
Reveille Technologies, Inc

	
Walgreens

	 	$	1,248	 
	
Sunmerge Systems Inc.

	
Walgreens

	 	$	14,319	 
	
Vaktech Corp, LLC

	
Walgreens

	 	$	22,274	 
	
Verinon Technology Solutions Ltd.

	
Walgreens

	 	$	20,557	 
	
Xpedite Technologies Inc.

	
Walgreens

	 	$	13,720	 
	
Compunnel Solftware Group Inc

	
EKC/Ceridian

	 	$	22,464	 
	
Avani Technology

	
EKC/Ceridian

	 	$	18,720	 
	
Innovate Solutions Inc

	
EKC/Ceridian

	 	$	16,864	 
	
Advent Global Solutions Inc

	
EKC/Ceridian

	 	$	166,900	 
	
Streams Line Technologies Inc

	
EKC/Ceridian

	 	$	9,120	 
	
V-soft Consulting Group Inc

	
EKC/Ceridian

	 	$	24,168	 
	
Total

	  	 	$	387,090	 

c. Off-shore Software Development Services = $ 491,923

 

  

-24-

  

 

Schedule 3.05 

 

Consents

a. Consent from LV Administrative Services Inc / Laurus Master Fund

 

b. Proof for shifting of employees' Payroll to MGL Solutions, Inc. with Paychex as the payroll processor.  Confirmation from paychex for processing the payroll for new company.

 

c. List of Vendors associated with the transfer of assets (clients)

 

	
Vendor Names

	
AA Software & Networking, Inc

	
DBA Bartronics USA

	
Edify Technologies Inc.

	
InfoVizon Technologies Inc

	
Reveille Technologies, Inc

	
Sunmerge Systems Inc.

	
Vaktech Corp, LLC

	
Verinon Technology Solutions Ltd.

	
Xpedite Technologies Inc.

	
Compunnel Solftware Group Inc

	
Avani Technology

	
Innovate Solutions Inc

	
Advent Global Solutions Inc

	
Streams Line Technologies Inc

	
V-soft Consulting Group Inc

 

  

-25-

  

 

Schedule 3.11 

 

Liens & Liabilities

 

 

None

 

 

 

 

 

 

 

 

  

-26-

  

Schedule 3.07 

 

Litigations

 

 

None

 

 

 

 

 

 

 

 

  

-27-

  

 

Schedule 3.10

 

Assets

 

List of Clients Transferred

	
ASAP Software  

	
Automotive.Com 

	
Ceridian 

	
Carestream

	
Comand Alkon 

	
Eastman Kodak 

	
Galaxy Systems

	
Glaxo SmithKline 

	
NPD 

	
Paychex

	
Schawk 

	
Superior Design 

	
Media Services Group 

	
Vulcan Materials 

	
Walgreens 

	
Welldoc 

	
AIMS Clients:

 o Jarden, Compac industries, US circuits, Componix, Precision Southeast, CSL

 o Furnel. Diversified Plastics, General Films, Hillsman Modular, Ironwood Industries

 o Mega Circuits, Netco, Plastic Container Corporation, Star Die, Tritech 

	
Any other IT solutions clients serviced from Schaumburg Location

  

-28-

  

 

Schedule 3.11 

 

Liens & Liabilities

 

Liens:

 

	
LV Administrative Services Inc

	 	
 

	 
	
Note Liability

	 	$	3,000,000	 
	  	 	 	 	 
	
Total

	 	$	3,000,000	 

Liabilities:

 

	
Payroll Obligations

	 	$	119,987	 
	
Vendor Obligations

	 	$	387,090	 
	
Off-shore Software Development Services

	 	$	491,923	 
	  	 	 	 	 
	
Total

	 	$	1,000,000	 

 

  

-29-

  

 

Schedule 3.12 

 

Employees & Vendors

 

	
Sl.No

	 	
EMPLOYEE NAME

	 	
Project

	 	1	 	
Alley, Todd

	 	
EKC

	 	2	 	
Ari, Ratna Babu

	 	
Walgreens

	 	3	 	
Arjunakani, Arjunan

	 	
NPD

	 	4	 	
Balakrishnan, Madanmohan

	 	
Unique

	 	5	 	
Balasubramanian, Jagadesh

	 	
Walgreens

	 	6	 	
Bardaiyar, Mohit

	 	
SG&A

	 	7	 	
Boratwar, Nishant

	 	
Walgreens

	 	8	 	
Burghardt, Jon

	 	
EKC

	 	9	 	
Chokkalingam, Sivakumar

	 	
FRI

	 	10	 	
Conner, Daniels

	 	
EKC

	 	11	 	
Desai, Harish Amritrao

	 	
Paychex

	 	12	 	
Doehler, Robert C

	 	
EKC

	 	13	 	
Donthu, Srinivasulu

	 	
Walgreens

	 	14	 	
Eswaran, Balasubramanian

	 	
NPD

	 	15	 	
Gajendran, Kalyana Sundaram

	 	
FRI

	 	16	 	
Glave, Richard Dale

	 	
EKC

	 	17	 	
Gnanasundaram, Sathishkumar

	 	
FRI

	 	18	 	
Gongadi, Davana Satish

	 	
Walgreens

	 	19	 	
Gopalan, Ravichandran

	 	
AIMS

	 	20	 	
Gupta, Anshul

	 	
Schawk

	 	21	 	
Haag, Connie

	 	
EKC

	 	22	 	
Hebbar, Prakash Ramesh

	 	
NPD

	 	23	 	
Kailasam, Vijayakumar

	 	
EKC

	 	24	 	
Kakarla, Swamijee

	 	
EKC

	 	25	 	
Karichianna G, Deivasigamani

	 	
Walgreens

	 	26	 	
Kota, Satya Chandra Mouli

	 	
Walgreens

	 	27	 	
Lallucci, Phillip Anthony

	 	
EKC

	 	28	 	
Loyd Eric

	 	
EKC

	 	29	 	
Maher, Robert

	 	
EKC

	 	30	 	
Miller, Richard

	 	
Walgreens

	 	31	 	
Montana, Katherine

	 	
EKC

 

  

-30-

  

	 	32	 	
Moughan, Thomas

	 	
EKC

	 	33	 	
Murugesan, Madhan

	 	
CommandAlkon

	 	34	 	
Nazir Ahmed, Thanveer Ahmed

	 	
EKC

	 	35	 	
Newhouse, Gregory

	 	
EKC

	 	36	 	
Nimma, Madhavi

	 	
EKC

	 	37	 	
Prakasam, Dillibabu

	 	
Primedia

	 	38	 	
Racherla, Visweswar Reddy

	 	
EKC

	 	39	 	
Raghavendra, Rao A

	 	
Walgreens

	 	40	 	
Rajapurohit, Chandrakanth

	 	
Walgreens

	 	41	 	
Ramadoss, Praveen Kasturi

	 	
FRI

	 	42	 	
Ramanujam, Anand

	 	
Walgreens

	 	43	 	
Revelli, Rajesh Kumar

	 	
FRI

	 	44	 	
Schneider, Cecilia

	 	
EKC

	 	45	 	
Schroek, Dennis R

	 	
EKC

	 	46	 	
Schwendiman, Dwight P

	 	
EKC

	 	47	 	
Sen, Amitava

	 	
Walgreens

	 	48	 	
Sreeram, Rajagopalachari

	 	
GSK

	 	49	 	
Subramani, Vijayaprabu

	 	
FRI

	 	50	 	
Subramanian, Karuppiah

	 	
GSK

	 	51	 	
Subramanian, Ramesh

	 	
EKC

	 	52	 	
Sudheer, Agnihothram S

	 	
Walgreens

	 	53	 	
Sundaram, Ranganathan

	 	
Schawk

	 	54	 	
Sureddi, Raghavendra Prakash

	 	
EKC

	 	55	 	
Tappon, Jim

	 	
EKC

	 	56	 	
Thangaiah, Balashanmugam

	 	
Walgreens

	 	57	 	
Thiruppandy, Muthukumar

	 	
FRI

	 	58	 	
Varadadesigan, P A

	 	
Galaxy

	 	59	 	
Varadaraj, Baskaran

	 	
NPD

	 	60	 	
Veeriah, Muniyandi

	 	
Walgreens

	 	61	 	
Venkateswaran, Seshadri Puduco

	 	
FRI

	 	62	 	
Wyant, Carol

	 	
EKC

 

  

-31-

  

 

Schedule 3.13 

 

Leases

 

 

None

 

 

 

 

 

 

 

 

  

-32-

  

 

Schedule 3.14

 

Loans & Obligations

 

  1.       LV Administrative Services Inc 

 

Note Liability = $ 3,000,000

 

 

 

 

 

 

  

-33-

  

 

Schedule 3.16

 

Customers

 

List of Clients Transferred

 

	
ASAP Software 

	
Automotive.Com 

	
Ceridian 

	
Carestream 

	
Comand Alkon 

	
Eastman Kodak 

	
Galaxy Systems 

	
Glaxo SmithKline 

	
NPD 

	
Paychex 

	
Schawk 

	
Superior Design 

	
Media Services Group 

	
Vulcan Materials 

	
Walgreens 

	
Welldoc 

	
AIMS Clients:

 o Jarden, Compac industries, US circuits, Componix, Precision Southeast, CSL

 o Furnel. Diversified Plastics, General Films, Hillsman Modular, Ironwood Industries

 o Mega Circuits, Netco, Plastic Container Corporation, Star Die, Tritech

 

  

-34-

  

Schedule 3.17 

 

Licenses & Permits

 

 

MGL Solutions will apply for license to do business in the State of Illinois.

 

 

 

 

 

 

 

 

  

-35-

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